<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 12, 1998
REGISTRATION NO. 333-46933
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------
V.I. TECHNOLOGIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
--------------
DELAWARE 2836 11-3238476
(STATE OR OTHER (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
JURISDICTION CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
OF INCORPORATION OR
ORGANIZATION)
155 DURYEA ROAD
MELVILLE, NEW YORK 11747
(516) 752-7314
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
JOHN R. BARR
PRESIDENT AND CHIEF EXECUTIVE OFFICER
V.I. TECHNOLOGIES, INC.
155 DURYEA ROAD
MELVILLE, NEW YORK 11747
(516) 752-7314
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPIES TO:
WILLIAM T. WHELAN, ESQ. ALAN L. JAKIMO, ESQ.
MARC A. RUBENSTEIN, ESQ. BROWN & WOOD LLP
PALMER & DODGE LLP ONE WORLD TRADE CENTER
ONE BEACON STREET NEW YORK, NEW YORK 10048-0557
BOSTON, MASSACHUSETTS 02108 (212) 839-5300
(617) 573-0100
--------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
--------------
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [_]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY
DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
This Amendment is filed solely to amend the exhibit list and to file
additional exhibits.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution
The following table sets forth the estimated costs and expenses, other than
underwriting discounts and commissions, expected to be incurred by the Company
in connection with the issuance and distribution of the Common Stock being
registered under this registration statement.
<TABLE>
<CAPTION>
<S> <C>
SEC Registration Fee $ 15,267
Nasdaq National Market Listing Fee 50,000
NASD Filing Fee and Expenses 5,675
Blue Sky Fees and Expenses 2,500
Printing and Engraving Expenses 100,000
Accounting Fees and Expenses 150,000
Legal Fees and Expenses 430,000
Transfer Agent and Registrar Fees 2,000
Miscellaneous 94,558
--------
Total $850,000
========
</TABLE>
Item 14. Indemnification of Directors and Officers
Article NINTH of the Company's Restated Certificate of Incorporation
provides that directors of the Company will not be personally liable to the
Company or its stockholders for monetary damages for breach of fiduciary duty
as a director, whether or not an individual continues to be a director at the
time such liability is asserted, except for liability (i) for any breach of
the director's duty of loyalty to the Company or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct or
a knowing violation of law, (iii) pursuant to Section 174 of the General
Corporation Law of the State of Delaware or (iv) for any transaction from
which the director derives an improper personal benefit.
Article TENTH of the Company's Restated Certificate of Incorporation
provides that the Company shall, to the fullest extent permitted by the
General Corporation Law of the State of Delaware, as amended from time to
time, indemnify each person who was or is a party or is threatened to be made
a party to any threatened, pending or completed action, suit or proceeding by
reason of the fact that such person is or was, or has agreed to become a
director or officer of the Company, or is or was serving, or has agreed to
serve, at the request of the Company, as a director, officer, or trustee of,
or in a similar capacity with, another corporation, partnership, joint
venture, trust or other enterprise. The indemnification provided for in
Article TENTH is expressly not exclusive of any other rights to which those
seeking indemnification may be entitled under any law, agreement or vote of
stockholders or disinterested directors or otherwise, and shall inure to the
benefit of the heirs, executors and administrators of such persons. Article
TENTH further permits the board of directors to authorize the grant of
indemnification rights to other employees and agents of the Company and such
rights may be equivalent to, or greater or less than, those set forth in
Article TENTH.
Section 102(b)(7) of the General Corporation law of the State of Delaware
provides that a corporation may eliminate or limit the personal liability of a
director to the corporation or its stockholders for monetary damages for
breach of fiduciary duty as a director, provided that such provision shall not
eliminate or limit the liability of a director (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct or
a knowing violation of law, (iii) pursuant to Section 174 of the General
Corporation Law of the State of Delaware, or (iv) for any transaction from
which the director derived an improper personal benefit. No such provision
shall eliminate or limit the liability of a director for any act or omission
occurring prior to the date when such provision becomes effective.
Section 145 of the General Corporation Law of the State of Delaware provides
that a corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or
II-1
<PAGE>
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request of
the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if (i) he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and (ii) with respect to any criminal action or proceeding, he had
no reasonable cause to believe his conduct was unlawful, provided, however, no
indemnification shall be made in connection with any proceeding brought by or
in the right of the corporation where the person involved is adjudged to be
liable to the corporation except to the extent indemnification is approved by
a court.
Pursuant to Section 145 of the General Corporation Law of the State of
Delaware and the By-laws of the Company, the Company maintains directors' and
officers' liability insurance for its executive officers and directors against
certain liabilities they may incur in their capacity as such.
The Company has entered into agreements with all of its directors and
executive officers affirming the Company's obligation to indemnify them to the
fullest extent permitted by law and providing various other protections.
Item 15. Recent Sales of Unregistered Securities
(a) Since the beginning of 1995, the Registrant has sold and issued the
following unregistered securities:
In September 1995 the Registrant issued 2,683,363 shares (adjusted to
reflect a dividend of 26,833 shares for every outstanding share of Common
Stock declared in October 1995) to the NYBC in connection with the transfer
of title to real property, building and fixtures used in the NYBC's plasma
fractionation business and certain other specified tangible and intangible
assets.
In October 1995 the Registrant issued a warrant to purchase 715,563
shares of Common Stock to the NYBC exercisable at $2.80 per share in
connection with a recapitalization of the Company. In September 1996 the
NYBC exercised this warrant.
In October 1995, the Registrant issued 1,788,908 shares of Common Stock
at a purchase price of $2.80 per share to certain purchasers affiliated
with Ampersand Specialty Materials and Chemicals III Limited Partnership.
In connection with this financing the Registrant also issued a warrant to
purchase 715,563 shares of Common Stock to Ampersand exercisable at $2.80
per share. In September 1996 Ampersand exercised this warrant.
In June 1996, the Registrant issued 126,386 shares of Common Stock to
certain purchasers affiliated with Ampersand Specialty Materials and
Chemicals III Limited Partnership in consideration of the provision of an
irrevocable standby letter of credit to secure a $5,000,000 loan from
Chemical Bank.
In June 1996, the Registrant issued 3,577 shares of Common Stock to CB
Capital Investors, L.P. as part of an upfront fee in connection with the
loan from Chemical Bank.
In June 1996 a warrant to purchase 3,577 shares of Common Stock at $2.80
per share was issued to the Trustees of Columbia University ("TCU") in
connection with the Company entering into a lease with TCU for its facility
at Audubon Center.
In April 1997, the Registrant sold 1,797,893 shares of Common Stock at a
purchase price of $2.98 per share to CB Capital Investors, L.P. and in
connection therewith issued a contingent stock purchase warrant to CB
Capital Investors, L.P. to purchase up to 1% of the fully diluted equity of
the Registrant for every $1,000,000 in subsequent private equity capital
raised, subject to a cap of 5%, for a purchase price of $.028 per share.
II-2
<PAGE>
In April 1997 the Registrant issued a warrant to purchase 32,361 shares
of Common Stock to Bear, Stearns & Co. Inc. exercisable at $.028 per share
for services as a private placement agent in connection with the April 1997
financing.
In January 1998, the Registrant issued 35,778 shares of Common Stock to
the NYBC in consideration of the forgiveness of an obligation to pay
$300,000 in royalty payments.
In February 1998, the Registrant sold 477,042 shares of Common Stock for
an aggregate purchase price of $4.0 million to Pall. In addition, Pall has
agreed to invest $5.0 million in Common Stock concurrently with the Closing
of this offering at a price per share equal to the price for which shares
of Common Stock are sold in this offering, less underwriters' discounts and
commissions.
Since its inception the Registrant has issued options to purchase an
aggregate of 1,698,880 shares of Common Stock under the 1998 Equity
Incentive Plan, exercisable at a weighted average exercise price of $6.51
per share. Options for 146,511 shares have been exercised to date.
(b) No underwriter was engaged in connection with the foregoing issuance of
securities except that Bear, Stearns served as a private placement agent in
connection with the April 1997 sale of shares to CB Capital Investors, L.P.
The above described issuances of Common Stock were made in reliance upon
Section 4(2) of the Securities Act of 1933, as amended (the "Securities Act"),
as transactions not involving any public offering, and Rule 701 promulgated
thereunder. The Company has reason to believe that all of the foregoing
purchasers were familiar with or had access to information concerning the
operations and financial conditions of the Company, and all of those
individuals were acquiring the shares for investment and not with a view to
the distribution thereof. At the time of issuance, all of the foregoing shares
of Common Stock were deemed to be restricted securities for purposes of the
Securities Act and the certificates representing such securities bore legends
to that effect.
Item 16. Exhibits and Financial Statement Schedules
(a) Exhibits
<TABLE>
<C> <S>
1.1* Form of Underwriting Agreement.
3.1** Certificate of Incorporation of Melville Biologics, Inc. (the
"Company"), dated December 31, 1992.
3.2** Certificate of Amendment of Certificate of Incorporation of the
Company, dated October 26, 1995.
3.3** Certificate of Amendment of Certificate of Incorporation of the
Company, dated June 12, 1996.
3.4** Certificate of Amendment of Certificate of Incorporation of the
Company, dated August 26, 1996.
3.5** Certificate of Amendment of Certificate of Incorporation of the
Company, dated April 29, 1997.
3.6** Certificate of Amendment of Certificate of Incorporation of the
Company, dated February 18, 1998.
3.7** Certificate of Amendment of Certificate of Incorporation of the
Company, dated February 24, 1998.
3.8** Form of Restated Certificate of Incorporation of Company, as proposed
to be amended and restated.
3.9** By-Laws of the Company, dated November 25, 1994, as amended on
December 12, 1997.
3.10** Form of Amended and Restated By-laws of Company, as proposed to be
amended and restated.
4.1* Specimen of Common Stock Certificate.
4.2** Stock Warrant between the Company and Bear, Stearns & Co. Inc., dated
April 29, 1997.
4.3** Warrant to Purchase Common Stock between the Company and the Trustees
of Columbia University in the City of New York, dated June 21, 1996.
4.4** Contingent Stock Subscription Warrant between the Company and CB
Capital Investors, Inc., dated April 29, 1997.
5.1** Opinion of Palmer & Dodge LLP.
</TABLE>
II-3
<PAGE>
(a) Exhibits
<TABLE>
<C> <S>
10.1** 1998 Equity Incentive Plan.
10.2** 1998 Director Stock Option Plan.
10.3** 1998 Employee Stock Purchase Plan.
10.4+ Non-Exclusive License Agreement (#1) for Solvent Detergent Treated
Blood Derived Therapeutic Products between the Company and the New
York Blood Center, Inc., dated September 21, 1995.
10.5+ Non-Exclusive License Agreement (#2) for UV Treated Blood Derived
Therapeutic Products between the Company and the New York Blood
Center, Inc., dated September 21, 1995.
10.6+ Exclusive License Agreement (#3) for Virally Inactivated Transfusion
Plasma Products between the Company and the New York Blood Center,
Inc., dated September 21, 1995, as amended on December 31, 1996 and
July 1, 1997.
10.7+ Exclusive License Agreement (#4) for Virally Inactivated Fibrin
Sealant/Thrombin Products between the Company and the New York Blood
Center, Inc., dated September 21, 1995, as amended on September 27,
1996 and January 1, 1998.
10.8+ Exclusive License Agreement (#5) for Virally Inactivated Cellular
Products between the Company and the New York Blood Center, Inc.,
dated September 21, 1995, as amended on February 16, 1998.
10.9 Omnibus Agreement between the Company and the New York Blood Center,
Inc., dated October 26, 1995.
10.10+ Exclusive Distribution Agreement between the Company and United States
Surgical Corporation, dated September 11, 1996, as amended on October
3, 1996.
10.11+ First Amended and Restated Agreement for Custom Processing between the
Company and Bayer Corporation, dated January 24, 1996.
10.12+ Modification Agreement between the Company and Bayer Corporation,
dated December 22, 1997.
10.13+ Supply, Manufacturing and Distribution Collaboration Agreement between
the Company and the American National Red Cross, dated December 15,
1997.
10.14+ Amended and Restated Collaboration Agreement among the Company, the
American National Red Cross and the New York Blood Center, Inc., dated
December 15, 1997.
10.15+ Joint Development, Marketing and Distribution Agreement between the
Company and Pall Corporation, dated February 19, 1998.
10.16+ Stock Purchase Agreement between Pall Corporation and the Company,
dated February 19, 1998.
10.17 Registration Rights Agreement between the Company and the Investors
named therein, dated February 19, 1998.
10.18 Facility Lease Agreement between the Company and Suffolk County
Industrial Development Agency, dated February 15, 1995.
10.19 Lease Agreement between the Company and Bayer Corporation, dated
February 7, 1995.
10.20 Sublease Agreement between the Company and Bayer Corporation, dated
February 7, 1995.
10.21 Security Agreement between the Company and Bayer Corporation, dated
December 22, 1997.
10.22 Lease between the Company and the Trustees of Columbia University in
the City of New York, dated June 21, 1996.
10.23+ Settlement Agreement between the Company and Bayer Corporation, dated
July 1, 1997.
10.24** Letter Agreement between the Company and Thomas R. Ostermueller, dated
November 7, 1997.
10.25** Memorandum from John Barr to Joanne Leonard, dated December 23, 1997.
10.26** Employment Agreement between the Company and Bernard Horowitz, dated
January 15, 1998.
10.27** Letter Agreement between the Company and John R. Barr, dated November
10, 1997.
10.28** Memorandum from Rick Charpie to the Company's Vice Presidents, dated
October 28, 1997.
10.29 Credit Agreement between the Company and The Chase Manhattan Bank,
dated December 22, 1997.
10.30 Intercreditor Agreement among the Company, Bayer Corporation and The
Chase Manhattan Bank, dated December 22, 1997.
</TABLE>
II-4
<PAGE>
(a) Exhibits
<TABLE>
<C> <S>
10.31 Mortgage and Security Agreement among the Company, Suffolk County
Industrial Development Agency and The Chase Manhattan Bank, dated
December 22, 1997.
10.32 Guaranty and Collateral Agreement between the Company and The Chase
Manhattan Bank, dated December 22, 1997.
10.33 Mortgage, Security Agreement and Fixture Filing among the Company,
Suffolk County Industrial Development Agency and Bayer Corporation,
dated February 15, 1995, as amended December 22, 1997.
10.34** Form of Indemnification Agreement.
23.1** Consent of Palmer & Dodge LLP (to be included in Exhibit 5.1).
23.2** Consent of Amster Rothstein & Ebenstein.
23.3** Consent of KPMG Peat Marwick LLP.
24.1** Power of Attorney (included in signature page hereto).
24.2** Certified resolutions of the Company authorizing power of attorney.
27.1** Financial Data Schedule.
</TABLE>
- --------
* To be filed by amendment.
** Previously filed.
+ Certain confidential material contained in the document has been omitted
and filed separately with the Securities and Exchange Commission pursuant
to Rule 406 of the Securities Act.
(b) Financial Statement Schedules
All schedules are omitted because they are not applicable or the required
information is shown in the financial statements or notes thereto.
Item 17. Undertakings
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be a part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
The undersigned Registrant hereby undertakes to provide to the Underwriters
at the closing specified in the Underwriting Agreement (filed herewith as
Exhibit 1.1) certificates in such denominations and registered in such names
as required by the Underwriters to permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described in Item 14 above, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has duly caused this Amendment No. 1 to its Registration
Statement (File No. 333-46933) to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Melville, State of New York, on
March 12, 1998.
V.I. TECHNOLOGIES, INC.
* JOHN R. BARR
By:__________________________________
JOHN R. BARR
PRESIDENT AND CHIEF EXECUTIVE
OFFICER
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to its Registration Statement (File No. 333-46933) has been signed by
the following persons in the capacities and on the dates indicated.
<TABLE>
<S> <C> <C>
SIGNATURE TITLE
DATE
* JOHN R. BARR President, Chief March 12, 1998
- --------------------------------- Executive Officer and
JOHN R. BARR Director (Principal
Executive Officer)
/s/ JOANNE M. LEONARD Vice President, Chief March 12, 1998
- --------------------------------- Financial Officer and
JOANNE M. LEONARD Treasurer (Principal
Financial Officer and
Principal Accounting
Officer)
* DAVID TENDLER Director March 12, 1998
- ---------------------------------
DAVID TENDLER
* RICHARD A. CHARPIE Director March 12, 1998
- ---------------------------------
RICHARD A. CHARPIE
* JEREMY HAYWARD-SURRY Director March 12, 1998
- ---------------------------------
JEREMY HAYWARD-SURRY
* BERNARD HOROWITZ, PH.D. Director March 12, 1998
- ---------------------------------
BERNARD HOROWITZ, PH.D.
* IRWIN LERNER Director March 12, 1998
- ---------------------------------
IRWIN LERNER
* PETER D. PARKER Director March 12, 1998
- ---------------------------------
PETER D. PARKER
* DAMION E. WICKER, M.D. Director March 12, 1998
- ---------------------------------
DAMION E. WICKER, M.D.
/s/ JOANNE M. LEONARD
*By:_________________________________
JOANNE M. LEONARD
ATTORNEY-IN-FACT
</TABLE>
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
(a) Exhibits PAGE NO.
------------ --------
<C> <S> <C>
1.1* Form of Underwriting Agreement.
3.1** Certificate of Incorporation of Melville Biologics,
Inc. (the "Company"), dated December 31, 1992.
3.2** Certificate of Amendment of Certificate of
Incorporation of the Company, dated October 26, 1995.
3.3** Certificate of Amendment of Certificate of
Incorporation of the Company, dated June 12, 1996.
3.4** Certificate of Amendment of Certificate of
Incorporation of the Company, dated August 26, 1996.
3.5** Certificate of Amendment of Certificate of
Incorporation of the Company, dated April 29, 1997.
3.6** Certificate of Amendment of Certificate of
Incorporation of the Company, dated February 18, 1998.
3.7** Certificate of Amendment of Certificate of
Incorporation of the Company, dated February 24, 1998.
3.8** Form of Restated Certificate of Incorporation of
Company, as proposed to be amended and restated.
3.9** By-Laws of the Company, dated November 25, 1994, as
amended on December 12, 1997.
3.10** Form of Amended and Restated By-laws of Company, as
proposed to be amended and restated.
4.1* Specimen of Common Stock Certificate.
4.2** Stock Warrant between the Company and Bear, Stearns &
Co. Inc., dated April 29, 1997.
4.3** Warrant to Purchase Common Stock between the Company
and the Trustees of Columbia University in the City of
New York, dated June 21, 1996.
4.4** Contingent Stock Subscription Warrant between the
Company and CB Capital Investors, Inc., dated April
29, 1997.
5.1** Opinion of Palmer & Dodge LLP.
10.1** 1998 Equity Incentive Plan.
10.2** 1998 Director Stock Option Plan.
10.3** 1998 Employee Stock Purchase Plan.
10.4+ Non-Exclusive License Agreement (#1) for Solvent
Detergent Treated Blood Derived Therapeutic Products
between the Company and the New York Blood Center,
Inc., dated September 21, 1995.
10.5+ Non-Exclusive License Agreement (#2) for UV Treated
Blood Derived Therapeutic Products between the Company
and the New York Blood Center, Inc., dated September
21, 1995.
10.6+ Exclusive License Agreement (#3) for Virally
Inactivated Transfusion Plasma Products between the
Company and the New York Blood Center, Inc., dated
September 21, 1995, as amended on December 31, 1996
and July 1, 1997.
10.7+ Exclusive License Agreement (#4) for Virally
Inactivated Fibrin Sealant/Thrombin Products between
the Company and the New York Blood Center, Inc., dated
September 21, 1995, as amended on September 27, 1996
and January 1, 1998.
10.8+ Exclusive License Agreement (#5) for Virally
Inactivated Cellular Products between the Company and
the New York Blood Center, Inc., dated September 21,
1995, as amended on February 16, 1998.
10.9 Omnibus Agreement between the Company and the New York
Blood Center, Inc., dated October 26, 1995.
10.10+ Exclusive Distribution Agreement between the Company
and United States Surgical Corporation, dated
September 11, 1996, as amended on October 3, 1996.
10.11+ First Amended and Restated Agreement for Custom
Processing between the Company and Bayer Corporation,
dated January 24, 1996.
10.12+ Modification Agreement between the Company and Bayer
Corporation, dated December 22, 1997.
10.13+ Supply, Manufacturing and Distribution Collaboration
Agreement between the Company and the American
National Red Cross, dated December 15, 1997.
10.14+ Amended and Restated Collaboration Agreement among the
Company, the American National Red Cross and the New
York Blood Center, Inc., dated December 15, 1997.
10.15+ Joint Development, Marketing and Distribution
Agreement between the Company and Pall Corporation,
dated February 19, 1998.
10.16+ Stock Purchase Agreement between Pall Corporation and
the Company, dated February 19, 1998.
10.17 Registration Rights Agreement between the Company and
the Investors named therein, dated February 19, 1998.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PAGE NO.
--------
<C> <S> <C>
10.18 Facility Lease Agreement between the Company and Suffolk
County Industrial Development Agency, dated February 15,
1995.
10.19 Lease Agreement between the Company and Bayer Corporation,
dated February 7, 1995.
10.20 Sublease Agreement between the Company and Bayer
Corporation, dated February 7, 1995.
10.21 Security Agreement between the Company and Bayer
Corporation, dated December 22, 1997.
10.22 Lease between the Company and the Trustees of Columbia
University in the City of New York, dated June 21, 1996.
10.23+ Settlement Agreement between the Company and Bayer
Corporation, dated July 1, 1997.
10.24** Letter Agreement between the Company and Thomas R.
Ostermueller, dated November 7, 1997.
10.25** Memorandum from John Barr to Joanne Leonard, dated December
23, 1997.
10.26** Employment Agreement between the Company and Bernard
Horowitz, dated January 15, 1998.
10.27** Letter Agreement between the Company and John R. Barr,
dated November 10, 1997.
10.28** Memorandum from Rick Charpie to the Company's Vice
Presidents, dated October 28, 1997.
10.29 Credit Agreement between the Company and The Chase
Manhattan Bank, dated December 22, 1997.
10.30 Intercreditor Agreement among the Company, Bayer
Corporation and The Chase Manhattan Bank, dated December
22, 1997.
10.31 Mortgage and Security Agreement among the Company, Suffolk
County Industrial Development Agency and The Chase
Manhattan Bank, dated December 22, 1997.
10.32 Guaranty and Collateral Agreement between the Company and
The Chase Manhattan Bank, dated December 22, 1997.
10.33 Mortgage, Security Agreement and Fixture Filing among the
Company, Suffolk County Industrial Development Agency and
Bayer Corporation, dated February 15, 1995, as amended
December 22, 1997.
10.34** Form of Indemnification Agreement.
23.1** Consent of Palmer & Dodge LLP (to be included in Exhibit
5.1).
23.2** Consent of Amster Rothstein & Ebenstein.
23.3** Consent of KPMG Peat Marwick LLP.
24.1** Power of Attorney (included in signature page hereto).
24.2** Certified resolutions of the Company authorizing power of
attorney.
27.1** Financial Data Schedule.
</TABLE>
- -------
* To be filed by amendment.
** Previously filed.
+ Certain confidential material contained in the document has been
omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act.
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
EXHIBIT 10.4
NON-EXCLUSIVE LICENSE AGREEMENT (#1)
FOR SOLVENT DETERGENT TREATED BLOOD
DERIVED THERAPEUTIC PRODUCTS
between
THE NEW YORK BLOOD CENTER, INC.
and
MELVILLE BIOLOGICS, INC.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE I. DEFINITIONS........................................................... 1
1.1 "AFFILIATE".............................................................. 1
1.2 "CONTRACT MANUFACTURING"................................................. 2
1.3 "CONTRACT MANUFACTURING SALES"........................................... 2
1.4 "DIRECT SALES"........................................................... 3
1.5 "EFFECTIVE DATE"......................................................... 3
1.6 "KNOW-HOW"............................................................... 3
1.7 "PATENT RIGHTS".......................................................... 3
1.8 "PRODUCT(S)"............................................................. 4
1.9 "TERRITORY".............................................................. 4
1.10 "SUPPLIERS/PURCHASERS"................................................... 4
1.11 "UNIT(S)"................................................................ 4
ARTICLE II. LICENSE GRANT...................................................... 4
ARTICLE III. DISCLOSURE AND IMPROVEMENTS........................................ 5
ARTICLE IV. PAYMENTS AND ROYALTIES............................................. 6
ARTICLE V. REPORTS, RECORDS AND ACCOUNTING FOR
ROYALTIES.......................................................... 7
ARTICLE VI. REPRESENTATIONS.................................................... 8
ARTICLE VII. COMPLIANCE; INDEMNIFICATION........................................ 9
ARTICLE VIII. INFRINGEMENT....................................................... 10
ARTICLE IX. CONFIDENTIALITY.................................................... 10
ARTICLE X. TERM; TERMINATION.................................................. 12
ARTICLE XI. NOTICES............................................................ 14
ARTICLE XII. ASSIGNMENT AND SUCCESSION.......................................... 15
ARTICLE XIII. GOVERNING LAW...................................................... 16
ARTICLE XIV. ENTIRE AGREEMENT; AMENDMENT........................................ 16
ARTICLE XV. SEVERABILITY....................................................... 17
</TABLE>
-i-
<PAGE>
NON-EXCLUSIVE LICENSE AGREEMENT
FOR SOLVENT DETERGENT TREATED BLOOD
DERIVED THERAPEUTIC PRODUCTS
----------------------------
AGREEMENT effective as of the EFFECTIVE DATE, by and between The New York
Blood Center, Inc. ("NYBC"), having an office at 310 East 67th Street, New York,
New York 10021, U.S.A., and Melville Biologics, Inc., a Delaware Corporation,
having an office at 155 Duryea Road, Melville, NY 11747 ("LICENSEE").
WHEREAS, NYBC has developed know-how and patent rights relating to
solvent/detergent virus inactivation technology for use with blood derived
therapeutic products; and
WHEREAS, LICENSEE desires to acquire a non-exclusive license under such
NYBC know-how and patent rights for the manufacture and sale of certain
products; and
NOW, THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, the receipt of which is hereby
acknowledged, NYBC and LICENSEE mutually agree as follows:
ARTICLE I. DEFINITIONS
As used in this Agreement, the following terms shall be defined as set
forth below:
1.1 "AFFILIATE" shall mean a corporation or other business entity controlled
by, controlling or under common control with LICENSEE. For this purpose,
control of a corporation or other business entity shall mean direct or
indirect beneficial ownership of fifty percent (50%) or more of the voting
interest in, or a fifty percent (50%) or greater interest in the equity of,
such corporation or other business entity, or the maximum percentage that a
foreign investor may own, if equal to or less than fifty percent (50%),
pursuant to local laws, customs or regulations of any country, but such
corporation, or other business entity,
<PAGE>
shall be deemed to be an AFFILIATE for only so long as such ownership or
control exists. Notwithstanding anything herein to the contrary, for the
purpose of this Agreement, NYBC is not an AFFILIATE of LICENSEE.
1.2 "CONTRACT MANUFACTURING" shall mean the viral inactivation processing by
LICENSEE of material supplied by or on behalf of SUPPLIERS/PURCHASERS such
that the material becomes PRODUCT, which PRODUCT (or its equivalent) is
intended for sale and/or distribution by such SUPPLIERS/PURCHASERS.
1.3 "CONTRACT MANUFACTURING SALES" shall mean the product of the number of
UNITS produced by CONTRACT MANUFACTURING and shipped to
SUPPLIERS/PURCHASERS times the price at which each UNIT is sold by the
SUPPLIERS/PURCHASERS to third parties, less allowances for return of
PRODUCTS or adjustments for defective quality. PRODUCT shall be deemed to
have been sold when first shipped and billed; provided, however, that when
transfers thereof are made between SUPPLIERS/PURCHASERS and their
affiliates, such PRODUCT shall not be deemed to have been sold until sold
to a purchaser independent of SUPPLIERS/PURCHASERS and their affiliates in
a bona fide, arm's-length transaction between unrelated parties. Payments
shall accrue hereunder only once with respect to the same UNIT of PRODUCT.
1.4 "DIRECT SALES" shall mean the total consideration received by LICENSEE
and/or its AFFILIATES from the sale, transfer or disposal of PRODUCT to
third parties, exclusive of amounts received by LICENSEE and its AFFILIATES
as a result of CONTRACT MANUFACTURING, less allowances for return of
PRODUCTS or adjustments for defective quality. PRODUCT shall be deemed to
have been sold when first shipped and billed; provided, however, that when
transfers thereof are made between LICENSEE and its AFFILIATES, such
PRODUCT shall not be deemed to have been sold until sold to a purchaser
independent of LICENSEE and its AFFILIATES in a bona fide, arm's-length
transaction between unrelated parties. Payments shall accrue hereunder
only once with respect to the same UNIT of PRODUCT.
-2-
<PAGE>
1.5 "EFFECTIVE DATE" of this Agreement shall mean the date of closing of the
sale of shares of common stock of LICENSEE to one or more funds controlled
by Ampersand Ventures, so long as this occurs prior to December 1, 1995.
1.6 "KNOW-HOW" shall mean the NYBC proprietary technical information relating
to the inactivation of viruses by the use of organic solvents and/or
detergents as described generally on Appendix A.
1.7 "PATENT RIGHTS" shall mean the NYBC patents and patent applications listed
on Appendix A relating to the inactivation of viruses by the use of organic
solvents and/or detergents.
1.8 "PRODUCT(S)" shall mean any product listed on Appendix B, the manufacture,
use or sale of which (1) involves the use of KNOW-HOW or (2) is covered by
a claim of PATENT RIGHTS. Appendix B may be added to during the term of
this Agreement only in the manner specified in paragraph 2.4.
1.9 "TERRITORY" shall mean worldwide.
1.10 "SUPPLIERS/PURCHASERS" shall mean non-AFFILIATES of LICENSEE who receive
PRODUCT from LICENSEE as a result of CONTRACT MANUFACTURING and who sell
and/or resell PRODUCT to third parties.
1.11 "UNIT(S)" shall mean PRODUCT packaged for sale in a single container and
intended for use by consumers/patients.
ARTICLE II. LICENSE GRANT
2.1 NYBC grants to LICENSEE, under the terms and conditions of this Agreement,
a non-exclusive license under PATENT RIGHTS and KNOW-HOW (a) to make, use,
sell,
-3-
<PAGE>
or otherwise dispose of PRODUCT, and (b) to use the methods covered by such
PATENT RIGHTS and KNOW-HOW for the manufacture, use and sale of PRODUCT.
2.2 The license grant herein is limited to making, using, selling or disposing
of PRODUCT in the TERRITORY.
2.3 Nothing contained in this Agreement shall be construed or interpreted as a
grant, by implication or otherwise, of any license except as expressly
specified in Paragraphs 2.1 and 2.2 hereof. LICENSEE agrees not to utilize
the PATENT RIGHTS and KNOW-HOW licensed under this Agreement in the
development, manufacture or use of any product not listed on Appendix B,
unless first permitted to do so under a separate written agreement with
NYBC.
2.4 Any amendment of Appendix B to add products shall require the written
consent of NYBC. NYBC may, in its sole and unfettered discretion and under
terms and conditions acceptable to NYBC, consent to the amendment of
Appendix B to include additional products. LICENSEE may not unilaterally
add any products to Appendix B.
ARTICLE III. DISCLOSURE AND IMPROVEMENTS
3.1 LICENSEE acknowledges receipt of KNOW-HOW.
3.2 NYBC shall have the right, but not the obligation, to inspect LICENSEE's
manufacturing sites, validation and/or processing records as they pertain
to the use and implementation of PATENT RIGHTS and KNOW-HOW.
3.3 LICENSEE hereby grants to NYBC an irrevocable, paid-up non-exclusive
license, with the right to grant sublicenses, to make, have made, use or
sell blood derived therapeutic products (exclusive of all products licensed
exclusively to LICENSEE by NYBC) under any improvements made by LICENSEE,
whether patentable or not, so long as the
-4-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
manufacture, use or sale of such improvements would infringe a claim of the
PATENT RIGHTS. During the term of this Agreement, LICENSEE shall provide
NYBC with copies of all patent applications and patents including such
improvements within thirty (30) days of filing of such applications and
within thirty (30) days of issuance of such patents.
ARTICLE IV. PAYMENTS AND ROYALTIES
4.1 Subject to paragraph 3.3, LICENSEE shall pay NYBC a running royalty at the
rate of ****************** of DIRECT SALES and ****************** of
CONTRACT MANUFACTURING SALES.
4.2 LICENSEE shall make all payments due under this Agreement on a quarterly
basis within thirty (30) days after the end of each calendar quarter.
4.3 All payments due under this Agreement shall be made without deductions for
taxes, assessments or other charges of any kind which may be imposed on
NYBC by any foreign government or political subdivision thereof with
respect to any amounts payable to NYBC pursuant to this Agreement, and such
taxes, assessments or other charges shall be assumed by LICENSEE.
4.4 All payments due under this Agreement shall be made in United States
dollars. All royalty calculations hereunder shall be based on the currency
in which the sale was made, with total sales converted to United States
dollars based on the exchange rate of Citibank, New York, on the first day
of the month in which the royalty becomes due.
ARTICLE V. REPORTS, RECORDS AND ACCOUNTING FOR ROYALTIES
5.1 Within thirty (30) days after the end of each calendar quarter during the
term of this Agreement, LICENSEE shall forward to NYBC a written report
setting forth DIRECT SALES and CONTRACT MANUFACTURING SALES. All such
information shall be
-5-
<PAGE>
presented on a country-by-country basis for the previous calendar quarter
and shall indicate the amount of royalties due, together with sufficient
supporting information to enable confirmation by NYBC.
5.2 LICENSEE shall keep full and accurate books of accounts and other records
in accordance with generally accepted accounting practice, showing all
information necessary for NYBC to ascertain and verify the royalties
payable by LICENSEE hereunder. During the term of this Agreement, and for
three (3) years thereafter, NYBC shall have the right to have, at its own
expense and upon ten (10) days written notice, an independent certified
public accountant of its own choosing, inspect, during regular business
hours, said books, records, files and all supporting data relating to
records kept pursuant to this Agreement. LICENSEE also agrees to permit
NYBC, or its representatives, to make and retain copies of any and all
invoices, records and accounts kept by LICENSEE pursuant to this Agreement.
If the inspection of LICENSEE by NYBC reveals an underpayment to NYBC of
ten percent (10%) or greater, then the costs of such inspection shall be
borne by LICENSEE.
5.3 On or about June 1 of each year during the term of this Agreement, LICENSEE
shall provide a written report to NYBC describing LICENSEE's efforts to
commercialize PRODUCTS, including a description of LICENSEE's efforts to
obtain any required governmental approval to market PRODUCTS. NYBC agrees
to keep such reports confidential, if requested to do so by LICENSEE.
ARTICLE VI. REPRESENTATIONS
6.1 Nothing in this Agreement is or shall be construed as:
(a) A warranty or representation by NYBC that anything made or used by
LICENSEE under any license granted in this Agreement is or will be
free from infringement of patents, copyrights, and other rights of
third parties; or
-6-
<PAGE>
(b) Granting by implication, estoppel, or otherwise any license, right or
interest other than as expressly set forth herein.
6.2 Except as expressly set forth in this Agreement, the parties MAKE NO
REPRESENTATIONS AND EXTEND NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR
IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW, STATUTE OR OTHERWISE, AND
THE PARTIES SPECIFICALLY DISCLAIM ANY IMPLIED WARRANTY OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE, OR WARRANTY OF NON-INFRINGEMENT.
6.3 LICENSEE represents and warrants that it shall not, directly or indirectly,
use NYBC's tradenames or trademarks in connection with promotions,
advertising or sales activity, without the prior written consent of NYBC.
Further, LICENSEE shall not make any use of NYBC's name without NYBC's
prior written consent, except if the use of NYBC's name is required by law,
regulation or judicial order, in which event LICENSEE will promptly inform
NYBC prior to any such required use.
6.4 LICENSEE represents and warrants that it has adequate insurance and
financial resources to cover all liability for any failure including,
without limitation, failure in design, manufacture, production and/or
operation.
ARTICLE VII. COMPLIANCE; INDEMNIFICATION
7.1 NYBC shall not be liable to LICENSEE, its AFFILIATES, or any third party
for any injury, illness, disease, allergy, allergic reaction, side effect,
death, or other adverse experience arising out of, or in connection with,
or as a consequence of research, manufacture, testing, advertising, sale,
distribution, or other use of PRODUCT.
7.2 LICENSEE shall conduct all of its operations relating to PRODUCT in
accordance with all applicable laws, regulations, requirements, and other
standards, which may be in effect
-7-
<PAGE>
from time-to-time, of all pertinent governmental authorities, including,
without limitation, standards for the validation and processing of PRODUCT.
7.3 LICENSEE agrees to exercise a reasonable standard of care in conducting its
activities relating to PRODUCT, including the testing, manufacture,
packaging, marketing, advertising, distribution and sale of PRODUCT.
7.4 LICENSEE agrees to indemnify, defend and hold harmless NYBC, its directors,
officers, employees and agents from and against any and all loss, damage,
demands, claims, actions and causes of action, assessments, liabilities,
costs and expenses which they may incur because of injury to or death of
any person or any other claim arising out of, or in connection with, or as
a consequence of, LICENSEE's manufacture, sale, or use of PRODUCT.
ARTICLE VIII. INFRINGEMENT
8.1 LICENSEE shall promptly provide written notification to NYBC in the event
of any third party infringement, or possible infringement, of PATENT
RIGHTS. Upon receipt of such notice, NYBC shall have the right, at its sole
discretion, to take appropriate legal action in connection therewith. In
the event that NYBC shall elect to take such action, the conduct of the
action shall be entirely directed by NYBC, and NYBC shall pay all costs and
expenses associated therewith and retain all recoveries of any such action.
8.2 LICENSEE agrees to report to NYBC, promptly and in written detail, each
claim of patent infringement made by a third party against LICENSEE as a
result of LICENSEE's manufacture, use or sale of PRODUCTS.
-8-
<PAGE>
ARTICLE IX. CONFIDENTIALITY
9.1 LICENSEE agrees not to use or disclose to any third party any KNOW-HOW
provided to it pursuant to this Agreement except as contemplated herein.
This obligation shall not apply to any information which:
(a) is or subsequently becomes known to the public through no fault of
LICENSEE;
(b) was in the possession of LICENSEE prior to disclosure by NYBC as
established by documentation provided by LICENSEE to NYBC within
thirty (30) days of disclosure of such information by NYBC to
LICENSEE;
(c) is obtained from a third party who or which has the lawful right to
disclose same to LICENSEE;
(d) is disclosed to governmental authorities in response to a lawful order
or demand for disclosure, or in order to obtain required consents,
permits, licenses, or other approvals relating to the manufacture, use
or sale of PRODUCT.
9.2 LICENSEE agrees to treat as confidential the terms and conditions of this
Agreement. Further, LICENSEE agrees not to issue any press release or other
public statement disclosing the existence of, or relating to, this
Agreement without the prior written consent of NYBC.
9.3 The provisions of this Article shall survive termination, cancellation, or
expiration of this Agreement.
ARTICLE X. TERM; TERMINATION
-9-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
10.1 The term of this Agreement shall be from the EFFECTIVE DATE until the later
of the seventeenth anniversary of the EFFECTIVE DATE or the last to expire
patent of PATENT RIGHTS, unless this Agreement is terminated earlier in
accordance with the provisions of this Article.
10.2 NYBC may terminate this Agreement at any time upon notice to LICENSEE if:
(a) LICENSEE fails to cure a breach of this Agreement within sixty (60)
days after notice thereof; or
(b) LICENSEE fails to make payments due under paragraph 4.1 of this
Agreement within ten (10) days after notice thereof; or
(c) LICENSEE fails in the performance of its obligation to conform to
applicable standards, regulations, or guidelines of the applicable
governmental agency, as determined by NYBC or governmental agency
review and fails to cure such breach within ninety (90) days after
notice thereof; or
(d) LICENSEE becomes insolvent, is adjudged bankrupt, files a petition in
bankruptcy, makes an assignment for the benefit of creditors or seeks
relief generally from its debts and obligations in accordance with a
similar or analogous procedure; or
(e) LICENSEE fails to make and sell PRODUCT within ************** of the
EFFECTIVE DATE. However, NYBC may not terminate this Agreement
pursuant to this subparagraph (e) if LICENSEE has used PATENT RIGHTS
or KNOW-HOW in connection with the manufacture and sale of other
products pursuant to other license agreements between NYBC and
LICENSEE.
-10-
<PAGE>
Upon such termination, (1) all rights in KNOW-HOW and PATENT RIGHTS shall
revert to NYBC and (2) LICENSEE will not use KNOW-HOW and PATENT RIGHTS for
any purposes whatsoever, unless permitted to do so under a separate
agreement with NYBC.
10.3 The expiration or earlier termination of this Agreement will not:
(a) affect the right of LICENSEE to sell PRODUCT manufactured prior to the
date of expiration or termination, provided that such sales,
notwithstanding expiration or termination, will be subject to
royalties in accordance with the provisions of Article IV and provided
further that such termination is not due to the reasons set forth in
Paragraph 10.2(c); or
(b) relieve LICENSEE from any other obligation under this Agreement,
including, without limitation, obligations to forward reports,
maintain records, permit an audit or inspection and to maintain
confidentiality; or
(c) release LICENSEE from any liability resulting from an act or omission
prior to expiration or termination or an act or omission, whenever
arising, relating to the provisions of Article VII; or
(d) serve to terminate the license granted under Paragraph 3.3 hereof,
which license shall survive any termination of this Agreement.
10.4 Invalidation by a court of last resort of any claim(s) of any or all of the
patents comprising PATENT RIGHTS shall relieve LICENSEE of its obligations
with respect to such claims; but, notwithstanding any other clause herein,
shall not terminate this Agreement.
10.5 LICENSEE may terminate this Agreement upon providing ninety (90) days prior
written notice to NYBC. Upon such termination, (1) all rights in KNOW-HOW
and PATENT RIGHTS shall revert to NYBC and (2) LICENSEE will not use KNOW-
HOW and
-11-
<PAGE>
PATENT RIGHTS for any purposes whatsoever, unless permitted to do so under
a separate agreement with NYBC.
ARTICLE XI. NOTICES
11.1 Any notice, report or other communication required or permitted to be given
or made under this Agreement by one of the parties to the other shall be in
writing and shall be deemed to have been sufficiently given or made for all
purposes if mailed by Certified Mail, postage prepaid, or sent by
facsimile, confirmed forthwith in written dispatch as described herein,
addressed to such other party at its respective address as follows:
If to NYBC:
----------
The New York Blood Center
310 East 67th Street
New York, NY 10021-6295, U.S.A.
Attention: Office of Patents And Licensing
cc: General Counsel
If to LICENSEE:
--------------
Melville Biologics, Inc.
155 Duryea Road
Melville, NY 11747
Attention: President
ARTICLE XII. ASSIGNMENT AND SUCCESSION
12.1 The rights and licenses granted by NYBC in this Agreement are personal to
LICENSEE and may not be assigned or otherwise transferred without the prior
written consent of NYBC. Any attempted assignment or transfer without such
consent shall be void and without effect.
-12-
<PAGE>
12.2 NYBC may assign or otherwise transfer this Agreement to any third party or
to a subsidiary of NYBC. NYBC shall give LICENSEE written notice of such
assignment or transfer and the written agreement of such assignee or
transferee to be bound by the terms and conditions of this Agreement. Upon
such assignment or transfer and agreement by such assignee or transferee,
the term NYBC as used herein shall mean such assignee or transferee.
ARTICLE XIII. GOVERNING LAW
13.1 This Agreement shall be construed and the rights of the+ parties governed
in accordance with the laws of the State of New York, excluding its law of
conflict of laws. Any dispute or issue arising hereunder, including any
alleged breach by LICENSEE, shall be heard, determined and resolved by an
action commenced in the federal courts in New York City, New York, which
the parties hereby agree shall have proper jurisdiction over the issues and
the parties. LICENSEE hereby agrees to submit itself to the jurisdiction of
the federal courts in New York and waives the right to make any objection
based on jurisdiction or venue. The New York courts shall have the right to
grant all relief to which each party is or shall be entitled hereunder,
including all equitable relief as the Court may deem appropriate.
13.2 This Agreement has been prepared jointly and shall not be strictly
construed against any party.
ARTICLE XIV. ENTIRE AGREEMENT; AMENDMENT
14.1 This Agreement supersedes all prior written and oral communications between
the parties with respect to PRODUCT and sets forth the entire Agreement of
the parties with respect to the subject matter contained herein and may not
be modified or amended except as expressly stated herein or by a written
agreement duly executed by both parties hereto.
-13-
<PAGE>
ARTICLE XV. SEVERABILITY
15.1 If any term or provision of this Agreement or the application thereof to
any person or circumstance shall to any extent be invalid or unenforceable,
the remainder of this Agreement or the application of such term or
provision to persons or circumstances other than those as to which it is
held invalid or unenforceable shall not be affected thereby and each term
and provision of this Agreement shall be valid and enforced to the fullest
extent permitted by law.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their duly authorized representatives.
THE NEW YORK BLOOD CENTER, INC.
By: /s/ John W. Adamson
------------------------------
Name: John W. Adamson, M.D.
----------------------------
Title: President
---------------------------
Date: 9-21-95
-----------------------------
MELVILLE BIOLOGICS, INC.
By: /s/ Thomas R. Ostermueller
------------------------------
Name: Thomas R. Ostermueller
---------------------------
Title: President
---------------------------
Date: 9/21/95
----------------------------
-14-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
APPENDIX A
FOR NON-EXCLUSIVE LICENSE AGREEMENT (#1)
FOR SOLVENT DETERGENT TREATED BLOOD
DERIVED THERAPEUTIC PRODUCTS
between
THE NEW YORK BLOOD CENTER, INC.
and
MELVILLE BIOLOGICS, INC.
KNOW-HOW - 3 Pages
PATENTS - 6 Pages
*********************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
*******************************[9 pages omitted]********************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
APPENDIX B
----------
PRODUCTS
--------
*********************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************[1 page omitted]********************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
EXHIBIT 10.5
NON-EXCLUSIVE LICENSE AGREEMENT (#2)
FOR UV TREATED
BLOOD DERIVED THERAPEUTIC PRODUCTS
between
THE NEW YORK BLOOD CENTER, INC.
and
MELVILLE BIOLOGICS, INC.
-----------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE I. DEFINITIONS...................................................... 1
1.1 "AFFILIATE"...................................................... 1
1.2 "CONTRACT MANUFACTURING"......................................... 2
1.3 "CONTRACT MANUFACTURING SALES"................................... 2
1.4 "DIRECT SALES"................................................... 3
1.5 "EFFECTIVE DATE"................................................. 3
1.6 "KNOW-HOW"....................................................... 3
1.7 "PATENT RIGHTS".................................................. 3
1.8 "PRODUCT(S)"..................................................... 3
1.9 "TERRITORY"...................................................... 4
1.10 "SUPPLIERS/PURCHASERS"........................................... 4
1.11 "UNIT(S)"........................................................ 4
ARTICLE II. LICENSE GRANT.................................................... 4
ARTICLE III. DISCLOSURE AND IMPROVEMENTS...................................... 5
ARTICLE IV. PAYMENTS AND ROYALTIES........................................... 6
ARTICLE V. REPORTS, RECORDS AND ACCOUNTING FOR
ROYALTIES........................................................ 7
ARTICLE VI. REPRESENTATIONS.................................................. 8
ARTICLE VII. COMPLIANCE; INDEMNIFICATION...................................... 9
ARTICLE VIII. INFRINGEMENT..................................................... 10
ARTICLE IX. CONFIDENTIALITY.................................................. 10
ARTICLE X. TERM; TERMINATION................................................ 11
ARTICLE XI. NOTICES.......................................................... 14
ARTICLE XII. ASSIGNMENT AND SUCCESSION........................................ 15
ARTICLE XIII. GOVERNING LAW.................................................... 15
ARTICLE XIV. ENTIRE AGREEMENT; AMENDMENT...................................... 16
ARTICLE XV. SEVERABILITY..................................................... 16
</TABLE>
-i-
<PAGE>
NON-EXCLUSIVE LICENSE AGREEMENT
FOR UV TREATED
BLOOD DERIVED THERAPEUTIC PRODUCTS
----------------------------------
AGREEMENT effective as of the EFFECTIVE DATE, by and between The New York
Blood Center, Inc. ("NYBC"), having an office at 310 East 67th Street, New York,
New York 10021, U.S.A., and Melville Biologics, Inc., a Delaware Corporation,
having an office at 155 Duryea Road, Melville, NY 11747 ("LICENSEE").
WHEREAS, NYBC has developed know-how and patent rights relating to virus
inactivation, utilizing light and certain compounds, for use with blood derived
therapeutic products; and
WHEREAS, LICENSEE desires to acquire a non-exclusive license under such
NYBC know-how and patent rights for the manufacture and sale of certain
products; and
NOW, THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, the receipt of which is hereby
acknowledged, NYBC and LICENSEE mutually agree as follows:
ARTICLE I. DEFINITIONS
As used in this Agreement, the following terms shall be defined as set
forth below:
1.1 "AFFILIATE" shall mean a corporation or other business entity controlled
by, controlling or under common control with LICENSEE. For this purpose,
control of a corporation or
<PAGE>
other business entity shall mean direct or indirect beneficial ownership of
fifty percent (50%) or more of the voting interest in, or a fifty percent
(50%) or greater interest in the equity of, such corporation or other
business entity, or the maximum percentage that a foreign investor may own,
if equal to or less than fifty percent (50%), pursuant to local laws,
customs or regulations of any country, but such corporation, or other
business entity, shall be deemed to be an AFFILIATE for only so long as
such ownership or control exists. Notwithstanding anything herein to the
contrary, for the purpose of this Agreement, NYBC is not an AFFILIATE of
LICENSEE.
1.2 "CONTRACT MANUFACTURING" shall mean the viral inactivation processing by
LICENSEE of material supplied by or on behalf of SUPPLIERS/PURCHASERS such
that the material becomes PRODUCT, which PRODUCT (or its equivalent) is
intended for sale and/or distribution by such SUPPLIERS/PURCHASERS.
1.3 "CONTRACT MANUFACTURING SALES" shall mean the product of the number of
UNITS produced by CONTRACT MANUFACTURING and shipped to
SUPPLIERS/PURCHASERS times the price at which each UNIT is sold by the
SUPPLIERS/PURCHASERS to third parties, less allowances for return of
PRODUCTS or adjustments for defective quality. PRODUCT shall be deemed to
have been sold when first shipped and billed; provided, however, that when
transfers thereof are made between SUPPLIERS/PURCHASERS and their
affiliates, such PRODUCT shall not be deemed to have been sold until sold
to a purchaser independent of SUPPLIERS/PURCHASERS and their affiliates in
a bona fide, arm's-length transaction between unrelated parties. Payments
shall accrue hereunder only once with respect to the same UNIT of PRODUCT.
1.4 "DIRECT SALES" shall mean the total consideration received by LICENSEE
and/or its AFFILIATES from the sale, transfer or disposal of PRODUCT to
third parties, exclusive
-2-
<PAGE>
of amounts received by LICENSEE and its AFFILIATES as a result of CONTRACT
MANUFACTURING, less allowances for return of PRODUCTS or adjustments for
defective quality. PRODUCT shall be deemed to have been sold when first
shipped and billed; provided, however, that when transfers thereof are made
between LICENSEE and its AFFILIATES, such PRODUCT shall not be deemed to
have been sold until sold to a purchaser independent of LICENSEE and its
AFFILIATES in a bona fide, arm's-length transaction between unrelated
parties. Payments shall accrue hereunder only once with respect to the same
UNIT of PRODUCT.
1.5 "EFFECTIVE DATE" of this Agreement shall mean the date of closing of the
sale of shares of common stock of LICENSEE to one or more funds controlled
by Ampersand Ventures, so long as this occurs prior to December 1, 1995.
1.6 "KNOW-HOW" shall mean the NYBC proprietary technical information relating
to the inactivation of viruses by the use of light and/or certain compounds
as described generally on Appendix A.
1.7 "PATENT RIGHTS" shall mean the NYBC patents and patent applications listed
on Appendix A relating to the inactivation of viruses by the use of light
and/or certain compounds.
1.8 "PRODUCT(S)" shall mean any product listed on Appendix B, the manufacture,
use or sale of which (1) involves the use of KNOW-HOW or (2) is covered by
a claim of PATENT RIGHTS. Appendix B may be added to during the term of
this Agreement only in the manner specified in paragraph 2.4.
1.9 "TERRITORY" shall mean worldwide.
-3-
<PAGE>
1.10 "SUPPLIERS/PURCHASERS" shall mean non-AFFILIATES of LICENSEE who receive
PRODUCT from LICENSEE as a result of CONTRACT MANUFACTURING and who sell
and/or resell PRODUCT to third parties.
1.11 "UNIT(S)" shall mean PRODUCT packaged for sale in a single container and
intended for use by consumers/patients.
ARTICLE II. LICENSE GRANT
2.1 NYBC grants to LICENSEE, under the terms and conditions of this Agreement,
a non-exclusive license under PATENT RIGHTS and KNOW-HOW (a) to make, use,
sell, or otherwise dispose of PRODUCT, and (b) to use the methods covered
by such PATENT RIGHTS and KNOW-HOW for the manufacture, use and sale of
PRODUCT.
2.2 The license grant herein is limited to making, using, selling, or disposing
of PRODUCT in the TERRITORY.
2.3 Nothing contained in this Agreement shall be construed or interpreted as a
grant, by implication or otherwise, of any license except as expressly
specified in Paragraphs 2.1 and 2.2 hereof. LICENSEE agrees not to utilize
the PATENT RIGHTS and KNOW-HOW licensed under this Agreement in the
development, manufacture or use of any product not listed on Appendix B,
unless first permitted to do so under a separate written agreement with
NYBC.
2.4 Any amendment of Appendix B to add products shall require the written
consent of NYBC. NYBC may, in its sole and unfettered discretion and under
terms and conditions acceptable
-4-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
to NYBC, consent to the amendment of Appendix B to include additional
products. LICENSEE may not unilaterally add any products to Appendix B.
ARTICLE III. DISCLOSURE AND IMPROVEMENTS
3.1 LICENSEE acknowledges receipt of KNOW-HOW.
3.2 NYBC shall have the right, but not the obligation, to inspect LICENSEE's
manufacturing sites, validation and/or processing records as they pertain
to the use and implementation of PATENT RIGHTS and KNOW-HOW.
3.3 LICENSEE hereby grants to NYBC an irrevocable, royalty-bearing non-
exclusive license, with the right to grant sublicenses, to make, have made,
use or sell blood derived therapeutic products (exclusive of all products
licensed exclusively to LICENSEE by NYBC) under any improvements made by
LICENSEE, whether patentable or not, so long as the manufacture, use or
sale of such improvements would infringe a claim of the PATENT RIGHTS.
During the term of this Agreement, LICENSEE shall provide NYBC with copies
of all patent applications and patents including such improvements within
thirty (30) days of the filing of such applications and within thirty (30)
days of the issuance of such patents. The amount of royalty payable to
LICENSEE shall be negotiated in good faith upon the request of NYBC.
ARTICLE IV. PAYMENTS AND ROYALTIES
4.1 LICENSEE shall pay NYBC a running royalty at the rate of ******** of DIRECT
SALES and ******** of CONTRACT MANUFACTURING SALES.
-5-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
4.2 LICENSEE shall make all payments due under this Agreement on a quarterly
basis within thirty (30) days after the end of each calendar quarter.
4.3 All payments due under this Agreement shall be made without deductions for
taxes, assessments or other charges of any kind which may be imposed on
NYBC by any foreign government or political subdivision thereof with
respect to any amounts payable to NYBC pursuant to this Agreement, and such
taxes, assessments or other charges shall be assumed by LICENSEE.
4.4 All payments due under this Agreement shall be made in United States
dollars. All royalty calculations hereunder shall be based on the currency
in which the sale was made, with total sales converted to United States
dollars based on the exchange rate of Citibank, New York, on the first day
of the month in which the royalty becomes due.
4.5 If it is necessary for LICENSEE to pay royalties under issued patents,
patent applications or know-how to any third party in order to make, have
made, use or sell PRODUCTS, LICENSEE may offset the royalties payable to
third parties against royalties payable to NYBC, provided that under no
circumstances may royalties to NYBC be reduced by more than a total of
******** (i.e. fall below ********* of DIRECT SALES and CONTRACT
MANUFACTURING SALES) in any calendar year as a result of such offsets.
ARTICLE V. REPORTS, RECORDS AND ACCOUNTING FOR ROYALTIES
5.1 Within thirty (30) days after the end of each calendar quarter during the
term of this Agreement, LICENSEE shall forward to NYBC a written report
setting forth DIRECT SALES and CONTRACT MANUFACTURING SALES. All such
information shall be
-6-
<PAGE>
presented on a country-by-country basis for the previous calendar quarter
and shall indicate the amount of royalties due, together with sufficient
supporting information to enable confirmation by NYBC.
5.2 LICENSEE shall keep full and accurate books of accounts and other records
in accordance with generally accepted accounting practice, showing all
information necessary for NYBC to ascertain and verify the royalties
payable by LICENSEE hereunder. During the term of this Agreement, and for
three (3) years thereafter, NYBC shall have the right to have, at its own
expense and upon ten (10) days written notice, an independent certified
public accountant of its own choosing, inspect, during regular business
hours, said books, records, files and all supporting data relating to
records kept pursuant to this Agreement. LICENSEE also agrees to permit
NYBC, or its representatives, to make and retain copies of any and all
invoices, records and accounts kept by LICENSEE pursuant to this Agreement.
If the inspection of LICENSEE by NYBC reveals an underpayment to NYBC of
ten percent (10%) or greater, then the costs of such inspection shall be
borne by LICENSEE.
5.3 On or about June 1 of each year during the term of this Agreement, LICENSEE
shall provide a written report to NYBC describing LICENSEE's efforts to
commercialize PRODUCTS, including a description of LICENSEE's efforts to
obtain any required governmental approval to market PRODUCTS. NYBC agrees
to keep such reports confidential, if requested to do so by LICENSEE.
ARTICLE VI. REPRESENTATIONS
6.1 Nothing in this Agreement is or shall be construed as:
-7-
<PAGE>
(a) A warranty or representation by NYBC that anything made or used by
LICENSEE under any license granted in this Agreement is or will be
free from infringement of patents, copyrights, and other rights of
third parties; or
(b) Granting by implication, estoppel or otherwise any license, right or
interest other than as expressly set forth herein.
6.2 Except as expressly set forth in this Agreement, the parties MAKE NO
REPRESENTATIONS AND EXTEND NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR
IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW, STATUTE OR OTHERWISE, AND
THE PARTIES SPECIFICALLY DISCLAIM ANY IMPLIED WARRANTY OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE, OR WARRANTY OF NON-INFRINGEMENT.
6.3 LICENSEE represents and warrants that it shall not, directly or indirectly,
use NYBC's tradenames or trademarks in connection with promotions,
advertising or sales activity, without the prior written consent of NYBC.
Further, LICENSEE shall not make any use of NYBC's name without NYBC's
prior written consent, except if the use of NYBC's name is required by law,
regulation or judicial order, in which event LICENSEE will promptly inform
NYBC prior to any such required use.
6.4 LICENSEE represents and warrants that it has adequate insurance and
financial resources to cover all liability for any failure including,
without limitation, failure in design, manufacture, production and/or
operation.
ARTICLE VII. COMPLIANCE; INDEMNIFICATION
-8-
<PAGE>
7.1 NYBC shall not be liable to LICENSEE, its AFFILIATES, or any third party
for any injury, illness, disease, allergy, allergic reaction, side effect,
death, or other adverse experience arising out of, or in connection with,
or as a consequence of research, manufacture, testing, advertising, sale,
distribution, or other use of PRODUCT.
7.2 LICENSEE shall conduct all of its operations relating to PRODUCT in
accordance with all applicable laws, regulations, requirements, and other
standards, which may be in effect from time-to-time, of all pertinent
governmental authorities, including, without limitation, standards for the
validation and processing of PRODUCT.
7.3 LICENSEE agrees to exercise a reasonable standard of care in conducting its
activities relating to PRODUCT, including the testing, manufacture,
packaging, marketing, advertising, distribution and sale of PRODUCT.
7.4 LICENSEE agrees to indemnify, defend and hold harmless NYBC, its directors,
officers, employees and agents from and against any and all loss, damage,
demands, claims, actions and causes of action, assessments, liabilities,
costs and expenses which they may incur because of injury to or death of
any person or any other claim arising out of, or in connection with, or as
a consequence of, LICENSEE's manufacture, sale, or use of PRODUCT.
ARTICLE VIII. INFRINGEMENT
8.1 LICENSEE shall promptly provide written notification to NYBC in the event
of any third party infringement, or possible infringement, of PATENT
RIGHTS. Upon receipt of such notice, NYBC shall have the right, at its
sole discretion, to take appropriate legal action in connection therewith.
In the event that NYBC shall elect to take such action, the
-9-
<PAGE>
conduct of the action shall be entirely directed by NYBC, and NYBC shall
pay all costs and expenses associated therewith and retain all recoveries
of any such action.
8.2 LICENSEE agrees to report to NYBC, promptly and in written detail, each
claim of patent infringement made by a third party against LICENSEE as a
result of LICENSEE's manufacture, use or sale of PRODUCTS.
ARTICLE IX. CONFIDENTIALITY
9.1 LICENSEE agrees not to use or disclose to any third party any KNOW-HOW
provided to it pursuant to this Agreement except as contemplated herein.
This obligation shall not apply to any information which:
(a) is or subsequently becomes known to the public through no fault of
LICENSEE;
(b) was in the possession of LICENSEE prior to disclosure by NYBC as
established by documentation provided by LICENSEE to NYBC within
thirty (30) days of disclosure of such information by NYBC to
LICENSEE;
(c) is obtained from a third party who or which has the lawful right to
disclose same to LICENSEE;
(d) is disclosed to governmental authorities in response to a lawful order
or demand for disclosure, or in order to obtain required consents,
permits, licenses, or other approvals relating to the manufacture, use
or sale of PRODUCT.
-10-
<PAGE>
9.2 LICENSEE agrees to treat as confidential the terms and conditions of this
Agreement. Further, LICENSEE agrees not to issue any press release or
other public statement disclosing the existence of, or relating to, this
Agreement without the prior written consent of NYBC.
9.3 The provisions of this Article shall survive termination, cancellation, or
expiration of this Agreement.
ARTICLE X. TERM; TERMINATION
10.1 The term of this Agreement shall be from the EFFECTIVE DATE until the later
of the seventeenth anniversary of the EFFECTIVE DATE or the last to expire
patent of PATENT RIGHTS, unless this Agreement is terminated earlier in
accordance with the provisions of this Article.
10.2 NYBC may terminate this Agreement at any time upon notice to LICENSEE if:
(a) LICENSEE fails to cure a breach of this Agreement within sixty (60)
days after notice thereof; or
(b) LICENSEE fails to make payments due under paragraph 4.1 of this
Agreement within ten (10) days after notice thereof; or
(c) LICENSEE fails in the performance of its obligation to conform to
applicable standards, regulations, or guidelines of the applicable
governmental agency, as determined by NYBC or governmental agency
review and fails to cure such breach within ninety (90) days after
notice thereof; or
-11-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
(d) LICENSEE becomes insolvent, is adjudged bankrupt, files a petition in
bankruptcy, makes an assignment for the benefit of creditors or seeks
relief generally from its debts and obligations in accordance with a
similar or analogous procedure; or
(e) LICENSEE fails to make and sell PRODUCT within ******** of the
EFFECTIVE DATE. However, NYBC may not terminate this Agreement
pursuant to this subparagraph (e) if LICENSEE has used PATENT RIGHTS
or KNOW-HOW in connection with the manufacture and sale of other
products pursuant to other license agreements between NYBC and
LICENSEE.
Upon such termination (1) all rights in KNOW-HOW and PATENT RIGHTS
shall revert to NYBC and (2) LICENSEE will not use KNOW-HOW and PATENT
RIGHTS for any purposes whatsoever, unless permitted to do so under a
separate agreement with NYBC.
10.3 The expiration or earlier termination of this Agreement will not:
(a) affect the right of LICENSEE to sell PRODUCT manufactured prior to the
date of expiration or termination, provided that such sales,
notwithstanding expiration or termination, will be subject to
royalties in accordance with the provisions of Article IV and provided
further that such termination is not due to the reasons set forth in
Paragraph 10.2(c); or
(b) relieve LICENSEE from any other obligation under this Agreement,
including, without limitation, obligations to forward reports,
maintain records, permit an audit or inspection and to maintain
confidentiality; or
-12-
<PAGE>
(c) release LICENSEE from any liability resulting from an act or omission
prior to expiration or termination or an act or omission, whenever
arising, relating to the provisions of Article VII.
10.4 Invalidation by a court of last resort of any claim(s) of any or all of the
patents comprising PATENT RIGHTS shall relieve LICENSEE of its obligations
with respect to such claims; but, notwithstanding any other clause herein,
shall not terminate this Agreement.
10.5 LICENSEE may terminate this Agreement upon providing ninety (90) days prior
written notice to NYBC. Upon such termination, (1) all rights in KNOW-HOW
and PATENT RIGHTS shall revert to NYBC and (2) LICENSEE will not use KNOW-
HOW and PATENT RIGHTS for any purposes whatsoever, unless permitted to do
so under a separate agreement with NYBC.
ARTICLE XI. NOTICES
11.1 Any notice, report or other communication required or permitted to be given
or made under this Agreement by one of the parties to the other shall be in
writing and shall be deemed to have been sufficiently given or made for all
purposes if mailed by Certified Mail, postage prepaid, or sent by
facsimile, confirmed forthwith in written dispatch as described herein,
addressed to such other party at its respective address as follows:
If to NYBC:
----------
The New York Blood Center
310 East 67th Street
New York, NY 10021-6295, U.S.A.
Attention: Office of Patents And Licensing
cc: General Counsel
-13-
<PAGE>
If to LICENSEE:
--------------
Melville Biologics, Inc.
155 Duryea Road
Melville, NY 11747
Attention: President
ARTICLE XII. ASSIGNMENT AND SUCCESSION
12.1 The rights and licenses granted by NYBC in this Agreement are personal to
LICENSEE and may not be assigned or otherwise transferred without the prior
written consent of NYBC. Any attempted assignment or transfer without such
consent shall be void and without effect.
12.2 NYBC may assign or otherwise transfer this Agreement to any third party or
to a subsidiary of NYBC. NYBC shall give LICENSEE written notice of such
assignment or transfer and the written agreement such assignee or
transferee to be bound by the terms and conditions of this Agreement. Upon
such assignment or transfer and agreement by such assignee or transferee,
the term NYBC as used herein shall mean such assignee or transferee.
ARTICLE XIII. GOVERNING LAW
13.1 This Agreement shall be construed and the rights of the parties governed in
accordance with the laws of the State of New York, excluding its law of
conflict of laws. Any dispute or issue arising hereunder, including any
alleged breach by LICENSEE, shall be heard, determined and resolved by an
action commenced in the federal courts in New York City, New York, which
the parties hereby agree shall have proper jurisdiction over the issues and
the parties. LICENSEE hereby agrees to submit itself to the jurisdiction
of the federal
-14-
<PAGE>
courts in New York and waives the right to make any objection based on
jurisdiction or venue. The New York courts shall have the right to grant
all relief to which each party is or shall be entitled hereunder, including
all equitable relief as the Court may deem appropriate.
13.2 This Agreement has been prepared jointly and shall not be strictly
construed against any party.
ARTICLE XIV. ENTIRE AGREEMENT; AMENDMENT
14.1 This Agreement supersedes all prior written and oral communications between
the parties with respect to PRODUCT and sets forth the entire Agreement of
the parties with respect to the subject matter contained herein and may not
be modified or amended except as expressly stated herein or by a written
agreement duly executed by both parties hereto.
ARTICLE XV. SEVERABILITY
15.1 If any term or provision of this Agreement or the application thereof to
any person or circumstance shall to any extent be invalid or unenforceable,
the remainder of this Agreement or the application of such term or
provision to persons or circumstances other than those as to which it is
held invalid or unenforceable shall not be affected thereby and each term
and provision of this Agreement shall be valid and enforced to the fullest
extent permitted by law.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their duly authorized representatives.
-15-
<PAGE>
THE NEW YORK BLOOD CENTER, INC
By: /s/ John W. Adamson, M.D.
--------------------------
Name: John W. Adamson, M.D.
--------------------------
Title: President
--------------------------
Date: 9/21/95
--------------------------
MELVILLE BIOLOGICS, INC.
By: /s/ Thomas R. Ostermueller
--------------------------
Name: Thomas R. Ostermueller
--------------------------
Title: President
--------------------------
Date: 9/21/95
--------------------------
-16-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
APPENDIX A
FOR NON-EXCLUSIVE LICENSE AGREEMENT (#2)
FOR UV TREATED BLOOD DERIVED THERAPEUTIC PRODUCTS
between
THE NEW YORK BLOOD CENTER, INC.
and
MELVILLE BIOLOGICS, INC.
KNOW-HOW - 2 Pages
PATENTS - 2 Pages
**************************************************************************
*******************************************************************************
*******************************************************************************
*******************************************************************************
*******************************************************************************
*********************** [4 pages omitted] *************************************
*******************************************************************************
*******************************************************************************
*******************************************************************************
*******************************************************************
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
APPENDIX B
----------
PRODUCTS
--------
**************************************************************************
*******************************************************************************
*******************************************************************************
*******************************************************************************
*******************************************************************************
************************ [1 page omitted] *************************************
*******************************************************************************
*******************************************************************************
*******************************************************************************
*******************************************************************
-19-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
EXHIBIT 10.6
EXCLUSIVE LICENSE AGREEMENT (#3)
FOR VIRALLY INACTIVATED TRANSFUSION PLASMA PRODUCTS
between
THE NEW YORK BLOOD CENTER, INC.
and
MELVILLE BIOLOGICS, INC.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE I. DEFINITIONS.................................. 1
1.1 "AFFILIATE"....................................... 1
1.2 "EFFECTIVE DATE".................................. 2
1.3 "KNOW-HOW"........................................ 2
1.3a "S/D KNOW-HOW".................................... 2
1.3b "UV KNOW-HOW"..................................... 2
1.3c "UNIVERSAL KNOW-HOW".............................. 2
1.4 "MILES AGREEMENTS"................................ 3
1.5 "NET PROCEEDS".................................... 3
1.6 "NET REVENUES".................................... 4
1.7 "PATENT RIGHTS"................................... 4
1.7a "S/D PATENT RIGHTS"............................... 4
1.7b "UV PATENT RIGHTS"................................ 4
1.7c "UNIVERSAL PATENT RIGHTS"......................... 5
1.8 "PRODUCT(S)"...................................... 5
1.9 "TERRITORY"....................................... 5
1.9a "NON-EXCLUSIVE TERRITORY"......................... 5
ARTICLE II. LICENSE GRANT............................. 5
ARTICLE III. DISCLOSURE, IMPROVEMENTS AND FDA
FILINGS................................... 8
ARTICLE IV. PAYMENTS AND ROYALTIES.................... 10
ARTICLE V. REPORTS, RECORDS AND ACCOUNTING FOR
ROYALTIES................................. 16
ARTICLE VI. REPRESENTATIONS........................... 17
ARTICLE VII. COMPLIANCE; INDEMNIFICATION............... 18
ARTICLE VIII. INFRINGEMENT.............................. 19
ARTICLE IX. CONFIDENTIALITY........................... 20
ARTICLE X. TERM; TERMINATION......................... 21
ARTICLE XI. NOTICES................................... 24
ARTICLE XII. ASSIGNMENT AND SUCCESSION................. 25
ARTICLE XIII. GOVERNING LAW............................. 25
ARTICLE XIV. ENTIRE AGREEMENT; AMENDMENT............... 26
ARTICLE XV. SEVERABILITY.............................. 26
</TABLE>
-i-
<PAGE>
EXCLUSIVE LICENSE AGREEMENT
FOR VIRALLY INACTIVATED TRANSFUSION PLASMA PRODUCTS
---------------------------------------------------
AGREEMENT effective as of the EFFECTIVE DATE, by and between The New
York Blood Center, Inc. ("NYBC"), having an office at 310 East 67th Street, New
York, New York 10021, U.S.A., and Melville Biologics, Inc., a Delaware
Corporation, having an office at 155 Duryea Road, Melville, New York 11747,
U.S.A. ("LICENSEE").
WHEREAS, NYBC has developed know-how and patent rights relating to
virus inactivation technology for use with blood plasma for transfusion,
cryoprecipitate for transfusion and serum for transfusion; and
WHEREAS, LICENSEE desires to acquire an exclusive license under such
NYBC know-how and patent rights for the manufacture and sale of such products;
and
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt of which is
hereby acknowledged, NYBC and LICENSEE mutually agree as follows:
ARTICLE I. DEFINITIONS
As used in this Agreement, the following terms shall be defined as set
forth below:
1.1 "AFFILIATE" shall mean a corporation or other business entity controlled
by, controlling or under common control with a party. For this purpose,
control of a corporation or other business entity shall mean direct or
indirect beneficial ownership of fifty percent (50%) or more of the voting
interest in, or a fifty percent (50%) or greater interest in the equity of,
<PAGE>
such corporation or other business entity, or the maximum
percentage that a foreign investor may own, if equal to or less than fifty
percent (50%), pursuant to local laws, customs or regulations of any
country, but such corporation, or other business entity, shall be deemed to
be an AFFILIATE for only so long as such ownership or control exists.
Notwithstanding anything herein to the contrary, for the purposes of this
Agreement, NYBC is not an AFFILIATE of LICENSEE.
1.2 "EFFECTIVE DATE" of this Agreement shall mean the date of closing of the
sale of shares of common stock of LICENSEE to one or more funds controlled
by Ampersand Ventures, so long as this occurs prior to December 1, 1995.
1.3 "KNOW-HOW" shall mean any one or more of S/D KNOW-HOW, UV KNOW-HOW and
UNIVERSAL KNOW-HOW.
1.3a "S/D KNOW-HOW" shall mean the NYBC proprietary technical information
relating to the inactivation of viruses by the use of organic solvents
and/or detergents as described generally on Appendix A1 hereof.
1.3b "UV KNOW-HOW" shall mean the NYBC proprietary technical information
relating to the inactivation of viruses by the use of light and/or certain
compounds as described generally on Appendix A2 hereof.
1.3c "UNIVERSAL KNOW-HOW" shall mean the NYBC proprietary technical information
relating to the removal of blood group antibodies as described generally on
Appendix A3 hereof.
1.4 "MILES AGREEMENTS" shall mean the following agreements:
-2-
<PAGE>
(a) the Reimbursement and Security Agreement dated February 7, 1995
between Melville Biologics, Inc. and Miles Inc.;
(b) the Mortgage, Security Agreement and Fixture Filing dated February 7,
1995 between Melville Biologics, Inc. and Miles Inc.;
(c) the Lease Agreement dated February 7, 1995 between Melville Biologics,
Inc. and Miles Inc.;
(d) the Agreement for Custom Processing dated February 7, 1995 between
Melville Biologics, Inc. and Miles Inc.; and
(e) the Term Note dated February 7, 1995 between Melville Biologics, Inc.
and PNC Bank, National Association.
1.5 "NET PROCEEDS" shall mean the total consideration received by LICENSEE in
any form (including without limitation upfront payments, license signing
and maintenance fees, minimum payments, royalties, research and development
funds, equipment and supplies, equity purchases in excess of fair market
value, etc.) from any third party or parties for a sublicense (or other
right, license, privilege or immunity) to make (or have made by a third
party), use and sell (or otherwise dispose of) a PRODUCT. NET PROCEEDS
does not include NET REVENUES.
1.6 "NET REVENUES" shall mean the total consideration received by LICENSEE
and/or its AFFILIATES in any form (including without limitation upfront
payments, license signing and maintenance payments, payments made to secure
marketing and/or distribution rights, payments made to support research,
development, clinical studies or registration, payments
-3-
<PAGE>
in the form of equipment or supplies, equity purchases in excess of fair
market value, etc.) from any third party in connection with the sale,
transfer or disposal (or the contemplated sale, transfer or disposal) of
PRODUCT by LICENSEE and/or its AFFILIATES, less allowances for return of
PRODUCTS or adjustments for defective quality. PRODUCT shall be deemed to
have been sold when first shipped and billed; provided, however, that when
transfers thereof are made between LICENSEE and its AFFILIATES, such
PRODUCT shall not be deemed to have been sold until sold to a purchaser
independent of LICENSEE and its AFFILIATES in a bona fide, arms-length
transaction between unrelated parties. Payments shall accrue hereunder only
once with respect to the same unit of PRODUCT.
1.7 "PATENT RIGHTS" shall mean any one or more of S/D PATENT RIGHTS, UV PATENT
RIGHTS AND UNIVERSAL PATENT RIGHTS.
1.7a "S/D PATENT RIGHTS" shall mean the NYBC patents and patent applications
listed on Appendix A1 hereof relating to the inactivation of viruses by the
use of organic solvents and/or detergents.
1.7b "UV PATENT RIGHTS" shall mean the NYBC patents and patent applications
listed on Appendix A2 hereof relating to the inactivation of viruses by the
use of light and/or certain compounds.
1.7c "UNIVERSAL PATENT RIGHTS" shall mean the NYBC patents and patent
applications listed on Appendix A3 hereof relating to the removal of blood
group antibodies.
-4-
<PAGE>
1.8 "PRODUCT(S)" shall mean any product listed on Appendix B hereof, the
manufacture, use or sale of which (1) involves the use of KNOW-HOW or (2)
is covered by a claim of PATENT RIGHTS.
1.9 "TERRITORY" shall mean the United States of America, Canada and Mexico.
1.9a "NON-EXCLUSIVE TERRITORY" shall mean worldwide with the exception of the
United States of America, Canada, Mexico, Albania, Austria, Belarus,
Belgium, Bosnia, Bulgaria, Croatia, Czech Republic, Denmark, Estonia,
Finland, France, Georgia, Germany, Greece, Hungary, Iceland, Ireland,
Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Macedonia, Monaco,
Mongolia, Netherlands, Norway, Poland, Portugal, Republic of Moldavia,
Romania, Russian Federation, Serbia, Slovakia, Slovenia, South Africa,
Spain, Sweden, Switzerland, Ukraine, United Kingdom and Vietnam.
ARTICLE II. LICENSE GRANT
2.1 Subject to paragraphs 2.5 and 2.6 hereof, NYBC grants to LICENSEE, under
the terms and conditions of this Agreement, an exclusive license in the
TERRITORY, with the exclusive right to grant sublicenses in the TERRITORY,
under PATENT RIGHTS and KNOW-HOW (a) to make, use, sell, or otherwise
dispose of PRODUCT, and (b) to use the methods covered by such PATENT
RIGHTS and KNOW-HOW for the manufacture, use and sale of PRODUCT. LICENSEE
will not grant any sublicense under KNOW-HOW and/or PATENT RIGHTS unless it
first receives the prior written consent of NYBC, which consent will not be
unreasonably withheld.
2.2 NYBC grants to LICENSEE, under the terms and conditions of this Agreement,
a non-exclusive license in the NON-EXCLUSIVE TERRITORY, with the non-
exclusive
-5-
<PAGE>
right to grant sublicenses in the NON-EXCLUSIVE TERRITORY, under PATENT
RIGHTS and KNOW-HOW (a) to make, use, sell, or otherwise dispose of
PRODUCT, and (b) to use the methods covered by such PATENT RIGHTS and KNOW-
HOW for the manufacture, use and sale of PRODUCT. LICENSEE will not grant
any sublicense under KNOW-HOW and/or PATENT RIGHTS unless it first receives
the prior written consent of NYBC, which consent will not be unreasonably
withheld.
2.3 The license and sublicense grant of paragraph 2.1 is limited to making,
using, selling and disposing of PRODUCT in the TERRITORY. The license and
sublicense grant of paragraph 2.2 is limited to making, using, selling and
disposing of PRODUCT in the NON-EXCLUSIVE TERRITORY.
2.4 Nothing contained in this Agreement shall be construed or interpreted as a
grant, by implication or otherwise, of any license except as expressly
specified in paragraphs 2.1, 2.2 and 2.3 hereof. LICENSEE agrees not to
utilize the PATENT RIGHTS and KNOW-HOW licensed under this Agreement in the
development, manufacture or use of any product not listed on Appendix B
hereof unless first permitted to do so under a separate written agreement
with NYBC.
2.5 NYBC has entered into agreements with third parties prior to the EFFECTIVE
DATE ("Prior Agreements") regarding some of the KNOW-HOW and PATENT RIGHTS
covered by this Agreement. The terms of this Agreement and licenses
granted hereunder are all subject to conflicting terms, if any, in the
Prior Agreements. All rights reserved to third parties under the Prior
Agreements shall remain so reserved and shall in no way be affected by this
Agreement. NYBC is not obligated under this Agreement to take any action
which would conflict in any respect with NYBC's past, current or future
obligations to third parties under the Prior Agreements.
-6-
<PAGE>
2.6 NYBC shall retain the right to make and use PRODUCTS in its own
laboratories for scientific purposes and for continued research. Further,
NYBC shall have the right to make PRODUCTS available to other scientific
institutions and researchers for scientific and research purposes.
2.7 NYBC is a party to a License Agreement effective August 13, 1993 with the
Alberta Research Council ("the ARC Agreement") relating to synthetic blood
group antigens A and B, free or attached to chromatographic resins. NYBC
will seek to amend the ARC Agreement so that NYBC and LICENSEE receive a
co-exclusive license under the Alberta Research Council technology and
patent rights covered by the ARC Agreement.
ARTICLE III. DISCLOSURE, IMPROVEMENTS AND FDA FILINGS
3.1 LICENSEE acknowledges receipt of KNOW-HOW.
3.2 NYBC shall have the right, but not the obligation, to inspect LICENSEE's
manufacturing sites, validation and/or processing records as they pertain
to the use and implementation of PATENT RIGHTS and KNOW-HOW.
3.3 NYBC hereby grants LICENSEE a right of first negotiation for a license
under any technology developed by NYBC after the EFFECTIVE DATE of this
Agreement (and not otherwise encumbered) for use with PRODUCTS ("New
Technology"). In implementation of the foregoing, at least once a year
during the term of this Agreement, NYBC will notify LICENSEE in writing of
any New Technology developed by NYBC and, at LICENSEE's option, conduct
good faith negotiations with LICENSEE for a license under such New
Technology, for use with PRODUCTS, under terms and conditions similar to
those set forth herein. If NYBC and LICENSEE are unable to reach an
agreement with respect to
-7-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
such New Technology within ******** of the first notification
provided by NYBC regarding such New Technology, then NYBC shall be free to
license such technology to a third party.
3.4 LICENSEE hereby grants to NYBC an irrevocable royalty-bearing non-exclusive
license, with the right to grant sublicenses, to make, use and sell
PRODUCTS outside of the TERRITORY under any improvements made by LICENSEE,
whether patentable or not, so long as the manufacture, use or sale of such
improvements would infringe a claim of the PATENT RIGHTS. LICENSEE shall
provide NYBC with copies of all patent applications and patents including
such improvements within thirty (30) days of filing of such applications
and within thirty (30) days of issuance of such patents. The amount of
royalty payable to LICENSEE shall be negotiated in good faith upon the
request of NYBC.
3.5 Between ******** and ********, LICENSEE agrees to spend a minimum of
******** to (i) modify that portion of LICENSEE'S facility dedicated to the
manufacture of PRODUCTS and/or (ii) to purchase equipment to be used solely
for the manufacture of PRODUCTS. If such monies have not been spent by
******** then NYBC, at its sole option, may immediately delete the U.S.A.
from the definition of TERRITORY upon written notice to LICENSEE.
3.6 No later than ******** LICENSEE shall either:
(a) complete and submit to the FDA amendments (including samples from
conformance lots) to (1) the existing Product License Application
for PRODUCTS and (2) the existing Establishment License Amendment
for LICENSEE's facility in Melville, New York, seeking the
approval of the
-8-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
FDA to manufacture PRODUCTS in LICENSEE's facility in Melville,
New York and to sell such products in the U.S.A.; or
(b) pay to NYBC ******** as a license maintenance fee.
If LICENSEE fails to file such amendments by ******** and also fails to
make such payment by ******** then NYBC, at its sole option, may immediately
delete the U.S.A. from the definition of TERRITORY upon written notice to
LICENSEE.
3.7 No later than ******** LICENSEE or a sublicensee of LICENSEE shall
file an application for approval to sell PRODUCT in Canada with the
appropriate Canadian government agency. If such application is not filed
by LICENSEE by ******** then NYBC, at its sole option, may immediately
delete Canada from the definition of TERRITORY upon written notice to
LICENSEE.
3.8 No later than ******** LICENSEE or a sublicensee of LICENSEE shall
file an application for approval to sell PRODUCT in Mexico with the
appropriate Mexican government agency. If such application is not filed by
LICENSEE by ******** then NYBC, at its sole option, may immediately
delete Mexico from the definition of TERRITORY upon written notice to
LICENSEE.
ARTICLE IV. PAYMENTS AND ROYALTIES
4.1 LICENSEE shall pay to NYBC a running royalty at the rate of ********
of NET REVENUES. If LICENSEE receives NET REVENUES prior to the
actual sale, transfer or disposal of PRODUCT and in the form of an upfront
payment (e.g. a payment made to
-9-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
secure marketing and/or distribution rights, to support research,
development, clinical trials or registration, or a payment in the form of
equipment or supplies, etc.), then LICENSEE may elect to defer payment of
royalty on the first ******** of such upfront payments for a period of two
(2) years from the date of LICENSEE's receipt of such upfront payments.
LICENSEE may make such election by providing written notice to NYBC within
ten (10) days of LICENSEE's receipt of such payment, which notice shall
describe the payment received, state the date the payment was received and
include LICENSEE's acknowledgment that royalty on such payment is due to
NYBC two (2) years after the date the payment was received by LICENSEE. In
no event shall LICENSEE defer more than ******** of royalty to NYBC
pursuant to this paragraph.
4.2 LICENSEE shall pay to NYBC ******** of NET PROCEEDS.
4.3 LICENSEE shall make the following payments to NYBC during the term of this
Agreement in order to maintain the licenses granted hereunder for the
United States of America (U.S.A.):
(a) ******** per annum, payable in four equal installments on February 1,
****, May 1, ****, August 1, **** and November 1, ****. This payment
may be credited against royalties due to NYBC, if any, for calendar
year **** under paragraphs 4.1 and 4.2 hereof with respect to the
U.S.A.
(b) ******** per annum, payable in four equal installments on February 1,
****, May 1, ****, August 1, **** and November 1, ****. This payment
may be credited against royalties due to NYBC,
-10-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
if any, for calendar year **** under paragraphs 4.1 and 4.2 hereof
with respect to the U.S.A.
(c) ******** per annum, payable each year in four equal installments on
February 1, May 1, August 1 and November 1, beginning in calendar year
**** and continuing for each calendar year thereafter until
termination of this Agreement. The payment for each calendar year may
be credited against royalties due to NYBC, if any, for such calendar
year under paragraphs 4.1 and 4.2 hereof with respect to the U.S.A.
(d) NYBC, at its sole option, may delete the U.S.A. from the definition of
TERRITORY if LICENSEE fails to make any of the payments required by
this paragraph after notice of such failure to LICENSEE and a
reasonable opportunity (ten (10) days from receipt of notice) to cure.
4.4 LICENSEE shall make the following payments to NYBC during the term of this
Agreement in order to maintain the licenses granted hereunder for Canada:
(a) ******** per annum, payable in four equal installments on February 1,
****, May 1, ****, August 1, **** and November 1, ****. This payment
may be credited against royalties due to NYBC, if any, for calendar
year **** under paragraphs 4.1 and 4.2 hereof with respect to Canada.
(b) ******** per annum, payable in four equal installments on February 1,
****, May 1, ****, August 1, **** and November 1, ****. This payment
may be credited against royalties due to NYBC, if any, for calendar
year **** under paragraphs 4.1 and 4.2 hereof with respect to Canada.
-11-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
(c) ******** per annum, payable each year in four equal installments on
February 1, May 1, August 1 and November 1, beginning in calendar year
**** and continuing for each calendar year thereafter until
termination of this Agreement. The payment for each calendar year may
be credited against royalties due to NYBC, if any, in such calendar
year under paragraphs 4.1 and 4.2 hereof with respect to Canada.
(d) NYBC, at its sole option, may delete Canada from the definition of
TERRITORY if LICENSEE fails to make any of the payments required by
this paragraph after notice of such failure to LICENSEE and a
reasonable opportunity (ten (10) days from receipt of notice) to cure.
4.5 LICENSEE shall make the following payments to NYBC during the term of this
Agreement in order to maintain the licenses granted hereunder for Mexico:
(a) ******** per annum, payable in four equal installments on February 1,
****, May 1, ****, August 1, **** and November 1, ****. This payment
may be credited against royalties due to NYBC, if any, for calendar
year **** under paragraphs 4.1 and 4.2 hereof with respect to Mexico.
(b) ******** per annum, payable in four equal installments on February 1,
****, May 1, ****, August 1, **** and November 1, ****. This payment
may be credited against royalties due to NYBC, if any, for calendar
year **** under paragraphs 4.1 and 4.2 hereof with respect to Mexico.
(c) ******** per annum, payable each year in four equal installments on
February 1, May 1, August 1 and November 1,
-12-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
beginning in calendar year **** and continuing for each calendar year
thereafter until termination of this Agreement. The payment for each
calendar year may be credited against royalties due to NYBC, if any,
in such calendar year under paragraphs 4.1 and 4.2 hereof with respect
to Mexico.
(d) NYBC, at its sole Option, may delete Mexico from the definition of
TERRITORY if LICENSEE fails to make any of the payments required by
this paragraph after notice of such failure to LICENSEE and a
reasonable opportunity (ten (10) days from receipt of notice) to cure.
4.6 LICENSEE shall make all payments due under paragraphs 4.1 and 4.2 of this
Agreement on a quarterly basis within thirty (30) days after the end of
each calendar quarter.
4.7 All payments due under this Agreement shall be made without deductions for
taxes, assessments or other charges of any kind which may be imposed on
NYBC by any foreign government or political subdivision thereof with
respect to any amounts payable to NYBC pursuant to this Agreement, and such
taxes, assessments or other charges shall be assumed by LICENSEE.
4.8 All payments due under this Agreement shall be made in United States
dollars. All royalty calculations hereunder shall be based on the currency
in which the sale was made, with total sales converted to United States
dollars based on the exchange rate of Citibank, New York, on the first day
of the month in which the royalty becomes due.
4.9 LICENSEE will make a reasonable quantity of PRODUCTS available for purchase
by NYBC at a price which is equal to the lowest price paid to LICENSEE by
similarly situated third parties for PRODUCTS. LICENSEE shall be relieved
of its obligations
-13-
<PAGE>
under this paragraph if elimination of NYBC's most favored customer status
is required in order to achieve a development and distribution agreement
with a third party.
4.9a NYBC, at its sole discretion, may agree to waive any royalty due under this
Agreement for PRODUCTS sold by LICENSEE to NYBC, in which event the price
charged to NYBC shall be reduced by the royalty amount.
ARTICLE V. REPORTS, RECORDS AND ACCOUNTING FOR ROYALTIES
5.1 Within thirty (30) days after the end of each calendar quarter during the
term of this Agreement, LICENSEE shall forward to NYBC a written report
setting forth all NET PROCEEDS and NET REVENUES. All such information
shall be presented on a country-by-country basis and a sublicensee-by-
sublicensee basis for the previous calendar quarter and shall indicate the
amount of royalties due, together with sufficient supporting information to
enable confirmation by NYBC. LICENSEE shall also provide to NYBC a copy of
all reports received from sublicensees.
5.2 LICENSEE shall keep full and accurate books of accounts and other records
in accordance with generally accepted accounting practice, showing all
information necessary for NYBC to ascertain and verify the royalties
payable by LICENSEE hereunder. During the term of this Agreement, and for
three (3) years thereafter, NYBC shall have the right to have, at its own
expense and upon ten (10) days written notice, an independent certified
public accountant of its own choosing, inspect, during regular business
hours, said books, records, files and all supporting data relating to
records kept pursuant to this Agreement. LICENSEE also agrees to permit
NYBC, or its representatives, to make and retain copies of any and all
invoices, records and accounts kept by LICENSEE pursuant to this Agreement.
If the inspection of LICENSEE by NYBC reveals an underpayment to NYBC
-14-
<PAGE>
of ten percent (10%) or greater, then the costs of such inspection shall be
borne by LICENSEE.
5.3 On or about June 1 of each year during the term of this Agreement, LICENSEE
shall provide a written report to NYBC describing LICENSEE's efforts to
commercialize PRODUCTS, including a description of LICENSEE's efforts to
obtain any required governmental approval to market PRODUCTS and to grant
sublicenses. NYBC agrees to keep such reports confidential, if requested
to do so by LICENSEE.
ARTICLE VI. REPRESENTATIONS
6.1 Nothing in this Agreement is or shall be construed as:
(a) A warranty or representation by NYBC that anything made or used by
LICENSEE under any license granted in this Agreement is or will be
free from infringement of patents, copyrights, and other rights of
third parties; or
(b) Granting by implication, estoppel or otherwise any license, right or
interest other than as expressly set forth herein.
6.2 Except as expressly set forth in this Agreement, the parties MAKE NO
REPRESENTATIONS AND EXTEND NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR
IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW, STATUTE OR OTHERWISE, AND
THE PARTIES SPECIFICALLY DISCLAIM ANY IMPLIED WARRANTY OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE, OR WARRANTY OF NON-INFRINGEMENT.
-15-
<PAGE>
6.3 LICENSEE represents and warrants that it shall not, directly or indirectly,
use NYBC's tradenames or trademarks in connection with promotions,
advertising or sales activity, without the prior written consent of NYBC.
Further, LICENSEE shall not make any use of NYBC's name without NYBC's
prior written consent, except if the use of NYBC's name is required by law,
regulation or judicial order, in which event LICENSEE will promptly inform
NYBC prior to any such required use.
6.4 LICENSEE represents and warrants that it has adequate insurance and
financial resources to cover all liability for any failure including,
without limitation, failure in design, manufacture, production and/or
operation.
ARTICLE VII. COMPLIANCE; INDEMNIFICATION
7.1 NYBC shall not be liable to LICENSEE, its AFFILIATES, its sublicenses or
any third party for any injury, illness, disease, allergy, allergic
reaction, side effect, death, or other adverse experience arising out of,
or in connection with, or as a consequence of research, manufacture,
testing, advertising, sale, distribution, or other use of PRODUCT.
7.2 LICENSEE shall conduct all of its operations relating to PRODUCT in
accordance with all applicable laws, regulations, requirements, and other
standards, which may be in effect from time-to-time, of all pertinent
governmental authorities, including, without limitation, standards for the
validation and processing of PRODUCT.
7.3 LICENSEE agrees to exercise a reasonable standard of care in conducting its
activities relating to PRODUCT, including the testing, manufacture,
packaging, marketing, advertising, distribution and sale of PRODUCT.
-16-
<PAGE>
7.4 LICENSEE agrees to indemnify, defend and hold harmless NYBC, its directors,
officers, employees and agents from and against any and all loss, damage,
demands, claims, actions and causes of action, assessments, liabilities,
costs and expenses which they may incur because of injury to or death of
any person or any other claim arising out of, or in connection with, or as
a consequence of, LICENSEE's manufacture, sale, or use of PRODUCT.
ARTICLE VIII. INFRINGEMENT
8.1 LICENSEE shall promptly provide written notification to NYBC in the event
of any third party infringement, or possible infringement, of PATENT RIGHTS
in the TERRITORY. Upon receipt of such notice, NYBC shall have the right,
at its sole discretion, to take appropriate legal action in connection
therewith. In the event that NYBC shall elect to take such action, the
conduct of the action shall be entirely directed by NYBC, and NYBC shall
pay all costs and expenses associated therewith and retain all recoveries
of any such action.
8.2 In the event NYBC decides that it will not take legal action against an
alleged infringer, LICENSEE shall have the right to take appropriate legal
action against the alleged infringer and shall pay all costs and expenses
associated therewith and retain all recoveries of any such action.
LICENSEE shall not initiate or settle or compromise any such legal action
without first obtaining the written consent of NYBC, which consent shall
not be unreasonably withheld.
8.3 In the event that either party initiates or carries on legal proceedings
against an alleged infringer, then the other party shall fully cooperate
with and supply all assistance reasonably requested by the litigating
party. The non-litigating party, at its own expense, may be represented by
counsel of their choice in any such proceeding.
-17-
<PAGE>
8.4 LICENSEE agrees to report to NYBC, promptly and in written detail, each
claim of patent infringement made by a third party against LICENSEE as a
result of LICENSEE's manufacture, use or sale of PRODUCTS.
ARTICLE IX. CONFIDENTIALITY
9.1 LICENSEE agrees not to use or disclose to any third party any KNOW-HOW
provided to it pursuant to this Agreement except as contemplated herein.
This obligation shall not apply to any information which:
(a) is or subsequently becomes known to the public through no fault of
LICENSEE;
(b) was in the possession of LICENSEE prior to disclosure by NYBC as
established by documentation provided by LICENSEE to NYBC within
thirty (30) days of disclosure of such information by NYBC to
LICENSEE;
(c) is obtained from a third party who or which has the lawful right to
disclose same to LICENSEE;
(d) is disclosed to governmental authorities in response to a lawful order
or demand for disclosure, or in order to obtain required consents,
permits, licenses, or other approvals relating to the manufacture, use
or sale of PRODUCT.
9.2 LICENSEE agrees to treat as confidential the terms and conditions of this
Agreement. Further, LICENSEE agrees not to issue any press release or
other public statement disclosing the existence of, or relating to, this
Agreement without the prior written consent of NYBC.
-18-
<PAGE>
9.3 The provisions of this Article shall survive termination, cancellation, or
expiration of this Agreement.
ARTICLE X. TERM; TERMINATION
10.1 The term of this Agreement shall be from the EFFECTIVE DATE until the later
of the seventeenth anniversary of the EFFECTIVE DATE or the last to expire
patent of PATENT RIGHTS, unless this Agreement is terminated earlier in
accordance with the provisions of this Article.
10.2 NYBC may terminate this Agreement at any time upon notice to LICENSEE if:
(a) LICENSEE fails to cure a breach of this Agreement within thirty (30)
days after notice thereof; or
(b) LICENSEE fails to make payments due under paragraphs 4.1 or 4.2 of
this Agreement within ten (10) days after notice thereof; or
(c) LICENSEE fails in the performance of its obligation to conform to
applicable standards, regulations, or guidelines of the applicable
governmental agency, as determined by NYBC or governmental agency
review and fails to cure such breach within ninety (90) days after
notice thereof; or
(d) LICENSEE becomes insolvent, is adjudged bankrupt, files a petition in
bankruptcy, makes an assignment for the benefit of creditors or seeks
relief generally from its debts and obligations in accordance with a
similar or analogous procedure; or
-19-
<PAGE>
(e) LICENSEE fails to make and sell PRODUCT within four (4) years of the
EFFECTIVE DATE; or
(f) an Event of Default or a default occurs prior to February 1, 1997
under any one or more of the MILES AGREEMENTS; or
(g) NYBC deletes the U.S.A., Canada and Mexico from the definition of
TERRITORY pursuant to paragraphs 3.5, 3.6, 3.7, 3.8 or 4.3, 4.4, 4.5
or any combination thereof.
Upon such termination, (1) all rights in KNOW-HOW and PATENT RIGHTS shall
revert to NYBC and (2) LICENSEE will not use KNOW-HOW and PATENT RIGHTS for
any purposes whatsoever, unless permitted to do so under a separate
agreement with NYBC.
10.3 The expiration or earlier termination of this Agreement will not:
(a) affect the right of LICENSEE to sell PRODUCT manufactured prior to the
date of expiration or termination, provided that such sales,
notwithstanding expiration or termination, will be subject to
royalties in accordance with the provisions of Article IV and provided
further that such termination is not due to the reasons set forth in,
paragraph 10.2(c) hereof; or
(b) relieve LICENSEE from any other obligation under this Agreement,
including, without limitation, obligations to forward reports,
maintain records, permit an audit or inspection and to maintain
confidentiality; or
-20-
<PAGE>
(c) release LICENSEE from any liability resulting from an act or omission
prior to expiration or termination or an act or omission, whenever
arising, relating to the provisions of Article VII; or
(d) serve to terminate the license granted under paragraph 3.4 of this
Agreement, which shall (1) survive any termination of this Agreement
and (2) become a worldwide royalty-free license upon any termination
of this Agreement.
10.4 Invalidation by a court of last resort of any claim(s) of any or all of the
patents comprising PATENT RIGHTS shall relieve LICENSEE of its obligations
with respect to such claims; but, notwithstanding any other clause herein,
shall not terminate this Agreement.
10.5 LICENSEE may terminate this Agreement upon providing ninety (90) days prior
written notice to NYBC. Upon such termination, (1) all rights in KNOW-HOW
and PATENT RIGHTS shall revert to NYBC and (2) LICENSEE will not use KNOW-
HOW and PATENT RIGHTS for any purposes whatsoever, unless permitted to do
so under a separate agreement.
ARTICLE XI. NOTICES
11.1 Any notice, report or other communication required or permitted to be given
or made under this Agreement by one of the parties to the other shall be in
writing and shall be deemed to have been sufficiently given or made for all
purposes if mailed by Certified Mail, postage prepaid, or sent by
facsimile, confirmed forthwith in written dispatch as described herein,
addressed to such other party at its respective address as follows:
If to NYBC:
----------
-21-
<PAGE>
The New York Blood Center, Inc.
310 East 67th Street
New York, NY 10021-6295
U.S.A.
Attention: Office of Patents And Licensing
cc: General Counsel
If to LICENSEE:
--------------
Melville Biologics, Inc.
155 Duryea Road
Melville, New York 11747
U.S.A.
Attention: President
ARTICLE XII. ASSIGNMENT AND SUCCESSION
12.1 The rights and licenses granted by NYBC in this Agreement are personal to
LICENSEE and may not be assigned or otherwise transferred without the prior
written consent of NYBC. Any attempted assignment or transfer without such
consent shall be void and without effect.
12.2 NYBC may assign or otherwise transfer this Agreement to any third party or
to a subsidiary of NYBC. NYBC shall give LICENSEE written notice of such
assignment or transfer and the written agreement of such assignee or
transferee to be bound by the terms and conditions of this Agreement. Upon
such assignment or transfer and agreement by such assignee or transferee,
the term NYBC as used herein shall mean such assignee or transferee.
ARTICLE XIII. GOVERNING LAW
-22-
<PAGE>
13.1 This Agreement shall be construed and the rights of the parties governed in
accordance with the laws of the State of New York, excluding its law of
conflict of laws. Any dispute or issue arising hereunder, including any
alleged breach by LICENSEE, shall be heard, determined and resolved by an
action commenced in the federal courts in New York City, New York, which
the parties hereby agree shall have proper jurisdiction over the issues and
the parties. LICENSEE hereby agrees to submit itself to the jurisdiction
of the federal courts in New York and waives the right to make any
objection based on jurisdiction or venue. The New York courts shall have
the right to grant all relief to which each party is or shall be entitled
hereunder, including all equitable relief as the Court may deem
appropriate.
13.2 This Agreement has been prepared jointly and shall not be strictly
construed against any party.
ARTICLE XIV. ENTIRE AGREEMENT; AMENDMENT
14.1 This Agreement supersedes all prior written and oral communications between
the parties with respect to PRODUCT and sets forth the entire Agreement of
the parties with respect to the subject matter contained herein and may not
be modified or amended except as expressly stated herein or by a written
agreement duly executed by both parties hereto.
ARTICLE XV. SEVERABILITY
15.1 If any term or provision of this Agreement or the application thereof to
any person or circumstance shall to any extent be invalid or unenforceable,
the remainder of this Agreement or the application of such term or
provision to persons or circumstances other than those as to which it is
held invalid or unenforceable shall not be affected thereby and
-23-
<PAGE>
each term and provision of this Agreement shall be valid and enforced to
the fullest extent permitted by law.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their duly authorized representatives.
THE NEW YORK BLOOD CENTER, INC.
By: /s/ John W. Adamson, M.D.
--------------------------
Name: John W. Adamson, M.D.
------------------------
Title: President
-----------------------
Date: 9/21/95
------------------------
MELVILLE BIOLOGICS, INC.
By: /s/ Thomas R. Ostermueller
---------------------------
Name: Thomas R. Ostermueller
-------------------------
Title: President
------------------------
Date: 9/21/95
-------------------------
-24-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
APPENDIX A1
FOR EXCLUSIVE LICENSE AGREEMENT (#3)
FOR VIRALLY INACTIVATED TRANSFUSION PLASMA PRODUCTS
between
THE NEW YORK BLOOD CENTER, INC.
and
MELVILLE BIOLOGICS, INC.
S/D KNOW-HOW - 6 Pages
S/D PATENTS - 7 Pages
**************************************************************
******************************************************************
******************************************************************
******************************************************************
******************************************************************
************************[10 pages omitted] *********************
******************************************************************
******************************************************************
******************************************************************
******************************************************
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
APPENDIX A2
FOR EXCLUSIVE LICENSE AGREEMENT (#3)
FOR VIRALLY INACTIVATED TRANSFUSION PLASMA PRODUCTS
between
THE NEW YORK BLOOD CENTER, INC.
and
MELVILLE BIOLOGICS, INC.
UV KNOW-HOW - 2 Pages
UV PATENTS - 2 Pages
**************************************************************
******************************************************************
******************************************************************
******************************************************************
******************************************************************
************************[4 pages omitted] *********************
******************************************************************
******************************************************************
******************************************************************
******************************************************
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
APPENDIX A3
FOR EXCLUSIVE LICENSE AGREEMENT (#3)
FOR VIRALLY INACTIVATED TRANSFUSION PLASMA PRODUCTS
between
THE NEW YORK BLOOD CENTER, INC.
and
MELVILLE BIOLOGICS, INC.
UNIVERSAL KNOW-HOW and UNIVERSAL PATENTS - 1 Page
**************************************************************
******************************************************************
******************************************************************
******************************************************************
******************************************************************
************************[1 page omitted] *********************
******************************************************************
******************************************************************
******************************************************************
******************************************************
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
APPENDIX B
----------
PRODUCTS
--------
***** ****** *** ***********
*************** *** ***********
***** *** ***********
-31-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
AMENDMENT I TO THE EXCLUSIVE LICENSE AGREEMENT (#3)
FOR VIRALLY INACTIVATED TRANSFUSION PLASMA PRODUCTS
BETWEEN THE NEW YORK BLOOD CENTER, INC. AND
MELVILLE BIOLOGICS, INC. (NOW V.I. TECHNOLOGIES, INC. OR "VITEX")
This Amendment I, effective December 31, 1996, is made and entered into by and
between NYBC, a New York Not-for-Profit Corporation, having an office at 310
East 67th Street, New York, New York, 10021, and VITEX, a Delaware Corporation,
having an office at 155 Duryea Road, Melville, New York 11747 ("LICENSEE").
WHEREAS, on September 21, 1995, NYBC and LICENSEE entered into an Exclusive
License Agreement (#3) for Virally Inactivated Transfusion Plasma Products ("THE
AGREEMENT"); and
WHEREAS, the parties desire to make certain additional changes in and to
the Agreement;
NOW, THEREFORE, in consideration of the foregoing and subject to the terms
and conditions set forth herein, the parties mutually agree as follows:
PARAGRAPH 3.6 of the Agreement shall be modified, so that it shall now read as
follows:
3.6 No later than ********, LICENSEE shall either:
(a) complete and submit to the FDA amendments (including samples from
conformance lots) to (1) the existing product License Application for
PRODUCTS and (2) the existing Establishment License Amendment for
LICENSEE's facility in Melville, New York, seeking the approval of the FDA
to manufacture PRODUCTS in LICENSEE's facility in Melville, New York and to
sell such products in the U.S.A.; or
(b) pay to NYBC ******** as a license maintenance fee.
If LICENSEE fails to file such amendments by ******** and also fails
to make such payment by ********, then NYBC, at its sole option, may
immediately delete the U.S.A. from the definition of TERRITORY upon written
notice to LICENSEE.
The Amendment I shall be deemed to be incorporated into the Agreement in full by
reference herein and shall be further deemed to be an integral part thereof as
though fully set forth therein.
<PAGE>
PAGE 2
With the exception of the above, all other provisions of the Agreement, shall
remain in effect.
IN WITNESS WHEREOF, the parties hereto have entered into and executed this
Amendment I on the dates set forth below.
NEW YORK BLOOD CENTER, INC. V.I. TECHNOLOGIES, INC.
By: /s/ John W. Adamson, M.D. By: /s/ Thomas R. Ostermueller
------------------------- --------------------------
Name: John W. Adamson, M.D. Name: Thomas R. Ostermueller
------------------------- --------------------------
Title: President Title: President and CEO
------------------------- --------------------------
Date: April 24, 1997 Date: 4/12/97
------------------------- --------------------------
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
AMENDMENT 2 TO THE EXCLUSIVE LICENSE AGREEMENT (#3)
FOR VIRALLY INACTIVATED TRANSFUSION PLASMA PRODUCTS
between THE NEW YORK BLOOD CENTER, INC. and
MELVILLE BIOLOGICS, INC. (now V.I. Technologies, Inc., or VITEX)
This Amendment 2, effective July 1, 1997, is made and entered
into by and between The New York Blood Center, Inc. ("NYBC"), a New York not-
for-profit corporation, having an office at 310 East 67th Street, New York, NY
10021 and V.I. Technologies, Inc. (formerly known as Melville Biologics, Inc.),
a Delaware corporation, having an office at 155 Duryea Road, Melville, NY 11747
("LICENSEE").
WHEREAS, on September 21, 1995 NYBC and LICENSEE entered into an
Exclusive License Agreement (#3) for Virally Inactivated Transfusion Plasma
Products and, thereafter, entered into an Amendment #1 of the License Agreement,
which Amendment was effective December 31, 1996 (collectively "the Agreement");
and,
WHEREAS, the parties wish to make further changes to the
Agreement;
NOW, THEREFORE, in consideration of the mutual covenants
contained in the Agreement and in this Amendment 2 and other good and valuable
consideration the receipt and sufficiency of which is hereby acknowledged, the
parties agree as follows:
1. Paragraph 3.7 of the Agreement is hereby deleted and
replaced with the following:
No later than January 1, ****, LICENSEE or a sublicensee of
LICENSEE shall file an application for approval to sell
PRODUCT in Canada with the appropriate Canadian government
agency. If such application is not filed by LICENSEE by
January 1, ****, then NYBC, at its sole option, may
immediately delete Canada from the definition of TERRITORY
upon written notice to LICENSEE.
2. Paragraph 3.8 of the Agreement is hereby deleted and
replaced with the following:
No later than January 1, ****, LICENSEE or a sublicensee of
LICENSEE shall file an application for approval to sell
PRODUCT in Mexico with the appropriate Mexican government
agency. If such application is not filed by LICENSEE by
January 1, ****, then NYBC, at its sole option, may
immediately delete Mexico from the definition of TERRITORY
upon written notice to LICENSEE.
3. LICENSEE shall have the option to make the below listed
payments under the Agreement in the form of either cash or shares of common
stock of the
1
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
LICENSEE. LICENSEE shall exercise its option within twenty (20) days of
execution of this Amendment 2 by NYBC and LICENSEE. If LICENSEE chooses to make
the payment in shares of common stock, this shall be done through the Stock
Purchase Agreement attached hereto as Attachment 1.
(1) The ******** payment due on August 1, **** and the
******** payment due on November 1, ****, both pursuant to
paragraph 4.3(a);
(2) The ******** payment due on August 1, **** and the
******** payment due on November 1, ****, both pursuant to
paragraph 4.4(a); and,
(3) The ******** payment due on August 1, **** and the
******** payment due on November 1, ****, both pursuant to
paragraph 4.5(a).
4. LICENSEE shall have the option to make the below listed
payment under the Agreement in the form of either cash or shares of common stock
of the LICENSEE. LICENSEE shall exercise its option by February 1, ****. If
LICENSEE chooses to make the payment in shares of common stock, this shall be
done through the Stock Purchase Agreement attached hereto as Attachment 1.
(1) The ******** payment due on February 1, **** pursuant
to paragraph 4.3(b);
(2) The ******** payment due on February 1, **** pursuant
to paragraph 4.4(b);
(3) The ******** payment due on February 1, **** pursuant
to paragraph 4.5(b).
5. NYBC acknowledges receipt of the prior payment of Fifty
Thousand Dollars ($50,000) from LICENSEE in partial consideration of the
amendments set forth herein.
6. This Amendment 2 shall be deemed to be incorporated into
the Agreement in full and to be an integral part thereof as though fully set
forth therein. With the exception of the above amendment, all other provisions
of the Agreement shall remain in full force and effect.
2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have entered into and
executed this Amendment 2 on the date first above written.
NEW YORK BLOOD CENTER, INC. V.I. TECHNOLOGIES, INC.
By:____________________________ By:______________________________
Name:__________________________ Name:____________________________
Title:_________________________ Title:___________________________
3
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment]
EXHIBIT 10.7
EXCLUSIVE LICENSE AGREEMENT (#4)
FOR VIRALLY INACTIVATED FIBRIN SEALANT/THROMBIN PRODUCTS
between
THE NEW YORK BLOOD CENTER, INC.
and
MELVILLE BIOLOGICS, INC.
--------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
ARTICLE I. DEFINITIONS..................................... 1
1.1 "AFFILIATE".......................................... 1
1.2 "EFFECTIVE DATE"..................................... 2
1.3 "KNOW-HOW"........................................... 2
1.3a "S/D KNOW-HOW"....................................... 2
1.3b "UV KNOW-HOW"........................................ 2
1.3c "PRODUCT KNOW-HOW"................................... 3
1.4 "NET PROCEEDS"....................................... 3
1.5 "NET REVENUES"....................................... 3
1.6 "PATENT RIGHTS"...................................... 4
1.6a "S/D PATENT RIGHTS".................................. 4
1.6b "UV PATENT RIGHTS"................................... 4
1.6c "PRODUCT PATENT RIGHTS".............................. 4
1.7 "PRODUCT(S)"......................................... 4
1.8 "TERRITORY".......................................... 4
ARTICLE II. LICENSE GRANT................................. 4
ARTICLE III. DISCLOSURE AND FDA FILINGS.................... 6
ARTICLE IV. PAYMENTS AND ROYALTIES........................ 8
ARTICLE V. REPORTS, RECORDS AND ACCOUNTING FOR
ROYALTIES..................................... 11
ARTICLE VI. REPRESENTATIONS............................... 12
ARTICLE VII. COMPLIANCE; ENDEMNIFICATION................... 14
ARTICLE VIII. INFRINGEMENT.................................. 15
ARTICLE IX. CONFIDENTIALITY............................... 16
ARTICLE X. TERM; TERMINATION............................. 17
ARTICLE XI. NOTICES....................................... 19
ARTICLE XII. ASSIGNMENT AND SUCCESSION..................... 20
ARTICLE XIII. GOVERNING LAW................................. 20
ARTICLE XIV. ENTIRE AGREEMENT; AMENDMENT................... 21
ARTICLE XV. SEVERABILITY.................................. 21
</TABLE>
-i-
<PAGE>
EXCLUSIVE LICENSE AGREEMENT
FOR VIRALLY INACTIVATED
FIBRIN SEALANT/THROMBIN PRODUCTS
--------------------------------
AGREEMENT effective as of the EFFECTIVE DATE, by and between The New York
Blood Center, Inc. ("NYBC"), having an office at 310 East 67th Street, New York,
New York 10021, U.S.A., and Melville Biologics, Inc., a Delaware Corporation,
having an office at 155 Duryea Road, Melville, New York 11747, U.S.A.
("LICENSEE").
WHEREAS, NYBC has developed know-how and patent rights relating to virus
inactivation technology for use with fibrin sealant, fibrinogen and thrombin and
has developed other know-how and patent rights relating to the manufacture and
use of fibrin sealant, fibrinogen and thrombin; and
WHEREAS, LICENSEE desires to acquire an exclusive license under such NYBC
know-how and patent rights for the manufacture and sale of such products; and
NOW, THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, the receipt of which is hereby
acknowledged, NYBC and LICENSEE mutually agree as follows:
ARTICLE I. DEFINITIONS
As used in this Agreement, the following terms shall be defined as set
forth below:
1.1 "AFFILIATE" shall mean a corporation or other business entity controlled
by, controlling or under common control with a party. For this purpose,
control of a corporation or other business entity shall mean direct or
indirect beneficial ownership of fifty percent (50%) or more of the voting
interest an, or a fifty percent (50%) or greater interest in the equity of,
such corporation or other business entity, or the maximum percentage that a
foreign
<PAGE>
investor may own, if equal to or less than fifty percent (50%), pursuant to
local laws, customs or regulations of any country, but such corporation, or
other business entity, shall be deemed to be an AFFILIATE for only so long
as such ownership or control exists. Notwithstanding anything herein to the
contrary, for the purposes of this Agreement, NYBC is not an AFFILIATE of
LICENSEE.
1.2 "EFFECTIVE DATE" of this Agreement shall mean the date of closing of the
sale of shares of common stock of LICENSEE to one or more funds controlled
by Ampersand Ventures, so long as this occurs prior to December 1, 1995.
1.3 "KNOW-HOW" shall mean any one or more of S/D KNOW-HOW, UV KNOW-HOW and
PRODUCT KNOW-HOW.
1.3a "S/D KNOW-HOW" shall mean the NYBC proprietary technical information
relating to the inactivation of viruses by the use of organic solvents
and/or detergents as described generally on Appendix A1 hereof.
1.3b "UV KNOW-HOW" shall mean the NYBC proprietary technical information
relating to the inactivation of viruses by the use of light and/or certain
compounds as described generally on Appendix A2 hereof.
1.3c "PRODUCT KNOW-HOW" shall mean the NYBC proprietary technical information
relating to the manufacture and use of fibrin sealant, fibrinogen and
thrombin as described generally on Appendix A3 hereof.
1.4 "NET PROCEEDS" shall mean the total consideration received by LICENSEE in
any form (including without limitation upfront payments, license signing
and maintenance fees, minimum payments, royalties, research and development
funds, equipment and supplies, equity purchases in excess of fair market
value, etc.) from any third party or parties for a sublicense (or other
right, license, privilege or immunity) to make (or have made by a
-2-
<PAGE>
third party), use and sell (or otherwise dispose of) a PRODUCT. NET
PROCEEDS does not include NET REVENUES.
1.5 "NET REVENUES" shall mean the total consideration received by LICENSEE
and/or its AFFILIATES in any form (including without limitation upfront
payments, license signing and maintenance payments, payments made to secure
marketing and/or distribution rights, payments made to support research,
development, clinical studies or registration, payments in the form of
equipment or supplies, equity purchases in excess of fair market value,
etc.) from any third party in connection with the sale, transfer or
disposal (or the contemplated sale, transfer or disposal) of PRODUCT by
LICENSEE and/or its AFFILIATES, less allowances for return of PRODUCTS or
adjustments for defective quality. PRODUCT shall be deemed to have been
sold when first shipped and billed; provided, however, that when transfers
thereof are made between LICENSEE and its AFFILIATES, such PRODUCT shall
not be deemed to have been sold until sold to a purchaser independent of
LICENSEE and its AFFILIATES in a bona fide, arm's-length transaction
between unrelated parties. Payments shall accrue hereunder only once with
respect to the same unit of PRODUCT.
1.6 "PATENT RIGETS" shall mean any one or more of S/D PATENT RIGHTS, UV PATENT
RIGHTS AND PRODUCT PATENT RIGHTS.
1.6a "S/D PATENT RIGHTS" shall mean the NYBC patents and patent applications
listed on Appendix A1 hereof relating to the inactivation of viruses by the
use of organic solvents and/or detergents.
1.6b "UV PATENT RIGHTS" shall mean the NYBC patents and patent applications
listed on Appendix A2 hereof relating to the inactivation of viruses by the
use of light and/or certain compounds.
-3-
<PAGE>
1.6c "PRODUCT PATENT RIGHTS" shall mean the NYBC patents and patent applications
listed on Appendix A3 hereof relating to the manufacture and use of fibrin
sealant, fibrinogen and thrombin.
1.7 "PRODUCT(S)" shall mean any product listed on Appendix B hereof, the
manufacture, use or sale of which (1) involves the use of KNOW-HOW or (2)
is covered by a claim of PATENT RIGHTS.
1.8 "TERRITORY" shall mean worldwide.
ARTICLE II. LICENSE GRANT
2.1 Subject to paragraphs 2.5 and 2.6 hereof, NYBC grants to LICENSEE, under
the terms and conditions of this Agreement, an exclusive license, with the
right to grant sublicenses, under UV PATENT RIGHTS and PRODUCT PATENT
RIGHTS and UV KNOW-HOW and PRODUCT KNOW-HOW (a) to make, use, sell, or
otherwise dispose of PRODUCT, and (b) to use the methods covered by UV
PATENT RIGHTS and PRODUCT PATENT RIGHTS and UV KNOW-HOW and PRODUCT KNOW-
HOW for the manufacture, use and sale of PRODUCT. LICENSEE will not grant
any sublicense under UV KNOW-HOW and PRODUCT KNOW-HOW and/or UV PATENT
RIGHTS and PRODUCT PATENT RIGHTS unless it first receives the prior written
consent of NYBC, which consent will not be unreasonably withheld.
2.2 NYBC grants to LICENSEE, under the terms and conditions of this Agreement,
a non-exclusive license, with the right to grant sublicenses, under S/D
PATENT RIGHTS and S/D KNOW-HOW (a) to make, use, sell, or otherwise dispose
of PRODUCT, and (b) to use the methods covered by such S/D PATENT RIGHTS
and S/D KNOW-HOW for the manufacture, use and sale of PRODUCT. LICENSEE
will not grant any sublicense under S/D KNOW-HOW and/or S/D PATENT RIGHTS
unless it first receives the prior written consent of NYBC, which consent
will not be unreasonably withheld.
-4-
<PAGE>
2.3 The license and sublicense grant herein is limited to making, using,
selling or disposing of PRODUCT in the TERRITORY.
2.4 Nothing contained in this Agreement shall be construed or interpreted as a
grant, by implication or otherwise, of any license except as expressly
specified in paragraphs 2.1, 2.2 and 2.3 hereof. LICENSEE agrees not to
utilize the PATENT RIGHTS and KNOW-HOW licensed under this Agreement in the
development, manufacture or use of any product not listed on Appendix B
hereof, unless first permitted to do so under a separate written agreement
with NYBC.
2.5 NYBC has entered into agreements with third parties prior to the EFFECTIVE
DATE ("Prior Agreements") regarding some of the KNOW-HOW and PATENT RIGHTS
covered by this Agreement. The terms of this Agreement and licenses
granted hereunder are all subject to conflicting terms, if any, in the
Prior Agreements. All rights reserved to third parties under the Prior
Agreements shall remain so reserved and shall in no way be affected by this
Agreement. NYBC is not obligated under this Agreement to take any action
which would conflict in any respect with NYBC's past, current or future
obligations to third parties under the Prior Agreements.
2.6 NYBC shall retain the right to make and use PRODUCTS in its own
laboratories for scientific purposes and for continued research. Further,
NYBC shall have the right to make PRODUCT(S) available to other scientific
institutions and researchers for scientific and research purposes.
ARTICLE III. DISCLOSURE AND FDA FILINGS
3.1 LICENSEE acknowledges receipt of KNOW-HOW.
-5-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
3.2 NYBC shall have the right, but not the obligation, to inspect LICENSEE's
manufacturing sites, validation and/or processing records as they pertain
to the use and implementation of PATENT RIGHTS and KNOW-HOW.
3.3 For so long as LICENSEE has an exclusive license under paragraph 2.1, NYBC
grants LICENSEE a right of first negotiation for a license under any
technology developed by NYBC after the EFFECTIVE DATE of this Agreement
(and not otherwise encumbered) for use with PRODUCTS ("New Technology"). In
implementation of the foregoing, at least once a year during the term of
this Agreement, NYBC will notify LICENSEE in writing of any New Technology
developed by NYBC and, at LICENSEE's option, conduct good faith
negotiations with LICENSEE for a license under such New Technology for
PRODUCTS under terms and conditions similar to those set forth herein. If
NYBC and LICENSEE are unable to reach an agreement with respect to such New
Technology within ******** of the first notification provided by
NYBC regarding such New Technology, then NYBC shall be free to license such
technology to a third party.
3.4 No later than April 1, ****, LICENSEE shall begin clinical trials in
support of an application for approval so sell PRODUCT in the United States
of America. If such clinical trials are not initiated by LICENSEE by April
1, ****, then NYBC, at its sole option, may convert the exclusive license
granted pursuant to paragraph 2.1 to a non-exclusive license.
3.5 No later than January 1, ****, LICENSEE shall either:
(a) have completed a Phase III clinical trial in support of an application
for approval to sell PRODUCT in the United States of America; or
(b) pay to NYBC ********.
-6-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
If LICENSEE fails to complete such clinical trials by January 1, **** and
also fails to make such payment by January 1, ****, then NYBC, at its sole
option, may convert the exclusive license granted pursuant to paragraph 2.1
to a non-exclusive license.
3.6 No later than June 1, ****, LICENSEE shall either:
(a) file an application for approval to sell PRODUCT in the U.S.A. with
the appropriate government agency; or
(b) pay NYBC ********.
If LICENSEE fails to file such application by June 1, **** and also fails
to make such payment by June 1, ****, then NYBC, at its sole option, may
convert the exclusive license granted pursuant to paragraph 2.1 to a non-
exclusive license.
ARTICLE IV. PAYMENTS AND ROYALTIES
4.1 LICENSEE shall pay NYBC a running royalty at the rate of ******** of NET
REVENUES. If LICENSEE receives NET REVENUES prior to the actual sale,
transfer or disposal of PRODUCT and in the form of an upfront payment (e.g.
a payment made to secure marketing and/or distribution rights, to support
research, development, clinical trials or registration, or a payment in the
form of equipment or supplies, etc.), then LICENSEE may elect to defer
payment of royalty on the first ******** of such upfront payments for a
period of two (2) years from the date of LICENSEE's receipt of such upfront
payments. LICENSEE may make such election by providing written notice to
NYBC within ten (10) days of LICENSEE's receipt of such payment, which
notice shall describe the payment received, state the date the payment was
received and include LICENSEE's acknowledgment that royalty on such payment
is due to NYBC two (2) years after the date the payment was received by
LICENSEE. In no
-7-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
event shall LICENSEE defer more than ******** of royalty to NYBC pursuant
to this paragraph.
4.2 LICENSEE shall pay to NYBC ******** of NET PROCEEDS.
4.3 LICENSEE shall make the following payments to NYBC during the term of this
Agreement in order to maintain the exclusivity of the licenses granted
hereunder:
(a) ******** per annum, payable in four equal installments on February 1,
****, May 1, ****, August 1, **** and November 1, ****. This payment
may be credited against royalties due to NYBC, if any, for calendar
year **** under paragraph 4.1 hereof.
(b) ******** per annum, payable in four equal installments on February 1,
****, May 1, ****, August 1, **** and November 1, ****. This payment
may be credited against royalties due to NYBC, if any, for calendar
year **** under paragraph 4.1 hereof.
(c) ******** per annum, payable in four equal installments on February 1,
****, May 1, ****, August 1, **** and November 1, ****. This payment
may be credited against royalties due to NYBC, if any, for calendar
year **** under paragraph 4.1 hereof.
(d) ******** per annum, payable each year in four equal installments on
February 1, May 1, August 1 and November 1, beginning in calendar year
**** and continuing for each calendar year thereafter until
termination of this Agreement. The payment for each calendar year may
be credited against royalties due to NYBC, if any, for such calendar
year under paragraph 4.1 hereof.
-8-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
(e) NYBC, at its sole option, may convert the exclusive license granted
pursuant to paragraph 2.1 to a non-exclusive license if LICENSEE fails
to make any of the payments required by this paragraph after notice of
such failure to LICENSEE and a reasonable opportunity (ten (10) days
from receipt of notice) to cure.
4.4 LICENSEE shall make all payments due under paragraph 4.1 of this Agreement
on a quarterly basis within thirty (30) days after the end of each calendar
quarter.
4.5 All payments due under this Agreement shall be made without deductions for
taxes, assessments or other charges of any kind which may be imposed on
NYBC by any foreign government or political subdivision thereof with
respect to any amounts payable to NYBC pursuant to this Agreement, and such
taxes, assessments or other charges shall be assumed by LICENSEE.
4.6 All payments due under this Agreement shall be made in United States
dollars. All royalty calculations hereunder shall be based on the currency
in which the sale was made, with total sales converted to United States
dollars based on the exchange sate of Citibank, New York, on the first day
of the month in which the royalty becomes due.
4.7 If it is necessary for LICENSEE to pay royalties under issued patents,
patent applications or know-how to any third party in order for LICENSEE to
make, have made, use or sell PRODUCTS, LICENSEE may offset the royalties
payable to third parties on LICENSEE's sales of PRODUCTS against royalties
payable to NYBC on NET REVENUES, provided that under no circumstances may
such royalties to NYBC be reduced by more than a total of ******** (i.e.
fall below ******** of NET REVENUES) in any calendar year as a result of
such offsets.
ARTICLE V. REPORTS, RECORDS AND ACCOUNTING FOR ROYALTIES
-9-
<PAGE>
5.1 Within thirty (30) days after the end of each calendar quarter during the
term of this Agreement, LICENSEE shall forward to NYBC a written report
setting forth all NET PROCEEDS and NET REVENUES. All such information
shall be presented on a country-by-country basis and a sublicensee-by-
sublicensee basis for the previous calendar quarter and shall indicate the
amount of royalties due, together with sufficient supporting information to
enable confirmation by NYBC. LICENSEE shall also provide to NYBC a copy of
all reports received from sublicensees.
5.2 LICENSEE shall keep full and accurate books of accounts and other records
in accordance with generally accepted accounting practice, showing all
information necessary for NYBC to ascertain and verify the royalties
payable by LICENSEE hereunder. During the term of this Agreement, and for
three (3) years thereafter, NYBC shall have the right to have, at its own
expense and upon ten (10) days written notice, an independent certified
public accountant of its own choosing, inspect, during regular business
hours, said books, records, files and all supporting data relating to
records kept pursuant to this Agreement. LICENSEE also agrees to permit
NYBC, or its representatives, to make and retain copies of any and all
invoices, records and accounts kept by LICENSEE pursuant to this Agreement.
If the inspection of LICENSEE by NYBC reveals an underpayment to NYBC of
ten percent (10%) or greater, then the costs of such inspection shall be
borne by LICENSEE.
5.3 On or about June 1 of each year during the term of this Agreement, LICENSEE
shall provide a written report to NYBC describing LICENSEE's efforts to
commercialize PRODUCTS, including a description of LICENSEE's efforts to
obtain any required governmental approval to market PRODUCTS and to grant
sublicenses. NYBC agrees to keep such reports confidential, if requested
to do so by LICENSEE.
ARTICLE VI. REPRESENTATIONS
6.1 Nothing in this Agreement is or shall be construed as:
-10-
<PAGE>
(a) A warranty or representation by NYBC that anything made or used by
LICENSEE under any license granted in this Agreement is or will be
free from infringement of patents, copyrights, and other rights of
third parties; or
(b) Granting by implication, estopped, or otherwise any license, right or
interest other than as expressly set forth herein.
6.2 Except as expressly set forth in this Agreement, the parties MAKE NO
REPRESENTATIONS AND EXTEND NO WARRANTIES OF ANY KIND, EITHER EPRESS OR
IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW, STATUTE OR OTHERWISE, AND
THE PARTIES SPECIFICALLY DISCLAIM ANY IMPLIED WARRANTY OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE, OR WARRANTY OF NON-INFRINGEMENT.
6.3 LICENSEE represents and warrants that it shall not, directly or indirectly,
use NYBC's tradenames or trademarks in connection with promotions,
advertising or sales activity, without the prior written consent of NYBC.
Further, LICENSEE shall not make any use of NYBC's name without NYBC's
prior written consent, except if the use of NYBC's name is required by law,
regulation or judicial order, in which event LICENSEE will promptly inform
NYBC prior to any such required use.
6.4 LICENSEE represents and warrants that it has adequate insurance and
financial resources to cover all liability for any failure including,
without limitation, failure in design, manufacture, production and/or
operation.
ARTICLE VII. COMPLIANCE; INDEMNIFICATION
7.1 NYBC shall not be liable to LICENSEE, its AFFILIATES, its sublicenses or
any third party for any injury, illness, disease, allergy, allergic
reaction, side effect, death, or other
-11-
<PAGE>
adverse experience arising out of, or in connection with, or as a
consequence of research, manufacture, testing, advertising, sale,
distribution, or other use of PRODUCT.
7.2 LICENSEE shall conduct all of its operations relating to PRODUCT in
accordance with all applicable laws, regulations, requirements, and other
standards, which may be in effect from time-to-time, of all pertinent
governmental authorities, including, without limitation, standards for the
validation and processing of PRODUCT.
7.3 LICENSEE agrees to exercise a reasonable standard of care in conducting its
activities relating to PRODUCT, including the testing, manufacture,
packaging marketing, advertising, distribution and sale of PRODUCT.
7.4 LICENSEE agrees to indemnify, defend and hold harmless NYBC, its directors,
officers, employees and agents from and against any and all loss, damage,
demands, claims, actions and causes of action, assessments, liabilities,
costs and expenses which they may incur because of injury to or death of
any person or any other claim arising out of, or in connection with, or as
a consequence of, LICENSEE's manufacture, sale, or use of PRODUCT.
ARTICLE VIII. INFRINGEMENT
8.1 LICENSEE shall promptly provide written notification to NYBC in the event
of any third party infringement, or possible infringement, of PATENT RIGHTS
in the TERRITORY. Upon receipt of such notice, NYBC shall have the right,
at its sole discretion, to take appropriate legal action in connection
therewith. In the event that NYBC shall elect to take such action, the
conduct of the action shall be entirely directed by NYBC, and NYBC shall
pay all costs and expenses associated therewith and retain all recoveries
of any such action.
8.2 In the event NYBC decides that it will not take legal action against an
alleged infringer, LICENSEE shall have the right to take appropriate legal
action against the alleged
-12-
<PAGE>
infringer and shall pay all costs and expenses associated therewith and
retain all recoveries of any such action. LICENSEE shall not initiate or
settle or compromise any such legal action without first obtaining the
written consent of NYBC, which consent shall not be unreasonably withheld.
8.3 In the event that either party initiates or carries on legal proceedings
against an alleged infringer, then the other party shall fully cooperate
with and supply all assistance reasonably requested by the litigating
party. The non-litigating party, at its own expense, may be represented by
counsel of their choice in any such proceeding.
8.4 LICENSEE agrees to report to NYBC, promptly and in written detail, each
claim of patent infringement made by a third party against LICENSEE as a
result of LICENSEE's manufacture, use or sale of PRODUCTS.
ARTICLE IX. CONFIDENTIALITY
9.1 LICENSEE agrees not to use or disclose to any third party any KNOW-HOW
provided to it pursuant to this Agreement except as contemplated herein.
This obligation shall not apply to any information which:
(a) is or subsequently becomes known to the public through no fault of
LICENSEE;
(b) was in the possession of LICENSEE prior to disclosure by NYBC as
established by documentation provided by LICENSEE to NYBC within
thirty (30) days of disclosure of such information by NYBC to
LICENSEE;
(c) is obtained from a third party who or which has the lawful right to
disclose same to LICENSEE;
-13-
<PAGE>
(d) is disclosed to governmental authorities in response to a lawful order
or demand for disclosure, or in order to obtain required consents,
permits, licenses, or other approvals relating to the manufacture, use
or sale of PRODUCT.
9.2 LICENSEE agrees to treat as confidential the terms and conditions of this
Agreement. Further, LICENSEE agrees not to issue any press release or
other public statement disclosing the existence of, or relating to, this
Agreement without the prior written consent of NYBC.
9.3 The provisions of this Article shall survive termination, cancellation, or
expiration of this Agreement.
ARTICLE X. TERM; TERMINATION
10.1 The term of this Agreement shall be from the EFFECTIVE DATE until the later
of the seventeenth anniversary of the EFFECTIVE DATE or the last to expire
patent of PATENT RIGHTS, unless this Agreement is terminated earlier in
accordance with the provisions of this Article.
10.2 NYBC may terminate this Agreement at any time upon notice to LICENSEE if:
(a) LICENSEE fails to cure a breach of this Agreement within thirty (30)
days after notice thereof; or
(b) LICENSEE fails to make payments due under paragraph 4.1 of this
Agreement within ten (10) days after notice thereof; or
(c) LICENSEE fails in the performance of its obligation to conform to
applicable standards, regulations, or guidelines of the applicable
governmental agency,
-14-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
as determined by NYBC or governmental agency review and fails to cure
such breach within ninety (90) days after notice thereof; or
(d) LICENSEE becomes insolvent, is adjudged bankrupt, files a petition in
bankruptcy, makes an assignment for the benefit of creditors or seeks
relief generally from its debts and obligations in accordance with a
similar or analogous procedure; or
(e) LICENSEE fails to make and sell PRODUCT within ******** of the
EFFECTIVE DATE.
Upon such termination, (1) all rights in KNOW-HOW and PATENT RIGHTS shall
revert to NYBC and (2) LICENSEE will not use KNOW-HOW and PATENT RIGHTS for
any purposes whatsoever, unless permitted to do so under a separate
agreement with NYBC. Further, upon such termination and also upon the
conversion of the exclusive license granted pursuant to paragraph 2.1 to a
non-exclusive license, NYBC shall have an irrevocable paid-up non-exclusive
license, with the right to grant sublicenses, to make, use and sell within
the TERRITORY any improvements made by LICENSEE, whether patentable or not,
so long as the manufacture, use or sale of such improvements would infringe
a claim of the PATENT RIGHTS.
10.3 The expiration or earlier termination of this Agreement will not:
(a) affect the right of LICENSEE to sell PRODUCT manufactured prior to the
date of expiration or termination, provided that such sales,
notwithstanding expiration or termination, will be subject to
royalties in accordance with the provisions of Article IV and provided
further that such termination is not due to the reasons set forth in,
paragraph 10.2(c) hereof; or
-15-
<PAGE>
(b) relieve LICENSEE from any other obligation under this Agreement,
including, without limitation, obligations to forward reports,
maintain records, permit an audit or inspection and to maintain
confidentiality; or
(c) release LICENSEE from any liability resulting from an act or omission
prior to expiration or termination or an act or omission, whenever
arising, relating to the provisions of Article VII.
10.4 Invalidation by a court of last resort of any claim(s) of any or all of the
patents comprising PATENT RIGHTS shall relieve LICENSEE of its obligations
with respect to such claims; but, notwithstanding any other clause herein,
shall not terminate this Agreement.
10.5 LICENSEE may terminate this Agreement upon providing ninety (90) days prior
written notice to NYBC. Upon such termination, (1) all rights in KNOW-HOW
and PATENT RIGHTS shall revert to NYBC and (2) LICENSEE will not use KNOW-
HOW and PATENT RIGHTS for any purposes whatsoever, unless permitted to do
so under a separate agreement with NYBC. Further, upon such termination,
NYBC shall have an irrevocable paid-up non-exclusive license, with the
right to grant sublicenses, to make, use and sell within the TERRITORY any
improvements made by LICENSEE, whether patentable or not, so long as the
manufacture, use or sale of such improvements would infringe a claim of the
PATENT RIGHTS.
ARTICLE XI. NOTICES
11.1 Any notice, report or other communication required or permitted to be given
or made under this Agreement by one of the parties to the other shall be in
writing and shall be deemed to have been sufficiently given or made for all
purposes if mailed by Certified Mail, postage prepaid, or sent by
facsimile, confirmed forthwith in written dispatch as described herein,
addressed to such other party at its respective address as follows:
-16-
<PAGE>
If to NYBC:
----------
The New York Blood Center, Inc.
310 East 67th Street
New York, NY 10021-6295
Attention: Office of Patents And Licensing
cc: General Counsel
If to LICENSEE:
--------------
Melville Biologics, Inc.
155 Duryea Road
Melville, NY 11747
Attention: President
ARTICLE XII. ASSIGNMENT AND SUCCESSION
12.1 The rights and licenses granted by NYBC in this Agreement are personal to
LICENSEE and may not be assigned or otherwise transferred without the prior
written consent of NYBC. Any attempted assignment or transfer without such
consent shall be void and without effect.
12.2 NYBC may assign or otherwise transfer this Agreement to any third party or
to a subsidiary of NYBC. NYBC shall give LICENSEE written notice of such
assignment or transfer and the written agreement of such assignee or
transferee to be bound by the terms and conditions of this Agreement. Upon
such assignment or transfer and agreement by such assignee or transferee,
the term NYBC as used herein shall mean such assignee or transferee.
ARTICLE XIII. GOVERNING LAW
13.1 This Agreement shall be construed and the rights of the parties governed in
accordance with the laws of the State of New York, excluding its law of
conflict of laws. Any dispute
-17-
<PAGE>
or issue arising hereunder, including any alleged breach by LICENSEE, shall
be heard, determined and resolved by an action commenced in the federal
courts in New York City, New York, which the parties hereby agree shall
have proper jurisdiction over the issues and the parties. LICENSEE hereby
agrees to submit itself to the jurisdiction of the federal courts in New
York and waives the right to make any objection based on jurisdiction or
venue. The New York courts shall have the right to grant all relief to
which each party is or shall be entitled hereunder, including all equitable
relief as the Court may deem appropriate.
13.2 This Agreement has been prepared jointly and shall not be strictly
construed against any party.
ARTICLE XIV. ENTIRE AGREEMENT; AMENDMENT
14.1 This Agreement supersedes all prior written and oral communications between
the parties with respect to PRODUCT and sets forth the entire Agreement of
the parties with respect to the subject matter contained herein and may not
be modified or amended except as expressly stated herein or by a written
agreement duly executed by both parties hereto.
ARTICLE XV. SEVERABILITY
15.1 If any term or provision of this Agreement or the application thereof to
any person or circumstance shall to any extent be invalid or unenforceable,
the remainder of this Agreement or the application of such term or
provision to persons or circumstances other than those as to which it is
held invalid or unenforceable shall not be affected thereby and each term
and provision of this Agreement shall be valid and enforced to the fullest
extent permitted by law.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their duly authorized representatives.
-18-
<PAGE>
THE NEW YORK BLOOD CENTER, INC.
By: /s/ John W. Adamson MD
------------------------------
Name: John W. Adamson MD
----------------------------
Title: President
---------------------------
Date: Sept 21, 1995
----------------------------
MELVILLE BIOLOGICS, INC.
By: /s/ Thomas R. Ostermueller
------------------------------
Name: Thomas R. Ostermueller
----------------------------
Title: President
---------------------------
Date: 9/21/95
---------------------------
-19-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
APPENDIX A1
FOR EXCLUSIVE LICENSE AGREEMENT (#4)
FOR VIRALLY INACTIVATED FIBRIN SEALANT/ThROMBIN PRODUCTS
between
THE NEW YORK BLOOD CENTER, INC.
and
MELVILLE BIOLOGICS, INC.
S/D KNOW-HOW - 3 Pages
S/D PATENTS - 6 Pages
**************************************************************************
******************************************************************************
******************************************************************************
******************************************************************************
******************************************************************************
***************************** [9 pages omitted] ***************************
******************************************************************************
******************************************************************************
******************************************************************************
******************************************************************
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
APPENDIX A2
FOR EXCLUSIVE LICENSE AGREEMENT (#4)
FOR VIRALLY INACTIVATED FIBRIN SEALANT/THROMBIN PRODUCTS
between
THE NEW YORK BLOOD CENTER, INC.
and
MELVILLE BIOLOGICS, INC.
UV KNOW-HOW - 2 Pages
UV PATENTS - 2 Pages
**************************************************************************
******************************************************************************
******************************************************************************
******************************************************************************
******************************************************************************
***************************** [4 pages omitted] ***************************
******************************************************************************
******************************************************************************
******************************************************************************
******************************************************************
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
APPENDIX A3
FOR EXCLUSIVE LICENSE AGREEMENT (#4)
FOR VIRALLY INACTIVATED FIBRIN SEALANT/THROMBIN PRODUCTS
between
THE NEW YORK BLOOD CENTER, INC.
and
MELVILLE BIOLOGICS, INC.
PRODUCT KNOW-HOW - 1 Page
PRODUCT PATENTS - 1 Page
**************************************************************************
******************************************************************************
******************************************************************************
******************************************************************************
******************************************************************************
***************************** [2 pages omitted] ***************************
******************************************************************************
******************************************************************************
******************************************************************************
******************************************************************
<PAGE>
APPENDIX B
PRODUCTS
--------
Fibrin Sealant
(Fibrinogen and Thrombin)
Thrombin
Fibrinogen
-26-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
[LETTERHEAD OF NEW YORK BLOOD CENTER APPEARS HERE]
September 27, 1996
Mr. Thomas R. Ostemueller
President and Chief Executive Officer
V.I. TECHNOLOGIES, INC.
155 Duryea Road
Melville, New York 11747
Re: EXCLUSIVE LICENSE AGREEMENT (#4) FOR VIRALLY INACTIVATED FIBRIN
SEALANT/THROMBIN PRODUCTS BETWEEN THE NEW YORK BLOOD CENTER, INC. ("NYBC")
AND MELVILLE BIOLOGICS, INC. (NOW V.I. TECHNOLOGIES, INC.), EFFECTIVE
OCTOBER 26, 1995 ("LICENSE AGREEMENT") - AMENDMENT I
Dear Tom:
In connection with the Exclusive Distribution Agreement of September 11, 1996
between your Company and United States Surgical Corporation, you have requested
an amendment of the above-identified Exclusive License Agreement with respect
to the possible institution of patent infringement actions against third
parties. NYBC is willing to amend the Exclusive License Agreement by the
addition of the following new Paragraph 8.5 to ARTICLE VIII. INFRINGEMENT:
8.5 Notwithstanding the provisions of Paragraphs 8.1 - 8.4 above, if, at any
time during the Term of the Exclusive Distribution Agreement between V.I
Technologies, Inc. (Formerly Melville Biologics, Inc., and referred to
herein as LICENSEE) and United States Surgical Corporation ("USSC") dated
September 11, 1996 ("the Distribution Agreement"), either NYBC or LICENSEE
or USSC becomes aware of any infringement by a third party of any of the
PRODUCT PATENT RIGHTS (which are included in the definition of IPR in the
Distribution Agreement) with respect to the manufacture or sale of any
product listed on APPENDIX B hereof, then NYBC and LICENSEE agree that ****
***********************************************************************
***************************************************************************
**************************************************************************
**********************************************************************
**********************************************************************
**********************************************************************
**************************************************************************
********************************************************************
**********************************************************************
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
Page 2 - (TRO - Exclusive L.A)
*****************************************************************
**************************************************************************
******************************************************************
*************************************************************************
************************************************************************
*********************************
With the exception of the addition set forth above, all the terms and conditions
of the captioned License Agreement shall remain in full force and effect.
If the foregoing is acceptable to your Company, please sign the enclosed copy of
this letter and return it to us. Our signature on this letter will serve to
confirm the amendment of the Exclusive License Agreement to include the new
Paragraph 8.5 as set forth above.
Sincerely yours,
/s/ John W. Adamson
- -------------------------
John W. Adamson, M.D.
President
New York Blood Center, Inc.
AGREED TO AND ACCEPTED BY:
/s/ Thomas R. Ostermueller
-------------------------------------
Thomas R. Ostermueller
President and Chief Executive Officer
V.I. Technologies, Inc.
(Formerly, Melville Biologics, Inc.)
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
SECOND AMENDMENT TO THE EXCLUSIVE LICENSE AGREEMENT (#4)
FOR VIRALLY INACTIVATED FIBRIN SEALANT/THROMBIN PRODUCTS
between THE NEW YORK BLOOD CENTER, INC. and
MELVILLE BIOLOGICS, INC. (now V.I. Technologies, Inc., or VITEX)
This Second Amendment, effective January 1, 1998, is made and
entered into by and between The New York Blood Center, Inc. ("NYBC"), a New York
not-for-profit corporation, having an office at 310 East 67th Street, New York,
NY 10021 and V.I. Technologies, Inc. (formerly known as Melville Biologics,
Inc.), a Delaware corporation, having an office at 155 Duryea Road, Melville, NY
11747 ("LICENSEE").
WHEREAS, NYBC and LICENSEE entered into an Exclusive License
Agreement (#4) for Virally Inactivated Fibrin Sealant/Thrombin Products,
Effective October 26, 1995, and, thereafter, entered into an Amendment of the
License Agreement on September 27, 1996 (collectively "the Agreement"); and,
WHEREAS, the parties wish to make further changes to the
Agreement;
NOW, THEREFORE, in consideration of the mutual covenants
contained in the Agreement and in this Second Amendment and other good and
valuable consideration the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
1. Paragraph 3.5 of the Agreement is hereby deleted and
replaced with the following:
No later than August 1, ****, LICENSEE shall either:
(a) have completed a Phase III clinical trial in support of an
application for approval to sell PRODUCT in the United
States of America; or
(b) pay to NYBC ********
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
If LICENSEE fails to complete such clinical trials by August 1,
**** and also fails to make such payment by August 1, ****, then
NYBC, at its sole option, may convert the exclusive license
granted pursuant to paragraph 2.1 to a non-exclusive license.
2. Paragraph 3.6 of the Agreement is hereby deleted and
replaced with the following:
No later than December 31, ****, LICENSEE shall either:
(a) file an application for approval to sell PRODUCT in the
U.S.A. with the appropriate government agency; or
(b) pay NYBC ********
If LICENSEE fails to file such application by December 31, ****
and also fails to make such payment by December 31, ****, then
NYBC, at its sole option, may convert the exclusive license
granted pursuant to paragraph 2.1 to a non-exclusive license.
3. NYBC acknowledges the prior receipt of ********
from LICENSEE, ******** of which was applied to satisfy the payments due to NYBC
under paragraph 4.3(a) and ******** was applied to partially satisfy the
payments due to NYBC under paragraph 4.3(b).
4. This Second Amendment shall be deemed to be incorporated
into the Agreement in full and to be an integral part thereof as though fully
set forth therein. With the exception of the above amendment, all other
provisions of the Agreement shall remain in full force and effect.
-2-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have entered into and
executed this Second Amendment on the date first above written.
NEW YORK BLOOD CENTER, INC. V.I. TECHNOLOGIES, INC.
By:____________________________ By:_______________________________
Name:__________________________ Name:_____________________________
Title:_________________________ Title:____________________________
-3-
<PAGE>
EXHIBIT 10.8
["****" indicates material omitted and filed separately with Securities and
Exchange Commission pursuant to a request for confidential treatment.]
EXCLUSIVE LICENSE AGREEMENT (#5)
FOR VIRALLY INACTIVATED CELLULAR PRODUCTS
between
THE NEW YORK BLOOD CENTER, INC.
and
MELVILLE BIOLOGICS, INC.
-----------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE I. DEFINITIONS....................................................... 1
1.1. "AFFILIATE"............................................................ 1
1.2. "CONTRACT MANUFACTURING"............................................... 2
1.3. "CONTRACT MANUFACTURING SALES"......................................... 2
1.4. "DIRECT SALES"......................................................... 3
1.5. "EFFECTIVE DATE"....................................................... 3
1.6. "KNOW-HOW"............................................................. 3
1.7. "MILES AGREEMENTS"..................................................... 3
1.8. "NET PROCEEDS"......................................................... 4
1.9. "PATENT RIGHTS"........................................................ 4
1.10. "PRODUCT(S)"........................................................... 5
1.11. "SUBLICENSEE DIRECT SALES"............................................. 5
1.12. "SUBLICENSEE CONTRACT MANUFACTURING SALES"............................. 5
1.13. "SUPPLIERS/PURCHASERS"................................................. 6
1.14. "TERRITORY"............................................................ 6
1.15. "UNIT(S)".............................................................. 6
ARTICLE II. LICENSE GRANT .................................................. 6
ARTICLE III. DISCLOSURE, IMPROVEMENTS AND FDA
FILINGS......................................................... 7
ARTICLE IV. PAYMENTS AND ROYALTIES ......................................... 9
ARTICLE V. REPORTS, RECORDS AND ACCOUNTING FOR
ROYALTIES....................................................... 12
ARTICLE VI. REPRESENTATIONS................................................. 13
ARTICLE VII. COMPLIANCE; INDEMNIFICATION..................................... 14
ARTICLE VIII. INFRINGEMENT.................................................... 15
ARTICLE IX. CONFIDENTIALITY................................................. 16
ARTICLE X. TERM; TERMINATION............................................... 17
ARTICLE XI. NOTICES......................................................... 20
ARTICLE XII. ASSIGNMENT AND SUCCESSION....................................... 21
ARTICLE XIII. GOVERNING LAW................................................... 21
ARTICLE XIV. ENTIRE AGREEMENT; AMENDMENT..................................... 22
ARTICLE XV. SEVERABILITY.................................................... 22
</TABLE>
-i-
<PAGE>
EXCLUSIVE LICENSE AGREEMENT
FOR VIRALLY INACTIVATED CELLULAR PRODUCTS
-----------------------------------------
AGREEMENT effective as of the EFFECTIVE DATE, by and between The New York
Blood Center, Inc. ("NYBC"), having an office at 310 East 67th Street, New York,
New York 10021, U.S.A., and Melville Biologics, Inc., a Delaware Corporation,
having an office at 155 Duryea Road, Melville, New York 11747, U.S.A.
("LICENSEE").
WHEREAS, NYBC has developed know-how and patent rights relating to virus
inactivation technology for use with cellular products; and
WHEREAS, LICENSEE desires to acquire an exclusive license under such NYBC
know-how and patent rights for the manufacture and sale of such products; and
NOW, THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, the receipt of which is hereby
acknowledged, NYBC and LICENSEE mutually agree as follows:
ARTICLE I. DEFINITIONS
As used in this Agreement, the following terms shall be defined as set
forth below:
1.1. "AFFILIATE" shall mean a corporation or other business entity controlled
by, controlling or under common control with a party. For this purpose,
control of a corporation or other business entity shall mean direct or
indirect beneficial ownership of fifty percent (50%) or more of the
voting interest in, or a fifty percent (50%) or greater interest in the
equity of, such corporation or other business entity, or the maximum
percentage that a foreign investor may own, if equal to or less than
fifty percent (50%), pursuant to local laws, customs or regulations of
any country, but such corporation, or other business entity, shall be
deemed to be an AFFILIATE for only
<PAGE>
so long as such ownership or control exists. Notwithstanding anything
herein to the contrary, for the purposes of this Agreement, NYBC is not
an AFFILIATE of LICENSEE.
1.2. "CONTRACT MANUFACTURING" shall mean the viral inactivation processing by
LICENSEE (or a sublicensee) of material supplied by or on behalf of
SUPPLIERS/PURCHASERS such that the material becomes PRODUCT, which
PRODUCT (or its equivalent) is intended for sale and/or distribution by
such SUPPLIERS/PURCHASERS.
1.3. "CONTRACT MANUFACTURING SALES" shall mean the product of the number of
UNITS produced by CONTRACT MANUFACTURING and shipped to
SUPPLIERS/PURCHASERS times the price at which each UNIT is sold by the
SUPPLIERS/PURCHASERS to third parties, less allowances for return of
PRODUCTS or adjustments for defective quality. PRODUCT shall be deemed
to have been sold when first shipped and billed; provided, however, that
when transfers thereof are made between SUPPLIERS/PURCHASERS and their
affiliates, such PRODUCT shall not be deemed to have been sold until
sold to a purchaser independent of SUPPLIERS/PURCHASERS and their
affiliates in a bona fide, arm's-length transaction between unrelated
parties. Payments shall accrue hereunder only once with respect to the
same UNIT of PRODUCT.
1.4. "DIRECT SALES" shall mean the total consideration received by LICENSEE
and/or its AFFILIATES from the sale, transfer or disposal of PRODUCT to
third parties, exclusive of amounts received by LICENSEE and its
AFFILIATES as a result of CONTRACT MANUFACTURING, less allowances for
return of PRODUCTS or adjustments for defective quality. PRODUCT shall
be deemed to have been sold when first shipped and billed; provided,
however, that when transfers thereof are made between LICENSEE and its
AFFILIATES, such PRODUCT shall not be deemed to have been sold until
sold to a purchaser independent of LICENSEE and its
-2-
<PAGE>
AFFILIATES in a bona fide, arm's-length transaction between unrelated
parties. Payments shall accrue hereunder only once with respect to the
same UNIT of PRODUCT.
1.5. "EFFECTIVE DATE" of this Agreement shall mean the date of closing of
the sale of shares of common stock of LICENSEE to one or more funds
controlled by Ampersand Ventures, so long as this occurs prior to
December 1, 1995.
1.6. "KNOW-HOW" shall mean the NYBC proprietary technical information
relating to the inactivation of viruses by the use of light and/or
certain compounds and the removal of process chemicals from labile
biological mixtures as described generally on Appendix A hereof.
1.7. "MILES AGREEMENTS" shall mean the following agreements:
(a) the Reimbursement and Security Agreement dated February 7, 1995
between Melville Biologics, Inc. and Miles Inc.;
(b) the Mortgage, Security Agreement and Fixture Filing dated
February 7, 1995 between Melville Biologics, Inc. and Miles Inc.;
(c) the Lease Agreement dated February 7, 1995 between Melville
Biologics, Inc. and Miles Inc.;
(d) the Agreement for Custom Processing dated February 7, 1995
between Melville Biologics, Inc. and Miles Inc.; and
(e) the Term Note dated February 7, 1995 between Melville Biologics,
Inc. and PNC Bank, National Association.
-3-
<PAGE>
1.8. "NET PROCEEDS" shall mean the total consideration received by LICENSEE
in any form (including without limitation upfront payments, license
signing and maintenance fees, minimum payments, royalties, research and
development funds, equipment and supplies, equity purchases in excess of
fair market value, etc.) from any third party or parties for a
sublicense (or other right, license, privilege or immunity) to make (or
have made by a third party), use and sell (or otherwise dispose of) a
PRODUCT. NET PROCEEDS does not include DIRECT SALES and amounts received
as a result of CONTRACT MANUFACTURING by LICENSEE.
1.9. "PATENT RIGHTS" mean the NYBC patents and patent applications listed on
Appendix A hereof relating to the inactivation of viruses by the use of
light and/or certain compounds and the removal of process chemicals from
labile biological mixtures.
1.10. "PRODUCT(S)" shall mean any product listed on Appendix B hereof, the
manufactures use or sale of which (1) involves the use of KNOW-HOW or
(2) is covered by a claim of PATENT RIGHTS.
1.11. "SUBLICENSEE DIRECT SALES" shall mean the total consideration received
by a sublicensee and/or its affiliates from the sale, transfer or
disposal of PRODUCT to third parties, exclusive of amounts received by
sublicensees and their affiliates as a result of CONTRACT Manufacturing,
less allowances for return of PRODUCTS or adjustments for defective
quality. PRODUCT shall be deemed to have been sold when first shipped
and billed; provided, however, that when transfers thereof are made
between a sublicensee and its affiliates, such PRODUCT shall not be
deemed to have been sold until sold to a purchaser independent of the
sublicensee and its affiliates in a bona fide, arm's-length transaction
between unrelated parties. Payments shall accrue hereunder only once
with respect to the same UNIT of PRODUCT.
1.12. "SUBLICENSEE CONTRACT MANUFACTURING SALES" shall mean the product of the
number of UNITS produced by CONTRACT MANUFACTURING by a sublicensee
-4-
<PAGE>
and shipped to SUPPLIERS/PURCHASERS times the price at which each UNIT
is sold by the SUPPLIERS/PURCHASERS to third parties, less allowances
for return of PRODUCTS or adjustments for defective quality. PRODUCT
shall be deemed to have been sold when first shipped and billed;
provided, however, that when transfers thereof are made between
SUPPLIERS/PURCHASERS and their affiliates, such PRODUCT shall not be
deemed to have been sold until sold to a purchaser independent of
SUPPLIERS/PURCHASERS and their affiliates in a bona fide, arms-length
transaction between unrelated parties. Payments shall accrue hereunder
only once with respect to the same UNIT of PRODUCT.
1.13. "SUPPLIERS/PURCHASERS" shall mean non-AFFILIATES of LICENSEE (or a
sublicensee) who receive PRODUCT from LICENSEE (or a sublicensee) as a
result of CONTRACT MANUFACTURING and who sell and/or resell PRODUCT to
third parties.
1.14. "TERRITORY" shall mean worldwide.
1.15. "UNIT(S)" shall mean PRODUCT packaged for sale in a single container and
intended for use by consumers/patients.
ARTICLE II. LICENSE GRANT
2.1. Subject to paragraph 2.4 hereof, NYBC grants to LICENSEE, under the
terms and conditions of this Agreement, an exclusive license, with the
right to grant sublicenses, under PATENT RIGHTS and KNOW-HOW (a) to
make, use, sell, or otherwise dispose of PRODUCT, and (b) to use the
methods covered by such PATENT RIGHTS and KNOW-HOW for the manufacture,
use and sale of PRODUCT. LICENSEE will not grant any sublicense under
KNOW-HOW and/or PATENT RIGHTS unless it first receives the prior written
consent of NYBC, which consent will not be unreasonably withheld.
-5-
<PAGE>
2.2. The license and sublicense grant herein is limited to making, using,
selling, or disposing of PRODUCT in the TERRITORY.
2.3. Nothing contained in this Agreement shall be construed or interpreted as
a grant, by implication or otherwise, of any license except as expressly
specified in paragraphs 2.1 and 2.2 hereof. LICENSEE agrees not to
utilize the PATENT RIGHTS and KNOW-HOW licensed under this Agreement in
the development, manufacture or use of any product not listed on
Appendix B hereof, unless first permitted to do so under a separate
written agreement with NYBC.
2.4. NYBC shall retain the right to make and use PRODUCTS in its own
laboratories for scientific purposes and for continued research.
Further, NYBC shall have the right to make PRODUCTS available to other
scientific institutions and researchers for scientific and research
purposes.
ARTICLE III. DISCLOSURE, IMPROVEMENTS AND FDA FILINGS
3.1. LICENSEE acknowledges receipt of KNOW-HOW.
3.2. NYBC shall have the right, but not the obligation, to inspect LICENSEE's
manufacturing sites, validation and/or processing records as they
pertain to the use and implementation of PATENT RIGHTS and KNOW-HOW.
3.3. For so long as LICENSEE has an exclusive license under paragraph 2.1,
NYBC hereby grants LICENSEE a right of first negotiation for a license
under any technology developed by NYBC after the EFFECTIVE DATE of this
Agreement (and not otherwise encumbered) in the field of viral
inactivation for use with PRODUCTS ("New Technology"). In implementation
of the foregoing, at least once a year during the term of this
Agreement, NYBC will notify LICENSEE in writing of any New Technology
developed by NYBC and, at LICENSEE's option, conduct good faith
negotiations with
-6-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
LICENSEE for a license under such New Technology for PRODUCTS under
terms and conditions similar to those set forth herein. If NYBC and
LICENSEE are unable to reach an agreement with respect to such New
Technology within ******** of the first notification provided by
NYBC regarding such New Technology, then NYBC shall be free to license
such technology to a third party.
3.4. In each of calendar years ********, LICENSEE shall spend a minimum of
******** (direct costs only) per annum, exclusively in the further
development, evaluation and registration of PRODUCTS.
3.5. Within ninety days (90) of the end of calendar year 1996, 1997 and 1998,
LICENSEE shall provide NYBC with a report detailing the progress made in
the development, evaluation and registration of PRODUCTS and including a
detailed accounting of all expenditures made in the preceding year by
LICENSEE exclusively for the development, evaluation and registration of
PRODUCTS. NYBC shall have the unfettered right to confirm the accuracy
of all aspects of the detailed accounting provided by LICENSEE.
3.6. If LICENSEE does not fulfill its obligations under paragraph 3.4 above
for any one of calendar years ********, then NYBC, at its sole option,
may terminate this Agreement, upon ten days (10) written notice to
LICENSEE. Upon termination of this Agreement pursuant to this paragraph,
NYBC shall have an irrevocable, paid-up, non-exclusive license, with the
right to grant sublicenses, to make, use and sell within the TERRITORY
any improvements made by LICENSEE, whether patentable or not, so long as
the manufacture, use or sale of such improvements would infringe a claim
of the PATENT RIGHTS.
-7-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
ARTICLE IV. PAYMENTS AND ROYALTIES
4.1. LICENSEE shall pay NYBC a running royalty at the rate of ******** of
DIRECT SALES and ******** of CONTRACT MANUFACTURING SALES.
4.2. LICENSEE shall pay to NYBC, on a quarterly basis, the greater of
******** of NET PROCEEDS received from each sublicensee or ******** of
the SUBLICENSEE DIRECT SALES and ******** of SUBLICENSEE CONTRACT
MANUFACTURING SALES.
4.3. LICENSEE shall make the following payments to NYBC during the term of
this Agreement in order to maintain the licenses granted hereunder:
(a) ******** per annum, payable in four equal installments on February
1, ****, May 1, ****, August 1, **** and November 1, ****. This
payment may be credited against royalties due to NYBC, if any, for
calendar year **** under paragraphs 4.1 and 4.2 hereof.
(b) ******** per annum, payable in four equal installments on February
1, ****, May 1, ****, August 1, **** and November 1, ****. This
payment may be credited against royalties due to NYBC, if any, for
calendar year **** under paragraphs 4.1 and 4.2 hereof.
(c) ******** per annum, payable each year in four equal installments on
February 1, May 1, August 1 and November 1, beginning in calendar
year **** and continuing for each calendar year thereafter until
termination of this Agreement. The payment for each calendar year
may be credited against royalties due to NYBC, if any, for such
calendar year under paragraphs 4.1 and 4.2 hereof.
-8-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
(d) NYBC, at its sole option, may terminate this Agreement if LICENSEE
fails to make any of the payments required by this paragraph after
notice of such failure to LICENSEE and a reasonable opportunity (ten
(10) days from receipt of notice) to cure.
4.4. LICENSEE shall make all payments due under paragraphs 4.1 and 4.2 of
this Agreement on a quarterly basis within thirty (30) days after the
end of each calendar quarter.
4.5. All payments due under this Agreement shall be made without deductions
for taxes, assessments or other charges of any kind which may be imposed
on NYBC by any foreign government or political subdivision thereof with
respect to any amounts payable to NYBC pursuant to this Agreement, and
such taxes, assessments or other charges shall be assumed by LICENSEE.
4.6. All payments due under this Agreement shall be made in United States
dollars. All royalty calculations hereunder shall be based on the
currency in which the sale was made, with total sales converted to
United States dollars based on the exchange rate of Citibank, New York,
on the first day of the month in which the royalty becomes due.
4.7. LICENSEE will make a reasonable quantity of PRODUCTS available for
purchase by NYBC, ** *** **** *********** *** ***** ** ***** *** *******
*** ***** **** ********* *** ******** **** ** ******** ** ***** ** *****
***** *** ***** ******* ** **** ***** ** ******* ** *** ******* *******
LICENSEE shall be relieved of its obligations under this paragraph if
elimination of NYBC's most favored customer status is required in order
to achieve a development and distribution agreement with a third party.
4.8. If it is necessary for LICENSEE to pay royalties under issued patents,
patent applications or know-how to any third party in order for LICENSEE
to make, have made, use or sell PRODUCTS, LICENSEE may offset ********
of the royalties payable to third
-9-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
parties on LICENSEE's sales of PRODUCT against royalties payable to NYBC
on DIRECT SALES and CONTRACT MANUFACTURING SALES, provided that under no
circumstances may such royalties to NYBC be reduced by more than a total
of ******** (i.e. fall below ******** of DIRECT SALES and CONTRACT
MANUFACTURING SALES) in any calendar year as a result of such offsets.
-10-
<PAGE>
ARTICLE V. REPORTS, RECORDS AND ACCOUNTING FOR ROYALTIES
5.1. Within thirty (30) days after the end of each calendar quarter during
the term of this Agreement, LICENSEE shall forward to NYBC a written
report setting forth all NET PROCEEDS, SUBLICENSEE DIRECT SALES,
SUBLICENSEE CONTRACT MANUFACTURING SALES, DIRECT SALES and CONTRACT
MANUFACTURING SALES. All such information shall be presented on a
country-by-country basis and a sublicensee-by-sublicensee basis for the
previous calendar quarter and shall indicate the amount of royalties
due, together with sufficient supporting information to enable
confirmation by NYBC. LICENSEE shall also provide to NYBC a copy of all
reports received from sublicensees.
5.2. LICENSEE shall keep full and accurate books of accounts and other
records in accordance with generally accepted accounting practice,
showing all information necessary for NYBC to ascertain and verify the
royalties payable by LICENSEE hereunder. During the term of this
Agreement, and for three (3) years thereafter, NYBC shall have the right
to have, at its own expense and upon ten (10) days written notice, an
independent certified public accountant of its own choosing, inspect,
during regular business hours, said books, records, files and all
supporting data relating to records kept pursuant to this Agreement.
LICENSEE also agrees to permit NYBC, or its representatives, to make and
retain copies of any and all invoices, records and accounts kept by
LICENSEE pursuant to this Agreement. If the inspection of LICENSEE by
NYBC reveals an underpayment to NYBC of ten percent (10%) or greater,
then the costs of such inspection shall be borne by LICENSEE.
5.3. On or about April 1, 1997 and each year thereafter during the term of
this Agreement, LICENSEE shall provide a written report to NYBC
describing LICENSEE's efforts to commercialize PRODUCTS, including a
description of LICENSEE's efforts to obtain any required governmental
approval to market PRODUCTS and to grant sublicenses and, when required
by paragraphs 3.4 and 3.5, a detailed accounting of all monies spent by
-11-
<PAGE>
LICENSEE in the preceding calendar year exclusively for the development,
evaluation and registration of PRODUCTS. NYBC agrees to keep such
reports confidential.
ARTICLE VI. REPRESENTATIONS
6.1. Nothing in this Agreement is or shall be construed as:
(a) A warranty or representation by NYBC that anything made or used by
LICENSEE under any license granted in this Agreement is or will be
free from infringement of patents, copyrights, and other rights of
third parties; or
(b) Granting by implication, estoppel, or otherwise any license, right
or interest other than as expressly set forth herein.
6.2. Except as expressly set forth in this Agreement, the parties MAKE NO
REPRESENTATIONS AND EXTEND NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR
IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW, STATUTE OR OTHERWISE,
AND THE PARTIES SPECIFICALLY DISCLAIM ANY IMPLIED WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OR WARRANTY OF NON-
INFRINGEMENT.
6.3. LICENSEE represents and warrants that it shall not, directly or
indirectly, use NYBC's tradenames or trademarks in connection with
promotions, advertising or sales activity, without the prior written
consent of NYBC. Further, LICENSEE shall not make any use of NYBC's name
without NYBC's prior written consent, except if the use of NYBC's name
is required by law, regulation or judicial order, in which event
LICENSEE will promptly inform NYBC prior to any such required use.
-12-
<PAGE>
6.4. LICENSEE represents and warrants that it has adequate insurance and
financial resources to cover all liability for any failure including,
without limitation, failure in design, manufacture, production and/or
operation.
ARTICLE VII. COMPLIANCE; INDEMNIFICATION
7.1. NYBC shall not be liable to LICENSEE, its AFFILIATES, its sublicenses or
any third party for any injury, illness, disease, allergy, allergic
reaction, side effect, death, or other adverse experience arising out of,
or in connection with, or as a consequence of research, manufacture,
testing, advertising, sale, distribution, or other use of PRODUCT.
7.2. LICENSEE shall conduct all of its operations relating to PRODUCT in
accordance with all applicable laws, regulations, requirements, and other
standards, which may be in effect from time-to-time, of all pertinent
governmental authorities, including, without limitation, standards for the
validation and processing of PRODUCT.
7.3. LICENSEE agrees to exercise a reasonable standard of care in conducting its
activities relating to PRODUCT, including the testing, manufacture,
packaging, marketing, advertising, distribution and sale of PRODUCT.
7.4. LICENSEE agrees to indemnify, defend and hold harmless NYBC, its
directors, officers, employees and agents from and against any and all
loss, damage, demands, claims, actions and causes of action, assessments,
liabilities, costs and expenses which they may incur because of injury to
or death of any person or any other claim arising out of, or in connection
with, or as a consequence of, LICENSEE's manufacture, sale, or use of
PRODUCT.
-13-
<PAGE>
ARTICLE VIII. INFRINGEMENT
8.1. LICENSEE shall promptly provide written notification to NYBC in the event
of any third party infringement, or possible infringement, of PATENT RIGHTS
in the TERRITORY. Upon receipt of such notice, NYBC shall have the right,
at its sole discretion, to take appropriate legal action in connection
therewith. In the event that NYBC shall elect to take such action, the
conduct of the action shall be entirely directed by NYBC, and NYBC shall
pay all costs and expenses associated therewith and retain all recoveries
of any such action.
8.2. In the event NYBC decides that it will not take legal action against an
alleged infringer, LICENSEE shall have the right to take appropriate legal
action against the alleged infringer and shall pay all costs and expenses
associated therewith and retain all recoveries of any such action.
LICENSEE shall not initiate or settle or compromise any such legal action
without first obtaining the written consent of NYBC, which consent shall
not be unreasonably withheld.
8.3. In the event that either party initiates or carries on legal proceedings
against an alleged infringer, then the other party shall fully cooperate
with and supply all assistance reasonably requested by the litigating
party. The non-litigating party, at its own expense, may be represented by
counsel of their choice in any such proceeding.
8.4. LICENSEE agrees to report to NYBC, promptly and in written detail, each
claim of patent infringement made by a third party against LICENSEE as a
result of LICENSEE's manufacture, use or sale of PRODUCTS.
ARTICLE IX. CONFIDENTIALITY
9.1. LICENSEE agrees not to use or disclose to any third party any KNOW-HOW
provided to it pursuant to this Agreement except as contemplated herein.
This obligation shall not apply to any information which:
-14-
<PAGE>
(a) is or subsequently becomes known to the public through no fault of
LICENSEE;
(b) was in the possession of LICENSEE prior to disclosure by NYBC as
established by documentation provided by LICENSEE to NYBC within
thirty (30) days of disclosure of such information by NYBC to
LICENSEE;
(c) is obtained from a third party who or which has the lawful right to
disclose same to LICENSEE;
(d) is disclosed to governmental authorities in response to a lawful
order or demand for disclosure, or in order to obtain required
consents, permits, licenses, or other approvals relating to the
manufacture, use or sale of PRODUCT.
9.2. LICENSEE agrees to treat as confidential the terms and conditions of this
Agreement. Further, LICENSEE agrees not to issue any press release or
other public statement disclosing the existence of, or relating to, this
Agreement without the prior written consent of NYBC.
9.3. The provisions of this Article shall survive termination, cancellation,
or expiration of this Agreement.
ARTICLE X. TERM; TERMINATION
10.1. The term of this Agreement shall be from the EFFECTIVE DATE until the
later of the seventeenth anniversary of the EFFECTIVE DATE or the last to
expire patent of PATENT RIGHTS, unless this Agreement is terminated
earlier in accordance with the provisions of this Article.
10.2. NYBC may terminate this Agreement at any time upon notice to LICENSEE if:
-15-
<PAGE>
(a) LICENSEE fails to cure a breach of this Agreement within thirty (30)
days after notice thereof; or
(b) LICENSEE fails to make payments due under paragraphs 4.1, 4.2 or 4.3
of this Agreement within ten (10) days after notice thereof; or
(c) LICENSEE fails to meet its obligations under paragraphs 3.4, 3.5 or
3.6 of this Agreement; or
(d) LICENSEE fails in the performance of its obligation to conform to
applicable standards, regulations, or guidelines of the applicable
governmental agency, as determined by NYBC or governmental agency
review and fails to cure such breach within ninety (90) days after
notice thereof; or
(e) LICENSEE becomes insolvent, is adjudged bankrupt, files a petition
in bankruptcy, makes an assignment for the benefit of creditors or
seeks relief generally from its debts and obligations in accordance
with a similar or analogous procedure; or
(f) LICENSEE fails to make and sell PRODUCT within seven (7) years of
the EFFECTIVE DATE; or
(g) an Event of Default or a default occurs prior to February 1, 1997
under any one or more of the MILES AGREEMENTS.
Upon such termination, (1) all rights in KNOW-HOW and PATENT RIGHTS shall
revert to NYBC and (2) LICENSEE will not use KNOW-HOW and PATENT RIGHTS
for any purposes whatsoever, unless permitted to do so under a separate
agreement with NYBC. Further, upon such termination, NYBC shall have an
irrevocable paid-up, non-exclusive license, with the right to grant
sublicenses, to make, use and sell within the TERRITORY any improvements
made by LICENSEE, whether patentable or not, so long as the
-16-
<PAGE>
manufacture, use or sale of such improvements would infringe a claim of
the PATENT RIGHTS.
10.3. The expiration or earlier termination of this Agreement will not:
(a) affect the right of LICENSEE to sell PRODUCT manufactured prior to
the date of expiration or termination, provided that such sales,
notwithstanding expiration or termination, will be subject to
royalties in accordance with the provisions of Article IV and
provided further that such termination is not due to the reasons set
forth in, paragraph 10.2(d) hereof; or
(b) relieve LICENSEE from any other obligation under this Agreement,
including, without limitation, obligations to forward reports,
maintain records, permit an audit or inspection and to maintain
confidentiality; or
(c) release LICENSEE from any liability resulting from an act or
omission prior to expiration or termination or an act or omission,
whenever arising, relating to the provisions of Article VII.
10.4. Invalidation by a court of last resort of any claim(s) of any or all of
the patents comprising PATENT RIGHTS shall relieve LICENSEE of its
obligations with respect to such claims; but, notwithstanding any other
clause herein, shall not terminate this Agreement.
10.5. LICENSEE may terminate this Agreement upon providing ninety (90) days
prior written notice to NYBC. Upon such termination, (1) all rights in
KNOW-HOW and PATENT RIGHTS shall revert to NYBC and (2) LICENSEE will not
use KNOW-HOW and PATENT RIGHTS for any purposes whatsoever, unless
permitted to do so under a separate agreement with NYBC. Further, upon
such termination, NYBC shall have an irrevocable paid-up, non-exclusive
license, with the right to grant sublicenses, to make, use and sell
within the TERRITORY any improvements made by LICENSEE, whether
-17-
<PAGE>
patentable or not, so long as the manufacture, use or sale of such
improvements would infringe a claim of the PATENT RIGHTS.
ARTICLE XI. NOTICES
11.1. Any notice, report or other communication required or permitted to be
given or made under this Agreement by one of the parties to the other
shall be in writing and shall be deemed to have been sufficiently given
or made for all purposes if mailed by Certified Mail, postage prepaid, or
sent by facsimile, confirmed forthwith in written dispatch as described
herein, addressed to such other party at its respective address as
follows:
If to NYBC:
----------
The New York Blood Center, Inc.
310 East 67th Street
New York, NY 10021-6295
U.S.A.
Attention: Office of Patents And Licensing
cc: General Counsel
If to LICENSEE:
--------------
Melville Biologics, Inc.
155 Duryea Road
Melville, New York 11747
U.S.A.
Attention: President
ARTICLE XII. ASSIGNMENT AND SUCCESSION
12.1. The rights and licenses granted by NYBC in this Agreement are personal to
LICENSEE and may not be assigned or otherwise transferred without the
prior written consent of NYBC. Any attempted assignment or transfer
without such consent shall be void and without effect.
-18-
<PAGE>
12.2. NYBC may assign or otherwise transfer this Agreement to any third party
or to a subsidiary of NYBC. NYBC shall give LICENSEE written notice of
such assignment or transfer and the written agreement of such assignee or
transferee to be bound by the terms and conditions of this Agreement.
Upon such assignment or transfer and agreement by such assignee or
transferee, the term NYBC as mused herein shall mean such assignee or
transferee.
ARTICLE XIII. GOVERNING LAW
13.1. This Agreement shall be construed and the rights of the parties governed
in accordance with the laws of the State of New York, excluding its law
of conflict of laws. Any dispute or issue arising hereunder, including
any alleged breach by LICENSEE, shall be heard, determined and resolved
by an action commenced in the federal courts in New York City, New York,
which the parties hereby agree shall have proper jurisdiction over the
issues and the parties.
LICENSEE hereby agrees to submit itself to the jurisdiction of the
federal courts in New York and waives the right to make any objection
based on jurisdiction or venue. The New York courts shall have the right
to grant all relief to which each party is or shall be entitled
hereunder, including all equitable relief as the Court may deem
appropriate.
13.2. This Agreement has been prepared jointly and shall not be strictly
construed against any party.
ARTICLE XIV. ENTIRE AGREEMENT; AMENDMENT
14.1. This Agreement supersedes all prior written and oral communications
between the parties with respect to PRODUCT and sets forth the entire
Agreement of the parties with respect to the subject matter contained
herein and may not be modified or amended except as expressly stated
herein or by a written agreement duly executed by both parties hereto.
-19-
<PAGE>
ARTICLE XV. SEVERABILITY
15.1. If any term or provision of this Agreement or the application thereof to
any person or circumstance shall to any extent be invalid or
unenforceable, the remainder of this Agreement or the application of such
term or provision to persons or circumstances other than those as to
which it is held invalid or unenforceable shall not be affected thereby
and each term and provision of this Agreement shall be valid and enforced
to the fullest extent permitted by law.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their duly authorized representatives.
THE NEW YORK BLOOD CENTER, INC.
By: /s/ John W. Adamson, M.D.
--------------------------------
Name: John W. Adamson, M.D.
--------------------------------
Title: President
-------------------------------
Date: 9/21/95
--------------------------------
MELVILLE BIOLOGICS, INC.
By: /s/ Thomas R. Ostermueller
--------------------------------
Name: Thomas R. Ostermueller
---------------------------------
Title: President
-------------------------------
Date: 9/21/95
-------------------------------
-20-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
APPENDIX A
FOR EXCLUSIVE LICENSE AGREEMENT (#5)
FOR VIRALLY INACTIVATED CELLULAR PRODUCTS
between
THE NEW YORK BLOOD CENTER, INC.
and
MELVILLE BIOLOGICS, INC.
KNOW-HOW - 1 Page
PATENTS - 2 Pages
**************************************************************************
*******************************************************************************
*******************************************************************************
*******************************************************************************
*******************************************************************************
*******************************[3 pages omitted]****************************
*******************************************************************************
*******************************************************************************
*******************************************************************************
**********************************************************
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
APPENDIX B
----------
PRODUCTS
--------
** **** ********* ** ***** ****** *** ***** **** ************ *** ********
*************
-25-
<PAGE>
[EXECUTION COPY]
AMENDMENT TO EXCLUSIVE LICENSE AGREEMENT (#5)
FOR VIRALLY INACTIVATED CELLULAR PRODUCTS
between
THE NEW YORK BLOOD CENTER, INC. ("NYBC")
and
V.I. TECHNOLOGIES, INC. (Formerly known as Melville Biologics, Inc.)("LICENSEE")
Whereas the above parties have executed the above-captioned Exclusive
License Agreement (#5) For Virally Inactivated Cellular Product on September 21,
1995, which agreement remains in full force and effect as of the date of this
AMENDMENT (the "EXCLUSIVE LICENSE AGREEMENT").
Whereas the above parties mutually desire to amend the EXCLUSIVE LICENSE
AGREEMENT so as to reflect current business opportunities available to LICENSEE,
utilizing the viral inactivation technology and to facilitate LICENSEE's entry
into a Joint Development, Marketing and Distribution Agreement (the "JOINT
DEVELOPMENT AGREEMENT") with Pall Corporation, a New York corporation, having
principal offices at 2200 Northern Blvd., East Hills, New York 11548 ("PALL
CORPORATION"), this AMENDMENT to remain in effect for the duration of the JOINT
DEVELOPMENT AGREEMENT (and any amendments thereto and extensions thereof)
between LICENSEE and PALL CORPORATION or the term of the EXCLUSIVE LICENSE
AGREEMENT, whichever shall be shorter.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt of which is
hereby acknowledged, NYBC and LICENSEE mutually agree as follows (all terms in
capitals retaining their original meanings unless otherwise defined herein):
1
<PAGE>
["**** indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
A. For the purpose of this AMENDMENT and to facilitate LICENSEE's
entry into the JOINT DEVELOPMENT AGREEMENT, the EXCLUSIVE LICENSE AGREEMENT is
hereby amended and supplemented as follows:
i) *** **** ********** ******** ***** **** * ***** ** **********
********** ************ ******* *** *** ******** *** ******* ****** ***********
** ***** ****** *** ***************** ******** ** ***** ***** ******** *** ***
** * ***** ***** ******* ** *** ***** ***** ******** ** *********** **** ****
************* ******* *** *********** ********** *** ******* ** ***** ******
********* ********* ******* ***** ******* ******* ** *** ***** *************
******** ** **** *********** **** ***** ************* ** ** *** ** ****
********* ** ***** ****** *** ***** **** ************ *** ******** *************
*** *** ************ *** ** **** ** ***** *** ******** *** *** ** ******** **
*** ** ******* ** * ***** ** ****** ******* ********* ******* **** *** ********
*** ***** *** ** *********** ** ******** *** **** ********** **********
********* ********* ******* ***** ******* ******* ** *** ***** **************
ii) the term "CONTRACT MANUFACTURER" shall mean a third party
manufacturing INACTIVATION PRODUCT for PALL CORPORATION's account.
iii) the term "FISCAL QUARTER" shall mean a fiscal quarter which ends
on the Saturday nearest to the last day of January, April, July or October in
each year.
iv) the term "INACTIVATION PRODUCT" shall mean a viral inactivation
compound, developed for and transferred to PALL CORPORATION by LICENSEE or
CONTRACT MANUFACTURER, for the ex vivo treatment of whole blood, red blood cell
concentrates and platelet concentrates the manufacture, use or sale of which (1)
involves the use of KNOW-HOW or (2) is covered by a claim of PATENT RIGHTS.
v) the term "PALL INFORMATION" shall mean all information made
available to NYBC, by PALL CORPORATION or by LICENSEE which is either non-
public, confidential or
2
<PAGE>
proprietary in nature, including but not limited to equipment, processes,
methods, trade and business secrets, know-how, technical and non-technical
materials, notes, memoranda, drawings, product samples and specifications,
financial information, reports, employee and contractor information, price and
quotations information, sources of supply, customer lists, business plans and
all data and other information which is furnished by PALL CORPORATION, or by
LICENSEE, to NYBC in connection with, relating to or regarding INACTIVATION
PRODUCT, AMENDMENT PRODUCT, or the JOINT DEVELOPMENT AGREEMENT between LICENSEE
and PALL CORPORATION and any other information designated by LICENSEE or PALL
CORPORATION as confidential or proprietary, regardless of whether such
information is furnished to NYBC by LICENSEE under the terms of this AMENDMENT
and whether such information is transmitted orally or in writing.
PALL INFORMATION shall not include any information that (i) was
rightfully in the possession of NYBC prior to the date of disclosure by PALL
CORPORATION, or by LICENSEE, to NYBC of such information, as evidenced by
written documents; (ii) was in the public domain prior to disclosure by PALL
CORPORATION, or by LICENSEE to NYBC; (iii) becomes part of the public domain by
publication or otherwise, except by an unauthorized act or omission of NYBC or
its officers, directors, employees, agents or representatives; (iv) is supplied
to NYBC by a third party, who is under no obligation to LICENSEE or PALL
CORPORATION to maintain such information in confidence; (v) is required to be
disclosed pursuant to applicable law, provided that if NYBC believes it is
required to disclose any PALL INFORMATION pursuant to applicable law, it shall
give timely written notice to LICENSEE and PALL CORPORATION so they may have an
opportunity to obtain a protective order or other appropriate relief.
B. In addition to the rights granted to LICENSEE under Article II of
the EXCLUSIVE LICENSE AGREEMENT, NYBC hereby grants to LICENSEE, under the terms
and conditions of this AMENDMENT, an exclusive, worldwide license, under PATENT
RIGHTS and KNOW-HOW (a) to make, have made, use, sell, or otherwise dispose of
AMENDMENT PRODUCT and (b) to use the methods covered by such PATENT RIGHTS and
3
<PAGE>
KNOW-HOW for the manufacture, use and sale of AMENDMENT PRODUCT. LICENSEE shall
also have the right without NYBC's consent to grant sublicenses under PATENT
RIGHTS and KNOW-HOW for the manufacture, use and sale of AMENDMENT PRODUCT to
PALL CORPORATION and to extend the right to use the methods covered by such
PATENT RIGHTS and KNOW-HOW to end-user purchasers of AMENDMENT PRODUCT or any
product utilizing, including or incorporating AMENDMENT PRODUCT. If LICENSEE
fails to meet PALL CORPORATION's requirements, PALL CORPORATION shall have the
right to have INACTIVATION PRODUCT made by a CONTRACT MANUFACTURER which has
been approved by NYBC, which approval shall not be unreasonably withheld or
delayed. LICENSEE shall remain responsible for the activities of PALL
CORPORATION pursuant to a sublicense granted to PALL CORPORATION under this
Paragraph B.
C. The negotiation right to New Technology under Section 3.3 of the
EXCLUSIVE LICENSE AGREEMENT shall be limited to apply to any New Technology
which competes directly or indirectly through a different channel of trade with
AMENDMENT PRODUCT or INACTIVATION PRODUCT in the inactivation of viruses and
pathogens for the decontamination of red blood cells and/or platelets in either
whole blood, packed red cells, platelet concentrates or apheresis platelets.
D. At LICENSEE's option it may substitute reports regarding the
progress, development and evaluation of INACTIVATION PRODUCT and AMENDMENT
PRODUCT for reports required with respect to the progress, development and
evaluation of PRODUCTS under Section 3.5 of the EXCLUSIVE LICENSE AGREEMENT. If
LICENSEE shall exercise its option under the terms of this Paragraph D (i) it
shall submit such reports every FISCAL QUARTER; and (ii) NYBC agrees that any
information contained in such reports is subject to the confidentiality
requirements set forth in Paragraph I of this AMENDMENT.
E. (i) LICENSEE shall pay or cause to be paid to NYBC on a FISCAL
QUARTER basis, within 30 days after the end of each FISCAL QUARTER, the
following royalties (the "ROYALTIES"): with respect to each sale by PALL
CORPORATION or its
4
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
AFFILIATES of AMENDMENT PRODUCT, ******** of the average price invoiced
during the preceding FISCAL QUARTER by PALL CORPORATION for sales of AMENDMENT
PRODUCT to independent third parties in arm's-length transactions, less credits
or allowances, if any, for rejections or returns; less customary trade discounts
actually given; less customs and duties paid; less bad debts; less separately
invoiced and actually incurred taxes and other charges of any governmental
authority that are imposed directly on or measured by the sale, transfer,
transportation, delivery or use (but excluding taxes on net income).
(ii) LICENSEE shall pay NYBC minimum royalties as set forth in
Section 4.3 of the EXCLUSIVE LICENSE AGREEMENT at a rate of ******** the
amounts specified in Sections 4.3(a), 4.3(b) and 4.3(c).
F. NYBC agrees that the ROYALTIES set forth in Paragraph E(i) of
this AMENDMENT shall be in lieu of any payments due under Paragraphs 4.1 and 4.2
of the EXCLUSIVE LICENSE AGREEMENT with respect to AMENDMENT PRODUCT and shall
be creditable against payments due to NYBC under Paragraph 4.3 of the EXCLUSIVE
LICENSE AGREEMENT.
G. LICENSEE agrees that it shall cause PALL CORPORATION, pursuant to
an agreement between LICENSEE and PALL CORPORATION, to make available to NYBC,
for its own use and not for resale, a reasonable quantity of AMENDMENT PRODUCT
at the lowest price paid by any third party to PALL CORPORATION in the U.S. and
in Canada for such AMENDMENT PRODUCT. NYBC, at its sole discretion, may agree to
waive all ROYALTIES due under this AMENDMENT in connection with such AMENDMENT
PRODUCT sold to NYBC, in which event, the lowest price charged to NYBC shall be
reduced by such ROYALTIES. LICENSEE and NYBC agree that the last sentence of
Section 4.7 of the EXCLUSIVE LICENSE AGREEMENT is hereby deleted.
H. LICENSEE shall be entitled to offset against ROYALTIES, ********
payable to third parties with respect to AMENDMENT PRODUCT, except
those paid to ********
5
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
********** **** ****** ******** ** *** ********* ********* ***** ******* ** ****
******* ********* **** *** ** to the same extent that it is entitled to with
respect to PRODUCT under the terms of Section 4.8 of the EXCLUSIVE LICENSE
AGREEMENT.
I. In addition to the confidentiality requirements set forth in
Sections 9.1, 9.2 and 9.3 of the EXCLUSIVE LICENSE AGREEMENT, NYBC and LICENSEE
agree as follows:
i) NYBC agrees that during the term of this AMENDMENT and for five
(5) years following the termination or expiration of this AMENDMENT, NYBC will
maintain in strictest confidence and shall not disclose, distribute or use
without PALL CORPORATION's prior written consent, and shall cause their
directors, officers, employees, agents, counsel and representatives to maintain
in strictest confidence, not disclose, distribute or use any PALL INFORMATION,
without PALL CORPORATION's prior written consent, for any purpose or in any
manner other than a purpose or manner approved in writing by PALL CORPORATION.
ii) Upon the expiration or termination of this AMENDMENT, all PALL
INFORMATION will be returned to PALL CORPORATION, or, at PALL CORPORATION's
election, destroyed.
iii) The provisions of this Paragraph I will survive the expiration or
termination of this AMENDMENT.
J. NYBC agrees that, prior to exercising its termination rights set
forth in Section 10.2 of the EXCLUSIVE LICENSE AGREEMENT, it shall give PALL
CORPORATION notice of its intent to terminate simultaneously with the notice
given to LICENSEE under the terms of Section 10.2, which notice shall expressly
describe the event entitling NYBC to exercise its termination rights, and NYBC
shall not terminate the EXCLUSIVE LICENSE AGREEMENT and/or this AMENDMENT if
within sixty days of receipt of such notice by PALL CORPORATION, PALL
CORPORATION cures the breach or eliminates the event or causes LICENSEE to cure
the breach or eliminate the event giving rise to NYBC's termination rights, to
6
<PAGE>
the reasonable satisfaction of NYBC.
K. NYBC agrees that, notwithstanding the terms of Sections 10.2 and
10.5 of the EXCLUSIVE LICENSE AGREEMENT, (i) if LICENSEE or PALL CORPORATION
have not satisfactorily, under the terms of Paragraph J of this AMENDMENT or the
terms of Section 10.2 of the EXCLUSIVE LICENSE AGREEMENT, cured the breach or
eliminated the event giving rise to NYBC's termination rights and NYBC exercises
its right to terminate the EXCLUSIVE LICENSE AGREEMENT and/or this AMENDMENT, or
(ii) if LICENSEE exercises its right to terminate the EXCLUSIVE LICENSE
AGREEMENT in accordance with the terms of Section 10.5 of the EXCLUSIVE LICENSE
AGREEMENT, NYBC shall not acquire any rights in or with respect to (x) any
patents, patent applications, know-how, inventions, data, processes, methods for
manufacture or use, techniques, or other technical information or intellectual
property, now owned or controlled by or licensed to or hereafter developed by or
for PALL CORPORATION, independently from LICENSEE (collectively the "PALL KNOW-
HOW"), (y) any products which utilize, include or incorporate any PALL KNOW-HOW,
and (z) any "Joint Patents" and "Joint Inventions" as such terms are defined in
the JOINT DEVELOPMENT AGREEMENT. PALL CORPORATION agrees that all rights in
KNOW-HOW and PATENT RIGHTS will revert to NYBC, and PALL CORPORATION will not
use KNOW-HOW and PATENT RIGHTS for any purpose whatsoever, unless permitted to
do so under a separate agreement with NYBC. Nothing herein shall alter
LICENSEE's obligations to NYBC in the event of a termination under Sections 10.2
and 10.5 of the EXCLUSIVE LICENSE AGREEMENT.
L. Notices to PALL CORPORATION shall be sent to:
PALL CORPORATION
2200 Northern Blvd.
East Hills, New York 11548
Attention: Samuel T. Wortham
7
<PAGE>
with a copy to:
Carter, Ledyard & Milburn
Two Wall Street
New York, New York 10005
Attention: Robert A. McTamaney, Esq.
M. All other terms and conditions of the EXCLUSIVE LICENSE AGREEMENT
shall apply to AMENDMENT PRODUCT and INACTIVATION PRODUCT as they apply to
PRODUCT thereunder, provided however, that to the extent of any conflict between
the terms and conditions of this AMENDMENT and the terms and conditions of the
EXCLUSIVE LICENSE AGREEMENT, the terms and conditions of this AMENDMENT shall
govern, supersede and prevail.
N. This AMENDMENT shall remain in effect for (i) the term of the
JOINT DEVELOPMENT AGREEMENT (and any amendments thereto and extensions thereof),
provided a copy of same is provided to NYBC, or (ii) the term of the EXCLUSIVE
LICENSE AGREEMENT, whichever is shorter. Termination of this AMENDMENT shall not
release either party from any liability which at the time of termination had
already accrued to the other party or which thereafter may accrue in respect of
any act or omission prior to such termination.
8
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this AMENDMENT to be
executed by their duly authorized representatives.
THE NEW YORK BLOOD CENTER, INC.
By: /s/ Robert Jones
-----------------------------
Name: Robert Jones
---------------------------
Title: President
--------------------------
Date: February 16, 1998
---------------------------
V.I. TECHNOLOGIES, INC.
By: /s/ John R. Barr
-----------------------------
Name: John R. Barr
---------------------------
Title: President
--------------------------
Date: February 16, 1998
---------------------------
9
<PAGE>
EXHIBIT 10.9
OMNIBUS AGREEMENT
BETWEEN
NYBC AND MELVILLE
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE I. DEFINITIONS................................................ 2
1.1 "TRANSFUSION PLASMA AGREEMENT"................................... 2
1.2 "FIBRIN SEALANT AGREEMENT"....................................... 2
1.3 "CELLULAR AGREEMENT"............................................. 2
1.4 "XOMA AGREEMENT"................................................. 2
1.5 "ALBUMIN AGREEMENT".............................................. 2
1.6 "EDISON AGREEMENT"............................................... 3
1.7 "ALBERTA AGREEMENT".............................................. 3
1.8 "EFFECTIVE DATE"................................................. 3
ARTICLE II - DIVISION OF RIGHTS AND OBLIGATIONS
UNDER THE XOMA AGREEMENT................................ 3
ARTICLE III - DIVISION OF RIGHTS AND OBLIGATIONS
UNDER THE ALBUMIN AGREEMENT............................. 5
ARTICLE IV - DIVISION OF RIGHTS AND OBLIGATIONS
UNDER THE EDISON AGREEMENT.............................. 6
ARTICLE V - DIVISION OF RIGHTS AND OBLIGATIONS
UNDER THE ALBERTA AGREEMENT............................. 10
ARTICLE VI - GOVERNMENT SUPPORT...................................... 11
ARTICLE VII - PROVISION OF SERVICES................................... 11
ARTICLE VIII - INDEMNIFICATION......................................... 13
ARTICLE IX - NOTICES................................................. 14
ARTICLE X - GOVERNING LAW........................................... 15
ARTICLE XI - ENTIRE AGREEMENT; AMENDMENT............................. 16
ARTICLE XII - SEVERABILITY............................................ 16
ARTICLE XIII - TERMINATION............................................. 17
</TABLE>
-i-
<PAGE>
OMNIBUS AGREEMENT
-----------------
AGREEMENT effective as of the EFFECTIVE DATE, by and between the New York
Blood Center, Inc. ("NYBC"), having an office at 310 East 67th Street, New York,
New York 10021, U.S.A., and Melville Biologics, Inc., a Delaware Corporation,
having an office at 155 Duryea Road, Melville, NY 11747 ("MELVILLE").
WHEREAS, NYBC and MELVILLE are both parties to certain license agreements
with third parties relating to intellectual property rights;
WHEREAS, NYBC and MELVILLE desire to define, as amongst themselves, their
rights and obligations under such agreements;
WHEREAS, NYBC desires to enter into a contract with MELVILLE for certain
technical assistance to be provided by MELVILLE to NYBC and to licensees of
NYBC;
NOW, THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, the receipt of which is hereby
acknowledged, NYBC and MELVILLE mutually agree as follows:
ARTICLE I. DEFINITIONS
As used in this Agreement, the following terms shall be defined as set
forth below:
<PAGE>
1.1 "TRANSFUSION PLASMA AGREEMENT" shall mean the "Exclusive License Agreement
For Virally Inactivated Transfusion Plasma Products" between NYBC and
MELVILLE effective October 26, 1995.
1.2 "FIBRIN SEALANT AGREEMENT" shall mean the "Exclusive License Agreement For
Virally Inactivated Fibrin Sealant/Thrombin Products" between NYBC and
MELVILLE effective October 26, 1995.
1.3 "CELLULAR AGREEMENT" shall mean the "Exclusive License Agreement For
Virally Inactivated Cellular Products" between NYBC and MELVILLE effective
October 26, 1995.
1.4 "XOMA AGREEMENT" shall mean the "Non-Exclusive License Agreement" between
NYBC and Xoma Corporation ("Xoma") dated July 1, 1995.
1.5 "ALBUMIN AGREEMENT" shall mean the "Technology Transfer Agreement" between
NYBC and OctaPharma S.A. ("OctaPharma") dated December 15, 1988.
1.6 "EDISON AGREEMENT" shall mean the "License Agreement" between NYBC,
MELVILLE and University Hospitals, Inc. ("Edison") effective January 1,
1996.
1.7 "ALBERTA AGREEMENT" shall mean the "License Agreement" between NYBC and The
Alberta Research Council ("Alberta") dated August 13, 1993.
-2-
<PAGE>
1.8 "EFFECTIVE DATE" shall mean "October 26, 1995".
ARTICLE II - DIVISION OF RIGHTS AND OBLIGATIONS
UNDER THE XOMA AGREEMENT
--------------------------------
2.1 For so long as the TRANSFUSION PLASMA AGREEMENT is in full force and effect
(i.e. has not been terminated by either party), NYBC agrees that it will
not grant a sublicense to any third party under the "Patent Rights"
licensed to NYBC under the XOMA AGREEMENT for PRODUCTS in the EXCLUSIVE
TERRITORY as those terms are defined in the TRANSFUSION PLASMA AGREEMENT.
2.2 MELVILLE shall be responsible for paying royalties to Xoma pursuant to
paragraph 3.1 of the XOMA AGREEMENT for MELVILLE's "Net Sales" (other than
sales to NYBC) and MELVILLE's "Sublicensee Net Sales" (as those terms are
defined in the XOMA AGREEMENT) and shall reimburse NYBC for any such
payments made by NYBC to Xoma.
2.3 NYBC shall be responsible for paying royalties to Xoma pursuant to
paragraph 3.1 of the XOMA AGREEMENT for NYBC's "Net Sales" (including
NYBC's resale of Licensed Products purchased from MELVILLE) and NYBC's
"Sublicensee Net Sales" (as those terms are defined in the XOMA AGREEMENT)
and shall reimburse MELVILLE for any such payments made by MELVILLE to
Xoma.
-3-
<PAGE>
2.4 NYBC shall be responsible for making the payments to Xoma required by
paragraph 3.2 of the XOMA AGREEMENT (which paragraph relates to maintenance
of the Xoma Patent Rights) or reimbursing MELVILLE for any payments made by
MELVILLE to Xoma under paragraph 3.2 of the XOMA AGREEMENT.
2.5 NYBC will not voluntarily terminate the XOMA AGREEMENT unless it first
receives the written consent to such termination from MELVILLE.
2.6 MELVILLE agrees to reimburse NYBC for any payments made by NYBC to Xoma
under paragraph 8.4 of the XOMA AGREEMENT as a direct or indirect result of
sale of Licensed Products (as defined in the XOMA AGREEMENT) by MELVILLE or
sublicensees of MELVILLE, including the sale of Licensed Products by
MELVILLE to NYBC.
2.7 NYBC agrees to reimburse MELVILLE for any payments made by MELVILLE to Xoma
under paragraph 8.4 of the XOMA AGREEMENT as a direct or indirect result of
sale of Licensed Products (as defined in the XOMA AGREEMENT) by NYBC or
sublicensees of NYBC, excluding Licensed Products manufactured by MELVILLE.
ARTICLE III - DIVISION OF RIGHTS AND OBLIGATIONS
UNDER THE ALBUMIN AGREEMENT
----------------------------------
3.1 NYBC and MELVILLE confirm the assignment of all rights and obligations of
NYBC under the ALBUMIN AGREEMENT to MELVILLE. MELVILLE warrants and
-4-
<PAGE>
represents that beginning February 8, 1995, it will abide by the terms and
conditions of the ALBUMIN AGREEMENT.
3.2 MELVILLE confirms that it is solely responsible for and will make all
payments due to OctaPharma under the ALBUMIN Agreement, if any, based upon
any fractionation activity of MELVILLE occurring after February 8, 1995.
3.3 NYBC confirms that it is solely responsible for and will make all payments
due to OctaPharma under the ALBUMIN AGREEMENT, if any, based upon any
fractionation activity of NYBC occurring before February 8, 1995.
3.4 NYBC and MELVILLE acknowledge that (1) OctaPharma has alleged that the
ALBUMIN AGREEMENT is terminated as a result of a failure by NYBC to pay
royalties to OctaPharma and (2) NYBC has denied any breach of the ALBUMIN
AGREEMENT and maintains that OctaPharma's attempted termination thereof is
invalid. NYBC and MELVILLE agree to provide assistance to each other in
opposing any attempt by OctaPharma to improperly terminate the ALBUMIN
AGREEMENT or to obtain payments under the ALBUMIN AGREEMENT which
OctaPharma is not entitled to. In any dispute between NYBC and/or MELVILLE
and OctaPharma, NYBC and MELVILLE will provide assistance to each other and
each will provide access to the books, records and personnel of the other
in connection with the defense of such dispute.
ARTICLE IV - DIVISION OF RIGHTS AND OBLIGATIONS
-5-
<PAGE>
UNDER THE EDISON AGREEMENT
----------------------------------
4.1 For so long as the TRANSFUSION PLASMA AGREEMENT is in full force and effect
(i.e. has not been terminated by either party), NYBC agrees that it will
not grant a sublicense to any third party under the "Patent Rights"
licensed to NYBC under the EDISON AGREEMENT for PRODUCTS in the EXCLUSIVE
TERRITORY as those terms are defined in the TRANSFUSION PLASMA AGREEMENT.
4.2 For so long as the FIBRIN SEALANT AGREEMENT is in full force and effect
(i.e. has not been terminated by either party), NYBC agrees that it will
not grant a sublicense to any third party under the "Patent Rights"
licensed to NYBC under the EDISON AGREEMENT for PRODUCTS in the TERRITORY
as those terms are defined in the FIBRIN SEALANT AGREEMENT.
4.3 For so long as the CELLULAR AGREEMENT is in full force and effect (i.e. has
not been terminated by either party), NYBC agrees that it will not grant a
sublicense to any third party under the "Patent Rights" licensed to NYBC
under the EDISON AGREEMENT for PRODUCTS in the TERRITORY as those terms are
defined in the CELLULAR AGREEMENT.
4.4 MELVILLE shall be responsible for paying royalties to Edison pursuant to
paragraph 3.1 of the EDISON AGREEMENT for MELVILLE's sales of "Product"
(other than sales to NYBC) and for sales of "Product" by MELVILLE's
"Sublicensees" (as those terms are
-6-
<PAGE>
defined in the EDISON AGREEMENT) and shall reimburse NYBC for any such
payments made by NYBC to Edison.
4.5 NYBC shall be responsible for paying royalties to Edison pursuant to
paragraph 3.1 of the EDISON AGREEMENT for NYBC's sales of "Product"
(including NYBC's resale of Products purchased from MELVILLE) and for sales
of "Product" by NYBC's "Sublicensees" (as those terms are defined in the
EDISON AGREEMENT) and shall reimburse MELVILLE for any such payments made
by MELVILLE to Edison.
4.6 MELVILLE shall be responsible for making the payments to Edison required by
paragraph 3.4 of the EDISON AGREEMENT (which paragraph relates to minimum
royalties) or reimbursing NYBC for any payments made by NYBC to Edison
under paragraph 3.4 of the EDISON AGREEMENT. Upon the termination of the
TRANSFUSION PLASMA AGREEMENT, FIBRIN SEALANT AGREEMENT and CELLULAR
AGREEMENT, MELVILLE shall no longer be responsible for making the payments
to Edison required by paragraph 3.4 of the EDISON AGREEMENT. Thereafter,
NYBC may, at its sole discretion, make such payments or fail to make such
payments. Upon the termination of one or two of the TRANSFUSION PLASMA
AGREEMENT, FIBRIN SEALANT AGREEMENT, and CELLULAR AGREEMENT, MELVILLE and
NYBC shall conduct good faith negotiations regarding responsibility for
making the payments to Edison required by paragraph 3.4 of the EDISON
AGREEMENT.
-7-
<PAGE>
4.7 NYBC shall be responsible for making the payments to Edison required by
paragraph 3.5 of the EDISON AGREEMENT (which paragraph relates to
maintenance of Edison's Patent Rights) or reimbursing MELVILLE for any
payments made by MELVILLE to Edison under paragraph 3.5 of the EDISON
AGREEMENT.
4.8 Neither NYBC nor MELVILLE will voluntarily terminate the EDISON AGREEMENT
without first receiving the written consent to such termination from the
other party.
4.9 MELVILLE agrees to reimburse NYBC for any payments made by NYBC to Edison
under paragraph 8.1 of the EDISON AGREEMENT as a direct or indirect result
of sale of "Products" (as defined in the EDISON AGREEMENT) by MELVILLE or
sublicensees of MELVILLE, including the sale of Products by MELVILLE to
NYBC.
4.10 NYBC agrees to reimburse MELVILLE for any payments made by MELVILLE to
Edison under paragraph 8.1 of the EDISON AGREEMENT as a direct or indirect
result of sale of "Products" (as defined in the EDISON AGREEMENT) by NYBC
or sublicensees of NYBC, excluding Products manufactured by MELVILLE.
ARTICLE V - DIVISION OF RIGHTS AND OBLIGATIONS
UNDER THE ALBERTA AGREEMENT
-----------------------------------
5.1 NYBC and MELVILLE acknowledge that Alberta has alleged that the ALBERTA
AGREEMENT is terminated as a result of a breach by NYBC and that NYBC has
also accused Alberta of a breach of the ALBERTA AGREEMENT. NYBC and
MELVILLE
-8-
<PAGE>
further acknowledge that NYBC has denied any breach of the ALBERTA
AGREEMENT and maintains that Alberta's attempted termination thereof is
invalid. The parties agree to provide assistance to each other in opposing
any attempt by Alberta to improperly terminate the ALBERTA AGREEMENT.
Further, NYBC and MELVILLE will seek to amend the ALBERTA AGREEMENT and/or
enter into a new Agreement with Synsorb Biotech, Inc. so that NYBC and
MELVILLE receive a co-exclusive license under the technology and patent
rights covered by the ALBERTA AGREEMENT.
5.2 For so long as the TRANSFUSION PLASMA AGREEMENT is in full force and effect
(i.e. has not been terminated by either party), NYBC agrees that it will
not grant a sublicense to any third party under the "ARC Background
Patents" and "ARC Trade Secrets" licensed to NYBC under the ALBERT
AGREEMENT for PRODUCTS in the EXCLUSIVE TERRITORY as those terms are
defined in the TRANSFUSION PLASMA AGREEMENT.
ARTICLE VI - GOVERNMENT SUPPORT
------------------
6.1 The licenses granted to MELVILLE by NYBC under the TRANSFUSION PLASMA
AGREEMENT, the FIBRIN SEALANT AGREEMENT and the CELLULAR AGREEMENT are all
subject to the rights reserved to the U.S. Government under 35 U.S.C. (S)
200 et. seq. and applicable regulations.
-- ---
ARTICLE VII - PROVISION OF SERVICES
---------------------
-9-
<PAGE>
7.1 As of January 1, 1996, MELVILLE agrees to provide support services to NYBC
in connection with the licenses granted (and to be granted) by NYBC to
third parties under NYBC's patent rights and know-how relating to
solvent/detergent ("S/D") virus inactivation technology ("Support
Services"). The personnel at MELVILLE who shall provide the Support
Services and a general description of the Support Services to be provided
is set forth on Exhibit A.
7.2 NYBC shall pay MELVILLE fees for such Support Services beginning January 1,
1996. The fees for the first year of Support Services and a description of
the Reports to be made by MELVILLE to NYBC are set forth on Exhibit B.
7.3 NYBC and MELVILLE shall negotiate the fixed fees for each successive
calendar year (and shall also negotiate any change in the Support Services
to be provided) at least thirty (30) days prior to the start of each
calendar year. Changes to the Support Services and/or fixed fees shall be
reflected on revised versions of Exhibits A and B which shall be attached
to this Agreement. If NYBC and MELVILLE are unable to agree upon the fee
for any successive year or if either party desires to terminate the
provision of the Support Services, then the obligations to provide and pay
for such services will terminate as of the first day of the successive
year.
7.4 If Dr. Bernard Horowitz shall cease to be an employee of MELVILLE or cease
to perform Support Services as specified in Exhibit A, then NYBC may elect
to terminate or renegotiate MELVILLE's provision of Support Services by
giving MELVILLE thirty (30)
-10-
<PAGE>
days written notice. MELVILLE's obligation to provide Support Services and
NYBC's obligation to pay for such services shall terminate at the end of
the thirty (30) day notice period. MELVILLE shall reimburse NYBC for any
payments made by NYBC to MELVILLE for Support Services to be performed
after termination.
7.5 If MELVILLE seeks to enter into any License Agreement with a third party
whereby intellectual property rights of said third party in the field of
viral inactivation are to be licensed to MELVILLE, then MELVILLE shall
notify NYBC and, if NYBC desires to obtain rights in such intellectual
property, MELVILLE shall work with and assist NYBC to this end. NYBC's
utilization of such intellectual property will be consistent with and
limited by the exclusive rights given to MELVILLE for certain products
under the TRANSFUSION PLASMA AGREEMENT, the FIBRIN SEALANT AGREEMENT and
the CELLULAR AGREEMENT, for so long as such agreements are in full force
and effect.
ARTICLE VIII - INDEMNIFICATION
---------------
8.1 MELVILLE agrees to indemnify, defend and hold harmless NYBC, its directors,
officers, employees and agents from and against any and all loss, damage,
demands, claims, actions and causes of action, assessments, liabilities,
costs and expenses which they may incur because of, or in connection with,
or as a consequence of, MELVILLE's acts or omissions with respect to its
obligations under the XOMA AGREEMENT, the ALBUMIN
-11-
<PAGE>
AGREEMENT, the EDISON AGREEMENT and/or the ALBERTA AGREEMENT, and with
respect to its obligations to provide Support Services.
8.2 NYBC agrees to indemnify, defend and hold harmless MELVILLE, its directors,
officers, employees and agents from and against any and all loss, damage,
demands, claims, actions and causes of action, assessments, liabilities,
costs and expenses which they may incur because of, or in connection with,
or as a consequence of, NYBC's acts or omissions with respect to its
obligations under the XOMA AGREEMENT, the ALBUMIN AGREEMENT, the EDISON
AGREEMENT and/or the ALBERTA AGREEMENT, and with respect to the provision
of Support Services by MELVILLE.
ARTICLE IX - NOTICES
-------
9.1 Any notice, report or other communication required or permitted to be given
or made under this Agreement by one of the parties to the other shall be in
writing and shall be deemed to have been sufficiently given or made for all
purposes if mailed by Certified Mail, postage prepaid, or sent by
facsimile, confirmed forthwith in written dispatch as described herein,
addressed to such other party at its respective address as follows:
If to NYBC:
----------
The New York Blood Center
310 East 67th Street
New York, NY 10021-6295, U.S.A.
Attention: Office of Patents And Licensing
cc: General Counsel
-12-
<PAGE>
If to MELVILLE:
--------------
Melville Biologics, Inc.
155 Duryea Road
Melville, NY 11747
Attention: President
ARTICLE X - GOVERNING LAW
-------------
10.1 This Agreement shall be construed and the rights of the parties governed in
accordance with the laws of the State of New York, excluding its law of
conflict of laws. Any dispute or issue arising hereunder, including any
alleged breach by MELVILLE, shall be heard, determined and resolved by an
action commenced in the federal courts in New York City, New York, which
the parties hereby agree shall have proper jurisdiction over the issues and
the parties. MELVILLE hereby agrees to submit itself to the jurisdiction of
the federal courts in New York and waives the right to make any objection
based on jurisdiction or venue. The New York courts shall have the right to
grant all relief to which each party is or shall be entitled hereunder,
including all equitable relief as the Court may deem appropriate.
10.2 This Agreement has been prepared jointly and shall not be strictly
construed against any party.
ARTICLE XI - ENTIRE AGREEMENT; AMENDMENT
---------------------------
-13-
<PAGE>
11.1 This Agreement supersedes all prior written and oral communications between
the parties and sets forth the entire Agreement of the parties with respect
to the subject matter contained herein and may not be modified or amended
except as expressly stated herein or by a written agreement duly executed
by both parties hereto.
ARTICLE XII - SEVERABILITY
------------
12.1 If any term or provision of this Agreement or the application thereof to
any person or circumstance shall to any extent be invalid or unenforceable,
the remainder of this Agreement or the application of such term or
provision to persons or circumstances other than those as to which it is
held invalid or unenforceable shall not be affected thereby and each term
and provision of this Agreement shall be valid and enforced to the fullest
extent permitted by law.
ARTICLE XIII - TERMINATION
-----------
13.1 If either party defaults on or breaches any material condition of this
Agreement, the aggrieved party may serve notice upon the other party of the
alleged default or breach. If such default or breach is not remedied within
sixty (60) days from the date of such notice, the aggrieved party may at
its election terminate this Agreement. Any failure to terminate hereunder
shall not be construed as a waiver by the aggrieved party of its right to
terminate for future defaults or breaches.
-14-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their duly authorized representatives.
THE NEW YORK BLOOD CENTER, INC.
By:/s/ John W. Adamson, M.D.
---------------------------
Name: John W. Adamson, M.D.
-------------------------
Title: President
-------------------------
Date: May 22, 1996
-------------------------
MELVILLE BIOLOGICS, INC.
By:/s/ Thomas R. Ostermueller
---------------------------
Name: Thomas R. Ostermueller
Title: President & CEO
------------------------
Date: May 14, 1996
------------------------
-15-
<PAGE>
EXHIBIT A - FOR 1996
SERVICES: The Support Services to be provided by MELVILLE personnel fall
into four basic categories:
1. Routine Support, including, but not limited to, answering
questions and requests for information, document review,
face-to-face licensee visits either in NY or at major
meetings
2. Workshops for licensees similar to those run previously
3. Viral testing to validate S/D process implementation
4. Biochemical testing for S/D reagents or residues
PERSONNEL: Bernard Horowitz, Ph.D.
Zygmund Roth, Ph.D.
Richard Shulman, Ph.D.
Ken Graziano, Ph.D.
John Hamman, Ph.D.
Joan Pehta, M.D.
Arnie Lippin
Sing Chin
Gary Swan
(list is illustrative, not inclusive)
TECHNOLOGIES: 1. Solvent Detergent Treatment and Know-How
2. S/D-Liquid IVIG Manufacturing and Know-How, including
clinical data
3. S/D Plasma Manufacturing and Know-How, including
clinical data (for existing NYBC licensees)
DEFINITIONS: Routine Support will include, but not be limited to,
---------------
answering questions and requests for information received
either from NYBC or directly from S/D licensees. The Routine
Support will also include meeting with either current or
future S/D licensees at mutually agreeable times. If visits
are required to a licensee's facility MELVILLE will be
reimbursed for all out-of-pocket expenses. Routine Support
will also include MELVILLE's continued public support of S/D
technology at major meetings both domestic and
international. MELVILLE will also update and
-16-
<PAGE>
correct technical support literature either in response to
questions or as part of the technology transfer process,
including the VIREX newsletter. The support and
participation of MELVILLE shall be acknowledged in
written/published materials. MELVILLE will also notify NYBC
in a timely manner of any improvements relating to the
covered technologies.
Workshops will be essentially as currently conducted and
---------
organized by the Office of Patents and Licensing at NYBC.
Each workshop is anticipated to require 1.5 days of active
participation by MELVILLE personnel and up to an additional
0.5 day of preparation time. MELVILLE will allow a portion
of the workshop to be held at MELVILLE if, desired by NYBC.
Viral Testing will include (but not be limited to) the
-------------
standard array of model viruses already offered such as VSV,
Sindbis and HIV. MELVILLE will also provide a virologist as
needed for consultation with licensee or NYBC staff.
MELVILLE will interpret and provide written reports of these
tests and agree to reformat their report to fit
international guidelines; if necessary.
Biochemical Testing includes primarily analysis of TNBP,
-------------------
Tween and Triton residues.
-17-
<PAGE>
EXHIBIT B - For 1996
--------------------
FEES: Routine Support - a monthly fixed fee of $10,000 will be
---------------
paid on a quarterly basis upon receipt of an invoice from
MELVILLE (example to be attached) which includes a quarterly
summary of the services provided and personnel involved.
Workshops - a fee of $10,000 will be paid to MELVILLE for
---------
each scheduled and completed workshop. MELVILLE will submit
an invoice to NYBC after each workshop. It is anticipated
that two (2) workshops will be scheduled in the coming year.
Viral Testing - a fee of $1,000 per sample per virus for
-------------
routine enveloped models such as VSV. A fee of $4,000 per
sample for HIV tests. The protocol to be followed will be
adjusted periodically based on regulatory input. MELVILLE
will submit an invoice to NYBC after each completed series
of tests, along with a report.
Biochemical Tests - a fee to be determined by the parties
-----------------
per sample per chemical tested. MELVILLE will submit an
invoice to NYBC after each completed series of tests, along
with a report.
REPORTS: In order to properly track and coordinate S/D licensee
support, MELVILLE will provide a quarterly summary report of
activity taken by MELVILLE on NYBC's behalf. The summary
should include the date of inquiry, identity of licensee and
contact person, MELVILLE personnel involved in answering the
inquiry, and the action taken/recommended. The report
should also list other activities such as licensee visits,
national meetings attended where S/D is discussed and number
and types of samples tested for licensees.
-18-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
EXHIBIT 10.10
EXCLUSIVE DISTRIBUTION AGREEMENT
BY AND BETWEEN
V.I. TECHNOLOGIES, INC.
AND
UNITED STATES SURGICAL CORPORATION
EFFECTIVE OCTOBER 4, 1996
<PAGE>
EXCLUSIVE DISTRIBUTION AGREEMENT
THIS AGREEMENT (this "Agreement"), made this 11th day of September, 1996
by and between V. I. TECHNOLOGIES, INC., a Delaware corporation having its
principal place of business at 155 Duryea Road, Melville, New York 11747
(formerly known as Melville Biologics, Inc.) ("VITEX"), and UNITED STATES
SURGICAL CORPORATION, a Delaware corporation having its principal place of
business at 150 Glover Avenue, Norwalk, Connecticut 06856 ("USSC").
WHEREAS, VITEX is the owner and/or licensee of proprietary rights to
certain fibrin-based surgical glue and certain related applicator technology;
and
WHEREAS, USSC is engaged in the manufacture, distribution and sale of
sutures, surgical staples and other devices and products used in surgery; and
WHEREAS, VITEX wishes to grant USSC exclusive rights to distribute and
sell its fibrin-based surgical glue, and improvements thereto, together with the
option to obtain exclusive rights to related applicator technology, and certain
other products; and
WHEREAS, USSC is willing to accept such rights and option; all on the
terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual promises contained herein
and intending to be legally bound, the parties agree as follows:
1. DEFINITIONS.
(a) For purposes of this Agreement, the definitions set forth below
shall be applicable:
"Act" shall mean the United States Food, Drug and Cosmetic Act of 1938,
as amended.
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
"Action" shall mean an action, suit or proceeding, whether civil or
criminal or in law or in equity.
"Affiliate" shall mean, as to each party to the Agreement, a Person (as
hereinafter defined) which (i) directly or indirectly owns or controls a
majority of the voting power of such a party, (ii) a majority of its voting
power is directly or indirectly owned or controlled by such party, or (iii) a
majority of its voting power is directly or indirectly owned or controlled by an
entity which directly or indirectly owns or controls a majority of the voting
power of such party. Notwithstanding the foregoing, VITEX's principal
stockholders, the New York Blood Center and Ampersand Ventures shall not be
considered Affiliates of VITEX.
"Applicator Product" shall mean a product whose primary function is to
apply a Product, Improved Product or Enhanced Product.
"CRO" shall mean clinical research organization.
"Enhanced Product" shall mean a Product or Improved Product for use
within the Field ***************************************************************
********************************************************************************
******************************.
"Exclusivity Minimum Sales" shall have the meaning set forth in Exhibit
C to this Agreement.
"Existing Patents" shall mean the patents and patent applications owned
by, or licensed to, VITEX or any of its Affiliates, or in which any of such
Persons have any right, title or interest, and which involve or relate to a
Product, and all foreign and domestic patents issuing on any of the foregoing
patent applications, and all continuations, continuations-in-part, divisions,
reissues, reexaminations, additions and renewals thereof including, without
limitation, the patents and patent applications listed on Exhibit B to this
Agreement.
"Field" shall mean all in vivo human and veterinary medical applications
involving gluing, sealing or providing hemostasis of or within any tissue, body
or organ, or a part or portion of any thereof.
-2-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
"Future Patents" shall mean any patents or patent applications which may
after the execution of this Agreement by the parties hereto be or become owned
by, or licensed to, VITEX or any of its Affiliates, or in which any of them may
have any right, title or interest, and which involve or relate to Products and
all foreign and domestic patents issuing on any of the foregoing patent
applications, and all continuations, continuations-in-part, divisions, reissues,
reexaminations, additions and renewals thereof.
"GAAP" shall mean generally accepted accounting principles.
"Good Manufacturing Practices" shall mean good manufacturing practices
as required by a Governmental Body (defined below) under applicable Law (defined
below) including, without limitation, good manufacturing practices recited for
medical devices set forth at 21 C.F.R. ss.821, as amended from time to time, and
the Establishment Regulation and Device Listing for Manufacturers of Devices set
forth at 21 C.F.R. ss.807, as amended from time to time.
"Governmental Approvals" shall mean permits, licenses, consents,
authorizations, approvals and filings with and registrations from any
Governmental Body specifically relating to the manufacture, marketing,
distribution or sale of a Product (defined below), but excluding any of the
foregoing necessary to conduct or engage in business generally or the
manufacturing, marketing, distribution or sale of surgical, medical or
pharmaceutical products generally.
"Governmental Body" shall mean any agency, bureau, commission, court,
department, political subdivision, tribunal or other instrumentality of any
government, whether federal, state or local, domestic or foreign.
"Improved Product" shall mean modified versions of a Product which
improve the storage or reconstitution time of a Product. Examples include a
********************************************************************************
***********************************************.
"Laws" shall mean statutes, laws, regulations, rules, ordinances,
guidelines, judgments, orders, decisions or interpretations of any Governmental
Body.
-3-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
"Lien" shall mean any mortgage, lien (voluntary or involuntary), pledge,
hypothecation, charge, preference, priority, security interest, claim, right or
encumbrance of any kind.
"ML" shall mean milliliter.
"Net Sales" shall mean gross sales of Products billed and shipped by
USSC or its Affiliates or permitted assignees less allowances and discounts
actually allowed (other than advertising allowances, or fees or commissions to
salesmen or sales representatives), returns, invoices written off as
uncollectible, billed taxes and customs duties, costs of insurance and
transportation freight and transit insurance, and shall not include samples or
demonstration materials or any sales to USSC employees for any reason other than
resale. The term "Net Sales" shall not include sales between USSC and its
Affiliates, or permitted assignees. For purposes of the "Net Sales" definition,
the term Products shall also include Products sold in packages, trays or other
groups of items consisting of one or more Products and one or more other
products (the "Package"). The Net Sales price of any Product sold in a Package
shall bear the same ratio to the Net Sales price of the Package, as the
individual retail list price of the Product bears to the sum of all individual
retail list prices of every item in the Package if all of such items were sold
separately.
"New Product" shall mean a product which is not a Product, an Improved
Product, or an Enhanced Product for use in the Field **************************
********************.
"New Application" shall mean any medical application of a Product,
Improved Product, or Enhanced Product for use outside the Field. Examples
include liposome-encapsulated chemotherapeutics delivered by fibrin glue.
"New York Blood Center License Agreement" shall mean that certain
agreement entitled "Exclusive License Agreement (#4) for Virally Inactivated
Fibrin Sealant/Thrombin Product between the New York Blood Center, Inc. and
Melville Biologics, Inc.", a copy of which is attached hereto as Exhibit E.
"Patents" shall mean collectively, Existing Patents and Future Patents.
-4-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
"Person" shall mean any individual, corporation, partnership,
association, trust or other entity or organization, including a governmental or
political sub division of any agency or instrumentality thereof.
"Products" shall mean collectively, fibrinogen combined with thrombin
and reconstitution solution (sometimes referred to as fibrin sealants or fibrin
glues) for use in the Field. Exhibit A shall contain initial specifications of
the Product.
"Region" shall mean, as the context shall apply, **********************
*******************************************************************************
*******************************************************************************
*******************************************************************************
*******************************************************************************
*******************************************************************************
*******************************************************************************
********************************************.
"Regulatory Costs" shall mean all costs, fees and expenses incurred or
required to be incurred by any party to this Agreement and their respective
advisors, consultants, representatives, agents and contractors in order to
obtain all necessary Governmental Approvals including, without limitation, the
costs of clinical trials.
"Technology" shall mean all technology pertaining to Products,
including, without limitation, data, inventions, applications, ideas or
concepts, processes, formulae, mixtures, compositions, delivery systems,
techniques, designs, specifications, drawings, technical information, methods,
analyses, test reports, component lists, catalogues, vendor lists and supplier
lists pertaining, directly or indirectly, to development, manufacture,
production, supply or use, including, but not limited to, technology that is or
could be the subject matter of a foreign or domestic patent or patent
application, whether or not reduced to writing in a patent application, records
pertaining to the manufacturing of the Products, including, without limitation,
batch production records, QC records and test methods and validation, as well as
all pharmaceutical and toxicological parts of all registration dossiers,
including all reasonable biological studies, virus validation studies, and
expert reports insofar as any of the foregoing relates to Products, and (ii) the
description of the processes involving or related to the
-5-
<PAGE>
manufacture or production of the Products, including, without limitation, as
described in Exhibit D to this Agreement.
"Territory" shall mean all countries of the world.
(b) In addition to the foregoing defined terms, the following terms
shall have the meanings set forth in the referenced Sections of this Agreement:
Term Section
---- -------
Alternative Enhanced Product Transaction 2
Bayer 14
Capacity Event 8
Capacity Event License 8
Capacity Event Period 8
Capacity Event Royalty 8
Clinical Trial Committee 6
Confidential Information 7
Dispute 25
Distribution Rights 2
Effective Date 26
Enhanced Product Exclusive Evaluation Period 2
Exclusive Evaluation Period 2
Exclusive Negotiation Period 2
Exclusivity Distributorship Fee 5
Existing Trial 6
Forecast 8
Force Majeure 22
IPRs 16
Liability 11
Maximum Japanese Price 9
NYBC 16
NYBC IPR 16
NYBC License 17
Plasma Recall 12
Price Increase Event 9
-6-
<PAGE>
Price Increase Level 9
Purchase Price 9
Regional Producer 3
Regional Sourced Products 3
Rights 2
Royalty 5
Senior Executives 24
Term 4
USSC Events of Default 18
USSC Indemnified Party 11
VITEX Events of Default 18
VITEX Indemnified Party 11
VITEX Marketing Materials 13
2. RIGHTS GRANTED.
--------------
For and during the Term (defined below), and subject to the terms and
conditions of this Agreement, the Parties agree to the following:
(a) Products: VITEX hereby grants and conveys to USSC the exclusive
right in the Territory to seek Governmental Approvals, use, market, distribute
and sell Products for use in the Field (collectively, the "Rights"). The Rights
shall include, but are not limited to, the right to market, distribute and sell
Products individually or in kits which may include one or more Products and one
or more other products, in USSC sole and absolute discretion.
(b) Improved Product:
(i) If during the Term, VITEX or any of its Affiliates conceives,
develops or obtains any rights, title or interest in an Improved Product, VITEX
shall furnish full written details thereof to USSC, shall provide to USSC any
prototype thereof in VITEX's possession or control and such Improved Product
shall be deemed to be Products for all purposes of this Agreement and included
within USSC's Rights under this Agreement.
-7-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
(ii) Notwithstanding Section 2(b)(i) above, during the term of this
Agreement, VITEX may propose to USSC, or USSC may propose to VITEX that VITEX
undertake development of a certain Improved Product. In either such event, VITEX
shall prepare and submit to USSC a detailed research and development plan
including proposals for research personnel, budgets and time frames for the
development of such Improved Product. If the parties shall agree upon such
research and development plan, USSC shall reimburse VITEX ******************* of
VITEX's documented and agreed upon direct research and development costs (i.e.
****************************************************************************)
pursuant to such plan for such Improved Product ******************************
****************************************************************.
Notwithstanding, the failure of USSC to agree to a research or development plan
or the funding thereof, or, in the event USSC commences funding and at any time
thereafter discontinues funding thereof, in whole or in part, shall not (aa) be
deemed a breach of this Agreement, (bb) reduce or eliminate USSC's Rights with
respect thereto under this Agreement, nor (cc) provide VITEX with the right to
transfer to any third Person any rights, title or interest in or with respect
thereto. The parties understand and agree that such USSC commitments and funding
shall be subject, in each case, to termination by USSC in its discretion at any
time on thirty (30) days notice, provided that USSC shall remain liable for such
costs incurred by VITEX thereafter based on prior written agreements or written
commitments agreed by USSC in writing which agreements or commitments are not
cancellable on such thirty (30) days' notice. In any such event, VITEX will use
reasonable efforts to terminate such agreement or commitment as promptly as
possible and to minimize the costs resulting therefrom. The control, direction
and costs of Phase III clinical trials of Improved Products shall be subject to
Section 6 below in this Agreement.
(iii) VITEX shall maintain books and records in reasonable detail
concerning the research and development costs reimbursable under Section
2(b)(ii) above. USSC shall have the right to inspect and copy such books and
records once each calendar year during normal business hours and with prior
notice.
(c) Enhanced Product:
(i) USSC shall have the right and option to obtain Rights with
respect to Enhanced Products in accordance with this Section 2(c)(i). If during
the Term, VITEX or any of its Affiliates conceives, develops or obtains any
rights, title or interest in an Enhanced Product,
-8-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
VITEX shall (i) furnish full written details thereof to USSC, (ii) provide to
USSC any prototype thereof in VITEX's possession or control, and (iii) provide
USSC a detailed research and development plan including proposals for research
personnel, budgets and time frames for the development of such Enhanced Product.
USSC shall have a period of **************** thereafter (the "Enhanced Product
Exclusive Evaluation Period") to exclusively evaluate such research and
development plan and to determine whether or not USSC wishes to obtain Rights in
respect thereof. During the Enhanced Product Exclusive Evaluation Period, VITEX
shall answer USSC questions concerning the Enhanced Products, shall promptly
forward to USSC any additional Technology or prototypes related to such Enhanced
Product that it may conceive, develop or come into possession or control of
during the Enhanced Product Exclusive Evaluation Period together with its best
good faith estimate of the expected transfer price thereof. If USSC determines
in its discretion to exercise its right and option with respect to such Enhanced
Product and USSC gives notice thereof no later than three (3) days after the
expiration of the Enhanced Product Exclusive Evaluation Period, then, in such
event, USSC shall have Rights with respect to such Enhanced Product provided and
for so long as USSC shall agree in its discretion to reimburse VITEX for *****
************* of VITEX's documented and agreed upon direct research and
development costs (i.e. ******************************************************
**********************) for such Enhanced Product occurring on and after such
notice date and prior to the design and submission for regulatory approval of
Phase III clinical trials and further provided that within thirty (30) days of
exercise of such option VITEX and USSC have agreed in writing upon the transfer
price for such Enhanced Product which agreement shall be negotiated in good
faith, but the failure of the parties to so agree shall not result in the loss
of USSC's Rights with respect to such Enhanced Product. The control, direction
and costs of Phase III clinical trials of such Enhanced Products shall be
subject to Section 6 below. The Parties understand and agree that such USSC
commitments and funding shall be subject, in each case, to termination by USSC
in its discretion at any time on thirty (30) days notice, provided that USSC
shall remain liable for such costs incurred by VITEX thereafter based on prior
written agreements or written commitments agreed by USSC in writing which
agreements or commitments are not cancellable on such thirty (30) days' notice.
In any such event, VITEX will use reasonable efforts to terminate such agreement
or commitment as promptly as possible and to minimize the costs resulting
therefrom. In the event (i) USSC gives VITEX notice of termination of its
commitments and funding with respect to an Enhanced Product under this Section
2(c)(i), and (ii) VITEX thereafter develops such Enhanced Product and/or
transfers any right, title or
-9-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
interest therein to any other Person either prior to or during commercialization
including, without limitation, in the form of license rights or distribution
rights, then, in any such event, VITEX shall repay to USSC from the proceeds,
income or other consideration received by VITEX therefrom ******************* of
the amount of the funding theretofore provided by USSC to VITEX in connection
with such Enhanced Product.
(ii) If during the Term, USSC has not exercised its option under
Section 2(c)(i) above with respect to an enhanced Product, USSC shall thereafter
have the right and option to obtain Rights with respect to such Enhanced Product
in accordance with Section 2(c)(iii) below. In such event, VITEX may proceed
with further research and development of such Enhanced Product, provided that it
shall periodically advise USSC in reasonable detail of all developments and test
results regarding such Enhanced Product and all business plans which VITEX may
develop or have developed with respect to such Enhanced Product. If USSC has not
exercised its option under Section 2(c)(i) above with respect to an Enhanced
Product, VITEX may thereafter enter into a research and development program for
such Enhanced Product with another Person (each an "Alternative Enhanced Product
Transaction"), provided that the terms agreed upon with a third Person shall not
be more favorable or superior to such third Person than were last offered to
USSC in writing.
(iii) If USSC has not exercised its option under Section 2(c)(i) above
with respect to an Enhanced Product unless and until VITEX enters into an
Alternative Enhanced Product Transaction, USSC shall continue to have the right
at its option to obtain Rights with respect to such Enhanced Product on notice
to VITEX provided USSC agrees to reimburse VITEX for (aa) *********************
of VITEX's documented direct research and development costs (i.e. *************
********************************************************************) for such
Enhanced Product occurring after the date of this Agreement and prior to the
exercise of such option, plus (bb) ********************* of VITEX's documented
and agreed upon direct research and development costs (i.e. *******************
**************************************************************) for such
Enhanced Product occurring after the date such option is exercised and prior to
the design and submission for regulatory approval of Phase III clinical trials,
plus (cc) in the event Phase III clinical trials for such Enhanced Product have
commenced then ************************** of the cost of Phase III clinical
trials for such Enhanced Product incurred prior to or after the date of exercise
of such option. The parties understand and agree that such USSC commitments
shall be subject, in each case, to termination by USSC at any
-10-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
time thereafter on thirty (30) days notice. The control, direction and costs of
Phase III clinical trials of such Enhanced Products which are subject to USSC's
Rights under this Agreement shall be subject to Section 6 below in this
Agreement. In the event (i) USSC gives VITEX notice of termination of its
commitments and funding with respect to an Enhanced Product under this Section
2(c)(iii) and VITEX thereafter develops such Enhanced Product and/or transfers
any right, title or interest therein either prior to or during commercialization
including, without limitation, in the form of license rights or distribution
rights, then, in any such event, VITEX shall repay to USSC from the proceeds,
income or other consideration received by VITEX therefrom ******************* of
the amount of the funding theretofore provided by USSC to VITEX in connection
with such Enhanced Product.
(iv) VITEX shall maintain books and records in reasonable detail
concerning the research and development costs reimbursable under this Section
2(c). USSC shall have the right to inspect and copy such books and records once
each calendar year during normal business hours and with prior notice.
(v) Upon exercise by USSC of its option under Section 2(c)(i) or
(iii) above, such Enhanced Product shall be considered a Product hereunder,
except as otherwise expressly stated in this Agreement.
(d) New Products and New Applications:
(i) If during the Term, VITEX or any of its Affiliates conceives,
develops or obtains any rights, title or interest in a New Product or New
Application, VITEX shall (i) furnish full written details thereof to USSC, (ii)
provide to USSC any prototype thereof in VITEX's possession or control, and
(iii) provide USSC a detailed research and development plan including proposals
for research personnel, budgets and time frames for the development of such New
Product or New Application. USSC shall have a period of *****************
thereafter (the "Exclusive Evaluation Period") to exclusively evaluate and
determine whether or not USSC wishes to obtain Rights in respect thereof. During
the Exclusive Evaluation Period, VITEX shall answer USSC questions concerning
the New Product or Application, shall promptly forward to USSC any additional
Technology or prototypes related to such New Product or New Application that it
may conceive, develop or come into possession or control of during the Exclusive
Evaluation Period. If USSC determines in its discretion to seek Rights
-11-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
with respect to the New Product or New Application and USSC notifies VITEX with
respect thereto no later than three (3) days after the expiration of the
Exclusive Evaluation Period then, in such event, VITEX shall negotiate
exclusively with USSC and in good faith during the following ***************
(the "Exclusive Negotiation Period") for a commercially reasonable agreement
with respect to such New Product or New Application. If USSC and VITEX reach an
agreement during the Exclusive Negotiation Period with respect to a New Product
or New Application, then the parties shall promptly reduce such agreement to
writing. If USSC (i) determines in its discretion not to obtain rights with
respect to such New Product or New Application and notifies VITEX of such
determination during either the Exclusive Evaluation Period or the Exclusive
Negotiation Period, as the case may be, or (ii) fails to notify VITEX as to
whether or not USSC desires to obtain rights with respect to such New Product or
New Application no later than three (3) days after the expiration of the
Evaluation Period, or (iii) the parties are unable to reach a commercially
reasonable agreement during the Exclusive Negotiation Period then, in any such
event, VITEX shall be free to sell or transfer to a third Person in its
discretion all of its rights, title and interest in and to such New Product or
New Product Application *************************************, provided that the
terms agreed upon with a third Person shall not be, more favorable or superior
to such third Person than were last offered to USSC in writing.
(ii) Without limiting Section 2(d)(i) above, the parties specifically
agree to the following with respect to a New Product consisting of an Applicator
Product: The Exclusive Negotiation Period shall commence following the Effective
Date after USSC has received a copy of all intellectual property information and
data concerning the Applicator Product together with any prototype which VITEX
may have in its possession or control; the parties shall negotiate exclusively
and in good faith for the grant to USSC of a worldwide exclusive license to
make, use and sell Applicator Products in the Field with Products, Improved
Products, Enhanced Products and New Products manufactured by, or licensed to
USSC from VITEX. Notwithstanding the foregoing, the parties have agreed that the
consideration for such license and rights shall be without a license fee but for
a periodic royalty on net sales not less than ****************** and not more
than *****************, the exact royalty percentage to be part of such
negotiations.
(e) VITEX shall not, directly or indirectly, (i) grant to any third
Person any rights in violation or otherwise inconsistent with the Rights; (ii)
market, distribute or sell any Product
-12-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
in violation of the Rights, or (iii) knowingly grant or assist any of its
distributors outside of the Field or other third Person the right to market,
distribute or sell any Products in the Field. VITEX shall (i) promptly advise
USSC in each instance in which it becomes aware of marketing, distribution or
sale of any Products in the Field by a distributor of VITEX Products outside of
the Field or other third Person, and shall provide USSC the details thereof to
the extent and as they become known to VITEX or its Affiliates; and (ii)
exercise its contract rights, if any, and the legal and equitable remedies
reasonably available to VITEX to enforce the exclusivity and other Rights of
USSC under this Agreement. Notwithstanding the foregoing, USSC shall have the
right at its option to enforce the Rights against any third Person including,
without limitation, by bringing a claim or Action in the name of VITEX. If USSC
chooses to exercise its option to enforce its Rights, VITEX shall (i) take no
action which would have the effect of hindering, delaying or otherwise impairing
or interfering with USSC's enforcement efforts and shall, at USSC's request,
discontinue any claim or Action which VITEX shall have previously commenced or
maintained against a third Person to enforce the exclusivity and other Rights
granted to USSC under this Agreement; (ii) assist USSC in connection with USSC's
enforcement efforts in respect of its Rights and USSC shall reimburse VITEX for
VITEX's out of pocket expenses, other than attorneys fees and expenses, in
connection with such assistance; and (iii) USSC shall bear the expense of such
enforcement efforts in respect of its Rights and USSC shall be entitled to the
recovery, if any, resulting from such enforcement efforts. No settlement,
consent judgment or other final disposition of such claim or Action shall be
made on any terms which adversely affects the Rights without the consent of
VITEX, which consent will not be unreasonably withheld.
3. CONVERSION TO NON EXCLUSIVE RIGHTS; JAPAN AND EUROPE SOURCING.
(a) The Rights granted to USSC under this Agreement shall be
converted to non exclusive upon thirty (30) days notice given by VITEX to USSC
if USSC shall fail to achieve the Exclusivity Minimum Sales during the relevant
period other than as a result of: *********************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
*******************
-13-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
*******************************************************************************
**************. Notwithstanding, any conversion of Rights in accordance with
this Section 3(a) shall not be deemed a breach of this Agreement by USSC or
otherwise limit or diminish the rights of USSC under or arising out of this
Agreement.
(b) In the event of any conversion of Rights to nonexclusive as
provided in Section 3(a) above, VITEX and third Persons authorized by VITEX to
market, distribute and sell Products shall have the right in their discretion to
use the Governmental Approvals of USSC, its Affiliates and permitted assignees
to import, market, distribute and sell Products, to the extent permitted by
applicable Law, until VITEX or such third Persons obtain separate Governmental
Approvals, provided that (i) VITEX or such third Persons shall apply for and
undertake in good faith to obtain separate Governmental Approvals as promptly as
reasonably possible, and *******************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
**************************************************************************. In
connection with such separate applications, (i) VITEX and such Third Persons
shall be entitled to utilize the same clinical data and other information which
USSC, its Affiliates and permitted assignees submitted in connection with their
applications for Governmental approvals, and (ii) USSC shall provide reasonable
cooperation with VITEX in connection with such separate applications for
Governmental Approvals, provided that VITEX shall reimburse USSC for its out of
pocket costs, other than attorneys fees and expenses, in connection with such
cooperation.
(c) If at any time during the Term, Japanese Governmental Bodies or
European Governmental Bodies require the production of Japanese or European
plasma sourced Products, as the case may be, or if the parties otherwise
mutually agree that such Japanese or European sourcing would be commercially
desirable, VITEX shall have the right to obtain a producer of Products in Japan
or in Europe (each a "Regional Producer") who is willing and able to produce
Japanese or European plasma sourced Products, as the case may be, (hereinafter
collectively, "Region Sourced Products"). VITEX shall notify USSC (if USSC is
-14-
<PAGE>
not already aware) if VITEX becomes aware of any such requirements and shall
keep USSC advised of all developments and information VITEX obtains concerning
any prospective Regional Producer. If in such circumstances VITEX secures a
Regional Producer then VITEX may provide such Regional Producer manufacturing
and production rights and licenses to permit such Regional Producer to produce
Region Sourced Products for sale to VITEX for resale in the Field exclusively to
USSC, its Affiliates and permitted assignees, provided (i) the manufacturing
related obligations of VITEX in Section 8 of this Agreement shall be made
binding upon each Regional Producer and USSC shall be accorded third party
beneficiary rights with respect thereof; (ii) VITEX shall provide USSC a copy of
the manufacturing agreement between VITEX and any Regional Producer; (iii) each
Regional Producer shall manufacture Products meeting specifications and quality
control standards no less stringent than those applicable to production
standards under applicable U.S. Laws, and (iv) nothing in this Section 3(c)
shall be deemed to permit VITEX to grant any marketing, distribution or sales
rights in Japan or Europe without USSC's written approval in USSC's sole and
absolute discretion except under the circumstances described in Section 3(a) and
(b).
(d) The parties shall enter into arrangements regarding title,
delivery and similar matters with respect to such permitted alternative sourcing
of Product to avoid, to the greatest extent reasonable possible, duplicative
taxation of Products and refilings for Governmental Approvals.
4. TERM.
(a) Unless earlier terminated in accordance with the terms and
provisions of this Agreement, the term of this Agreement (the "Term") shall be
fifteen (15) years, commencing on the Effective Date of this Agreement (defined
below).
5. EXCLUSIVITY DISTRIBUTORSHIP FEE: CAPACITY EVENT LICENSE ROYALTY
(a) In consideration of the grant to USSC of the Rights and the other
rights under this Agreement, USSC shall pay VITEX (i) an exclusivity
distributorship fee (the "Exclusivity Distributorship Fee") in the sum of Three
Million Dollars ($3,000,000) in immediately available funds within three (3)
business days of the Effective Date of this Agreement.
-15-
<PAGE>
(b) In the event a Capacity Event License is granted under Section 8(h),
USSC shall deliver quarterly written reports to VITEX for each three (3) month
period ending on the last days of the months of March, June, September and
December of each year, within forty-five (45) days after the end of each such
period. The report shall set forth the Net Sales of Products which are
manufactured under the Capacity Event License and sold by USSC, its Affiliates
and permitted assignees during the immediately preceding calendar quarter and
the amount of the Capacity Event Royalty payable to VITEX. All information
contained in such quarterly reports shall be treated as USSC's Confidential
Information. Simultaneously with the submission of each report, USSC shall pay
to VITEX by check or bank transfer the amount of Capacity Event Royalties due to
VITEX for the report period under the terms of this Agreement. USSC shall
maintain records in sufficient detail and, upon reasonable notice, allow any
independent certified public accounting firm of nationally recognized standing,
appointed by VITEX to examine its consolidated books and records. Such
examinations shall occur on or after February 15 of any calendar year (or, if
VITEX appoints for purposes of such examination the accounting firm employed by
USSC to conduct its regular annual audit, prior to February 15,) only during
normal business hours and not more than once a year, and shall be solely for the
purpose of verifying the calculation of Capacity Event Royalties due under this
Agreement. A final such examination may occur once during the year immediately
succeeding termination of this Agreement. In the event VITEX appoints for the
purpose of examining USSC's consolidated books and records the accounting firm
employed by USSC to conduct its regular annual audit, and if the examination
provided for herein is performed at substantially the same time as such regular
annual audit, the fees and expenses of the accounting firm performing the
examination shall be borne by USSC. In any other event, the fees and expenses of
the accounting firm performing the examination shall be borne by VITEX. Unless
written objection is made by VITEX and delivered to USSC within thirty (30) days
after completion of such examinations, the calculation of Royalties paid by USSC
prior to the date of such examination shall be final and binding on the Parties,
except insofar as adjusted or corrected as a result of USSC's regular annual
audit. It is understood that USSC shall not be required to furnish or permit the
examination of the identities, at any time, of customers or other information as
to specific sales. Any information provided to VITEX or its accountants pursuant
hereto shall be treated as USSC's Confidential Information.
6. REGULATORY APPROVALS.
--------------------
-16-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
(a) Following the Effective Date of this Agreement and except as otherwise
provided in this Section 6, USSC shall have sole and complete discretion and
control, and shall bear all Regulatory Costs for the marketing, distribution and
sale of the Product in the Territory by USSC, its Affiliates and permitted
assignees. Notwithstanding the foregoing, **************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
******************************************************. Without limiting the
foregoing, in the event of a dispute between VITEX and USSC during the course of
VITEX managing a U.S. clinical trial, the parties shall discuss and seek to
resolve such dispute but USSC shall have final authority with respect to such
matter in dispute. VITEX shall maintain books and records in reasonable detail
concerning the clinical management costs reimbursable under this Section 6(a).
USSC shall have the right to inspect and copy such books and records during
normal business hours and with prior notice.
(b) Promptly following the Effective Date of this Agreement, VITEX shall
deliver to USSC a copy of all test results, documentation, information and data
in the possession or control of VITEX or its Affiliates involving or relating to
the Existing Trial. During the term of this Agreement, VITEX shall (i) make
available to USSC a copy of all test results, documentation, information and
data involving or relating to the Existing Trial when any of the same becomes
available to VITEX or its Affiliates, and (ii) promptly advise USSC of all
communications from any Governmental Body with respect to the Existing Trial.
(c) All documentation, information and data supplied by VITEX or its
Affiliates or third Persons hired or employed by VITEX and included in USSC's
filings for Governmental Approvals shall contain accurate and complete test
results, data and information. Upon USSC's request from time to time during the
term of this Agreement, VITEX shall reasonably cooperate and consult with and
assist USSC in connection with USSC regulatory interaction involving the
Products, other than the management of U.S. clinicals discussed in Section 6(a)
above. Such cooperation, consultation and assistance shall be given by VITEX
without charge, except that USSC shall pay VITEX's documented and reasonable out
of pocket costs (other than attorneys fees and expenses) incurred in connection
therewith, provided same shall in each
-17-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
instance be approved by USSC in advance and appropriate documentation thereof
submitted to USSC in connection with requests by VITEX for payment of such
costs.
(d) All material communications from Governmental Bodies relating to the
marketing, distribution or sale of a Product will be shared by USSC with VITEX.
A copy of all proposed filings with Governmental Bodies relating to the
marketing, distribution or sale of a Product shall be sent to VITEX in advance
of the filing thereof with as much notice as is reasonably possible, in order
for VITEX to provide its comments with respect to the proposed filing.
(e) Each Governmental Approval for the marketing, distribution and sale of
a Product obtained hereunder shall be in the name of USSC, a designated
Affiliate of USSC or a USSC distributor, except if and insofar as a country's
Laws only allow ownership in the name of the manufacturer.
(f) Promptly following the Effective Date of this Agreement by both
parties, the parties shall establish a committee (the "Clinical Trial
Committee"). The Committee shall be composed of one individual designated by
VITEX and one individual designated by USSC. The Clinical Trial Committee shall
meet no less frequently than quarterly to discuss and communicate with respect
to clinical trials for Products, to provide advice and recommendations to VITEX
and USSC in connection with their responsibilities for clinical trials under
this Agreement, and for USSC to advise VITEX concerning the progress of USSC in
obtaining Governmental Approvals for Products.
(g) VITEX shall provide quantities of Product to USSC for research and
development and for clinical trials without charge. VITEX shall also provide
other assistance to USSC in connection with USSC's conduct of clinical trials,
provided that USSC shall reimburse VITEX for its documented and reasonable out
of pocket costs (other than attorneys fees and expenses) in connection with such
requested assistance, provided same shall in each instance be approved by USSC
in advance.
(h) *********************************************************************
*******************************************************************************
*******************************************************************************
********.
-18-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
Notwithstanding, the foregoing, the Parties acknowledge that there are numerous
complexities and uncertainties involved with obtaining Governmental Approvals
for a new product, especially a blood product. The Parties understand and agree
that reasonable people can differ as to the appropriate strategy, approach or
individual decision with respect to obtaining Governmental Approvals and that
there can be no assurance that USSC will be able to obtain any of the
Governmental Approvals or, if obtained, such Governmental Approvals will be
obtained in a timely fashion designed to commercialize the Products. ***********
********************************************************************************
********************************************************************************
********************************************************: (V) any act or
omission of USSC or its Affiliates in good faith to obtain such Governmental
Approval; (W) any act or omission of a CRO or other third Person hired or
engaged by, or contracted with, USSC, its Affiliate or by a CRO; (X) any act or
omission of a Governmental Body; (Y) an act or omission of VITEX or any VITEX
Affiliate, any source of a Product or any of its components (e.g. fibrin,
thrombin, or reconstitution solution) thereof (including, without limitation,
NYBC), manufacturers, vendors or other third Persons hired or engaged by, or
contracted with, any of them in connection with the execution of VITEX's rights
and obligations under or arising out of this Agreement, or (Z) Force Majeure,
provided that, in any of such events, USSC shall *******************************
******* to overcome the denial or delay, subject to the foregoing exceptions.
********************************************************************************
****************************** in accordance with this Section 6(h) shall not be
deemed a breach of this Agreement by USSC or otherwise limit or diminish the
rights of USSC under or arising out of this Agreement except that, in such
event, USSC's Rights under this Agreement shall thereafter during the remainder
of the term of this Agreement become nonexclusive only in such portion of the
Territory (i.e. in the case of Europe, USSC's Rights shall become nonexclusive
solely in the Major Country in which such **************************************
**********************************************************.
7. CONFIDENTIALITY.
---------------
(a) Subject to Section 7(b) below, the term "Confidential Information"
shall mean, unless specified in writing to the contrary, any proprietary
information or material regarding the business or affairs of VITEX or USSC
including, without limitation, Technology, research,
-19-
<PAGE>
development, products, employee lists, vendor lists, and customer lists and
marketing and sales information, as well as the terms and conditions of this
Agreement. Subject to the provisions of subparagraph (c) below, any and all
Confidential Information given by either party to the other under this Agreement
shall not be disclosed to any third Person and shall not be used for purposes
other than the fulfillment of obligations under this Agreement.
(b) The following information shall not be considered Confidential
Information and is excluded from the provisions of subparagraph (a) above:
(i) information which, at the time of disclosure, is in the public
domain;
(ii) information which, after disclosure, becomes part of the public
domain by publication or otherwise, except by breach of this Agreement;
(iii) information which a party can establish by written proof was in
its possession at the time of disclosure and was not acquired, directly or
indirectly, from the other party or acquired from any third party subject to any
obligation of confidentiality to the disclosing party; or
(iv) information which is required by Law to be disclosed, provided
that such disclosure is subject to all applicable governmental or judicial
protection available for like material and the party relying on this exception
notifies the other party in writing in advance of such intended disclosure,
promptly after the notifying party becomes aware of the disclosure requirement.
(c) The parties agree to disclose or make available any Confidential
Information received under this Agreement only to those of their employees,
agents, consultants, sublicensee, vendors and suppliers to whom it shall be
reasonably necessary in order to facilitate the performance of their respective
obligations or the exercise of their respective rights hereunder and only after
they have undertaken to comply with all of the confidentiality obligations
hereunder. Each party to this Agreement agrees to be responsible for, and to
indemnify the other against, any breaches of the aforementioned confidentiality
obligations by any of its employees, agents, consultants, sublicensees, vendors
and suppliers.
-20-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
(d) The provisions of this Section 7 shall survive the expiration or
termination of this Agreement for a period of ***************.
8. SUPPLY OF PRODUCTS.
------------------
(a) Subject to the terms of this Agreement and during the Term, VITEX
shall supply USSC's requirements of Products, subject to the terms and
conditions of this Section 8.
(b) VITEX shall diligently qualify and register or cause to be qualified
and registered with all applicable Governmental Bodies all production facilities
used to manufacture and produce the Products, so as to permit the supply of
Products in a timely manner under this Agreement. VITEX shall provide quarterly
reports to USSC of its progress in establishing, qualifying and registering such
production facilities and will permit USSC and its representatives to inspect,
at its cost and expense, at any time during normal business hours and upon
reasonable prior notice.
(c)
(i) Promptly following the Effective Date of this Agreement, USSC shall
provide to VITEX a non-binding ************* forecast for Products. Such non-
binding forecast shall be updated and presented to VITEX annually throughout the
Term. The purpose of this forecast is to assist VITEX in its production planning
and to facilitate its ability to supply USSC requirements of Products but USSC
shall bear no liability for the accuracy or completeness thereof or be bound to
purchase Products in accordance with such non-binding forecast. VITEX shall
treat such non-binding forecast as USSC Confidential Information and may not
share it with any third party.
(ii) On or before twelve (12) months prior to the anticipated date of the
first Governmental Approval for the marketing, distribution or sale of a
Product, the parties will meet to discuss inventory requirements for the launch
of such Product following such Governmental Approval.
-21-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
(iii) Beginning with the first calendar quarter which is at least six
(6) months prior to the anticipated date of obtaining the first Governmental
Approval for the marketing, distribution or sale of a Product, and fifteen days
(15) prior to the beginning of each calendar quarter thereafter, USSC shall
furnish VITEX a rolling forecast (the "Forecast") of its semiannual delivery
requirements of Products for the immediately succeeding ************************
********************************************************************************
********************************************************************************
********. Binding forecasts for the ******************* following commercial
sale of a Product which exceed by ************************** the most recent
non-binding Forecast for the same period, and binding forecasts subsequent to
the ******************* following commercial sale of a Product which exceed by
******************* the most recent non-binding Forecast for the same period,
shall not trigger a Capacity Event as described below. Exhibit F attached hereto
shall serve to further reflect the parties agreement in this respect.
(d) USSC purchase orders shall be in writing and shall specify the
quantities and sizes of Products, the delivery destination within the Territory
and such other terms of sale not covered by this Agreement. Each purchase order
shall represent a firm commitment by USSC to purchase the specified quantity of
Products. VITEX may reject USSC's purchase order within ten (10) days after its
receipt, if the purchase order fails to comply with the requirements of this
Section 8 or in the event any of the other proposed terms of sale set forth in
the USSC purchase order which are not covered by this Agreement are not
acceptable to VITEX. If the purchase order complies with the requirements of
this Section 8, it shall be acknowledged and accepted promptly in writing by
VITEX. In the event of any discrepancy between a purchase order and this
Agreement, the terms of this Agreement shall govern.
(e) Products shall be labeled, sterilized and individually packed for
shipment and storage in accordance with specifications, including temperature
specifications, as mutually agreed upon and in accordance with applicable Laws.
All Products shall be identified by individual Product and batch numbers.
Products delivered by VITEX to USSC shall not include an applicator. USSC
presently expects to include applicator(s) in a package or kit incorporating the
packaged Product received from VITEX. The parties will discuss any alternative
product configurations, such as bulk fibrin, thrombin or reconstitution
solution, or if the parties desire to include an applicator in the packaged
Product received from VITEX.
-22-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
(f) VITEX shall prepare, obtain, and transmit to USSC such documents as
shall be required for USSC or its nominee to take over customs clearance and to
satisfy other import formalities into the Territory and export formalities, if
any.
(g) Upon loading the Products on board carrier at the dock of VITEX's
manufacturing plant and facilities, title to the Products and all risk of loss
or damage thereto shall pass to and be borne by USSC.
(h) VITEX covenants and agrees to have sufficient equipment or facilities
to provide manufacturing capacity for Products which USSC, its Affiliates and
permitted assignees order from VITEX.
VITEX shall use reasonable efforts to meet any requirements of USSC that
exceed a Forecast. USSC agrees that the nonbinding portions of its Forecasts
shall be made by USSC in good faith so that VITEX may provide sufficient
capacity for Products which USSC, its Affiliates and permitted assignees order
from VITEX, provided, however, that USSC shall have no liability for the
accuracy and completeness of such Forecasts and shall have no obligation to
order any Product in the nonbinding portion of a Forecast.
If at any time during the Term VITEX is unwilling or unable to supply
Products pursuant to USSC purchase orders for **************** or more (even if
due to Force Majeure) but not in the event such Purchase Orders exceed by twenty
five percent (25%) or more of the most recent binding Forecast, (each a
"Capacity Event") then, in such event, but only for so long as such condition
continues but for a period of not less than one (1) year ("Capacity Event
Period"), USSC shall be deemed to have satisfied its Exclusivity Minimum Sales
for the Capacity Event Period and USSC shall have the right in its discretion to
require VITEX on written notice to (i) transfer to USSC the data and information
necessary to manufacture or have a third party manufacture Products during the
Capacity Event Period, and (ii) grant to USSC a fully paid up option and right
to obtain an exclusive, worldwide license and right, with the right to
sublicense, during the Capacity Event Period to manufacture and produce Products
for sales by USSC or its Affiliates and permitted assignees under the Patents
and Technology (the "Capacity Event License"). In such event, VITEX shall
provide assistance to USSC to effect the aforesaid transfer provided USSC shall
pay to VITEX its out of pocket costs (excluding attorney fees and expenses)
-23-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
During any Capacity Event Period, USSC shall continue to purchase Product
from VITEX on the terms and conditions of this Agreement to the extent VITEX is
willing and able to supply Products to USSC in accordance with the terms and
conditions of this Agreement.
The Capacity Event License shall be exercisable by USSC upon notice thereof
given to VITEX without the need for execution of any further documentation,
except that for good order's sake the Parties shall execute a document
evidencing the effectiveness of the Capacity Event License. As full and complete
consideration for the Capacity Event License, USSC shall pay to VITEX a periodic
royalty (the "Capacity Event Royalty") (i) during the ******************* of the
Capacity Event Period equal to (x) ****************** on all Net Sales of
Products manufactured under the Capacity Event License by USSC or its third
party manufacturers, reduced by (y) the amount of any additional out of pocket
costs and expenses (e.g. higher per unit prices by a third party supplier) which
USSC may incur in connection with obtaining an alternative supply of Products,
provided that the Capacity Event Royalty shall in any such event be no less than
**************** on all such Net Sales, and (ii) during the term of this
Agreement subsequent to the ******************* of the Capacity Event Period,
the Capacity Event Royalty shall be equal to (x) ***************** on all Net
Sales of Products manufactured under the Capacity Event License by USSC or its
third party manufacturers, reduced by (y) the amount of any additional out of
pocket costs and expenses (e.g.. higher per unit prices by a third party
supplier) which USSC may incur in connection with obtaining an alternative
supply of Products, provided that the Capacity Event Royalty shall in any such
event be no less than ********************************* on all such Net Sales.
The recordkeeping and audit provisions set forth in Section 5(b) shall
apply to the Capacity Event License. USSC shall have the right at its discretion
to terminate the Capacity Event License at any time upon notice to VITEX but
without any termination or other fee being due by USSC to VITEX in connection
with such termination.
(i) If the Rights are converted to non exclusive in accordance with this
Agreement, VITEX shall (i) offer prices and terms of sale for Products to USSC,
its Affiliates and permitted assignees which shall be VITEX's lowest prices and
best terms considering (aa) the price and terms set forth in this Agreement, and
(bb) the prices and best terms on which VITEX has sold and agrees to sell
Products to any third Person for comparable quantities, and (ii) allocate its
production of Products and production of Products for VITEX by third Person
between (aa) its sales to USSC, its Affiliates
-24-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
and permitted assignees, and (bb) its sales or transfers to third Persons, in a
proportion that is at least as favorable to USSC, its Affiliates and permitted
assignees as the ratio that the Products set forth in the Forecasts bears to the
number of Products set forth in VITEX's bona fide, good faith sales forecasts
for sales by VITEX, its Affiliates and third Persons.
(j) Notwithstanding anything set forth in this Section 8 to the contrary,
VITEX shall require thirty six (36) months of notice by USSC prior to providing
USSC with the first shipment of Product for veterinary applications.
9. PRICE AND TERMS OF SALE.
-----------------------
(a) Prices for Products shall be as follows:
(i) Except as provided in Sections 9(a)(ii), 9(a)(iii) and 9(a)(iv)
below, the purchase price for a Product, ** ******* ******* **********
************* ******** shall be ******** multiplied by the
****** ** ** ** ********** ******* ********* ** *** ******* (the Purchase
Price").
(ii) The purchase price for a Product, Ex Factory VITEX's or third
Person's Japanese manufacturing facility, for resale in Japan, may be higher
than the Purchase Price but only if and to the extent that regulatory and
commercial considerations require the manufacture of Japanese sourced Product in
Japan for the Japanese market, and in no event shall the purchase price exceed
******** mutiplied by *** ****** ** ** ** ********** ******* contained in the
Product (the "Maximum Japanese Price"), provided that if Japanese sourced
Product is (aa) required by Japanese Governmental Bodies, or if the parties have
mutually agreed that Japanese sourced Product is commercially desirable, and
(bb) is not commercially available in Japan for the Maximum Japanese Price,
then, in such event, the parties will discuss such situation and seek out a
mutually acceptable resolution, but in such event VITEX shall not be required to
sell to USSC at the Maximum Japanese Price a Product for resale in Japan, and
USSC shall not be required to purchase for resale in Japan a Product from VITEX
or a Japanese producer at a price in excess of the Maximum Japanese Price.
(iii) Subsequent to the ***** *** ******** ***** following the first
Governmental Approval to market, distribute and sell a Product in the United
States, Japan or a Major
-25-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
Country in Europe (i.e.. ******* ****** ** *** ****** ******* ***** **** *
***** ******* ********), if a "Price Increase Event" (defined below) has
occurred with respect to such year, the purchase price for a Product shall be
increased by ******** multiplied by *** ****** ** ** ** **********
******* contained in the Product. For purposes of this Section 9(a)(iii), a
Price Increase Event shall be deemed to have occurred if the sale of Products by
USSC, its Affiliates and permitted assignees in such calendar year or thereafter
following Governmental Approval are less than a "Price Increase Level", as
defined hereinafter, for such year, unless due to (W) any act or omission of a
Governmental Body, (X) any act or omission of VITEX or a VITEX Affiliate, (Y)
any act or omission of a supplier of a Product, or any components (e.g. fibrin,
thrombin, or reconstitution solution) thereof (including, without limitation,
NYBC), manufacturers, vendors or other third Persons hired or engaged by, or
contracted with, any of them in connection with the execution of VITEX's rights
and obligations under or arising out of this Agreement, or (Z) Force Majeure.
The "Price Increase Level" shall be *** ******* *** ***** ******* ****** ** ***
*********** ******* ***** *** **** ****, as the case may be. Upon a mutual
determination by the parties that a Price Increase Event for such year has
occurred, VITEX will invoice USSC for the additional amounts owed to it for
Products sold to USSC since the beginning of such year, which invoice shall be
paid within forty five (45) days of receipt unless disputed by USSC in good
faith.
(iv) Notwithstanding any other provision of this Agreement, the Purchase
Price shall be fixed for the ***** *** *** ***** following Governmental Approval
to Market distribute and sell a Product in the United States, Japan or a Major
Country in Europe (i.e. ******* ****** ** *** ****** ******* ***** **** * *****
******* *********). Subsequent to the ***** *** *** ***** following Governmental
Approval, the Purchase Price shall be subject to increase or reduction through
negotiation by the parties in good faith on an annual basis taking into
consideration conditions in the marketplace including, without limitation,
competitive products, as well as distributor margins, manufacturing costs and
efficiencies and other increases and decreases, if any, otherwise provided for
in this Section 9. Notwithstanding, any determination to change the Purchase
Price shall not consider increases in manufacturing costs unless and to the
extent such costs (calculated in accordance with GAAP consistently applied) for
any twelve (12) month period have increased by ******** or more above the
manufacturing costs for the Product (calculated in the same manner) measured for
the twelve (12) month period commencing when the Product is first commercially
sold under this Agreement in the United States, Japan or a Major Country in
Europe (i.e. ******* ****** **
-26-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
*** ****** ******* ***** **** * ***** ******* *********). In the event VITEX
desires to propose to USSC an increase in the Purchase Price based, in whole or
in part, on an increase in VITEX's manufacturing costs, VITEX shall at its
expense appoint an independent certified public accounting firm of nationally
recognized standing to examine VITEX's books and records and confirm to VITEX
and USSC the manufacturing cost figures calculated in accordance with this
Section 9(a)(iv). Such report shall be provided to USSC in connection with any
such VITEX request for an increase in the Purchase Price based, in whole or in
part, on increases in VITEX's manufacturing costs. Such manufacturing cost
information shall be treated as VITEX's Confidential Information.
(b) Prices for Improved Products: The parties shall in good faith discuss
and seek to reach a mutually satisfactory agreement with respect to the
appropriate price for each Improved Product giving due consideration for pricing
of similar or competitive products and other market related considerations.
Prices for Improved Products shall be subject to increase or reduction to the
same extent as provided in this Agreement for Products.
(c) All dollar amounts stated in this Agreement are expressed in U.S.
dollars, and all payments to be made to any party hereunder are to be made in
legal currency of the United States and shall be subject to any withholding
requirements under applicable Law. All payments to be made under this Agreement
shall be paid by wire transfer in immediately available funds, to such account
as the receiving party shall have designated from time to time in writing to the
other party.
(d) VITEX covenants and agrees that at the time of sale or transfer of a
Product to USSC, its Affiliates and permitted assignees, it shall have, transfer
and convey good and marketable title to the Product free and clear of all Liens.
(e) VITEX will notify USSC in writing no later than ten (10) business days
prior to completion of QC release testing of all Products to be available for
delivery. USSC will arrange for the pickup and shipping of such Products within
fifteen (15) business days of such availability. In the event that such
arrangements are not timely made or in the event of any other delay in delivery
not attributable to VITEX, VITEX shall store the Products at USSC expense upon
commercially reasonable terms and conditions to be agreed by VITEX and
-27-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
USSC. If storage is not available at the VITEX facility, USSC shall make its
owns arrangements for storage at alternative FDA approved locations and for
transportation thereof.
(f) The purchase price for Product purchased pursuant to USSC's purchase
orders shall be paid by USSC to VITEX within ******** from the date VITEX has
made the Product available to USSC at VITEX's Melville, Long Island facility in
accordance with USSC's purchase order (unless the parties make mutually
acceptable alternative arrangements) provided USSC has received a complete
invoice related thereto and USSC has not rejected the Product in accordance with
Section 10 below. The invoice date may coincide with but shall not be earlier
than the date on which VITEX has made the Product available to USSC at VITEX's
facility.
(g) All Products will be delivered by *****, ****** *** ********, *** ****
******* ****.
10. WARRANTIES; LIMITATION OF LIABILITY; REJECTION OF PRODUCT.
---------------------------------------------------------
(a) VITEX represents and warrants that the Products to be sold to USSC
under this Agreement shall not be adulterated or misbranded at the time of
delivery within the meaning of the Act, shall meet VITEX's standard
specifications for the Products, and shall be free of defects in material and
workmanship. VITEX shall document from time to time, and provide USSC with, such
specifications in reasonably complete detail. THIS WARRANTY IS IN LIEU OF ALL
OTHER WARRANTIES, EXPRESS, STATUTORY OR IMPLIED, INCLUDING THE IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
(b) EACH PARTY'S LIABILITY UNDER OR ARISING OUT OF THIS AGREEMENT SHALL BE
LIMITED TO ACTUAL DAMAGES. IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR
INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES SUFFERED BY THE PARTIES OR ANY
OTHERS RESULTING FROM THE USE OF THE PRODUCT.
-28-
<PAGE>
(c) USSC may reject any shipment or partial shipment from VITEX that does
not meet VITEX's representations and warranties as set forth in this Section 10,
upon notice to VITEX delivered within forty five (45) days after receipt by USSC
of such shipment or, in the case of any latent defect, after USSC discovered or
had a reasonable basis for discovering such defect. Any shipment of Products
that are not rejected by USSC within such period shall be deemed accepted. In no
event shall VITEX be liable for any nonconformity of the Products resulting from
the shipment, storage or handling of such Products after delivery by VITEX in
accordance with Section 8 above, or the tampering, alteration or mishandling of
the Product by any person (including any customer of USSC) following such
delivery.
(d) Upon the request of VITEX, USSC shall furnish evidence of
nonconformity of the shipment of Product. If VITEX confirms the nonconformity,
VITEX will use diligent efforts to promptly replace the Product at no additional
charge to USSC with a conforming shipment and issue a credit to USSC for any
costs and expenses incurred by USSC in shipping the rejected Product to USSC.
11. INDEMNIFICATION.
---------------
(a) VITEX shall indemnify, defend and hold harmless USSC and its
Affiliates, employees, officers, directors and agents (each, a "USSC Indemnified
Party") from and against any and all liability, loss, damage, cost and expense
(including reasonable attorneys' fees and expenses) (collectively, a
"Liability") (subject to the limitations in subparagraph (c) below) which the
USSC Indemnified Party may incur, suffer or be required to pay resulting from or
arising in connection with (i) the breach by VITEX of any representation or
warranty contained in Section 17 of this Agreement, or (ii) any negligent act or
omission of VITEX or any Affiliate thereof in the design, manufacture, handling,
transportation or storage by VITEX or its agents, or any other activity
conducted by VITEX under or arising out of this Agreement which is a proximate
cause of injury, death or property damage to a third Person.
(b) USSC shall indemnify, defend and hold harmless VITEX and its
Affiliates, employees, officers, directors and agents (each, an "VITEX
Indemnified Party") from and against any Liability (subject to the limitations
in subparagraph (c) below) which the VITEX Indemnified Party may incur, suffer
or be required to pay resulting from or arising in
-29-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
connection with (i) the breach by USSC of any representation or warranty
contained in Section 17 of this Agreement, or (ii) any negligent act or omission
of USSC (or any Affiliate thereof) in the handling, transportation, storage,
distribution, marketing and sale of the Products by USSC, its Affiliates or
permitted assignees, excluding the design and manufacture of the Product but
including manufacture of the Product under a Capacity Event License, or any
other activity conducted by USSC, its Affiliates or permitted assignees under or
arising out of this Agreement which is a proximate cause of injury, death or
property damage to a third Person.
(c) The obligations of the indemnifying party under subparagraphs (a) and
(b) above are conditioned upon the delivery of written notice to the
indemnifying party of any potential Liability promptly after the indemnified
party becomes aware of such potential Liability. The indemnifying party shall
have the right to assume the defense of any claim or Action related to the
Liability if it has assumed responsibility for the claim or Action in writing.
If the indemnifying party defends the claim or Action, the indemnified party may
participate in (but not control) the defense or settlement thereof at its sole
cost and expense.
(d) Neither party may settle a claim or action related to a Liability
without the consent of the other party if such settlement would impose any
monetary obligation on the other party or require the other party to submit to
an injunction.
(e) Commencing prior to the date of shipment of the first batch of Product
from VITEX to USSC and thereafter, during the Term, each party shall maintain
comprehensive general liability insurance, including product liability insurance
with broad form vendors coverage with insurance carriers reasonably acceptable
to the other party on a claims made basis in an amount not less than ********
combined single limit for bodily injury and property damage per occurrence and
in the aggregate. Such insurance may contain provision for a deductible or self-
insured retention not to exceed ******** of such party's stockholders' equity.
Such insurance shall include the other as an additional named insured as its
interest may appear. Prior to delivery of the first batch of a Product from
VITEX to USSC, each party shall furnish the other party with a certificate of
insurance evidencing such coverage so naming the other party as an additional
insured as its interest may appear and with thirty (30) days' written notice to
the other party of cancellation or material
-30-
<PAGE>
change. Nothing set forth herein in this Section 11(e) is intended to substitute
for the indemnity rights of each party set forth in this Agreement.
12. VITEX MANUFACTURING OF PRODUCTS.
-------------------------------
(a) VITEX agrees to produce and manufacture Products in compliance
with Good Manufacturing Practices, applicable Laws and pursuant to current
Product specifications. In discharging its obligations hereunder, VITEX shall
obtain all applicable Governmental Approvals and observe in all material
respects all applicable Laws including, without limitation, those relating to
registration requirements for the manufacturing, assembling or supply of medical
devices and defect notification.
(b) USSC and its representatives shall have the right, but not the
obligation, to inspect the production, labeling, shipping, packaging and quality
control and sterilization facilities of VITEX as well as all records relating to
the manufacturing sites of such manufacturing party to verify compliance with
Good Manufacturing Practices and applicable Laws. Such inspections shall be
during normal business hours and with advance notice.
(c) VITEX shall notify USSC thirty (30) days prior to making, or any
third party making on VITEX's behalf, any material change in the composition or
design of the Product, in the materials used to manufacture the Product or in
the manufacturing process. In connection with any such change, VITEX shall
provide test results to USSC within seven (7) days of any such changes to assure
that the Product continues to meet safety and efficacy at least to the levels of
the prior specification. All information disclosed by VITEX to USSC pursuant to
this Section 12 shall be considered VITEX Confidential Information.
(d) VITEX shall institute and fund any recall, field corrective
action, or the like in circumstances relating to a Product defect or failure
which requires such action by a Governmental Body or as otherwise may be
required pursuant to applicable Laws, if caused by VITEX's acts or omissions.
USSC shall institute and fund any recall, field corrective action, or the like
in circumstances relating to a Product defect or failure which requires such
action by a Governmental Body or as otherwise may be required by applicable
Laws, if caused by USSC's acts or omissions. In either circumstance, the actual
retrieval of the Product sold by USSC, its
-31-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
Affiliates or permitted assignees shall be undertaken by USSC, its Affiliates or
permitted assignees, as the case may be. Both parties shall maintain adequate
records concerning traceability of Products. Each party shall provide the other
with a copy of any reported adverse experience involving a Product purchased or
sold under this Agreement. Any death, serious injury, potential for occurrence
of the same or change in the frequency or occurrence in field experiences
required to be reported by a party to this Agreement to any Governmental Body
shall be reported to the other party as promptly as possible to enable the
parties to comply with applicable Laws in a timely manner. *************** ***
***** ********* ** **** ********* ** *** ********, ** *** ***** ** *** ******,
***** ********** ******, ** *** **** ** * ******* ********* *** ****** **
******** ******* ***** *** *** ****** ** *** ******* ** * ******* ** *** *******
** *** ******** ** **************, ** **** ** **** ** ******* ** *********** **
*********, ***** ***** ****** *** ******* *** *********** ** *** **** **** ***
******* ** ******** ** ******* *****.
(e) **** ***** ****** ** *** ***** ******* ***** ** *** ******
******* ***** ** ****** ****** ********* *********, *** ** ** ***** **** ****
*** ******* ******** ******* *****,**** *** **** *****, ** ***** *** *****
****** **** ******* ********** ********** **** * ******* ******* ******** ******
********* ********. **** ********* ****** ***** **** **** ******* ** *****
********. **** ***** **** *** ***** ** ********* **** ******, *** ***** *******
**** ***** ** ********** **** **** ************. * ******* ******* ** * ******
** ****** **** ** *** *********** ** ******* *** ** ********* ** * ******
********* *** ** *** ** ** ***** ** ***** ** ****. ******* *** ***** ****** **
**** ******* ***** ** ******** ** ********** *** *** ********** ** ***** **
******* ********** ******* ** *** ********* ****** ** **** ***** *** ***** **
**** *********.
13. USSC DISTRIBUTION OF PRODUCTS.
-----------------------------
(a) VITEX shall make available to USSC, at no charge to USSC, samples
of all VITEX's sales literature, catalogues, technical manuals, specification
and data sheets and other promotional materials relating to a Product which it
may prepare or have prepared from time to time during the Term (collectively,
"VITEX Marketing Materials"). Five copies of all VITEX Marketing Materials
existing on the Effective Date of this Agreement is executed by all of the
parties hereto shall be delivered to USSC promptly following the Effective Date
of
-32-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
this Agreement. USSC shall have the right to copy, disseminate and use VITEX
Marketing Materials, in whole or excerpts, at no charge.
(b) USSC shall have unqualified discretion and control over its
Product marketing decisions and promotional materials. Without limiting the
foregoing, USSC shall have the right to prepare such sales literature and other
advertising and promotional materials as USSC determines to be necessary or
appropriate for the marketing, distribution and sale of the Products within the
Territory provided that USSC shall provide to VITEX a copy of all USSC's sales
literature and other advertising and promotional materials prepared by it or on
its behalf excluding copies of materials which contain the same claims and are
used in the same market as materials previously provided to VITEX. VITEX shall
have no liability for any claim by any third party arising out of the creation,
use or distribution by USSC of any sales literature or other advertising or
promotional materials not approved by VITEX, which approval shall not be
unreasonably delayed or denied.
14. NON COMPETE.
-----------
(a) During the Term unless and until the Rights are converted to non-
exclusive under Sections 3(a) and 3(b), VITEX and its Affiliates shall sell
Product only to USSC, and neither VITEX nor any of its Affiliates shall, except
as permitted in Sections 2(c),2(d) and 14(b) knowingly, directly or indirectly,
(i) develop, market, distribute or sell, or (ii) consult with, or otherwise
assist any third Person to develop, market, distribute or sell in the Field, any
product, alone or in any kit form, which may be competitive with a Product, in
or into any portion of the Territory in which and for so long as USSC has
exclusive Rights in such portion of the Territory under this Agreement. *******
********* ** *** ********* ***** ** ****** ** ******** ***** **** ********* ****
****** ************* ******** ***** **** ************** ** *************
******** ***** ********, ****** *****, ***** ** *** ******** ******** *****
*********** *** ** ***** ****** *********, ******** **** ***** ***** ***
********* *********** ** ******* ******** ** *** ***** ***** *** *** ** ***
*****.
(b) During the Term unless and until the Rights are converted to
nonexclusive under Section 3(a) or (b), USSC and its Affiliates shall purchase
Product only from VITEX, and neither USSC nor any of its Affiliates shall
knowingly, directly or indirectly, market or sell a
-33-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
product competitive with a Product in any portion of the Territory for so long
as USSC has exclusive rights under this Agreement with respect to such portion
of the Territory, or (ii) consult with, or otherwise assist any third Person to
develop, market, distribute or sell in the Field, any product alone or in kit
form, which may be competitive with a Product in or into any portion of the
Territory for so long as USSC has exclusive rights under this Agreement in such
portion of the Territory. *************** *** *********, **** ***** *** **
******* ** *** ********* ************ **** ******* ** *** ***********,
*********, ************ *** **** ** ****** **** **** * ******** ******
************* *********, ********* **** ** *** ********* ****** *** ***
*********** ******** ** ****, *** ********** *** ********* ********* ** *
******** **** ******* *** ********* ****** *** ***** ** ******** ** ****, ***
********** *** ********* ********* ** **** ******** ****, ****, ** **** *****,
***** ***** **** *** ***** ** ******* ****** ****** ***** **** ********* **
************ ** ********** **** ******* **** *** *** ********* **** ***
*********** ********** ******** ****. Subsequent to USSC's first commercial sale
of a Recombinant Product, USSC shall at its expense appoint an independent
certified public accounting firm of nationally recognized standing to examine
USSC's books and records and confirm to VITEX and USSC whether the net sales of
USSC, its Affiliates and permitted assignees of Recombinant Products exceeds the
net sales of USSC, its Affiliates and permitted assignees of Products. Such
information shall be retained by VITEX as USSC's Confidential Information. Such
examination shall occur on or after February 15 of any such calendar year.
15. TRADEMARKS.
----------
(a) Unless prohibited by local Law, all labeling and packaging
material for the Products and their respective components shall provide (if
applicable) that the Products are manufactured by, and sold under license from,
"V. I. Technologies, Inc." USSC shall appropriately identify, in compliance with
applicable Laws, all Products and its appropriate components with any Existing
Patent or Future Patent numbers or appropriate Existing or Future Patent legends
applicable to such component.
(b) Notwithstanding Section 15(a) above or anything else in this
Agreement to the contrary, USSC may utilize any trademark, trade name or logo in
connection with the promotion, marketing and sale of a Product which USSC in its
discretion may decide (other
-34-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
than trademarks, tradenames or logos owned by VITEX unless VITEX has given USSC
written consent to use such VITEX trademarks, tradenames or logos in connection
with USSC's marketing and sale of Products, which consent shall be in VITEX's
discretion). All such trademarks, trade names and logos (with the exception of
trademarks, tradenames or logos of VITEX used with permission as described
above) shall be owned by USSC, shall not become a Trademark owned by VITEX nor
shall VITEX acquire any right, title or interest therein or have the right to
use any thereof during or after the Term. VITEX agrees that any rights arising
to it from the use of the USSC trademarks in the Territory and any goodwill
related thereto shall inure to the benefit of USSC.
16. PROTECTION OF INTELLECTUAL PROPERTY RIGHTS.
------------------------------------------
(a) If, at any time during the Term, either party shall become aware
of any apparent infringement or threatened infringement by a third Person of the
Existing Patents or Future Patents in the Field (collectively, the "IPRs"), the
parties having the knowledge thereof shall promptly give notice to the other
party. **** ***** **** *** *****, *** *** *** **********, ** *********, ** ***
**** **** *** *******, ** ****** ** *** *** **** ** ** *** **** ** ***** ** ***
**********, *** ***** ** ******** ** *********** **** *** ** *** ******** **
*******, ******** ** ****** ******** ** ********* ** *** **** ******, ********
**** **** ***** ***** ******** ** *** ********** ***** *** **** ******* *** **
***** **** ******* ** *** *******, ******** ** ****** ******** ** ********* **
*** **** ****** ***** ********** ***** **** ******* ** *** **** ** ********
***** ***** ********* **** **** ****** ** ***** ** ********** **** *** ***** **
**** *********. In the event that any such Action for infringement may only be
asserted in a particular jurisdiction in the name of VITEX or any of its
Affiliates, then VITEX agrees that it will allow USSC to prosecute such Action
in VITEX's name or in the name of VITEX's Affiliates at USSC's request. USSC
shall have sole control of the Action and all negotiations for its compromise or
settlement.
(b) If, at any time during the Term, either party becomes aware of a
claim or Action by a third Person that the use of an IPR or the marketing,
distribution or sale of a Product in the Territory infringes or allegedly
infringes the intellectual property rights of a third Person, the parties having
the knowledge thereof shall promptly give notice to the other party. Such notice
shall set forth the claim of the apparent infringement or threatened
-35-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
infringement to the extent then known by the notifying party. **** ***** ****
*** ****** ** ****** **, ** *** ******, ****** *** **** ***** ** ****** ** ***
****** **** ** ** ***** ** ** ********* **** *** *** ********* **** ***
************ ******** ****** ** *** ***** ******. *************** *** *********,
** ***** *** ****** ********* ***** ** ** ** ** *** **** ** **** ********* ** *
***** ** ******, ** *** ***** ** *** ************ ******** ***** ******** ***
***** *** **** ***** ******** ***** ** ******, **** ***** **** ** ********** **
****** ***** ** *********** *******. **** ***** **** **** ******* ** *** *******
** **** ***** ** ****** *** *** *********** *** *** ********** ** **********.
(c) VITEX will provide reasonable assistance and information to USSC
in connection with such claims and Actions, upon reasonable prior notice,
including, without limitation, securing the testimony of its officers,
directors, employees, agents and inventors, provided that USSC shall reimburse
VITEX for all out of pocket expenses, other than attorney's fees and expenses,
incurred by VITEX in providing such cooperation.
(d) Notwithstanding anything in this Section 16 to the contrary, the
parties acknowledge that certain of the IPR include intellectual property
licensed by VITEX from the New York Blood Center ("NYBC") (the "NYBC IPR")
pursuant to the New York Blood Center License Agreement. VITEX hereby conveys to
USSC all of VITEX's rights under the NYBC IPR or otherwise to defend the NYBC
IPR in the Field.
17. REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS.
-----------------------------------------------------
(a) VITEX and USSC each hereby represent and warrant to the other as
follows:
(i) The execution, delivery and performance of this Agreement
by such party has been duly authorized by all requisite corporate action;
(ii) The execution, delivery and performance of this Agreement
by such party and the rights granted to the other party hereto is not restricted
or otherwise limited by, and does not conflict with, or constitute a breach or
default under, (A) its certificate of incorporation or bylaws or any equivalent
charter documents, (B) any Law applicable to it, or
-36-
<PAGE>
(C) any provision of any agreement, contract, commitment or instrument to which
it is a party or by which it or any of its assets is bound;
(iii) Except for Governmental Approvals required to manufacture
and market the Products, the execution, delivery and performance of this
Agreement by such party does not require any Governmental Approval.
(iv) There is no claim, Action or investigation, pending or
currently threatened against it, which (i) if adversely determined, would
restrict or limit its right to enter into this Agreement, grant the rights which
are granted by it under this Agreement or carry out its respective obligations
under this Agreement) or (ii) involves or relates to any of the IPRs.
(b) VITEX hereby further represents, warrants, covenants and agrees
with USSC as follows:
(i) The description of Products, set forth in Exhibit A of
---------
this Agreement is a true, correct and complete description of such Products as
of the date of this Agreement.
(ii) The patents and patent applications set forth in Exhibit B
---------
of this Agreement constitute and include all of the patents and patent
applications owned by, or licensed to, VITEX or its Affiliates, or in which any
of them has any right, title or interest, relating to Products. The nature of
any such licensors' rights, title or interest in the foregoing is as set forth
in Exhibit B. There is no Lien on VITEX's interest in any of the foregoing and
---------
VITEX covenants and agrees to retain such interests free and clear of any Lien.
(iii) Set forth on Exhibit D is a description of the
---------
manufacturing process which VITEX will use to manufacture the Products under
this Agreement. With the exception of those portions of the said manufacturing
process covered by patent rights of the New York Blood Center and licensed to
VITEX under the license agreement attached as Exhibit E hereto (the "NYBC
---------
License"), VITEX is the owner of all rights, title and interest in any
Technology necessary to manufacture the Products under this Agreement. There is
no Lien on any of VITEX's said rights or on VITEX's interest in the NYBC
License. VITEX covenants and agrees to retain its said rights free and clear of
any Liens. To VITEX's knowledge, but without
-37-
<PAGE>
specific investigation, there is no Lien on NYBC's interest in the NYBC License
or on the patents which are the subject of the NYBC Agreement.
(iv) The New York Blood Center License Agreement set forth in
Exhibit E of this Agreement is a true, correct and complete copy of such
- ---------
agreement and constitutes all of the arrangements between the NYBC and VITEX
with respect to all intellectual property involving or relating to the Products,
Improved Products or Enhanced Products.
(c) The representation and warranties of each party contained in
subparagraphs (a) and (b) above (i) shall be considered to have been relied upon
by the other party hereto regardless of any discussion, review or investigation
made by or on behalf of, the other party, and (ii) shall survive the execution
of this Agreement and shall remain true and correct after the date hereof with
the same effect as if made as of the date hereof.
(d) Each party hereto covenants and agrees that it shall not enter
into any oral or written agreement or arrangement that would be inconsistent
with its obligations under this Agreement or the rights granted to the other
party in this Agreement.
(e) Nothing in this Agreement shall be construed as a representation
or warranty that the IPRs are valid or enforceable or that their exercise does
not infringe any intellectual property rights of third parties. Notwithstanding
the foregoing, VITEX hereby represents and warrants to USSC that, to the best of
its knowledge and belief, neither the exercise of the IPRs nor the marketing,
distribution or sale of Products thereunder would infringe the valid
intellectual property rights of any third Person.
18. TERMINATION OF AGREEMENT.
------------------------
(a) VITEX may terminate this Agreement upon written notice to USSC in
the event of any of the following ("USSC Events of Default"):
(i) USSC commits any breach of a provision of this Agreement,
which breach continues for sixty (60) consecutive days after receipt of notice
thereof from VITEX, except for USSC's failure to make payment to VITEX of any
material amount due and owing
-38-
<PAGE>
and such failure continues for fifteen (15) consecutive days after receipt of
notice thereof from VITEX, unless USSC contests same in good faith.
(ii) USSC makes an assignment for the benefit of creditors, or
a trustee or receiver for USSC or any substantial part of its assets is
appointed and such trustee or receiver is not discharged or stayed within sixty
(60) consecutive days; or
(iii) Any proceeding involving USSC is voluntarily commenced by
USSC under any bankruptcy, reorganization, insolvency, readjustment of debt,
dissolution or liquidation Law; or if such proceeding is involuntarily
instituted against USSC and the same shall remain undismissed or unstayed for
sixty (60) consecutive days.
(b) USSC may terminate this Agreement upon written notice to VITEX in
the event of any of the following ("VITEX Events of Default"):
(i) VITEX grants third parties any rights conflicting with the
Rights, or commits any other breach of a provision of this Agreement, which
breach continues for sixty (60) consecutive days after receipt of notice thereof
from USSC, unless VITEX contests the existence of such breach in good faith;
(ii) VITEX makes an assignment for the benefit of creditors, or
a trustee or receiver for VITEX or any substantial party of its assets is
appointed and such trustee or receiver is not discharged or stayed within sixty
(60) consecutive days; or
(iii) Any proceeding involving VITEX is voluntarily commenced by
VITEX under any bankruptcy, reorganization, insolvency, readjustment of debt,
dissolution or liquidation Law; or if such proceeding is involuntarily
instituted against VITEX the same shall remain undismissed or unstayed for sixty
(60) consecutive days.
(c) USSC may terminate this Agreement upon nine (9) months notice to
VITEX.
(d) The parties may terminate this Agreement upon the mutual
agreement of VITEX and USSC set forth in a writing signed by both parties.
-39-
<PAGE>
19. POST-TERMINATION OBLIGATIONS; SURVIVAL.
--------------------------------------
(a) Upon expiration of the Term or termination prior to the end of
the Term, USSC, its Affiliates and permitted assignees shall have the right to
market, distribute and sell or cause to be marketed, distributed and sold all
stocks of Products on hand on the date of expiration as well as any thereof
subject to outstanding purchase orders.
(b) In the event of any termination of this Agreement as provided in
Section 18(a) or 18(c) above, all Governmental Approvals specific to the
marketing and sale of the Products which are in the name of USSC or its
Affiliates shall be promptly transferred to VITEX, to the extent transferable.
(c) Neither USSC nor VITEX shall be relieved of their respective
obligations to pay sums of money due and payable or accrued under this Agreement
as of the date of such termination or expiration.
(d) Any provision required to interpret and enforce the parties'
rights and obligations under this Agreement upon the expiration or termination
of this Agreement shall survive such expiration or termination to the extent
required for the full observation and performance of this Agreement by the
parties hereto.
20. NOTICES.
-------
(a) All notices, and other communications required or called for
under this Agreement shall be in writing, shall be transmitted by overnight U.S.
Mail, postage prepaid, or by certified or registered U.S. Mail, return receipt
request, postage prepaid or by overnight Federal Express or another nationally
recognized courier service (billed to sender) and shall be deemed delivered when
received by the party to whom it is addressed at:
If to VITEX:
V.I. Technologies, Inc.
155 Duryea Road
Melville, NY 11747
-40-
<PAGE>
Attn.: Chief Executive Officer
If to USSC:
United States Surgical Corporation
150 Glover Avenue
Norwalk, CT 06856
Attn.: Senior Vice President and General Counsel
21. INDEPENDENT RELATIONSHIP.
------------------------
(a) Nothing herein contained shall be deemed to create an employment,
agency, joint venture or partnership relationship between the parties hereto or
any of their agents or employees, or any other legal arrangement that would
impose liability upon one party for the act or failure to act of the other
party. Neither party shall have any power to enter into any contracts or
commitments or to incur any liabilities in the name of, or on behalf of, the
other party, or to bind the other party in any respect whatsoever.
22. FORCE MAJEURE.
-------------
(a) Failure of any party to perform its obligations under this
Agreement (except the obligation to make payments when properly due) shall not
subject such party to any liability or place them in breach of any term or
condition of this Agreement to the other party if such failure is caused by any
cause beyond the reasonable control of such non-performing party, including,
without limitation, acts of God, fire, explosion, flood, drought, war, riot,
sabotage, embargo, strikes or other labor double, failure in whole or in part of
suppliers to deliver on schedule materials, equipment or machinery, interruption
of or delay in transportation, a national health emergency or compliance with
any Law of any Governmental Body, or Product recall or Plasma Recall
(collectively, "Force Majeure"). The party affected by such Force Majeure shall
notify the other party immediately and in detail of the commencement and nature
of such Force Majeure and the probable consequences thereof, and shall use its
best efforts to render performance in a timely manner, utilizing to such end all
resources reasonably available to it under the circumstances.
-41-
<PAGE>
23. PUBLIC DISCLOSURE.
-----------------
(a) Neither party shall make any press release or other written or
oral public announcement regarding this Agreement and the transaction
contemplated hereby until first obtaining the prior consent of the other party,
which shall not be unreasonably withheld, unless such public announcement is
required by Law. The party required by Law to make any such public announcement
or other disclosure shall use reasonable efforts to inform the other party of
the proposed announcement or disclosure in reasonably sufficient time prior to
public release, and shall use reasonable efforts to provide the other party with
a written copy thereof in order to allow such other party to comment upon such
announcement or disclosure.
24. GOVERNING LAW; RESOLUTIONS OF DISPUTES.
--------------------------------------
(a) This Agreement and all questions relating to its validity,
interpretation, performance and enforcement shall be governed by and construed
in accordance with the internal laws of the State of Connecticut applicable to
contacts entered into and to be performed entirely within the State of
Connecticut without reference to its conflicts of laws provisions.
(b) The parties hereby agree that they will attempt in good faith to
resolve any controversy, claim or dispute ("Dispute") arising out of or relating
to this Agreement promptly by negotiations. Any material Dispute which is not
settled by the parties within fifteen (15) days after notice of such Dispute is
given by one party to the other in writing shall be referred to a senior
executive of USSC and the Chief Executive Officer of VITEX who are authorized to
settle such Disputes on behalf of their respective companies (each, a "Senior
Executive" and collectively, "the Senior Executives"). The Senior Executives
will meet for negotiations within fifteen (15) days of the referral of the
Dispute to them, at a time and place mutually acceptable to the Senior
Executives, but which meeting may be held telephonically.
(c) Subject to the procedure set forth in Section 24(b), any
controversy or claim or dispute arising out of or relating to this Agreement, or
the breach thereof, shall be exclusively settled by any federal or state court
located in the State of Connecticut and the parties
-42-
<PAGE>
irrevocably submit to the exclusive jurisdiction of such courts and waive any
and all objections to jurisdiction, venue or service that they may have under
the law of the State of Connecticut or otherwise in those courts in any such
action, suit or proceeding.
25. MISCELLANEOUS.
-------------
(a) ENTIRE UNDERSTANDING. This Agreement contains the entire
--------------------
understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior and contemporary agreements and understandings,
inducements or conditions, express or implied, written or oral, between the
parties hereto except as herein contained. The express terms hereof control and
supersede any course of performance and/or usage of the trade inconsistent with
any of the terms hereof. This Agreement may not be modified or amended other
than by an agreement in writing signed by all parties.
(b) PROVISIONS SEPARABLE. The provisions of this Agreement are
--------------------
independent of and separable from each other, and no provision shall be affected
or rendered invalid or unenforceable by virtue of the fact that for any reason
any other or others of them may be invalid or unenforceable in whole or in part.
(c) WAIVER. Neither the failure nor any delay on the part of either
------
party to exercise any right under this Agreement shall operate as a waiver
thereof, nor shall any single or partial exercise of any right preclude any
other or further exercise of the same or of any other right, nor shall any
waiver of any right with respect to any occurrence be construed as a waiver of
such right with respect to any other occurrence. No waiver shall be effective
unless it is in writing and is signed by the party asserted to have granted such
waiver.
(d) EXECUTION IN COUNTERPARTS. This Agreement may be executed in any
-------------------------
number of counterparts, each of which shall be deemed to be an original as
against any party whose signature appears thereon, and all of which shall
together constitute one and the same instrument. This Agreement shall be binding
when one or more counterparts hereof, individually or taken together, shall bear
the signatures of all of the parties reflected hereon as the signatories.
-43-
<PAGE>
(e) BINDING NATURE OF AGREEMENT. This Agreement shall be binding
---------------------------
upon and inure to the benefit of the parties hereto and their respective
successors and assigns. Neither party shall transfer or assign this Agreement,
in whole or in part, without the prior written consent of the other; except that
USSC may, without such consent, assign this Agreement to an Affiliate of USSC
provided USSC remains liable for the performance thereof by such Affiliate.
(g) SECTION HEADINGS. The section headings in this Agreement are for
----------------
convenience only; they form no part of this Agreement and shall not affect its
interpretation.
26. EFFECTIVE DATE.
--------------
(a) Notwithstanding anything in this Agreement to the contrary, this
Agreement and each of the party's rights and obligations under this Agreement,
other than set forth in Section 26(b) below, shall become effective on the
"Effective Date" which shall be that date which is one (1) business day
following the last to occur of the following: (i) VITEX shall have received
approval of this Agreement and the transactions contemplated hereby by the VITEX
Board of Directors, but which shall occur no later than September 13, 1996; (ii)
USSC shall have completed its diligence review concerning VITEX, the New York
Blood Center License Agreement and the NYBC IPR with results thereof
satisfactory to USSC in its sole and complete discretion, (iii) VITEX and USSC
shall have agreed to their mutual satisfaction, in their sole and complete
discretion, on changes, if any, to the provisions of Sections 8(h) with respect
to a Capacity Event License and Section 16 (Protection of Intellectual Property
Rights) of this Agreement arising out of or related to the NYBC IPR, and any
consent, approval by NYBC, or lack thereof, with respect thereto, (iv) the
parties shall have mutually agreed upon the contents of Exhibits A, B and D, and
-------------------
(v) a site visit to VITEX's Melville, New York facilities by USSC personnel with
results thereof satisfactory to USSC in its sole and complete discretion.
Notwithstanding the foregoing, this Agreement shall terminate and be of no
further force and effect unless the Effective Date shall occur on or prior to
October 4, 1996. Each of the parties shall reserve the right not to have this
Agreement become effective in the event that between the date hereof and the
proposed Effective Date there shall occur a material adverse change concerning
Products or the business condition of the other party.
-44-
<PAGE>
(b) The parties hereby covenant and agree to use commercially
reasonable efforts to cause the conditions set forth in Section 26(a) above to
be satisfied as soon as practicable after the date hereof. Without limiting the
foregoing, (i) VITEX shall prepare and submit to USSC on or prior to September
18,1996 for USSC's review and comments a draft of Exhibits A, B and D, (ii)
-------------------
VITEX shall, and shall use reasonable commercial efforts to cause the NYBC to,
provide USSC with information and documents responsive to USSC's diligence
requests to NYBC as soon as practicable, but in any event prior to September 18,
1996, in order that USSC may complete its diligence review, (iii) VITEX shall
use reasonable commercial efforts to (aa) obtain the consent of the NYBC to the
Capacity Event License in Section 8(h), and (bb) obtain the consent of the NYBC
to an amendment to, or waiver of, the relevant provisions of the New York Blood
Center License Agreement to the mutual satisfaction of the parties as relates to
Section 16 hereof, such consent to be obtained by VITEX on or before September
20,1996, (iv) VITEX shall cooperate with USSC to arrange USSC's site visit to
VITEX's Melville, New York facilities no later than September 20, 1996, (v) USSC
shall complete its review and comments of VITEX's draft of Exhibit D within two
days after USSC's receipt of such draft from VITEX; (vi) USSC shall complete its
diligence review within fourteen (14) calendar days following the receipt by
USSC of additional documents and information requested by USSC from VITEX and
NYBC in connection with USSC's diligence review, and (vii) subject to VITEX's
cooperation, USSC shall complete its site visit to VITEX's Melville, New York
facilities no later than September 20, 1996.
-45-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
under seal as of the date first above written.
V.I. TECHNOLOGIES, INC.
By: /s/ Thomas R. Ostermueller
---------------------------------
Name: Thomas R. Ostermueller
Title: President & CEO
UNITED STATES SURGICAL CORPORATION
By: /s/ Eitan Nahum
---------------------------------
Name: Eitan Nahum
Title: Vice President, Strategic Planning and Business
Development
-46-
<PAGE>
EXHIBITS
--------
EXHIBIT A Description of Product
EXHIBIT B Existing Patents
EXHIBIT C Exclusivity Minimum Sales
EXHIBIT D Manufacturing Processes
EXHIBIT E VITEX/New York Blood Center License Agreement
EXHIBIT F Forecasts
-47-
<PAGE>
EXHIBIT A
---------
DESCRIPTION OF PRODUCT
----------------------
-48-
<PAGE>
EXHIBIT B
---------
EXISTING PATENTS
----------------
-49-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
EXHIBIT C
---------
EXCLUSIVITY MINIMUM SALES
-------------------------
<TABLE>
<CAPTION>
Year following MLs sold in MLs sold in MLs sold in
-------------- ----------- ----------- -----------
Governmental Approval U.S.A Europe Japan
--------------------- ----- ------ -----
<S> <C> <C> <C>
1 ******** ******** ********
2 ******** ******** ********
3 ******** ******** ********
4 ******** ******** ********
5 ******** ******** ********
</TABLE>
1. "Exclusivity Minimum Sales" shall mean * ****** ********* ****** ******
------------------------------
******** *** ********, ******** ******** *** ******** ******** ******* ** ****
********* ***** ** ********** ** * *** ** ******* ******* **** *** ***** *****
********* **** *** **** ** ***** ************ ******** *** *** ********** ****
** * ******* ** ******** ** **** ** *** ****** ** ** ****, *** ********** **
********* ********* ** * ***** ******* ** ****** ***** *** ** *******, ****** **
*** *** ***** **** ***** ******* *********, ** ** *****.
2. Exclusivity Minimum Sales after the 5th year following Governmental
-------------------------------------------------------------------
Approval: *** *********** ******* **** ***** ***** ******** ** ***** ***** ***
- --------
*** **** ********* ************ ******** ** *** **** ***** ** *** ***** *****
*** *** *** **** ********* ************ ********, ******* ** ********* **
******** ** **** ******* *. *** ******* ***** ***** ** *** *** ** *** *** ****
********* ************ ******** *** *** **** **** *** **** ****** **********
********* ** **** ***** *** **** ** ******** ***** **** ********* *******, **
***, **** *** ********** ** *** *********** ******* ***** ***** ***** **
********** ** *** *********** *********, ******* **********, ***********
******** *** *** ****** ** *********** ************* ** ******** ******** ***
******** ********. *************** *** *********, *** ******* ********* ***
***** **** *** *********** ******* ***** ***** *** *********** *** ** *******
***** ****** *********** *** ****** ** ******* * ************ ******** **
******** ******* ****** *********** ** ***** ** ****** ***** **** **** *** ***
********* *** ******* ** ****** *** **** ******** ** *** *****. ***********, ***
********* ******* ***** **** ** ********** **** *** *********. ***************
******** ** *** ******** ** **** ******* *, *** ***** ******** ** **** *******,
*** ***** ******* ** ** *** *********, *** ***********
-50-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
******* **** ***** *** **** **** ***** *** *** **** ********* ************
******** ***** *** ****** *** *********** ******* ***** *** *** *** ****
********* ************ ******** *** ***** ** *** ***** ***** *** ***** **
********** ** ********** **** *** ***** ******** ** **** *******.
3. Proration: Exclusivity Minimum Sales shall commence with the first
---------
calendar quarter following the date of such Governmental Approvals. The annual
minimums shall be prorated by calendar quarter as follows: ****** of the annual
minimum in the first calendar quarter following such Governmental Approval;
****** of the annual minimum in the second calendar quarter following such
Governmental Approval; ****** of the annual minimum in the third calendar
quarter following such Governmental Approval; and ****** of the annual minimum
in the fourth calendar quarter following such Governmental Approval. The
foregoing is not intended to create quarterly minimums, but rather to compute
annual calendar minimum sales requirements recognizing that Governmental
Approvals may be obtained at different times during a calendar year.
-51-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
4. Examples: The following examples shall serve to clarify Exclusivity
--------
Minimum Sales:
Example 1: If Governmental Approval is received in the U.S.A. on
March 30th, and no Governmental Approval in a Major Country in Europe (see
above) or Japan is received through the end of such calendar year, then the
Exclusivity Minimum Sales would be ****** ML (i.e. ****** ML).
Example 2: Example 1 situation plus the following: If Governmental Approval is
- ---------
received in a Major Country in Europe on June 30th of the next calendar year,
and no Governmental Approval is received in Japan through the end of such
calendar year, then the Exclusivity Minimum Sales for such calendar year would
be ****** ML calculated as the sum of the following:
U.S.A.: ****** being ****** of the remainder of First Year following
- ------
Governmental Approval in the U.S.A., plus ****** being ****** of the Second Year
following Governmental Approval in the U.S.A.; plus
Europe: ****** being ****** of the First Year following Governmental Approval in
- ------
Europe
Example 3: Example 2 situation plus the following: If Governmental Approval is
- ---------
received in Japan on September 30th of the next calendar year of this Agreement,
then the Exclusivity Minimum Sales for such calendar year would be ****** ML
calculated as the sum of the following:
U.S.A.: ****** being ****** of the Second Year following Governmental Approval
- ------
in the U.S.A., plus ****** being ****** of the Third Year following Governmental
Approval in the U.S.A.; plus
Europe: ****** being ****** of the First Year following Governmental Approval in
- ------
Europe, plus ****** being ****** of the Second Year following Governmental
Approval in Europe; plus
Japan: ****** being ****** of the First Year following Governmental Approval in
- -----
Japan
-52-
<PAGE>
EXHIBIT D
---------
MANUFACTURING PROCESSES
-----------------------
-53-
<PAGE>
EXHIBIT E
---------
VITEX/NEW YORK BLOOD CENTER LICENSE AGREEMENT
---------------------------------------------
See Exhibit 10.7 to the Registration Statement.
-54-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
EXHIBIT F
---------
FORECASTS
---------
Example:
USSC's Initial Forecast:
****** binding ****** Units consisting of:
******Units ******
****** Units ******
****** non binding ****** Units consisting of:
****** Units ******
****** Units ******
USSC's Forecast ****** Later With Maximum Allowable Increases That
Would Not Trigger Capacity Event in the ******:
****** binding ****** Units consisting of:
****** Units ******
****** Units ******
(****** ******** *********** ** ********)
-59-
<PAGE>
NEW YORK Blood Center
310 E. 67th Street, New York NY 10021
212/570-3000
September 27, 1996
Mr. Thomas R. Ostermueller
President and Chief Executive Officer
V.I. TECHNOLOGIES, INC.
155 Duryea Road
Melville, New York 11747
RE: EXCLUSIVE LICENSE AGREEMENT (#4) FOR VIRALLY
INACTIVATED FIBRIN SEALANT/THROMBIN PRODUCTS
Dear Tom:
Reference is made to SECTIONS 2.1 and 2.2 of the above-referenced Exclusive
License Agreement (the "NYBC LICENSE") between the New York Blood Center, Inc.
("NYBC") and Melville Biologics, Inc. (now V.I. Technologies, Inc.) ("VITEX").
Under those Sections, VITEX has agreed not to grant any sublicenses under the
rights granted to it under the NYBC License without the prior written consent of
NYBC.
You have provided us with a copy of the Exclusive Distribution Agreement between
VITEX and United States Surgical Corporation, dated September 11, 1996 (the
"USSC Agreement"). Under SECTION 8(H) of the USSC Agreement, VITEX is required
to grant to USSC a Capacity Event License to manufacture and produce Products
(as such terms are defined in the USSC AGREEMENT) under certain circumstances,
which license would constitute a sublicense under the NYBC License. The
Effective Date of the USSC Agreement is subject to, among other events, the
NYBC's written consent to the said SECTION 8(H).
NYBC hereby consents to any Capacity Event License required to be granted by
VITEX under the provisions of SECTION 8(H) of the USSC Agreement.
Sincerely yours,
BY: /s/ John W. Adamson, M.D.
-----------------------------
John W. Adamson, M.D.
President
New York Blood Center, Inc.
cc: M. Sparrow, Esq.
M. DeWyngaert, Ph.D.
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
NEW YORK Blood Center
310 E. 67th Street, New York, NY 10021-6295
212/570-3010
OFFICE OF THE PRESIDENT
September 27, 1996
Mr. Thomas R. Ostermueller
President and Chief Executive Officer
V.I. TECHNOLOGIES, INC.
155 Duryea Road
Melville, New York 11747
Re: EXCLUSIVE LICENSE AGREEMENT (#4) FOR VIRALLY INACTIVATED
FIBRIN SEALANT/THROMBIN PRODUCTS between the New York Blood
Center, Inc. ("NYBC") and Melville Biologics, Inc. (Now V.I.
Technologies Inc.). Effective October 26, 1995 ("License
Agreement") - AMENDMENT I
Dear Tom:
In connection with the Exclusive Distribution Agreement of September 11,
1996 between your Company and United States Surgical Corporation, you
have requested an amendment of the above-identified Exclusive License
Agreement with respect to the possible institution of patent
infringement actions against third parties. NYBC is willing to amend the
Exclusive License Agreement by the addition of the following new
Paragraph 8.5 to ARTICLE VIII. INFRINGEMENT:
8.5. Notwithstanding the provisions of PARAGRAPHS 8.1 - 8.4 above, if,
at any time during the Term of the Exclusive Distribution
Agreement between V.I. Technologies, Inc. (Formerly Melville
Biologics, Inc., and referred to herein as LICENSEE) and United
States Surgical Corporation ("USSC") dated September 11, 1996
("THE DISTRIBUTION AGREEMENT"), either NYBC or LlCENSEE or USSC
becomes aware of any infringement by a third party of any of the
PRODUCT PATENT RIGHTS (which are included in the definition of
IPR in the Distribution Agreement) with respect to the
manufacture or sale of any product listed on APPENDIX B hereof,
then NYBC and LICENSEE agree ***********************************
*****************************************************************
****************************************************************
************************************************************
****************************************************************
**************************************************************
**************************************************************
****************************************************************
*************************************************************
**************************************************************
*****************************************************************
*******************************************************
*********************************************
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
PAGE 2 - (TRO - EXCLUSIVE L.A.)
*****************************************************************
***************************************************************
***************************************************************
**************************************************************
*******************************************************
*************************
With the exception of the addition set forth above, all the terms and
conditions of the captioned License Agreement shall remain in full force
and effect.
If the foregoing is acceptable to your Company, please sign the enclosed
copy of this letter and return it to us. Our signature on this letter
will serve to confirm the amendment of the Exclusive License Agreement
to include the new Paragraph 8.5 as set forth above.
Sincerely yours,
/s/ John W. Adamson M.D.
---------------------------
John W. Adamson, M.D.
President
New York Blood Center, Inc.
AGREED TO AND ACCEPTED BY:
/s/ Thomas R. Ostermueller
--------------------------
Thomas R. Ostermueller
President and Chief Executive Officer
V.I. Technologies, Inc.
(Formerly, Melville Biologics, Inc.)
<PAGE>
NEW YORK Blood Center
71O E. 62th Street, New York NY 10071-6295
212/570-3010 Fax 212/570-3195
OFFICE OF THE PRESIDENT
October 2, 1996
Mr. Thomas R. Ostermueller
President and Chief Executive Officer
V.I. TECHNOLOGIES, INC.
155 Duryea Road
Melville, New York 11747
Re: EXCLUSIVE LICENSE AGREEMENT (#4) FOR VIRALLY INACTIVATED
FIBRIN SEALANT/THROMBIN PRODUCTS - CONSENT TO ASSIGNMENT
Dear Tom:
Reference is made to SECTION 12.1 of the above-referenced Exclusive LICENSE
Agreement (the "NYBC License") between the New York Blood Center, Inc. ("NYBC")
and Melville Biologics, Inc. (now, V.I. TECHNOLOGIES, Inc.) ("VITEX"). Under
that Section, VITEX has agreed not to assign or otherwise transfer any of the
rights granted to it under the NYBC License without the prior written consent of
NYBC.
You have provided us with a copy of the Exclusive Distribution Agreement between
VITEX and United States Surgical Corporation ("USSC"), dated September 11, 1996,
amended on October 3, 1996, all effective on October 4, 1996 (the "USSC
AGREEMENT"). NYBC understands that under SECTION 16(D) of the USSC Agreement,
VITEX is required to assign to USSC, to the extent necessary to carry out the
provisions of SECTION 16, its rights under SECTION 8.2 of the NYBC License.
NYBC hereby consents to the assignment to USSC of VlTEX's rights under Section
8.2 of the NYBC License, provided that USSC agrees to assume VlTEX's obligations
under SECTIONS 8.2 and 8.3 of the NYBC License. Nothing contained herein (or in
the USSC Agreement) shall serve to alter or expand the rights of VITEX (or its
assignee, USSC) under Section 8.2 of the NYBC License.
Sincerely yours,
BY: /s/ John W. Adamson MD
--------------------------
John W. Adamson, M.D.
President
New York Blood Center, Inc.
cc: M. Sparrow, Esq.
K. George, Esq. (A,R&E)
<PAGE>
AMENDMENT AGREEMENT
THIS AMENDMENT AGREEMENT, made this 3rd day of October, 1996 by and
between V.I. TECHNOLOGIES, INC., a Delaware corporation having its principal
place of business at 155 Duryea Road, Melville, New York 11747 (formerly known
as Melville Biologics, Inc.) ("VITEX"), and UNITED STATES SURGICAL CORPORATION,
a Delaware corporation having its principal place of business at 150 Glover
Avenue, Norwalk, Connecticut 06856 ("USSC").
WHEREAS, VITEX and USSC (collectively the "Parties") are parties to an
Exclusive Distribution Agreement dated September 11, 1996 (the "Distribution
Agreement"); and
WHEREAS, pursuant to Section 26 thereof, the Distribution Agreement will
not become effective until certain conditions have been satisfied; and
WHEREAS, the Parties desire to confirm that all of the said conditions
have been satisfied and that the Distribution Agreement shall become effective
subject to certain amendments to Section 16 thereof, all on the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual promises contained herein
and intending to be legally bound, the parties agree as follows:
1. Definitions. Unless otherwise expressly defined, capitalized
terms will have the meanings ascribed to them in the Distribution Agreement.
2. Satisfaction of Conditions. The Parties hereby acknowledge and
agree that all of the conditions to effectiveness set forth in Section 26(a) of
the Distribution Agreement have been satisfied, including, without limitation,
the following:
(a) Exhibits A, B and D. Exhibits A, B and D to the Distribution
Agreement in the form agreed on by the Parties, are attached as Exhibits
A, B and D hereto.
(b) Consent of NYBC to Capacity Event License. A letter dated
September 27, 1996 consenting on behalf of the New York Blood Center to
the Capacity Event License in Section 8(h) of the Distribution Agreement
is attached as Exhibit E hereto.
(c) Amendment to NYBC License. A letter agreement dated September
27, 1996 amending the NYBC License with respect to certain matters
covered by Section 16 of the Distribution Agreement is attached as
Exhibit F hereto.
3. Effective Date. The Parties agree that the Effective Date of the
Distribution Agreement shall be October 4, 1996.
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
4. Amendment to Section 16. Section 16 of the Distribution Agreement
is hereby deleted in its entirety and replaced with the following:
16. Protection of Intellectual Property Rights
(a) Prosecution of Third Party Infringers. If, at any time
during the Term, either party shall become aware of any apparent
infringement or threatened infringement by a third Person of the
Existing Patents or Future Patents in the Field (collectively,
the "IPRs"), the party having the knowledge thereof shall
promptly give notice to the other party. Unless the Rights have
been converted to non-exclusive in accordance with this
Agreement, and except as otherwise provided in Section 16(b)
below. *****************************************************
*************************************************************
************************************************************
************************************************************
************************************************************
***************************************************************
**********************************************************
*****************************************************************
*****************************************************************
****************************************************************
*****************. In the event that any such Action for
infringement may only be asserted in a particular jurisdiction in
the name of VITEX or any of its Affiliates, then VITEX agrees
that it will allow USSC to prosecute such Action in VITEX's name
or in the name of VITEX's Affiliates at USSC's request. ****
**************************************************************
*************************************************************
***************************************************************
*************************************************************
*****************************************************************
****************************************************************
*********************************************************
************************************************************
************************************************************
****************************************************************
*********************************************************
*****************************************************************
****************************************************************
****************************************************************
**********************************************************
*********************************************
(b) Limitations on USSC's Rights Regarding Third Party
Infringers. Notwithstanding anything in Section 16(a) to the
contrary, the parties acknowledge that certain of the IPR include
intellectual property licensed by VITEX from the New York Blood
Center (the "NYBC IPR") pursuant to the New York Blood Center
License Agreement, and that with respect to the NYBC IPR, USSC's
rights under Section 16(a) are limited to (i) those rights
expressly granted to it pursuant to the amendment to the New York
Blood Center License Agreements dated September 27, 1996, and
(ii) those rights at VITEX granted to it under Section 8.2 of the
New York Blood Center License Agreement, which rights VITEX
hereby assign to USSC to the extent necessary to carry out the
provisions of Section 16(a) subject to USSC's assumption of the
obligations of VITEX hereunder.
-2-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
(c) Defense of Claims of Infringement. If, at any time during
the Term, either party becomes aware of a claim or Action by a
third Person that the use of an IPR or the marketing,
distribution or sale of a Product in the Territory infringes or
allegedly infringes the intellectual property rights of a third
Person, the parties having the knowledge thereof shall promptly
give notice to the other party. Such notices shall set forth the
claim of the apparent infringement or threatened infringement to
the extent then known by the notifying party.
(i) *********************************************
*******************************************************
******************************************************
******************************************************
********************************************************
********************************************************
********************************************************
**************************************************
******************************************************
*********************************************************
***************************************************
***************************************************
**********************************************************
*******************************************************
*************************************************
*******************************************************
*******************************************************
********************************************************
*****************************************************
********************************************************
******************************************************
*********************************************************
*********************************************************
********************************************************
********************************************************
**********************************************************
******************
(ii) *****************************************
******************************************************
*****************************************************
**************************************************
**********************************************************
**********************************************************
*******************************************************
********************************************************
*********************************************************
******************************************************
************************************************
******************************************************
(aa) *************************************
************************************************
**************************************
************************************************
***********************************************
*****************************************
*****************************
-3-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
(bb) **********************************
*********************************************
********************************
(cc) **********************************
********************************************
***************************************
*******************************************************
*************************************************
*********************************************************
********************************************************
**********************************************************
****************************************************
**************************************************
********************************************************
**********************************************************
***********************************************
*************************************************************
*****************************************************************
**************************************************************
***************************************************************
***********************************************************
********************************************************
******************************************************
(d) Mutual Assistance. Each party will provide reasonable
-----------------
assistance and information to the other party in connection with
all such claims and Actions, upon request with reasonable prior
notice, including, without limitation, securing the testimony of
its officers, directors, employees, agents, and inventors,
provided that the party prosecuting or defending the claim or
Action shall reimburse the other party for all out of pocket
expenses, other than attorney's fees and expenses, incurred by
such other party in providing such requested cooperation.
5. Miscellaneous.
-------------
(a) Effect of Amendments. Except as expressly amended hereby,
--------------------
the Distribution Agreement shall remain in full force and effect. All provisions
of the Distribution Agreement relating to the interpretation or enforcement
thereof shall apply equally to this Amendment Agreement.
(b) Execution in Counterparts. This Amendment Agreement may be
-------------------------
executed in any number of counterparts, each of which shall be deemed to be an
original as against any party whose signature appears thereon, and all of which
shall together constitute one and the same instrument. This Amendment Agreement
shall be binding when one or more counterparts hereof, individually or taken
together, shall bear the signatures of all of the parties reflected hereon as
the signatories.
-4-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
under seal as of the date first above written.
V.I. TECHNOLOGIES, INC.
By: /s/ Thomas R. Ostermueller
--------------------------------
Name: Thomas R. Ostermueller
------------------------------
Title: President & CEO
-----------------------------
UNITED STATES SURGICAL CORPORATION
By: /s/ Eitan Nahum
--------------------------------
Name: Eitan Nahum
------------------------------
Title: V.P.
-----------------------------
EXHIBITS
- --------
Exhibit A Description of Products
Exhibit B Existing Patents
Exhibit C None
Exhibit D Manufacturing Processes
Exhibit E New York Blood Center Consent Letter
Exhibit F New York Blood Center License Amendment
Schedule 1 List of Patents Covered by Section 16(e)
- 5 -
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
EXHIBIT A
DESCRIPTION OF PRODUCTS
*************************************************************************
*******************************************************************************
****************************************************************************
*******************************************************************************
*******************************[1 page omitted]*************************
*******************************************************************************
******************************************************************************
******************************************************************************
**************************************************************
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
EXHIBIT B
<TABLE>
<CAPTION>
PATENT/SERIAL NUMBER TITLE INVENTOR
<S> <C> <C>
</TABLE>
*************************************************************************
*******************************************************************************
****************************************************************************
*******************************************************************************
******************************[2 pages omitted]*************************
*******************************************************************************
******************************************************************************
******************************************************************************
**************************************************************
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
EXHIBIT D
*************************************************************************
*******************************************************************************
****************************************************************************
*******************************************************************************
******************************[5 pages omitted]*************************
*******************************************************************************
******************************************************************************
******************************************************************************
**************************************************************
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
EXHIBIT 10.11
FIRST AMENDED AND RESTATED
AGREEMENT FOR CUSTOM PROCESSING
THIS FIRST AMENDED AND RESTATED AGREEMENT, entered into as of this 24th
day of January, 1996, between Bayer Corporation, formerly known as Miles, Inc.
("Bayer"), with offices at 400 Morgan Lane, West Haven, Connecticut 06516, and
Melville Biologics, Inc. ("Melville"), a Delaware Corporation with offices at
155 Duryea Road, Melville, New York 11747.
R E C I T A L S:
Bayer (then known and referred to as Miles) and Melville entered into
that certain Agreement for Custom Processing, dated February 7, 1995 ("Original
Agreement"), and now desire to amend and restate such Original Agreement in its
entirety (effective retroactively as of February 7, 1995) as follows:
Bayer desires to procure, and Melville desires to provide, for a period
of at least four (4) years, the processing and fractionation of ******** liters
of Bayer Input Per year into Intermediates and Albumin [Human] Bulk.
The Original Agreement became effective on February 7, 1995 and this
Agreement, commencing on the date set forth above, will be effective
retroactively as of February 7, 1995, and processing and fractionation hereunder
are expected to start as soon as possible in 1995, after the successful
completion of the fractionation facility renovation, qualification, validation,
processing of Conformance Lots and submission of appropriate documentation to
the FDA.
As the timely availability of the fractionation capacity is critical to
the success of this Agreement, a joint Bayer/Melville regulatory, engineering,
production and Quality Assurance task force will review the proposed Melville
facility changes and regulatory requirements necessary to be made and satisfied
in order to commence fractionation for Bayer and will agree to a regulatory
strategy to meet the fastest practicable timeline for the commencement of
routine fractionation at Melville. Both parties met and reviewed their
preliminary strategy with the FDA on September 29, 1994, and received input from
the FDA suggesting that the current timeline for the commencement of routine
fractionation in 1995 is reasonable. If the impact of future FDA action is such
that the Start-Up Period cannot begin by January 1, 1996, then Bayer, at its
option, may negotiate with Melville to amend this Agreement appropriately. In no
event will a delay in the beginning of the Start-Up Period beyond July 1, 1996
be acceptable to Bayer.
Under separate agreements, executed concurrently with the execution of
the Original Agreement, Melville has obtained a $10,000,000 credit facility from
PNC Bank, N.A., and Bayer has executed a Guarantee Agreement in favor of PNC
Bank, N.A. (the documents relating thereto, including without limitation the
Reimbursement Agreement and the Mortgage referred to below, are hereinafter
identified as the "Loan Documents").
<PAGE>
Page 2
Bayer and Melville have entered into a Reimbursement and Security
Agreement of even date with the Original Agreement (the "Reimbursement
Agreement") pursuant to which Melville has agreed to reimburse Bayer for any
amount paid or incurred by Bayer under its guaranty, which obligations are
secured by security interests granted in the Reimbursement Agreement and by a
mortgage of even date with the Original Agreement (the "Mortgage").
Melville has leased to Bayer the building, land, certain equipment and
fixtures located at 155 Duryea Road, Melville, New York 11747 (other than the
area thereof to be used for MBI General Operations, as defined in the
Reimbursement Agreement) under a Lease Agreement of even date with the Original
Agreement (the "Lease"), and Bayer has subleased such leased premises to
Melville under a Sublease Agreement of even date with the Original Agreement
(the "Sublease"), which Sublease terminates in the event of a Bayer Takeover (as
defined in Section 12.2 hereof).
NOW, THEREFORE, it is hereby agreed as follows:
SECTION 1
GENERAL TERMS
1.1 Definitions
A. "Accepted Material" means Bayer Input duly received and accepted by
Melville as being in accordance with the requirements of this Agreement.
B. "Albumin [Human] Bulk" is a liquid sterile bulk form of albumin produced
by Melville utilizing Melville's Ultra filtration (UF) process from the
Bayer Input. Albumin [Human] Bulk shall meet the release specifications
to be developed by Bayer and Melville and incorporated herein as
Schedule E.
C. "Base Yields" means the yields, expressed as yields of recoverable paste
of Intermediates and of recoverable grams of protein of Albumin [Human]
Bulk, each per liter processed, as specified as to such products in the
table set forth in Section 4.1.
D. "cGMP's" or "current Good Manufacturing Practices" means the FDA's
regulations and related guidance covering the methods, facilities and
controls used in manufacturing, processing, packing and storing drugs,
as applicable to Intermediates and Albumin [Human] Bulk.
E. "Conformance Lots" means production lots of Intermediates of Albumin
[Human] Bulk produced prior to the Start-Up Period for the purpose of
establishing that their manufacture is in conformance with release
specifications provided by Bayer and agreed to by Melville.
<PAGE>
Page 3
Conformance Lots will be provided to Bayer for further manufacture into
finished product, and, as appropriate, to the FDA.
F. "Cryoprecipitate" means the resultant centrifugate derived at Step 1 of
Melville's FDA licensed fractionation process by cold precipitation of
the Bayer Plasma (Bayer Input) and released in conformance with the
Bayer' Cryoprecipitate specifications incorporated herein as Schedule A.
G. "FDA" means the United States Food and Drug Administration, and
particularly includes its Center for Biologics Evaluation and Research,
which has comprehensive regulatory authority over the production and
marketing of the plasma-derived products which are the subject of this
Agreement.
H. "Fraction II + III" and "Fraction II + IIIw" mean the pastes rich in IgG
(Immune Globulins) derived from either Melville's existing FDA licensed
fractionation process or future processes to be submitted by Melville to
the FDA with specific changes as requested by Bayer and released in
conformance with Bayer's Fraction II + III and Fraction II + IIIw paste
specifications incorporated herein as Schedules B-1 and B-2.
I. "Fraction IV-1" and "Fraction IV-4" mean the pastes from either
Melville's existing FDA licensed fractionation process or future
processes to be submitted by Melville to the FDA with specific changes
as requested by Bayer and released in conformance with Bayer's Fraction
IV-1 paste specification incorporated herein as Schedule C.
J. "Fraction V" means the paste rich in Albumin derived from Melville's
existing FDA licensed fractionation process and released in conformance
with Bayer's Fraction V paste specification incorporated herein as
Schedule D-1.
K. "Intermediates" means the Fraction II + III Paste, Fraction II + IIIw
Paste, Fraction IV-1 Paste, Fraction IV-4 Paste, Fraction V Paste,
Purified Fraction V Paste and Cryoprecipitate processed by Melville from
the Bayer Input. Intermediates shall meet the release specifications
provided by Bayer and set forth in Schedules A through E.
L. "Bayer Input" means plasma supplied by Bayer to Melville that has been
produced, tested, packaged, labeled, stored and shipped in accordance
with Bayer requirements and FDA regulations (21 CFR ss.ss. 640.60 et
seq), and all other applicable guidelines, directives and bulletins,
including industry standards.
M. "Project" means the engineering, construction, implementation and
validation activities associated with the project identified in Exhibit
A and which exhibit will be supplemented and modified as formal
engineering phases are completed.
<PAGE>
Page 4
N. "Purified Fraction V" means "Albumin Paste" derived by precipitating
Fraction V as specified in Melville's FDA-licensed fractionation process
and released in conformance with Bayer's Purified Fraction V
specification incorporated herein as Schedule D-2.
O. "SOP's" means Melville's standard operating procedures for processing
and fractionation operations hereunder, as approved by Bayer and as the
same may be amended from time-to-time with the approval of Bayer.
P. "Start-Up Period" means the ninety (90) day period commencing with the
first day of routine processing of Intermediates, after Melville's
successful completion of processing of Conformance Lots.
Q. "Year" means for purposes of scheduling and determination of Processing
Fees, a period of twelve (12) consecutive months. The first such year
will begin with the first day of the Start-Up Period, which must be no
later than July 1, 1996, and, for subsequent years, upon the anniversary
of such day.
1.2 Term
The term during which Bayer shall supply Bayer Input to Melville, and Melville
shall conduct processing and fractionation operations hereunder (the "Term"),
shall (a) commence on (i) the date on which the Start-Up Period has been
initiated, or (ii) July 1, 1996, whichever is earlier, and (b) terminate on (i)
if the Start-Up Period has been initiated before December 31, 1995, on December
31, 1999, or (ii) if the Start-Up Period has been initiated after December 31,
1995, on the fourth anniversary of the date of commencement of the Start-Up
Period, or June 30, 2000, whichever is earlier (the "Initial Term"); provided,
however, that the Term shall be automatically extended for one (1) additional
year (the "First Renewal Period") upon the same terms and conditions (except for
the processing fee which shall be adjusted for inflation as provided in
Paragraph 4.3(d) of this Agreement), unless Bayer gives Melville written notice
of cancellation of the First Renewal Period, such notice to be given no later
than July 1, 1998. In addition, if the Term is extended to include the First
Renewal Period, the Term shall be extended beyond the First Renewal Period for
up to one (1) additional year (the "Second Renewal Period") upon the same terms
and conditions (except for the processing fee which shall be adjusted for
inflation as provided in Paragraph 4.3(d) of this Agreement), unless Bayer gives
Melville written notice that the Term will not be extended, such notice to be
given no later than July 1, 1999. With respect to the July 1, 1998, and July 1,
1999, notification dates provided for in this Section 1.2, Bayer will use its
best efforts to provide as much additional advance notice as possible.
SECTION 2
EVALUATION PERIOD AND START UP PERIOD
2.1 FDA Approval of Bayer Use of Intermediates and Albumin [Human] Bulk
<PAGE>
Page 5
Bayer acknowledges that the start-up and shipment of Intermediates and Albumin
[Human] Bulk to Bayer from Melville's facility in Melville, New York in
interstate commerce may require both entities to obtain appropriate FDA
approvals; and if so, Intermediates and Albumin [Human] Bulk produced for Bayer
prior to the receipt of such FDA approvals will be shipped to Bayer or, if Bayer
so directs, will be quarantined by Melville at Bayer's expense until such time
as such FDA approvals are obtained. Furthermore, Bayer will pay Melville for
Intermediates and Albumin [Human] Bulk, so quarantined, as if released and
tendered for shipment to Bayer in accordance with Section 6.3 of this Agreement.
2.2 Project Management
Bayer shall make available to Melville a project engineer to assist Melville
management in the successful completion of the Project. The project engineer
shall devote up to one-third of his/her full-time regular hours in providing
advice and assistance, including review and analysis of the site for required
structural and equipment modifications necessary to accommodate the activities
of Melville in fulfillment of its processing and fractionation activities
hereunder. When reasonably required, Bayer shall extend the services of the
project engineer through the procurement and installation periods. All routine
direct costs of the project engineer shall be absorbed by Bayer.
2.3 Technical Assistance
In order to assist Melville management, if reasonably requested by Melville in
writing, Bayer will provide technical expertise to help achieve and maintain
targeted product yields and improve overall operating efficiencies. In addition,
Bayer will provide training at its Clayton, North Carolina fractionation plant
for Melville production and other appropriate personnel, to expedite their
training in Bayer's current fractionation procedures and policies. All personnel
and travel costs for such personnel shall be absorbed by Melville.
Bayer may, at its option, install Bayer's production and other appropriate
personnel at the Melville site to represent Bayer's interests and support the
fractionation operation. These individuals will be Bayer's employees and Bayer
will pay all their salary and expenses.
2.4 Bayer has disclosed to Melville (subject to the confidentiality
provisions of Section 10) Bayer's currently licensed process for producing (a)
Fraction II + IIIw and (b) Purified Fraction V. Melville shall incorporate the
details in an appropriate submission to the FDA as an optional production
procedure to be used for the supplying of Intermediates to Bayer. Melville and
Bayer, through their respective regulatory and Quality Assurance
representatives, shall closely cooperate in formulating the proposed procedure
and expediting the requisite submissions and approvals.
SECTION 3
CUSTOM FRACTIONATION
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
Page 6
3.1 Once fractionation facility renovation, validation and qualification
have been completed, Bayer will supply to Melville sufficient Bayer Input for
the processing of Conformance Lots to meet both Melville's and Bayer's
regulatory requirements. Bayer will pay Melville the Base Processing Fee for the
Bayer Input processed as Conformance Lots, as payment for Melville's performance
hereunder and in satisfaction of Bayer's rental obligations under the Lease.
3.2 Once processing of Conformance Lots has been completed, during the Term
Bayer shall deliver to Melville sufficient Bayer Input to permit processing at a
rate of one lot (consisting of five production batches), approximating ********
liters, per week for ******** aggregating approximately ******** liters per year
("the Production Plan Rate"). During the First Renewal Period and the Second
Renewal Period, if applicable, the Production Plan Rate may be established by
Bayer, in its sole discretion, at any quantity between ******** and ********
liters per year. In the event Bayer elects to reduce the Production Plan Rate
below ******** liters per year during either the First or Second Renewal
Periods; (a) the weekly Bayer Input shall be adjusted proportionally, and (b)
Bayer shall notify Melville of its intention to so reduce the Production Plan
Rate at least six months prior to the beginning of the affected Renewal Period.
Melville shall process the Bayer Input into the following products, as directed
by Bayer: Cryoprecipitate, Fraction II + III or Fraction II + IIIw, Fraction IV-
1, Fraction IV-4, and Fraction V or Purified Fraction V or Albumin [Human] Bulk,
all in accordance with Melville's then-current FDA approved product licenses,
and all other applicable regulations, guidelines and current directives.
3.3 Except as expressly provided in Sections 2.1 and 2.4, Melville does not
contemplate making any further material changes to its filings with the FDA as
to its product licenses, processes or facility with respect to the processing of
Intermediates or Albumin [Human] Bulk using Bayer Input. Melville shall notify
Bayer prior to instituting any process changes or license amendments with
respect to the processing of Bayer Input into Intermediates or Albumin [Human]
Bulk.
3.4 During the Term, Bayer and Melville shall hold quarterly meetings to
review the performance of their respective obligations under this Agreement.
3.5 Melville shall complete and tender for delivery the Intermediates and
Albumin [Human] Bulk produced from each lot within the following time frames:
Intermediates ****************
Albumin [Human] Bulk ****************
3.6 Any unforeseen development arising in processing which may cause a delay
in delivery, including without limitation any proceedings relating to revocation
or suspension of Melville's FDA licenses, will be promptly communicated to
Bayer, and Bayer shall consult with Melville toward a resolution of the problem
acceptable to both parties, including, without limitation, the extension of
delivery times for the lots in question. With the exception of delays covered by
the
<PAGE>
Page 7
provisions of Sections 3.7 or 13, Bayer will charge Melville for each day's
delay in delivery an amount equal to the dollar value of the work-in-process
(WIP) inventory subject to such delay multiplied by the then current prime or
base rate, as announced by Citibank, N.A., plus 2% and divided by 365. Such
charge will be deducted from amounts otherwise due to Melville from Bayer.
3.7 Melville shall endeavor to give Bayer advance notice as to when
shortages of inventories of Bayer Input threaten to curtail production below the
weekly level of capacity utilization provided for by the Production Plan Rate
defined in Section 3.2, or as the Production Plan Rate may be subsequently
modified by mutual agreement.
3.8 Bayer shall ship the Bayer Input, packaged and documented in accordance
with the shipment procedures specified in Schedule F and otherwise in
conformance with applicable FDA requirements for plasma.
3.9 Following receipt of each shipment of Bayer Input, Melville shall
inspect, or otherwise ascertain, its conformity with the requirements of the FDA
and of the relevant Melville SOP's. Prior to release for processing hereunder,
each unit of Bayer Input shall have been visually examined and verified against
accompanying documentation (i.e., "100% inspected"). Melville shall have the
right to reject any units which do not meet its SOP's or FDA standards or which
are otherwise damaged, possibly contaminated, improperly packaged, labeled or
stored, which are the subject of a lookback, or which are not properly
documented. Melville must notify Bayer by facsimile of any such rejected units
within 24 hours of inspection. All rejected units are to be destroyed when
notified by Bayer or, if notification is not promptly received, may be held at
the expense and risk of Bayer for a period of 30 days, after which Melville may
dispose of them in accordance with its SOP's. Melville will provide to Bayer
documentation of any destruction of such units.
3.10 In the event (a) Bayer notifies Melville of any non-conformity or
unsuitability of any unit of Bayer Input after the same has been accepted and
pooled, or (b) Melville notifies Bayer of any non-conformity or unsuitability of
a pool upon Melville's testing in accordance with the characteristics and
specifications set forth in Schedules A through E, and the pool is thereby
deemed unsuitable, then Bayer shall remain liable to Melville for the processing
fees (liters of Bayer Input accepted and pooled multiplied by the Base
Processing Fee then in effect) for such lot. Melville shall cooperate with Bayer
in any reasonable efforts requested by Bayer to correct any deficiency
attributable to such Bayer Input. If appropriate, and if requested by Bayer, any
retesting, reprocessing, or additional processing and testing of the unsuitable
pool shall be done by Melville at the sole cost and expense of Bayer.
3.11 Melville will be responsible for the storage and handling of Bayer Input
as specified by Bayer, for pool testing as specified by Bayer and for the
release testing of Intermediates and Albumin [Human] Bulk in accordance with
Bayer's and Melville's release specifications schedule.
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
Page 8
SECTION 4
BASE PROCESSING FEE/BASE YIELDS
4.1 Bayer shall pay Melville, as payment for the fractionation of the Bayer
Input and in satisfaction of Bayer's rental obligation under the Lease, a Base
Processing Fee equivalent to ******** per liter of plasma placed into process in
1995 and 1996, ******** per liter of plasma placed into process in 1997,
******** per liter of plasma placed into process in 1998, and ******** per liter
of plasma placed into process in 1999 and ******** per liter of plasma placed
into process during the two Renewal Periods, if applicable, subject to
adjustment, offset and recoupment as provided below in this Section 4 and in
Section 12.2:
<TABLE>
<CAPTION>
BASE BASE YIELD
----------
PROCESSING Paste
MATERIAL FEE* Weight (g/L) Protein
- -------- ---- ------------ -------
<S> <C> <C> <C>
Cryoprecipitate $******
Recovered Plasma ****** ******
Source Plasma ****** ******
IgG $******
Fraction II + III ******
or
Fraction II + IIIw ******
Fraction IV-1 $****** ****** ******
Albumin $******
Fraction V ******
or
Purified Fraction V ******
or
Albumin [Human] Bulk ______ ****** ******
SUM: $******
</TABLE>
Per Liter of Plasma Processed in 1995 and 1996. In 1997, the Sum of the
product-specific Base Processing Fees shall be $****** and each of the
product-specific Base Processing Fees shall be the 1996 Fee multiplied
by ******. In 1998 and 1999 and each of the two Renewal Periods (if
applicable), the Sum of the product-specific Base Processing Fees shall
be $****** and each of the product-specific Base Processing Fees shall
be equal to the 1996 Fee multiplied by ******.
<PAGE>
Page 9
Processing fees and rental payments will be assessed by Melville and adjusted,
offset or recouped by Bayer, when necessary, in accordance with Sections 4.3 and
12.2. Adjustments in the processing fees and rental payments pursuant to Section
4.3 will be based on yields per liter of plasma (Bayer Input) processed ((i) for
Intermediates, in accordance with paste weights in grams per liter; and (ii) for
Albumin [Human] Bulk, in accordance with total protein content in grants per
liter) and will be calculated based upon the relative dollar value, paste weight
and protein content assigned to each material in the foregoing table. Bayer will
also determine the quantity of the relevant, recoverable protein derived from
the Intermediate pastes; if different than indicated above, Bayer and Melville
personnel will work to improve the yield of the relevant protein.
The yields of recoverable protein as determined by Bayer may be audited by
Melville, and when requested Bayer shall provide Melville with samples of
dissolved pastes for confirmatory assay. Base Yields will be reviewed after any
significant process changes are made and mutually agreed-to adjustments in Base
Yields will be made as appropriate and as negotiated in good faith. The Base
Yields specified above are for the Initial Term, except during the production of
Conformance Lots and during the Start-Up Period which shall be subject to the
provisions in Sections 3.1 and 4.3 respectively.
Bayer represents that the Base Yields listed above are the average yields
achieved for the preceding 12 months, on a product-by-product basis, at Bayer's
Clayton facility, such average yields taking into account losses incurred for
any reason, including without limitation, losses due to contamination, re-work
and spillage. Melville personnel shall have the right to audit Clayton yields
throughout the Term. If actual Clayton average yields for the preceding 12
months are lower than indicated above, when processing Bayer plasma of
comparable quality and, where applicable, using comparable purification methods,
the Base Yield shall be lowered to reflect such average actual Clayton yield, on
a product-by-product basis.
4.2 Melville and Bayer acknowledge (i) that the Base Processing Fee is based
upon the Base Yields referenced above; (ii) that optimum yields of Intermediates
from the Fraction II + IIIw and Fraction IV-1 in-process will not be obtained
during the Start-Up Period; and (iii) that adjustments to the process procedures
may result in additional improvements which cannot be forecast with any
precision at this time. Melville covenants and agrees that it will make all
reasonable efforts and otherwise cooperate with Bayer to maintain and, to the
extent possible, increase yields, maintain product purity and institute Quality
Control and Quality Assurance testing and analysis procedures in order to
facilitate Bayer utilization of Intermediates and Albumin [Human] Bulk in its
production process.
4.3 (a) During the Start-Up Period, Melville shall be paid the full Base
Processing Fees for Intermediates and Albumin [Human] Bulk if the yields
achieved are at least 85% of the Base Yields. If actual yields achieved fall
below 85% of the Base Yields during the Start-Up Period, the payments to
Melville will be reduced by that percentage represented by a fraction, of which
the numerator is 85% minus the percentage yield actually achieved and the
denominator is 85%. Bayer shall promptly notify Melville of such reduced yields
and payments. Melville shall also be
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
Page 10
paid more than the amount called for by the Base Yields, in accordance with the
formula set forth in Section 4.3(c), if the actual yields achieved exceed 100%
of the Base Yields.
(b) Following the Start-Up Period, if in any quarter Melville shall fail
to achieve the Base Yields set forth above for the Intermediates or Albumin
[Human] Bulk delivered under the Agreement, including by reason of losses due to
production problems, then, after notice thereof from Bayer with appropriate
supporting details, Melville shall make a lump sum payment to Bayer by an amount
equal to the quarterly total processing fees charged for each such product
multiplied by a percentage amount equal to 100% less the percentage of the Base
Yields actually achieved.
(c) Following the Start-Up Period, if in any quarter Melville shall
exceed the Base Yields set forth above for the Intermediates or Albumin [Human]
Bulk delivered under the Agreement, then Melville shall invoice Bayer for a lump
sum payment to Melville equal to the quarterly total processing fees charged for
each such product multiplied by a percentage amount equal to the percentage of
Base Yields actually achieved less 100%.
(d) For any annual period beginning on January 1, 1999 and for any
annual period under either the First or Second Renewal Periods beginning on any
subsequent January 1, the Base Processing Fees calculated in accordance with
Section 4.1 shall be adjusted, effective as of January 1 of the applicable
calendar year, by that percentage represented by a fraction the numerator of
which is the CPI (as defined below) on January 1 (or the first business day
thereafter) of the applicable year and the denominator of which is the CPI on
January 1, 1997 (or the first business day thereafter). For purposes of this
Agreement, "CPI" shall mean the Consumer Price Index (U.S. City Average) as
compiled by the Bureau of Labor Statistics, United States Department of Labor,
which became effective in January 1978. If the United States Department of Labor
ceases to compile and publish the CPI, the Parties will mutually agree upon a
comparable Index.
4.4 During the Start-Up Period, Bayer and Melville shall evaluate the data
as to actual yields and will jointly pursue efforts to isolate and identify
procedural modifications to improve and enhance average yields of Intermediates
and Albumin [Human] Bulk per liter of Bayer Input.
4.5 Bayer shall consult with Melville quarterly during the Term and
cooperate and collaborate in efforts to refine procedures and improve yields and
quality during the Term.
4.6 The Base Yields will remain fixed for the Initial Term. Processing Fees
will be reviewed annually and adjustments, if any, will be made through mutual
agreement.
4.7 Should any Bayer Input be rightfully rejected as unsuitable for
production by Melville prior to the checking of individual units, due to obvious
unacceptable shipping conditions, Bayer shall expedite the delivery of an
equivalent amount of Bayer Input as a replacement.
4.8 Bayer shall provide Melville with a minimum of ******** liters of plasma,
suitable for timely processing, in each of ******** during the Initial Term
beginning with
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
Page 11
the Start-Up Period, as required by the Production Plan Rate specified in
Section 3.2, including modification thereof by mutual written agreement. During
the First and Second Renewal Periods (if applicable), Bayer will provide
Melville with a minimum quantity of Plasma in each of the ******** consistent
with the Production Plan Rate established for the applicable Renewal Period
pursuant to Section 3.2 of this Agreement (the "Renewal Period Weekly Minimum").
Subject to the provisions of Section 13 and provided there has not been an Event
of Default under Section 12.1 and a termination under Section 12.2(a)(i) or a
suspension under Section 12.2(a)(ii), if Bayer fails to provide Bayer Input at
the Production Plan Rate, Bayer shall pay to Melville an amount equal to either
******** (during the Initial Term) or the Renewal Period Weekly Minimum (during
either the First or Second Renewal Period), less the number of liters so
delivered in a given week and on hand in inventory at the beginning of such
week, multiplied by the Base Processing Fee then in effect. Unless otherwise
mutually agreed, Melville shall reconcile and invoice Bayer on a monthly basis
for the actual amount owed, if any, based on the formulation set forth in this
section. Such payment shall be made within 30 days of Melville's invoice
therefor.
SECTION 5
PAYMENT TERMS AND INVOICE PROCEDURES
5.1 Melville shall invoice Bayer for all lots processed at the time of
notice provided in Section 6.3. All Melville invoices may be verified by Bayer
by the reports provided for in Section 8.2.
5.2 All invoices for charges or credits incurred under this Agreement are to
be submitted to Bayer and to Melville at the following addresses:
Bayer Inc. Melville Biologics, Inc.
Attention: Ms. Sandra Capps Attention: Controller
Accounts Payable 155 Duryea Road
P. O. Box 507 Melville, New York 11747
Clayton, North Carolina 27520
5.3 All invoices, whether from Bayer to Melville or from Melville to Bayer,
shall be due and payable net 30 days from the invoice date, with interest
payable thereafter, at the then current prime or base rate, as announced by
Citibank, N.A.. plus 2%.
5.4 In the event that Bayer makes any payment by recoupment or offset, Bayer
will so notify Melville and include with its payment a statement indicating the
amount of, and reason for, any such recoupment or offset.
5.5 In the event that amounts due from Melville to Bayer at any time under
this Agreement or otherwise exceed amounts due from Bayer to Melville, Bayer
will, in conformance with the provisions of this Section 5, bill Melville for
the amount of such excess.
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
Page 12
SECTION 6
DELIVERY/RISK OF LOSS
6.1 All Intermediates and Albumin [Human] Bulk shall be delivered by
Melville, FOB its loading dock, Melville, New York.
6.2 Melville shall notify Bayer monthly of all Intermediates and Albumin
[Human] Bulk processed from Bayer Input, such notice to include the release
status.
6.3 Upon completion of processing, including required release testing,
Melville shall provide notice to Bayer by mail or by facsimile of all lots of
Intermediates and Albumin [Human] Bulk available for delivery. Bayer shall
arrange for the pick up and shipping of all such tendered Intermediates and
Albumin [Human] Bulk not later than 30 days for Intermediates and seven days for
Albumin [Human] Bulk after the giving of such notice. In the event the
arrangements are not timely made or for any other delay in acceptance by Bayer
not otherwise attributable to Melville, Melville shall store the delivered
Intermediates and Albumin [Human] Bulk upon commercially reasonable terms and
conditions to be agreed to by the parties. If storage is unavailable to Bayer at
the Melville facility, Bayer shall make its own arrangements for storage of the
material at alternate FDA approved locations and for transportation thereto.
6.4 (a) The parties agree that Bayer shall bear the risk of loss to the
Bayer Input until the shipment is received in acceptable condition in accordance
with Melville's SOP's from the common carrier at the Melville receiving dock.
The risk of loss to the Bayer Input or the Intermediates or Albumin [Human] Bulk
derived therefrom due to casualty, spoilage, loss, theft, fire, damage or
destruction shall be borne by Melville after the shipment of Bayer Input is
delivered to Melville by the common carrier and until delivery is tendered to
Bayer and until the Intermediates and Albumin [Human] Bulk are placed in the
care, custody and control of a common carrier under contract to Bayer for
transporting to Bayer's facility in Clayton, North Carolina, or a storage
location arranged for by Bayer. Bayer shall bear the risk of loss to the
Intermediates and Albumin [Human] Bulk thereafter.
(b) Except as otherwise provided in Section 3.10, in the event of the
loss of a plasma pool which is nonrecoverable by re-work and which results in
the loss of all Intermediates and Albumin [Human] Bulk in process or to be
processed from the Bayer Input from such lost pool ("a Catastrophic Loss"),
Melville shall compensate Bayer for the damages attributable to the Catastrophic
Loss as follows: (i) if the plasma pool loss is attributable to Melville's
negligence, Melville shall compensate Bayer at the rate of ******** per liter,
for the liters of Bayer Input so lost; or (ii) if the plasma pool is lost for
any other reason, Melville shall compensate Bayer at the then-current value of
the plasma, for the liters of Bayer Input so lost. Bayer Input involved in a
Catastrophic Loss shall not be used in the calculation of Base Yield.
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
Page 13
6.5 Melville represents and agrees that it maintains a policy of insurance
with coverage for casualty, spoilage, loss, theft, fire, damage or destruction
to personal property of others in its care, custody and control with limits of
at least ******** per loss occurrence and per year and a deductible of not
more than ********; that the policy will show Bayer as an additional insured on
such policy of insurance; that such insurance will not be reduced (except by
payment of loss), cancelled or terminated during the Term; and that the insurer
will agree to give Bayer at least 15 days' notice prior to the cancellation,
reduction (except by payment of loss) or termination of such polices of
insurance.
6.6 Each party represents and agrees that it maintains a policy of insurance
for liability coverage for injury or death to persons with limits of at least
******** per loss occurrence and a deductible of not more than ********; that
the policy will show the other party as a loss/payee on such policy; that such
insurance will not be reduced (except by payment of loss), cancelled or
terminated during the Term; and that the insurer will agree to give the other
party at least 15 days' notice prior to the cancellation, reduction (except by
payment of loss) or termination of such policies of insurance.
SECTION 7
DISPOSITION OF RESIDUAL FRACTIONS AND PRECIPITATE
7.1 The Bayer Input and all residuals of the Bayer Input shall remain the
property of Bayer and Bayer shall retain title to all such property. Melville
shall not use, transfer or dispose of the Bayer Input in any fashion except as
contemplated by this Agreement or upon the express written consent of Bayer.
Bayer Input will at all times be traceable and identifiable (by labels, signs or
other appropriate means as required by law). Furthermore, upon request, Melville
will execute Financing Statements or Continuation Statements to be filed by
Bayer relating to the Bayer Input.
7.2 After processing Intermediates and Albumin [Human] Bulk, Melville shall
dispose of any such residuals in accordance with Bayer's approved SOP's unless
directed otherwise by Bayer. If so directed, Melville shall hold all residuals
for the account of and at the expense and risk of Bayer.
7.3 Anything in the foregoing to the contrary notwithstanding, Melville
shall have the right to prepare samples solely for the purpose of (i)
ascertaining conformance with agreed-upon release specifications, (ii)
ascertaining yields of Intermediates and Albumin [Human] Bulk and (iii)
ascertaining product characteristics for any other purpose set forth in this
Agreement from all material processed by it in accordance with its SOP's and
release procedures and to retain such samples. In addition, Melville shall
prepare and furnish samples to Bayer in accordance with the provisions of
Schedules A through E.
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
Page 14
SECTION 8
RECORDS AND REPORTS
8.1 Melville shall maintain accuracy records of Bayer Input received,
accepted, processed, in storage, and delivered by Melville, laboratory testing
reports, assays, correspondence and other documents concerning lot releases as
provided in Melville SOP's. Such records shall be available for examination by
duly authorized representatives of Bayer upon request. Duly authorized
representatives of Bayer shall, during Melville's normal business hours, have
the right to conduct at Bayer's expense physical inventories to confirm accuracy
of records. Any such inventory may be conducted only after forty-eight (48)
hours' prior written notice to Melville.
8.2 Melville shall furnish Bayer, on forms specified by Bayer, with monthly
reports as to the Bayer Input in raw material inventory, in-process and
delivered.
SECTION 9
WAREHOUSING
9.1 All Intermediates and Albumin [Human] Bulk shall be stored by Melville
under conditions conforming to FDA and Bayer requirements. All Intermediates
shall be stored at ******** or colder, in a freezer with a validated
temperature monitoring system pending pickup by Bayer. Albumin [Human] Bulk
containers shall be stored at ********.
SECTION 10
CONFIDENTIALITY
10.1 All Melville Confidential Information disclosed to Bayer by Melville or
any parent, subsidiary or affiliated organization of Melville during the Term is
disclosed in reliance on Bayer's agreement hereby to treat all such information
in the strictest confidence. Bayer shall refrain from using, communicating or
disclosing Melville Confidential Information to any person or entity without the
prior written consent of Melville, except as provided herein or as required by
law or regulation. "Melville Confidential Information" shall include all
proprietary or trade secret information pertaining to Intermediates and Albumin
[Human] Bulk and the business or property of Melville, its Parents, subsidiaries
or affiliated entities that is not in the public domain (unless in the public
domain due to a breach by Bayer of its obligations hereunder).
Bayer shall designate the persons who shall receive any of the information to be
disclosed to it by Melville or its parents, subsidiaries or affiliates pursuant
to this Agreement and, prior to disclosure to such persons, such persons shall
execute similar confidentiality agreements with Melville, and such persons will
be entitled to use the Melville Confidential Information in connection with the
transaction contemplated by this Agreement, including during the period of any
Bayer Takeover.
<PAGE>
Page 15
Bayer shall keep the Melville Confidential Information secret and confidential
from all persons not so designated.
10.2 Bayer acknowledges that in the event of a breach by it or any person
designated by it of any obligation under or pursuant to Section 10.1, the injury
to Melville would not be reparable in damages and that Melville shall be
entitled to all relief in equity, including injunctive relief.
10.3 All Bayer Confidential Information disclosed to Melville by Bayer or any
parent, subsidiary or affiliated organization of Bayer during the Term is
disclosed in reliance upon Melville's agreement hereby to treat all such
information in the strictest confidence. Melville shall refrain from using,
communicating or disclosing Bayer's Confidential Information to any person or
entity without the prior written consent of Bayer, except as provided herein or
as required by law or regulation. "Bayer Confidential information" shall include
all proprietary or trade secret information pertaining to Intermediates and
Albumin [Human] Bulk and the business or property of Bayer, its parents,
subsidiaries or affiliated entities that is not in the public domain (unless in
the public domain due to a breach by Melville of its obligations hereunder).
Melville shall designate the persons who shall receive any of the information to
be disclosed to it by Bayer or its parents, subsidiaries or affiliates pursuant
to this Agreement and, prior to disclosure to such persons, such persons shall
execute similar confidentiality agreements with Bayer, and such persons will be
entitled to use the Bayer Confidential Information to perform Melville's
obligations under this Agreement. Melville shall keep the Bayer Confidential
Information secret and confidential from all persons not so designated.
10.4 Melville acknowledges that in the event of a breach by it or any person
designated by it of any obligation under or pursuant to Section 10.3, the injury
to Bayer would not be reparable in damages and that Bayer shall be entitled to
all relief in equity, including injunctive relief.
10.5 Both parties represent and acknowledge that these confidentiality
provisions do not contemplate or implicitly or explicitly authorize any
disclosures or agreement that would be prohibited under the antitrust laws of
the United States or of any state.
10.6 The obligations of confidentiality and non-use set forth in this Section
10 shall continue in effect for two years following the expiration of the Term,
including any extensions or renewals thereof.
SECTION 11
WARRANTIES
11.1 Melville warrants (a) that all Bayer Input accepted for processing
pursuant to this Agreement shall be stored and handled in compliance with
applicable FDA regulations, and (b) that all Intermediates and Albumin [Human]
Bulk processed therefrom (i) shall conform to the
<PAGE>
Page 16
specifications set forth in Schedules A through E as may be revised by mutual
agreement, and (ii) shall be processed, stored, tested, packaged, labeled and
shipped in compliance with CGMP'S and all other applicable FDA regulations,
including standards, practices, procedures and directives, requirements and
specifications stated or referred to therein. This Warranty shall not apply to
any defect or other unfitness attributable in whole or in part to the Bayer
Input.
11.2 Bayer warrants that all plasma supplied hereunder shall be collected,
tested, labelled, stored and handled by Bayer in compliance with CGMP'S and all
other applicable FDA regulations, including standards and methods, practices,
procedures and directives, requirements and specifications stated or referred to
herein.
SECTION 12
DEFAULT; TERMINATION
12.1 The occurrence of any of the following events constitutes an Event of
Default under this Agreement:
a. Melville fails to commence the Start-Up Period on or before July
1, 1996.
b. Melville materially fails to perform its obligations to process
Bayer Input in accordance with this Agreement and fails to
commence a cure of said failure within 30 days and to complete
such cure within 90 days following notice thereof.
c. Melville materially fails to conform to a continued program for
protection of Bayer Input once in Melville's possession and fails
to commence a cure of said failure within 30 days and to complete
such cure within 90 days following notice thereof.
d. Melville fails to maintain the insurance coverage referenced in
Section 6.5 and fails to cure said failure within 10 days.
e. Melville sells the fractionation facility without giving Bayer
the Right of First Refusal provided for in Section 16.
f. Melville materially breaches any of its other material
obligations imposed by this Agreement and fails to cure said
material breach within 90 days following notice thereof.
g. Melville's establishment and/or product licenses under which the
Intermediates and Albumin [Human] Bulk are processed are revoked
or suspended by the FDA or state authorities because of material
compliance failures by Melville, and (i) Melville elects not to
appeal such revocation or suspension, or (ii) Melville fails to
cure said license revocation or suspension within 90 days;
provided, however, that
<PAGE>
Page 17
Melville shall not be in default hereunder so long as Melville
has commenced the process of reinstating such license(s) within
such 90-day period and is diligently pursuing the same to
completion (a "Compliance Default").
h. Melville shall default in its obligations under the Loan
Documents (excluding therefrom the Reimbursement Agreement and
the Mortgage), and such default shall continue after all
applicable notice and cure1568Xperiods.
i. An Event of Default as defined in the Mortgage.
j. A default as defined in the Reimbursement Agreement.
k. Any representation or warranty of Melville contained in this
Agreement shall be materially false.
l. Melville shall fail to perform its material obligations under the
Lease or Sublease and the same shall remain uncured 30 days after
receipt by Melville of notice thereof; provided, however, if such
matter cannot reasonably be cured within 30 days, Melville shall
not be in default hereunder so long as Melville has commenced a
cure within such 30-day period and is diligently pursuing the
same to completion.
m. Melville files or has filed against it any petition for relief
under any Chapter of the United States Bankruptcy Code or any
other or similar state or federal insolvency law, or a receiver,
custodian, trustee or assignee for the benefit of creditors is
appointed for Melville or any part of Melville's assets;
provided, however, a petition filed against Melville shall only
become a default if it continues unstayed and in effect for a
period of 60 days.
12.2 (a) If an Event of Default has occurred and is continuing, then Bayer
may, at its option, either (i) terminate the Term; or (ii) suspend its
obligations hereunder, including suspension of payments for fractionation,
during such continuation, or (iii) notify Melville that Bayer will take over
operation of the processing of Bayer Input at Melville's fractionation facility,
using any combination of Bayer's and Melville's personnel as is appropriate
("Bayer Takeover") for the balance of the Term, including any renewals or
extensions thereof.
(b) In the event of a Bayer Takeover as a result of a Compliance
Default, Melville shall, at Melville's expense, use its reasonable efforts to
appeal such revocation or suspension and/or to correct the problems giving rise
to the Compliance Default and insofar as possible, and subject to FDA approval,
to permit Bayer to continue to process Bayer Input at Melville's fractionation
facility.
<PAGE>
Page 18
(c) Nothing contained in this Section 12 shall preclude Bayer from
utilizing any remedy for an Event of Default by Melville, whether specified in
this Agreement or any other agreement or now or hereafter existing at law or in
equity.
(d) Effective upon a Bayer Takeover, Melville will permit Bayer to
conduct Processing and Fractionation Operations, as defined in the Reimbursement
Agreement, under (i) subject to FDA approval, all licenses and permits now held
by, or hereafter issued to, Melville and necessary or appropriate to process
Bayer Input at Melville's fractionation facility, (ii) all such contracts as
Bayer may specify relating to the processing of Bayer Input at Melville's
fractionation facility, and (iii) all patents and patent applications and the
inventions and improvements therein disclosed, all trade secrets, business
secrets, know-how, show-how and other information and any and all tangible
embodiments thereof and any other intellectual property rights of Melville used
in the processing of Bayer Input at Melville's fractionation facility. Bayer
will have no obligation to assume any pre-existing liability of Melville, and,
if Bayer does assume any such liability, Bayer will be entitled to reimbursement
(including by way of offset or recoupment from amounts otherwise owed by Bayer
to Melville) for any direct or indirect expense paid or incurred by Bayer in
connection with such assumed liability.
(e) To the extent that Melville's compliance with Section 12.2(d) would
constitute a breach of any such contract, license or permit, unless the consent,
waiver or approval of another party thereto has been obtained, this Agreement
shall not constitute any such assignment or agreement to assign unless and until
such consent, waiver or approval is obtained. Melville agrees to continue to use
its reasonable efforts to obtain all such consents as have not been obtained
prior to the date of a Bayer Takeover and further agrees to cooperate with Bayer
after the date of a Bayer Takeover in any reasonable arrangement (such as
subcontracting, sublicensing or subleasing) designed to provide for Bayer, on
terms no less favorable than Melville is entitled to, the benefits under the
applicable contract, license or permit of any and all rights of Melville
thereunder.
(f) In the event of a Bayer Takeover, Melville hereby offers to sell to
Bayer any supplies, inventory, raw materials or other items not included as
Demised Premises under the Lease and used solely in the Processing and
Fractionation Operations, at Melville's cost for any such item. Bayer will have
no obligation to purchase any such item, and nothing contained in this Section
12.2(f) shall be construed to limit or restrict Bayer's rights as a secured
party under any Loan Document with respect to any such item.
(g) In the event of a Bayer Takeover, Melville, at the reasonable
request of Bayer, agrees to execute and deliver such instruments, documents and
other writings and in general to cooperate in taking such actions as may be
necessary or desirable to confirm, carry out and effectuate fully the intent and
purposes of this Section 12.2.
(h) In the event of a Bayer Takeover, during the Bayer Takeover and
after commencement of processing by Bayer of Bayer Input, Bayer shall continue
to be responsible for payment to
<PAGE>
Page 19
Melville for processing of Intermediates and Albumin [Human] Bulk at the Base
Processing Fees and at the Production Plan Rate volumes (provided, however,
that, notwithstanding anything to the contrary in Section 4.8, Bayer shall only
be required to pay for the volumes actually processed if such volumes are less
than the Production Plan Rate volumes, so long as Bayer is using its best
efforts to utilize the available fractionation capacity fully to meet the
Production Plan Rate volumes), and consistent with all other terms and
conditions as set forth in this Agreement, but Bayer shall first deduct
therefrom and pay all expenses of employees, vendors and suppliers and other
reasonable direct and indirect expenses related to the processing operations for
Bayer Input, including without limitation, any reasonable expenses Bayer may
incur in performing Melville's obligations under the Lease. All payments net of
all expenses, and after recoupment of all other amounts due Bayer by Melville
(whether arising under this Agreement or otherwise), shall be paid to Melville
or as Melville shall direct.
12.3 In the event of a Bayer Takeover, Bayer shall:
(a) Subject to reimbursement under Section 12.2(h), arrange for, pay as
and when due and payable, all charges for, and use its best efforts to ensure,
the uninterrupted provision of heating, ventilation, air conditioning,
refrigeration, fuel, gas, electricity, water (including water for injection),
sewerage, telephone, rubbish removal, security services, and any and all other
utility services to the Common Areas and to Lessor's Retained Areas, as defined
in the Lease.
(b) Subject to reimbursement under Section 12.2(h), make and pay for all
maintenance and repairs necessary to conduct the Processing and Fractionation
Operations;
(c) Indemnify and hold Melville harmless from and against any and all
claims, demands, liabilities and expenses, including reasonable attorneys' fees,
related to any negligence or willful misconduct in Bayer's conduct of the
Processing and Fractionation Operations.
(d) Comply in all material respects with all laws relating to the (i)
Processing and Fractionation Operations and (ii) the use of Melville's facility
and with all terms of Melville's FDA establishment and product licenses
12.4 If Bayer elects a Bayer Takeover pursuant to Section 12.2 and commences
implementation of a Bayer Takeover, such Bayer Takeover will terminate at the
expiration of the Term.
12.5 If Bayer materially breaches any of its representations, warranties,
obligations or responsibilities hereunder, Melville, at its option, may
terminate the Term by giving Bayer 90 days' prior written notice of termination;
provided, however, that if Bayer cures such breach within 90 days after receipt
of such written notice, the Term shall remain in effect. If Bayer fails to cure
such breach and Melville terminates the Term, Bayer shall pay to Melville as
liquidated damages in respect of future processing fees hereunder and future
rentals under the Lease, and not as a penalty, the balance of the payments that
would be otherwise due if the Term had not been so terminated and processing
operations had continued, based on the Base Processing Fee then in
<PAGE>
Page 20
effect and the Production Plan Rate. Such payments will be made on the first day
of each month through the month during which the Term would have expired absent
any early termination thereof.
SECTION 13
FORCE MAJEURE;
FAILURE OF PRESUPPOSED CONDITIONS
13.1 In the event that (i) (A) Melville's establishment and/or product
licenses under which the Intermediates and Albumin [Human] Bulk are processed
shall be revoked or suspended by the FDA for reasons other than a Compliance
Default as defined in Section 12. 1(g) or should state authorities take action
to close the Melville fractionation facility or terminate its operation for such
reasons, and (B) the parties are unable to cause reinstatement of such
establishment and/or product licenses or the issuance of new establishment
and/or product licenses or to cause state authorities to permit reopening of
Melville's fractionation facility within a reasonable period of time, or (ii)
all or a portion of Melville's facility at 155 Duryea Road, Melville, New York,
is taken by any government or public authority under the power of eminent domain
or conveyed in lieu thereof, or is damaged such that in Melville's reasonable
judgement it is impracticable to resume the processing of Bayer Input at such
facility, the Term shall automatically terminate, without penalty to any party,
and neither Melville nor Bayer shall be further liable to the other under this
Agreement except for obligations and liabilities incurred prior to such
termination and except as set forth in Sections 10 and 14. All Bayer Input shall
to the extent possible be returned to Bayer in accordance with its written
instructions to Melville.
13.2 If either party shall be delayed, interrupted or prevented from the
performance of any obligations under this Agreement (other than for the payment
of monies otherwise accrued or owing) by reason of any act of God, fire, flood,
war (declared or undeclared), disaster, strike, labor difficulty or any other
cause beyond the control of such party, then that party shall not be liable to
the other for the failure in performance. The affected party shall notify the
other immediately upon the occurrence of the condition causing the inability to
perform or rendering performance impracticable, and shall similarly provide
immediate notice to the other party upon the termination of the condition.
SECTION 14
INDEMNIFICATION
14.1 Bayer shall indemnify and hold harmless Melville and its parent,
subsidiaries and affiliated entities and the officers, directors, employees and
shareholders thereof, from any and all liability to any third parties and
reasonable attorney fees, costs and expenses they may incur as a result of (i)
any defects, impurity, nonconformity to specifications, or noncompliance with
any applicable regulations, including CGMP'S, in the Bayer Input; (ii) improper
handling by Bayer of the
<PAGE>
Page 21
Intermediates and Albumin [Human] Bulk; (iii) negligence or willful misconduct
by Bayer or any of its officers, employees or agents; (iv) defects in product
design or product specification; or (v) advertising, promotion, marketing or
sale by or for Bayer of products manufactured from Intermediates or Albumin
[Human] Bulk.
14.2 Melville shall indemnify and hold harmless Bayer, its parent,
subsidiaries and affiliated entities and the officers, directors, employees and
shareholders thereof, from any and all liability to any third parties and
reasonable attorney fees, costs and expenses they may incur as a result of (i)
any defects, impurity, nonconformity to specifications, or noncompliance with
any applicable regulations, including CGMP'S, in the Intermediates or Albumin
[Human] Bulk caused by Melville; (ii) improper handling of the Bayer Input,
Intermediates and Albumin [Human] Bulk by Melville; or (iii) negligence or
willful misconduct by Melville or any of its officers, employees or agents.
SECTION 15
GENERAL TERMS AND CONDITIONS
15.1 All waivers by any party must be explicitly in writing. A failure of
either party to enforce any breach or default shall not be construed as a waiver
of such breach or default, and a waiver of any single breach or default shall
not constitute a waiver of any subsequent breaches or defaults.
15.2 In the event that one or more portions of this Agreement shall be deemed
invalid or unenforceable by a court of competent jurisdiction, the remainder of
this Agreement may be enforced in accordance with its terms and such invalidity
or unenforceability shall not impair the enforceability of any other sections of
this Agreement.
15.3 Neither Melville nor Bayer shall assign any of its rights under this
Agreement, nor delegate any of its obligations to any other person or entity
except with the prior written consent of the other party, which consent shall
not be unreasonably withheld. However, (a) Bayer shall have the right to assign
its rights and obligations to a successor in interest should Bayer's parent
company decide to change the name of its subsidiary in the United States or
assign the assets of the subsidiary to a newly-formed subsidiary company; and
(b) Melville shall have the right to assign its rights and obligations to a
party (or parties) assuming ownership or control of fifty percent (50%) or more
of Melville's common stock; provided, however, that Melville shall have given
Bayer notice in advance of any such transaction.
15.4 Any notice, request, instruction or other document to be given hereunder
by either of the parties hereto shall be in writing and delivered personally, or
sent by certified mail, facsimile transmission or other provable means, to the
following addresses or such other address for the purposes of notification as
one party may, by written notice, give to the other. It shall be deemed complete
upon receipt.
<PAGE>
Page 22
To Melville: Melville Biologics, Inc.
155 Duryea Road
Melville, New York 11741
Attention: Thomas R. Ostermueller
Phone Number: (516) 752-7339
Facsimile Number: (516) 752-8754
To Bayer: Bayer Corporation
Pharmaceutical Division
Biological Products
400 Morgan Lane
West Haven, Connecticut 06516
Attention: Law Department
Phone Number: (203) 937-2401
Facsimile Number: (203) 937-2795
15.5 This Agreement shall be construed and enforced in accordance with the
laws of the State of Connecticut.
15.6 The parties shall attempt in good faith to resolve any dispute arising
out of or relating to this Agreement promptly by negotiation between executives.
Except for matters governed by Section 15.10 with respect to which Bayer may
seek specific performance or other equitable remedies at any time, if the matter
has not been resolved within 60 days of a party's request for negotiation,
either party may initiate a resolution of the dispute in accordance with the
rules of the American Arbitration Association ("AAA"). AAA costs shall be split
evenly between the parties. Each party shall bear its own costs for attorneys,
experts, witnesses and other related fees.
15.7 This Agreement, the Lease, the Sublease and the Loan Documents and the
exhibits and schedules to each such document (including without limitation the
Reimbursement Agreement and the Mortgage) constitute one single agreement
between Bayer and Melville, although they have been executed as separate
documents for convenience and ease of reference, and together such documents
constitute the complete and entire agreement between the parties hereto with
respect to the transactions contemplated herein and supersede all previous
written or oral negotiations, commitments, memoranda, understandings and any
prior agreement between Bayer and Melville or their parents, subsidiaries or
affiliated entities concerning their subject matter.
15.8 Bayer agrees and acknowledges for the benefit of Melville and of the
sole stockholder of Melville, the New York Blood Center, Inc., a New York
Corporation ("NYBC"), that NYBC shall not be obligated for or liable in respect
of any of the obligations or liabilities of Melville under, or for any breach by
Melville of, this Agreement, the Lease, the Sublease and the Loan Documents and
the exhibits and schedules to each such document (including without limitation
the Reimbursement Agreement and the Mortgage). Bayer agrees and acknowledges for
the benefit
<PAGE>
Page 23
of Melville and of NYBC that NYBC has not in any way induced Bayer to enter into
this Agreement.
15.9 This Agreement will be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns.
15.10 Melville agrees that the subject matter of Sections 12.2 and 16.1 is
unique, that damages would not be a sufficient remedy to Bayer for a breach by
Melville of Section 12.2 or 16.1 and that Bayer will have the right to seek
specific performance or other equitable relief in enforcing Melville's
obligations under Section 12.2 or 16.1.
SECTION 16
OPTION TO PURCHASE / FIRST RIGHT OF REFUSAL
16.1 During the term of this Agreement, should Melville receive a valid
viable offer from a third party for purchase of Melville's facility or for the
purchase of all or any portion of Melville's assets necessary for the Processing
and Fractionation Operations (and not including a sale/leaseback or
lease/leaseback arrangement for the purpose of obtaining financing or favorable
tax benefits, including without limitation a conveyance to an Industrial
Development Authority or other similar governmental or quasi-governmental
authority), Melville shall so inform Bayer in writing, stating the name of the
third party and the terms on which the third party proposes to purchase the
facility or such assets. Bayer shall have 60 days from receipt of Melville's
written notice to purchase the facility at the price and on the other terms
tendered by such third party; provided, however, that in the event that the
third party proposes to purchase the facility or such assets other than for cash
(either at closing or on a deferred basis), Bayer will have the right to
purchase the facility or such assets for cash in an amount equal to the fair
market value of such non-cash payment as determined in good faith by Bayer and
Melville, payable at the same time as payment other than for cash is proposed by
the third party; and, provided, further that such 60-day period shall be
extended in the event of any dispute between Bayer and Melville relating to this
right of first refusal, for a period of 20 days following resolution of such
dispute. Bayer shall have the right in such circumstance to examine, and
Melville shall have the obligation to furnish to Bayer, (i) documentation
sufficient to establish the credibility and amount of such third party offer and
(ii) such materials relating to Melville and its operations and financial
condition as Bayer may reasonably request. If Bayer does not exercise the option
granted to it pursuant to this Section 16.1, Melville will have the right to
sell the facility or such assets to the third party identified in the notice to
Bayer at the price and on the terms specified in such notice; provided, that
such third party shall expressly assume Melville's obligations under this
agreement, the Lease, the Sublease and, if Bayer consents, under the
Reimbursement Agreement. Nothing contained in this Section 16.1 shall be
construed to limit or restrict Bayer's rights as a secured party under the
Reimbursement Agreement, the Mortgage or any other Loan Document.
<PAGE>
Page 24
SECTION 17
OTHER AMENDMENTS AND RATIFICATION
17.1. Bayer and Melville hereby stipulate and agree that the references to
"Custom Processing Agreement," "Agreement for Custom Processing" or "Processing
Agreement" in each of the following Agreements or documents to which one or both
of them are a party (collectively, the "Other Agreements") are hereby amended to
mean this Amended and Restated Agreement for Custom Processing, dated as of
__________ ___, 1996, and all references to "Miles Inc" or "Miles" in any of the
Other Agreements are hereby amended to mean "Bayer Corporation" or "Bayer":
(a) Letter Agreement for $10,000,000 Term Loan, by and between PNC Bank,
N.A. and Melville Biologics, Inc., dated February 7. 1995
(b) Term Note for $10,000,000 from Melville Biologics, Inc. in favor of PNC
Bank, N.A.
(c) Guaranty Agreement of Miles Inc. in favor of PNC Bank, N.A., dated
February 7, 1995.
(d) Reimbursement and Security Agreement, by and between Miles Inc. and
Melville Biologics, Inc., dated February 7, 1995.
(e) Mortgage, Security Agreement and Fixture Filing, from Suffolk County
Industrial Development Agency and Melville Biologies, Inc. to Miles
Inc., dated as of February 15, 1995 (as recorded in the Suffolk County,
New York, Clerk's Office in Liber 18919, Page 642).
(f) Lease Agreement, from Melville Biologics, Inc. to Miles Inc., dated
February 7, 1995.
(g) Memorandum of Lease (as recorded in Suffolk County, New York, Clerk's
Office in Liber 11714, Page 396).
(h) Sublease Agreement, from Miles Inc. to Melville Biologics, Inc., dated
February 7, 1995.
(i) Memorandum of Sublease (as recorded in Suffolk County, New York, Clerk's
Office in Liber 11714, Page 397.
(j) Financing Statements filed by Miles Inc. against Melville Biologics,
Inc.
(k) Facility Lease Agreement, by and between Suffolk County Industrial
Development Agency and Melville Biologics, Inc., dated as of February
15, 1995.
<PAGE>
Page 25
(l) Letter Agreement, between Miles, Inc. and Melville Biologics, Inc.,
dated February 6, 1995 (regarding approval of future advances under the
PNC Bank Term Loan).
Except as amended above, each of the parties hereby ratifies and confirms that
all of the Other Agreements are and remain in full force and effect in
accordance with their respective terms. The parties further agree to execute and
deliver to the other party or file any and all other instruments, documents or
statements, including but not limited to financing statements, amendments to
mortgages, amended or supplemental memoranda of leases or any other item,
reasonably requested or deemed necessary by the other party to fully document
and perfect the amendments reflected in this Agreement or otherwise preserve or
protect the parties' rights or obligations.
IN WITNESS WHEREOF, this Agreement has been executed the day and year
first above written.
MELVILLE BIOLOGICS, INC.
By: /s/ Thomas R. Ostermueller
---------------------------------
Its: President and CEO
--------------------------------
BAYER CORPORATION
PHARMACEUTICAL DIVISION
BIOLOGICAL PRODUCTS
By: /s/ Jack Ryan
----------------------------------------
Its: Vice President, Commercial Development
---------------------------------------
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
Page 26
Schedule A Cryo Release Specifications
**************************************************************************
*******************************************************************************
*******************************************************************************
*******************************************************************************
*******************************************************************************
*********************** [3 pages omitted] ************************************
*******************************************************************************
*******************************************************************************
*******************************************************************************
*******************************************************************
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
Page 27
Schedule B-1 Fraction II + III Paste Release Specifications
**************************************************************************
*******************************************************************************
*******************************************************************************
*******************************************************************************
*******************************************************************************
*********************** [3 pages omitted] *************************************
*******************************************************************************
*******************************************************************************
*******************************************************************************
*******************************************************************
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
Page 28
Schedule B-2 Fraction II + IIIw Paste Release Specifications
**************************************************************************
*******************************************************************************
*******************************************************************************
*******************************************************************************
*******************************************************************************
*********************** [4 pages omitted] *************************************
*******************************************************************************
*******************************************************************************
*******************************************************************************
*******************************************************************
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
Page 29
Schedule C Fraction IV-1 Paste Release Specifications
**************************************************************************
*******************************************************************************
*******************************************************************************
*******************************************************************************
*******************************************************************************
*********************** [3 pages omitted] *************************************
*******************************************************************************
*******************************************************************************
*******************************************************************************
*******************************************************************
<PAGE>
Page 30
Schedule D-1 Fraction V Paste Release Specifications
(To be provided at a future date, if necessary)
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
Page 31
Schedule D-2 Purified Fraction V Paste Release Specifications
**************************************************************************
*******************************************************************************
*******************************************************************************
*******************************************************************************
*******************************************************************************
*********************** [5 pages omitted] *************************************
*******************************************************************************
*******************************************************************************
*******************************************************************************
*******************************************************************
<PAGE>
Page 32
Schedule E Albumin [Human] Bulk Release Specifications
(To be provided at a future date, if necessary)
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
Page 33
Schedule F Miles Input - Shipment Procedures
**************************************************************************
*******************************************************************************
*******************************************************************************
*******************************************************************************
*******************************************************************************
*********************** [4 pages omitted] *************************************
*******************************************************************************
*******************************************************************************
*******************************************************************************
*******************************************************************
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
EXHIBIT 10.12
MODIFICATION AGREEMENT
----------------------
This Modification Agreement (this "Agreement") dated as of December 22,
1997, between V.I. Technologies, Inc. (formerly known as Melville Biologics,
Inc.), a Delaware corporation ("VITEX") and Bayer Corporation (formerly known as
Miles, Inc.), an Indiana corporation ("Bayer").
WITNESSETH:
WHEREAS, VITEX and Bayer are parties to the First Amended and Restated
Agreement for Custom Processing dated January 24, 1996 (the "Agreement for
Custom Processing"), and to the Other Agreements, as defined in Section 17 of
the Agreement for Custom Processing, relative to processing and fractionation by
VITEX of plasma supplied by Bayer and related matters; and
WHEREAS, VITEX operates its fractionation business on property (the
"Property") located at 155 Duryea Road, Melville, New York, owned by the Suffolk
County Industrial Development Agency ("SCIDA") and leased by SCIDA to VITEX
under the Lease Agreement (the "IDA Lease") dated as of February 15, 1995; and
WHEREAS, VITEX has leased a portion of the Property to Bayer under a Lease
Agreement (the "Lease Agreement"), and Bayer has sub-leased the same portion
back to VITEX under the Sublease Agreement (the "Sublease"), both dated as of
February 7, 1995; and
WHEREAS, pursuant to the Credit Agreement, dated as of December 22, 1997
(the "Chase Credit Agreement"), being entered into between VITEX and The Chase
Manhattan Bank (formerly known as Chemical Bank) ("Chase"), Chase has agreed to
make a Term Loan (as defined in the Chase Credit Agreement) (the "Chase Term
Loan") in the principal amount of $10,750,000 to VITEX subject to the terms and
conditions set forth therein, and VITEX shall deliver to Chase certain documents
thereunder;
WHEREAS, the Term Note documenting a loan previously provided by PNC Bank,
N.A. ("PNC") to VITEX, referred to in said Section 17, is being paid from the
proceeds of the Chase Term Loan, and the related Letter Agreement between VITEX
and PNC dated February 7, 1995 is being terminated;
WHEREAS, (i) the Guaranty Agreement of Bayer in favor of PNC, dated
February 7, 1995, relative to said Term Note of PNC Bank, is being terminated;
(ii) the reimbursement obligations of VITEX relative to the Guaranty Agreement
under the Reimbursement and Security Agreement dated February 7, 1995 (the
"Reimbursement Agreement"), are being terminated and (iii) the Mortgage,
Security Agreement and Fixture Filing
<PAGE>
dated as of February 15, 1995 from VITEX and SCIDA to Bayer (the "1995
Mortgage"), and associated filings, securing said reimbursement obligation, is
being amended;
WHEREAS, VITEX and Bayer are entering into a Security Agreement, dated the
date hereof amending and restating the Reimbursement Agreement, the Security
Agreement and an amendment to the 1995 Mortgage pursuant to the Amendment to
Mortgage, Security Agreement and Fixture Filing being entered into concurrently
herewith (as so amended, the "Bayer Mortgage"), to secure obligations of VITEX
under the Agreement for Custom Processing, as amended by this Agreement;
WHEREAS, the term loan previously provided to VITEX by Chemical Bank is
being paid and replaced by the Chase Term Loan and the related Credit Agreement
between VITEX and Chemical Bank dated as of June 21, 1996 is being terminated;
WHEREAS, the Letter of Credit of Silicon Valley Bank, N.A. ("Silicon") in
favor of Chemical Bank provided by the Ampersand Limited Partners, as defined in
the Reimbursement Agreement dated as of June 21, 1996, between Silicon and said
Ampersand Limited Partners, is being canceled, along with such Reimbursement
Agreement;
WHEREAS, the Intercreditor Agreement dated as of June 21, 1996 (the "1996
Intercreditor Agreement"), among VITEX, Bayer and said Ampersand Limited
Partners is being terminated;
WHEREAS, as conditions precedent to making loans to VITEX under the Chase
Credit Agreement, Chase has required such payoffs and such terminations, and
that VITEX, Bayer and Chase enter into the Intercreditor Agreement dated the
date hereof (the "Intercreditor Agreement");
WHEREAS, to reflect the foregoing changes and to effect certain other
modifications to the agreements or documents referred to below, the parties wish
to enter into this Modification Agreement.
NOW, THEREFORE, in consideration of the premises and intending to be
legally bound, the parties hereby agree as follows:
1. The 1995 Mortgage shall be amended by the Amendment to Mortgage,
Security Agreement and Fixture Filing among VITEX, SCIDA and Bayer, dated as of
the date hereof, (b) the Reimbursement Agreement shall be amended and restated
as set forth in the Security Agreement and (c) the 1996 Intercreditor Agreement
shall be terminated by provisions of the Ampersand Termination, Discharge and
Release,
2
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
said Amendment to Mortgage, Security Agreement and Fixture Filing and the VITEX
Intercreditor Termination, Discharge and Release, all as of the date of this
Agreement.
2. Bayer consents to the Chase Credit Agreement, the Chase Term Loan and
the transaction contemplated by the Chase Credit Agreement, including, pursuant
to the Intercreditor Agreement, a first mortgage to Chase on the Property (the
"Chase Mortgage"), provided for therein. The Bayer Mortgage shall be subordinate
to said first mortgage as provided in the Intercreditor Agreement.
3. The Agreement for Custom Processing is amended as follows:
A. Section 1.2 is revised as follows:
(i) Strike language after "(b)" in the fourth line through the
words "(the "Initial Term")" and add the words "terminate on
December 31, 2001 (the "Initial Term")";
(ii) In the eleventh line "July 1, 1998" is changed to "July 1,
2000";
(iii) In the seventeenth line, both references to "July 1, 1999"
are changed to July 1, 2001" and "July 1, 1998" is changed to
"July 1, 2000".
B. Add at end of Section 1.2 the words "The processing fee be
adjusted as provided in Paragraph 4.3(d) for the years 1998, 1999, 2000 and
2001".
C. The second sentence of Section 3.2 is deleted in its entirety and
replaced with the following:
"During the Initial Term, the First Renewal Period and Second
Renewal Period, if applicable, the Production Plan Rate will be as
follows:
1998 ******* liters per year
1999 ******* liters per year
2000 ******* liters per year
2001 ******* liters per year
3
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
2002 Between ******** liters per
year as agreed by Bayer and VITEX
2003 Between ******** liters per
year as agreed by Bayer and VITEX"
D. Amend the next to last sentence of Section 3.6 to read in its
entirety as follows:
"With the exception of delays covered by the provisions of Section 3.7
or 13, Bayer will charge VITEX for each day's delay in delivery an
amount equal to the dollar value of the work in process (WIP)
inventory subject to such delay multiplied by the prevailing London
Interbank Offered Rate plus 1/8 of one percent and divided by 365."
E. Amend Section 4.1 by adding after the word "during" in line 6 add
the words "2000 and 2001 and during" and amend the third sentence of the
footnote to begin as follows: "In 1998, 1999, 2000 and 2001," and strike the
words "In 1998 and 1999." Also, in Section 4.1, change the yield for Fraction
II+IIIw from ******** grams per liter to ******** grams per liter.
F. The first sentence of Section 4.6 is amended to read as follows:
"The Base Yields will remain fixed through December 31, 2001."
G. Section 4.8 is amended to add the following language to the
beginning of the second sentence "During 1998, 1999, 2000 and 2001" and after
the word "applicable" add the words "period or." The third sentence shall be
amended to add the words "prior to 1998" after the words "Initial Term" and the
words "for 1998, 1999, 2000, 2001 and" before the words "the Renewal Period
Weekly Minimum" and after the words "(during" the words "1998, 1999, 2000, 2001
and."
H. Section 6.4(b) is amended to add the following after the word
"lost" at the end of the next to last sentence: A; provided, however that where
the Catastrophic Loss can be corrected to meet the requirements of this
Agreement set forth in Schedules A through E as applicable, by reprocessing of
the material in accordance with existing licenses, specifications and in
accordance with applicable FDA requirements, VITEX'S liability under this
Section 6.4(b) shall be limited solely to its cost of processing."
I. Section 12.1 is amended to strike clauses a and h, to add at the
end of subparagraph the following: "or if such Right of First Refusal is of no
further force and
4
<PAGE>
effect, VITEX sells the facility or such assets as contemplated by Section 16.1
without the purchaser's assuming VITEX's obligations under this Agreement," and
to add a new clause as follows: "n.A default or Event of Default as defined in
the Chase Credit Agreement".
J. Section 12.2(h) is amended to change the parenthetical expression
after "due Bayer by VITEX" in the last sentence to the following: "(arising
under this Agreement)".
K. Section 15.7 is amended to read in its entirety as follows: "15.7
This Agreement, the Lease and the Sublease and the exhibits and schedules to
each such document constitute one single agreement between Bayer and VITEX,
although they have been executed as separate documents for convenience and ease
of reference, and together such documents constitute the complete and entire
agreement between the parties hereto with respect to the transactions
contemplated herein and supersede all previous written or oral negotiation,
commitments, memoranda, understandings, and any prior agreement between Bayer
and VITEX or their parents, subsidiaries, affiliated entities concerning their
subject matter."
L. Section 16.1 is amended to amend the next to last sentence
thereof to eliminate the words "and, if Bayer consents, under the Reimbursement
Agreement" and add the word "and" after the word "Lease." The following sentence
shall be added at the end of Section 16.1. "On and after the consummation of an
IPO, (i) Bayer's option or right of first refusal to purchase the facility or
any or all of the assets necessary for the Processing and Fractionation
Operations shall expire and be of no further force or effect and (ii) any sale
by VITEX, after such consummation of an IPO, of all or any of such assets (not
including any such sale/leaseback or lease/leaseback arrangement) shall be made
only on condition that the purchaser thereof shall assume VITEX'S obligations
under this Agreement."
M. Amend Section 17.1 to add after "1996" the following: "and as
amended by the Modification Agreement dated as of December 22, 1997", and to
strike clauses (a), (b), (c) and (l). Clause (d) shall be amended to change the
reference therein and throughout the Agreement from said Reimbursement Agreement
to the Security Agreement between VITEX and Bayer dated as of December 22, 1997.
Clause (e) shall be amended to change the reference therein and throughout the
Agreement from said Mortgage as amended by the Amendment to Mortgage, Security
Agreement and Fixture Filing among VITEX, SCIDA and Bayer, dated December 22,
1997. Clauses (f) and (h) are amended to change the references therein and
throughout the Agreement to said Lease and Sublease as amended by said
Modification Agreement. Clause (k) shall be amended to change the reference
therein and throughout the Agreement from said Facility Lease to said Facility
Lease as amended by the Facility Lease Modification Agreement between SCIDA and
VITEX, dated December 22, 1997. Clause (m) shall be added to incorporate by
reference the Equipment Lease Agreement between SCIDA and VITEX, dated as of May
1, 1996, as modified by the Equipment Lease Modification Agreement,
5
<PAGE>
dated December 22, 1997. Clause (n) shall be added to incorporate by reference
the Security Agreement granted by SCIDA and VITEX to Bayer, dated as of May 1,
1996, as modified by the Security Modification Agreement, dated December 22,
1997. Clause (o) shall be added to incorporate by reference the Intercreditor
Agreement among Bayer, VITEX and The Chase Manhattan Bank, dated December 22,
1997.
N. Section 15.4 is amended by changing the telephone numbers and
facsimile numbers for Bayer to "Phone number: (203) 812-2401" and "Facsimile
Number: (203) 812-2795"; and by changing the address for notice to Vitex to the
following:
To VITEX: V.I. Technologies, Inc.
155 Duryea Road
Melville, New York 11747
Attention: Chief Financial Officer
Phone: (516) 752-7314
Fax: (516) 752-8754
6
<PAGE>
O. For purposes of this Agreement, the term "IPO" shall mean the
consummation of the first underwritten public offering for the account of VITEX
of its common stock pursuant to a registration statement declared effective
under the federal Securities Act of 1933, as amended, with aggregate gross
proceeds (before underwriter discounts and commissions) to VITEX of not less
than $25,000,000.
4. The Agreement For Custom Processing shall be further modified in that
all references therein to the PNC Loan and Guaranty shall be deleted; all
references to "Melville," AMBI" and "Melville Biologics, Inc." shall be changed
to "VITEX" or "V.I. Technologies, Inc." respectively; all references to "Miles"
and "Miles, Inc." shall be changed to "Bayer" and "Bayer Corporation,"
respectively; all references to the "Reimbursement Agreement" shall be changed
to the "Security Agreement"; but shall otherwise remain in full force and
effect, subject to changes provided for in this Agreement.
5. The Lease and Sublease shall be modified in that all references
therein shall be modified and amended as follows:
A. References to "Melville Biologics, Inc." shall be deemed to
refer to "VITEX"; to "Miles, Inc." shall be deemed to refer to "Bayer"; to the
"Miles Takeover" shall be deemed to refer to the "Bayer Takeover."
B. References to the Processing Agreement shall be deemed to refer
to the Custom Processing Agreement.
C. The term of the Lease and of the Sublease shall be extended to
be co-extensive with the Custom Processing Agreement.
D. All references therein to the guaranty by Lessee to PNC Bank,
N.A. shall be deleted; to the Reimbursement Agreement shall be deleted and
replaced with a reference to the Security Agreement; to the Mortgage will be
deleted and replaced with a reference to the Bayer Mortgage; to the Loan
Documents shall be amended to delete the Reimbursement Agreement, Mortgage and
guaranty and to include the Security Agreement and the Bayer Mortgage; and to
the Sublease will be amended to refer to the Sublease as modified pursuant to
this Agreement.
7
<PAGE>
E. In Lease paragraph 16 a new Section (c) shall be added as
follows:
(c) so long as the Chase Mortgage shall be in effect, the
provisions of the Chase Mortgage and the Intercreditor Agreement among Lessor
and Lessee and the Chase Manhattan Bank shall govern the relationship between
this Lease and the Chase Mortgage, notwithstanding any other provision of this
paragraph 16.
6. Miscellaneous.
-------------
6.2 Successors and Assigns. This Agreement is being entered into for
----------------------
the benefit of, and shall be binding upon, the parties and their respective
successors and assigns.
6.2 Notices; Amendments, etc.
-------------------------
(a) Any notices hereunder shall be in writing and shall be sufficiently
given if personally delivered, telecopied or mailed by first class, registered
or certified mail, return receipt requested, postage prepaid, and addressed to
the address of the relevant party at the address set forth under its signature
below, or to such other address or addresses as the party to whom such notice is
directed may have designated by like notice in writing to the other parties
hereto. A notice shall be deemed to have been given when personally delivered
or, if telecopied, upon receipt or, if mailed, on the earlier of (i) three (3)
days after the date on which it is deposited in the mail, or (ii) the date on
which it is received.
(b) This Agreement may be amended and the terms hereof may be waived only
with the written consent of Bayer and VITEX.
6.3. Counterparts. This Agreement may be executed in any number of
------------
counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute one agreement.
6.4 Severability. Any provision to this Agreement which is
------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
6.5 Effective Time; Entire Agreement; Governing Law. This Agreement
-----------------------------------------------
shall become effective upon disbursement of the Chase Term Loan by Chase,
payment, termination and cancellation of the PNC Term Loan, Chemical Term Loan
and Silicon Letter of Credit, and related agreements, and entering into the
Security Agreement, Bayer Mortgage and Intercreditor
8
<PAGE>
Agreement as referred to in the recitals to this Agreement. This Agreement
embodies the entire agreement and understanding of the parties hereto regarding
the subject matter hereof. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK: HOWEVER, THE
FOREGOING SHALL NOT AFFECT THAT THE GOVERNING LAW OF THE CUSTOM PROCESSING
AGREEMENT IS THAT OF THE STATE OF CONNECTICUT.
9
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Modification Agreement
as of the date first set forth above.
V.I. TECHNOLOGIES, INC.
By: /s/ Joanne Leonard
-------------------------
Name: Joanne Leonard
Title: Vice President, CFO
BAYER CORPORATION
By: /s/ Jack Ryan
-------------------------
Name: Jack Ryan
Title: Vice President
10
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission Pursuant to a request for confidential treatment.]
EXHIBIT 10.13
SUPPLY, MANUFACTURING, AND
DISTRIBUTION COLLABORATION AGREEMENT
This SUPPLY, MANUFACTURING AND DISTRIBUTION COLLABORATION AGREEMENT (the
"Agreement") is entered into this 15th day of December, 1997, (the "Effective
Date" ) by and between V.I. TECHNOLOGIES, INC., a Delaware corporation, with its
headquarters at 155 Duryea Road, Melville, New York 11747 ("VITEX") and the
AMERICAN NATIONAL RED CROSS, a corporation formed under the laws of the United
States, with its headquarters at 8111 Gatehouse Road, Falls Church, Virginia
22042 (the "ANRC").
WITNESSETH:
-----------
WHEREAS, VITEX is the owner/and or licensee of certain Proprietary Rights
(as hereinafter defined) with respect to the Product (as hereinafter defined),
and
WHEREAS, the ANRC has certain expertise in the promotion, distribution,
marketing and sale of products similar to the Product; and
WHEREAS, VITEX has certain expertise in the processing and manufacturing of
products similar to the Product; and
WHEREAS, the parties have entered into a Collaboration Agreement dated
February 22, 1991 between VITEX and the ANRC as First Amended and Restated in an
agreement dated July 22, 1996 (collectively the "First Collaboration
Agreement"); and
WHEREAS, as a result of the First Collaboration Agreement, each of the
parties has invested significant funds and other resources toward development of
the Product; and
WHEREAS, the mission of the ANRC is to fulfill the needs of the American
people for the safest, most reliable and most cost-effective blood, plasma and
tissue services through voluntary donations; and
WHEREAS, the ANRC desires to enter into this Agreement so as to materially
enhance the safety of the Input (as hereinafter defined) to aid and assist in
advancing the health and well being of as many people as possible and thereby
furthering the charitable mission of the ANRC; and
WHEREAS, VITEX does not have and does not desire to establish a
distribution system for the Product; and
WHEREAS, the ANRC's distribution system is well-suited for professional
distribution of the Product; and
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission Pursuant to a request for confidential treatment.]
WHEREAS, in furtherance of the First Collaboration Agreement and the
parties' desire to extend their collaboration, VITEX desires that the ANRC shall
be solely responsible for the promotion, marketing, sale and distribution of the
Product in the Territory (as hereinafter defined) and the ANRC is prepared to
accept such responsibility, all in accordance with the terms and conditions of
this Agreement; and
WHEREAS, the First Collaboration Agreement is amended and restated
contemporaneously with this Agreement (the "Amended First Collaboration
Agreement"); and
WHEREAS, the parties desire to set forth such further understandings and
agreements as set forth herein.
NOW, THEREFORE, in consideration of the promises and the mutual covenants
and agreements contained herein, VITEX and the ANRC hereby agree as follows:
SECTION 1.
---------
DEFINITIONS
When used in this Agreement, the terms set forth in this Section shall have
the following meanings:
1.1. "Affiliate" shall mean, with respect to each Party, any entity
directly or indirectly controlled by, controlling, or under common control with
such Party. For purposes of this definition, the meaning of word "control"
(including the terms "controlled by" and "under common control with") as used
with respect to any entity, means possession, direct or indirect, of the power
to direct or cause the direction of the management and policies of a Person
whether through ownership or vesting securities, contracts or otherwise. A
Person shall be deemed to control another Person if such Person owns fifty
percent (50%) or more of the voting securities of such other Person.
1.2. "Annual Report" shall have the meaning set forth in Schedule 5.8.
1.3. "Base Price" shall have the meaning set forth in Section 5.1(a).
1.4. "Base Sale Price" shall have the meaning set forth in Section 5.1
(a).
1.5. "Competitive Product" shall mean human blood plasma intended for
transfusion which has been demonstrated ***************************************
********************************************************************************
********************** as compared to the Product, and has received final FDA
approval for the same indications for which the Product is then currently used.
1.6. "Confidential Information" shall have the meaning set forth in
Section 9.4
-2-
<PAGE>
1.7. "CPI" shall mean the Consumer Price Index (U.S. City Average) which
became effective in January 1978 as compiled by the Bureau of Labor Statistics,
United States Department of Labor.
1.8. "Distribution Rights" shall have the meaning set forth in Section
2.1.
1.9. "FDA" shall mean the United States Food and Drug Administration or
any successor agency or body.
1.10. "GAAP" shall mean generally accepted accounting principles in the
United States consistently applied.
1.11. "Governmental Authorities" shall mean any office, department or
agency of the government of the Territory having jurisdiction over any aspect of
the manufacture, sale or distribution of the Product.
1.12. "Informational Materials" shall have the meaning set forth in
Section 3.4.
1.13. "Initial Purchase Order" shall have the meaning set forth in Section
2.2.
1.14. "Input" shall mean human blood plasma provided to VITEX by the ANRC
pursuant to the terms of this Agreement which plasma meets the specifications
set forth in Schedule 1.14 hereto.
1.15. "Know-How" shall mean all proprietary technical information,
including processes, formulae, designs and data, owned or possessed in whole or
part by VITEX relating to the manufacture or use of the Product. Know-How
existing as of the Effective Date is specified in Schedule 1.15.
1.16. "Marketing Expenses" shall have the meaning set forth in Section 3.3
.
1.17. "Marketing Materials" shall have the meaning set forth in Section
3.3 .
1.18. "Marketing Committee" shall have the meaning set forth in Section
4.6.
1.19. "Minimum Purchase Requirements" shall have the meaning set forth in
Section 3.6.
1.20. "NYBC" shall mean the New York Blood.Center, Inc., a New York not-
for-profit corporation, with its headquarters at 310 East 6.7th Street, New
York, New York 10021.
1.21. "Party" or "Parties" shall mean VITEX or the ANRC or both, as the
case may be.
-3-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission Pursuant to a request for confidential treatment.]
1.22. "Patent Rights" shall mean all patents and patent applications owned
and/or licensed by VITEX relating to the manufacture, use or sale of the
Product. Patent Rights existing as of the Effective Date are listed in Schedule
1.22.
1.23. "Period One" shall mean the *************************** which will
commence when the FDA releases the first lot of the Product for delivery to the
ANRC.
1.24. "Period Two" shall mean the ****************************** period
immediately following the conclusion of Period One.
1.25. "Person" shall mean an individual, corporation, partnership, limited
liability company or any other entity, or any government or agency or political
subdivision of a government.
1.26. "PLA" shall mean a Product License Application submitted for
approval by the FDA. "S/D Plasma PLA" shall mean the PLA for solvent/detergent-
treated human blood plasma for transfusion submitted by the NYBC for filing with
the FDA on February 28, 1993, as revised on July 1, 1994. Pursuant to the
Amended and Restated Asset Transfer Agreement between NYBC and VITEX, dated
February 7, 1995, the S/D Plasma PLA was transferred from NYBC to VITEX.
1.27. "Product" shall mean the product referenced in the S/D Plasma PLA,
which product is a human blood plasma, pooled and treated to inactivate virus
and intended for transfusion as such or following minor changes in composition.
Purified plasma derivatives, such as coagulation factor concentrates,
fibrinogen, immunoglobulin, prepared from Virus-inactivated plasma are not
covered by this Agreement. The Product is also known under the names VIPLAS/SD,
Plas Plus or S/D Plasma and conforms to the specifications set forth in Schedule
1.27. The Product is manufactured by processing Input using VITEX'S Proprietary
Rights.
1.28. "Proprietary Rights" shall collectively mean Patent Rights and Know-
How.
1.29. "Purchase Order" shall mean a form of irrevocable take or pay
purchase order for the Product from the ANRC to VITEX in the form of Schedule
1.29 hereto.
1.30. "Quarterly Report" shall have the meaning set forth in Section 5.8.
1.31. "Registration(s)" shall mean any consent, approval or authorization
of filing or registration with, notification to or other action with respect to
Governmental Authorities in the Territory required to be completed in order to
market and commercially distribute each Product.
1.32. "SOPs" shall mean VITEX's standard operating procedures for
inspection of the Input hereunder, as approved by the ANRC and as the same may
be amended from time-to-time by VITEX with the approval of the ANRC, which
approval will not be unreasonably withheld.
-4-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission Pursuant to a request for confidential treatment.]
1.33. "Subsequent Generation Product(s)" shall mean a new form of virus-
inactivated human blood plasma, pooled and treated-to inactivate virus and other
viruses and intended for transfusion which is the subject of a new PLA or a
supplement or amendment of the S/D Plasma PLA, such new PLA, supplement or
amendment covering a product with substantially altered quality or character,
not simply a therapeutic indication or use of an approved product. Examples of
such Subsequent Generation Product include virus-inactivated human blood plasma
product intended for transfusion, the processing of which includes two virus
inactivation methods, or which is further processed to remove blood type-
specific antibodies.
1.34. "Subsequent Period(s)" shall mean every twelve (12) consecutive
month period following Period Two during the Term which commences on the
anniversary of the commencement of Period Two.
1.35. "Term" shall have the meaning set forth in Section 7.1.
1.36. "Territory" shall mean the states of the United States of America,
the District of Columbia, Canada and Mexico.
1.37. "Unit" shall mean two hundred (200) milliliters of frozen liquid
Product, prepared within VITEX' s manufacturing specifications and intended for
use in patients.
SECTION 2.
---------
GRANT OF DISTRIBUTION RIGHTS
2.1. Grant of Distribution Rights. Subject to the terms and conditions
----------------------------
set forth herein, VITEX hereby grants to the ANRC an exclusive, non-transferable
right to promote, distribute, market and sell, but not process or manufacture
the Product for commercial use in the Territory (the "Distribution Rights").
The Product shall be processed or manufactured by, or on behalf of, VITEX.
VITEX agrees that it will not grant Distribution Rights to the Product in the
Territory to any third party during the Term of this Agreement, except as
provided herein.
2.2. Initial Order. In consideration of VITEX's grant of the
-------------
Distribution Rights to the ANRC, the ANRC agrees to purchase from VITEX and has
placed with VITEX, on or prior to the Effective Date hereof, a Purchase Order
equal to ************************************** Units of the Product during
Period One for the purchase price provided for in this Agreement (the reinitial
Purchase Order"). The ANRC hereby agrees to provide VITEX sufficient Input on a
timely basis in order to permit VITEX to meet its production schedule for
fulfilling the Initial Purchase Order and all future Purchase Orders during
Period Two and any Subsequent Periods. The production schedule for Period One is
attached hereto as Schedule 2.2. The production schedules for Period Two and
Subsequent Periods will be provided by VITEX or the ANRC within sixty (60) days
after receipt by VITEX of the Purchase Order related to such period. All Input
provided to VITEX pursuant to this Agreement will meet the specifications set
forth in Schedule 1.14.
-5-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission Pursuant to a request for confidential treatment.]
2.3. Additional Takedowns. While the ANRC will not be obligated to
--------------------
purchase more than ************************************** Units during Period
One, if VITEX can process more than ************************************** Units
during Period One, it is the present intention of the ANRC to purchase all of
this excess production, and it will provide the Input for this purpose if
available.
2.4. Subsequent Takedowns. In order for the ANRC to maintain the
--------------------
Distribution Rights hereunder, (i) the ANRC will be required to purchase
pursuant to Purchase Orders delivered to VITEX ************** prior to the
commencement of Period Two with respect to Period Two and ************** prior
to the commencement of any Subsequent Period with respect to that Subsequent
Period a minimum of ************************************ Units of the Product
during Period Two and for every Subsequent Period during the Term, and (ii) the
ANRC must supply Input to VITEX in accordance with the terms of this Agreement.
2.5. Obligation to Make Payments. Once a Purchase Order is delivered to
---------------------------
and accepted by VITEX in accordance with the terms hereof, the ANRC will be
required to pay VITEX the amounts payable under the Purchase Order even if the
ANRC fails to deliver, or delivers insufficient, Input or the ANRC fails to
accept delivery of the Product when available. In circumstances where VITEX is
unable to produce the Product as a result of a breach of this Agreement by the
ANRC, the ANRC will be required to pay VITEX the amounts as provided for in
Section 5.1 (a) and Section 5 .4, except for the royalty set forth in Section
5.1 (a) when the Product would otherwise be available to the ANRC if adequate
Input has been delivered by the ANRC on a timely basis as provided in this
Agreement. In circumstances where VITEX is unable to deliver the Product as a
result of a breach of this Agreement by VITEX, the ANRC will not be required to
pay the amounts as provided in Section 5.1 and Section 5.4.
SECTION 3.
---------
OBLIGATIONS OF ANRC
3.1. Agreement to Purchase/Exclusivity. In exercising the Distribution
---------------------------------
Rights, the ANRC agrees that it shall purchase all of its requirements for the
Product from VITEX. Except as provided in this Section 3.1, the ANRC shall not
at any time during the Term, directly or indirectly through an Affiliate or any
other party, promote, distribute, market, sell or otherwise deliver the Product
or any similar or other product for use within the Territory, or provide Input
to produce such other product for use within the Territory, unless such product
has been processed and manufactured by, or on behalf of, VITEX. Notwithstanding
the foregoing, the ANRC may promote, distribute, market, sell or otherwise
deliver a Competitive Product. The ANRC will promptly notify VITEX if the ANRC
has determined to promote, distribute, market sell or otherwise deliver a
Competitive Product.
3.2. Sales Activities. The ANRC shall conduct sales activities pursuant
----------------
to the Distribution Rights by purchasing the Product from VITEX for resale to
and use by its customers
-6-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission Pursuant to a request for confidential treatment.]
in the Territory. The ANRC shall conduct all sales activities hereunder in a
manner consistent with the highest standards of fair trade, fair competition and
business ethics and shall cause all of its Affiliates, agents and employees to
do the same. The ANRC agrees to conduct all of its activities under this
Agreement in accordance with applicable laws, rules and regulations.
3.3. Marketing Strategies. In exercising the Distribution Rights, the
--------------------
ANRC will develop reasonable and appropriate marketing strategies for the
Product in the Territory and will promote actively the features and benefits of
the Product in the Territory. To this end, the ANRC will produce labeling,
package inserts, patient instructions, promotional materials, plans for
distribution and other related materials as reviewed by the Parties
(collectively the "Marketing Materials"). The ANRC shall submit Marketing
Materials to VITEX for its review before such Marketing Materials are used by
the ANRC. The ANRC agrees to budget and spend at least *********************
************ in cumulative expenses during calendar years 1998 and 1999 which
include expenses for all direct marketing, direct selling, promotional,
educational, advertising and similar activities previously reviewed by VITEX
(collectively "Marketing Expenses"). These Marketing Expenses are designed to
exclusively benefit the Product or Subsequent Generation Product(s) produced by
or for VITEX based on VITEX's Proprietary Rights and the budget for Marketing
Expenses will be determined and mutually agreed upon by the Parties in advance.
Schedule 3.3 represents the ANRC's initial Marketing Expenses Proposal. Some
allocation for direct sales force selling time expense, not to exceed ****
**************************** over the years 1998 and 1999, will be part of the
ANRC budget for Marketing Expenses.
3.4. International Materials.
-----------------------
(a) Availability. In exercising the Distribution Rights, the ANRC
------------
shall establish and follow appropriate and reasonable standards and procedures
regarding the promotion, distribution, marketing and sale of the Product as
required by applicable Governmental Authorities, and in accordance therewith the
ANRC shall make all informational materials required by Governmental
Authorities, including but not limited to patient instructions and package
inserts (collectively "Informational Materials"), available to each physician,
customer or other user to whom a Unit of Product is distributed or delivered.
The ANRC shall not exercise its Distribution Rights with respect to any Unit of
Product without including appropriate portions of the Informational Materials
applicable to the Product. The ANRC shall submit any Informational Materials to
VITEX for its review and approval before any such Informational Materials are
used by the ANRC.
(b) Changes. The ANRC shall make changes in any Informational
-------
Materials subject to VITEX's prior approval (i) immediately upon receipt or
development of new information with respect to the Product or otherwise, to the
extent necessary to keep the Informational Materials fully accurate at all times
and (ii) as required by applicable Governmental Authorities.
3.5. Quality Assurance. In exercising the Distribution Rights and its
-----------------
obligations hereunder to form pools of Input and ship Input to and Product from
VITEX's processing facility, the ANRC shall establish and maintain appropriate
quality control review procedures in
-7-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission Pursuant to a request for confidential treatment.]
accordance with the requirements of all Governmental Authorities and shall
promote, market, distribute and sell the Product in the Territory in accordance
with the requirements of all applicable Governmental Authorities, the highest
standards of quality and medical ethics prevailing in the blood plasma industry,
and in compliance in all material respects with all applicable laws and
regulations. The ANRC shall immediately notify VITEX if the quality of any Unit
of the Product does not meet mutually accepted quality levels as determined by
the Parties from time to time and as reflected in the specifications in Schedule
1.27 or any finding by the FDA with respect thereto. The ANRC shall promptly
notify VITEX if the quality of any human blood plasma used to create Input does
not meet the specifications for the Input or a finding by the FDA of which the
ANRC becomes aware with respect to such human blood plasma used to create the
Input or with respect to the formation of pools or shipping or storage of Input
or the Product which is the responsibility of the ANRC hereunder. From time to
time, and upon reasonable notice to the ANRC of no less ten ( 10) days, VITEX
shall have the right to audit the ANRC's compliance with the requirements of the
FDA with respect to this Agreement. In the event of a finding by VITEX that the
ANRC is not in compliance, VITEX shall provide notice of its findings to the
ANRC. In response to such notice, the ANRC shall respond to VITEX regarding such
notice and shall include in such response steps (if any) which the ANRC will
undertake to address such findings. The ANRC agrees to take all reasonable and
appropriate steps to insure compliance with the requirements of the FDA,
relevant to SOPs and specifications set forth in Schedule 1.14.
3.6. Minimum Purchase Requirements.
-----------------------------
(a) The ANRC agrees that it shall be subject to certain minimum
purchase requirements (the "Minimum Purchase Requirements") with respect to its
purchase of the Product from VITEX during the Term of this Agreement. The
Minimum Purchase Requirements for the Territory shall be ********************
****************** Units of the Product during Period One and *****************
******************* Units of Product during Period Two and for each Subsequent
Period thereafter. The ANRC agrees to provide sufficient Input on a timely basis
to VITEX to meet VITEX's production schedule for fulfilling these Purchase
Orders. These minimum purchase commitments will take the form of Purchase Orders
that will be issued as provided in Section 2.4. If the ANRC fails to undertake
these minimum purchase commitments in the form of Purchase Orders timely
delivered to VITEX as provided herein and pay for the same or fails to supply
the necessary amount of Input which after processing will provide the requisite
amount of the Product on a timely basis all as provided in this Agreement, then
VITEX shall have the right in its sole and absolute discretion to ( 1 )
terminate this Agreement if VITEX determines in its reasonable judgment that the
ANRC has not exercised its reasonable best efforts to achieve significant market
penetration and/or the ANRC is not using its reasonable best efforts to perform
its marketing duties and distribution objectives hereunder or Input delivery
responsibilities hereunder or **************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
**********************************************
-8-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission Pursuant to a request for confidential treatment.]
(b) In the event that in any Subsequent Period VITEX shall have
capacity in excess of that needed to meet the Minimum Purchase Requirements,
VITEX shall have the right to notify the ANRC of this situation in writing and
may request that the ANRC increase its Purchase Orders and delivery of Input and
accept such increased supply of the Product. The ANRC shall have ***************
****************** from the date of such notice to provide VITEX with amended
Purchase Orders reflecting the increased capacity and a commitment to provide
Input. Should the ANRC not provide VITEX with such amended Purchase Orders and a
commitment to provide Input in the requisite time, *****************************
********************************************************************************
********************************************************************************
****************************************************************************
**********************
3.7. Universal Availability and Resale Prices.
----------------------------------------
(a) ***************************************************************
*******************************************************************************
*******************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
**************************
(b) In exercising its Distribution Rights in the Territory, the ANRC
agrees as follows:
(i) The Product shall be made available to every
hospital, blood center or other customer in the Territory on commercially
reasonable terms;
(ii) In the event that availability of the Product is
insufficient to meet the demand, supplying the Product to blood centers pursuant
to preexisting contractual commitments shall take preference over supplying the
Product to other blood centers, hospitals or customers outside of preexisting
contractual commitments; and
(iii) In the event that it becomes necessary to allocate
supply of the Product due to inadequate availability of the Input, the Product
shall be supplied pro rata on the basis of preexisting contractual commitments
without preference among blood centers, hospitals or other customers.
(c) If the ANRC elects to terminate a contractual commitment to
supply the Product to a blood center, the ANRC shall provide such blood center,
with a written notice thereof at least ************** in advance of the ANRC's
intent to terminate. Notwithstanding the foregoing, the ANRC may terminate such
contractual commitment in the event of a material breach of the contractual
commitment by the blood center, effective immediately upon written notice to the
breaching party by the ANRC.
-9-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission Pursuant to a request for confidential treatment.]
3.8. Compliance with Law. In exercising the Distribution Rights, the ANRC
-------------------
agrees to comply with all laws and regulations applicable to the ANRC in the
conduct of its activities hereunder or otherwise applicable to the ANRC's
business.
3.9. Distribution. In exercising the Distribution Rights, the ANRC shall:
------------
(a) Develop A Market. Subject to the terms hereof, develop a
market for the Product within the Territory. Such efforts shall include, without
limitation, development of educational and training programs for blood centers,
blood banks, hospitals and other health care providers and distribution of
patient information packages.
(b) Monitor Use. Monitor the distribution and dispensation of the
Product in the Territory to ensure that such distribution and dispensation is
accomplished in accordance with this Agreement.
3.10. Information. In exercising the Distribution Rights, the ANRC shall
-----------
promptly form-NiITEX of any new development which relates to the Product of
which the ANRC may become aware which may have any adverse affect on either
Party's ability to perform its obligations hereunder or which concerns any
serious health risk or unexpected reaction believed to be associated with or
attributed to the use of the Product.
3.11. Reimbursement. The ANRC shall reimburse VITEX as provided in
-------------
Section 4.2. The ANRC shall provide VITEX with replacement Input as promptly as
possible if such Input is rejected by VITEX as provided in Section 4.2.
SECTION 4.
---------
OBLIGATIONS OF VITEX
4.1. Agreement to Manufacture. Subject to the conditions set forth in
------------------------
this Agreement, VITEX agrees to manufacture and process Input and deliver the
Product required by the ANRC to exercise its Distribution Rights hereunder.
4.2. Quality Assurance.
-----------------
(a) Following receipt of each shipment of Input at VITEX's
processing facility in Melville, Long Island, New York, VITEX shall inspect, or
otherwise ascertain, the conformity of the Input with the requirements of the
FDA, the relevant VITEX SOPs and the specifications set forth in Schedule 1.14.
Prior to release for processing hereunder, each unit of Input shall be visually
examined and verified against accompanying documentation (i.e. 100% inspected).
VITEX shall have the right to reject any units which do not meet SOPs, FDA
standards or the specifications of Schedule 1.14, or which are otherwise
damaged, possibly contaminated, improperly packaged, labeled or stored, which
are the subject of a lookback or which are not properly documented. VITEX must
notify the ANRC of any such rejected units within ********************** of
-10-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission Pursuant to a request for confidential treatment.]
VITEX's completion of inspection thereof. All rejected units are to be destroyed
when VITEX is notified to do so by the ANRC, or if notification is not promptly
received by VITEX, VITEX may hold the rejected units at the expense and risk of
the ANRC for a period of thirty (30) days, after which VITEX may dispose of them
in accordance with its SOPs. VITEX shall provide to the ANRC documentation of
any destruction of such units. The costs of destruction and disposition of the
rejected units will be for the account of the ANRC.
(b) In the event (1) the ANRC notifies VITEX of any non-conformity
or unsuitability if any unit of Input after the same has been accepted and
pooled, or (2) VITEX notifies the ANRC of any non-conformity or unsuitability of
a pool as provided in Section 4.2(a), and the pool is thereby deemed unsuitable,
********************************************************************************
**** VITEX shall cooperate with the ANRC in any reasonable efforts requested by
the ANRC to correct the deficiencies including any retesting, reprocessing, or
additional processing and testing of the unsuitable pool, such activity of VITEX
shall be at the sole cost and expense of the ANRC. VITEX shall be responsible
for the storage and handling of Input while in VITEX's processing facility in
Melville, Long Island, New York, and for reimbursing the ANRC for pool testing
conducted by the ANRC in accordance with procedures agreed to by both Parties
hereto.
(c) VITEX shall promptly notify the ANRC if the quality of the
Product does not meet the specifications for the Product or a finding by the FDA
of which VITEX becomes aware with respect to the Product or with respect to
shipping or storage of the Input or the Product which is the responsibility of
VITEX hereunder. From tirade to time and upon reasonable notice to VITEX of no
less than ten (10) days, the ANRC shall have the right to audit VITEX's
compliance in inspecting the Input, with the requirements of the FDA, the
relevant VITEX SOPs, the specifications set forth in Schedule 1.14 and this
Agreement. In the event of a finding by the ANRC that VITEX is not in
compliance, the ANRC shall provide notice of its findings to VITEX. In response
to such notice, VITEX shall respond to the ANRC regarding such notice and shall
include in such response the steps (if any) which VITEX will undertake to
address such findings. VITEX will promptly advise the ANRC of the finding of any
inspection or examination by the FDA of VITEX's activities as it relates to this
Agreement of which VITEX is aware. VITEX agrees to take all reasonable and
appropriate steps to ensure compliance with the requirements of the FDA,
relevant SOPs and specifications set forth in Schedule 1.27.
4.3. Visits. From and after the date the ANRC commences purchasing of the
------
Product from VITEX, VITEX may at its sole discretion make representatives of
VITEX available to the ANRC in the Territory for the purpose of aiding in
introduction and penetration of the Product in the Territory.
4.4. Maintaining Registrations. VITEX shall be responsible at its sole
-------------------------
expense, for obtaining and maintaining any required Registrations in the
Territory, including, but not limited to, all reporting and updating and the
preparation and submission of all amendments and supplements thereto and other
requirement of the applicable Governmental Authorities. All Registrations shall
remain the sole and exclusive property of VITEX.
-11-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission Pursuant to a request for confidential treatment.]
4.5. Marketing Support. VITEX agrees to make every reasonable effort to
-----------------
respond to a request by the ANRC for specific marketing support with respect to
the promotion of the features and benefits of the Product in the Territory.
VITEX agrees to budget and spend two million dollars ($2,000,000) in cumulative
Marketing Expenses during calendar years 1998 and 1999. Schedule 4.5 represents
VITEX's initial Marketing Expenses proposal in this regard.
4.6. Right of First Refusal. VITEX hereby agrees to provide the ANRC with
----------------------
a right of first refusal ("ROFR") for exclusive distribution rights in the
Territory for the Subsequent Generation Product(s). Pursuant to this ROFR, if
the Subsequent Generation Product(s) become available during the Term, the
Parties agree to negotiate in good faith the terms and conditions of the
distribution rights with respect to such Subsequent Generation Product(s). This
ROFR shall not be available to the ANRC if VITEX has the right to terminate this
Agreement because of a material breach by the ANRC of this Agreement or
otherwise as provided in Section 7.2(a) and the period to cure such breach has
expired. A Subsequent Generation Product shall be deemed to become available
for this purpose no later than the receipt of a Registration from the FDA with
respect to such Subsequent Generation Product. Should the Parties not be able to
reach a mutually binding contract within a ninety (90) day period from the date
VITEX advises the ANRC of the prospective availability of the Subsequent
Generation Product(s), then VITEX shall have the right to negotiate with any
other Person for the distribution rights in the Territory for the Subsequent
Generation Product(s); Prior to entering into the initial contract with a third
party with respect to the distribution rights in the Territory for a Subsequent
Generation Product, VITEX shall disclose to the ANRC the key terms of any such
alternative proposal. The ANRC shall have thirty (30) days therefrom to enter
into a binding contract with VITEX on terms and conditions matching in all
material respects the key terms the alternative proposal. VITEX will be required
to accept the ANRC proposal. If the ANRC does not enter into a binding contract
with VITEX within such thirty (30) day period, VITEX may for a period of ninety
(90) days be free to enter into a binding agreement with respect to the
alternative proposal. In the event VITEX enters into such a binding agreement
with a third party, VITEX shall thereafter not be required to offer the ANRC a
ROFR with respect to such Subsequent Generation Product.
SECTION 5.
SALES PROCEDURES
5.1. Price.
-----
(a) Base Price of Product. The sales price of the Product to the
---------------------
ANRC shall be ************************ per Unit of the Product, (the "Base
Price") plus a quarterly "royalty" of ****************************************
*********************************** per Unit of the Product (such ***** being
the "Base Sale Price") times the number of Units of the Product sold in such
quarter. Average selling price shall mean the selling price of a Unit of Product
by the ANRC to an end user or a Person which is not an Affiliate of the ANRC.
The Base Price and the Base Sale Price shall be adjusted by *******************
************************ each year Commencing with the first anniversary of the
date of commencement of Period One and on each
-12-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission Pursuant to a request for confidential treatment.]
anniversary thereafter during the Term. The ANRC agrees to negotiate in good
faith an additional adjustment to the Base Price and the Base Sale Price of up
to ******************************************** commencing with the first
anniversary of the date of commencement of Period One arid on each anniversary
thereafter during the Term.
(b) Additional Payments by the ANRC.
-------------------------------
(i) In the event any additional labor, material or packaging,
including relabeling is required in meeting the packaging specifications or any
special delivery conditions of the ANRC (including, without limitation, any
effort VITEX is requested to take relating to any Informational Materials), the
ANRC will reimburse VITEX for VITEX's actual additional costs, provided (a) such
costs have been approved in advance by the ANRC and (b) to the extent such
additional costs arise from packaging materials, the ANRC shall have been given
the opportunity to supply such materials directly to VITEX. In the event the
ANRC orders Units of the Product which may entitle VITEX to such additional
payments, and the ANRC fails to approve such additional payments, any ensuing
dispute shall be resolved in accordance with the provisions of Section 8.2.
(ii) Any and all taxes, including customs duties (other than
income taxes) assessed to VITEX by federal, state, or local governments on sales
of the Product to the ANRC shall be paid by the ANRC.
5.2. Ordering Procedures. ***********************************************
-------------------
****** after the Effective Date, the ANRC shall provide VITEX with sales
forecasts in a form (rolling twelve months) agreed to by the Parties setting
forth the expected number of Units which the ANRC reasonably expects to purchase
from time to time. The Purchase Orders shall be placed by the ANRC and filled
by VITEX in accordance with this Agreement and upon such other additional
procedures and upon such other terms and, conditions as the Parties may agree
from time to time.
5.3. Shipment Terms and Storage. The ANRC shall be responsible for the
--------------------------
collection and pooling of Input and for all shipment and delivery of pooled
Input to VITEX's processing and manufacturing facility or other location
designated by VITEX. VITEX agrees to reimburse the ANRC for reasonable costs
incurred in pool formation by the ANRC of the Input and reasonable costs
including insurance costs incurred in shipping the pooled Input to VITEX's
processing and manufacturing facility or other location designated by VITEX and
from VITEX s facility to the ANRC central facility for distribution of the
Product in the Territory which central facility must be in the continental
United States. All shipments of the Product shall be f.o.b. at VITEX's
manufacturing facility or other place designated by VITEX from time to time.
All storage costs of Input at VITEX's location and storage costs of the Product
at VITEX's location prior to delivery to the ANRC shall be at the sole expense
of VITEX; provided. however that all storage costs of the Product shall be at
the sole expense of the ANRC, if the ANRC fails to take delivery of the Product
substantially in accordance with the delivery schedule provided by VITEX to the
ANRC.
-13-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission Pursuant to a request for confidential treatment.]
5.4. Payment Terms. Payment shall be made by the ANRC for the Product
-------------
promoted, marketed, distributed and sold by the ANRC and its Affiliates as
follows. The ANRC will pay ****************************************************
********************************************************************************
*******************************************************************************
********************************************************** The royalty set
forth in Section 5.1 (a) shall be paid **************** after the close of each
calendar quarter based on the average price per Unit that the ANRC receives for
sales of the Product during such calendar quarter.
5.5. Unanticipated Cost Escalation. The Base Price for the Product is
-----------------------------
based in part on VITEX's estimate of its full scale production costs. VITEX is
not aware of any imminent substantial increase in its manufacturing costs.
Nevertheless, should VITEX's full scale production costs suffer unanticipated
increases in the future (including but not limited to the regulatory imposition
of new environmental or product testing costs), the ANRC will agree to negotiate
in good faith an increase in the Base Price which reflects VITEX's increased
full sale production costs.
5.6. *********************************************************************
*********************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
*************************************************** This price rebate will be
adjusted pro rata as the Base Price is adjusted as provided in Section 5.1(a).
5.7. Marketing Committee.
-------------------
(a) Subject to Section 10.6, the activities of VITEX under Section 4.5
and of the ANRC under Section 3.3 shall be coordinated by a Marketing Committee
consisting of the Vice President Marketing and Sales for VITEX, and a
counterpart from the ANRC and whatever other members the Parties jointly
determine. The Marketing Committee shall meet at least monthly for the first six
(6) months during calendar year 1998 and at least quarterly thereafter.
(b) The ANRC shall use its best efforts in realizing the market goal of
maximum market penetration in the Territory. Irrespective of the magnitude of
the ANRC's purchases from
-14-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission Pursuant to a request for confidential treatment.]
VITEX, if the VITEX senior representative on the Marketing Committee reasonably
determines that the ANRC is not exercising its best efforts towards full market
penetration, VITEX will have the right to request greater resources and/or
programs to remedy the deficiencies. If the ANRC does not comply with this
request, VITEX and the ANRC will negotiate in good faith to find some resolution
to the situation. If the Parties cannot identify a mutually satisfactory
resolution, VITEX may terminate this Agreement.
(c) Each Party agrees to notify the Marketing Committee of consumer
complaints regarding the Product. The Marketing Committee shall be responsible
for formulating responses to such complaints.
5.8. Records and Reports.
-------------------
(a) Sales Records. The ANRC shall maintain, and cause its
-------------
Affiliates to maintain, in accordance with GAAP, complete and accurate records
of all sales of the Product.
(b) Reports. Each Party agrees to provide the other Party with the
-------
reports which are its responsibility as set forth in Schedule 5.8. Reports shall
be produced on a prompt and timely basis.
SECTION 6.
---------
ALLOCATION OF RISKS; DEFENSE OF PATENT RIGHTS
6.1. Indemnity.
---------
(a) Except as provided in Section 6.1 (b), the ANRC shall indemnify
and hold harmless VITEX, its officers, directors, agents, employees and
Affiliates (the "VITEX ("Indemnities") from any claim or suit~(based on any
injury, illness, disease, allergy, allergic reaction, side effect, death or
other adverse experience) and from all, losses and expenses, including without
limitation reasonable attorney fees, costs and expenses the VITEX Indemnities
may incur as a result of ******************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
*********************** provided however, that upon learning of the filing of
any such claim or suit, VITEX shall promptly notify the ANRC and permit the ANRC
at the ANRC's cost, to handle and control 8 such claim or suit and shall
cooperate in the defense thereof
(b) Except as provided in Section 6.1 (a), VITEX shall indemnify and hold
harmless the ANRC, its officers, directors, agents, employees and Affiliates
(the "ANRC Indemnities") from any claim or suit (based on any injury, illness,
disease, allergy, allergic reaction, side effect, death or other adverse
experience) and from all losses and expenses, including without limitation
reasonable attorney fees, costs and expenses the ANRC Indemnities
-15-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission Pursuant to a request for confidential treatment.]
may incur as a result of ******************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
******************** provided however, that upon learning of the filing of any
such claim or suit, the ANRC shall promptly notify VITEX and permit VTTEX; at
VITEX's cost, to handle and control such claim or suit and shall cooperate in
the defense thereof.
6.2. Exclusion of Warranty.
---------------------
(a) VITEX MAKES NO Representation OR WARRANTIES WHATSOEVER AS TO THE
PRODUCT OR ITS DESIGN, VALUE, EFFICACY OR FREEDOM FROM DEFECTS IN DESIGN OR
MANUFACTURE OR OTHERWISE EXCEPT AS SPECIFICALLY PROVIDED HEREIN. ALL WARRANTIES
OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND OTHERWISE ARE EXPRESSLY
EXCLUDED.
(b) The ANRC MAKES NO REPRESENTATIONS OR WARRANTIES WHATSOEVER AS TO THE
INPUT OR ITS DESIGN, VALUE, EFFICACY OR FREEDOM FROM DEFECTS IN DESIGN OR
MANUFACTURE OR OTHERWISE EXCEPT AS SPECIFICALLY PROVIDED HEREIN. ALL WARRANTIES
OF MERCHANTABILITY. FITNESS FOR A PARTICULAR PURPOSE AND OTHERWISE ARE EXPRESSLY
EXCLUDED.
6.3. Insurance or Equivalent. Each Party shall maintain, at its sole
-----------------------
expense, at all times, during the term of this Agreement The insurance coverage
set forth in Schedule 6.3, with respect to its activities relating to the
Product in the Territory. Such insurance coverage shall be maintained in an
amount not less than the amount required by this Agreement and with carriers
with an A.M. Best rating of not less than A. Such insurance policy shall be
written as primary policy coverage and not contributing with or in excess of any
insurance which the other Party shall carry with respect to the obligations of
each Party under this Agreement. Each insurance policy shall provide that at
least thirty (30) days' prior written notice of cancellation of, or material
change which reduces the terns, amounts and conditions below that which are
required herein, shall be given to the other Party. Each Party shall furnish
certificates of insurance to the other on or before the date the Distribution
Rights are initially granted hereunder thereafter upon request by the other
Party. VITEX shall supply evidence of its property insurance on an ACORD
"Evidence Property Insurance" Form 27. In the event each Party shall cease
selling the Product as a result of the termination of the Distribution Rights or
otherwise, VITEX may satisfy its obligations under this Section 6.3 by
purchasing discontinued product liability insurance for such period as the ANRC
may reasonably approve and providing coverage comparable to the ANRC's general
liability insurance in effect at that time. During the Term of this Agreement,
each Party shall have the right to obtain certificates of insurance from the
other Party that insurance coverage is maintained by the other Party. From time
to time but at least annually, upon request from the other Party, each Party
shah provide to the other Party notice of insurance coverage maintained by it to
satisfy its obligations under this Section 6.3.
-16-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission Pursuant to a request for confidential treatment.]
6.4. No Warranty Against Infringement. Neither VITEX nor the ANRC makes
--------------------------------
any representation or warranty to the other that the Product will not infringe
the patents, trademarks, trade names, or other intellectual property rights in
the Territory of any other Person. VITEX is not aware, on the Effective Date, of
any claim of such infringement by any other Person.
6.5. No Consequential Damages. NOTWITHSTANDING ANYTHING HEREIN TO THE
------------------------
CONTRARY, UNDER NO CIRCUMSTANCES SHALL VITEX OR THE ANRC BE LIABLE TO EACH OTHER
OR ANY OTHER PERSON FOR ANY INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL
DAMAGES, INCLUDING BUT NOT LIMITED TO LOST GOODWILL OR LOST PROFITS.
6.6. Recalls and Returns. Liability and risk associated with returns and
-------------------
recalls of the Product shall be allocated as follows. **************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
************************************************************* The ANRC will bear
the out-of-pocket costs of ************************************************. The
ANRC will be required to pay VITEX s full processing costs (but not any profit)
for the Faulty Plasma lot(s), to pay the logistical and other direct costs of
the recall procedure and to supply VITEX with sufficient Input to produce and
manufacture replacement Units. *************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
************************************************************************* which
constituted such Input Loss plus interest at the applicable federal rate if such
payment is not made by VITEX within six months after the date it is due.
Payments referred to in the immediately preceding sentence shall be due 30 days
after the occurrence of the event giving rise to the payment. In addition, VITEX
will bear the out-of-pocket costs of a Faulty Processing case. To the extent
that the actual yield of the Product from Input falls below the ***************
***** minimum target yield, ***************************************************
********************************************** In the case of a Faulty
Processing or an Input Loss, **************************************************
********************************************************************************
********************************************************************************
*************************************************************** In all other
instances of recalls or Product returns that do not fall into one of the three
prior categories. The Marketing Committee will review the matter. If the
Marketing Committee cannot reach a mutually satisfactory resolution, VITEX and
the ANRC will negotiate in good faith to find some resolution to the situation.
If the two Parties hereto cannot identify a mutually satisfactory resolution,
the matter will be submitted to arbitration pursuant to Section 8.2. In no event
shall either Party be liable to the other for special, incidental or
consequential damages, punitive damages, lost profits and other losses.
-17-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission Pursuant to a request for confidential treatment.]
6.7. Patent Enforcement.
------------------
(a) The ANRC shall promptly provide written notification to VITEX, in the
event the ANRC becomes aware of any third party infringement or possible
infringement of the Patent Rights. Upon receipt of such notice and subject to
VITEX's rights under the Exclusive License Agreement (#3) For Virally
Inactivated Transfusion Plasma Products between VITEX and the New York Blood
Center, Inc., VITEX shall have the right, but not the obligation, to take
appropriate legal action in connection therewith. In the event that VITEX elects
to take such action, the conduct of the action shall be entirely directed by
VITEX, and VITEX shall pay all costs and expenses associated therewith and
retain all recoveries of any such action. However, in the event that VITEX
elects not to take such action, then VITEX shall elect to grant in writing to
the ANRC the right to sue in its own name at its own expense and for its own
benefit, any such infringement under the Patent Rights. In such event, VITEX
agrees that it will cooperate with the ANRC. Further, if the ANRC prevails in
such action, the ANRC shall retain any recoveries up to and including an amount
equal to the ANRC's reasonable costs and expenses incurred in bringing the
action. Any recoveries in excess of such amounts shall be divided equally
between VITEX and the ANRC.
(b) The ANRC agrees to report to VITEX, promptly and in written detail.
Each claim of patent infringement of which the ANRC becomes aware based solely
on ANRC' s exercise of the Distribution Rights. In the event of litigation
against the ANRC on account of any such claim, and upon the ANRC's providing
notice of same to VITEX, within ten (10) days after service thereof upon the
ANRC, VITEX shall undertake the defense of any such litigation at its own cost
and expense. Alternatively, at VITEX's option, VITEX may permit the ANRC to
defend, and in such event, the ANRC shall have the right to reimburse itself
fully from up to ******************* of each future payment to VITEX becoming
due hereunder, following the filing of each such suit, for all its expenses
arising out of, or in connection with, the defense of such suit. In either
event, each Party shall cooperate with the other, including providing witnesses,
documents or other evidence in its possession relating to the defense of such
litigation. In the event that VITEX, having undertaken the defense of such suit,
discovers that the claim against the ANRC is not based solely upon the ANRC's
exercise of the rights granted herein, then to the extent such claim is based on
actions taken by the ANRC outside of the scope of the Distribution Rights
hereunder, the ANRC shall reimburse VITEX for VITEX's costs and expenses to such
extent, as well as any amounts paid in settlement or to satisfy judgments to
such extent.
SECTION 7.
---------
TERM, TERMINATION AND RENEWAL
7.1. Term. Unless sooner terminated by a Party hereto, this
----
Agreement shall remain in effect for four (4) years and nine (9) months from the
commencement of Period One (the
-18-
<PAGE>
"Term"). The expiration or termination of this Agreement or any part hereof
shall not release the ANRC or VITEX from any liability which at the time of
expiration or termination has already accrued, or which thereafter may accrue.
7.2. Termination Prior to Term.
-------------------------
(a) By VITEX. Subject to the right of the ANRC to have any dispute
--------
hereunder resolved in accordance with the provisions of Section 8.2, this
Agreement may be terminated immediately by VITEX whenever any of the following
events occur:
(i) the ANRC's failure to pay all sums due VITEX hereunder as
and when due, which failure is not cured within fifteen ( 15) days after receipt
of notice that such payment has not been paid when due;
(ii) the ANRC s failure to maintain insurance as required by
Section 6.3, which failure is not cured within fifteen (15) days after receipt
of notice from VITEX that the ANRC is in breach of its obligations under this
Agreement to maintain insurance;
(iii) any other material breach of this Agreement or a Purchase
Order by the ANRC not cured within ninety (90) days after receipt written of
notice thereof from VITEX;
(iv) a court of competent jurisdiction enters a decree or
order of relief (1) with respect to the ANRC in any voluntary or involuntary
case or proceeding under any bankruptcy, insolvency or similar law or (2)
appointing a receiver, liquidator, assignee, trustee or similar official of the
ANRC or any substantial part of its assets, and such decree or order is
consented to by the ANRC or continues unstayed and in effect for a period of
sixty (60) days:
(v) the ANRC files a voluntary petition or acquiesces in or
fails to contest an involuntary petition, or an involuntary petition is filed
against the ANRC and is not dismissed within sixty (60) days, in any case or
proceeding under any bankruptcy, insolvency or similar law;
(vi) the ANRC makes a general assignment for the benefit of
creditors;
(vii) the ANRC is dissolved or liquidated;
(viii) the ANRC is prevented from performing its obligations
hereunder by any law, governmental or other action (other than laws of general
application) and has not resumed such performance, in compliance with all
applicable laws, within one hundred twenty (120) days following the date as of
which performance was prevented;
(ix) the ANRC fails to provide VITEX with Input
as required in this Agreement;
-19-
<PAGE>
(x) the ANRC fails to timely deliver to VITEX a Purchase
Order as provided in this Agreement;
(xi) VITEX exercises its rights under Section 3.6(a) or
Section 5.7; or
(xii) in the event the conditions for termination arise as
provided in Section 10.7.
If any of these events should occur, then and in addition to the other
rights and remedies which VITEX may have at law or in equity, VITEX may, at its
option, upon written notice to the ANRC and subject to the rights of the ANRC
under the provisions of Section 8.2: ( 1 ) immediately terminate this Agreement
and all Distribution Rights hereunder in their entirety; or (2) convert any
rights granted herein with respect to the Product and/or any country or
territory within the Territory to non-exclusive rights and in which event the
ROFR rights of the ANRC will terminate. In the event VITEX converts the rights
pursuant to items (2) above, VITEX reserves the right at any time thereafter to
terminate this Agreement or the Distribution Rights in their entirety. Any
action by VITEX shall be effective as of the date specified in the notice.
(b) By the ANRC. Subject to the right of VITEX to have any dispute
-----------
hereunder resolved in accordance with the provisions of Section 8.2, this
Agreement may be terminated by the ANRC whenever any of the following events
occur:
(i) any material breach of this Agreement by VITEX not cured
within ninety (90) days after written receipt of notice thereof from the ANRC;
(ii) VITEX's failure to maintain insurance as required by
Section 6.3, which failure is not cured within fifteen ( 15) days after receipt
of notice from the ANRC that VITEX is in breach of its obligations under this
Agreement to maintain insurance;
(iii) a court of competent jurisdiction enters a decree or
order of relief (1) with respect to VITEX in any voluntary or involuntary case
or proceeding under any bankruptcy, insolvency or similar law or (2) appointing
a receiver, liquidator, assignee, trustee or similar official of VITEX or any
substantial part of its assets, and such decree or order is consented to by
VITEX or continues unstayed and in effect for a period of sixty (60) days;
(iv) VITEX files a voluntary petition or acquiesces in or
fails to contest an involuntary petition, or an involuntary petition is filed
against VITEX and is not dismissed within sixty (60) days, in any case or
proceeding under any bankruptcy, insolvency or similar law;
(v) VITEX makes a general assignment for the benefit of
creditors;
(vi) VITEX is dissolved or liquidated;
(vii) VITEX is prevented from performing its obligations
hereunder by any law, governmental or other action (other than laws of general
application) and has not resumed
-20-
<PAGE>
such performance, in compliance with all applicable laws, within one hundred
twenty (120) days following the date as of which performance was prevented; or
(viii) in the event the conditions for termination arise as
provided in Section 10.7.
If any of these events should occur, then and in addition to the other
rights and remedies which the AMRC may have at law or in equity, the ANRC may,
subject to the rights of VITEX under the provisions of Section 8.2, immediately
terminate this Agreement by written notice, which shall set forth the event or
events of default that have occurred. The termination shall be effective as of
the date specified in the notice.
7.3. Obligations Upon Termination or Expiration. Upon termination or
------------------------------------------
expiration of this Agreement the mutual rights and obligations of the Parties
shall forthwith terminate to the extent of such termination; provided that no
such expiration or termination shall terminate or otherwise affect (i) the
Parties' respective obligations under Section 6.9, Section 8.2, and Section 9.4,
as applicable, (ii) any right or obligation accruing hereunder prior to such
expiration or termination, or accruing thereafter in respect of any event
occurring prior thereto and (iii) unless VITEX shall notify the ANRC of its
objection to further sale of the Product, the ANRC shall have the right to
dispose of its existing inventory of the Product (including the Product ordered
priority termination but delivered after termination) in the ordinary course of
business during the six (6) month period following the date of termination.
After such termination or expiration, (a) VITEX shall not be required to accept
any new Purchase Orders from the ANRC or fulfill Purchase Orders that have not
been delivered as of the date of termination and (b) except as expressly set
forth above, the ANRC shall immediately discontinue selling, marketing and
distributing the Product. In the event of any termination pursuant to Section
7.2(a) above, the ANRC shall immediately (a) assign and transfer to VITEX any
and all rights the ANRC may have with respect to any Registrations relating to
the Product to the extent permissible under applicable law and (b) make
available, transfer and assign to VITEX any other information available to the
ANRC with respect to any Registrations and the Product. In the event of any
termination pursuant to Section 7.2(b) above VITEX shall provide the ANRC with
such assistance as may be reasonably requested by the ANRC in order to enable
the ANRC to arrange for an alternative processing source for the Product,
provided, however such alternative processing source must enter into a license
agreement with VITEX in form and substance reasonably satisfactory to VITEX for
the utilization of Patent Rights to process Input to manufacture the Product.
Upon termination or expiration of this Agreement, except as provided in Section
6.6(4), VITEX shall return all unprocessed Input to the ANRC and complete the
processing of all pooled Input to the extent reasonably possible.
7.4. Termination By the ANRC. The ANRC may terminate this Agreement
-----------------------
without liability if within thirty days after the Effective Date, (i) the ANRC
receives a written opinion of its legal counsel addressed to the ANRC that the
Product cannot be manufactured, used or sold in the Territory based upon the
valid, United States patent rights of persons other than VITEX and the NYBC and
(ii) the ANRC notifies VITEX of such termination and its receipt of such opinion
and the ANRC provides a copy of such opinion to VITEX.
-21-
<PAGE>
SECTION 8.
---------
INTERPRETATION AND ENFORCEMENT
------------------------------
8.1. Rules of Interpretation.
-----------------------
(a) Waiver. The waiver by either Party hereto of a breach or
------
default in any of the provisions of this Agreement by the other Party shall not
be construed as a waiver of any succeeding breach of the same or other
provisions; nor shall any delay or omission on the part of either Party to
exercise or avail itself of any right, power, or privilege that it has or may
have hereunder operate as a waiver of any breach or default by the other Party.
(b) Headings. The headings of the articles and sections of this
--------
Agreement are inserted for convenience only and shall not be deemed to
constitute a part hereof
(c) Separability. If any provision of this Agreement is found by any
------------
panel of arbitrators referred to in Section 8.2 below or by any court of
competent jurisdiction to be invalid or unenforceable, the invalidity of such
provision shall not affect the other provisions of this Agreement and all
provisions not affected by such invalidity or unenforceability shall remain in
full force and effect.
8.2. Resolution of Disputes. Any dispute arising out of or relating to
----------------------
any provision of this Agreement or to the Parties' performance of any of their
respective obligations hereunder, whether or not any such dispute involves a
cause of action or claim for relief within the jurisdiction of a court of law or
equity, shall be resolved in the following manner: such dispute shall be set
forth in writing by representatives of both VITEX and the ANRC and shall
promptly be presented to the duly appointed representatives of VITEX and the
ANRC. Such duly appointed representatives shall forthwith negotiate in good
faith in order to resolve such dispute as soon as possible. If, within ten (10)
days after the submission of any such dispute to them, such representatives are
unable to work out a mutually agreeable solution, or to agree to continue such
good faith negotiations for an additional period of time, such dispute shall be
settled by arbitration before a panel of three (3) arbitrators chosen by such
representatives within ten (10) days after they determine that they cannot
resolve any dispute by their good faith negotiations. If such representatives
cannot agree upon the selection of the arbitrators, the arbitrators shall be
selected according to the Rules of the American Arbitration Association as at
the time in effect. Such arbitration shall take place in New York City, New York
in accordance with such Rules. Any decision of the arbitrators shall be final
and binding upon the Parties, and the Parties expressly agree to abide by any
equitable relief granted in such arbitration. The Parties shall bear the costs,
including attorneys' fees, in connection with any such arbitration in accordance
with the arbitrators determination thereof. Judgment upon any award of the
arbitrators may be entered in any court of competent jurisdiction. Except in
cases of purported fraud, no Party to the arbitration shall have any right to
bring any action to challenge any such arbitration award hereunder, nor shall it
be permitted to oppose any petition to confirm such an award hereunder.
Notwithstanding the foregoing, either Party hereto may seek equitable relief in
a court of competent jurisdiction.
-22-
<PAGE>
8.3. Governing Law. This Agreement is made and executed in the State of
-------------
New York and shall be governed by the laws of the State of New York in all
respects, without regard to principles of conflicts of law, including matters of
validity, construction, performance and remedy.
SECTION 9.
---------
PARTIES' RELATIONS
9.1. No Assignment. This Agreement shall not be assignable by either
-------------
party without the prior written consent of the other Party, which consent shall
not be unreasonably withheld. Notwithstanding the foregoing, either Party may,
without the consent of the other Party, assign this Agreement to a transferee or
successor in interest of all or substantially all of the business to which this
Agreement relates, whereupon this Agreement shall bind and inure to the benefit
of any such transferee, successor or assignee; provided however that any such
transferee, successor or assignee shall expressly assume in writing the
performance of all of the terms and conditions of this Agreement to be performed
by it.
9.2. Distributors and Agents. The ANRC may, with the prior written
-----------------------
approval of VITEX, which approval shall not be unreasonably withheld, appoint as
distributors or agents entities which are not FDA licensed blood centers for the
sale, distribution and promotion of the Product in the Territory or any part
thereof, provided that the appointment thereof shall not relieve the ANRC of any
of its responsibilities hereunder.
9.3. Relationship Between Parties. The ANRC and VITEX agree that in
----------------------------
all matters relating to this.Agreement they are and shall be acting as
independent contractors and shall bear all of their expenses in connection with
this Agreement. Neither the ANRC nor VITEX is, and shall not hold itself out
as, an agent, partner or joint venturer of the other. Neither the ANRC nor
VITEX shall have any authority to assume or create any obligation, express or
implied, on behalf of the other. Neither the ANRC nor VITEX shall make
quotations or write letters in the name of the other but in every instance shall
use its own name.
9.4. Confidential Information.
------------------------
(a) Disclosure to Third Parties. During the term of this Agreement
---------------------------
and after termination of this Agreement for any reason neither Party shall, nor
shall it permit its respective directors, trustees, officers, employees,
independent contractors, consultants, agents, or Affiliates to use or disclose
to any third party, except as may be required by the FDA or other Governmental
Authorities, any proprietary information received from or related to the other
Party hereto, including, without limitation, any information relating to the
Proprietary Rights and the Product or otherwise relating to any technology,
know-how, trade secrets, designs, methods, customer information, practices,
ideas, discoveries, processes and other information relating to the business of
the other Party (all information set forth above referred to collectively as the
"Confidential Information") except as permitted in writing by 'the other party,
and except as
-23-
<PAGE>
specifically permitted hereunder. Each party-shall be permitted to disclose
to any of its directors, trustees, officers, employees, independent contractors,
consultants and agents with a need to know, such portion of such Confidential
Information as is necessary to permit such party to exercise any right or
perform any obligation hereunder, provided that each such party acknowledges-and
agrees to be bound by the terms of this Section.
(b) Exceptions. Confidential Information shall not include
----------
information which (i) was at the time of disclosure generally known to the
public through no fault of the receiving party of the Confidential Information,
(ii) subsequently becomes generally known to the public other than by breach of
this Agreement, (iii) the receiving party, by documentary evidence can
demonstrate was known to or in the possession of the receiving party prior to
disclosure by the disclosing party, or (iv) the receiving party, by documentary
evidence, can demonstrate became known to the receiving party subsequent to
disclosure by the disclosing party through a third party having no obligation of
confidentiality to the disclosing party.
(c) Disclosure of Confidential Information. If either Party hereto
--------------------------------------
becomes legally compelled to disclose any Confidential Information of the other
Party, that Party will. promptly notify the other Party so that the other Party
may seek a protective order or other appropriate remedy and/or waive compliance
with the provisions of this Agreement. If a protective order or other remedy is
not obtained, or if the other Party waives compliance with the provisions of
this Agreement, the disclosing Party or such other person shall furnish only
that portion of the Confidential Information which such Party is legally
required to disclose and such Party will not oppose any action by the other
Party to obtain other reliable assurance that confidential treatment will be
accorded such Confidential Information.
(d) Further Action. Each of the Parties shall take such further
--------------
action as shall be reasonably requested by the other Party to ensure the
safeguarding and confidentiality of the other Party's Confidential Information.
(e) Limitation. The ANRC recognizes that VITEX may wish to sell
----------
securities which may be registered under the Securities Act of 1933, as amended
or in one or more private placements. The foregoing provisions of this Section
shall not restrain VITEX from making disclosures which its counsel recommends
pursuant to such Act, the Securities Exchange Act of 1934, as amended or to a
purchaser in a private placement.
(f) The provisions of this Section shall survive termination,
cancellation or expiration of this Agreement and of the First Collaboration
Agreement, as amended and restated.
9.5. Publicity. The Parties agree not to issue any press release or
---------
other public statement disclosing the existence of or relating to the terms and
conditions of this Agreement without the prior written consent of the other
Party. Notwithstanding, neither Party shall be prevented from complying with
any duty of disclosure it may have pursuant to law or from making such
disclosures as counsel recommends in connection with potential or actual legal
disputes with third parties.
-24-
<PAGE>
9.6. Use of Tradenames and Trademarks. The Parties agree not to use
--------------------------------
directly or indirectly the other Party's tradenames or trademarks in connection
with promotions, advertising or sales activity without the prior written consent
of the other Party. All material in connection with such activities which is
submitted by one Party to the other Party for its consent shall be in compliance
with the consenting Party's written specifications for the use of its tradenames
or trademarks. Any consent granted under this Section shall not excuse any
failure to comply with such specifications. If a Party determines that the
other Party's use of its tradenames and trademarks is not in compliance with
such Party's written specifications, then that Party shall be entitled to
request that the other Party refrain from using such tradenames or trademarks
within three (3) days from the receipt of written notice of such request.
Notwithstanding any consent previously given, a Party may revoke its consent as
to specific uses of its tradenames or trademarks provided however that such
revocation shall not take effect until the supply of such material in existence
before such revocation has been exhausted.
SECTION 10.
----------
MISCELLANEOUS
10.1. Entire Agreement. This Agreement and the Schedules hereto,
----------------
which are an integral part hereof, embody the entire understanding between the
Parties with respect to the subject matter hereof. The Parties agree that no
representations have been made or relied upon, except as specifically stated in
this Agreement. Notwithstanding the foregoing, this Agreement shall not
supersede the Amended and Restated Collaboration Agreement among the ANRC, VITEX
and the New York Blood Center, Inc. dated the date hereof.
10.2. Modifications. This Agreement may be modified only by a writing
-------------
signed by both Parties.
10.3. Notices. Unless otherwise specifically provided, all notices,
-------
demands, or requests required or permitted by this Agreement shall be in writing
and may be delivered personally or by facsimile transmission, or may be sent by
mail, addressed to the addresses set forth below or such other addresses that
the Parties may designate in writing pursuant to this Section 10.3. Any notice
delivered personally or by facsimile transmission shall be deemed received on
the date thereof, and any notice given by mail shall be deemed received on the
third business days after the postmarked date thereof. Nothing contained herein
shall justify or excuse failure to give oral notice for the purpose of informing
the other Party thereof when prompt notification is appropriate, but such oral
notice shall not satisfy the requirement of written notice.
If to VITEX: V.I. Technologies, Inc.
155 Duryea Road
Melville, New York 11747
Attention: President
Facsimile: (516)752-8754
-25-
<PAGE>
with a copy to:
Gibbons, Del Deo, Dolan, Griffinger & Vecchione
One Riverfront Plaza
Newark, New Jersey 07102
Attention: Frank E. Lawatsch, Jr.
Facsimile: (973) 639-6249
If to the ANRC: American National Red Cross
1616 Fort Myer Drive, 17th Floor
Rosslyn, Virginia 22209-3100
Attention: Chris Lamb
Facsimile: (703)312-8742
with a copy to:
Office of General Counsel
1616 Fort Meyer Drive, 18th Floor
Rosslyn, Virginia 22209-3100
Facsimile: (7D3) 312-5728
10.4. No Third-Party Benefits. Nothing in this Agreement shall be
-----------------------
construed to confer upon any Person not a Party hereto any right, remedy or
claim hereunder.
10.5. Modification of First Collaboration Agreement. To the extent the
----------------------------------------------
provisions in this Agreement are inconsistent with the provisions of the First
Collaboration Agreement, the provisions of this Agreement shall govern.
10.6. Tax Exempt Status of the ANRC. Notwithstanding any other provision
-----------------------------
in this Agreement, the ANRC shall not be required to engage in any activity that
would jeopardize the charitable tax exempt status of the ANRC nor shall the ANRC
or VITEX be required to engage in any activity that presents a reasonable
likelihood of the imposition of intermediate sanctions under the Internal
Revenue Code of 1986, as amended, on VITEX, the ANRC or managers of the ANRC.
10.7. Severability. In the event implementation of any of the provisions
------------
of this Agreement present a material risk of loss of the ANRC's tax exempt
status or the imposition of intermediate sanctions under the Internal revenue
Code of 1986, as amended, or if any provision of this Agreement is held invalid,
illegal or unenforceable in any jurisdiction ("Invalid Provision"), the Parties
shall promptly negotiate in good faith a lawful, valid enforceable provision
that is similar in terms to such Invalid Provision as may be possible while
giving effect to the future benefits and burdens accruing to the Parties
hereunder, and which removes the risk, if any, of loss of the ANRC's tax exempt
status and the imposition of intermediate sanctions under the Internal Revenue
Code of 1986, as amended. The remaining provisions of this Agreement shall
remain binding on the Parties hereto. In the event that the Parties cannot
agree on a provision to replace an Invalid Provision, at the ANRC's election,
the Parties shall attempt to renegotiate their
-26-
<PAGE>
relationship in good faith under commercially reasonable terms, or this
Agreement shall terminate under either Section 7.2(a)(xii) or Section
7.2(b)(viii) of this Agreement. The ANRC does not believe on the date hereof
that any provisions of this Agreement are an Invalid Provision.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the 15th day of
December, 1997.
V.I. TECHNOLOGIES, INC.
By: /s/ John R. Barr
----------------------------
Name: John R. Barr
Title: President
AMERICAN NATIONAL RED CROSS
By:____________________________
Name:
Title:
-27-
<PAGE>
SCHEDULES
Schedule 1.14 - Specifications of the Input
Schedule 1.15 - Know-How
Schedule 1.22 - Patent Rights
Schedule 1.27 - Specifications of the Product
Schedule 1.29 - Form of Purchase Order
Schedule 2.2 - Production Schedule
Schedule 3.11 - Testing
Schedule 3.3 - ANRC Marketing Expenses Proposal
Schedule 4.5 - VITEX Marketing Expenses Proposal
Schedule 5.8 - Records and Reports
Schedule 6.3 - Insurance Coverage
-28-
<PAGE>
SCHEDULE 1.14
SPECIFICATIONS OF THE INPUT
---------------------------
51
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission Pursuant to a request for confidential treatment.]
Page 1 of 12
PLASMA FOR SOLVENT/DETERGENT (sp)
---------------------------------
PLASMA PROCESSING SPECIFICATIONS
--------------------------------
(the "SPECIFICATIONS")
----------------------
1.0 OBJECTIVE
To establish a program for the acceptance of plasma by V.I. Technologies,
Inc. ("VITEX") for use in SD Plasma processing.
2.0 DEFINITIONS
2.1. Plasma for SD Plasma Processing (the "PSDP") - The fluid portion of
whole blood (Human) collected in the U.S. by FDA-licensed blood
centers from volunteer, non-remunerated donors and containing no
additives other than FDA approved anti-coagulant. The plasma must
have been drawn from adult humans who are in good physical condition
to give blood, in so far as can be determined by personal history
and physical examination on the date of collection.
In order for plasma to be acceptable for use in the production of SD
Plasma it needs to meet the requirements for Recovered Plasma
(Frozen) or Source Plasma from plateletpheresis or plasmapheresis as
well as the additional requirements outlined in these
SPECIFICATIONS. The plasma shall be separated from red cells and
frozen solid no longer than ******** after collection. (It is
preferable for the plasma derived from a whole blood collection to
be separated from both red cells and platelets, but this is not
---
required.) The plasma shall be frozen flat and stored continuously
at ************* or below. Once frozen, plasma may not be thawed.
Plasma for SD Plasma Processing must be collected, prepared
(processed), labeled and stored in accordance with these
SPECIFICATIONS and in a manner fully consistent with plasma or any
blood component intended for transfusion, e.g. FFP or Red Blood Cell
Concentrate. PSDP needs to be labeled by ABO type. As such, PSDP
must undergo a blood center's normal cGMP practices for unit release
and labeling and ultimate release for distribution (i.e. release for
transport by VITEX's authorized carrier to VITEX for SD Plasma
Processing) as would be the case for any labeled blood component
intended for transfusion.
52
<PAGE>
Page 2 of 12
VITEX RETAINS THE RIGHT TO REJECT OR OTHERWISE NOT ACCEPT ANY UNITS
OF PLASMA FOR SD PLASMA PROCESSING WHENEVER IT BELIEVES, IN ITS SOLE
DISCRETION, THAT THE UNITS SUPPLIED ARE NOT IN FULL CONFORMANCE WITH
THESE SPECIFICATIONS.
2.2 Short Supply Agreement - An agreement between a plasma supplier and
VITEX, signed by the respective Responsible Heads or by their
designated individuals, in accordance with 21 CFR 601.22. By
completing and signing the Short Supply Agreement, the plasma
supplier certifies that it has received these SPECIFICATIONS and has
read and understood them, and that the plasma supplier will abide by
all terms and conditions as stated in these SPECIFICATIONS.
3.0. PROCEDURE
3.1. Within two weeks of the date of the Short Supply Agreement, and upon
any reasonable request by VITEX thereafter while a Short Supply
Agreement between the parties is in effect, the plasma supplier will
provide VITEX with a copy of its current FDA Establishment License.
3.2 The SPECIFICATIONS outlined herein are applicable to plasma used in
the production of products in short supply, as defined in 21 CFR
601.22.
3.3 The following regulations and other requirements apply specifically:
3.3.1. 21 CFR 606.3 through 606.170 - Current good manufacturing
practices for blood and blood components.
3.3.2. 21 CFR 610.40 and 610.41 - Standards for Hepatitis testing.
3.3.3. 21 CFR 610.45 - Human Immunodeficiency Virus (HIV-1/2)
requirements and recommendations).
3.3.4. 21 CFR 640.1 through 640.5 - Standards for collection and
testing of whole blood.
3.3.5. 21 CFR 640.16 and 21 CFR 640.24 - Preparation of plasma and
platelets.
3.3.6. 21 CFR 606.121 - Standards for labeling, including 21 CFR
606.121(c)(12) with respect to ABO labeling requirements.
53
<PAGE>
Page 3 of 12
3.3.7. Plasma for SD Plasma Processing is to be collected only from
volunteer, non-remunerated donors under the age of 59.5.
Donor selection, blood collection and recordkeeping shall be
performed according to FDA approved procedures (including
the requirements of the December 11, 1996 guideline "Interim
Recommendations for Deferral of Donors at Increased Risk for
HIV-1 Group O Infection" and "Revised Precautionary Measures
to Reduce the Possible Risk of Transmission of Creutzieldt-
Jakob Disease (CJD) by Blood and Blood Products") and the
procedures defined in the current edition of the AABB
"Standards for Blood Banks and Transfusion Services".
Persons who have received treatment with extracts from human
pituitary glands, such as growth hormone, gonadotropins or
thyroid-stimulating hormone (thyrotropin), are not
acceptable as donors. Persons having received dura mater
grafts are not acceptable as donors.
Autologous donors are not acceptable. Plasma that has been
irradiated is not acceptable.
The plasma pooled by VITEX must reflect the original
antibody spectrum of the donor population. It should be
neither enriched nor deprived of special antibodies, either
by screening or by adsorption methods, except for antibodies
against HIV, HCV and HTLV. Anti-HBc positive donations
should not be removed. If for its own reasons a plasma
supplier wishes to remove anti-HBc positive donations from
its shipments, the supplier must inform VITEX of this in
writing before the first shipment without anti-HBc positive
units is to be shipped to VITEX.
Donor documentation (donor assessment, identification, test
results) is to be kept for at least 10 years.
3.3.8 All units of PSDP must be tested by an FDA approved method
and found negative or non-reactive to the following tests:
HBsAg, RCV antibody, HIV-1/2 antibodies, HIV-1 antigen (HIV-
Ag) and Syphilis. (ALT testing is not required.)
54
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
Page 4 of 12
3.3.9 Donors of all units of PSDP collected as of February 15,
1998 must be tested, and found negative, for HTLV-II by an
FDA licensed donor screening test.
3.3.10 Positive antibody screen (red cell antibodies) units are to
be excluded.
3.3.11 Only single units in FDA-approved satellite bags of a closed
multiple system are acceptable. Pooled plasma will not be
accepted. The volume per unit must be at least 160 mL.
3.3.12 The plasma supplier's manufacturing process must assure that
plasma units are free of microbial or pyrogenic
contamination, essentially free of red blood cells, and the
hemoglobin content is not to exceed 100mg per 100mL.
Grossly lipemic units will not be accepted. Leaking,
damaged or cracked bags are not to be shipped.
3.3.13 Only plasma which has been collected and processed under the
Establishment License number which has been defined in the
mutually-agreed Short Supply Agreement may be delivered to
VITEX.
Within two weeks of the date of the Short Supply Agreement,
VITEX must be informed if the HBsAg, anti-HIV 1/2, anti-HCV,
HIV-1 antigen or Syphilis antibody tests are not performed
under the same Establishment License as the Establishment
License for the collection and processing operations. In
addition, in those cases where the testing defined in the
preceding sentence is performed under a different
Establishment License, the responsibilities between the
plasma supplier (i.e. the blood collection center) and the
testing laboratory must be provided in writing to VITEX.
3.3.14 If FDA requires any additional screening tests or testing
modifications, such testing shall be implemented as soon as
required.
3.4 Prior to freezing, PSDP is to be stored at room temperature (not
refrigerated) whenever allowed under 21 CFR 640 regulations. Units
must be frozen solid within ******** after collection.
55
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission Pursuant to a request for confidential treatment.]
Page 5 of 12
3.5 If Fresh Frozen Plasma (FFP) originally prepared from whole blood is
to be used as PSDP, then each unit must be relabeled as Recovered
Plasma in accordance with Section 3.8 below.
3.6 If FFP prepared by plateletpheresis or plasmapheresis is to be used
as PSDP, then each unit must be relabeled as Source Plasma in
accordance with Section 3.8 below. (A blood center will need to
hold a Source Plasma license to ship such material for SD Plasma
processing.)
3.7 Prior to shipment to VITEX (or pick-up by its contract carrier),
units of PSDP may be stored at ************************************
*********************************************************
3.8 The labeling on each unit shall comply with all applicable FDA
requirements. The following information shall be displayed on the
front of the plasma bag:
3.8.1 Donor number: each plasma unit has to be labeled with a
unique donor/donation number and labeled with the bar code
corresponding to this number.
3.8.2 Collection date or expiration date.
3.8.3 Name, address, and Registration number of the blood center.
3.8.4 The name "RECOVERED PLASMA" in a prominent position if the
unit is prepared from whole blood or was prepared originally
as FFP from whole blood. The name "SOURCE PLASMA" needs to
appear in a prominent position if the unit originally was
prepared as Fresh Frozen Plasma from platelpheresis or
plasmapheresis.
3.8.5 Statement of the volume of plasma and the type of anti-
coagulant used.
3.8.6 Statement to indicate that the plasma was frozen within
******** after collection.
3.8.7 Recommended storage temperature, i.e., store at or below
************.
56
<PAGE>
Page 6 of 12
3.8.8 Statement that the plasma is non-reactive for HBsAg, HIV-Ag
and negative for antibodies to HIV-1/2 and HCV by FDA
approved tests.
3.8.9 The statement: "CAUTION: FOR MANUFACTURING USE ONLY".
3.8.10 The unit must indicate ABO type. (Note: Rh + or - may be
included on the label, but is not required; either is
acceptable for SD Plasma processing.)
3.8.11 Any bar code symbology used on the label must comply with
current approved FDA guidelines.
3.8.12 Examples of product labels that conform to the requirements
of this Section 3.8 are shown in FRAP0001G/4 and
FRAP0001G/5, attached to these SPECIFICATIONS.
3.9 The shipment of each ABO type represents a separate shipment for
documentation purposes. Therefore, each shipment requires its own
Summary Control Sheet (see 3.9.5 below) and Bill of Lading (see
3.9.6 below). Each shipment of PSDP must be packaged, labeled and
documented as outlined below:
3.9.1 Only shipping cartons provided by VITEX may be used to ship
PSDP to VITEX.
3.9.2 All units of PSDP must be segregated by type (A, B, O, AB)
into separate shipping cartons at the blood center. Each
shipping carton will hold 20 units of PSDP processed from
whole blood. The ABO type will need to be clearly marked on
the shipping carton exterior (see 3.9.3 below). No mixing of
ABO type will be allowed.
3.9.3 Each shipping carton of plasma must be labeled with the
approved label provided by VITEX. The label is to be placed
in the space indicated on the shipping carton. The following
information is to be entered onto the label (see FRAP0001G/6
for an example of a properly completed shipping carton
label):
57
<PAGE>
Page 7 of 12
3.9.3.1 The name and address of the plasma supplier.
3.9.3.2 The Bill of Lading Number.
3.9.3.3 The shipping carton number (e.g. Box 1 of 20) for the
shipment.
3.9.3.4 The ABO type is to be designated by circling the
applicable type on the label.
3.9.4 Each shipping carton of plasma must contain a Packing Slip
which includes a list of all of the individual units in that
shipping carton. Donor number and the date of collection or
the expiration date are to be provided on the Packing Slip
for each unit. The Packing Slip shall also include the date
and initials of the responsible person, the total number of
units and the total volume (in liters) of plasma in the
shipping carton. (See FRAP0001G/7 for an example of a
properly completed Packing Slip.)
3.9.5 Each shipment (by ABO type) must be accompanied by a Summary
Control Sheet referencing each Packing Slip in the shipment,
and a copy of each Packing Slip is to be stapled to the
Summary Control Sheet. The Summary Control Sheet must be
enclosed in a sealed plastic bag and placed in a separate,
clearly marked shipping carton. The Summary Control Sheet
must include the name, generation (if applicable) and
manufacturer of the screening tests listed on the Summary
Control Sheet and a statement certifying that all units have
been tested and found negative or non-reactive using FDA-
approved tests for the following: HBsAg, HCV antibodies, HIV-
1/2 antibodies, Syphilis antibodies, and HIV-1 antigen. The
Summary Control Sheet is to be signed and dated by an
appropriate responsible person. (The Summary Control Sheet
for shipping PSDP to VITEX is shown as FRAP0001G/8.)
3.9.6 Each shipment (by ABO type) must be accompanied by a properly
completed Bill of Lading (BOL). The BOL will include
(FRAP0001G/9 provides an example of a properly completed
BOL):
58
<PAGE>
Page 8 of 12
3.9.6.1 The name and address of the processing establishment.
3.9.6.2 A BOL number which will consist in part of a shipper
number assigned by VITEX to each processing
establishment shipping PSDP to VITEX and a sequential
shipment number (assigned by the blood center).
3.9.6.3 The date of shipment.
3.9.6.4 The consignee (i.e. VITEX) and the consignee's address
(i.e. c/o Caliber Logistics Healthcare, 525 Park East
Boulevard, New Albany, IN 47150).
3.9.6.5 the number of shipping cartons in the shipment and the
description of contents (i.e. Plasma for SD Plasma
Processing), the total number of units, the total
weight in Kg and the total volume in liters.
3.9.6.6 The shipper's signature.
3.9.7 The processing establishment must retain a copy of the
Bill of Lading, the Packing Slips, and the Summary
Control Sheet for each shipment to facilitate any
future tracking and recovery of a unit shipped to VITEX
for SD Plasma processing.
3.10 To optimize the packaging of plasma units, the following guidelines
are provided:
3.10.1 The bottom of the shipping carton provided by VITEX is to be
taped closed.
3.10.2 PACK ONLY ONE BLOOD TYPE PER SHIPPING CARTON.
3.10.3 Remove all tags and strings from the plasma units.
59
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
Page 9 of 12
3.10.4 Remove tubing segments.
3.10.5 Stand each plasm unit on its side, alternating port
direction, with labels facing in the same direction.
3.10.6 If the shipping carton is not full, add filler material to
protect the plasma units from breakage. NO SHIPPING CARTON
WITH LESS THAN TEN (10) UNITS SHOULD BE SHIPPED TO VITEX.
3.10.7 The Packing Slip for each shipping carton should be enclosed
in a sealed plastic bag to protect it from leaks and then
placed inside the shipping carton.
3.10.8 Each shipping carton is to be sealed with tape.
3.11 Ship cartons containing PSDP (or turn over to the VITEX designated
carrier) at ************* or below.
3.12 Notification and Recall - **************************************
******************************************************************
********************************************************************
*****************************************************************
********************************************************************
*******************************************************************
***********
****** ***********************************************************
******************************************************
************************************************************
*****************************************************
*******
****** ***********************************************************
***********************************************************
**************************************************
******** ***********************************************
**************************************************
******************************************
**************************************************
***********************************
60
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
Page 10 of 12
***********************************************
***************************************
******** ***********************************************
*****************************************
***********
3.12.2.3 A recipient develops a post transfusion infection
that can be traced back to the donor.
******** ******************************************
***********************************************
************************************************
******************
3.12.3 All necessary information (See FRAP0001G11, "PLASMA
NOTIFICATION" form) is to be provided to VITEX (Attention:
Quality Assurance Department) by fax at (516) 752-8768 and
the original PLASMA NOTIFICATION form also mailed to:
Quality Assurance Department
V.I. Technologies, Inc. (VITEX)
155 Duryea Road
Melville, NY 11747
3.13 Each blood center shall maintain a quality assurance system that
provides confidence that all systems and elements that influence the
quality and safety of the PSDP are as expected.
3.14 Failure to comply with any of the aforementioned SPECIFICATIONS
shall be sufficient cause for VITEX to reject any PSDP delivered to
VITEX.
4.0 RESPONSIBILITIES
4.1 Plasma Suppliers - It is the responsibility of each plasma supplier
to ensure that the collection, preparation, testing, labeling and
storage of all PSDP has been carried out according to all of these
SPECIFICATIONS. A written recall procedure in conformance with
current FDA requirements shall be in place. (See FRAP0001G/10 for
Recall and Lookback Procedure Guidelines.)
61
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
Page 11 of 12
4.2 Transportation Contractor - It is the responsibility of the
Transportation Contractor to pick up and deliver the PSDP in
acceptable condition to the proper storage location. Storage during
transit must be shown to have been carried out at ******** or
colder.
4.3 VITEX Records Retention Department - It is the responsibility of
Records Retention to maintain all records associated with shipments
of PSDP.
4.4 VITEX Quality Assurance Inspectors - It is the responsibility of the
Quality Assurance Inspectors to follow the established Warehouse -
Quality Assurance System.
5.0 ADDITIONAL INFORMATION
5.1 VITEX reserves the right to conduct on-site visits, either by the
VITEX Quality Assurance Department or by another qualified party
designated by VITEX, of Plasma Supplier's operations under 21 CFR
601.22. VITEX reserves the right to reject incoming shipments of
Plasma for SD Plasma Processing that fail to meet these
SPECIFICATIONS.
5.2 Short Supply Agreement - Under FDA Establishment License number 386,
VITEX is authorized under the Products in Short Supply regulations
to further manufacture plasma collected at licensed whole blood
collection centers. A signed Short Supply Agreement between the
collection center and the manufacturer, VITEX, shall be available
for inspection by FDA investigators.
5.3 All Packing Slips pertinent to the PSDP units received will remain
on file in the VITEX Records Retention Department.
6.0 DOCUMENTATION
6.1 FRAP0001G/4 - Example of PSDP Label - Recovered Plasma (Frozen).
6.2 FRAP0001G/5 - Example of PSDP Label - Source Plasma.
6.3 FRAP0001G/6 - Example of PSDP Shipping Carton Label.
6.4 FRAP0001G/7 - Example of PSDP Packing Slip.
6.5 FRAP0001G/8 - PSDP Summary Control Sheet.
62
<PAGE>
Page 12 of 12
6.6 FRAP0001G/9 - Example of PSDP Bill of Lading.
6.7 FRAP0001G/10 - Recall and Lookback Guidelines.
6.8 FRAP0001G/11 - PLASMA NOTIFICATION Form.
6.9 FRAP0010/1 - Short Supply Agreement (Fractionation)
6.10 FRAP0010/2 - Short Supply Agreement (SD Plasma)
**
If there are any questions with respect to these
SPECIFICATIONS, please contact VITEX, Quality Assurance
Department, by phone: (516) 752-7314 ext. 126 or 127
by fax: (516) 752-8768
63
<PAGE>
[Example of PSDP Label - Recovered Plasma (Frozen)]
<PAGE>
RECALL AND LOOKBACK PROCEDURE GUIDELINES FOR BLOOD CENTERS The plasma
----------------------------------------------------------
supplier providing Plasma for SD Plasma Processing to VITEX shall have in place
a written recall procedure that will include the following:
1. Distribution procedures that will document the production, labeling and
shipment of each plasma unit so that the disposition of the unit can be
readily determined to facilitate its recall, if necessary. Information on
the date of collection, date of shipment, bill of lading number, and
carton, number shall be accessible, and whether the plasma is recovered,
from plasmapheresis, or from plateletpheresis.
2. The possible reasons to initiate a recall, e.g. donor reconsideration,
incomplete donor history, testing deficiencies, viral marker reactivity,
positive confirmatory tests, etc. If the unit is considered unacceptable
for transfusion for any reason, VITEX should be notified within seventy-
two (72) hours of such a determination, giving the specific reason as well
as all test results.
3. Procedures for the delegation of the authority to initiate a recall.
4. Lookbacks - instructions should indicate that any FDA-recommended lookback
be performed.
5. CJD - (Creutzfaldt - Jakob Disease) - the conditions under which unit is
to be recalled for CJD of the donor or a relative, in accordance with
current FDA guidelines.
6. For any recall:
. To expedite retrieval of a plasma unit, please fax all necessary
information to VITEX at Fax number (516) 752-8768. The attached
PLASMA NOTIFICATION form (FRAP0001G/11) provides an example of
the information to be provided to VITEX and the appropriate fax
and phone numbers.
. Also, mail the original to:
Quality Assurance Department
V.I. Technologies, Inc. (VITEX)
155 Duryea Road
Melville New York 11747
7. The unit being recalled will be destroyed by VITEX (if it is still
available); written notification will be sent confirming that the unit has
been destroyed.
65
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
VITEX PSDP SUMMARY CONTROL SHEET
AND LETTER OF TESTING CERTIFICATION
- --------------------------------------------------------------------------------
Blood Center Name:
-------------------------------------------------------
Address:
-----------------------------------------------------------------
City, State, Zip:
--------------------------------------------------------
FDA License Number:
------------------------------------------------------
Phone:
-------------------------------------------------------------------
Fax:
---------------------------------------------------------------------
- --------------------------------------------------------------------------------
TO: QA Department Phone # (516) 752-7314 ext. 126 or 127
V.I. Technologies, Inc. (VITEX) Fax # (516) 752-8768
155 Duryea Road
Melville, NY 11747
Please be advised that we are shipping one of the following:
_____Recovered Plasma (Frozen, within **** hours).
ABO Type - A B AB O (circle one)
_____Source Plasma.
ABO Type - A B AB O (circle one)
Bill of Lading Number:
-----------------------
Number of Boxes:
-----------------------------
The shipment contains ___________ plasma units.
The shipment contains _____________ liters of plasma.
All donations are from bleed date _________ to bleed date ___________.
All units have been stored at ************** for ___________ days.
and ______________at ***************
- --------------------------------------------------------------------------------
************** ***************** ********** ************
- --------------------------------------------------------------------------------
*****
- --------------------------------------------------------------------------------
****************
- --------------------------------------------------------------------------------
*************
- --------------------------------------------------------------------------------
********
- --------------------------------------------------------------------------------
*************
- --------------------------------------------------------------------------------
***************************************************************************
**********************************************************
- ----------------------------------------------------------------
Signature of Responsible Head or Designee Date
66
<PAGE>
PLASMA NOTIFICATION
DATE:_________________________
TO: FROM:
Quality Assurance Department Blood Center Name:
V.I. Technologies, Inc. (VITEX) ---------------------
155 Duryea Road Address:
Melville, New York 11747 -------------------------------
(P) 516-752-7314 x 126 or 127 City, State, Zip:
(F) 516-752-8768 ----------------------
FDA License Number:
--------------------
Name:
----------------------------------
Signature:
-----------------------------
Phone:
---------------------------------
Fax:
-----------------------------------
Our records indicate that we have shipped the following plasma unit(s) to your
facility and have subsequently initiated a recall or lookback. Please destroy
the unit if it has not been further manufactured.
-----------------------------------------------------------
Unit Number BOL # To Date Box Type of
VITEX Shipped Number Plasma
-----------------------------------------------------------
-----------------------------------------------------------
-----------------------------------------------------------
-----------------------------------------------------------
-----------------------------------------------------------
-----------------------------------------------------------
-----------------------------------------------------------
-----------------------------------------------------------
-----------------------------------------------------------
-----------------------------------------------------------
Reason for notification:
Medical History Deferral/Self Exclusion
This unit has been tested and found non-reactive/negative by FDA recommended
viral marker test procedures. Reason for request to destroy plasma unit:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
67
<PAGE>
[Example of PSDP Label - Source Plasma]
<PAGE>
[Example of PSDP Shipping Carton - Label]
<PAGE>
EXAMPLE OF PSDP PACKING SLIP
----------------------------
Shipment Information:
- --------------------
Ship Date: Shipment Number:
Shipped to: Shipping Region:
- --------------------------------------------------------------------------------
Carton Information:
- ------------------
Carton/Control Number: Units in Carton:
Product Type: Frozen Recovered Plasma Net Weight: Kg
- -------------------------------------------------------------------------------
Unit Number Coll. Date Unit Number Coll. Date Unit Number Coll. Date
1. 011 017 73 01/20/97 2. 011 017472 01/20/97 3. 011FN57196 01/20/97
4. 011 596 53 01/20/97 5. 011 596061 01/20/97 6. 011FF37544 01/20/97
7. 011FZ34 36 01/20/97 8. 011FC54829 01/20/97 9. 011LX21421 01/20/97
10. 011FZ12 29 01/21/97 11. 011 596040 01/20/97 12. 011FC34836 01/20/98
13. 011FF37 45 01/20/97 14. 011 596050 01/20/97 15. 011FF37842 01/20/97
14. 011 596 57 01/20/97 17. 011 596052 01/20/97 18. 011FC3 824 01/20/97
19. 011FC34132 01/20/97 20. 011 596959 01/20/97
- -------------------------------------------------------------------------------
Carton packed by Date:
---------------------------
Verified by Date:
---------------------------
- --------------------------------------------------------------------------------
70
<PAGE>
[Example of PSDP Bill of Lading]
<PAGE>
SCHEDULE 1.15
KNOW-HOW
--------
72
<PAGE>
SCHEDULE 1.15
Know-How
--------
The use of solvent-detergent technology has become widespread in the
preparation of blood derivatives to inactivate lipid-enveloped viruses. Because
viruses which lack lipid envelopes and/or are heat-resistant (e.g. hepatitis A
(HAV) or parvo virus (B19)) may be present the use of two methods of virus
elimination that operates by different mechanisms has been advocated. The
virucidal treatment of plasma or other protein solutions by ultraviolet
radiation and quenchers (UVC) has as its basis the higher absorption of light
energies between 250 and 260 nm by nucleic acid as compared with protein, and
orders of magnitude larger target presented by nucleic acids. The technology
will enhance existing techniques in the use of UVC irradiation by improving
compatibility with labile proteins through the addition of quenchers of reactive
oxygen species (ROS). Adoption of UVC irradiation has been limited in the past
because of the low recovery of coagulation factors when the fluence was
increased to levels required for complete viral inactivation. Current
experimental data indicates that greater than 10/5/ infectious doses of HAV or
porcine parvo virus could be eliminated at 0.1 J/cm/2/ without significant loss
of valuable coagulation factors. Later experiments have shown that a wide range
of viruses can be inactivated by UVC. The addition of NYBC's UVC treatment to
existing processes used in the manufacture of blood components and derivatives
and other therapeutic proteins will provide a substantial added margin of
safety, especially for non-enveloped viruses.
73
<PAGE>
UVC irradiation requires a specialized piece of equipment - the
irradiator. To deal with the large volumes of material to be irradiated, a
device capable of handling biological fluids in a continuous flow manner was
developed. The current device allows for accurate exposure of the sample with
UVC light without over or underexposure. This capability is achieved by
irradiating a thin film of liquid that flows down the inside surface of a
rapidly rotating cylinder set at a desired angle. In the interior of the
cylinder are positioned several UV lamps. Since the solution is maintained as a
thin film throughout transit, it is irradiated uniformly. The device was
designed to be placed in-line in a pharmaceutical manufacturing setting and to
be run for extended periods. In order to treat larger quantities of material,
multiple units can be run in parallel and the material repooled following
treatment.
The device has a complete array of sensors and fail-safes to
continuously monitor operating parameters, e.g. cylinder rotation speed, light
intensity, fluid flow rates, power, and temperature. The system is computer
operated and is intended to meet government regulations. The KNOW-HOW also
includes clinical data, toxicology data, the results of neoimunogen studies,
etc., and such other general information contained in the laboratory notebooks
and reports of Dr. B. Horowitz and of the scientific staff reporting to him.
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
SCHEDULE 1.22
PATENT RIGHTS
-------------
************************************************************************
*****************************************************************************
*****************************************************************************
*****************************************************************************
*****************************************************************************
*******************************[3 pages omitted]*************************
*****************************************************************************
*****************************************************************************
*****************************************************************************
*************************************************************
75
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
SCHEDULE 1.27
SPECIFICATIONS OF THE PRODUCT
-----------------------------
************************************************************************
*****************************************************************************
*****************************************************************************
*****************************************************************************
*****************************************************************************
*******************************[2 pages omitted]*************************
*****************************************************************************
*****************************************************************************
*****************************************************************************
*************************************************************
79
<PAGE>
SCHEDULE 1.29
FORM OF PURCHASE ORDER
----------------------
82
<PAGE>
[Form of Purchase Order]
<PAGE>
SCHEDULE 2.2
PRODUCTION SCHEDULE
-------------------
84
<PAGE>
Date: October 15, 1997
To: DonM
Gary
Jim
Joanne
John
Re: Rick
From: DonH
Subject: Red Cross Ramp Plan
Delisa English of the Red Cross requested an updated production ramp plan
today. Attached please find two rampup plans, one that assumes no FDA lot
release hold and one that assumes an FDA lot release hold. The logic on
the attachments has been reviewed with DonM in advance of sending it to the
Red Cross.
Joanne, let's use these numbers in our updated financial plan.
85
<PAGE>
CONFIDENTIAL
SENT VIA FAX
703-312-8746
Date: October 15, 1997
To: Delisa English
American Red Cross
From: Donald Hawthorne
Vitex
Subject: Production Ramp Schedule
Attached please find two updated production ramp schedules. The
assumptions page highlights the major assumptions.
The only difference between the two production ramp schedules is the
requirement for an FDA lot release. We have been told recently, on an
informal basis, that the FDA will not require a formal lot release
procedure from the agency. However, we have enclosed two schedules since
the outcome is not yet a certainty. The assumptions are largely similar to
an earlier model shared with the Red Cross.
The "Incoming Liters" column represents the Vitex plasma requirements from
the Red Cross.
Please call me at 516-752-7314, extension 212 if you have any questions.
Best regards.
/s/ Don
86
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
CONFIDENTIAL
Major Production Ramp Assumptions
---------------------------------
The FDA ELA letter is received in the **********************
The Red Cross is the exclusive distributor of the Vitex product.
The Red Cross will begin providing plasma on a regular basis to Vitex during the
week of ***********
The initial production new hire headcount will begin work between **************
Vitex will begin producing *********** at the start of ******** with the
following exceptions:
The FDA inspection, originally assumed for ************, now appears to be
a ******** event. As a result, ********** can be produced the week of the
inspection.
********** can be produced during the week of *************
The FDA inspection outcome is satisfactory.
*********** will be produced in the ******************************
The next group of production new hire head count will begin work on ************
These people will be trained during the weeks of ********* and ********* (i.e.,
the weeks of *********** ************, during which time no lots will be
produced.
FDA license is issued at year end *****
The ramp schedule will begin at *****************************************
increasing at the rate specified on the attachment.
One ramp schedule attachment assumes the normal ****** Vitex lot release period
plus a ****** FDA lot release period. A second ramp schedule attachment assumes
the normal ****** Vitex lot release with no FDA lot release requirement. The
FDA has told Vitex informally that the latter scenario is more likely.
Goods are released to the Red Cross once approximately ************ are produced
and released by Vitex and/or the FDA. This begins the initial ***************
during which time Vitex will produce at least **************
*** production yield. **** units per pool at *** ml/unit. ***************
*************************
87
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
Production Schedule
<TABLE>
<CAPTION>
Number Incoming Saleable Units Cumulative
Week Week of of Fills Liters Units Released Released
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
03-Nov-97 **** ******** ********
10-Nov-97 **** ******** ********
17-Nov-97 **** ******** ******** ********
24-Nov-97 **** ******** ******** ********
01-Dec-97 **** ******** ******** ********
08-Dec-97 **** ******** ******** ********
15-Dec-97 **** ******** ******** ********
Training 22-Dec-97 **** ******** ******** ********
Training 29-Dec-97 **** ******** ******** ********
05-Jan-98 **** ******** ******** ********
12-Jan-98 **** ******** ******** ********
19-Jan-98 **** ******** ******** ********
26-Jan-98 **** ******** ******** ********
1 02-Feb-98 **** ******** ******** ******** ********
2 09-Feb-98 **** ******** ******** ******** ********
3 16-Feb-98 **** ******** ******** ******** ********
4 23-Feb-98 **** ******** ******** ******** ********
5 02-Mar-98 **** ******** ******** ******** ********
6 09-Mar-98 **** ******** ******** ******** ********
7 16-Mar-98 **** ******** ******** ******** ********
8 23-Mar-98 **** ******** ******** ******** ********
9 30-Mar-98 **** ******** ******** ******** ********
10 06-Apr-98 **** ******** ******** ******** ********
11 13-Apr-98 **** ******** ******** ******** ********
12 20-Apr-98 **** ******** ******** ******** ********
13 27-Apr-98 **** ******** ******** ******** ********
14 04-May-98 **** ******** ******** ******** ********
15 11-May-98 **** ******** ******** ******** ********
16 18-May-98 **** ******** ******** ******** ********
17 25-May-98 **** ******** ******** ******** ********
18 01-Jun-98 **** ******** ******** ******** ********
19 08-Jun-98 **** ******** ******** ******** ********
20 15-Jun-98 **** ******** ******** ******** ********
21 22-Jun-98 **** ******** ******** ******** ********
22 29-Jun-98 **** ******** ******** ******** ********
23 06-Jul-98 **** ******** ******** ******** ********
24 13-Jul-98 **** ******** ******** ******** ********
25 20-Jul-98 **** ******** ******** ******** ********
26 27-Jul-98 **** ******** ******** ******** ********
27 03-Aug-98 **** ******** ******** ******** ********
</TABLE>
10/15/97 ******* 1 of 2
88
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
Production Schedule
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
28 10-Aug-98 **** ******** ******** ******** ********
29 17-Aug-98 **** ******** ******** ******** ********
30 24-Aug-98 **** ******** ******** ******** ********
31 31-Aug-98 **** ******** ******** ******** ********
32 07-Aug-98 **** ******** ******** ******** ********
33 14-Sep-98 **** ******** ******** ******** ********
34 21-Sep-98 **** ******** ******** ******** ********
35 25-Sep-98 **** ******** ******** ******** ********
36 05-Oct-98 **** ******** ******** ******** ********
37 12-Oct-98 **** ******** ******** ******** ********
38 19-Oct-98 **** ******** ******** ******** ********
39 26-Oct-98 **** ******** ******** ******** ********
</TABLE>
Assumption: ******** for VITEX QA release
10/15/97 ******** 2 of 2
89
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
Production Schedule
<TABLE>
<CAPTION>
Week Week of Number Incoming Saleable Units Cumulative
of Fills Liters Units Released Released
<S> <C> <C> <C> <C> <C> <C>
03-Nov-97 **** ******** ********
10-Nov-97 **** ******** ********
17-Nov-97 **** ******** ********
24-Nov-97 **** ******** ********
01-Dec-97 **** ******** ********
08-Dec-97 **** ******** ********
15-Dec-97 **** ******** ********
Training 22-Dec-97 **** ******** ********
Training 29-Dec-97 **** ******** ******** ********
05-Jan-98 **** ******** ******** ********
12-Jan-98 **** ******** ******** ********
19-Jan-98 **** ******** ******** ********
26-Jan-98 **** ******** ******** ********
02-Feb-98 **** ******** ******** ********
09-Feb-98 **** ******** ******** ********
16-Feb-98 **** ******** ******** ********
23-Feb-98 **** ******** ******** ********
02-Mar-98 **** ******** ******** ********
09-Mar-98 **** ******** ******** ********
1 16-Mar-98 **** ******** ******** ******** ********
2 23-Mar-98 **** ******** ******** ******** ********
3 30-Mar-98 **** ******** ******** ******** ********
4 06-Apr-98 **** ******** ******** ******** ********
5 13-Apr-98 **** ******** ******** ******** ********
6 20-Apr-98 **** ******** ******** ******** ********
7 27-Apr-98 **** ******** ******** ******** ********
8 04-May-98 **** ******** ******** ******** ********
9 11-May-98 **** ******** ******** ******** ********
10 18-May-98 **** ******** ******** ******** ********
11 25-May-98 **** ******** ******** ******** ********
12 01-Jun-98 **** ******** ******** ******** ********
13 08-Jun-98 **** ******** ******** ******** ********
14 15-Jun-98 **** ******** ******** ******** ********
15 22-Jun-98 **** ******** ******** ******** ********
16 29-Jun-98 **** ******** ******** ******** ********
17 06-Jul-98 **** ******** ******** ******** ********
18 13-Jul-98 **** ******** ******** ******** ********
19 20-Jul-98 **** ******** ******** ******** ********
</TABLE>
10/15/97 ******** ******** 1 of 2
90
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
Production Schedule
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
20 27-Jul-98 **** ******** ******** ******** ********
21 03-Aug-98 **** ******** ******** ******** ********
22 10-Aug-98 **** ******** ******** ******** ********
23 17-Aug-98 **** ******** ******** ******** ********
24 24-Aug-98 **** ******** ******** ******** ********
25 31-Aug-98 **** ******** ******** ******** ********
26 07-Aug-98 **** ******** ******** ******** ********
27 14-Sep-98 **** ******** ******** ******** ********
28 21-Sep-98 **** ******** ******** ******** ********
29 25-Sep-98 **** ******** ******** ******** ********
30 05-Oct-98 **** ******** ******** ******** ********
31 12-Oct-98 **** ******** ******** ******** ********
32 19-Oct-98 **** ******** ******** ******** ********
33 26-Oct-98 **** ******** ******** ******** ********
34 02-Nov-98 **** ******** ******** ******** ********
35 09-Nov-98 **** ******** ******** ******** ********
36 16-Nov-98 **** ******** ******** ******** ********
37 23-Nov-98 **** ******** ******** ******** ********
38 30-Nov-98 **** ******** ******** ******** ********
39 07-Dec-98 **** ******** ******** ******** ********
</TABLE>
Assumption: ******** for VITEX QA release and ********
10/15/97 ******** ******** 2 of 2
91
<PAGE>
SCHEDULE 3.11
TESTING
-------
92
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
M E M O R A N D U M
V I T E X
---------
TO Joanne Leonard
FROM: Roger Kelley
DATE: October 29, 1997
RE: ARC Testing of SD Plasma
- --------------------------------------------------------------------------------
As per your request of 10/28: the testing we would like the ARC labs (preferably
the National Testing Laboratory in Philadelphia) to perform on each lot of SD
Plasma is for ****************************************************************
We would probably send the samples once a week by overnight express *****
************************************************** Testing should be completed
by ARC within **** calendar days of receipt, with the results to be faxed to
Vitex on or before the ****. The hard copy of the results should also be
mailed out by the ****. Fax results to the attention of Dr. Roger Kelley at
515-752-8754. Note: the contract should also reserve the right for Vitex to
conduct periodic GMI compliance audits of the testing laboratory (FDA requires
this).
If necessary, we could send the samples out more frequently than once per week
but this would needlessly increase our shipping costs without any concomitant
decrease in release time.
Please let me know if you have any additional questions or need any additional
information.
93
<PAGE>
SCHEDULE 3.3
ANRC MARKETING EXPENSES PROPOSAL
--------------------------------
94
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
SCHEDULE 3.3
ANRC MARKETING EXPENSES PROPOSAL
--------------------------------
The ANRC agrees to contribute and budget expenses for direct marketing,
direct selling, promotional, educational, advertising and similar activities, as
follows and subject to conditions outlined below:
******** months) - **********
********** months) - **********
Conditions
- ----------
VITEX continues to meet minimum supply requirements.
The ANRC budget will not include fixed overhead (e.g. fixed personnel
expenses) travel and entertainment expends (except as part of a project or
event specific targeted to a customer audience), marketing research, or
advertising agency retainer fees.
All moneys spent for the express marketing of the Product.
VITEX contributions not allocable to the ANRC direct sales force selling
time expense.
Up to ********** of the ANRC contribution to marketing may be allocated to
sales force expense.
95
<PAGE>
SCHEDULE 4.5
VITEX MARKETING EXPENSES PROPOSAL
---------------------------------
96
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
SCHEDULE 4.5
VITEX MARKETING EXPENSES PROPOSAL
---------------------------------
VITEX agrees to contribute to and budget for direct marketing expenses for the
Product as follows and subject to the conditions outlined below:
**** months ****= **********
**** months ****= **********
Conditions:
- ----------
The ANRC continues to meet minimum purchase requirements
VITEX budget will not include fixed overheads (e.g. personnel expenses),
travel and entertainment expenses (except as part of a project or event
expense for agreed upon target audience), market research, or advertising
agency retainer fees.
All monies spent for the express benefit of the Product Proprietary
Technology.
VITEX contributions not allocable to ANRC direct sales force selling time
expense.
97
<PAGE>
SCHEDULE 5.8
RECORDS AND REPORTS
-------------------
98
<PAGE>
SCHEDULE 5.8
RECORDS AND REPORTS
-------------------
The Reports should discriminate sales (dollars and unit of the Product and
Input) as well as marketing activities directed at customers within a region or
locality by customer class (blood center, hospital and/or other customer).
a) Sales: Nationally, be region, by account, by month and quarter, dollars
and units
b) Sales activity reporting: Nationally, by region, by account, by customer
type/class, by quarter, by representative, including provision for
monitoring targeted special activities, e.g. teleconferences, speakers,
training, etc.
c) Database of contracts pending or entered into, by relevant terms:
cost/price, volume, plasma re-purchases ("buy side"), by customer type
and class, i.e. blood center, hospital, blood bank, end-user,
intermediaries (BCA), etc.
99
<PAGE>
SCHEDULE 6.3
INSURANCE COVERAGE
------------------
100
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
SCHEDULE 6.3
INSURANCE COVERAGE
------------------
Each Party shall maintain at all times during this Agreement the following
insurance policies at its sole cost and expense:
(a) (1) Commercial General Liability Insurance in an amount of at least
********* naming the other Party an additional insured as its
interests may appear;
(2) an auto liability policy with at least ********** in coverage,
and;
(3) Workers' Compensation coverage covering each Party's own
employees with statutory limits for each jurisdiction where the work
required under this Agreement is performed (including monopolistic
states if any work is to be performed in one or more of them) and an
employers' liability policy with at least the following limits:
********** per accident, ********** per disease, and ********** per
disease (each employee).
(b) (1) VITEX further agrees to maintain full replacement value "All
Risk" property insurance on all property and equipment of VITEX used
under this Agreement, and said property insurance shall insure at all
times all the Product and VITEX agrees to waive any right of
subrogation for loss or damage to any VITEX property at, on, or in
VITEX's facilities or in transit. VITEX agrees to obtain, if required
in such property insurance, a waiver of subrogation in favor of the
ANRC. Said property insurance shall include Business Interruption and
Extra Expense coverage for such losses arising from loss or damage to
the
101
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
aforementioned VITEX property without expectation of contribution from
any such insurance the ANRC may maintain.
(2) VITEX further agrees to maintain Product Liability Insurance in
an amount not less than ********** specifically insuring claims
arising from the development, manufacture and use of the Product and
the performance by VITEX of its services to the ANRC, as defined in
this Agreement and related material, including, but not limited to,
coverage for all expenses, including attorney's fees, incurred in the
investigation, negotiation, arbitration, and defense of any suit or
claim for damages including lost earnings of the ANRC. Said Product
Liability Insurance shall not exclude claims of a professional nature
arising from VITEX's development of the viral inactivation process.
(c) (1) The ANRC further agrees to maintain Professional Liability
Insurance (including medical malpractice) in an amount not less than
********** specifically insuring claims arising from performance by
the ANRC of its services to VITEX as defined in this Agreement and
related material, including, but not limited to, coverage for all
expenses, including attorney's fees, incurred in the investigation,
negotiation, arbitration, and defense of any suit or claim for damages
including lost earnings of VITEX.
102
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
EXHIBIT 10.14
AMENDED AND RESTATED
COLLABORATION AGREEMENT
AMONG
AMERICAN NATIONAL RED CROSS,
NEW YORK BLOOD CENTER, INC.
AND
V.I. TECHNOLOGIES, INC.
THIS AMENDED AND RESTATED COLLABORATION AGREEMENT (the "Restated
Agreement") entered into this 15th day of December, 1997, (the "Effective Date")
by and between the American National Red Cross, a congressionally chartered not
for profit corporation, with its headquarters at 8111 Gatehouse Road, Falls
Church, Virginia 22042 (the "ANRC"), New York Blood Center, Inc., a New York
not-for-profit corporation, with its headquarters at 310 East 67th Street, New
York, New York 10021 (the "NYBC"), and V.I. Technologies, Inc., a Delaware for-
profit corporation, with its headquarters at 155 Duryea Road, Melville, New York
11747 (formerly known as Melville Biologics, Inc., "VITEX").
WHEREAS, the ANRC and the NYBC entered into that certain Collaboration
Agreement dated February 22, 1991 (the "Original Agreement"); and.
WHEREAS, the ANRC, the NYBC and VITEX have entered into a First Amendment
and Restatement of the Original Agreement on July 22, 1996 (the "First Restated
Agreement"); and
WHEREAS, with the consent of the NYBC, the ANRC and VITEX have
contemporaneously entered into a Supply, Manufacturing, and Distribution
Collaboration Agreement
<PAGE>
(the "Distribution Agreement") providing for (a) VITEX's processing of Input (as
hereinafter defined) provided by the ANRC and manufacturing of the Product (as
hereinafter defined) by VITEX, and (b) VITEX's granting the ANRC certain
distribution rights to the Product; and
WHEREAS, the mission of the ANRC is to fulfill the needs of the American
people for the safest, most reliable and most cost-effective blood, plasma and
tissue services through voluntary donations; and
WHEREAS, the ANRC entered into the Original Agreement, the First Restated
Agreement, the Distribution Agreement and this Restated Agreement so as to
materially enhance the safety of the Input (as hereinafter defined) to aid and
assist in advancing the health and well-being of as many people as possible and
thereby furthering the charitable mission of the ANRC.
NOW, THEREFORE, the NYBC, the ANRC and VITEX agree to amend and restate the
First Restated Agreement in its entirety by agreeing to the following:
ARTICLE I
---------
DEFINITIONS
2
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
1.1 "ANRC Know-How" shall mean all proprietary technical information,
including processes, formulae, designs and data, owned or possessed in whole or
in party by the ANRC relating to the manufacture or use of the Product.
1.2 "Expansion" shall mean the expansion (i.e., facility and equipment)
of the Melville Plant to accommodate the processing of up to ******************
*******************.
1.3 "Input" shall mean human blood plasma provided to VITEX by the ANRC
pursuant to the terms of the Distribution Agreement which plasma meets the
specifications set forth in the Distribution Agreement.
1.4 "FDA" shall mean the U.S. Food and Drug Administration or any
successor agency.
1.5 "Know-How" shall mean VITEX Know-How and ANRC Know-How.
1.6 "Melville Plant" shall mean the manufacturing facility licensed by
the FDA, located in Melville, New York, and occupied and controlled by VITEX.
1.7 "PLA" shall mean a Product License Application submitted to and for
approval by the FDA. "S/D Plasma PLA" shall mean the PLA for solvent/detergent-
treated human blood plasma for transfusion submitted by the NYBC for filing with
the FDA on February 28, 1993, as revised on July 11, 1994. Pursuant to the
Amended and Restated Asset Transfer Agreement between the NYBC
3
<PAGE>
and VITEX, dated February 7, 1995 (the "Asset Transfer Agreement"), the S/D
Plasma PLA was transferred from the NYBC to VITEX.
1.8 "Product" shall mean the product referenced in the S/D Plasma PLA,
which product is a human blood plasma, pooled and treated to inactivate virus
and intended for transfusion as such or following minor changes in composition.
Purified plasma derivatives, such as coagulation factor concentrates,
fibrinogen, or immunoglobulin, prepared from virus-inactivated plasma, are not
covered by this Agreement and the Distribution Agreement. The Product is also
known under the names VIPLAS/SD, Plas Plus or S/D Plasma and conforms to the
specifications set forth in the Distribution Agreement.
1.9 "Units(s)" shall mean two hundred (200) milliliters of frozen liquid
Product, prepared within VITEX's manufacturing specifications and intended for
use in patients.
1.10 "VITEX Know-How" shall mean all proprietary technical information,
including processes, formulae, designs and data, owned or possessed in whole or
in part by the NYBC and/or VITEX relating to the manufacture or use of the
Product.
4
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
ARTICLE II
----------
PAYMENTS
2.(a) As of the Effective Date, the ANRC has loaned VITEX three million
dollars ($3,000,000) (the "Expansion Fee") for the Expansion. Such Expansion Fee
is a loan that shall be repaid by VITEX to the ANRC in accordance with Sections
2(b) and 2(c).
2.(b) VITEX shall amortize the Expansion Fee at the rate of fifteen
percent (15%) per year for five (5) years following approval of the S/D Plasma
PLA, provided, however, that during Period One (as defined in the Distribution
Agreement), the ANRC shall provide ******* units of Input, and further provided,
that during Period Two (as defined in the Distribution Agreement) and every
Subsequent Period(s) (as defined in the Distribution Agreement), the ANRC shall
provide ******* units of Input, all in accordance with the Distribution
Agreement. The balance of the Expansion Fee will be payable in the fifth
anniversary of the approval of the S/D Plasma PLA.
2.(c) If in any year the ANRC fails to provide the Input as set forth in
Section 2(b), the amortization of the Expansion Fee for such year shall be
prorated accordingly.
5
<PAGE>
ARTICLE III
-----------
CONFIDENTIALITY
3.1 Each party agrees not to disclose any Know-How or other proprietary
information provided to it pursuant to the Restated Agreement. This obligation
shall not apply to any such information which:
(a) Is or subsequently becomes known to the public through no
fault of the disclosing party.
(b) Was in the possession of the disclosing party prior to
disclosure hereunder as established by documentation within thirty
(30) days of disclosure.
(c) Is obtained from a third party who or which has the right to
disclose same.
(d) Is disclosed to governmental, authorities in response to a
lawful order or demand for disclosure or in order to obtain required
consents, permits, licenses or other approvals relating to the
processing, use or sale of Product.
3.2 Each party agrees to treat as confidential the terms and conditions
of the Restated Agreement.
3.3 The provisions of this Article shall survive termination,
cancellation or expiration of the Restated Agreement.
6
<PAGE>
3.4 To the extent there are any inconsistencies with respect to
confidentiality between the Restated Agreement and the Distribution Agreement,
the Distribution Agreement shall control.
ARTICLE IV
----------
TERM
The Restated Agreement shall terminate upon repayment of the Expansion Fee
to the ANRC. Termination of the Restated Agreement shall not affect Article
III, which shall survive such termination.
ARTICLE V
---------
NOTICES
Any notice, report or other communication required or permitted to be given
or made under the Restated Agreement by one of the parties to the other shall be
in writing and shall be deemed to have been sufficiently given or made for all
purposes if mailed by certified mail, postage prepaid, or by facsimile,
confirmed forthwith in written dispatch as described herein, addressed to such
other party at its respective address as follows:
7
<PAGE>
If to the NYBC: New York Blood Center, Inc.
310 East 67th Street
New York, New York 10021
Attention: Miriam Sparrow, Esq.
If to VITEX: V.I. Technologies, Inc.
155 Duryea Road
Melville, New York 11747
Attention: President
Facsimile: (516) 752-8754
with a copy to: Crummy, Del Deo, Dolan, Griffinger & Vecchione
One River Front Plaza
Newark, New Jersey 07102
Attention: Frank Lawatsch, Jr.
Facsimile: (973) 639-6249
If to the ANRC: American National Red Cross
1616 Fort Myer Drive, 17th Floor
Rosslyn, Virginia 22209-3100
Attention: Christopher Lamb, Esq.
with a copy to: Office of General Counsel
1616 Fort Myer Drive, 18th Floor
Rosslyn, Virginia 2209-3100
Facsimile: (703) 312-5728
ARTICLE VI
----------
RELATIONSHIP WITH THE NEW YORK BLOOD CENTER
The ANRC and the NYBC agree to negotiate in good faith an agreement under
which the ANRC will provide the NYBC with the opportunity to purchase the
Product at reasonable cost and, subject to equitable allocation required in the
event of unavailability of the Product, in
8
<PAGE>
quantities that the NYBC deems sufficient for its needs. The agreement between
the ANRC and the NYBC will insure that the ANRC will supply the Product on terms
which are commercially reasonable and no less favorable than those granted to
any other purchaser of the Product.
ARTICLE VII
-----------
GOVERNING LAW
The Restated Agreement shall be construed and the rights of the parties
governed in accordance with the laws of the State of New York, without regard to
principles of conflicts of law, including matters of validity, construction,
performance and remedy.
ARTICLE VIII
------------
ENTIRE AGREEMENT; AMENDMENT
The Restated Agreement, and the Distribution Agreement set forth the entire
understanding and agreement of the parties with respect to the subject matter
contained herein and may not be modified or amended except as expressly stated
herein or by a written agreement duly executed by all parties hereto.
9
<PAGE>
ARTICLE IX
----------
DISTRIBUTION AGREEMENT
To the extent the Distribution Agreement may be deemed an amendment to the
First Restated Agreement, the NYBC consents to such amendment, but such consent
shall not be deemed a consent to the terms and conditions of the Distribution
Agreement to which it is not a party.
10
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused the Restated Agreement to be
executed in triplicate by their duly authorized representatives.
AMERICAN NATIONAL RED CROSS NEW YORK BLOOD CENTER, INC.
SIGNATURE: SIGNATURE:
NAME: NAME:
TITLE: TITLE:
DATE: DATE:
V.I. TECHNOLOGIES, INC.
SIGNATURE:
NAME:
TITLE:
DATE:
11
<PAGE>
EXHIBIT 10.15
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
JOINT DEVELOPMENT,
MARKETING AND DISTRIBUTION AGREEMENT
BETWEEN
PALL CORPORATION
AND
V.I. TECHNOLOGIES, INC.
FEBRUARY 19, 1998
THIS FORM OF AGREEMENT IS SUBJECT TO REVISION UPON APPROPRIATE NOTIFICATION AND
SHALL BE KEPT CONFIDENTIAL PURSUANT TO THE TERMS OF THE MUTUAL NON-DISCLOSURE
AGREEMENT ENTERED INTO BETWEEN PALL CORPORATION AND V.I. TECHNOLOGIES, INC. AS
OF MARCH 21, 1997.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
BACKGROUND 1
ARTICLE I DEFINITIONS......................................................... 1
Section 1.01 Defined Terms............................................... 1
Section 1.02 Other Definitional Provisions............................... 6
ARTICLE II COOPERATIVE DEVELOPMENT............................................ 7
Section 2.01 Cooperative Development..................................... 7
Section 2.02 Management Board............................................ 7
(a) Constitution.................................................... 7
(b) Voting.......................................................... 7
(c) Deadlock........................................................ 7
(d) Responsibilities of Management Board............................ 7
Section 2.03 Review of Project Plan, Budget and Timetable................ 9
Section 2.04 Exchange of Information..................................... 9
Section 2.05 Inventions.................................................. 9
(a) Joint Inventions................................................ 9
(b) Sole Inventions................................................. 9
(c) Patent Prosecution of Inventions................................10
Section 2.06 Cost-Sharing................................................10
(a) Cost-Sharing Generally..........................................10
(b) Recordkeeping...................................................10
(c) Management Board Costs..........................................10
Section 2.07 Budget Contingencies........................................10
(a) Exceeding Previously Established Budget.........................10
(b) Reconciliation of Expenditures..................................11
Section 2.08 Responsibilities of Parties.................................11
ARTICLE III SUPPLY OF VITEX INACTIVATION COMPOUNDS AND SYSTEM MANUFACTURING...11
Section 3.01 Pall Responsibilities.......................................11
Section 3.02 Vitex Responsibilities......................................11
Section 3.03 Reference Set Production....................................12
Section 3.04 Systems Specifications......................................12
Section 3.05 Vitex Specifications........................................12
Section 3.06 Source of Supply............................................12
Section 3.07 Failure of Vitex to Meet Pall Requirements..................12
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
Section 3.08 System Improvements......................................... 13
ARTICLE IV MARKETING AND EXCLUSIVE DISTRIBUTION RIGHTS........................ 13
Section 4.01 Appointment as Exclusive Distributor........................ 13
Section 4.02 Meetings Concerning Marketing............................... 13
Section 4.03 Responsibilities of the Parties during the Exclusive
Distributorship Period...................................... 13
(a) Pall Responsibilities........................................... 13
(b) Vitex Responsibilities.......................................... 13
Section 4.04 Revenue Sharing............................................. 14
Section 4.05 NYBC....................................................... 14
ARTICLE V PATENTS, KNOW-HOW, AND LICENSE GRANTS............................... 14
Section 5.01 Vitex Sole Ownership........................................ 14
Section 5.02 Pall Sole Ownership......................................... 14
Section 5.03 Regulatory Files............................................ 14
Section 5.04 License of Vitex Patents and Vitex Know-How................. 15
ARTICLE VI PROSECUTION OF PATENT RIGHTS....................................... 15
Section 6.01 Vitex Patents............................................... 15
Section 6.02 Pall Patents................................................ 15
Section 6.03 Joint Patents............................................... 15
Section 6.04 Material; Review and Comment................................ 15
Section 6.05 Election Not to Pay Expenses................................ 15
ARTICLE VII TRADEMARKS........................................................ 16
Section 7.01 Pall Trademarks............................................. 16
Section 7.02 Vitex Trademarks............................................ 16
ARTICLE VIII REGULATORY REQUIREMENTS.......................................... 16
Section 8.01 Recalls..................................................... 16
Section 8.02 Compliance With Other Regulatory Requirements............... 17
Section 8.03 Press Releases.............................................. 17
ARTICLE IX CONFIDENTIAL INFORMATION........................................... 18
Section 9.01 General..................................................... 18
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
Section 9.02 Exceptions.................................................. 18
Section 9.03 Survival.................................................... 19
ARTICLE X ADDITIONAL SYSTEMS.................................................. 19
ARTICLE XI REPORTS............................................................ 19
Section 11.01 Quarterly Sales Reports.................................... 19
Section 11.02 Cost of Goods/Reference Revenue............................ 20
Section 11.03 Vitex Reports.............................................. 20
ARTICLE XII BOOKS AND RECORDS................................................. 20
Section 12.01 Records.................................................... 20
Section 12.02 Retention.................................................. 20
ARTICLE XIII TERM AND TERMINATION............................................. 21
Section 13.01 Term....................................................... 21
Section 13.02 Termination by Agreement................................... 21
Section 13.03 Termination for Cause...................................... 21
ARTICLE XIV REPRESENTATIONS, WARRANTIES, COVENANTS
AND INDEMNITIES............................................................... 22
Section 14.01 Vitex Representations...................................... 22
Section 14.02 Vitex Indemnification: Representations and Warranties...... 25
Section 14.03 Vitex Indemnification: Products............................ 25
Section 14.04 Material Breach: Patents................................... 26
Section 14.05 Vitex Insurance............................................ 26
Section 14.06 Pall Representations....................................... 26
Section 14.07 Pall Indemnification: Representations and Warranties....... 28
Section 14.08 Pall Indemnification: Products............................. 28
Section 14.09 Pall Insurance............................................. 28
Section 14.10 Covenants and Assurances of Pall and Vitex................. 28
(a) Mutual Covenants of the Parties................................. 28
(b) Covenants of Vitex.............................................. 29
ARTICLE XV INFRINGEMENT....................................................... 30
Section 15.01 Defense of Third Party Infringement Suits.................. 30
Section 15.02 Third Party Patent Expenses................................ 30
</TABLE>
iii
<PAGE>
<TABLE>
<S> <C>
Section 15.03 Suits for Infringement by Others........................... 31
(a) Joint Patents................................................... 31
(b) Vitex Patents; Vitex Know-How; Pall Patents; Pall Know-How...... 31
ARTICLE XVI MISCELLANEOUS..................................................... 32
Section 16.01 Notices.................................................... 32
Section 16.02 Entire Agreement........................................... 33
Section 16.03 Amendments................................................. 33
Section 16.04 Deadlocks: Governing Law; Arbitration...................... 33
Section 16.05 Disputes Other than Deadlocks.............................. 33
Section 16.06 Assignment................................................. 34
Section 16.07 Binding Effect............................................. 34
Section 16.08 Waivers.................................................... 34
Section 16.09 Partial Invalidity......................................... 34
Section 16.10 Severability............................................... 34
Section 16.11 Governing Law; Consent to Jurisdiction..................... 34
Section 16.12 Costs and Attorneys' Fees.................................. 35
Section 16.13 Counterparts............................................... 35
</TABLE>
iv
<PAGE>
Page [Section]
Exhibits Reference
-------- --------------
Exhibit A - Pall Patents 4 [Article 1]
Exhibit B - Vitex Patents 6 [Article 1]
Exhibit C - Cooperative Development Exceptions 7 [2.01]
Exhibit D - Vitex Representation Exceptions 22 [14.01]
Exhibit E - Amendment to Exclusive License 24 [14.01(h)]
Agreement (#5) For Virally Inactivated
Cellular Products
Exhibit F - License Agreements to be Amended 29 [14.10(b)]
v
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
THIS JOINT DEVELOPMENT, MARKETING AND DISTRIBUTION AGREEMENT (the
"Agreement") is made between PALL CORPORATION, a New York corporation ("Pall")
with principal offices at 2200 Northern Blvd., East Hills, New York 11548, and
V.I. TECHNOLOGIES, INC., a Delaware corporation ("Vitex") with principal offices
at 155 Duryea Road, Melville, New York 11747, dated as of the 19th day of
February, 1998.
BACKGROUND
Vitex has developed proprietary compounds for the inactivation of
viruses and pathogens for the decontamination of certain blood products. Pall
has developed a variety of filtration products including those relating to the
collection, preservation, processing, manipulation, storage and treatment of
blood and blood components.
Pall and Vitex wish to combine their efforts and resources in the
development and commercialization of systems consisting of instrumentation,
disposables and compounds for use in the inactivation of viruses and pathogens
for the decontamination of red blood cells and/or platelets in either whole
blood, packed red cells, platelet concentrates or apheresis platelets.
ARTICLE I
DEFINITIONS
-----------
SECTION 1.01 DEFINED TERMS. The capitalized words in this Agreement
-------------
shall have the meanings assigned to them in this Article I.
"AFFILIATE" with respect to any Person, means any other Person that
-----------
directly or indirectly, through one or more intermediaries, controls or is
controlled by or is under common control with the Person specified.
"CARRYING COSTS" means the cost of capital employed (including
----------------
inventory plus receivables plus net fixed assets used in or dedicated to the
development, manufacture, marketing and distribution of the Systems, less
payables), which shall be calculated on the last day of the previous fiscal
quarter of Pall by multiplying such capital by the prevailing Federal Funds rate
as adjusted from time to time, as published in The Wall Street Journal and
-----------------------
determined on the first day of each fiscal quarter of Pall.
********** ************ **** ***** * ******* ********** **
****************************
************ ******** ******** **** * ********* *** ** *** ***** ******** ** *
********* ****
"COOPERATIVE DEVELOPMENT WORK" means the Cooperative Development Work
------------------------------
defined in Section 2.01 of this Agreement.
1
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
***** ** ****** ****** *** ****** **** ** ****** *** **** **
***************
********** ******** *** * ********* ************ *** ** ** ************
********* ********* *** *** ******* ** ***** ************ ********* *********
*** ************* ****** ******* ******** ******** *** ************ ****** ****
**** ***** ** ** ********** ** ********** **** **** *** ****** ** ******* ***
*** **** *** *** ***** ********** ******* ** ******* ** * ********** ***** ***
** ******** ** *** ********** ****** ********* ******** **** **** ** ***** *****
******** ********
*** ******* *** ******* ******** ** ************ ******** ******* ** *****
******* ******** ** ************ ******** ******* ******* ** **** **********
****** *** ********** ********* ** ******* ***** ** **** *********** *******
************ *** ********** ****** ********* *** *********** *************
******** ***** **** *** ******** *** ******** ** **** ** ***** ** ******** **
*** ********** ******
*******************************************************************
********************************************************
*** ** *** ************ ******** ** **** ** * *********** ***** ******
**** ** ****** **
*** ** *** ************ ******** ** **** ** * **** ** * *********
************ **** ****** **** ** ***** *** *** ************ ******** **** ******
********* ********
"DOLLARS" AND "$" means dollars in lawful currency of the United
-----------------
States of America.
"FDA" means the United States Food and Drug Administration.
-----
"FULLY ALLOCATED MANUFACTURING COST" means the cost of direct
------------------------------------
materials, direct labor (which includes fringe benefits), other direct
manufacturing costs, including, but not limited to, factory costs, and indirect
costs, such as supervisory and support labor, supplies, utilities, machinery and
equipment maintenance costs (including associated depreciation) and plant
operating and maintenance costs (including associated depreciation).
"GAAP" means generally accepted accounting principles in the United
------
States of America in effect from time to time as applied by Pall or Vitex, as
the case may be, on a consistent basis.
"GOOD MANUFACTURING PRACTICES" means "good manufacturing practices" as
------------------------------
defined by the FDA (including under 21 C.F.R. Part 820), or other Governmental
Authority with respect to the Vitex Inactivation Compounds.
2
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
"GOVERNMENTAL AUTHORITY" means any nation or government, any state or
------------------------
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
********************************************************************
******************************************************************************
******************************************************************************
**********************************
"INSTRUMENTATION" means light boxes developed and manufactured by or
-----------------
for Vitex which are part of the Systems necessary for activating the Vitex
Inactivation Compounds.
"INVENTIONS" means any and all technical information, applications,
------------
data or knowledge developed or acquired in the performance of or through
cooperation under this Agreement, including but not limited to operating
conditions, process designs, specifications, drawings, devices, technology,
discoveries and know-how relating thereto, whether or not these would be
patentable.
"JOINT PATENTS" means patents which have been obtained for a Joint
---------------
Invention in accordance with Section 6.03 of this Agreement.
"KNOWLEDGE" means the actual knowledge of any executive officer of
-----------
Pall or Vitex.
"LOSS" for any given System configuration means the amount by which
------
the sum of (i) Carrying Costs, (ii) Pall's Costs of Goods/Reference Revenue,
(iii) Pall's Marketing and Administrative Expenses and (iv) Vitex's Cost of
Goods exceeds Net Sales.
"MANAGEMENT BOARD" means the Management Board created pursuant to
------------------
Section 2.02 of this Agreement.
"MARKETING AND ADMINISTRATIVE EXPENSES" for Pall in any calendar year
---------------------------------------
means Pall's costs incurred for the marketing, selling and administering
(customer support) of the Systems, as the Management Board shall approve from
time to time.
"NET SALES" means the amount invoiced by Pall for sales of either a
-----------
*****************************************************************; less credits
or allowances, if any, for rejections or returns; less customary trade discounts
actually given; less customs and duties paid; less bad debts; less separately
invoiced and actually incurred taxes and other charges of any Governmental
Authority that are imposed directly on or measured by the sale, transfer,
transportation, delivery or use (but excluding taxes on net income). *********
********************************************************************************
********************************************************************************
****************************************************************
3
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
*** ***** ********* ************* **** ** *** ****** **** ** ********** **** **
*** **** ***** ********** ******** ** *** ********** ******
"PALL KNOW-HOW" means unpatented inventions, applications, data,
---------------
processes, compositions, techniques and other technical information proprietary
to Pall, which are solely owned by Pall or which Pall has the right to control
the use of, relating to the Systems, including methods for manufacture *********
************************************************ or any portions thereof.
"PALL PATENTS" means all United States and foreign patent applications
--------------
and patents that relate to the Systems or any portion thereof or methods for
manufacture or use thereof, owned by Pall or licensed to Pall with the right to
sublicense and claiming an invention conceived solely by employees and/or agents
and/or licensors of Pall both prior to the date of this Agreement and during the
term of this Agreement pursuant to the Cooperative Development Work, including
any continuations, divisions, reissues, re-examinations and all foreign
counterparts thereof, as set forth in Exhibit A hereto.
---------
"PALL'S FIELD OF USE" means filtration, separation, filters, filter
---------------------
media and supports and their design and manufacture.
"PERSON" means any individual, corporation, partnership, association,
--------
joint-stock company, trust, unincorporated association, joint venture or
Governmental Authority.
"PROFIT" for any given System configuration means Net Sales minus
--------
******** ****** ***** *** ********* *** *** *** ****** **** ** ***************
******* **** **** ****** ********* *** ************** ******** **** *****
******* **** ** ******
"PROJECT PLAN" means the project plan detailing the responsibilities
--------------
of the parties and the projected milestones for the Cooperative Development Work
as approved by the Management Board and as amended from time to time by the
Management Board.
"REFERENCE REVENUE" means for any ********* ************ *** ** ***
-------------------
***** ***** *** ******* *** ***** ***** ** * **** * ********* *** ** * **** **
********* **** ** *** **** *** ** ***** ****** ********* *** **************
******** ** ********** **** **** ********* *****, based on sales during the
three calendar months prior to the date of determination, or, in the case of
**** *** ********* ************ **** ***** ** ***** ** **** * ********* **** **
**** ** ********* ***** ** ************ during the three calendar months prior
to the first sale of such ********* ************ *** (the "Initial Reference
Revenue"). Reference Revenue shall be determined once every three months.
*******************************************************************
****
4
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
"REGULATORY APPROVALS" means (1) in the United States, approval from
----------------------
the FDA for marketing and promotion of the System, or (2) outside of the United
States, an analogous order by a non-U.S. Governmental Authority which requires
regulatory approval prior to marketing and promotion of a System in such non-
U.S. country.
"REVENUE SHARING PAYMENTS" means the payments described in Section
--------------------------
4.04.
"SPECIFICATIONS FOR THE VITEX INACTIVATION COMPOUNDS" means the
-----------------------------------------------------
performance, quality and reliability standards which the Management Board
requires for the Vitex Inactivation Compounds to be acceptable for commercial
implementation, promulgated by the Management Board in accordance with Section
2.02(a) of this Agreement and in conformity with any applicable FDA
requirements. Such Specifications shall include a provision that the Vitex
Inactivation Compounds be made according to Good Manufacturing Practices or (if
Vitex shall elect to manufacture the Vitex Inactivation Compounds outside the
United States) other applicable regulatory authority.
*****************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
*****************************************************
***************************************************************
**************************************************************
"SYSTEMS SPECIFICATIONS" means such performance, cost, quality and
------------------------
reliability requirements as the Management Board agrees must be met by a System
in order for the System to be acceptable for marketing and distribution under
this Agreement.
*******************************************************************
********************************************************************************
********************************************************************************
****
******************************************************************
********************************************************************************
***************
"VITEX INACTIVATION COMPOUNDS" means the compounds developed by Vitex
------------------------------
for the inactivation of viruses and pathogens in red blood cells.
"VITEX KNOW-HOW" means unpatented inventions, applications, data,
----------------
processes, compositions, techniques and other technical information proprietary
to Vitex, which is solely owned by Vitex or which Vitex has the right to control
the use of, relating to the Systems,
5
<PAGE>
including methods for manufacture or use of Vitex Inactivation Compounds and
Systems or portions thereof.
"VITEX PATENTS" means all United States and foreign patent
---------------
applications and patents that relate to the Vitex Inactivation Compounds or
compositions or formulations thereof, or otherwise relating to a System or
portion thereof, or methods for manufacture or use of such System or Vitex
Inactivation Compounds owned by or licensed to Vitex with the right to
sublicense and claiming an invention conceived solely by employees and/or agents
and/or licensors of Vitex both prior to the date of this Agreement and during
the term of the Cooperative Development Work, including any continuations,
divisions, reissues, reexaminations and all foreign counterparts thereof, as set
forth in Exhibit B hereto.
---------
"VITEX'S FIELD OF USE" means Vitex's processes or compounds for
----------------------
inactivating viruses and pathogens in red blood cells, platelets and other blood
products and components.
SECTION 1.02 OTHER DEFINITIONAL PROVISIONS. In addition to the terms
-----------------------------
defined in Section 1.01, the following terms are defined in the Sections of this
Agreement noted below:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
Term Section
- ----- -------
- --------------------------------------------------------------------------------------
<S> <C>
AAA 16.04(a)
- --------------------------------------------------------------------------------------
Agreement Preamble
- --------------------------------------------------------------------------------------
Advance 2.07(a)
- --------------------------------------------------------------------------------------
Confidential Information 9.01
- --------------------------------------------------------------------------------------
Cooperative Development Work 2.01
- --------------------------------------------------------------------------------------
Cure Period 13.03(b)
- --------------------------------------------------------------------------------------
Defaulting Party 13.03(a)
- --------------------------------------------------------------------------------------
EFOS 3.02
- --------------------------------------------------------------------------------------
Exclusive Distributor 4.01
- --------------------------------------------------------------------------------------
Exclusive Distributorship Period 4.01
- --------------------------------------------------------------------------------------
Fair Price 13.03(d)
- --------------------------------------------------------------------------------------
Joint Invention 2.05(a)
- --------------------------------------------------------------------------------------
License Agreements 14.01(i)
- --------------------------------------------------------------------------------------
License Amendment 14.01(h)
- --------------------------------------------------------------------------------------
Licensed Intellectual Property 5.04
- --------------------------------------------------------------------------------------
Losses 14.03
- --------------------------------------------------------------------------------------
Material Default 13.03(a)
- --------------------------------------------------------------------------------------
Non-Defaulting Party 13.03(a)
- --------------------------------------------------------------------------------------
Notice of Termination 13.03(b)
- --------------------------------------------------------------------------------------
Notice to Cure 13.03(b)
- --------------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
<TABLE>
<S> <C>
- ----------------------------------------------------------------------------------------
NYBC 3.02
- ----------------------------------------------------------------------------------------
Pall Preamble
- ----------------------------------------------------------------------------------------
Platelet Inactivation Compounds Article X
- ----------------------------------------------------------------------------------------
Revenue Sharing Payments 4.04
- ----------------------------------------------------------------------------------------
Rules 16.04(a)
- ----------------------------------------------------------------------------------------
Sole Invention 2.05(b)
- ----------------------------------------------------------------------------------------
Sole Patent 2.05(c)
- ----------------------------------------------------------------------------------------
UH 3.02
- ----------------------------------------------------------------------------------------
Vitex Preamble
- ----------------------------------------------------------------------------------------
</TABLE>
ARTICLE II
COOPERATIVE DEVELOPMENT
-----------------------
SECTION 2.01 COOPERATIVE DEVELOPMENT. From the date of this
-----------------------
Agreement, Pall and Vitex shall work together diligently to develop, and obtain
Regulatory Approval for, the Systems, including research and development and
clinical work (the "Cooperative Development Work") and thereafter market Systems
for the filtration of human blood and the inactivation of viruses and pathogens
in red blood cells. Except for the work currently conducted by Pall and set
forth on Exhibit C hereto, neither party shall work independently or with a
---------
third party in the development and/or commercialization of systems for use in
the inactivation of viruses and pathogens for decontamination of red blood cells
and/or platelets, unless approved by the Management Board. Except as set forth
in the preceding sentence, if either party is planning to work independently or
with a third party in the development and/or commercialization of systems for
use in the inactivation of viruses and pathogens for decontamination of red
blood cells and/or platelets, it shall disclose such planned activity to the
Management Board, and the Management Board shall have the option of bringing
such activity within the scope of this Agreement and requiring the parties to
pursue it jointly.
SECTION 2.02 MANAGEMENT BOARD.
----------------
2.02(A) CONSTITUTION. The Management Board shall be composed of four
------------
people consisting of two officers or employees of each party designated by such
party. The role of the Management Board is to facilitate the overall
relationship of Pall and Vitex under this Agreement and to manage the research,
development and marketing of Systems. System Specifications and Vitex
Inactivation Compounds Specifications recommended by Pall or Vitex shall not be
deemed finalized until they are approved by the Management Board. The
Management Board shall meet from time to time as appropriate, but not less
frequently than four times during each calendar year, alternating between the
offices of Pall and Vitex, unless the parties shall agree otherwise.
7
<PAGE>
2.02(B) VOTING. All decisions of the Management Board shall be made
------
by unanimous vote or written consent, with Pall and Vitex each having one vote
regardless of the number of representatives attending any meeting.
2.02(C) DEADLOCK. In the event of a deadlock of the Management
--------
Board, if it is unable to reach agreement within two days of the onset of the
deadlock, then the matter shall first be referred to the Chief Executive
Officers of Pall and Vitex who shall use their best efforts to reach an amicable
resolution, and then failing such resolution, shall be finally settled by
arbitration as set forth in Section 16.04 hereof.
2.02 (D) RESPONSIBILITIES OF MANAGEMENT BOARD. The Management Board
------------------------------------
shall be responsible for:
(i) approving Project Plans, all changes to any Project Plans and
determining whether to engage in a new project;
(ii) setting budgets and approving all changes to budgets, and
resource allocation;
(iii) approving accounting methods of the parties for purposes of
determining Cost of Goods for either party;
(iv) approving the amortization of capital expenditures;
(v) approving Pall's Marketing and Administrative Expenses;
(vi) in its sole discretion, revising the percentage used in
calculating the floor price of a System;
(vii) approving Specifications for the Vitex Inactivation Compounds
and Systems Specifications, and any changes thereto;
(viii) overseeing Cooperative Development Work;
(ix) approving matters set forth in Section 2.01 of this Agreement;
(x) approving the filing of Sole Patents, where such filing would
involve the disclosure of Confidential Information (however, Management
Board approval is not required for the filing of a Sole Patent where such
filing would not involve the disclosure of Confidential Information);
(xi) designating the party which shall be primarily responsible for
the prosecution of Joint Patents;
8
<PAGE>
(xii) reviewing records of the parties relating to costs and
expenses incurred in connection with the Cooperative Development Work,
approving and reconciling cash outlays and expenditures of the parties and
directing payment by either of the parties to the other party;
(xiii) developing timetables for Pall's requirements projections for
the Vitex Inactivation Compounds and Instrumentation;
(xiv) approving changes to Vitex's source of raw materials, the
Vitex Inactivation Compounds or Instrumentation, and approving improvements
to the Systems;
(xv) determining the countries in which the Systems shall be
marketed and sold;
(xvi) approving all claims made regarding the Systems in connection
with labeling, marketing or promotional matters;
(xvii) all matters relating to Joint Patents;
(xviii) ensuring compliance with the applicable clinical, medical and
regulatory requirements and fulfilling and discharging or arranging for a
party to this Agreement (or both) to fulfill and discharge all applicable
requirements of the FDA or other Governmental Authority; and
(xix) determining what action should be taken when a party to this
Agreement has reason to believe or has received notice from the FDA or
another Governmental Authority that a product developed, manufactured or
sold pursuant to the terms of this Agreement must be withdrawn or recalled.
SECTION 2.03 REVIEW OF PROJECT PLAN, BUDGET AND TIMETABLE. The
--------------------------------------------
Project Plans, budget and timetable for the Cooperative Development Work will be
reviewable by the Management Board from time to time, with the intent that the
parties move expeditiously and effectively toward commercialization of the
Systems.
SECTION 2.04 EXCHANGE OF INFORMATION. Subsequent to March 21, 1997
-----------------------
and in connection with the Cooperative Development Work, Pall and Vitex shall
exchange all material information developed pursuant to the Cooperative
Development Work, including the exchange of Pall Know-How and information
concerning Pall Patents and Vitex Know-How and information concerning Vitex
Patents. The exchange will occur subject to the confidentiality provisions of
Article IX of this Agreement. Under this Agreement the cooperation between Pall
and Vitex will be solely in connection with developing the Systems.
9
<PAGE>
SECTION 2.05 INVENTIONS.
----------
2.05(A) JOINT INVENTIONS. If an Invention has been made by both
----------------
parties jointly, each party making an inventive contribution to such Invention,
such Invention shall be referred to as a "Joint Invention." Such Joint
Inventions shall be the joint property of the parties, each party having an
undivided one-half interest, with Pall having an exclusive royalty-free
worldwide license under all Joint Inventions relating to Pall's Field of Use and
Vitex having an exclusive royalty-free worldwide license under all Joint
Inventions that relate to Vitex's Field of Use.
For any uses outside of either Pall's Field of Use or Vitex's Field of
Use, each party has joint rights to the Joint Invention. The parties agree that
neither party may grant any sublicenses under any Joint Invention without the
prior written approval of the other party.
2.05(B) SOLE INVENTIONS. Should either party conceive and reduce to
---------------
practice any Invention without any inventive input of the other party (a "Sole
Invention"), then that party shall own all rights to its Sole Invention, except
that the other party shall have a non-exclusive right to practice the Sole
Invention only in furtherance of this Agreement.
2.05(C) PATENT PROSECUTION OF INVENTIONS. Patent prosecution for
--------------------------------
Joint Inventions shall be carried out as set forth in Section 6.03 hereof. Each
party shall bear full responsibility for all patent prosecution and maintenance
matters with respect to its Sole Inventions provided that each party gives the
Management Board reasonable notice prior to filing an application for any patent
with respect to a Sole Invention (the "Sole Patent") and, to the extent that
such filing involves the disclosure of any Confidential Information, obtains the
approval of the Management Board prior to such filing. The Management Board
shall designate one party as primarily responsible for the prosecution of Joint
Patents. The costs of such prosecution and the costs of maintenance of the
Joint Patents shall be equally shared by the parties.
SECTION 2.06 COST-SHARING.
------------
2.06(A) COST-SHARING GENERALLY. Pall and Vitex shall equally share
----------------------
costs and expenses associated with the Cooperative Development Work, fifty
percent to be borne by Pall and fifty percent to be borne by Vitex. Cost and
expenses shall include only those expenditures made in accordance with budgets
approved by the Management Board related to research, development, clinical
trials, Regulatory Approval, certain patent royalties as described in Section
15.02 of this Agreement, filing of Joint Patents (subject to Section 6.05), and
other expenses that this Agreement expressly provides shall be subject to cost
sharing. All changes to a budget must be approved by the Management Board.
2.06(B) RECORDKEEPING. Each party shall maintain detailed records
-------------
which accurately identify costs and expenses incurred and paid in connection
with the Cooperative
10
<PAGE>
Development Work. Each party shall submit this information to the Management
Board on the last business day of March for the period ending January 31, and on
the last business day of September for the period ending July 31 (or such
alternative dates as the Management Board may establish) with an estimate of
expenses to be incurred during the subsequent six months. Expenses internally
generated in the event that tasks are performed by a party's own staff will be
accounted for on a uniform average cost per full time equivalent basis.
2.06(C) MANAGEMENT BOARD COSTS. Each of Pall and Vitex shall bear
----------------------
their respective costs with respect to participation on the Management Board
during the Cooperative Development Work, including travel expenses for meetings
and participation on the Management Board.
SECTION 2.07 BUDGET CONTINGENCIES.
--------------------
2.07(A) EXCEEDING PREVIOUSLY ESTABLISHED BUDGET. If the Management
---------------------------------------
Board determines that the budget for the Cooperative Development Work must be
increased over the previously established budget, then Pall will fund fifty
percent and Vitex will fund fifty percent of any increase in the previously
approved budget; provided that in the event Vitex is unable to fund such
increase, Pall may, at its sole discretion, fund Vitex's share of such increase
(or any portion thereof) (the "Advance") and deduct the Advance over time
through deductions from Vitex's share of the Profits, on a schedule approved by
the Management Board.
2.07(B) RECONCILIATION OF EXPENDITURES. Unless otherwise agreed, the
------------------------------
Management Board shall reconcile actual cash outlays and expenses approved by
the Management Board with respect to the Cooperative Development Work on a
quarterly basis to the goal that costs are borne in the proportion of fifty
percent by Pall and fifty percent by Vitex. The Management Board shall review
the budgets at the beginning of each fiscal quarter of Pall, and to the extent
that either Pall or Vitex is expected to incur more than fifty percent of the
expenses budgeted for such fiscal quarter, the Management Board shall direct the
other party, within thirty days after the beginning of such fiscal quarter, to
pay to the party expected to incur such expenses an amount necessary to ensure
that projected expenses for such fiscal quarter are borne fifty percent by each
party. Any portion of a payment made in accordance with the preceding sentence
which is not utilized by either party in connection with the Cooperative
Development Work for such fiscal quarter shall be carried forward by such party
to the following fiscal quarter.
SECTION 2.08 RESPONSIBILITIES OF PARTIES. Pall and Vitex shall
---------------------------
cooperate in the Cooperative Development Work as set forth in the Project Plan.
Any changes to the Project Plan must be approved by the Management Board.
ARTICLE III
11
<PAGE>
SUPPLY OF VITEX INACTIVATION COMPOUNDS
AND SYSTEM MANUFACTURING
--------------------------------------
After Regulatory Approval has been obtained for the Systems, the
Systems shall be manufactured, marketed and sold in accordance with the
provisions of this Article III.
SECTION 3.01 PALL RESPONSIBILITIES. Pall shall be responsible for
---------------------
all aspects relating to production, manufacturing, assembly, sterilization,
packaging, warehousing, marketing (including customer support) and distribution
of the Systems, but not including manufacturing of the Vitex Inactivation
Compounds or the Instrumentation, except as provided in Section 3.07. Pall
shall provide Vitex with its projected requirements for the Vitex Inactivation
Compounds and Instrumentation in accordance with a timetable developed by the
Management Board.
SECTION 3.02 VITEX RESPONSIBILITIES. Vitex shall supply or arrange
----------------------
for a third party to supply, Pall's requirements for the Vitex Inactivation
Compounds and Instrumentation used in each System. The parties shall agree upon
an order, supply and delivery mechanism for the Vitex Inactivation Compounds and
Instrumentation. Vitex shall also diligently pursue any rights it may have
under agreements with third parties, including, but not limited to, The New York
Blood Center, Inc. ("NYBC"), EFOS International ("EFOS"), University Hospitals,
Inc. or any current successor ("UH"), and Collaborative BioAlliance, Inc., and
their respective Affiliates, for obtaining new technology developed by such
third parties, whether in conjunction with Vitex or not, which technology may be
necessary or useful in achieving the objectives of this Agreement.
SECTION 3.03 REFERENCE SET PRODUCTION. Pall shall tool and scale up
------------------------
the production model of all Reference Sets and any necessary additions to
Reference Sets required for the Systems.
SECTION 3.04 SYSTEMS SPECIFICATIONS. Pall's manufacture of each
----------------------
System shall be in accordance with the Systems Specifications. Any change to
the Systems Specifications must be approved in writing by the Management Board.
SECTION 3.05 VITEX SPECIFICATIONS. Vitex shall supply Vitex
--------------------
Inactivation Compounds in bulk form to Pall to be used as a component of the
Systems and Pall shall obtain from Vitex Inactivation Compounds to meet Pall's
requirements of inactivation compounds for use in the Systems. Vitex
Inactivation Compounds shall meet the Specifications for the Vitex Inactivation
Compounds determined by the Management Board pursuant to Section 2.02(a) hereof.
Any change in specifications for the Vitex Inactivation Compounds must be
approved in writing by the Management Board.
12
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
SECTION 3.06 SOURCE OF SUPPLY. In the event Pall recommends, and the
----------------
Management Board approves such recommendation, that Vitex change Vitex's source
of raw materials or Vitex Inactivation Compounds or Instrumentation because of
actual or anticipated irregularity of supply, or failure to meet specifications,
and viable alternate sources of supply are available, Vitex will use its
reasonable best efforts to implement Pall's recommendation that Vitex utilize
such alternate sources of raw materials, Vitex Inactivation Compounds and/or
Instrumentation.
SECTION 3.07 FAILURE OF VITEX TO MEET PALL REQUIREMENTS. Pall shall
------------------------------------------
be free to obtain the Vitex Inactivation Compounds or Instrumentation from a
third party if Vitex fails to meet Pall's requirements for the Vitex
Inactivation Compounds or Instrumentation within ******** after Pall gives
written notice to Vitex that Vitex is in default of its obligations to supply
Pall's requirements hereunder. Vitex agrees to grant, such third party that Pall
selects, the right to manufacture the Vitex Inactivation Compounds or
Instrumentation, for Pall's account, and further agrees to provide such third
party with the information and the right to use the Vitex Patents and Vitex
Know-How that are necessary to permit such third party to make the Vitex
Inactivation Compounds or Instrumentation for Pall's account, provided, however
-------- -------
that such third party shall first provide Vitex with written undertakings,
executed by a properly authorized officer of such third party, that it will
treat such information, Vitex Patents and Vitex Know-How as Confidential
Information and be subject to confidentiality requirements similar to those set
forth in Article IX of this Agreement. To the extent that Pall obtains the Vitex
Inactivation Compounds or Instrumentation from a third party, all payments made
by Pall to such third party shall be included in Pall's Cost of Goods.
SECTION 3.08 SYSTEM IMPROVEMENTS. During the term of this Agreement,
-------------------
as approved by the Management Board, Pall and Vitex will cooperate in making
improvements to each System to meet changing market needs. The costs for such
improvements shall be budgeted by the Management Board and subject to cost
sharing pursuant to Section 2.06(a) of this Agreement.
ARTICLE IV
MARKETING AND EXCLUSIVE DISTRIBUTION RIGHTS
-------------------------------------------
SECTION 4.01 APPOINTMENT AS EXCLUSIVE DISTRIBUTOR. Pall and Vitex
------------------------------------
agree that Pall shall be the exclusive worldwide distributor (the "Exclusive
Distributor") for the Systems during the term of this Agreement (the "Exclusive
Distributorship Period"). In acting as the Exclusive Distributor, Pall may
solicit sales directly or through one or more of its Affiliates or independent
distributors. Pall shall use commercially reasonable efforts to promote, market
and sell Systems developed under this Agreement in those countries of the world
in which the Management Board determines that such Systems should be promoted,
marketed and sold. All responsibilities of Pall set forth in this Section 4.01
shall be conducted in compliance with all
13
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
pertinent regulatory requirements of the FDA and other Governmental Authorities.
Pall shall send copies of any reports submitted to the FDA or any other
Governmental Authority under the terms of this Section 4.01, upon their
submission, to Vitex.
SECTION 4.02 MEETINGS CONCERNING MARKETING. The Management Board
-----------------------------
shall meet from time to time at the request of either Pall or Vitex to discuss
and approve marketing strategies in order to optimize customer acceptance and
effective promotion of the Systems. All final decisions regarding Systems
marketing, distribution and pricing shall be made by Pall.
SECTION 4.03 RESPONSIBILITIES OF THE PARTIES DURING THE EXCLUSIVE
----------------------------------------------------
DISTRIBUTORSHIP PERIOD. During the Exclusive Distributorship Period the
- -----------------------
responsibilities of the parties shall be as follows:
4.03(A) PALL RESPONSIBILITIES. Pall shall use its reasonable best
---------------------
efforts to promote and distribute the Systems within ******** after the
Regulatory Approval is obtained, using generally the same channels and methods,
exercising the same diligence, and adhering to the same standards which it
employs with respect to its own products sold to the health care market.
4.03(B) VITEX RESPONSIBILITIES. Vitex shall use reasonable best
----------------------
efforts to supply Pall's requirements for the Vitex Inactivation Compounds and
Instrumentation consistent with Pall's forecasts of its expected requirements
for the Vitex Inactivation Compounds and Instrumentation, and shall promptly
notify Pall of any expected delay and the duration of any expected delay. Vitex
shall provide Pall with certificates of analysis for the Vitex Inactivation
Compounds, certificates of free sale, trademark authorizations, and any other
documents which Pall may require for registration purposes of the Vitex
Inactivation Compounds or the Instrumentation, at Pall's request, if available.
Unless prohibited by local law, all such registrations and approvals shall be in
the name of Vitex and Pall.
SECTION 4.04 REVENUE SHARING. In consideration of the Cooperative
---------------
Development Work to be undertaken and other obligations set forth in this
Agreement, Pall and Vitex shall share Net Sales as follows: (i) no later than
thirty days after the first and all subsequent fiscal quarters of Pall following
the first commercial sale of the Systems, Pall shall pay to Vitex, with respect
to Net Sales in such fiscal quarter, Vitex's Cost of Goods; and (ii) no later
than sixty days after the first and all subsequent fiscal quarters of Pall
following the first commercial sale of Systems, Pall shall pay to Vitex, with
respect to Net Sales in such fiscal quarter, a sum equal to fifty percent of the
Profits for such fiscal quarter (less any Advances made to Vitex pursuant to the
terms of Section 2.07(a) of this Agreement, royalty payments deducted pursuant
to Section 15.02 of this Agreement and Losses for such fiscal quarter) (the
"Revenue Sharing Payments"), and Pall shall retain the balance of the proceeds
of the Net Sales of Systems as to which Pall has invoiced the customer during
such fiscal quarter. To the extent Profits are exceeded by Losses in any fiscal
quarter of Pall, Vitex's share of such net loss shall be
14
<PAGE>
carried forward cumulatively to the subsequent fiscal quarters of Pall and shall
offset any Profit payable to Vitex for such subsequent fiscal quarters until
fully exhausted.
The Revenue Sharing Payments due and payable hereunder shall be
computed for each fiscal quarter of Pall in the currency in which the sale was
made, but shall be definitively discharged by payments to Vitex in dollars
converted from such currency using the average of spot rates for such currency
for the last business day of the second and third months of such quarter and of
the first month of the subsequent quarter, as quoted in The Wall Street Journal.
-----------------------
SECTION 4.05 NYBC. Pall agrees to make available to NYBC a
----
reasonable quantity of Inactivation Assemblies at the lowest price charged by
Pall to third parties in the U.S. and Canada for such Inactivation Assemblies.
It is the understanding of the parties hereto that said Inactivation Assemblies
will be for NYBC's own use and not for resale by NYBC and Pall's obligation to
make such sales shall be conditioned on NYBC's compliance with that
understanding.
ARTICLE V
PATENTS, KNOW-HOW, AND LICENSE GRANTS
-------------------------------------
SECTION 5.01 VITEX SOLE OWNERSHIP. Vitex shall own and/or control
--------------------
all Vitex Patents and Vitex Know-How.
SECTION 5.02 PALL SOLE OWNERSHIP. Pall shall own and/or control all
-------------------
Pall Patents and Pall Know-How.
SECTION 5.03 REGULATORY FILES. Pall and Vitex shall each have full
----------------
access to all materials filed and correspondence with the FDA and other
regulatory agencies in connection with the Cooperative Development Work and the
Systems, and shall be entitled to use and rely on such materials with respect to
any Regulatory Approval for a product covered by this Agreement which is sought
by either Pall or Vitex.
SECTION 5.04 LICENSE OF VITEX PATENTS AND VITEX KNOW-HOW. With
-------------------------------------------
respect to any Vitex Patents, Vitex Know-How or any other Vitex intellectual
property needed by Pall for the performance of its responsibilities and exercise
of its rights under this Agreement (the "Licensed Intellectual Property"), Vitex
grants to Pall an exclusive, paid-up royalty-free license under the Licensed
Intellectual Property with the right to sublicense, as approved by the
Management Board.
ARTICLE VI
PROSECUTION OF PATENT RIGHTS
----------------------------
15
<PAGE>
SECTION 6.01 VITEX PATENTS. Vitex shall have the right to timely
-------------
prepare, file, prosecute and maintain, under its exclusive control and at its
expense, Vitex Patents.
SECTION 6.02 PALL PATENTS. Pall shall have the right to timely
------------
prepare, file, prosecute and maintain, under its exclusive control and at its
expense, Pall Patents.
SECTION 6.03 JOINT PATENTS. The Management Board shall have the
-------------
right to timely prepare, file, prosecute and maintain (or direct the appropriate
party to timely prepare, file, prosecute and maintain), under its exclusive
control, Joint Patents, with costs and expenses to be shared by Pall and Vitex
as set forth in Section 2.06(a) hereof and subject to Section 6.05, but if it
does not, then either Pall or Vitex may, subject to joint ownership rights set
forth in Section 2.05(a) and subject to Section 6.05, prepare, file, prosecute
and maintain such Joint Patents. The parties shall file internationally under
the Patent Cooperation Treaty and/or the European Patent Convention or the most
appropriate mechanism in order to minimize expenses, as determined by the
Management Board. The reasonable expenses of preparing, filing, prosecuting and
maintaining corresponding Joint Patents in the countries that are approved by
the Management Board shall be borne equally by the parties. Unless such other
countries are agreed to by the parties in writing, such other country filings
shall not be made. Such patent expenses should be included in the budget
approved by the Management Board and shall be shared equally by the parties as
set forth in Section 2.06(a).
SECTION 6.04 MATERIAL; REVIEW AND COMMENT. Each party shall
----------------------------
cooperate with the other so that all material that is pertinent to the
examination of a Joint Patent is brought to the attention of the other party.
The parties to this Agreement shall have the right to review and comment on
substantive documents prepared in connection with the preparation, filing,
prosecution and maintenance of the Joint Patents prior to the filing of such
papers; however, such review and comment shall be performed expeditiously so as
not to negatively affect patent rights and shall be performed at the reviewing
party's sole cost and expense.
SECTION 6.05 ELECTION NOT TO PAY EXPENSES. If either party elects
----------------------------
for any reason not to pay its share of the reasonable expenses for a particular
Joint Patent, then, at the option of the other party:
6.05(A) the joint ownership of that nonpaying party under this
Agreement with respect to that particular patent application or patent shall
immediately terminate and the paying party shall exclusively own that particular
patent or patent application, without affecting the nonpaying party's rights
under all other patent applications and patents; or
6.05(B) the application or patent shall be allowed to lapse.
16
<PAGE>
In the event the paying party elects option (a) above, the nonpaying
party hereby agrees to execute documents necessary to transfer its interest in
such patent or patent application to the paying party provided that the paying
party agrees to license back to the non-paying party rights to such patent or
patent application on a royalty-free basis to the extent necessary to
manufacture, use or sell the Systems.
ARTICLE VII
TRADEMARKS
----------
SECTION 7.01 PALL TRADEMARKS. Vitex shall make no use of any Pall
---------------
trademark without the prior written approval of Pall.
SECTION 7.02 VITEX TRADEMARKS. Except as set forth in this Section
----------------
7.02, Pall shall make no use of any Vitex trademark without the prior written
approval of Vitex. Pall shall include the Vitex name and mark (or successor name
and mark acceptable to Pall) on the Systems and on packaging, literature and
promotional material and advertising for the Systems unless Pall makes a good
faith determination that the Vitex name cannot be used due to third party
rights. Pall shall, to the extent practical, provide to Vitex for review copies
of all proposed uses of the Vitex name and mark and references to Vitex. To the
extent practical, Pall shall include on material bearing such trademarks an
acknowledgment that such trademarks are the property of Vitex. If necessary in
any market to maintain Vitex's rights in the Vitex trademarks, Pall shall enter
into a registered user agreement regulating its use of the Vitex trademarks.
ARTICLE VIII
REGULATORY REQUIREMENTS
-----------------------
SECTION 8.01 RECALLS. In the event that either party to this Agreement
-------
has reason to believe that a recall or market withdrawal of any product or
products developed, manufactured or sold pursuant to this Agreement is warranted
for any reason, or if either party is notified by the FDA or another
Governmental Authority of a request or demand for such a withdrawal or recall,
such party shall immediately notify the Management Board. Within 24 hours of
receipt of such notice the Management Board shall meet and: (i) determine if
such a withdrawal or recall is warranted and, if warranted, to formulate a
strategy for implementing such withdrawal or recall, or (ii) to formulate a
position why such a withdrawal or recall is not warranted, and (iii) if the
withdrawal or recall request originated from the FDA or other Governmental
Authority, to formulate a plan to address such request. The actual withdrawal or
recall of a product under the terms of this Section 8.01 shall be conducted by
Pall, unless otherwise directed by the Management Board.
17
<PAGE>
The expenses of a withdrawal or recall, if conducted in accordance with the
terms of this Section 8.01, shall be equally shared, provided, however, that if
-------- -------
the recall or withdrawal is solely due to the fault of one of the parties, as
determined by the Management Board, that party shall bear the full cost of such
recall or withdrawal.
SECTION 8.02 COMPLIANCE WITH OTHER REGULATORY REQUIREMENTS.
---------------------------------------------
(a) The Management Board shall control and be responsible for the parties'
compliance with the clinical, medical and regulatory requirements applicable to
the products developed, manufactured or sold and the transactions engaged in
under this Agreement. The Management Board shall fulfill and discharge, or
arrange for one of the parties (or both) to fulfill and discharge, each
applicable FDA or other Governmental Authority requirement, arising from or
related to the transactions contemplated by this Agreement; provided, however,
-------- -------
that Pall shall solely be responsible for fulfilling and discharging all
requirements which exist in connection with such of Pall's responsibilities as
are set forth in Section 4.01 of this Agreement, and further provided, that
------- --------
requirements which exist by reason of investigational activities with respect to
any System or part thereof shall be fulfilled and discharged by the party
performing such investigational activity. Copies of all reports submitted to or
by the FDA or other Governmental Authority under the terms of this Section 8.02
shall be provided by the party submitting or receiving such reports to the other
party.
(b) Each party to this Agreement shall promptly notify the Management
Board of any inspection or other action taken or threatened to be taken by the
FDA or other Governmental Authority with respect to any System, or any part
thereof, of which they become aware.
(c) In the event that a meeting is scheduled between the FDA or other
Governmental Authority in connection with the transactions contemplated by this
Agreement, the party arranging such meeting shall provide the other party and
the Management Board with reasonable advance notice of such meeting so that the
parties can discuss the contents of such meeting before it takes place and
determine if representatives of the second party should be present at the
meeting.
(d) The parties agree to, during the term of this Agreement, maintain
records and otherwise establish procedures to assure compliance with all
statutory, regulatory and professional requirements which apply to the
transactions contemplated by this Agreement.
SECTION 8.03 PRESS RELEASES. Each party may issue various press releases
--------------
and other public announcements concerning approval by the FDA or other
Governmental Authority for, or marketing of any System, or other matters or
transactions contemplated by this Agreement. However, neither party shall issue
any such press release or other public announcement prior to the review and
written approval of the other party, which approval shall not be unreasonably
withheld.
18
<PAGE>
ARTICLE IX
CONFIDENTIAL INFORMATION
------------------------
SECTION 9.01 GENERAL. The Mutual Non-Disclosure Agreement, entered
-------
into by Pall and Vitex as of March 21, 1997 is hereby merged into and subsumed
by the provisions of this Article IX. The parties to this Agreement, at all
times, shall maintain in strictest confidence and shall not disclose, distribute
or use, for any purpose or in any manner, other than a purpose or manner
approved by the Management Board, and shall cause their directors, officers,
employees, agents, counsel and representatives to maintain in strictest
confidence, all proprietary and confidential information and materials (whether
or not patentable), including, without limitation, equipment, processes,
methods, data, software, reports, know-how, sources of supply, price information
and quotations, customer lists, patent positions and business plans which are
communicated to, learned of, developed or otherwise acquired by either party,
directly or indirectly, pursuant to this Agreement and any other information
designated by the disclosing party as confidential or proprietary in relation to
the subject matter of this Agreement, which information is provided by one party
to the other either directly or indirectly ("Confidential Information"). All
such Confidential Information shall remain the property of Pall or Vitex as the
case may be, or shall be jointly owned if relating to a Joint Invention, and
upon the termination of this Agreement shall be returned to Pall or Vitex or
both of them as applicable, or, at either party's election (or by mutual
agreement in the case of jointly owned Confidential Information), if permitted
by law, destroyed. Failure to comply with the terms of this Section shall
constitute a Material Default (as defined in Section 13.03(a) of this
Agreement).
SECTION 9.02 EXCEPTIONS. Confidential Information shall not include
----------
any information that (a) was rightfully in the possession of the receiving party
prior to the date of disclosure of such information to the receiving party as
evidenced by written documents; (b) was in the public domain prior to the
disclosure to the receiving party; (c) becomes part of the public domain by
publication or otherwise, except by an unauthorized act or omission by the part
of the receiving party; (d) is supplied to the receiving party by a third party
who is under no obligation to the disclosing party to maintain such information
in confidence; (e) is developed by or for the receiving party independently of
the disclosure made under this Agreement; or (f) is required to be disclosed
pursuant to applicable law; provided that if the receiving party believes it is
required to disclose any Confidential Information pursuant to any applicable
law, it shall give timely written notice to the other party so that the other
party may have an opportunity to obtain a protective order or other appropriate
relief. Each party shall be entitled, in addition to any other right or remedy
it may have, at law or in equity, to an injunction, without the posting of any
bond or other security, enjoining or restraining the other party from any
violation or threatened violation of this Article IX.
19
<PAGE>
SECTION 9.03 SURVIVAL. The obligations of this Article IX shall
--------
survive termination of this Agreement and each of the parties hereto shall
continue to observe them regardless of whether its rights hereunder shall be
terminated or it shall cease to be a party hereto.
ARTICLE X
ADDITIONAL SYSTEMS
------------------
In consideration of the transactions contemplated by this Agreement
with respect to the Systems, Vitex shall work to develop compounds for the
inactivation of viruses and pathogens in platelets (the "Platelet Inactivation
Compounds") and agrees with Pall that if it develops a Platelet Inactivation
Compound during the term of this Agreement, the parties will, as soon as
feasible, prepare a project plan detailing Cooperative Development Work to be
performed in connection with the filtration of blood and inactivation of viruses
and pathogens in platelets. The parties agree to engage in Cooperative
Development Work for the development and commercialization of systems utilizing
the Platelet Inactivation Compounds and market, sell and distribute such systems
on the terms and conditions contained in this Agreement, including, but not
limited to, the equal sharing of costs, profits and expenses. The parties agree
that Vitex's failure to develop Platelet Inactivation Compounds shall not be a
ground for termination of this Agreement.
ARTICLE XI
REPORTS
-------
SECTION 11.01 QUARTERLY SALES REPORTS. Each quarterly payment made
-----------------------
under Section 4.04 shall be accompanied by a full and accurate accounting of all
Net Sales of Systems by Pall for the fiscal quarter. Each such report shall
include the following information for each type of System, separately as to each
of the following regions: Western Hemisphere, Europe, Japan, rest of world:
11.01(A) The number of Stand-Alone Inactivation Assemblies and Composite
Inactivation Sets sold to third parties by Pall;
11.01(B) The Net Sales, with a breakdown between Net Sales of Stand-Alone
Inactivation Assemblies and Composite Inactivation Sets;
11.01(C) Cost of Goods/Reference Revenue;
11.01(D) Computation of the Revenue Sharing Payment due to Vitex;
20
<PAGE>
11.01(E) Customer published price lists for Systems; and
11.01(F) Any deductions from Revenue Sharing Payments.
To the extent Pall is unable to provide any such information when due,
Pall will provide to Vitex at such time Pall's best estimates of such
information, and will provide actual information as soon as it is available,
provided, however, that Pall will, in any event, provide reports when due of
actual Net Sales and Cost of Goods/Reference Revenue.
SECTION 11.02 COST OF GOODS/REFERENCE REVENUE. To the extent not
-------------------------------
provided under Section 11.01 above, each party will furnish quarterly reports to
the other party on such party's Cost of Goods/Reference Revenue for components
supplied by such party.
Each report under this Article XI shall include the certification of
the party making the report attesting to the fact that the report is an accurate
and complete accounting of all information required hereunder.
SECTION 11.03 VITEX REPORTS. Vitex agrees to provide Pall with a
-------------
copy of and obtain Pall's consent to any report to be delivered by Vitex to a
third party, prior to such delivery, if such report contains any Confidential
Information, or any information regarding the Systems, Pall, this Agreement or
any other matters which are the subject of this Agreement.
ARTICLE XII
BOOKS AND RECORDS
-----------------
SECTION 12.01 RECORDS. Pall and Vitex shall keep full and accurate
-------
books of account containing all particulars that may be necessary for the
purpose of calculating all amounts owing to either party. Books of account
maintained by the parties shall be kept at their principal place of business,
except that with respect to books of account ordinarily kept by either party
elsewhere (e.g. abroad), the originals or copies thereof shall be made available
at the principal place of business on request. All such reports and data shall
be open for inspection on a confidential basis at all reasonable times and
either party may conduct, at its own expense, once every year during normal
business hours through an independent certified public accountant, an
examination of the accounts contemplated above. If any audit shall show that
either party underpaid amounts due under this Agreement as to the period covered
by the audit, then the party which underpaid shall immediately pay to the other
any such deficiency, and if such party has underpaid by ten percent or more, the
underpaying party shall pay the other party's audit expenses.
21
<PAGE>
SECTION 12.02 RETENTION. Books and records required to be maintained
---------
by the parties hereunder shall be retained for at least three years from the
date of the payment to which they pertain.
ARTICLE XIII
TERM AND TERMINATION
--------------------
SECTION 13.01 TERM. This Agreement shall continue so long as any
----
System is being developed or marketed under this Agreement, unless terminated
earlier pursuant to Section 13.02 or Section 13.03.
SECTION 13.02 TERMINATION BY AGREEMENT. This Agreement may be
------------------------
terminated by the mutual written agreement of Pall and Vitex, with such effect
as shall be set forth in such agreement.
SECTION 13.03 TERMINATION FOR CAUSE.
---------------------
13.03(A) As used herein, "Material Default" means the failure of a
party hereto (the "Defaulting Party") to perform or fulfill such party's
obligations under this Agreement and either (i) the obligations which such party
has failed to perform or fulfill are of such nature or importance that it is
impractical for the parties to continue jointly the business which is
contemplated by this Agreement or unreasonable to expect the other party (the
"Non-Defaulting Party") to continue such business jointly or (ii) the nature of
the obligations which the Defaulting Party has failed to perform or fulfill or
the circumstances of such failure are such as to evidence either bad faith by
the Defaulting Party or the inability of the Defaulting Party, for financial or
other reasons, to continue to perform its obligations under this Agreement. In
addition, the termination of BERNARD HOROWITZ's employment with Vitex shall be
deemed a Material Default by Vitex.
13.03(B) If either party hereto shall be in Material Default, the
Non-Defaulting Party shall have the right to give the Defaulting Party a notice
(a "Notice to Cure") advising the Defaulting Party in reasonable detail of the
respects in which, in the judgment of the Non-Defaulting Party, the Defaulting
Party is in Material Default. The Notice to Cure shall specify a period of
time, not less than 30 days from the date on which such notice is given, within
which the Defaulting Party must cure its Material Default, and the Defaulting
Party shall have such specified period of time (or such longer period as may
reasonably be required to cure the alleged Material Default in light of the
nature thereof) (the "Cure Period") within which to cure its Material Default.
Unless the Material Default has been cured by the end of the Cure Period, then
within 60 days thereafter the Non-Defaulting Party may give the Defaulting Party
a further notice (the "Notice of Termination") to the effect that this Agreement
shall terminate as of the date specified in such notice which shall be not less
than 30 days from the date on which
22
<PAGE>
such Notice of Termination is given. On the date so specified, unless prior to
said date the effect of the Notice of Termination has been suspended or
nullified by court order, this Agreement shall be deemed terminated as between
the parties, but such termination shall not relieve the Defaulting Party of
liability to the Non-Defaulting Party for damages (including consequential but
not punitive damages) arising from its Material Default and from the termination
of this Agreement.
13.03(C) In the event of termination under the terms of Section
13.03(b) above, the Non-Defaulting Party shall have the right, if it so elects,
to take over and continue the business and operations to be conducted by the
parties under this Agreement and to acquire from the Defaulting Party, for a
"Fair Price" (as hereinafter defined), all of the patents, know-how and other
intellectual property required for such continuance of the business and
operations and all other rights and property, tangible and intangible, including
inventory and work in process, required for such continuance, provided, however,
-------- -------
that if Pall is the Defaulting Party, Vitex shall acquire no rights to
manufacture or market Reference Sets or any Systems which include a Reference
Set, or any patents, know-how or other intellectual or other property or rights
relating to Reference Sets. If the Non-Defaulting Party does not, in the event
of termination, elect, in accordance with the preceding sentence to take over
and continue the business and operations conducted under this Agreement, the
Non-Defaulting Party shall nevertheless, at its option, be entitled to request,
and the Defaulting Party shall be obligated to grant to the Non-Defaulting Party
upon such request, a license, upon the same terms as applicable to the
Defaulting Party, and at no additional cost to the Non-Defaulting Party, to all
the patents, know-how and other intellectual property controlled by or licensed
to the Defaulting Party, or if such patents, know how and other intellectual
property are owned by the Defaulting Party, a perpetual worldwide royalty-free
license to such patents, know-how or other intellectual property, which is
required or used in connection with the Systems and the transactions
contemplated by this Agreement; provided, however, that if Pall is the
-------- -------
Defaulting Party, Pall shall not be obligated to grant a license to Vitex with
respect to any patents, know-how or intellectual property or rights relating to
Reference Sets.
13.03(D) As used in this Section, a "Fair Price" means (i) the amount
which, as of the effective date of the termination, an unrelated third party
would pay to acquire the rights of the Defaulting Party under this Agreement
without giving effect to the Material Default minus (ii) the damages for which
the Defaulting Party has become liable by reason of the Material Default.
Pending determination of the Fair Price, either by agreement of the parties or
by court decision, the Non-Defaulting Party shall have the right to take over
and continue the business as aforesaid provided the Non-Defaulting Party
furnishes adequate security for the payment of the estimated amount of the Fair
Price. Adequate security shall be deemed to be a letter of credit of a
responsible financial institution selected by the Non-Defaulting Party or the
deposit of cash or readily saleable securities in escrow with such institution.
If the parties are unable to agree on the estimated amount of the Fair Price
within 30 days after the effective date of the termination, such estimated
amount shall be determined by arbitration in accordance with Section 16.04
hereof.
23
<PAGE>
ARTICLE XIV
-----------
REPRESENTATIONS, WARRANTIES, COVENANTS AND INDEMNITIES
------------------------------------------------------
SECTION 14.01 VITEX REPRESENTATIONS. Except as set forth in Exhibit
--------------------- -------
D hereto, Vitex represents and warrants that as of the date of this Agreement:
- -
14.01(A) Vitex is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware, has the corporate
power and authority to own and operate its properties and assets and to conduct
its business as presently conducted, and is qualified to do business as a
foreign corporation and is in good standing in the State of New York and in all
other jurisdictions where such qualification is required, except where failure
to so qualify would not have a material adverse effect on the condition
(financial or otherwise), results of operations, business, assets, or prospects
of Vitex. As of the date of this Agreement, Vitex has no majority-owned,
consolidated subsidiaries.
14.01(B) Vitex has the corporate power and authority to execute,
deliver and perform this Agreement, has taken all corporate action necessary to
authorize the execution, delivery and performance by Vitex of this Agreement and
has delivered to Pall a certificate of the Secretary or Assistant Secretary of
Vitex as to (A) the incumbency and signature of each officer of Vitex executing
instruments and agreements on behalf of Vitex in connection with the
transactions contemplated hereby, and (B) duly adopted resolutions of Vitex's
Board of Directors authorizing the execution, delivery and performance by Vitex
of this Agreement and the instruments and agreements to be executed and
delivered by Vitex hereunder. No consent or authorization of, or filing with,
any Person (including, without limitation, any Governmental Authority) is
required in connection with the execution, delivery and performance by Vitex of
this Agreement, except for consents, authorizations or filings which to obtain
or make would not, in the aggregate, have a material adverse effect on the
ability of Vitex to perform its obligations hereunder.
14.01(C) This Agreement has been duly executed and delivered by
Vitex, and this Agreement constitutes the legal, valid and binding obligation of
Vitex, enforceable against Vitex in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium, or similar laws affecting creditors' rights generally or by general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
14.01(D) [INTENTIONALLY DELETED]
14.01(E) Vitex has granted no prior license or assignment of rights
under the Vitex Patents, Vitex Know-How or other Vitex intellectual property
rights to be used in the
24
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
Cooperative Development Work and has all right, power and authority necessary to
allow the use of all such intellectual property for the purposes of and as
required or contemplated by this Agreement.
14.01(F) To Vitex's Knowledge, there are no material foreign or
United States administrative, judicial or Patent and Trademark Office
proceedings contesting the inventorship or ownership of any Vitex Patent.
14.01(G) Neither the execution and delivery of this Agreement nor the
performance of the obligations of Vitex hereunder will result in a violation,
breach or event of default (or any event or condition which with notice or the
passage of time or both would constitute an event of default) of or with respect
to any material agreement or any order of any court of competent jurisdiction
binding upon Vitex or upon the property of Vitex.
14.01(H) Vitex has arranged for the execution by NYBC of the Amendment
to Exclusive License Agreement (#5) for Virally Inactivated Cellular Products,
dated February 16, 1998 (the "License Amendment"), and has delivered to Pall,
prior to or at the time of the execution of this Agreement, a fully executed
copy of the License Amendment, which is annexed hereto as Exhibit E.
---------
14.01(I) Vitex has given Pall copies of the following agreements which
represent all agreements that are necessary or are otherwise of material
importance to (except to the extent that failure to have an agreement would not
individually or in the aggregate have a material adverse effect upon the
obligations undertaken and transactions contemplated by this Agreement) the
development and commercialization of Systems and the performance of the
transactions contemplated by this Agreement: (i) Exclusive License Agreement
(#5) For Virally Inactivated Cellular Products, dated September 21, 1995, with
NYBC, as amended by the License Amendment, (ii) Licensing Agreement, dated
January 1, 1996, with ******** and NYBC, as amended by First Amendment to
Licensing Agreement, dated December 11, 1995 (and any amendments thereto), (iii)
Research, Development, License and Manufacturing Master Agreement, dated as of
March 15, 1997, with EFOS (and any amendments thereto), and (iv) Omnibus
Agreement, dated May 22, 1996, with NYBC (and any amendments thereto)
(collectively referred to as the "License Agreements"). If amended in accordance
with the terms of Section 14.10(b)(ii) of this Agreement, the License Agreements
will provide the necessary rights to carry out the transactions contemplated by
this Agreement.
14.01(J) Vitex has given Samuel T. Wortham, Group Vice President of
Pall, a fully executed copy of Bernard Horowitz's Employment Agreement with
Vitex, which Employment Agreement constitutes the legal, valid and binding
obligation of each of Vitex and Bernard Horowitz, enforceable against each of
Vitex and Bernard Horowitz, in accordance with its terms.
25
<PAGE>
14.01(K) Vitex has formally terminated and has no further obligations
under Project Agreement, dated October 15, 1996 and Letter Agreement dated
November 25, 1996, each with The Ohio State University Research Foundation (and
any other amendments thereto).
14.01(L) The agreement, effective as of May 6, 1994, between Vitex,
NYBC, The Alberta Research Council and Synsorb Biotech Inc. is not necessary for
and is not of material importance to the development and commercialization of
Systems and the performance of the transactions contemplated by this Agreement.
14.01(M) The execution of this Agreement and delivery to Pall does
not conflict with the terms of the License Agreements if amended pursuant to the
terms of Section 14.10(b)(ii) of this Agreement.
14.01(N) The transactions contemplated by this Agreement will not
result in the loss by Vitex of the benefits of the License Agreements or of any
business relationship with the parties to the License Agreements.
14.01(O) As of the date of this Agreement, no litigation,
investigation or proceeding by or before any court or Governmental Authority or
arbitrator is pending or, to Vitex's Knowledge, threatened against Vitex with
respect to or in connection with the Vitex Patents and the Vitex Know-How which,
if adversely determined, would have a material adverse effect on the ability of
Vitex to perform its obligations hereunder, or which relates, in any way to the
validity of this Agreement or of any action taken or to be taken by Vitex
pursuant to this Agreement.
14.01(P) Vitex has advised Pall of any Knowledge of any third party
patent or know-how that might be infringed by the incorporation of any Vitex
Patent or Vitex Know-How likely to be embodied or used in a System.
14.01(Q) Vitex has no Knowledge of any technology not licensed to
Pall hereunder that it believes would be necessary to optimally use the Vitex
Inactivation Compounds or Instrumentation.
14.01(R) This Agreement and the other documents, certificates or
written statements furnished or to be furnished to Pall by or on behalf of Vitex
in connection with the transactions contemplated by this Agreement, taken as a
whole, do not, as of the date of this Agreement, contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements contained therein, in light of the circumstances in which they were
made, not misleading. The representations and warranties of Vitex set forth in
this Agreement are true and correct as of the date of this Agreement (except for
such inaccuracies or breaches of warranties as will not have a material adverse
effect on the ability of Vitex to
26
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
perform its obligations hereunder) and Pall shall have received a certificate to
that effect signed on behalf of Vitex by an authorized officer of Vitex.
SECTION 14.02 VITEX INDEMNIFICATION: REPRESENTATIONS AND WARRANTIES.
-----------------------------------------------------
Vitex shall indemnify Pall for any losses sustained or expenses incurred by Pall
as a result of a breach by Vitex of any of the foregoing representations and
warranties.
SECTION 14.03 VITEX INDEMNIFICATION: PRODUCTS. Vitex shall defend,
-------------------------------
indemnify and hold Pall harmless from and against any and all claims, actions,
causes of action, judgments, awards, losses, damages (but not including punitive
damages), liabilities, suits and expenses, including reasonable attorney's fees
(collectively, "Losses") by reason of liability imposed by law upon Pall
********* **** *** **** ** ******* ** *** ****** *** **** *********, *********
*********, *** *** ******* ** ******** *********, ****** **** *** ******* **
******* ** ************** *** *** ***** *********** ********** **
*************** ************ **** *** *******; provided that Pall shall give
Vitex prompt written notice of such claim and Vitex shall have the right to
defend such claim at its expense (Pall having the right to participate in any
such defense at Pall's own expense).
SECTION 14.04 MATERIAL BREACH: PATENTS. A breach by Vitex of its
------------------------
representations and warranties contained in Section 14.01(e) of this Agreement
shall constitute a Material Default under the terms of this Agreement.
SECTION 14.05 VITEX INSURANCE. Vitex shall, at its own expense,
---------------
establish and at all times during the period from Regulatory Approval until
three years after the last delivery of a System under this Agreement carry
products liability insurance in an amount not less than ******** initially,
adjusted for inflation annually thereafter, each occurrence combined single
limit bodily injury and property damage, provided that such insurance is
available on commercially reasonable terms. The insurance policy shall be
endorsed to name Pall as an additional insured and to provide for written
notification to Pall by the insurer not less than thirty (30) days prior to
cancellation, non-renewal or material change. A certificate of insurance
evidencing compliance with this section and referencing this Agreement shall be
furnished to Pall by Vitex within ten (10) days after Regulatory Approval.
SECTION 14.06 PALL REPRESENTATIONS. Pall represents and warrants to
--------------------
Vitex that as of the date of this Agreement:
14.06(A) Pall is a corporation duly organized, validly existing and
in good standing under the laws of New York, and has the corporate power and
authority to own its properties and to carry on its business as presently
conducted.
14.06(B) Pall has the corporate power and authority to execute,
deliver and perform this Agreement, has taken all corporate action necessary to
authorize the execution,
27
<PAGE>
delivery and performance by Pall of this Agreement and has delivered to Vitex a
certificate of the Secretary or Assistant Secretary of Pall as to (A) the
incumbency and signatures of each officer of Pall executing instruments and
agreements on behalf of Pall in connection with the transactions contemplated
hereby, and (B) duly adopted resolutions of Pall's Executive Committee of the
Board of Directors authorizing the execution, delivery and performance by Pall
of this Agreement and the instruments and agreements to be executed and
delivered by Pall hereunder. No consent or authorization of, or filing with, any
Person (including, without limitation, any Governmental Authority) is required
in connection with the execution, delivery and performance by Pall of this
Agreement, except for consents, authorizations or filings which to obtain or
make would not, in the aggregate, have a material adverse effect on the ability
of Pall to perform its obligations hereunder.
14.06(C) This Agreement has been duly executed and delivered by Pall,
and this Agreement constitutes the legal, valid and binding obligation of Pall,
enforceable against Pall in accordance with its terms, except as enforcement may
be limited by bankruptcy, insolvency, reorganization, moratorium, or similar
laws affecting creditors' rights generally or by general principles or equity
(regardless of whether enforcement is sought in a proceeding in equity or at
law).
14.06(D) Pall has granted no prior license or assignment of rights
under the Pall Patents, Pall Know-How or other Pall intellectual property rights
to be used in the Cooperative Development Work that would materially impair its
ability to develop, manufacture or sell Systems and has all right, power and
authority necessary to allow the use of all such intellectual property for the
purposes of and as required or contemplated by this Agreement.
14.06(E) To Pall's Knowledge, there are no material foreign or United
States administrative, judicial or Patent and Trademark Office proceedings
contesting the inventorship or ownership of any Pall Patent that is likely to be
embodied or used in a System.
14.06(F) Neither the execution and delivery of this Agreement, nor
the performance of the obligations of Pall hereunder will result in a violation,
breach or event of default (or any event or condition which with notice or the
passage of time or both would constitute an event of default) of or with respect
to any material agreement or any order of any court of competent jurisdiction
binding upon Pall or upon the property of Pall.
14.06(G) Pall is not a party to any agreement materially adverse to
the obligations undertaken and rights granted in this Agreement.
14.06(H) The execution of this Agreement and delivery to Vitex does
not conflict with the terms of any agreement which Pall is a party to or which
it is bound by.
28
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
14.06(I) As of the date of this Agreement, no litigation
investigation or proceeding by or before any court or Governmental Authority or
arbitrator is pending or, to Pall's Knowledge, threatened against Pall with
respect to or in connection with the Pall Patents and the Pall Know-How which,
if adversely determined, will have a material adverse effect on the ability of
Pall to perform its obligations hereunder, or which relates in any way to the
validity of this Agreement or of any action taken or to be taken by Pall
pursuant to this Agreement.
14.06(J) Pall has advised Vitex of any Knowledge of any third party
patent or know-how that might be infringed by the incorporation by Pall of any
Pall Patent or Pall Know-How likely to be embodied or used in a System.
14.06(K) Pall has no Knowledge of any technology not licensed to
Vitex it believes would be necessary to optimally use the Pall Patents or Pall
Know-How in a System.
14.06(L) This Agreement and the other documents, certificates or
written statements furnished or to be furnished to Vitex by or on behalf of Pall
in connection with the transactions contemplated by this Agreement, taken as a
whole, do not as of the date of this Agreement, contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements contained therein, in light of the circumstances in which they were
made, not misleading. The representations and warranties of Pall set forth in
this Agreement are true and correct as of the date of this Agreement (except for
such inaccuracies or breaches of warranties as will not have a material adverse
effect on the ability of Pall to perform its obligations hereunder) and Vitex
shall have received a certificate to that effect signed on behalf of Pall by an
authorized officer of Pall.
SECTION 14.07 PALL INDEMNIFICATION: REPRESENTATIONS AND WARRANTIES.
----------------------------------------------------
Pall shall indemnify Vitex for losses sustained or expenses incurred by Vitex as
a result of a breach by Pall of the foregoing representations and warranties.
SECTION 14.08 PALL INDEMNIFICATION: PRODUCTS. Pall shall indemnify
------------------------------
and hold Vitex harmless from and against any and all Losses by reason of
liability imposed by law upon Vitex resulting from the sale of Systems to the
extent any such liability, including but not limited to product liability,
arises from the failure of components of Systems manufactured, marketed or
distributed by or for Pall (excluding Vitex Inactivation Compounds and
Instrumentation if manufactured by a third party) to conform to specifications;
provided that Vitex shall give Pall prompt written notice of such claim and Pall
shall have the right to defend such claim at its expense (Vitex having the right
to participate in such defense at its own expense).
SECTION 14.09 PALL INSURANCE. Pall shall, at its own expense,
--------------
establish and maintain until three years after the last delivery of a System
under this Agreement products liability insurance in an amount not less than
******** initially, adjusted for inflation annually thereafter, each
occurrence combined single limit bodily injury and property damage, provided
29
<PAGE>
that such insurance is available on commercially reasonable terms. The insurance
policy shall be endorsed to name Vitex as an additional insured and to provide
for written notification to Vitex by the insurer not less than thirty days prior
to cancellation, non-renewal or material change. A certificate of insurance
evidencing compliance with this Section and referencing this Agreement shall be
furnished to Vitex by Pall within ten days of the date that Pall becomes
obligated to establish such insurance.
SECTION 14.10 COVENANTS AND ASSURANCES OF PALL AND VITEX.
------------------------------------------
14.10(A) MUTUAL COVENANTS OF THE PARTIES.
-------------------------------
(i) At any time subsequent to the date of this Agreement, each of
the parties hereto will use its reasonable best efforts in good faith to take,
or cause to be taken, all action, and to do, or cause to be done, all things
necessary, proper or advisable to consummate and make effective the transactions
contemplated by this Agreement.
(ii) At any time subsequent to the date of this Agreement, each of
Pall and Vitex will not knowingly or intentionally take, or voluntarily omit to
take, any action which will result in a breach of any representation, warranty
or covenant by such party in this Agreement.
(iii) At all times subsequent to the date of this Agreement, Vitex
will permit Pall and its representatives and Pall will permit Vitex, and its
representatives, reasonable access to each of their respective records,
materials, information and data, in connection with the transactions
contemplated by this Agreement, excluding any such materials containing
confidential information not related to the transactions contemplated by this
Agreement. Vitex shall, in particular, grant Pall and its representatives,
access to such records, materials, information and data as necessary to
satisfactorily complete its technical, business and legal due diligence.
(iv) During the term of this Agreement, each of the parties hereto
agrees that it shall not, without the prior written consent of the other,
directly or indirectly, own, manage, operate, finance, join, control, or
participate in the ownership, management, operation, financing or control of, or
be connected as a partner or otherwise with, any other business which (A)
directly or indirectly competes with the provision, distribution, marketing or
sale of the Systems (the "Business"), except, with respect to Pall, as set forth
in Section 2.01 and Exhibit C, or (B) solicits any customers or clients of the
Business in connection with the Systems. In the event that the provisions of
this Section 14.10(a)(iv) should ever be deemed to exceed the time, geographic
or product limitations or any other limitations permitted by applicable laws,
then such provisions shall be deemed reformed to the maximum extent required by
applicable laws. Each of the parties acknowledges, however, that this Section
14.10(a)(iv) has been negotiated by the parties and that the time, geographic
and product limitations, as well as the limitation on activities, are reasonable
in light of the circumstances pertaining to this Agreement and the
30
<PAGE>
transactions contemplated hereby. Any violation of this Section 14.10(a)(iv)
shall constitute a Material Default (as defined in Section 13.03(a) of this
Agreement).
SECTION 14.10(B) COVENANTS OF VITEX. Vitex hereby covenants that
------------------
Vitex will use its reasonable best efforts in good faith to take, or cause to be
taken, all actions necessary, proper or advisable in order to ensure that:
(i) Vitex is not a party to any agreement materially adverse to the
obligations undertaken and rights granted in this Agreement;
(ii) Certain of the License Agreements, as are listed in Exhibit F
---------
annexed hereto, are amended (to Pall's sole satisfaction) as provided in the
annexed Exhibit F, and shall deliver to Pall, on or before April 1, 1998, fully
---------
executed copies of such amendments;
(iii) The execution of this Agreement and delivery to Pall does not
conflict with the terms of any agreement which Vitex is a party to or which it
is bound by; and
(iv) From and after the date of this Agreement and for two (2) years
following its termination, Vitex agrees that it shall not, without the prior
written consent of Pall, directly or indirectly, own, manage, operate, finance,
join, control or participate in the ownership, management, operation, financing
or control of, or be connected as a partner or otherwise with, any other
business which (A) directly or indirectly competes with any systems for
collection, processing and storage of blood and leukocyte depletion filters
produced or manufactured by or for Pall or its Affiliates and sold by Pall or
its Affiliates ("Pall's Business") or (B) solicits any customers or clients of
Pall's Business, now or hereafter existing, in connection with the provision,
distribution, marketing or sale of systems for collection, processing and
storage of blood and leukocyte depletion filters. In the event that the
provisions of this Section 14.10(b)(iv) should ever be deemed to exceed the
time, geographic or product limitations or any other limitations required by
applicable laws, then such provisions shall be deemed reformed to the maximum
extent permitted by applicable laws. Vitex acknowledges, however, that this
Section 14.10(b)(iv) has been negotiated by the parties and that the time,
geographic and product limitations, as well as the limitation on activities, are
reasonable in light of the circumstances pertaining to this Agreement and the
transactions contemplated hereby. Any violation of this Section 14.10(b)(iv)
shall constitute a Material Default (as defined in Section 13.03(a) of this
Agreement).
ARTICLE XV
INFRINGEMENT
------------
31
<PAGE>
SECTION 15.01 DEFENSE OF THIRD PARTY INFRINGEMENT SUITS. In the
-----------------------------------------
event that a third party shall sue either party alleging that the manufacture,
use or sale of a System, or any part thereof, infringes a patent of such third
party, the Management Board shall have the option to control the defense of such
suit. The parties shall provide reasonable cooperation in the defense of such
suit and furnish all evidence in their control. All attorneys' fees as well as
any judgments, settlements, or damages payable with respect to such suit shall
be subject to cost sharing pursuant to Section 2.06(a), except that to the
extent the suit is based on a product used by either Pall or Vitex outside of a
System, the other party shall only be required to contribute pro rata to the
defense and to the ultimate payment of damages or settlement. Neither party
shall enter into any settlement that materially affects the other party's rights
or interests without such other party's prior written consent, which consent
shall not be unreasonably withheld.
SECTION 15.02 THIRD PARTY PATENT EXPENSES. All patent royalties
---------------------------
payable to NYBC in connection with the Vitex Patents pursuant to the terms of
the License Amendment, net of any offsets or credits to which Vitex is entitled
to under Paragraph H of the License Amendment, shall be borne equally by Pall
and Vitex. For purposes of this Section 15.02, the terms "patent royalties" and
"patent royalty payments" shall not include any payments described in Section
4.3 of the Exclusive License Agreement (#5) for Virally Inactivated Cellular
Products dated September 21, 1995 (as amended by the License Amendment) to the
extent such payments exceed the amount of "ROYALTIES" (as such term is defined
in the License Amendment) payable under Paragraph E(i) of the License Amendment.
With respect to Vitex's share of the patent royalties paid to NYBC in connection
with the Vitex Patents under the terms of this Section 15.02, Pall may deduct
from Revenue Sharing Payments due to Vitex, Vitex's share of such patent royalty
payments if Pall, at Vitex's request, shall have paid Vitex's share of such
patent royalty payments. The parties to this Agreement agree and acknowledge
that all other patent royalties or patent payments which must be paid in
connection with the Vitex Patents shall be borne exclusively by Vitex and all
patent royalties or patent payments which must be paid in connection with the
Pall Patents shall be borne exclusively by Pall.
SECTION 15.03 SUITS FOR INFRINGEMENT BY OTHERS.
--------------------------------
15.03(A) JOINT PATENTS. In the event Pall or Vitex acquires
-------------
Knowledge of any actual or threatened infringement of a Joint Patent or Joint
Invention, that party shall promptly notify the Management Board and the
Management Board shall determine the most appropriate action to take. All
expenses in pursuing any such suit shall be subject to cost-sharing. Any award
in such suit shall be divided equally between the parties.
15.03(B) VITEX PATENTS; VITEX KNOW-HOW; PALL PATENTS; PALL KNOW-HOW.
----------------------------------------------------------
In the event Pall or Vitex acquires Knowledge of any actual or threatened
infringement of the Vitex Patents or Vitex Know-How, or the Pall Patents or Pall
Know-How, that party shall promptly notify the Management Board and (i) with
respect to actual or threatened infringement of such of Vitex's Patents as are
licensed to Vitex under agreements with third parties or such of Pall's
32
<PAGE>
Patents as are licensed to Pall under agreements with third parties, the
Management Board shall promptly provide written notification to such third
parties and in determining the appropriate action to be taken, comply with the
other requirements of the relevant third-party agreement and (ii) with respect
to actual or threatened infringements of all other Vitex Patents, Pall Patents,
Pall Know-How, or Vitex Know-How, the Management Board shall determine the most
appropriate action to take. All expenses for pursuing any such suit shall be
subject to cost sharing, except where Pall and Vitex shall not share control of
such suit or the award or settlement in any such suit, or as otherwise required
by an agreement between Pall or Vitex and a third party. Any award in such suit
shall be divided equally between the parties, except where otherwise required by
an agreement between Pall or Vitex and a third party. In the event that the
Management Board determines not to proceed with suit, the owner of the relevant
Patent and Know-How may at its sole discretion and expense initiate and conduct
an infringement action relating to alleged infringement of such Patent or Know-
How and retain any settlement or award which may be obtained.
In the event the accused product is not in competition with a System:
(i) Vitex alone may, in its sole discretion and at its expense,
initiate and conduct an infringement action relating to alleged infringement of
Vitex Patents or Vitex Know-How and retain any settlement or award which may be
obtained, provided, however, that Vitex complies with the applicable provisions
-------- -------
of any relevant agreement between Vitex and a third party.
(ii) Pall alone may, in its sole discretion and at its expense,
initiate and conduct an infringement action relating to alleged infringement of
Pall Patents or Pall Know-How and retain any settlement or award which may be
obtained provided, however, that Pall complies with the applicable provisions of
-------- -------
any relevant agreement between Pall and a third party.
ARTICLE XVI
MISCELLANEOUS
-------------
SECTION 16.01 NOTICES. Any notice, consent or approval required or
-------
permitted to be given or sent hereunder shall be in writing and shall be sent by
registered or certified mail or overnight delivery service such as Federal
Express, and, if intended for either party, shall be addressed to it (if sent by
mail or overnight delivery service) at the address given below for each party,
or at such other address and for the attention of such other Person of which
either party shall have given notice to the other in the manner herein provided.
Each such notice shall be deemed to be given on the date five days after the
date on which it is mailed or one business day after the date on which it is
received by the overnight delivery service.
(a) If to Pall to:
33
<PAGE>
Pall Corporation
2200 Northern Blvd.
East Hills, New York 11548
Attention: Samuel T. Wortham
with a copy to:
Carter, Ledyard & Milburn
Two Wall Street
New York, New York 10005
Attention: Robert A. McTamaney, Esq.
(b) If to Vitex, to:
V.I. Technologies, Inc.
155 Duryea Road
Melville, New York 11747
Attention: President
with a copy to:
Gibbons, Del Deo, Dolan, Griffinger & Vecchione, P.C.
One Riverfront Plaza
Newark, New Jersey 07102
Attention: Frank E. Lawatsch, Esq.
SECTION 16.02 ENTIRE AGREEMENT. This Agreement constitutes the
----------------
entire agreement between the parties with respect to the matters dealt with in
this Agreement and supersedes any previous agreements or understandings between
the parties in relation to such matters. Each of the parties acknowledges that
in entering into this Agreement, it has not relied on any representation or
warranty save as expressly set out herein or in any document referred to herein.
SECTION 16.03 AMENDMENTS. This Agreement may be amended, modified or
----------
supplemented only by a written instrument that refers expressly to this
Agreement and that is executed by an authorized signatory of the party to be
charged therewith. Any modification or variation of this Agreement other than
in accordance with this Section 16.03 shall be null and void.
SECTION 16.04 DEADLOCKS: GOVERNING LAW; ARBITRATION.
-------------------------------------
34
<PAGE>
16.04(A) All deadlocks of the Management Board shall be finally
settled by binding arbitration in New York, New York under the Arbitration Rules
(the "Rules") of the American Arbitration Association (the "AAA") by one
arbitrator selected by the AAA.
16.04(B) This contract shall be governed, interpreted and construed
exclusively under the substantive laws of the State of New York. The arbitrator
shall apply New York law to the merits of any dispute or claim, without
reference to rules of conflict of law. The arbitration proceedings shall be
governed by the Rules, without reference to state arbitration law. At the
request of either party, the arbitrator will enter an appropriate protective
order to maintain the confidentiality of information produced or exchanged in
the course of the arbitration proceedings. Judgment on the award rendered by
the arbitrator may be entered in any court having jurisdiction thereof.
16.04(C) The parties may apply to any court of competent jurisdiction
for a temporary restraining order, preliminary injunction, or other interim or
conservatory relief, as necessary, without breach of this arbitration agreement
and without any abridgment of the powers of the arbitrator.
16.04(D) The arbitrator will award to the prevailing party, if any,
as determined by the arbitrator, all of its costs and fees, including, without
limitation, AAA administrative fees, arbitrator fees, travel expenses, out-of-
pocket expenses (including, without limitation, such expenses as copying,
telephone, facsimile, postage, and courier fees), witness fees, and attorneys'
fees and disbursements. If the arbitrator determines that there is no clearly
"prevailing party", the arbitrator can apportion such expenses between the
parties in such respective percentages as he deems appropriate.
SECTION 16.05 DISPUTES OTHER THAN DEADLOCKS. All disputes other than
-----------------------------
deadlocks of the Management Board (including disputes or claims arising out of
or in relation to this Agreement, or the interpretation, making, performance,
breach, validity or termination thereof) shall be resolved by appropriate legal
proceedings and not by arbitration and the governing law and jurisdiction shall
be as set forth in Section 16.11 of this Agreement.
SECTION 16.06 ASSIGNMENT. The rights and liabilities conferred by
----------
this Agreement are personal to the parties hereto and may not be assigned or
transferred in whole or in part by either party hereto without the prior consent
in writing of the other party; except that Pall may assign its rights and
obligations hereunder to any of its Affiliates.
SECTION 16.07 BINDING EFFECT. This Agreement shall be binding upon,
--------------
and shall inure to the benefit of and be enforceable by, the parties hereto and
their respective successors and permitted assigns. This Agreement is for the
sole benefit of the parties hereto and nothing in this Agreement, expressed or
implied, is intended or shall be construed to confer upon any
35
<PAGE>
Person, other than the parties and successors and assigns permitted by Section
16.06, any right, remedy or claim under or by reason of this Agreement.
SECTION 16.08 WAIVERS. No failure to exercise and no delay in
-------
exercising on the part of any party hereto any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power or privilege preclude any other or further exercise
thereof. In the event that any party hereto shall expressly waive any breach,
default or omission hereunder, no such waiver shall apply to, or operate as, a
waiver of similar breaches, defaults or omissions or be deemed a waiver of any
other breach, default or omission hereunder. The rights and remedies of each of
the parties in connection herewith are cumulative and are not exclusive of any
rights or remedies provided by law or equity.
SECTION 16.09 PARTIAL INVALIDITY. The respective restrictions on
------------------
the parties herein contained are considered reasonable by the parties but, if
any such restriction shall be found void but would be valid if some part thereof
were deleted or the period or area of application reduced, such restriction
shall apply with such modification as may be necessary to make it valid and
effective.
SECTION 16.10 SEVERABILITY. If at any time any provision of this
------------
Agreement is or becomes invalid, illegal or unenforceable in any respect under
the law of any jurisdiction, neither the validity, legality or enforceability of
the remaining provisions shall in any way be affected or impaired thereby.
SECTION 16.11 GOVERNING LAW; CONSENT TO JURISDICTION. This Agreement
--------------------------------------
will be deemed to have been made and delivered in the State of New York and will
be governed as to validity, interpretation, construction, effect and in all
other respects by the internal laws of the State of New York. Pall and Vitex
(a) agree that any legal suit, action or proceeding arising out of or relating
to this Agreement may be instituted in the Supreme Court of the State of New
York, County of Nassau, or in the United States District Court for the Southern
District of New York, (b) waive any objection to the venue of any such suit,
action or proceeding, and (c) irrevocably consent to the jurisdiction of the
Supreme Court of the State of New York, County of Nassau, and the United States
District Court for the Southern District of New York in any such suit, action or
proceeding. Both parties further agree to accept and acknowledge service of any
and all process which may be served in any such suit, action or proceeding in
such courts and agree that service of process sent by registered mail, return
receipt requested, to the other party at such party's then current address under
Section 16.01 of this Agreement will be deemed in every respect effective
service of process in any such suit, action or proceeding.
SECTION 16.12 COSTS AND ATTORNEYS' FEES. Each party will pay its own
-------------------------
costs and attorneys' fees incident to this Agreement and the transactions
contemplated hereby (except as may be specifically provided for herein) whether
or not these transactions shall be consummated.
36
<PAGE>
SECTION 16.13 COUNTERPARTS. This Agreement may be executed in any
------------
number of counterparts, and by each party on separate counterparts, each of
which as so executed and delivered shall be deemed an original but all of which
together shall constitute one and the same instrument, and it shall not be
necessary in making proof of this Agreement as to any party hereto to produce or
account for more than one such counterpart executed and delivered by such party.
37
<PAGE>
IN WITNESS WHEREOF, Pall and Vitex have caused this Agreement to be
executed by their authorized representatives as of the date first above written.
PALL CORPORATION
By: /s/ Samuel T. Wortham
----------------------------------------------
Name: Samuel T. Wortham
Title: Group Vice President
V.I. TECHNOLOGIES, INC.
By: /s/ John Barr
----------------------------------------------
Name: John Barr
Title: President
38
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
EXHIBIT A
PALL PATENTS
**************************************************************
******************************************************************
******************************************************************
******************************************************************
******************************************************************
************************ [22 pages omitted] ***********************
******************************************************************
******************************************************************
******************************************************************
******************************************************
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
EXHIBIT B
---------
VITEX PATENTS
-------------
***************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
******************************[11 pages omitted]********************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************
<PAGE>
EXHIBIT C
COOPERATIVE DEVELOPMENT EXCEPTIONS
1. The alliance with Quadrant Healthcare, Ltd., in Cambridge, England,
pursuant to Technology License Agreement, dated August 3, 1997, between
Pall Corporation and Quadrant Holdings Cambridge Ltd.
<PAGE>
EXHIBIT D
VITEX REPRESENTATION EXCEPTIONS
The following agreements are excepted from Vitex's representations and
warranties:
(1) Biomanufacturing Agreement, dated as of July 23, 1997, between Vitex
and Collaborative Bio Alliance, Inc.
<PAGE>
EXHIBIT E
[See Exclusive License Agreement (#5) and amendment thereto filed as
Exhibit 10.8 to the Registration Statement]
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
EXHIBIT F
LICENSE AGREEMENTS TO BE AMENDED
As provided in Section 14.10(b) of the Joint Development, Marketing and
Distribution Agreement, Vitex shall use its reasonable best efforts in good
faith to amend, in accordance with the instructions set forth below, and deliver
to Pall, on or before April 1, 1998, fully executed amendments of the following
License Agreements (terms not defined herein shall have the meaning given to
them in the Joint Development, Marketing and Distribution Agreement):
** **************************************************************************
*******************************************
***************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
*******************
***************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
***************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************
<PAGE>
2. RESEARCH DEVELOPMENT, LICENSE AND MANUFACTURING MASTER AGREEMENT (THE "EFOS
---------------------------------------------------------------------------
AGREEMENT"), DATED AS OF MARCH 15, 1997, BETWEEN VITEX AND EFOS
---------------------------------------------------------------
(A) TERM AND TERMINATION. Unless earlier terminated, the EFOS Agreement
---------------------
remains in force for a period of two years from March 15, 1997, automatically
renewing thereafter for one year terms (unless terminated by either party with
six months prior notice). EFOS may earlier terminate the EFOS Agreement for an
uncured failure by Vitex to make the required payments or to perform any of its
material obligations thereunder, and thus, the amendment of this Agreement, must
require that EFOS notify Pall of any default by Vitex under the terms of the
EFOS Agreement and give Pall an opportunity to cure the default and take over
Vitex's position vis-a-vis EFOS.
3. OMNIBUS AGREEMENT (THE "NYBC AGREEMENT"), DATED MAY 22, 1995, BETWEEN VITEX
---------------------------------------------------------------------------
AND NYBC
--------
(A) DUTY TO ASSIST. Section 7.5 of the NYBC Agreement provides that if
--------------
Vitex seeks to enter into a license agreement with a third party whereby
intellectual property rights of the third party in the field of viral
inactivation are to be licensed to Vitex, then Vitex, if NYBC so desires, must
assist NYBC to obtain rights in such intellectual property. The NYBC Agreement
must be amended to provide that it does not apply to any licenses that Vitex
obtains as a result of the Pall-Vitex transaction.
(B) TERMINATION. The NYBC Agreement may be terminated by NYBC upon an
-----------
uncured breach by Vitex of a material condition. Therefore, the amendment of
this Agreement must contain notice and cure provisions similar to those of the
License Amendment.
(C) DEFINITIONS. The definition Section of the NYBC Agreement should be
-----------
amended to provide that the "Cellular Agreement" and the "Edison Agreement"
include the original agreement and any amendments thereto.
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment]
EXHIBIT 10.16
V.I. TECHNOLOGIES, INC.
PALL CORPORATION
------------------------------
STOCK PURCHASE AGREEMENT
------------------------------
FEBRUARY 19, 1998
<PAGE>
Table of Contents
-----------------
<TABLE>
<CAPTION>
Page
Section No.
- ------- ----
<S> <C>
Glossary of Defined Terms.......................................... i
1. Sale and Purchase................................................ 1
2. The Closings..................................................... 3
3. Representations and Warranties of Vitex.......................... 5
(a) Organization; Good Standing.............................. 5
(b) Subsidiaries............................................. 5
(c) Capitalization........................................... 6
(d) No Defaults or Violations................................ 6
(e) Key Agreements and Instruments........................... 6
(f) Governmental Filings and Authorizations.................. 7
(g) Authorization and Enforceability of Agreements........... 7
(h) Authorization and Reservation of Shares.................. 8
(i) Consents and Approvals................................... 8
(j) Effect of Agreements on Business and Commitments of Vitex 8
(k) Litigation............................................... 8
(l) Reports and Financial Statements......................... 9
(m) Liabilities.............................................. 9
(n) Employees................................................ 9
(o) Employee Benefit Plans................................... 10
(p) Patents, Licenses, etc................................... 11
(q) Taxes.................................................... 11
(r) Properties............................................... 12
(s) Condition of Properties.................................. 12
(t) Insurance................................................ 12
(u) No Material Transaction or Material Adverse Effect....... 12
(v) Transactions with Related Parties........................ 12
(w) Registration Rights...................................... 13
(x) Private Offering......................................... 13
(y) Brokerage................................................ 13
(z) Illegal or Unauthorized Payments; Political Contributions 13
(aa) Material Facts........................................... 13
4. Covenants of Vitex............................................... 14
(a) Board Representation..................................... 14
(b) Financial and Business Information....................... 14
(i) Interim Statements............................... 14
(ii) Annual Statements................................ 14
(iii) Audit Reports.................................... 15
(iv) Other Reports.................................... 15
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
(v) Progress Reports................................. 15
(vi) Requested Information............................ 15
(c) Inspection............................................... 15
(d) Conduct of Business and Maintenance of Existence......... 15
(e) Insurance................................................ 16
(f) Keeping of Books......................................... 16
(g) Lost, etc. Certificates Evidencing Shares; Exchange ..... 16
(h) Commencement and Termination of Covenants................ 16
(i) Form D Filing............................................ 16
(j) Registration of Shares................................... 16
(k) Reservation of Shares.................................... 16
5. Representations, Warranties and Covenants of Pall;
Additional Covenants of Vitex.................................. 17
(a) General................................................... 17
(b) Disclosure of Non-Public Information...................... 18
(c) Securities Act Matters.................................... 18
(d) No Intention of Board to Pay Dividends.................... 18
(e) Hart-Scott Act Compliance................................. 18
(f) Consents and Approvals.................................... 18
(g) Black-Out Period.......................................... 19
(h) Standstill Agreement...................................... 19
6. Conditions to Closings........................................... 22
(a) Conditions to Pall's Obligations.......................... 22
(i) Representations and Warranties................... 22
(ii) Compliance with Agreements....................... 22
(iii) No Legislation or Injunction..................... 22
(iv) No Material Adverse Effect....................... 22
(v) Consents and Approvals........................... 22
(vi) Officers' Certificate............................ 23
(vii) Opinion of Counsel............................... 23
(viii) Secretary's Certificate.......................... 23
(ix) Approval of Proceedings.......................... 23
(x) Other Agreements................................. 23
(xi) Recent Financial Statements...................... 24
(xii) Antitrust Approvals.............................. 24
(xiii) Director Designee................................ 24
(b) Conditions to Vitex's Obligations......................... 24
(i) No Legislation or Injunction..................... 24
(ii) Consents and Approvals........................... 24
(iii) Officer's Certificate............................ 24
(iv) Antitrust Approvals.............................. 25
(v) Secretary's Certificate.......................... 25
(vi) Approval of Proceedings.......................... 25
</TABLE>
-ii-
<PAGE>
<TABLE>
<S> <C>
(vii) Other Agreements................................. 25
7. Expenses......................................................... 25
8. Notices.......................................................... 26
9. Parties; Assignment.............................................. 27
10. Survival of Provisions........................................... 27
11. Amendment and Modification....................................... 27
12. Further Assurances............................................... 27
13. Waiver of Breach................................................. 27
14. Remedies......................................................... 27
15. Entire Agreement................................................. 28
16. Severability..................................................... 28
17. Counterparts..................................................... 28
18. Governing Law; Consent to Jurisdiction........................... 28
</TABLE>
Exhibit A Form of First Stockholders' Agreement
Exhibit B Form of Second Stockholders' Agreement
Exhibit C Form of Registration Rights Agreement
Exhibit D Form of Opinion of Gibbons, Del Deo, Dolan, Griffinger &
Vecchione, P.C.
-iii
<PAGE>
Stock Purchase Agreement
Glossary of Defined Terms
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Section or Location
Term in Agreement
---- --------------------
- ----------------------------------------------- -------------------------------
<S> <C>
Affiliate...................................... 5(h)(v)
Agreements..................................... 3(f)
Average Market Price........................... 1(b)
Benefit Arrangement............................ 3(o)
Blood Center Amendment......................... Preamble
Board.......................................... 4(a)
Commission..................................... 3(1)
Common Stock................................... Preamble
Closing........................................ 2(g)
Closing Date................................... 2(g)
Closings....................................... 2(g)
Commitments.................................... 3(j)
Disclosure Letter.............................. 3 (first paragraph)
Exchange Act................................... 5(h)(i)
FDA............................................ 2(e)
Fifth Closing.................................. 2(e)
First Stockholders' Agreement.................. Preamble
Fourth Closing................................. 2(d)
GAAP........................................... 3(1)
Hart-Scott Act................................. 3(f)
Initial Closing................................ 2(a)
Intellectual Property.......................... 3(p)
IND............................................ 2(b)
IPO............................................ 1(b)
- --------------------------------------------------------------------------------
</TABLE>
-i-
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Section or Location
Term in Agreement
---- --------------------
- ---------------------------------------------- -------------------------------
<S> <C>
IPO Closing.................................... 2(f)
IPO Closing Date............................... 1(b)
Joint Development Agreement.................... Preamble
Key Agreements and Instruments................. 3(d)
Letter of Intent............................... Preamble
Market Prices.................................. 1(b)
Material Adverse Effect........................ 3(a)
Nasdaq......................................... 1(b)
Non-Public Information......................... 5(b)
Other Securities............................... 5(h)(i)
Person......................................... 3(i)
Prohibited Securities.......................... 5(h)(ii)
Qualified Director............................. 4(a)
Registration Rights Agreement.................. Preamble
Second Closing................................. 2(b)
Second Stockholders' Agreement................. Preamble
Securities Act................................. 3(1)
Shares......................................... 1(g)
Subsidiaries................................... 3(b)
System......................................... 2(b)
Third Closing.................................. 2(c)
13D Group...................................... 5(h)(v)
Underwriters' IPO Closing...................... 2(f)
Voting Power................................... 5(h)(i)
- --------------------------------------------------------------------------------
</TABLE>
_________________________
STOCK PURCHASE AGREEMENT
_________________________
-ii-
<PAGE>
Page
Section No.
- ------- ----
This Stock Purchase Agreement is dated as of February 19, 1998, by and
between V.I. Technologies, Inc., a Delaware corporation ("Vitex"), and Pall
Corporation, a New York corporation ("Pall").
WHEREAS, in a letter dated and signed by Pall on November 3, 1997, and
signed by Vitex on November 5, 1997 (the "Letter of Intent"), Pall confirmed its
intention to acquire an equity position in Vitex and enter into an operating
agreement with Vitex to develop and market systems which utilize Vitex's
proprietary compounds to inactivate viruses and other pathogens in red blood
cells and platelets; and
WHEREAS, prior to or concurrently with the execution and delivery of this
Agreement, (i) Pall and Vitex are executing and delivering a Joint Development,
Marketing and Distribution Agreement (the "Joint Development Agreement"), (ii)
Pall and certain stockholders of Vitex are executing and delivering a
Stockholders' Agreement in the form of Exhibit A hereto (the "First
Stockholders' Agreement") and a Second Stockholders' Agreement in the form of
Exhibit B hereto (the "Second Stockholders' Agreement"), (iii) Pall, Vitex and
certain stockholders of Vitex are executing and delivering a Registration Rights
Agreement in the form of Exhibit C hereto (the "Registration Rights Agreement"),
and (iv) The New York Blood Center, Inc. and Vitex have executed an Amendment to
Exclusive License Agreement (#5) for Virally Inactivated Cellular Products (the
"Blood Center Amendment"); and
WHEREAS, Pall wishes to purchase, and Vitex wishes to sell, shares of the
common stock, par value $0.01 per share, of Vitex (the "Common Stock") as
proposed in the Letter of Intent and as provided in this Agreement;
NOW, THEREFORE, to effect such purchase and sale and in consideration of
the mutual covenants, representations, warranties and agreements hereinafter set
forth, and intending to be legally bound by this Agreement, Vitex and Pall agree
as follows:
1. Sale and Purchase. Subject to the conditions set forth herein, Vitex
-----------------
agrees to issue and sell to Pall, and Pall agrees to purchase from Vitex, shares
of Common Stock as follows:
(a) At the Initial Closing (as defined in paragraph 2(a) of this
Agreement), Vitex will issue to Pall 1,333,333 shares of Common Stock for
an aggregate purchase price of $4 million;
-iii-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment]
Page
Section No.
- ------- ----
(b) At the Second Closing (as defined in paragraph 2(b) of this
Agreement), Vitex will issue to Pall ******** shares of Common Stock for
an aggregate purchase price of ********; provided that if the Second
Closing occurs on or after the closing date (the "IPO Closing Date") of the
initial underwritten public offering by Vitex of its Common Stock (the
"IPO"), the number of shares of Common Stock to be issued under this
paragraph 1(b) shall be obtained by dividing ******** by the "Average
Market Price" on the date of the Second Closing. For purposes of this
Agreement, (i) the Average Market Price on any date shall be the average of
the "Market Prices" for the twenty trading days immediately preceding such
date, (ii) a trading day shall be a day on which the New York Stock
Exchange is open for business, and (iii) Market Price on any date shall be
the following: (A) if the Common Stock is listed or admitted for trading on
one or more United States national securities exchanges, the closing price
on such date for the Common Stock on the principal exchange in the United
States on which the Common Stock is listed; (B) if the Common Stock is not
listed or admitted for trading on any United States national securities
exchange, the closing price on such date for the Common Stock on the Nasdaq
National or Nasdaq Small-Cap Market ("Nasdaq"); (C) if the Common Stock is
not listed or admitted for trading on a United States national securities
exchange or on Nasdaq, the average of the reported bid and asked prices on
such date in the over-the-counter market as furnished by the Nasdaq
Bulletin Board or (if such prices were not furnished by the Nasdaq Bulletin
Board) as furnished by the National Quotation Bureau, Inc. or (if such firm
is not then engaged in the business of reporting such prices) as furnished
by any member of the National Association of Securities Dealers, Inc.
selected jointly and in good faith by Pall and Vitex; or (D) if the Common
Stock is not publicly traded, the fair market value thereof determined
jointly and in good faith by Pall and Vitex; provided that if Pall and
Vitex are unable to reach agreement as to fair market value within a
reasonable period of time, the fair market value shall be determined in
good faith by an independent investment banking firm selected jointly and
in good faith by Pall and Vitex or, if Pall and Vitex are unable to reach
agreement as to that selection, by an independent investment banking firm
selected by the American Arbitration Association in accordance with its
rules; and provided further, that if any but not all of the trading days
used to compute Average Market Price are on or after the IPO Closing Date,
the Market Price on any date preceding the IPO Closing Date shall be the
purchase price per share for which the Common Stock is sold in the IPO,
less underwriters' discounts and commissions.
(c) At the Third Closing (as defined in paragraph 2(c) of this
Agreement), Vitex will issue to Pall ******** shares of Common Stock for
an aggregate purchase price of ******** *******, provided that if the Third
Closing occurs on or after the IPO Closing Date, the number of shares of
Common Stock to be issued under this paragraph 1(c) shall be obtained by
dividing ******** by the Average Market Price;
-iv-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment]
Page
Section No.
- ------- ----
(d) At the Fourth Closing (as defined in paragraph 2(d) of this
Agreement), Vitex will issue to Pall ******** shares of Common Stock for
an aggregate purchase price of ********, provided that if the Fourth
Closing Date occurs on or after the IPO Closing Date, the number of shares
of Common Stock to be issued under this paragraph 1(d) shall be obtained by
dividing ******** by the Average Market Price;
(e) At the Fifth Closing (as defined in paragraph 2(e) of this
Agreement), Vitex will issue to Pall ******** shares of Common Stock for
an aggregate purchase price of ********, provided that if the Fifth
Closing Date occurs on or after the IPO Closing Date, the number of shares
of Common Stock to be issued under this paragraph 1(e) shall be obtained by
dividing ******** by the Average Market Price;
(f) At the IPO Closing (as defined in paragraph 2(f) of this
Agreement), Pall will pay to Vitex $5 million, in consideration for which
Vitex will issue to Pall a number of shares of Common Stock obtained by
dividing 5,000,000 by the purchase price per share for which the Common
Stock is sold in the IPO, less underwriters' discounts and commissions.
(g) All shares of Common Stock issued by Vitex to Pall pursuant to
this Agreement are hereinafter referred to collectively as the "Shares."
2. The Closings.
------------
(a) The closing of the purchase and sale of the Shares pursuant to
paragraph 1(a) of this Agreement (the "Initial Closing") shall occur on
February 19, 1998, or such other date as may be agreed upon by Pall and
Vitex. At the Initial Closing, Pall will pay Vitex $4 million less any
payments previously made by Pall to Vitex pursuant to Section 4A of the
Letter of Intent, in immediately available funds to such account as Vitex
shall designate, against delivery to Pall of a certificate for 1,333,333
Shares. Upon making such payment, Pall shall have no further obligation to
make payments under Section 4A of the Letter of Intent.
(b) The closing of the purchase and sale of the Shares pursuant to
paragraph 1(b) of this Agreement (the "Second Closing") shall occur on such
date as may be agreed upon by Pall and Vitex; provided that without the
written consent of both Pall and Vitex, but subject to Section 6 of this
Agreement, the Second Closing shall occur on the tenth business day after
the date on which the ****** *** ******* ** ******* * ** *** *****
*********** ********** ** ***** **** ** ***** ** * ******** *************
*** ******* ** ** *** ********* ***** *** ******** *** *** ***** * ***** **
******* *************** *** **** ***********
-v-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment]
Page
Section No.
- ------- ----
*** *** ****** **** ****** . At the Second Closing, Pall will pay Vitex
******** in immediately available funds to such account as Vitex shall
designate, against delivery to Pall of a certificate for the number of
Shares determined under paragraph 1(b) of this Agreement.
(c) The closing of the purchase and sale of the Shares pursuant to
paragraph 1(c) of this Agreement (the "Third Closing") shall occur on such
date as may be agreed upon by Pall and Vitex; provided that without the
written consent of both Pall and Vitex, but subject to Section 6 of this
Agreement, the Third Closing shall occur on the tenth business day after
the date on which the ****** ** ***** **** ** ***** ** * ********
************* *** ******* ** ** *** ********* ***** *** ******** *** ***
***** * ***** ** *** ***. At the Third Closing, Pall will pay Vitex
******** in immediately available funds to such account as Vitex shall
designate, against delivery to Pall of a certificate for the number of
shares determined under paragraph 1(c) of this Agreement.
(d) The closing of the purchase and sale of the Shares pursuant to
paragraph 1(d) of this Agreement (the "Fourth Closing") shall occur on such
date as may be agreed upon by Pall and Vitex; provided that without the
written consent of both Pall and Vitex, but subject to Section 6 of this
Agreement, the Fourth Closing shall occur on the tenth business day after
the date on which the ****** ** ***** **** ** ***** ** * ********
************* *** ******* ** ** *** ********* ***** *** ******** *** ***
***** * ***** ** *** ***. At the Fourth Closing, Pall will pay Vitex
******** in immediately available funds to such account as Vitex shall
designate, against delivery to Pall of a certificate for the number of
shares determined under paragraph 1(d) of this Agreement.
(e) The closing of the purchase and sale of the Shares pursuant to
paragraph 1(e) of this Agreement (the "Fifth Closing") shall occur on such
date as may be agreed upon by Pall and Vitex; provided that without the
written consent of both Pall and Vitex, but subject to Section 6 of this
Agreement, the Fifth Closing shall occur on the tenth business day after
the date on which ***** ***** ******* **** *** ****** ****** **** *** ****
************** **** ****** ***** ******** ** *** ********* ********
*********** *** *** ****** ******** ** ** *** *********. At the Fifth
Closing, Pall will pay Vitex ******** in immediately available funds to
such account as Vitex shall designate, against delivery to Pall of a
certificate for the number of Shares determined under paragraph 1(e) of
this Agreement.
(f) The closing of the purchase and sale of the Shares pursuant to
paragraph 1(f) of this Agreement (the "IPO Closing") shall occur
concurrently with the closing of the IPO (the "Underwriters' IPO Closing"),
subject to Section 6 of this Agreement. At the IPO Closing, Pall will pay
Vitex $5 million in immediately available funds to such account as
-vi-
<PAGE>
Page
Section No.
- ------- ----
Vitex shall designate, against delivery to Pall of a certificate for the
number of Shares determined under paragraph 1(f) of this Agreement.
(g) The Initial Closing, the Second Closing, the Third Closing, the
Fourth Closing, the Fifth Closing and the IPO Closing are hereinafter
referred to collectively as the "Closings" and individually as a "Closing."
Each Closing other than the IPO Closing shall occur at the offices of
Carter, Ledyard & Milburn, 2 Wall Street, New York, New York, or such other
location as may be agreed upon by Vitex and Pall. The IPO Closing shall
occur at the same location as the Underwriters' IPO Closing, or such other
location as may be agreed upon by Vitex and Pall. The date on which any
Closing occurs is referred to herein as a "Closing Date."
(h) Adjustments. The number of Shares issuable to Pall at any Closing
-----------
pursuant to paragraphs (b) through (f) of Section 1 shall be appropriately
adjusted to reflect any split, subdivision, reverse split or consolidation
of the outstanding Common Stock, or the issuance of any stock dividend, at
any time after the date of this Agreement and prior to such Closing.
3. Representations and Warranties of Vitex. Except as set forth in a
---------------------------------------
Disclosure Letter being delivered by Vitex to Pall simultaneously with the
execution and delivery of this Agreement, and at each Closing as provided in
subsection 6(a)(i) of this Agreement (a "Disclosure Letter"), Vitex represents
and warrants to Pall as follows:
(a) Organization; Good Standing. Vitex is a corporation duly
---------------------------
organized, validly existing and in good standing under the laws of
Delaware, with full power and authority, corporate and other, to own or
lease and operate its properties and to conduct its business as currently
conducted, and is duly qualified to do business as a foreign corporation
and is in good standing in the State of New York and in all other
jurisdictions where such qualification is required, except where failure so
to qualify would not have a material adverse effect on the condition
(financial or otherwise), results of operations, business, assets, or
prospects of Vitex and its Subsidiaries (as defined below) taken as a whole
(a "Material Adverse Effect"). Except as provided in paragraph 3(f), Vitex
has made all necessary filings under all applicable corporate, securities
and any other laws to which it is subject, except where the failure to file
would not have a Material Adverse Effect.
(b) Subsidiaries. As of the date of this Agreement, Vitex has no
------------
majority-owned, consolidated subsidiaries (each, a "Subsidiary" and,
collectively, the "Subsidiaries"). At each Closing, the Subsidiaries of
Vitex, if any, will be as set forth in Schedule 3(b) of the Disclosure
-------------
Letter for such Closing. References below to a Subsidiary or Subsidiaries
shall
-vii-
<PAGE>
Page
Section No.
- ------- ----
not apply on the date of this Agreement and thereafter shall apply only on
Closing Dates when Vitex shall have one or more Subsidiaries.
Each Subsidiary is a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation, with
full power and authority, corporate and other, to own or lease and operate
its properties and to conduct its business as currently conducted, and is
duly qualified to do business as a foreign corporation and is in good
standing in all jurisdictions where such qualification is required, except
where failure so to qualify would not have a Material Adverse Effect. Each
Subsidiary has made all necessary filings required under all applicable
corporate, securities and any other laws to which it is subject, except
where failure to file would not have a Material Adverse Effect. Vitex has
no subsidiaries other than the Subsidiaries.
(c) Capitalization.
--------------
(i) The authorized capital of Vitex consists of 40,000,000
shares of Common Stock and 500 shares of preferred stock, and there
are issued and outstanding 22,394,612 shares of Common Stock, all of
which have been duly authorized and validly issued and are fully-paid
and non-assessable. Schedule 3(c)(i) of the Disclosure Letter sets
----------------
forth the names of all current record holders of the Common Stock and
the number of shares of Common Stock held of record by each of them.
Vitex will be required to update Schedule 3(c)(i) only in the
----------------
Disclosure Letters for Closings prior to the IPO Closing.
(ii) Except as set forth in Schedule 3(c)(ii) to the Disclosure
-----------------
Letter, there are no outstanding securities convertible into Common
Stock or any options, warrants, rights or other derivative securities
to purchase any Common Stock or securities convertible into Common
Stock.
(d) No Defaults or Violations. Neither Vitex nor a Subsidiary is in
-------------------------
violation of, or in default under, any term or provision of (i) its
certificate of incorporation or by-laws, (ii) any indenture, mortgage, deed
of trust, credit agreement, note or other evidence of indebtedness,
contract, commitment, undertaking, arrangement, or other agreement or
instrument to which it is a party or by which it or any of its properties
or business is bound or subject, and which is material to Vitex and the
Subsidiaries taken as a whole (collectively, the "Key Agreements and
Instruments"), which violation or default would have a Material Adverse
Effect, or (iii) any existing applicable law, rule, regulation, ordinance,
code, judgment, order or decree of any governmental agency or court,
domestic or foreign, having
-viii-
<PAGE>
Page
Section No.
- ------- ----
jurisdiction over Vitex or any Subsidiary or any of their respective
properties or businesses, which violation or default would have a Material
Adverse Effect. Vitex and each Subsidiary owns, possesses or has obtained
all material governmental and other licenses, permits, certifications,
registrations, approvals or consents and other authorizations necessary to
own or lease, as the case may be, and operate its properties and to conduct
its business as currently conducted, and all such licenses, permits,
certifications, registrations, approvals, consents and other authorizations
are in full effect and in good standing. There are no proceedings pending
or, to the best of Vitex's knowledge, threatened seeking to cancel,
terminate or limit any such licenses, permits, certifications,
registrations, approvals or consents or authorizations, which cancellation,
termination or limitation would constitute a Material Adverse Effect, nor
is there any basis therefor.
(e) Key Agreements and Instruments. Schedule 3(e) of the Disclosure
------------------------------ -------------
Letter sets forth a true and complete list of each of the Key Agreements
and Instruments then in effect. A true and complete copy of each of such
Key Agreements and Instruments (including all exhibits and schedules
thereto) has previously been furnished to Pall, except those Key Agreements
and Instruments (identified by an asterisk in Schedule 3(e)) which Pall has
--------------
elected not to request or which Vitex is prohibited from furnishing to Pall
by confidentiality agreements, provided that Vitex shall have furnished to
Pall summaries of the material terms of such Agreements, to the extent not
prohibited by confidentiality agreements. Each of the Key Agreements and
Instruments is valid, binding and enforceable against Vitex or a Subsidiary
and, to Vitex's best knowledge, the other parties thereto, in accordance
with its terms, and is in full force and effect.
(f) Governmental Filings and Authorizations. Each filing,
---------------------------------------
authorization, approval, consent, order, registration, license or permit of
any court or governmental or regulatory agency or body required in
connection with the execution and delivery by Vitex of this Agreement, the
Joint Development Agreement, the Registration Rights Agreement and the
Blood Center Amendment (collectively, the "Agreements"), and the
consummation of the transactions therein contemplated, has been made or
obtained, except such as may be required under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "Hart-Scott Act").
(g) Authorization and Enforceability of Agreements. Vitex has full
----------------------------------------------
power and authority, corporate and other, to execute and deliver the
Agreements, to consummate the transactions contemplated thereby and to
perform its obligations thereunder. The execution and delivery of the
Agreements by Vitex, and the performance by Vitex of its obligations
thereunder, have been duly authorized by all necessary corporate action on
the part of Vitex.
-ix-
<PAGE>
Page
Section No.
- ------- ----
The Agreements have been duly executed and delivered by Vitex and
constitute the valid and binding obligations of Vitex, enforceable against
Vitex in accordance with their terms, except insofar as enforcement may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium
and other laws affecting the rights of creditors generally, and by the
discretion of courts in granting equitable remedies, and except to the
extent that compliance with the Hart-Scott Act may be required. The
execution and delivery of the Agreements by Vitex, the performance by Vitex
of the transactions therein contemplated, and the compliance by Vitex with
the terms of the Agreements do not, and will not, with or without the
giving of notice or the lapse of time, or both, (A) result in any violation
of the certificate of incorporation or by-laws of Vitex or any of its
Subsidiaries, (B) result in a breach of or conflict with any of the terms
or provisions of, or constitute a default under, or result in the
modification or termination of, or result in the creation or imposition of
any lien, security interest, charge or encumbrance upon any of the
properties or assets of Vitex or any of its Subsidiaries pursuant to, any
of the Key Agreements and Instruments, (C) violate any existing applicable
law, rule, regulation, judgment, order or decree of any governmental agency
or court, domestic or foreign, having jurisdiction over Vitex or a
Subsidiary or its or their properties or business, or (D) result in or have
any Material Adverse Effect.
(h) Authorization and Reservation of Shares. The issuance and sale of
---------------------------------------
the Shares have been duly authorized by Vitex on or prior to the date of
this Agreement, and, when issued and paid for as provided in this
Agreement, each Share will be validly issued and fully paid and
nonassessable, and Pall will not be subject to any personal liability
solely by reason of being the holder of the Shares. Vitex has duly
reserved not less than 7,000,000 authorized but unissued shares of Common
Stock (subject to adjustment as provided in paragraph 2(h) of this
Agreement) for issuance to Pall under this Agreement at the Closings
subsequent to the Initial Closing, and will at all times maintain a
sufficient reserve of authorized but unissued shares of Common Stock for
issuance to Pall under this Agreement.
(i) Consents and Approvals. The execution and delivery by Vitex of
----------------------
the Agreements, the issuance of any of the Shares, and the performance by
Vitex of its other obligations under the Agreements do not require Vitex or
any of its Subsidiaries to obtain any consent, approval, clearance or
action of, or make any filing submission or registration with, or give any
notice to, any Person or judicial authority. As used in this Agreement,
"Person" shall mean an individual, partnership, joint stock company,
corporation, limited liability company, trust or unincorporated
organization, and a government, agency, regulatory authority or political
subdivision thereof.
(j) Effect of Agreements on Business and Commitments of Vitex.
---------------------------------------------------------
Neither the
-x-
<PAGE>
Page
Section No.
- ------- ----
purchase of the Shares by Pall nor the consummation of the transactions
contemplated by the Agreements will result in (i) the loss by Vitex of the
benefits of any material business relationship, including with any customer
or supplier, (ii) the acceleration of the vesting of any outstanding
option, warrant, call, commitment, agreement, conversion right, preemptive
right or other right to subscribe for, purchase or otherwise acquire any of
the shares of the capital stock or any debt securities of Vitex or any of
its Subsidiaries (collectively "Commitments", and each individually a
"Commitment"), (iii) any obligation of Vitex or its Subsidiaries to grant,
extend or enter into any Commitment, or (iv) any right in favor of any
Person to terminate or cancel any of the Key Agreements and Instruments.
(k) Litigation. There are no claims, actions, suits, proceedings,
----------
arbitrations, investigations or inquiries by or before any governmental
agency, court or tribunal, domestic or foreign, or before any private
arbitration tribunal, pending or, to the best of Vitex's knowledge,
threatened against Vitex or any Subsidiary or involving the properties or
business of Vitex or any Subsidiary which, if determined adversely, would,
individually or in the aggregate, result in a Material Adverse Effect, or
which relate in any way to the validity of the capital stock of Vitex or
the validity of the Agreements, or of any action taken or to be taken by
Vitex pursuant to or in connection with the Agreements. Neither Vitex nor
any Subsidiary is subject to any order, writ, judgment, injunction, decree,
determination or award of any court or of any governmental agency or
instrumentality (whether federal, state, local or foreign) which could
reasonably be expected to have a Material Adverse Effect.
(l) Reports and Financial Statements. KPMG Peat Marwick LLP are the
--------------------------------
independent public accountants to the Company and are "independent public
accountants" within the meaning of the Securities Act of 1933, as amended
(the "Securities Act"), and the regulations of the Securities and Exchange
Commission (the "Commission") promulgated thereunder. Vitex has furnished
Pall with true and complete copies of Vitex's audited financial statements
at December 31, 1996, and December 31, 1995, and for the fiscal years then
ended, and unaudited financial statements at December 31, 1997, and for
the year then ended. Such financial statements (i) have been prepared in
accordance with United States generally accepted accounting principles
("GAAP") applied on a consistent basis (except as may be indicated therein
or in the notes thereto), (ii) present fairly, in all material respects,
the financial position of Vitex as at the dates thereof and the results of
its operations and cash flows for the periods then ended subject, in the
case of the unaudited financial statements, to normal year-end audit
adjustments and any other adjustments described therein, and (iii) are, in
all material respects, in accordance with the books of account and records
of Vitex except as indicated therein. Schedule 3(l) of the Disclosure
-------------
Letter for each Closing prior to the IPO Closing will update this paragraph
3(l) with respect to all annual financial statements
-xi-
<PAGE>
Page
Section No.
- ------- ----
and the most recent interim financial statement delivered to Pall by Vitex
pursuant to paragraph 4(b) of this Agreement since the date of the
immediately preceding Disclosure Letter.
(m) Liabilities. Except as and to the extent reflected or reserved
-----------
against in the financial statements of Vitex referred to in paragraph 3(l)
above, Vitex as at December 31, 1997, had no material liabilities, debts,
obligations or claims asserted against it, whether accrued, absolute,
contingent or otherwise, and whether due or to become due, and including,
but not limited to, liabilities on account of taxes, unfunded past service
liabilities under any pension, profit sharing or similar plan, other
governmental charges or lawsuits brought subsequent to such date. Schedule
--------
3(m) of the Disclosure Letter for each Closing prior to the IPO Closing
----
will update this paragraph 3(m) as of the end of the fiscal quarter of
Vitex immediately preceding the Closing Date of such Closing.
(n) Employees.
---------
(i) Vitex and its Subsidiaries are in full compliance with all
laws regarding employment, wages, hours, equal opportunity, collective
bargaining and payment of social security and other taxes except to
the extent that noncompliance would not have a Material Adverse
Effect. Except as would not have a Material Adverse Effect, no
complaint of any unfair labor practice or discriminatory employment
practice against Vitex or any Subsidiary has been filed or, to the
best of Vitex's knowledge, threatened to be filed with or by the
National Labor Relations Board, the Equal Employment Opportunity
Commission or any other administrative agency, federal or state, that
regulates labor or employment practices, nor is any grievance filed
or, to the best of Vitex's knowledge, threatened to be filed, against
Vitex or any Subsidiary by any employee pursuant to any collective
bargaining or other employment agreement to which Vitex or any
Subsidiary is a party or is bound. Vitex and its Subsidiaries are in
compliance with all applicable federal, state, provincial and local
laws and regulations regarding occupational safety and health
standards except to the extent that noncompliance will not have a
Material Adverse Effect, and have received no unresolved complaints
from any federal, state or local agency or regulatory body alleging
violations of any such laws or regulations.
(ii) Schedule 3(n)(ii) of the Disclosure Letter lists all
-----------------
employment contracts between Vitex or a Subsidiary and its officers
and other employees currently in effect. Except as may be provided in
such Schedule, the employment of all Persons employed by Vitex or its
Subsidiaries is, subject to the provisions of
-xii-
<PAGE>
Page
Section No.
- ------- ----
applicable law, terminable at will without any penalty or severance
obligation of any kind on the part of the employer. All sums due for
employee compensation and benefits and all vacation time owing to any
employees of Vitex or any of its Subsidiaries have been duly and
adequately accrued on the accounting records of Vitex and the
Subsidiaries.
(iii) To the best knowledge of Vitex, after due inquiry, none of
Vitex's executive officers is obligated under any contract (including
licenses, covenants or commitments of any nature) or other agreement,
or subject to any judgment, decree or order of any court or
administrative agency, that would interfere with the use of such
executive officer's fulltime best efforts to promote the interests of
Vitex or that would conflict with Vitex's business as currently
conducted or proposed to be conducted.
(iv) Vitex is not aware that any officer or key employee, or
that any group of key employees, intends to terminate their employment
with Vitex, nor does Vitex intend at present to terminate the
employment of any of the foregoing.
(o) Employee Benefit Plans. Vitex and the Subsidiaries have no
----------------------
employee benefit plans (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974) covering former and current
employees of Vitex or a Subsidiary, or under which Vitex or a Subsidiary
has any obligation or liability. Schedule 3(o) of the Disclosure Letter
-------------
lists all material compensation plans then in effect, including, without
limitation, those relating to bonuses, commissions, profit-sharing,
savings, stock options, insurance and deferred compensation or other
similar fringe or employee benefits arrangements covering former or current
employees of Vitex or a Subsidiary or under which Vitex or a Subsidiary has
any obligation or liability (each, a "Benefit Arrangement"). A true and
complete copy of each Benefit Arrangement has previously been furnished to
Pall. The Benefit Arrangements are and have been administered in
substantial compliance with their terms and with the requirements of
applicable law.
(p) Patents, Licenses, etc.
----------------------
(i) Vitex and each Subsidiary owns, free and clear of all
encumbrances, restrictions, liens, security interests and charges, and
has good and marketable title to, or holds adequate licenses or
otherwise possesses all such rights as are necessary to use all
patents (and applications therefor), patent disclosures, trademarks,
service marks, trade names, copyrights (and applications therefor),
integrated circuit
-xiii-
<PAGE>
Page
Section No.
- ------- ----
topographies, inventions, discoveries, processes, know-how,
scientific, technical, engineering and marketing data, formulae and
techniques used or proposed to be used, in or necessary for the
conduct of its business as now conducted or as proposed to be
conducted (collectively, "Intellectual Property").
(ii) Neither Vitex nor a Subsidiary has received notice or
otherwise has reason to know of any conflict or alleged conflict with
the rights of others pertaining to the Intellectual Property described
in this paragraph 3(p) where the effect of such conflict could have a
Material Adverse Effect. To Vitex's best knowledge, Vitex's business,
as presently conducted and as proposed to be conducted, does not
infringe upon or violate any patent rights or trade secrets of others
except where Vitex has a valid license or sublicense. To Vitex's best
knowledge, Vitex and its Subsidiaries have the right to use all trade
secrets, processes, customer lists and other rights incident to their
respective businesses as now conducted or as proposed to be conducted.
(iii) To the best knowledge of Vitex, after due inquiry, no
employee of Vitex or a Subsidiary has violated any employment
agreement or proprietary information agreement which he or she had
with a previous employer or any patent policy of such employer, or is
a party to or threatened by any litigation concerning any patents,
trademarks, trade secrets, service names, trade names, copyrights,
licenses and the like.
(q) Taxes. Vitex and each Subsidiary has filed all tax returns
-----
required to be filed with the appropriate taxing authorities, including all
state, municipal and other local authorities (whether relating to income,
sales, goods and services, franchise, withholding, real or personal
property or other types of taxes) or has duly obtained extensions of time
for the filing thereof, and has paid in full all taxes which have become
due pursuant to such returns or claimed to be due by any such taxing
authority or otherwise due and owing, except for taxes which are being
contested in good faith by way of appropriate proceedings and in respect of
which appropriate reserves have been taken on the financial statements of
Vitex and except where the failure to file such tax returns or to pay such
taxes would not have a Material Adverse Effect. The provisions for taxes
in the balance sheets described in paragraph 3(l) are sufficient for the
payment in all material respects of all accrued and unpaid federal, state,
county and local taxes of Vitex and its Subsidiaries whether or not
assessed or disputed as of the respective dates of such balance sheets.
(r) Properties. Vitex and each Subsidiary have good and marketable
----------
title to all
-xiv-
<PAGE>
Page
Section No.
- ------- ----
properties owned by them, free and clear of all security interests,
charges, mortgages, liens, encumbrances and defects, except such as do not
materially affect the value or transferability of such property and do not
interfere with the use of such property made or proposed to be made by
Vitex or such Subsidiary. The leases, licenses or other contracts or
instruments under which Vitex and each Subsidiary leases, holds or is
entitled to use any property, real or personal, are valid, subsisting and
enforceable, with only such exceptions as are not material and do not
interfere with the use of such property made, or proposed to be made, by
Vitex or such Subsidiary, and all rentals, royalties or other payments
accruing thereunder which became due prior to the date of this Agreement
have been duly paid, and neither Vitex nor any Subsidiary is in material
default thereunder and, to the best of Vitex's knowledge, no event has
occurred which, with the passage of time or the giving of notice, or both,
would constitute a material default thereunder. Neither Vitex nor a
Subsidiary has received notice of any violation of any applicable law,
ordinance, regulation, order or requirement relating to its owned or leased
properties, except where such violation would not have a Material Adverse
Effect.
(s) Condition of Properties. All facilities, machinery, equipment,
-----------------------
fixtures, vehicles and other properties owned, leased or used by Vitex and
its Subsidiaries are reasonably fit and usable for the purposes for which
they are being used, are adequate and sufficient for Vitex's or a
Subsidiary's business and conform in all material respects with all
applicable ordinances, regulations and laws, except where the failure to
conform would not have a Material Adverse Effect.
(t) Insurance. As described in Schedule 3(t) of the Disclosure
--------- -------------
Letter, Vitex and the Subsidiaries have insured their properties against
loss or damage by fire or other casualty and maintain such other insurance,
including but not limited to, such liability insurance as is usually
maintained by companies similar in size and credit standing to Vitex and
engaged in the same or similar businesses and owning similar properties.
(u) No Material Transaction or Material Adverse Effect. Since the end
--------------------------------------------------
of Vitex's last completed fiscal year, (i) Vitex has not entered into any
material transactions other than in the ordinary course of business, except
for those provided for in the Agreements; and (ii) there has not been any
event that has had or may have a Material Adverse Effect.
(v) Transactions with Related Parties. Since the beginning of Vitex's
---------------------------------
last completed fiscal year, neither Vitex nor a Subsidiary has been a party
to any transaction, has had any relationship, or has lent money in any
manner that would require disclosure under Item 404 of Regulation S-K of
the Commission. To the best knowledge of Vitex, there exist
-xv-
<PAGE>
Page
Section No.
- ------- ----
no agreements among stockholders of Vitex to act in concert with respect to
their voting or holding of Vitex securities, except as provided in the
Stockholders' Agreement dated as of April 29, 1997, among Vitex and the
stockholders of Vitex listed on Schedule I thereto, which Agreement will
terminate as of the Initial Closing and be replaced by the First
Stockholders' Agreement.
(w) Registration Rights. Vitex is not under any contractual
-------------------
obligation to register any of its securities for resale under the
Securities Act, other than (i) contractual obligations to current or former
employees and directors relating to their stock compensation from Vitex,
and (ii) as provided in a Registration Rights Agreement dated April 29,
1997, among Vitex and the stockholders of Vitex listed on Schedule I
thereto, which Agreement will terminate as of the Initial Closing and be
replaced by the Registration Rights Agreement.
(x) Private Offering. Based upon the representations, warranties and
----------------
covenants of Pall set forth in Section 5 hereof, the offer, issuance and
sale of the Shares are and will be exempt from the registration and
prospectus delivery requirements of the Securities Act, and have been or
will be registered or qualified (or are or will be exempt from registration
and qualification) under the registration, permit or qualification
requirements of all applicable state securities laws.
(y) Brokerage. There are no claims for brokerage commissions or
---------
finder's fees or similar compensation in connection with the transactions
contemplated by the Agreements based on any arrangement made by or on
behalf of Vitex, and Vitex agrees to indemnify and hold Pall harmless
against any costs or damages incurred by Pall as a result of any such
claim.
(z) Illegal or Unauthorized Payments; Political Contributions.
---------------------------------------------------------
Neither Vitex nor any Subsidiary, nor any of the current officers and
directors of Vitex or a Subsidiary on its behalf, has, directly or
indirectly, made or authorized any payment, contribution or gift of money,
property, or services, (a) as a kickback or bribe to any Person or (b) to
any political organization, or the holder of or any aspirant to any
elective or appointive public office except for personal political
contributions not involving the use of funds of Vitex or a Subsidiary.
(aa) Material Facts. This Agreement (including the Disclosure Letter
--------------
being delivered herewith), the Joint Development Agreement, and the other
documents, certificates or written statements furnished or to be furnished
to Pall by or on behalf of Vitex in connection with its purchase of the
Shares, taken as a whole, do not contain any untrue
-xvi-
<PAGE>
Page
Section No.
- ------- ----
statement of a material fact or omit to state a material fact necessary to
make the statements contained therein, in light of the circumstances in
which they were made, not misleading. Schedule 3(a)(a) of the Disclosure
----------------
Letter for each Closing will update the immediately preceding sentence but
need not include the Joint Development Agreement after the Initial Closing.
Except for factors affecting the economy or the pharmaceutical or health
care industry generally, there is no fact which is known to Vitex, which
has not been disclosed by Vitex to Pall in a Disclosure Letter or
otherwise, and which will have a Material Adverse Effect.
4. Covenants of Vitex. Vitex covenants and agrees as follows:
------------------
(a) Board Representation.
--------------------
(i) For so long as the Joint Development Agreement is in effect,
Vitex will use its best efforts, consistent with the fiduciary duty of
its Board of Directors (the "Board"), to cause to be nominated,
elected and maintained in office as a director on the Board one person
who is nominated by Pall from time to time and who is a Qualified
Director as defined in the Second Stockholders' Agreement. Pall's
initial nominee is Jeremy Hayward-Surry, and Vitex acknowledges that,
as of the date of this Agreement, to the best of its knowledge, he is
a Qualified Director. Vitex shall pay all reasonable out-of-pocket
expenses incurred by the directors nominated by Pall in connection
with attending Board meetings or transacting other Vitex business.
(ii) Pall shall nominate a director, or request the removal of
its nominee from the Board, by delivering a notice to the Secretary of
the Company. As promptly as practicable, but in any event within 10
days after delivery of such notice, the Company shall take or cause to
be taken such corporate actions as may be reasonably required to cause
the election or removal requested in such notice. Such corporate
actions may include calling a meeting, or soliciting a written
consent, of the Board.
(b) Financial and Business Information. Until the IPO Closing, Vitex
----------------------------------
will deliver to Pall:
(i) Interim Statements - as soon as available, and in any event
------------------
within 45 days after the close of each of the first three fiscal
quarters of each fiscal year of Vitex, interim consolidated financial
statements of Vitex and any Subsidiaries prepared in accordance with
Article 10 of Regulation S-X of the Commission.
-xvii-
<PAGE>
Page
Section No.
- ------- ----
(ii) Annual Statements - as soon as available after the end of
-----------------
each fiscal year of Vitex, and in any event within 90 days thereafter,
a consolidated balance sheet of Vitex and any Subsidiaries at the end
of such year; and consolidated statements of income, stockholders'
equity and cash flows of Vitex and any Subsidiaries for such year,
setting forth in each case in comparative form the figures for the
previous fiscal year, all in reasonable detail and accompanied by an
auditors' report thereon of independent certified public accountants
of recognized national standing selected by Vitex.
(iii) Audit Reports - promptly upon receipt thereof, one copy of
-------------
each other financial report and internal control letter submitted to
Vitex by independent accountants in connection with any annual,
interim or special audit made by them of the books of Vitex.
(iv) Other Reports - promptly upon their becoming available, one
-------------
copy of: each financial statement, report, registration statement,
prospectus, notice, definitive proxy statement or other written
communication sent by Vitex to its stockholders generally or filed
with or submitted to the Commission or any securities exchange by
Vitex or a Subsidiary; any press release issued by Vitex or a
Subsidiary; and any communications of any nature whatsoever prepared
by the Commission, the NASD or any national securities exchange which
is addressed to Vitex or a Subsidiary.
(v) Progress Reports - prior to each regularly scheduled
----------------
meeting of the Board, a narrative report of Vitex's activities since
the date of the last such report, including a description of business
development, operating results and marketing efforts.
(vi) Requested Information - with reasonable promptness, such
---------------------
other data and information as from time to time Pall may reasonably
request.
(c) Inspection. In connection with any Closing, Vitex will permit
----------
employees and other representatives of Pall: to visit and inspect any of
the properties of Vitex and any Subsidiaries; to examine all its and their
books of account, records, reports and other papers that Vitex is not
contractually required to keep confidential or secret, or that are not
subject to attorney-client privilege; to make copies and extracts
therefrom; and to discuss its affairs, finances and accounts with Vitex's
officers, directors, key employees and independent public accountants or
any of them (and by this provision Vitex authorizes such accountants to
discuss with Pall's employees and other representatives the finances and
affairs of Vitex and
-xviii-
<PAGE>
Page
Section No.
- ------- ----
any Subsidiaries), all at such reasonable times and as often as may be
reasonably requested.
(d) Conduct of Business and Maintenance of Existence. Vitex will (i)
------------------------------------------------
prior to the IPO Closing, continue to engage in business of the same
general type as now conducted by it, (ii) preserve, renew and keep in full
force and effect its corporate existence, and (iii) take all reasonable
action to maintain all rights, privileges and franchises necessary or
desirable for the normal conduct of its business.
(e) Insurance. Vitex will maintain insurance with responsible and
---------
reputable insurance companies or associations in such amounts and covering
such risks as is usually carried by companies similar in size and credit
standing to Vitex and engaged in the same or similar businesses and owning
similar properties, provided that such insurance is and remains available
to Vitex at commercially reasonable rates.
(f) Keeping of Books. Vitex will keep proper books of record and
----------------
account, in which full and correct entries shall be made of all financial
transactions and the assets and business of Vitex and its subsidiaries in
accordance with GAAP.
(g) Lost, etc. Certificates Evidencing Shares; Exchange. Upon receipt
---------------------------------------------------
by Vitex of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of any certificate evidencing any Shares owned by
Pall, and (in the case of loss, theft or destruction) of an indemnity
satisfactory to it, and upon reimbursement to Vitex of all reasonable
expenses incidental thereto, and upon surrender and cancellation of such
certificate, if mutilated, Vitex will make and deliver in lieu of such
certificate a new certificate of like tenor and for the number of
securities evidenced by such certificate which remain outstanding. Prior
to the IPO Closing, Pall's agreement of indemnity shall constitute an
indemnity satisfactory to Vitex for purposes of this paragraph 4(g); after
the IPO Closing, Vitex shall have the right to require Pall to furnish such
form of indemnity as Vitex or its transfer agent requires of Vitex
stockholders generally. Upon surrender of any certificate representing any
securities of Vitex for exchange at the office of Vitex, Vitex at its
expense will cause to be issued in exchange therefor new certificates in
such denomination or denominations as may be requested for the same
aggregate number of securities represented by the certificate so
surrendered and registered in the name of Pall.
(h) Commencement and Termination of Covenants. Except as otherwise
-----------------------------------------
specifically provided in any paragraph of this Section 4, the obligations
of Vitex and the rights of Pall set forth in this Section 4 shall begin on
the date of this Agreement and shall terminate one year after the last of
the Closings.
-xix-
<PAGE>
Page
Section No.
- ------- ----
(i) Form D Filing. If the sale of the Shares to Pall qualifies for an
-------------
exemption from registration provided by Regulation D under the Securities
Act, Vitex will timely file with the Commission a Form D under the
Securities Act in connection with the sale of the Shares to Pall.
(j) Registration of Shares. Vitex will register any or all of the
----------------------
Shares under the Securities Act for the public resale thereof in accordance
with, and will be bound by the provisions of, the Registration Rights
Agreement.
(k) Reservation of Shares. Vitex will at all times maintain a reserve
---------------------
of authorized but unissued shares of Common Stock and/or treasury shares
sufficient for the fulfillment by Vitex of its obligations to issue Shares
to Pall pursuant to this Agreement.
5. Representations, Warranties and Covenants of Pall; Additional
-------------------------------------------------------------
Covenants of Vitex.
------------------
(a) General. Pall hereby represents and warrants that:
-------
(i) Pall is a corporation duly organized, validly existing and in
good standing under the laws of New York, with full power and
authority, corporate and other, to execute and deliver the Agreements,
to consummate the transactions contemplated thereby and to perform its
obligations thereunder. The execution, delivery and performance by
Pall of the Agreements to which it is a party, and the performance by
Pall of its obligations thereunder, have been duly authorized by all
necessary corporate action on the part of Pall. The Agreements to
which Pall is a party have been duly executed and delivered by Pall
and constitute the valid and binding obligations of Pall, enforceable
against Pall in accordance with their terms, except insofar as
enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws affecting the rights of
creditors generally and by the discretion of courts in granting
equitable remedies, and except and to the extent that compliance with
the Hart-Scott Act may be required;
(ii) Pall is an "accredited investor" within the meaning of Rule
501(a) of Regulation D under the Securities Act, and is purchasing the
Shares at the relevant Closing for its own account, and not with a
view to any distribution thereof in a transaction that would violate
the Securities Act or the securities laws of any state of the United
States or any other applicable jurisdiction, but without prejudice to
Pall's right at all times to sell or otherwise dispose of all or any
part of the Shares under a registration statement under the Securities
Act or under an exemption from said
-xx-
<PAGE>
Page
Section No.
- ------- ----
registration available under the Securities Act;
(iii) Pall's principal executive offices are located in the
State of New York;
(iv) Pall understands that an investment in Vitex bears a high
degree of risk and represents that it has such knowledge and
experience in financial and business matters that it is capable of
evaluating the merits and risks of purchasing the Shares, and is able
to bear the economic risks of its investment for an indefinite period
of time; and
(v) Pall has had access to such financial and other
information, and has been afforded the opportunity to ask such
questions of representatives of Vitex and receive answers thereto, as
it deems necessary in connection with its purchase of the Shares.
(b) Disclosure of Non-Public Information. As to so much of the
------------------------------------
information and other material furnished under or in connection with the
Agreements (whether furnished before, on or after the date hereof,
including without limitation information furnished pursuant to paragraphs
4(b) and (c) hereof) as constitutes or contains non-public business,
financial or other information of Vitex or a Subsidiary ("Non-Public
Information"), Pall covenants that it will use due care to prevent its
officers, directors, employees, counsel, accountants and other
representatives from (i) disclosing any Non-Public Information to Persons
other than Palls's directors, authorized officers and other employees,
counsel, accountants and other authorized representatives, or (ii) using
Non-Public Information in any manner that would constitute a violation of
U.S. federal or state securities laws; provided that Pall may disclose or
deliver any information or other material disclosed to or received by it
should Pall be advised by its counsel (a copy of such advice to be
delivered to Vitex) that such disclosure or delivery is required by law,
regulation or judicial or administrative order or otherwise in connection
with a resale of Shares by Pall in a transaction which is not covered by a
registration statement under the Securities Act, so long as the recipient
of such information enters into a confidentiality agreement with Vitex in
form and substance reasonably satisfactory to Vitex. For purposes of this
paragraph 5(b), "due care" means at least the same level of care that Pall
would use to protect the confidentiality of its own sensitive or
proprietary information, and this obligation shall survive termination of
this Agreement.
(c) Securities Act Matters. Pall acknowledges that the Shares are
----------------------
being offered to it in a transaction not involving any public offering
within the meaning of the Securities
-xxi-
<PAGE>
Page
Section No.
- ------- ----
Act and that the offer and sale of the Shares to Pall have not been
registered and will not be registered under the Securities Act or under the
securities laws of any state of the United States. Pall agrees that it will
not sell or otherwise transfer the Shares except pursuant to an effective
registration statement under the Securities Act or as provided in Section
14 of the Registration Rights Agreement.
(d) No Intention of Board to Pay Dividends. Pall acknowledges that
--------------------------------------
the Board has no obligation to declare, and has no present intention of
declaring, any dividends on the Common Stock.
(e) Hart-Scott Act Compliance. Promptly, and in any event in such time
-------------------------
as will avoid any delay in any of the Closings at the respective times
provided for in Section 2 of this Agreement, Pall and Vitex will (i)
prepare any required Notification and Report Forms under the Hart-Scott Act
with respect to the acquisition of any Shares by Pall, (ii) file such forms
with the United States Federal Trade Commission and Department of Justice,
and (iii) respond to any request for additional information in connection
with such filing.
(f) Consents and Approvals. Vitex and Pall will use their respective
----------------------
reasonable best efforts to obtain as promptly as practicable any consent or
approval of any Person, including any regulatory authority, required in
connection with the transactions contemplated by the Agreements.
(g) Black-Out Period. In connection with the IPO, Pall agrees that
----------------
if required by the managing underwriters, Pall will undertake to them, on
the same terms as the other significant pre-IPO stockholders of Vitex, that
it will not effect any offer, sale or other disposition of any of the
Shares (except to a subsidiary of Pall) for a period of not more than 180
days from the IPO Closing Date.
(h) Standstill Agreement.
--------------------
(i) Pall agrees that, without the prior consent of the Board, it
will not at any time, nor will it permit any of its subsidiaries to,
acquire directly or indirectly, by purchase or otherwise, record
ownership or beneficial ownership (within the meaning of Rule 13d-3
under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) of any voting securities of Vitex other than the Shares , or
rights or options to acquire, or securities convertible into or
exchangeable for, any such voting securities (such voting securities
other than the Shares, and such rights, options and convertible or
exchangeable securities, being herein defined as "Other
-xxii-
<PAGE>
Page
Section No.
- ------- ----
Securities"), if after such acquisition (and giving effect to the
exercise of any such rights or options or the conversion or exchange
of such securities), Pall and its subsidiaries would beneficially own
in the aggregate capital stock of Vitex having 20% or more of the
voting power of all outstanding shares of Vitex entitled to vote in
the election of directors generally (the "Voting Power"); provided
that (i) subsequent reductions in the number of outstanding shares of
outstanding capital stock of Vitex (or rights or options therefor)
shall not be deemed to cause a violation of this subsection 5(h)(i),
and (ii) the term "Other Securities" shall not include any voting
securities of Vitex, or any rights or options to acquire, or
securities convertible into or exchangeable for, any such voting
securities, which Pall may acquire pursuant to any provision of this
Agreement (including paragraph 5(h)(v)).
(ii) If at any time Pall and/or its subsidiaries are the record
owners or beneficial owners in the aggregate of capital stock of Vitex
having 20% or more of the Voting Power and such capital stock includes
Other Securities, such Other Securities, only to the extent that
Pall's Voting Power exceeds 20%, shall be deemed to be "Prohibited
Securities." Pall agrees that neither it nor any of its subsidiaries
shall (and neither it nor any of its subsidiaries shall be entitled
to) vote any Prohibited Securities with respect to any matter subject
to the vote or written consent of Vitex's stockholders, provided that
the foregoing shall not be deemed to limit Vitex's remedies in the
event that the Prohibited Securities were acquired in violation of
subsection 5(h)(i).
(iii) In the event that as a result of the purchase of Shares at
any Closing, Pall and its subsidiaries become the record owners or
beneficial owners of Prohibited Securities, Pall agrees that, as soon
as and in a manner that is commercially reasonable, Pall will, and
will cause its subsidiaries to, sell or otherwise dispose of such
number of Prohibited Securities as will reduce Pall's Voting Power to
less than 20%, provided that Pall and its subsidiaries shall not be
obligated so to sell or otherwise dispose of Prohibited Securities at
any time or in any manner which would, in the reasonable opinion of
counsel to Pall, (I) cause Pall or any of its subsidiaries to be
liable to Vitex pursuant to Section 16(b) of the Exchange Act, or (II)
result in a violation by Pall or any of its subsidiaries of Section 5
or 17(a) of the Securities Act, or Section 10(b) of the Exchange Act
or Rule 10b-5 thereunder.
(iv) Pall agrees that, without the prior consent of the Board,
it will not at any time, nor will it permit any of its subsidiaries
to: (A) solicit proxies to vote any securities of Vitex under any
circumstances for a change in the directors or
-xxiii-
<PAGE>
Page
Section No.
- ------- ----
management of Vitex, or in connection with a merger or acquisition of
the Company, or deposit any securities of Vitex in a voting trust or
subject them to a voting agreement or other agreement of similar
effect (other than the First Stockholders' Agreement or a revocable
proxy granted by Pall with respect to shares of Common Stock which are
not Prohibited Securities); (B) initiate, propose, or otherwise
solicit any stockholder of Vitex for the approval of, or induce or
attempt to induce any other person to initiate, any stockholder
proposal for a change in the directors or management of Vitex or in
connection with a merger or acquisition of Vitex; or (C) take any
action individually or jointly with any Person or group, or assist any
Person or group in taking any action, which it could not take
individually under the terms of this paragraph 5(h).
(v) The preceding provisions in this paragraph 5(h) shall
terminate in the event that
(A) any Person or 13D Group (defined below) other than Pall
or an Affiliate, as defined in Rule 12b-2 under the Exchange Act
("Affiliate"), of Pall shall have commenced a tender offer for a
majority of the outstanding shares of Common Stock (or any other
outstanding class of voting securities of Vitex), or
(B) any Person or 13D Group, other than (x) Pall or an
Affiliate of Pall, (y) any Person which is a stockholder of Vitex
on the date of this Agreement, or any Affiliate of such person or
(z) any Person or 13D Group which has previously entered into an
agreement with Vitex substantially identical to this paragraph
5(h) prior to becoming the direct or indirect owner of 20% of the
Voting Power, shall have become the direct or indirect beneficial
owner of more than 20% of the Voting Power, or
(C) the Board shall (I) approve any transaction set forth in
clause (A) immediately preceding, (II) liquidate Vitex or sell
all or substantially all of the assets of Vitex to another
Person, (III) approve a merger or consolidation of Vitex with any
other Person that would result in the voting securities of Vitex
outstanding immediately prior thereto representing less than a
majority of the voting power to elect a majority of the board of
directors or similar body of the Person surviving such merger or
resulting from such consolidation, or (IV) sell or otherwise
issue to any person voting securities of Vitex having a majority
of the combined Voting Power of the voting
-xxiv-
<PAGE>
Page
Section No.
- ------- ----
securities of Vitex.
In the event of any action by the Board described in the immediately
preceding clause (C), Vitex shall notify Pall at least 15 days prior
to the final approval of such transaction, and any such Board
determination shall be conditioned upon the notification by Vitex to
Pall in compliance with this sentence. For purposes of this
subsection 5(h)(v), a "13D Group" means any group formed for the
purpose of acquiring, holding, voting or disposing of securities of
Vitex that would be required under the Exchange Act, and the rules and
regulations promulgated thereunder, to file a statement on Schedule
13D with the Commission as a "Person" within the meaning of Section
13(d)(3) of the Exchange Act, if such group beneficially owned
sufficient securities to require such a filing. All of the provisions
of this subsection 5(h)(v) shall be reinstated and shall apply in full
force according to their terms in the event that: (x) if the preceding
provisions of this subsection 5(h)(v) shall have terminated as a
result of a tender offer under clause (A) above, such tender offer (as
originally made or as extended or modified) shall have terminated
(without any securities being accepted thereunder for purchase) prior
to the commencement of a tender offer by Pall or any of its
Subsidiaries that would have been permitted pursuant to clause (A) as
a result of such third-party tender offer, (y) any tender offer by
Pall or any of its Affiliates (as originally made or as extended or
modified) that was permitted to be made pursuant to clause (A) shall
have terminated (without any securities being accepted thereunder for
purchase), or (z) if the preceding provisions of this subsection
5(h)(v) shall have terminated as a result of clause (C), the Board
shall have determined to rescind or abandon the previous action
described in clause (C) (and no such action shall have closed) prior
to the commencement of a tender offer by Pall or any of its
Subsidiaries that would have been permitted to be made pursuant to
clause (C), unless prior to such Board determination to rescind or
abandon, a tender offer described in clause (A) above shall have
commenced. Upon reinstatement of the provisions of this subsection
5(h)(v), the preceding provisions of this subsection shall continue to
govern including, without limitation, those that provide for the
termination of the preceding provisions of this subsection 5(h)(v) in
the event that any of the events described in clauses (A), (B) or (C)
shall occur.
(vi) All provisions of this paragraph 5(h) shall terminate (A) at
any time after the last Closing when Pall and its subsidiaries shall
beneficially own shares of capital stock of Vitex having less than 10%
of the Voting Power, or (B) upon the closing of any tender offer for,
or acquisition by Pall or its subsidiaries of, any voting securities
of Vitex, or rights or options to acquire any such securities, that
was permitted by this paragraph 5(h).
-xxv-
<PAGE>
Page
Section No.
- ------- ----
6. Conditions to Closings.
----------------------
(a) Conditions to Pall's Obligations. The obligations of Pall
--------------------------------
hereunder at each Closing shall be subject to the performance by Vitex of
all its obligations hereunder to be performed on or prior to the
corresponding Closing Date, and to the satisfaction, prior thereto or
concurrently therewith, or the waiver by Pall, of each of the following
conditions:
(i) Representations and Warranties. The representations and
------------------------------
warranties of Vitex contained in this Agreement and (with respect to
the Initial Closing only) in the Joint Development Agreement, taken
together with the Disclosure Letter being delivered herewith, shall be
true and correct on and as of such Closing Date as though such
representations and warranties were made at and as of such date,
except as otherwise affected by the transactions contemplated hereby
and except that, at each Closing, (I) Vitex shall deliver to Pall a
new Disclosure Letter, dated the Closing Date of such Closing, setting
forth the exceptions and other information necessary to make Vitex's
representations and warranties herein true and correct as of the
Closing Date for such Closing, and (II) this subsection 6(a)(i) shall
be deemed satisfied provided that the Disclosure Letter for such
Closing, taken as a whole, does not indicate a Material Adverse Effect
since the immediately preceding Disclosure Letter.
(ii) Compliance with Agreements. Vitex shall have performed and
--------------------------
complied with in all material respects all agreements, covenants and
conditions contained in the Agreements which are required to be
performed or complied with by Vitex prior to or on such Closing Date.
(iii) No Legislation or Injunction. There shall have been
----------------------------
adopted no law or regulation, and there shall be no effective or
pending injunction, writ, preliminary restraining order or any order
of any nature issued by a court of competent jurisdiction, prohibiting
the transactions provided for in the Agreements or any of them from
being consummated as therein provided.
(iv) No Material Adverse Effect. There shall have been no
--------------------------
developments in the business or financial condition of Vitex or a
Subsidiary, whether or not set forth in the Disclosure Letter for such
Closing, which in the reasonable opinion of Pall have or are likely to
have a Material Adverse Effect.
-xxvi-
<PAGE>
Page
Section No.
- ------- ----
(v) Consents and Approvals. All filings, consents, waivers,
----------------------
authorizations, licenses, permits, certificates and approvals of any
Person required to have been made or obtained on or prior to such
Closing Date in connection with the execution, delivery and
performance of the Agreements, all of which will be set forth on
Schedule 3(i) of the Disclosure Letter for such Closing, shall have
-------------
been duly made or obtained and shall be in full force and effect on
such Closing Date.
(vi) Officers' Certificate. Vitex shall have delivered to Pall
---------------------
a certificate of Vitex's President and Chief Executive Officer, dated
as of such Closing Date, certifying that the conditions specified in
the foregoing subsections 6(a)(i), (ii), (iii) and (v) hereof have
been fulfilled.
(vii) Opinion of Counsel. Pall shall have received from
------------------
Gibbons, Del Deo, Dolan, Griffinger & Vecchione, P.C., counsel to
Vitex, or any other counsel reasonably satisfactory to Pall, a legal
opinion, dated as of such Closing Date, in substantially the form of
Exhibit D hereto.
(viii) Secretary's Certificate. Pall shall have received a
-----------------------
certificate, dated such Closing Date, of the Secretary of Vitex
attaching (i) a true and complete copy of the certificate of
incorporation of Vitex as of such date, certified by the Secretary of
State of Delaware, (ii) a true and complete copy of Vitex's By-Laws as
of such date, (iii) true and complete copies of the certificate of
incorporation and by-laws of each Subsidiary as of such date, (iv)
certificates of good standing of the appropriate officials of the
jurisdictions of incorporation of Vitex and each Subsidiary, New York
and each other jurisdiction in which Vitex and each Subsidiary is
qualified to do business as a foreign corporation, and (v) all
resolutions of the Board authorizing or relating to the execution and
delivery of the Agreements and the transactions contemplated thereby,
the issuance of the Shares and the reservation for issuance of a
sufficient number of Shares pursuant to paragraph 3(h) of this
Agreement.
(ix) Approval of Proceedings. All proceedings to be taken in
-----------------------
connection with the transactions contemplated by the Agreements, and
all documents incident thereto, shall be reasonably satisfactory in
form and substance to Pall and its counsel, Carter, Ledyard & Milburn;
and Pall shall have received copies of all documents or other evidence
which it and such counsel may reasonably request in connection with
such transactions and of all records of corporate proceedings in
connection therewith in form and substance reasonably satisfactory to
Pall and such counsel.
-xxvii-
<PAGE>
Page
Section No.
- ------- ----
(x) Other Agreements. The First Stockholders' Agreement, the
----------------
Second Stockholders' Agreement, the Joint Development Agreement, the
Registration Rights Agreement and the Blood Center Amendment shall
have been executed and delivered by all parties thereto other than
Pall, and shall remain in full force and effect, and all parties to
such agreements other than Pall shall be in substantial compliance
with their obligations thereunder, provided that at the IPO Closing,
the First Stockholders' Agreement shall terminate, and the Second
Stockholders' Agreement shall commence in full force and effect.
(xi) Recent Financial Statements. Vitex shall have provided
---------------------------
Pall with its most recent interim or annual financial statements in
accordance with paragraph 4(b) of this Agreement.
(xii) Antitrust Approvals. The waiting period under the Hart-
-------------------
Scott Act and other applicable antitrust regulations of any applicable
jurisdictions shall have expired or been terminated, if necessary to
permit such Closing to occur without its constituting a violation of
the Hart-Scott Act, provided that (i) if this condition is not
satisfied as of the time provided in Section 2 of this Agreement for
any Closing, and (ii) Pall and Vitex are both in compliance with
paragraph 5(e) of this Agreement, such Closing shall be adjourned
until not later than the tenth business day after this condition shall
have been satisfied.
(xiii) Director Designee. Pursuant to the First Stockholders'
-----------------
Agreement or the Second Stockholders' Agreement and paragraph 4(a) of
this Agreement, Jeremy Hayward-Surry, or his successor as designated
by Pall, shall be serving as a duly elected director of Vitex.
(b) Conditions to Vitex's Obligations. The obligations of Vitex at
---------------------------------
each Closing shall be subject to the performance by Pall of all of its
obligations hereunder to be performed on or prior to the corresponding
Closing Date, and to the satisfaction, prior thereto or concurrently
therewith, or the waiver by Vitex, of each of the following conditions:
(i) No Legislation or Injunction. There shall have been
----------------------------
adopted no law or regulation, and there shall be no effective or
pending injunction, writ, preliminary restraining order or any order
of any nature issued by a court of competent jurisdiction, prohibiting
the transactions provided for in the Agreements or any of them from
being consummated as therein provided.
-xxviii-
<PAGE>
Page
Section No.
- ------- ----
(ii) Consents and Approvals. All filings, consents, waivers,
----------------------
authorizations, licenses, permits, certificates and approvals of any
Person required to have been made or obtained on or prior to such
Closing Date in connection with the execution, delivery and
performance of the Agreements, all of which are set forth on Schedule
--------
3(i) of the Disclosure Letter for such Closing, shall have been duly
----
made or obtained and shall be in full force and effect on such Closing
Date.
(iii) Officer's Certificate. Pall shall have delivered to Vitex
---------------------
a certificate of the Chairman and Chief Executive Officer or the
President of Pall, dated as of such Closing Date, certifying that (A)
the representations and warranties of Pall contained in this Agreement
and (with respect to the Initial Closing only) in the Joint
Development Agreement are true as of such Closing Date as though such
representations and warranties were made at and as of such date, and
(B) Pall shall have performed and complied with in all material
respects all agreements, covenants and conditions contained in the
Agreements which are required to be performed or complied with by Pall
prior to or on such Closing Date.
(iv) Antitrust Approvals. The waiting period under the Hart-
-------------------
Scott Act and other applicable antitrust regulations of any applicable
jurisdictions shall have expired or been terminated, if necessary to
permit such Closing to occur without its constituting a violation of
the Hart-Scott Act, provided that (i) if this condition is not
satisfied as of the time provided in Section 2 of this Agreement for
any Closing, and (ii) Pall and Vitex are both in compliance with
paragraph 5(e) of this Agreement, such Closing shall be adjourned
until not later than the tenth business day after this condition shall
have been satisfied.
(v) Secretary's Certificate. Vitex shall have received a
-----------------------
certificate, dated such Closing Date, of the Secretary of Pall
attaching all resolutions of the Board of Directors of Pall and its
Executive Committee authorizing or relating to the execution and
delivery of the Agreements to which Pall is a party, and the
transactions contemplated thereby.
(vi) Approval of Proceedings. All proceedings to be taken in
-----------------------
connection with the transactions contemplated by the Agreements, and
all documents incident thereto, shall be reasonably satisfactory in
form and substance to Vitex and its counsel, Gibbons, Del Deo, Dolan,
Griffinger & Vecchione, P.C.; and Vitex shall have received copies of
all documents or other evidence which it and such counsel may
reasonably request in connection with such transactions and of all
records of
-xxix-
<PAGE>
Page
Section No.
- ------- ----
corporate proceedings in connection therewith in form and substance
reasonably satisfactory to Pall and such counsel.
(vii) Other Agreements. The Joint Development Agreement shall
----------------
have been executed and delivered by Pall and shall remain in full
force and effect, and Pall shall be in substantial compliance with its
obligations thereunder.
7. Expenses. Except as provided in Sections 5 and 8 of the Registration
--------
Rights Agreement, Pall and Vitex shall each bear their respective out-of-pocket
expenses incurred in connection with the transactions contemplated by the
Agreements, including without limitation, the reasonable fees and disbursements
of their respective counsel. Vitex shall pay all finders' or brokers' fees or
similar payments incurred by it in connection with such transactions. Pall
represents and warrants that it has not incurred any liability for, and is
unaware of any claim for, any finders' or brokers' fees or similar payments in
connection with the transactions contemplated hereby.
8. Notices. All notices and other communications provided for or
-------
permitted hereunder shall be made in writing by hand delivery or registered
first class mail, postage prepaid, return receipt requested, or air courier
guaranteeing overnight delivery to the following addresses:
If to Pall:
Pall Corporation
2200 Northern Boulevard
East Hills, New York 11548
Attention: Corporate Secretary
with a copy to:
Carter, Ledyard & Milburn
2 Wall Street
New York, New York 10005-2072
Attention: Robert A. McTamaney, Esq.
If to Vitex:
V.I. Technologies, Inc.
155 Duryea Road
Melville, New York 11747
Attention: President
-xxx-
<PAGE>
Page
Section No.
- ------- ----
with a copy to:
Gibbons, Del Deo, Dolan, Griffinger & Vecchione, P.C.
One Riverfront Plaza
Newark, New Jersey 07102-5497
Attention: Frank E. Lawatsch, Jr., Esq.
All such notices and communications shall be deemed to have been duly given
and received at the time delivered by hand, if personally delivered; five
business days after being deposited in the mail, postage prepaid, if mailed; and
on the next business day, if timely delivered to an air courier guaranteeing
overnight delivery. Either party may change its address for notices by a notice
to the other party given in accordance with this section.
9. Parties; Assignment. This Agreement will inure to the benefit of and
-------------------
be binding upon Pall, Vitex and their respective successors and permitted
assigns. This Agreement is for the sole and exclusive benefit of Pall and Vitex
and their respective successors and permitted assigns, and for the benefit of no
other person, and no other person will have any legal or equitable right, remedy
or claim under, or in respect of, this Agreement. The rights and obligations
provided for in this Agreement may not be assigned or transferred in whole or in
part by either party hereto without the prior consent in writing of the other
party, provided that Pall can assign any or all of its rights and obligations
hereunder to one or more of its wholly-owned subsidiaries. Except as provided
in the Registration Rights Agreement, no purchaser or transferee of any of the
Shares from Pall will be deemed a successor or assign of Pall entitled to any
benefits of the Agreements, merely by reason of such purchase.
10. Survival of Provisions. All warranties, representations and covenants
----------------------
made by Pall and Vitex in the Agreements or in any certificate or other
instrument delivered by Pall or Vitex under the Agreements shall be considered
to have been relied upon by Vitex or Pall, as the case may be, and shall survive
all deliveries to Pall of the Shares, or payment to Vitex for such Shares, for a
period of one year following each Closing with respect to the Shares sold at
such Closing, regardless of any investigation made by Vitex or Pall, as the case
may be, or on Vitex's or Pall's behalf. All statements in any such certificate
or other instrument shall constitute warranties and representations by Vitex or
Pall, as the case may be, hereunder.
11. Amendment and Modification. Neither this Agreement, nor any term or
--------------------------
provision hereof, may be changed, waived, discharged, amended, modified or
terminated in any manner other than by an instrument in writing signed by the
party to be charged therewith.
-xxxi-
<PAGE>
Page
Section No.
- ------- ----
12. Further Assurances. Pall and Vitex will perform any and all acts and
------------------
execute any and all documents as may be necessary and proper under the
circumstances in order to accomplish the intent and purposes of this Agreement
and to carry out its provisions. Each such party shall use its reasonable
efforts to fulfill or obtain the fulfillment of the respective conditions to
each Closing as promptly as practicable.
13. Waiver of Breach. The failure of any party hereto to insist upon
----------------
strict performance of any of the covenants and agreements herein contained, or
to exercise any option or right herein conferred in any one or more instances,
will not be construed to be a waiver or relinquishment of any such option or
right, or of any other covenants or agreements, and the same will be and remain
in full force and effect.
14. Remedies. In addition to being entitled to exercise all rights
--------
provided herein and any and all legal remedies in the event of a breach of this
Agreement, including recovery of liquidated or other damages, Pall and Vitex
each agree (i) that the other will be entitled to specific performance of its
rights under this Agreement, (ii) that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions
of this Agreement, and (iii) that it will waive the defense in any action for
specific performance that a remedy at law would be adequate. In addition, if
Vitex shall be in breach of its obligation to issue any Shares to Pall pursuant
to this Agreement, Pall shall have the right to acquire from other stockholders
of Vitex a number of shares of Common Stock less than or equal to the number of
Shares that would have been issued to Pall but for such breach. Such shares as
acquired by Pall shall be deemed to be Shares acquired pursuant to this
Agreement at a Closing for purposes of paragraph 5(h) of this Agreement.
Notwithstanding the foregoing, in no event shall the provisions of this Section
14 permit Pall to own at any time more shares of Common Stock than Pall would
have been entitled to own pursuant to paragraph 5(h) of this Agreement if Vitex
had not been in breach of this Agreement with respect to the sale of Shares to
Pall.
15. Entire Agreement. This Agreement (including the exhibits hereto) and
----------------
the Joint Development Agreement (including the exhibits thereto) constitute the
entire agreement and understanding of the parties with respect to their entire
subject matter, and there are no representations, inducements, promises or
agreements, oral or otherwise, not embodied therein. Any and all prior
discussions, negotiations, commitments and understandings relating to the
subject matter of this Agreement and the Joint Development Agreement, including,
without limitation, the Letter of Intent, are superseded hereby. There are no
conditions precedent to the effectiveness of the Agreements other than as stated
therein, and there are no related collateral agreements existing between the
parties that are not referred to therein.
-xxxii-
<PAGE>
Page
Section No.
- ------- ----
16. Severability. In the event that any part or parts of this Agreement
------------
shall be held illegal or unenforceable by any court or administrative body of
competent jurisdiction, such determination shall not affect the remaining
provisions of this Agreement which shall remain in full force and effect.
17. Counterparts. This Agreement may be executed in counterparts and each
------------
of such counterparts will for all purposes be deemed to be an original, and such
counterparts will together constitute one and the same instrument.
18. Governing Law; Consent to Jurisdiction. This Agreement will be deemed
--------------------------------------
to have been made and delivered in the State of New York and will be governed as
to validity, interpretation, construction, effect and in all other respects by
the internal laws of the State of New York. Pall and Vitex (a) agree that any
legal suit, action or proceeding arising out of or relating to this Agreement
may be instituted in the Supreme Court of the State of New York, County of
Nassau, or in the United States District Court for the Southern District of New
York, (b) waive any objection to the venue of any such suit, action or
proceeding, and (c) irrevocably consent to the jurisdiction of the Supreme Court
of the State of New York, County of Nassau, and the United States District Court
for the Southern District of New York in any such suit, action or proceeding.
Both parties further agree to accept and acknowledge service of any and all
process which may be served in any such suit, action or proceeding in such
courts and agree that service of process sent by registered mail, return receipt
requested, to the other party at such party's then current address under Section
8 of this Agreement will be deemed in every respect effective service of process
in any such suit, action or proceeding.
IN WITNESS WHEREOF, Vitex and Pall have each caused this Agreement to be
executed by its duly authorized officer, each as of the date first above
written.
V.I. TECHNOLOGIES, INC.
/s/ John Barr
By: -----------------------------------------------------
Print Name:
Title:
PALL CORPORATION
-xxxiii-
<PAGE>
Page
Section No.
- ------- ----
/s/ Jeremy Hayward-Surry
By: ---------------------------------------------------
Print Name:
Title:
-xxxiv-
<PAGE>
Page
Section No.
- ------- ----
EXHIBIT A
FIRST STOCKHOLDERS' AGREEMENT
A-i
<PAGE>
Page
Section No.
- ------- ----
EXHIBIT B
SECOND STOCKHOLDERS' AGREEMENT
THIS SECOND STOCKHOLDERS' AGREEMENT is made and entered into as of the
19th day of February, 1998, by and among the undersigned holders (the
"Stockholders") of Common Stock, par value $0.01 per share ("Common Stock"), of
V.I. Technologies, Inc., a Delaware corporation (the "Company"), and Pall
Corporation, a New York corporation ("Pall").
WHEREAS, the Stockholders currently hold of record an aggregate of
22,103,362 of the issued and outstanding shares of Common Stock; and
WHEREAS, it is a condition to Pall's obligations under the Stock Purchase
Agreement dated as of February 19, 1998, between Pall and the Company (the
"Stock Purchase Agreement") that the Stockholders provide for the voting of
their shares of Common Stock in accordance with the terms hereof after the "IPO
Closing" (as defined in the Stock Purchase Agreement);
NOW, THEREFORE, in order to satisfy such condition, and in consideration of
the mutual covenants and agreements contained herein and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Stockholders and Pall agree as follows:
1. Representation on Board of Directors
------------------------------------
1.1 Each Stockholder agrees that, effective as of the IPO Closing, and for
so long thereafter as this Agreement remains in effect, it will vote all shares
of voting stock of the Company held of record by it (and all other such shares
the voting of which is within its sole control, or within the shared control of
Stockholders only), and otherwise use all reasonable efforts, to elect and
maintain in office as a director of the Company one person who is nominated by
Pall from time to time and who is a Qualified Director. Such nomination shall
be made by Pall in accordance with the terms of subsection 4(a)(i) of the Stock
Purchase Agreement. For purposes of this Agreement, voting stock shall mean the
Common Stock and any other class of equity securities of the Company the holders
of which have the right to vote together with holders of Common Stock in the
election of directors. A Qualified Director shall be a person (A) who is
qualified to serve as a director of the Company under applicable law, (B) who
has consented to serve as a director of the Company, (C) who has not been barred
from serving as a director of an entity having securities registered under the
Securities Exchange Act of 1934, (D) with respect to whom no disclosure would be
required by Vitex in response to Item 401(f) of Regulation S-K of the Securities
and Exchange Commission, and (E) whose service as a director of the Company (i)
will not result in the delisting of, or inability to
B-i
<PAGE>
Page
Section No.
- ------- ----
list, any class of the Company's equity securities on any national securities
exchange or on the Nasdaq National or Small Cap Stock Market, or (ii) will not,
in the good faith judgment of the Company's Board of Directors, result in the
loss or material limitation of, or refusal to grant, any license, permit or
approval that is material to the Company's business.
Pall has initially nominated Jeremy Hayward-Surry to serve as a director of
the Company, and the Stockholders acknowledge that, as of the date of this
Agreement, to the best of their knowledge, he is a Qualified Director.
1.2 At such time as the Joint Development, Marketing and Distribution
Agreement between Pall and Vitex is no longer in effect, Pall shall lose its
right to nominate a person to serve as a director of the Company and this
Agreement shall terminate. In addition, this Agreement shall terminate
immediately if Pall shall purchase securities of the Company in violation of
paragraph 5(i) of the Stock Purchase Agreement, or shall commence a tender offer
for equity securities of the Company unless such tender offer either (A) has the
prior approval of the Company's Board of Directors, or (B) is permitted by
paragraph 5(i) of the Stock Purchase Agreement.
1.3 In the event that any member of the Company's Board of Directors
nominated by Pall pursuant to Section 1.1 resigns or otherwise ceases to be a
member of the Board of Directors for any reason, or in the event that Pall shall
nominate a person who is a Qualified Director to succeed its nominee on the
Board of Directors, the Stockholders shall use their reasonable best efforts to
nominate and elect a successor director in accordance with Pall's rights of
nomination as provided in Section 1.1 of this Agreement (unless the Board of
Directors shall have promptly elected such successor).
1.4 As long as this Agreement remains in effect, the Stockholders shall
not take any action to remove from office any director nominated pursuant to
Section 1.1 unless such director shall not be a Qualified Director or unless
Pall shall nominate a successor as provided in Section 1.3.
2. Miscellaneous
-------------
2.1 This Agreement shall be binding upon and inure to the benefit of the
respective heirs, executors, administrators, assigns, transferees and successors
in interest of the parties hereto. Any person who becomes a record holder of
voting stock of the Company after the date hereof may become a party to this
Agreement by executing a counterpart hereof and upon such execution shall,
without further action on the part of the Stockholders, be deemed a
"Stockholder" for all purposes of this Agreement.
2.2 This Agreement shall be governed by and construed in accordance with
the laws of
B-ii
<PAGE>
Page
Section No.
- ------- ----
the State of Delaware.
2.3 This Agreement may be executed in counterparts, all of which together
shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have each executed this Agreement as
of the date first above written.
STOCKHOLDERS:
PALL CORPORATION CB CAPITAL INVESTORS, L.P.
By: CB Capital Partners, Inc.,
its general partner
By: /s/ J. Hayward-Surry By: /s/ Damion E. Wicker
------------------------ ----------------------------
Print Name: J. Hayward-Surry Print Name:
Title: President Title:
NEW YORK BLOOD CENTER, INC.
/s/ John Barr By: /s/ Robert Jones
- --------------------------- ----------------------------
John Barr Print Name:
Title:
/s/ Bernard Horowitz AMPERSAND SPECIALTY MATERIALS
- --------------------------- AND CHEMICALS II LIMITED PARTNERSHIP
Bernard Horowitz
By: ASMC Management Company
Limited Partnership
By: ASMC-II MCLP LLP,
its General Partner
B-iii
<PAGE>
Page
Section No.
- ------- ----
By: /s/ Richard A. Charpie
------------------------------------------------------------
Print Name: Richard A. Charpie
Title: Managing General Partner
AMPERSAND SPECIALTY MATERIALS AND
CHEMICALS III LIMITED PARTNERSHIP
By: ASMC III Management Company
Limited Partnership
By: ASMC-III MCLP LLP,
its General Partner
By: /s/ Richard A. Charpie
------------------------------------------------------------
Print Name: Richard A. Charpie
Title: Managing General Partner
LABORATORY PARTNERS I
LIMITED PARTNERSHIP
By: Ampersand Lab Partners Management
Company Limited Partnership
By: Ampersand Lab Partners MCLP LLP,
its General Partner
By: /s/ Richard A. Charpie
------------------------------------------------------------
Print Name: Richard A. Charpie
Title: Managing General Partner
B-iv
<PAGE>
Page
Section No.
- ------- ----
AMPERSAND SPECIALTY MATERIALS AND
CHEMICALS III COMPANION FUND
LIMITED PARTNERSHIP
By: ASMC III Management Company
Limited Partnership
By: ASMC-III MCLP LLP,
its General Partner
By: /s/ Richard A. Charpie
------------------------------------------------------------
Print Name: Richard A. Charpie
Title: Managing General Partner
LABORATORY PARTNERS COMPANION
FUND LIMITED PARTNERSHIP
By: Ampersand Lab Partners Management
Company Limited Partnership
By: Ampersand Lab Partners MCLP LLP,
its General Partner
By: /s/ Richard A. Charpie
------------------------------------------------------------
Print Name: Richard A. Charpie
Title: Managing General Partner
B-v
<PAGE>
Page
Section No.
- ------- ----
EXHIBIT C
REGISTRATION RIGHTS AGREEMENT
D-i
[See Exhibit 10.17 to the Registration Statement]
<PAGE>
Exhibit 10.17
- --------------------------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT
dated February 19, 1998,
among
V.I. TECHNOLOGIES, INC.
and the
STOCKHOLDERS LISTED HEREIN
- --------------------------------------------------------------------------------
<PAGE>
REGISTRATION RIGHTS
AGREEMENT dated February 19, 1998, among
V.I. TECHNOLOGIES, INC., a Delaware
corporation (the "Company"), and the
stockholders of the Company listed on
Schedule I (the "Investors").
Each Investor currently owns (or has the right to acquire) the number of
shares of Common Stock, $.01 par value (the "Common Stock"), of the Company set
forth opposite the name of such Investor on Schedule I. The parties hereto deem
it to be in their best interests to set forth their rights and obligations in
connection with public offerings and sales of shares of Common Stock.
Accordingly, the parties agree as follows:
SECTION 1. DEFINITIONS.
-----------
As used in this Agreement, the following terms shall have the following
meanings:
"AFFILIATE" has the meaning ascribed to it in Rule 12b-2 promulgated under
the Exchange Act.
"AMPERSAND" means collectively, Ampersand Specialty Materials and Chemical
II Limited Partnership, Ampersand Specialty Materials and Chemicals III Limited
Partnership, Laboratory Partners I Limited Partnership, Ampersand Specialty
Materials and Chemicals III Companion Fund Limited Partnership and Laboratory
Partners Companion Fund Limited Partnership.
"AMPERSAND INVESTORS" means Ampersand, any Affiliate of Ampersand which
owns Restricted Shares and any successor to, or assignee or transferee of, an
Ampersand Investor who shall agree in writing to be treated as an Ampersand
Investor and to be bound by the terms and comply with the provisions of this
Agreement.
"CBCI" means CB Capital Investors, L.P., a Delaware limited partnership.
"CBCI DEMAND REGISTRATION DATE" means the earlier of (i) October 29, 1999
and (ii) the date nine months after the date upon which the registration
statement for use in the Initial Public Offering shall have been declared
effective.
"CBCI INVESTOR" means CBCI, any Affiliate of CBCI which owns Restricted
Shares and any successor to, or assignee or transferee of, a CBCI Investor who
shall agree in writing to be treated as a CBCI Investor and to be bound by the
terms and comply with the provisions of this Agreement.
"COMMISSION" means the Securities and Exchange Commission or any other
Federal agency at the time administering the Securities Act.
-2-
<PAGE>
"EXCHANGE ACT" means the Securities Exchange Act of 1934, and the rules and
regulations of the Commission promulgated thereunder, all as the same shall be
in effect from time to time.
"INITIAL PUBLIC OFFERING" means the first underwritten public offering of
Common Stock for sale to the public for the account of the Company and offered
on a "firm commitment" or "best efforts" basis pursuant to an offering
registered under the Securities Act with the Commission on Form S-1 or its then
equivalent.
"NYBC" means New York Blood Center. Inc. a New York not-for-profit
corporation.
"NYBC INVESTOR" means NYBC, any Affiliate of NYBC which owns Restricted
Shares and any successor to, or assignee or transferee of, a NYBC Investor who
shall agree in writing to be treated as a NYBC Investor and to be bound by the
terms and comply with the provisions of this Agreement.
"OTHER SHARES" means at any time those shares of Common Stock which do not
constitute Primary Shares or Registrable Shares.
"PRIMARY SHARES" means at any time the authorized but unissued shares of
Common Stock or shares of Common Stock held by the Company in its treasury.
"PALL" means Pall Corporation, a New York corporation.
"PALL INVESTOR" means Pall, any Affiliate of Pall which owns Restricted
Shares and any successor to, or assignee or transferee of, a Pall Investor who
shall agree in writing to be treated as a Pall Investor and to be bound by the
terms and comply with the provisions of this Agreement.
"REGISTRABLE SHARES" means at any time, with respect to any Stockholder,
the Restricted Shares held by such Stockholder which constitute Common Stock.
"RESTRICTED SHARES" means at any time, with respect to any Stockholder, the
shares of Common Stock, any other securities which by their terms are
exercisable or exchangeable for or convertible into Common Stock or other
securities which are so exercisable or convertible and any securities received
in respect thereof, which are held by such Stockholder and which have not
previously been sold to the public pursuant to a registration statement under
the Securities Act or pursuant to Rule 144 or which are not (or would not be,
upon any such exercise, exchange or conversion) eligible for sale by the holder
thereof under Rule 144(k) or any successor rule thereto or any complementary
rule thereto.
"RULE 144" means Rule 144 promulgated under the Securities Act or any
successor rule thereto or any complementary rule thereto.
"SECURITIES ACT" means the Securities Act of 1933, and the rules and
regulations of the Commission thereunder, all as the same shall be in effect
from time to time.
-3-
<PAGE>
"STOCKHOLDERS" means the Investors and any person or entity that acquires
Restricted Shares directly or indirectly from an Investor in accordance with
Section 17.
"TRANSFER" means any disposition of any Restricted Shares or of any
interest therein which constitutes a sale within the meaning of the Securities
Act, other than any disposition pursuant to an effective registration statement
under the Securities Act and complying with all applicable state securities and
"blue sky" laws.
SECTION 2. DEMAND REGISTRATION.
-------------------
(a) Subject to paragraph (d) below, the Stockholders holding at least 30%
of the then outstanding Restricted Shares held collectively by all Ampersand
Investors and all NYBC Investors shall be entitled to request that the Company
effect a registration under the Securities Act of Registrable Shares in
accordance with this Section.
(b) (i) Subject to paragraph (d) below, at any time after the CBCI Demand
Registration Date, the Stockholders holding at least 50% of the then
outstanding Restricted Shares held by all CBCI Investors shall be entitled
to request that the Company effect a registration under the Securities Act
of Registrable Shares in accordance with this Section.
(ii) Subject to paragraph (d) below, at any time after the date 180
days after the consummation of the Initial Public Offering, the
Stockholders holding at least 50% of the then outstanding Restricted Shares
held by all Pall Investors shall be entitled to request that the Company
effect a registration under the Securities Act of Registrable Shares in
accordance with this Section.
(c) If the Company shall be requested to effect a registration under the
Securities Act of Registrable Shares in accordance with this Section, then the
Company shall promptly give written notice of such proposed registration to all
Stockholder who are then holders of Restricted Shares and shall offer to include
in such proposed registration any Registrable Shares requested to be included in
such proposed registration by such holders who respond in writing to the
Company' s notice within 30 days after delivery of such notice (which response
shall specify the number of Registrable Shares proposed to be included in such
registration). The Company shall promptly use its commercially reasonable
efforts in good faith to effect such registration on an appropriate form,
including Form S-2 or S-3, if available, under the Securities Act of the
Registrable Shares which the Company has been so requested to register.
(d) The Company shall not be obligated to effect any registration under the
Securities Act requested under this Section except in accordance with the
following provisions:
(i) the Company shall not be obligated to (A) file more than two
registration statements initiated pursuant to paragraph (a), (B) file more
than two registration statements initiated pursuant to paragraph (b)(i) ,
(C) file more than four registration statements initiated pursuant to
paragraph (b)(ii) of which not more than two registration
-4-
<PAGE>
statements may be filed prior to two years after the date hereof, (D)
effect any registration initiated pursuant to paragraphs (b)(i) if the
Company shall reasonably conclude that the anticipated gross offering price
of all Registrable Shares to be included therein would be less than $10,
000, 000, (E) file any registration statement requested pursuant to
paragraph (b)(i) at any time the CBCI Investors shall own less than
1,256,278 (subject to adjustment for stock splits, stock combinations and
the like) Restricted Shares, (F) file any registration statement requested
pursuant to paragraph (b)(ii) at any time when the anticipated gross
offering price of all Registrable Shares to be included therein for the
account of Pall Investors would be less than $2,000,000 unless the number
of Registrable Shares to be sold for the account of Pall Investors is at
least 600,000 shares (subject to adjustment for stock splits, stock
combinations and the like) or (G) file more than one registration statement
pursuant to this Section within any consecutive 180-day period, which
registration statement(s) were initiated pursuant to this Section and
become effective or which are rescinded without reimbursement as specified
in the last paragraph of this Section;
(ii) The Company's obligations to file a registration statement under
this Section shall be suspended at any time when (A) it has not received a
request under paragraph (a) or (b) above, and (B) it has filed, or its
Board of Directors has approved the filing of, a registration statement
under the Securities Act (other than on Form S-4 or Form S-8 or any
successor forms thereto) for the offer and sale of Primary Shares. Such
obligations shall resume on the earliest to occur of (X) the date on which
such registration statement is withdrawn by the Company, or the Company's
Board of Directors abandons its determination to file a registration
statement for the offer and sale of Primary Shares, (Y) the date which is
90 days after the effective date of such registration statement, and (Z)
the date which is 180 days after the first filing date of such registration
statement;
(iii) the Company may delay the filing or effectiveness of any
registration statement pursuant to this Section for a period not to exceed
90 days after the date of the Company's receipt of a request for
registration if the Company's Board of Directors has determined that such
registration would have a material adverse effect upon the Company or its
then current business plans; provided, however, that the Company may cause
-------- -------
such delay only once during any 360-day period;
(iv) with respect to any registration pursuant to this Section, the
Company may include in such registration any Primary Shares or Other
Shares; provided, however, that if the managing underwriter (if any)
-------- -------
advises the Company that the inclusion of all Registrable Shares, Primary
Shares and Other Shares proposed to be included in such registration would
interfere with the successful marketing (including pricing) of all such
shares, then the number of Registrable Shares, Primary Shares and Other
Shares proposed to be included in such registration shall be included in
the following order:
(A) first, the Registrable Shares held by the Stockholders, pro rata
----- --- ----
based upon the number of Restricted Shares (based upon Common Stock
equivalents) owned by each such Stockholder at the time of such
registration;
-5-
<PAGE>
(B) second, the Primary Shares; and
------
(C) third, the Other Shares.
-----
(e) Any registration statement initiated pursuant to this Section 2 shall
count as a registration for purposes of the limitations contained in paragraph
(d)(i) above and shall be deemed to have been initiated pursuant to paragraph
(a), (b)(i) or paragraph (b)(ii), as applicable, by the Stockholder which has
the greatest number of Restricted Shares included in such registration statement
at the time of its initial filing.
(f) A requested registration under this Section may be rescinded by written
notice to the Company by all of the Stockholders requesting such registration
pursuant to paragraphs (a) or (b) and (c); such rescinded registration shall not
count as a registration statement initiated pursuant to this Section for
purposes of paragraph (d)(i) above if such registration statement is rescinded
prior to the effective date thereof and if the Stockholder initiating such
request (as provided in paragraph (e) above) shall have reimbursed the Company
for all out-of-pocket expenses incurred by the Company in connection with such
rescinded registration. Even if a registration statement is not rescinded
pursuant to this paragraph (f), the Company will, at any time prior to the
effectiveness of a registration statement, deregister any or all of a
Stockholder's Registrable Shares included in such registration statement,
promptly upon the Company's receipt of a written request from such Stockholder
and the Company may withdraw a registration statement so requested if a
Stockholder requesting deregistration initiated the registration statement.
SECTION 3. REGISTRATIONS ON FORM S-3.
-------------------------
(a) Subject to paragraph (d) below, at such time as the Company shall have
qualified for the use of Form S-3 or any successor form promulgated under the
Securities Act, the Ampersand Investors, and the NYBC Investors shall be
entitled to request that the Company effect a registration under the Securities
Act of Registrable Shares in accordance with this Section.
(b) (i) Subject to paragraph (d) below, at such time as the Company shall
have qualified for the use of Form S-3 or any successor form promulgated under
the Securities Act, the CBCI Investors shall be entitled to request that the
Company effect a registration under the Securities Act of Registrable Shares in
accordance with this Section.
(ii) Subject to paragraph (d) below, at such time as the Company shall
have qualified for the use of Form S-3 or any successor form promulgated under
the Securities Act, the Pall Investors shall be entitled to request that the
Company effect a registration under the Securities Act of Registrable Shares in
accordance with this Section.
(c) If the Company shall be requested to effect a registration under the
Securities Act of Registrable Shares in accordance with this Section, then the
Company shall promptly give
-6-
<PAGE>
written notice of such proposed registration to all Stockholders who are then
holders of Restricted Shares and shall offer to include in such proposed
registration any Registrable Shares requested to be included in such proposed
registration by such holders who respond in writing to the Company's notice
within 30 days after delivery of such notice (which response shall specify the
number of Registrable Shares proposed to be included in such registration). The
Company shall promptly use its commercially reasonable efforts in good faith to
effect such registration on Form S-3 of the Registrable Shares which the Company
has been so requested to register.
(d) The Company shall not be obligated to effect any registration under the
Securities Act requested under this Section except in accordance with the
following provisions:
(i) the Company shall not be obligated to (A) file more than four
registration statements initiated pursuant to paragraph (a), (B) file
more than two registration statements initiated pursuant to paragraph
(b) (i), (C) file more than four registration statements initiated
pursuant to paragraph (b)(ii), of which not more than two registration
statements may be filed prior to two years after the date hereof,(D)
effect any such registration initiated pursuant to paragraph (b)(i) or
(b)(ii) if the Company shall reasonably conclude that the anticipated
gross offering price of all Registrable Shares to be included therein
would be less than $500,000, (E) file any registration statement
requested pursuant to paragraph (b)(i) at any time the CBCI Investors
shall own less than 1,256,278 (subject to adjustment for stock splits,
stock combinations and the like) Restricted Shares or (F) file any
registration statement requested pursuant to paragraph (b)(ii) by Pall
Investors at any time when (I) the Pall Investors own less than one
percent of the outstanding shares of Common Stock and (II) all such
Registrable Shares owned by the Pall Investors may be sold and
transferred under Rule 144 at that time;
(ii) the Company may delay the filing or effectiveness of any
registration statement pursuant to this Section for a period not to
exceed 90 days after the date of the Company's receipt of a request for
registration if the Company's Board of Directors has determined that
such registration would have a material adverse effect upon the Company
or its then current business plans; provided, however, that the Company
-------- -------
may cause such delay only once during any 360-day period;
(e) Any registration statement initiated pursuant to this Section 3 shall
count as a registration for purposes of the limitations contained in paragraph
(d)(i) above and shall be deemed to have been initiated pursuant to paragraph
(a) or paragraph (b)(i) or (b)(ii), as applicable, by the Stockholder which has
the greatest number of Restricted Shares included in such registration statement
at the time of its initial filing.
(f) A requested registration under this Section may be rescinded by written
notice to the Company by all of the Stockholders requesting such registration
pursuant to paragraphs (a) or (b) or (c); such rescinded registration shall not
count as a registration statement initiated pursuant to this Section for
purposes of paragraph (d)(i) above if such registration statement is rescinded
prior to the effective date thereof and if the Stockholder initiating such
request (as provided in
-7-
<PAGE>
paragraph (e) above) shall have reimbursed the Company for all out-of-pocket
expenses incurred by the Company in connection with such rescinded registration.
Even if a registration statement is not rescinded pursuant to this paragraph
(f), the Company will, at any time prior to the effectiveness of a registration
statement, deregister any or all of a Stockholder's Registrable Shares included
in such registration statement, promptly upon the Company's receipt of a written
request from such Stockholder and the Company may withdraw a registration
statement so requested if a Stockholder requesting deregistration initiated the
registration statement.
SECTION 4. PIGGYBACK REGISTRATION.
----------------------
If the Company at any time proposes for any reason to register Primary
Shares or Other Shares under the Securities Act (other than on Form S-4 or Form
S-8 promulgated under the Securities Act or any successor forms thereto or other
than in connection with an exchange offer or offering solely to the Company's
stockholders ), it shall promptly give written notice to each Stockholder of its
intention to so register the Primary Shares or Other Shares and, upon the
written request, given within 10 days after delivery of any such notice by the
Company, of any Stockholder to include in such registration Registrable Shares
held by such Stockholder (which request shall specify the number of Registrable
Shares proposed to be included in such registration), the Company shall use its
commercially reasonable efforts to cause all such Registrable Shares to be
included in such registration on the same terms and conditions as the securities
otherwise being sold in such registration; provided, however, that if the
-------- -------
managing underwriter advises the Company that the inclusion of all Registrable
Shares or Other Shares proposed to be included in such registration would
interfere with the successful marketing (including pricing) of the Primary
Shares proposed to be registered by the Company, then the number of Primary
Shares, Registrable Shares and Other Shares proposed to be included in such
registration shall be included in the following order:
(a) first, the Primary Shares;
-----
(b) second, the Registrable Shares held by the Stockholders, pro rata based
------ --- -----
upon the number of Restricted Shares (based upon Common Stock equivalents)
specified in their written requests made under this Section 4 above; and
(c) third, the Other Shares.
-----
SECTION 5. EXPENSES.
--------
The Company shall bear the expense of the first two registrations effected
pursuant to Section 2(a), the first two registrations effected pursuant to
Section 2(b)(i), the first four registrations effected pursuant to Section
2(b)(ii) or 3(b)(ii), the first registration effected pursuant to Section
3(b)(i), and all registrations effected pursuant to Section 3(a) and Section 4,
including, in each case, without limitation, all registration and filing fees
(including all expenses incident to filing with the NASD), fees and expenses of
complying with securities and blue sky laws, printing expenses, and fees and
expenses of the Company's counsel and accountants, and the fees and expenses of
the Selling Stockholders' Counsel (as defined below), but excluding any
underwriters' or brokers' discounts or commissions and the fees of any counsel
to the selling
-8-
<PAGE>
Stockholders, other than the Selling Stockholders' Counsel. However, if the
Company has borne the expense of two registration statements on Form S-1
effected pursuant to Section 2(b)(ii), the Company shall bear one-half, and the
Pall Investors as a group shall bear one-half, of the expense of any additional
registrations effected pursuant to Section 2(b)(ii) on Form S-1, provided that
Form S-2 or Form S-3 is not available for such additional registrations. The
expenses of any additional registrations pursuant to Sections 2 and 3 shall be
borne by the Stockholders participating in such registration pro rata based upon
--- -----
the number of shares registered pursuant thereto by each such Stockholder.
SECTION 6. HOLDBACK AGREEMENT.
-------------------
(a) If the Company at any time shall register shares of Common Stock under
the Securities Act pursuant to an Initial Public Offering and the managing
underwriter for such registration shall request, the Stockholders shall not
sell, make any short sale of, grant any option for the purchase of, or otherwise
dispose of any Restricted Shares (other than those shares of Common Stock
included in such registration) without the prior written consent of the Company
for a period designated by the Company in writing to the Stockholders, which
period shall not begin more than 10 days prior to the effective date of the
registration statement pursuant to which such Initial Public Offering shall be
made and shall not last more than 180 days after the effective date of such
registration statement; provided that the Stockholders shall be bound by this
---------
provision only if, and to the extent, the executive officers of the Company
owning Common Stock shall be bound by such a provision.
(b) If the Company at any time shall register shares of Common Stock under
the Securities Act (including any registration pursuant to Sections 2, 3 or 4)
for sale to the public after the Initial Public Offering and the managing
underwriter for such registration shall request, the Stockholders shall not
sell, make any short sale of, grant any option for the purchase of, or otherwise
dispose of any Restricted Shares (other than those shares of Common Stock
included in such registration) without the prior written consent of the Company
for a period designated by the Company in writing to the Stockholders, which
period shall not begin more than 10 days prior to the effective date of the
registration statement pursuant to which such public offering shall be made and
shall not last more than 90 days after the effective date of such registration
statement; provided that the Stockholders shall be bound by this provision only
--------
if, and to the extent, the executive officers of the Company owning Common Stock
shall be bound by such a provision.
SECTION 7. PREPARATION AND FILING.
----------------------
If and whenever the Company is under an obligation pursuant to the
provisions of this Agreement to use its commercially reasonable efforts to
effect the registration of any Registrable Shares, the Company shall, as
expeditiously as practicable:
(a) use its commercially reasonable efforts in good faith to cause a
registration statement that registers such Registrable Shares to become and
remain effective for a period of 180 days (as extended pursuant to Section
25) or until all of such Registrable Shares have been disposed of (if
earlier);
-9-
<PAGE>
(b) furnish, at least five business days before filing a registration
statement that registers such Registrable Shares, a prospectus relating
thereto or any amendments or supplements relating to such a registration
statement or prospectus, to one counsel selected by the holders of a
majority of such Registrable Shares (the "Selling Stockholders' Counsel."),
copies of all such documents proposed to be filed (it being understood that
such five-business-day period need not apply to successive drafts of the
same document proposed to be filed so long as such successive drafts are
supplied to such counsel in advance of the proposed filing by a period of
time that is customary and reasonable under the circumstances);
(c) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective for at least a period of 180 days (as extended pursuant
to Section 25) or until all of such Registrable Shares have been disposed
of (if earlier) and to comply with the provisions of the Securities Act
with respect to the sale or other disposition of such Registrable Shares;
(d) notify in writing the Selling Stockholders' Counsel promptly (i)
of the receipt by the Company of any notification with respect to any
comments by the Commission with respect to such registration statement or
prospectus or any amendment or supplement thereto or any request by the
Commission for the amending or supplementing thereof or for additional
information with respect thereto, (ii) of the receipt by the Company of any
notification with respect to the issuance by the Commission of any stop
order suspending the effectiveness of such registration statement or
prospectus or any amendment or supplement thereto or the initiation or
threatening of any proceeding for that purpose and (iii) of the receipt by
the Company of any notification with respect to the suspension of the
qualification of such Registrable Shares for sale in any jurisdiction or
the initiation or threatening of any proceeding for such purposes;
(e) use its commercially reasonable efforts in good faith to register
or qualify such Registrable Shares under such other securities or blue sky
laws of such jurisdictions as any seller of Registrable Shares reasonably
requests and do any and all other acts and things which may be reasonably
necessary or advisable to enable such seller of Registrable Shares to
consummate the disposition in such jurisdictions of the Registrable Shares
owned by such seller; provided, however, that the Company will not be
-------- -------
required to qualify generally to do business, subject itself to general
taxation or consent to general service of process in any jurisdiction where
it would not otherwise be required so to do but for this paragraph (e);
(f) furnish to each seller of such Registrable Shares such number of
copies of a summary prospectus or other prospectus, including a preliminary
prospectus, in conformity with the requirements of the Securities Act, and
such other documents as such seller of Registrable Shares may reasonably
request in order to facilitate the public sale or other disposition of such
Registrable Shares;
-10-
<PAGE>
(g) use its commercially reasonable efforts to cause such Registrable
Shares to be registered with or approved by such other governmental
agencies or authorities as may be necessary by virtue of the business and
operations of the Company to enable the seller or sellers thereof to
consummate the disposition of such Registrable Shares;
(h) notify on a timely basis each seller of such Registrable Shares at
any time when a prospectus relating to such Registrable Shares is required
to be delivered under the Securities Act within the appropriate period
mentioned in paragraph (a) of this Section, of the happening of any event
as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material
fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing and, at the request of such seller, prepare and
furnish to such seller a reasonable number of copies of a supplement to or
an amendment of such prospectus as may be necessary so that, as thereafter
delivered to the offerees of such shares, such prospectus shall not include
an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances then existing;
(i) make available for inspection by the Selling Stockholders' Counsel
or any underwriter participating in any disposition pursuant to such
registration statement and any attorney, accountant or other agent retained
by a seller of Registrable Shares or any such underwriter (collectively,
the "Inspectors"), all pertinent financial and other records, pertinent
corporate documents and properties of the Company (collectively, the
"Records"), as shall be reasonably necessary to enable them to exercise
their due diligence responsibility, and cause the Company's officers,
directors and employees to supply all information (together with the
Records, the "Information") reasonably requested by any such Inspector in
connection with such registration statement. Any of the Information which
the Company determines in good faith to be confidential, and of which
determination the Inspectors are so notified, shall not be disclosed by the
Inspectors unless (i) the disclosure of such Information is necessary to
avoid or correct a misstatement or omission in the registration statement,
(ii) the release of such Information is ordered pursuant to a subpoena or
other order from a court of competent jurisdiction or (iii) such
Information has been made generally available to the public. Each Investor
agrees that it will, upon learning that disclosure of such Information is
sought in a court of competent jurisdiction, give notice to the Company and
allow the Company, at the Company's expense, to undertake appropriate
action to prevent disclosure of the Information deemed confidential;
(j) use its commercially reasonable efforts in good faith to obtain
from its independent certified public accountants "comfort" letters in
customary form and at customary times and covering matters of the type
customarily covered by comfort letters;
(k) use its commercially reasonable efforts in good faith to obtain
from its counsel an opinion or opinions in customary form;
-11-
<PAGE>
(l) provide a transfer agent and registrar (which may be the same
entity and which may be the Company) for such Registrable Shares;
(m) issue to any underwriter to which any seller of Registrable Shares
may sell shares in such offering certificates evidencing such Registrable
Shares; provided, however, that the Company shall have the right to approve
-------- -------
any such underwriter which approval shall not be unreasonably withheld;
(n) list such Registrable Shares on any national securities exchange
on which any shares of the Common Stock are listed or, if the Common Stock
is not listed on a national securities exchange, use its commercially
reasonable efforts to qualify such Registrable Shares for inclusion on the
automated quotation system of the National Association of Securities
Dealers, Inc. (the "NASD") or such national securities exchange as the
holders of a majority of such Registrable Shares shall request;
(o) otherwise use its commercially reasonable efforts in good faith to
comply with all applicable rules and regulations of the Commission and make
available to its securityholders, as soon as reasonably practicable,
earnings statements (which need not be audited) covering a period of 12
months beginning within three months after the effective date of the
registration statement, which earnings statements shall satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158 thereunder;
and
(p) use its commercially reasonable efforts in good faith to take all
other steps necessary to effect the registration of such Registrable Shares
contemplated hereby.
SECTION 8. INDEMNIFICATION.
---------------
In connection with any registration of any Registrable Shares under the
Securities Act pursuant to this Agreement, the Company shall and hereby agrees
to indemnify and hold harmless the seller of such Registrable Shares, its
officers and directors, each underwriter, broker or any other person acting on
behalf of such seller and each other person, if any, who controls any of the
foregoing persons within the meaning of the Securities Act, against any losses,
claims, damages or liabilities, joint or several, (or actions in respect
thereof) to which any of the foregoing persons may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in the
registration statement under which such Registrable Shares were registered under
the Securities Act, any preliminary prospectus or final prospectus contained
therein or otherwise filed with the Commission, any amendment or supplement
thereto or any document incident to registration or qualification of any
Registrable Shares, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and shall reimburse
such seller, such officer or director, such underwriter, such broker or such
other person acting on behalf of such seller and each such controlling person
for any legal or other expenses reasonably incurred by any of them in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the Company shall not be liable in any such case
-------- -------
to the extent that any
-12-
<PAGE>
such loss, claim, damage, liability or action arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in said registration statement, preliminary prospectus, final prospectus,
amendment, supplement or document incident to registration or qualification of
any Registrable Shares in reliance upon and in conformity with written
information furnished to the Company in an instrument duly executed by such
seller or underwriter specifically for use in the preparation thereof; provided,
--------
further, that the foregoing indemnity shall not inure to the benefit of any
- -------
underwriter, with respect to any preliminary prospectus, from whom the person
asserting any losses, claims, damages and liabilities and judgments purchased
Registrable Shares or any person controlling such underwriter, if a copy of the
prospectus (as then amended or supplemented if the Company shall have furnished
any amendments or supplements thereto) was not sent or given by or on behalf of
such underwriter to such person, if required by law so to have been delivered,
or prior to a written confirmation of the sale of the Registrable Shares to such
person, and if the prospectus (as so amended and supplemented) would have cured
the defect giving rise to such loss, claim, damage, liability or judgment,
unless such failure to deliver the prospectus (as so amended and supplemented)
was a result of noncompliance by the Company with Section 7(f) hereof.
In connection with any registration of Registrable Shares under the
Securities Act pursuant to this Agreement, each seller of Registrable Shares
shall indemnify and hold harmless (in the same manner and to the same extent as
set forth in the preceding paragraph of this Section) the Company, each director
of the Company, each officer of the Company who shall sign such registration
statement, each underwriter, broker or other person acting on behalf of such
seller, each person who controls any of the foregoing persons within the meaning
of the Securities Act and each other seller of Registrable Shares under such
registration statement with respect to any statement or omission from such
registration statement, any preliminary prospectus or final prospectus contained
therein or otherwise filed with the Commission, any amendment or supplement
thereto or any document incident to registration or qualification of any
Registrable Shares, if such statement or omission was made in reliance upon and
in conformity with written information furnished to the Company or such
underwriter in an instrument duly executed by such seller or underwriter
specifically for use in connection with the preparation of such registration
statement, preliminary prospectus, final prospectus, amendment, supplement or
document; provided, however, that such obligation to indemnify will be several,
-------- -------
not joint and several, among such sellers of Registrable Shares, and the maximum
amount of liability in respect of such indemnification shall be in proportion to
and limited to, in the case of each seller of Registrable Shares, an amount
equal to the net proceeds actually received by such seller from the sale of
Registrable Shares effected pursuant to such registration.
The indemnification required by this Section 8 will be made by periodic
payments during the course of the investigation or defense, as and when bills
are received or expenses incurred, subject to prompt refund in the event any
such payments are determined not to have been due and owing hereunder.
Promptly after receipt by an indemnified party of notice of the
commencement of any action involving a claim referred to in the preceding
paragraphs of this Section, such indemnified party will, if a claim in respect
thereof is made against an indemnifying party, give written notice
-13-
<PAGE>
to the latter of the commencement of such action. In case any such action is
brought against an indemnified party, the indemnifying party will be entitled to
participate in and to assume the defense thereof, jointly with any other
indemnifying party similarly notified to the extent that it may wish, with
counsel reasonably satisfactory to such indemnified party, and after notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party shall not be responsible for any
legal or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof; provided, however, that if any indemnified
-------- -------
party shall have reasonably concluded that there may be one or more legal or
equitable defenses available to such indemnified party which are additional to
or conflict with those available to the indemnifying party, or that such claim
or litigation involves or could have an effect upon matters beyond the scope of
the indemnity agreement provided in this Section, the indemnifying party shall
not have the right to assume the defense of such action on behalf of such
indemnified party and such indemnifying party shall reimburse such indemnified
party and any person controlling such indemnified party for that portion of the
fees and expenses of any counsel retained by the indemnified party which is
reasonably related to the matters covered by the indemnity agreement provided in
this Section.
The indemnification provided for under this Agreement will remain in full
force and effect regardless of any investigation made by or on behalf of the
indemnified party or any officer, director or controlling person of such
indemnified party and will survive the transfer of the Registrable Shares by the
relevant Stockholder.
If the indemnification provided for in this Section is held by a court of
competent jurisdiction to be unavailable to an indemnified party with respect to
any loss, claim, damage, liability or action referred to herein, then the
indemnifying party, in lieu of indemnifying such indemnified party hereunder,
shall contribute to the amounts paid or payable by such indemnified party as a
result of such loss, claim, damage, liability or action in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on the one
hand and of the indemnified party on the other in connection with the statements
or omissions which resulted in such loss, claim, damage or liability as well as
any other relevant equitable considerations. The relative fault of the
indemnifying party and of the indemnified party shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the indemnifying party or by the indemnified
party and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company and
the sellers of Registrable Shares agree that it would not be just and equitable
if contributions pursuant to this paragraph were determined by pro rata
--- ----
allocation or by any other method of allocation which did not take into account
the equitable considerations referred to herein. The amount paid or payable to
an indemnified party as a result of the losses, claims, damages, liabilities or
expenses referred to above shall be deemed to include, subject to the limitation
set forth in the fourth paragraph of this Section 8, any legal or other expenses
reasonably incurred in connection with investigating or defending the same.
Notwithstanding the foregoing, in no event shall the amount contributed by a
seller of Registrable Shares exceed the aggregate net proceeds received by such
seller from the sale of its Registrable Shares.
-14-
<PAGE>
SECTION 9. UNDERWRITING AGREEMENT.
----------------------
Notwithstanding the provisions of Sections 6, 7 and 8, to the extent that
the Company and the Stockholders selling Registrable Shares in a proposed
registration shall enter into an underwriting or similar agreement, which
agreement contains provisions covering one or more issues addressed in such
Sections, the provisions contained in such Sections addressing such issue or
issues shall be superseded with respect to such registration by such other
agreement.
SECTION 10. INFORMATION BY HOLDER.
---------------------
Each Stockholder selling Registrable Shares in a proposed registration
shall furnish to the Company such written information regarding such holder and
the distribution proposed by such Stockholder as the Company may reasonably
request in writing and as shall be reasonably required in connection with any
registration, qualification or compliance referred to in this Agreement.
SECTION 11. EXCHANGE ACT COMPLIANCE.
-----------------------
From and after the CBCI Demand Registration Date or such earlier date as a
registration statement filed by the Company pursuant to the Exchange Act
relating to any class of the Company's securities shall have become effective,
the Company shall comply with all of the reporting requirements of the Exchange
Act and with all other public information reporting requirements of the
Commission which are conditions to the availability of Rule 144 for the sale of
the Common Stock. The Company shall cooperate with each Stockholder in
supplying such information as may be necessary for such Stockholder to complete
and file any information reporting forms presently or hereafter required by the
Commission as a condition to the availability of Rule 144.
SECTION 12. NO CONFLICT OF REGISTRATION RIGHTS.
----------------------------------
The Company represents and warrants to the Stockholders that the
registration rights granted to the Stockholders hereby do not conflict with any
other registration rights granted by the Company. The Company shall not, after
the date hereof, grant any registration rights which conflict with the
registration rights granted hereby.
SECTION 13. RULE 144 REQUIREMENTS.
---------------------
With a view to making available to the Stockholders the benefits of Rule
144 promulgated under the Securities Act and any other rule or regulation of the
Commission that may at any time permit a Stockholder to sell Registrable Shares
to the public without registration, the Company agrees to use its best efforts
to
(a) make and keep current public information available, as those terms are
understood and defined in Rule 144(c)(1) (at any time after it has become
subject to the reporting requirements of the Exchange Act);
-15-
<PAGE>
(b) file with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act
(at any time after it has become subject to such reporting requirements); and
(c) furnish to any holder of Registrable Shares upon request a written
statement by the Company as to its compliance with the reporting requirements of
Rule 144(c)(1) and of the Securities Act and the Exchange Act (at any time after
it has become subject to such reporting requirements), a copy of the most recent
annual or quarterly report of the Company filed under Section 13 or 15(d) of the
Exchange Act, and such other reports and documents of the Company as such holder
may reasonably request to avail itself of any similar rule or regulation of the
Commission allowing it to sell any such securities without registration.
SECTION 14. RESTRICTION ON TRANSFER.
-----------------------
(a) The Restricted Shares shall not be transferable except upon the
conditions specified in this Section, which conditions are intended to insure
compliance with the provisions of the Securities Act.
(b) Each certificate representing Restricted Shares shall (unless otherwise
permitted by the provisions of paragraph (c) and (d) below) be stamped or
otherwise imprinted with a legend in substantially the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED OR
OTHERWISE DISPOSED OF UNLESS AND UNTIL SUCH SHARES ARE REGISTERED
UNDER THE ACT AND SUCH LAWS OR (1) REGISTRATION UNDER APPLICABLE STATE
SECURITIES LAWS IS NOT REQUIRED AND (2) AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY IS FURNISHED TO THE COMPANY TO THE EFFECT
THAT REGISTRATION UNDER THE ACT IS NOT REQUIRED."
The foregoing legend shall be removed from the certificates representing any
Registrable Shares at the request of the holder thereof at such time as they
become registered and sold under the Securities Act or eligible for resale
pursuant to Rule 144(k) under the Securities Act.
(c) The holder of any Restricted Shares by acceptance thereof agrees, prior
to any Transfer of any Restricted Shares, to give written notice to the Company
of such holder's intention to effect such Transfer and to comply in all other
respects with the provisions of this Section. Each such notice shall describe
the manner and circumstances of the proposed Transfer. Upon request by the
Company, the holder delivering such notice shall deliver a written opinion,
addressed to the Company, of counsel for the holder of Restricted Shares,
stating that in the opinion of such counsel (which opinion and counsel shall be
reasonably satisfactory to the
-16-
<PAGE>
Company) such proposed Transfer does not involve a transaction requiring
registration or qualification of such Restricted Shares under the Securities Act
or the securities or "blue sky" laws of any state of the United States. Such
holder of Restricted Shares shall be entitled to Transfer such Restricted Shares
in accordance with the terms of the notice delivered to the Company, if the
Company does not reasonably object to such Transfer and request such opinion
within fifteen days after delivery of such notice, or, if it requests such
opinion, does not reasonably object to such Transfer within fifteen days after
delivery of such opinion. Each certificate or other instrument evidencing the
securities issued upon the Transfer of any Restricted Shares (and each
certificate or other instrument evidencing any untransferred balance of such
Registered Shares) shall bear the legend set forth in paragraph (b) above unless
(i) in such opinion of counsel to the holder of Restricted Shares (which opinion
and counsel shall be reasonably acceptable to the Company) registration of any
future Transfer is not required by the applicable provisions of the Securities
Act or (ii) the Company shall have waived the requirement of such legends.
(d) Notwithstanding the foregoing provisions of this Section, the
restrictions imposed by this Section upon the transferability of any Restricted
Shares shall cease and terminate when (i) any such Restricted Shares are sold or
otherwise disposed of (A) pursuant to an effective registration statement under
the Securities Act or (B) in a transaction contemplated by paragraph (c) above
which does not require that the Restricted Shares so transferred bear the legend
set forth in paragraph (b) hereof, or (ii) the holder of such Restricted Shares
has met the requirements for Transfer of such Restricted Shares under Rule
144(k) under the Securities Act (subject to the delivery of opinions as set
forth above). Whenever the restrictions imposed by this Section shall
terminate, the holder of any Restricted Shares as to which such restrictions
have terminated shall be entitled to receive from the Company, without expense,
a new certificate not bearing the restrictive legend set forth in paragraph (b)
above and not containing any other reference to the restrictions imposed by this
Section.
SECTION 15. TERMINATION.
-----------
This Agreement shall terminate and be of no further force or effect on the
date on which there remains no Registrable Shares outstanding, provided that no
further Registrable Shares are then issuable to Pall pursuant to the Stock
Purchase Agreement dated as of February 19, 1998 between the Company and Pall or
the Stock Purchase Agreement has been terminated.
-17-
<PAGE>
SECTION 16. SUCCESSORS AND ASSIGNS.
----------------------
This Agreement shall bind and inure to the benefit of the Company and the
Stockholders and, subject to Section 17, their respective successors and
assigns. The parties acknowledge that CBCI is in the process of a
reorganization, pending approval from the United States Small Business
Administration, pursuant to which CBCI is transferring substantially all of its
assets to CB Capital Investors, L.P., a Delaware limited partnership ("CBCI,
L.P."), in exchange for a general partner interest in CBCI, L.P. and that CBCI,
L.P. shall succeed in interest to CBCI's rights and obligations with respect to
this Agreement.
SECTION 17. ASSIGNMENT.
----------
The Stockholders may assign their rights hereunder to any persons or
entities that acquire Restricted Shares from an Investor; provided, however,
-------- -------
that such person or entity shall, as a condition to the effectiveness of such
assignment, be required to execute a counterpart to this Agreement whereupon
such person or entity shall have the benefits of, and shall be subject to the
restrictions contained in, this Agreement with respect to such Restricted
Shares.
SECTION 18. ENTIRE AGREEMENT.
----------------
This Agreement contains the entire agreement among the parties with respect
to the subject matter hereof and supersedes all prior arrangements or
understandings with respect hereto including, without limitation, the Common
Stock Purchase Agreement dated as of October 26, 1995 among the Company and the
parties named therein, the Common Stock Purchase Agreement dated as of June 21,
1996 among the Company and the parties named therein and the Registration Rights
Agreement dated April 29, 1997 among the Company and the parties named therein.
SECTION 19. NOTICES.
-------
All notices, requests, consents and other communications hereunder to any
party shall be deemed to be sufficient if contained in a written instrument and
shall be deemed to have been duly given when delivered in person, by telecopy,
by nationally-recognized overnight courier, or by first class registered or
certified mail, postage prepaid, addressed to such party at the address set
forth below or such other address as may hereafter be designated in writing by
the addressee to the addressor:
(i) if to the Company:
V.I. Technologies, Inc.
155 Duryea Road
Melville, New York 11747
Fax: (516) 752-3854
Telephone: (516) 752-7398
Attention: Ms. Joanne Leonard
-18-
<PAGE>
with a copy to:
Gibbons, Del Deo, Dolan, Griffinger & Vecchione
One Riverfront Plaza
Newark, New Jersey 07102
Fax: (973) 639-6249
Telephone: (973) 596-4637
Attention: Frank Lawatsch
(ii) if to the Investors:
to the address set forth for such Investor on
Schedule I, with copies to:
O'Sullivan Graev & Karabell, LLP
30 Rockefeller Plaza
New York, New York 10112
Fax: (212) 408-2420
Telephone: (212) 408-2400
Attention: John J. Suydam
Carter, Ledyard & Milburn
2 Wall street
New York, New York 10005
Fax: (212) 732-3232
Attention: Robert A. McTamaney
All such notices, requests, consents and other communications shall be deemed to
have been delivered (a) in the case of personal delivery or delivery by
telecopy, on the date of such delivery, (b) in the case of a nationally-
recognized overnight courier, on the next business day and (c) in the case of
mailing, on the fifth business day following such mailing if sent by certified
mail, return receipt requested.
SECTION 20. MODIFICATIONS: AMENDMENTS: WAIVERS.
----------------------------------
The terms and provisions of this Agreement may not be modified or amended,
except pursuant to a writing signed by the Company and Stockholders holding at
least a majority of the Restricted Shares (based upon Common Stock equivalents)
then held by each of the Ampersand Investors, the CBCI Investors, the NYBC
Investors and the Pall Investors.
SECTION 21. COUNTERPARTS.
------------
This Agreement may be executed in any number of counterparts, and each such
counterpart hereof shall be deemed to be an original instrument, but all such
counterparts together shall constitute but one agreement.
-19-
<PAGE>
SECTION 22. HEADINGS.
--------
The headings of the various sections of this Agreement have been inserted
for convenience of reference only and shall not be deemed to be a part of this
Agreement.
SECTION 23. SEVERABILITY.
------------
It is the desire and intent of the parties that the provisions of this
Agreement be enforced to the fullest extent permissible under the law and public
policies applied in each jurisdiction in which enforcement is sought.
Accordingly, if any provision of this Agreement would be held in any
jurisdiction to be invalid, prohibited or unenforceable for any reason, such
provision, as to such jurisdiction, shall be ineffective, without invalidating
the remaining provisions of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction. Notwithstanding the
foregoing, if such provision could be more narrowly drawn so as not to be
invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such
jurisdiction, be so narrowly drawn, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction.
SECTION 24. GOVERNING LAW; SUBMISSION TO JURISDICTION.
-----------------------------------------
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York, without giving effect to principles governing
conflicts of laws. The Company and the Investors submit to, and agree to take
all further steps necessary to submit to, the jurisdiction of the United States
District Court for the Southern District of New York and the Supreme Court of
the State of New York in the County of Nassau, and irrevocably waive any
objection to venue in such District or County, as the case may be, in the event
liability is alleged and/or any action, suit or proceeding is commenced under
this Agreement.
SECTION 25. SUSPENSION OF DISPOSITION OF REGISTRABLE SHARES.
-----------------------------------------------
It shall be a condition precedent to the obligations of the Company under
Section 7 that each seller of Registrable Shares shall have agreed that, (i)
upon receipt of any notice from the Company of the happening of any event of the
kind described in paragraph 7(h) hereof, such selling Stockholder will forthwith
discontinue disposition of Registrable Shares until such selling Stockholder
receives copies of a supplemented or amended prospectus contemplated by
paragraph 7(h) hereof, or until such selling Stockholder is advised in writing
by the Company that the use of the prospectus may be resumed and has received
copies of any additional or supplemental filings which are incorporated by
reference in the prospectus, and (ii) if so directed by the Company, such
selling Stockholder will deliver to the Company (at the expense of the Company)
all copies, other than permanent file copies then in such selling Stockholder's
possession, of the prospectus covering such Registrable Shares current at the
time of receipt of such notice. The 180-day periods referred to in paragraphs
7(a) and 7(c) of this Agreement shall be extended by the number of days during
which a selling Stockholder is prevented from disposing of Registrable Shares by
virtue of this Section 25.
-20-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement on the date first written above.
V.I. TECHNOLOGIES, INC.
By: /s/ John Barr
--------------------------------
Name:
Title:
CB CAPITAL INVESTORS, L.P.
By: CHASE CAPITAL PARTNERS, its General Partner
By: /s/ Damion E. Wicker
--------------------------------
Name:
Title:
NEW YORK BLOOD CENTER, INC.
By: /s/ Robert Jones
--------------------------------
Name:
Title:
AMPERSAND SPECIALTY MATERIALS AND CHEMICALS II
LIMITED PARTNERSHIP
By: ASMC-II MANAGEMENT COMPANY LIMITED
PARTNERSHIP,
By: ASMC-II MCLP LLP, its General Partner
By: /s/ Richard A. Charpie
--------------------------------
Name: Richard A. Charpie
Title: Managing General Partner
-21-
<PAGE>
AMPERSAND SPECIALTY MATERIALS AND CHEMICALS III
LIMITED PARTNERSHIP
By: ASMC-III MANAGEMENT COMPANY LIMITED
PARTNERSHIP,
By: ASMC-III MCLP LLP, its General Partner
By: /s/ Richard A. Charpie
--------------------------------
Name: Richard A. Charpie
Title: Managing General Partner
LABORATORY PARTNERS I LIMITED PARTNERSHIP
By: AMPERSAND LAB PARTNERS MANAGEMENT COMPANY
LIMITED PARTNERSHIP
By: AMPERSAND LAB PARTNERS MCLP LLP, its General
Partner
By: /s/ Richard A. Charpie
--------------------------------
Name: Richard A. Charpie
Title: Managing General Partner
-22-
<PAGE>
AMPERSAND SPECIALTY MATERIALS AND CHEMICALS III
COMPANION FUND LIMITED PARTNERSHIP
By: ASMC-III MANAGEMENT COMPANY LIMITED
PARTNERSHIP,
By: ASMC-III MCLP LLP, its General Partner
By: /s/ Richard A. Charpie
--------------------------------
Name: Richard A. Charpie
Title: Managing General Partner
LABORATORY PARTNERS COMPANION FUND LIMITED PARTNERSHIP
By: AMPERSAND LAB PARTNERS MANAGEMENT COMPANY
LIMITED PARTNERSHIP
By: AMPERSAND LAB PARTNERS MCLP LLP, its General
Partner
By: /s/ Richard A. Charpie
--------------------------------
Name: Richard A. Charpie
Title: Managing General Partner
PALL CORPORATION
By: /s/ J. Hayward-Surry
--------------------------------
Name: J. Hayward-Surry
Title:
-23-
<PAGE>
SCHEDULE I
----------
<TABLE>
<CAPTION>
Investors Shares of
- --------- Common Stock
------------
<S> <C>
CB Capital Investors, L.P. 5,025,112
c/o Chase Capital Partners
380 Madison Avenue, 12th Floor
New York, New York 10017
Fax: (212) 622-3101
Phone: (212) 622-3100
Attention: Damion E. Wicker and Jonas Steinman
New York Blood Center, Inc. 9,600,000
310 East 67th Street
New York, New York 10021
Fax: (212) 570-3010
Phone: (212) 570-3195
Attention: Robert L. Jones
Ampersand Specialty Materials and 2,941,300
Chemical II Limited Partnership
c/o Ampersand Ventures
55 Williams Street
Wellesley, Massachusetts 02181
Fax: (617) 239-0824
Phone: (617) 239-0700
Attention: Richard Charpie and Peter Parker
Ampersand Specialty Materials and Chemicals III 3,038,951
Limited Partnership
c/o Ampersand Ventures
55 Williams Street
Wellesley, Massachusetts 02181
Fax: (617) 239-0824
Phone: (617) 239-0700
Attention: Richard Charpie and Peter Parker
Laboratory Partners I Limited Partnership 926,510
c/o Ampersand Ventures
55 Williams Street
Wellesley, Massachusetts 02181
Fax: (617) 239-0824
Phone: (617) 239-0700
Attention: Richard Charpie and Peter Parker
</TABLE>
-24-
<PAGE>
<TABLE>
<S> <C>
Ampersand Specialty 49,414
Materials and Chemicals III
Companion Fund Limited
Partnership
c/o Ampersand Ventures
55 Williams Street
Wellesley, Massachusetts
02181
Fax: (617) 239-0824
Phone: (617) 239-0700
Attention: Richard Charpie and Peter Parker
Laboratory Partners 397,075
Companion Fund
Limited Partnership
c/o Ampersand Ventures
55 Williams Street
Wellesley, Massachusetts
02181
Fax: (617) 239-0824
Phone: (617) 239-0700
Attention: Richard Charpie and Peter Parker
Pall Corporation 1,333,333 plus such additional shares as shall be
2200 North Boulevard issued to Pall pursuant to the Stock Purchase
East Hills, New York Agreement dated as of February 19, 1998
11548
Fax: (516) 484-3529
Phone: (516) 484-5400
Attention: Jeremy Hayward-Surry
</TABLE>
-25-
<PAGE>
EXHIBIT 10.18
Transcript Document No.2
------------------------
SUFFOLK COUNTY INDUSTRIAL DEVELOPMENT AGENCY
(SUFFOLK COUNTY, NEW YORK)
and
MELVILLE BIOLOGICS, INC.
____________
FACILITY LEASE AGREEMENT
____________
Dated as of February 15, 1995
1995 Real Estate Transfer
(Melville Biologics, Inc. Facility)
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I
[Reserved.] ............................................................ 3
ARTICLE II
REPRESENTATIONS AND COVENANTS
SECTION 2.1 Representations and Covenants of
Agency ................................................. 3
SECTION 2.2 Representations and Covenants of
Company ................................................ 4
ARTICLE III
FACILITY SITE AND TITLE INSURANCE
SECTION 3.1 Agreement to Convey to Agency ........................... 5
SECTION 3.2 Title Insurance ......................................... 5
SECTION 3.3 Subordination of Facility Lease Agreement ............... 5
ARTICLE IV
ACQUISITION, RENOVATION AND EQUIPPING
OF FACILITY
SECTION 4.1 Acquisition, renovation and equipping
of Facility ............................................ 6
SECTION 4.2 [Reserved.] ............................................. 7
SECTION 4.3 Certificates of Completion .............................. 7
SECTION 4.4 Completion by Company ................................... 7
SECTION 4.5 Remedies to be Pursued Against
Contractors, Subcontractors,
Materialmen and their Sureties ......................... 7
</TABLE>
-i-
<PAGE>
ARTICLE V
DEMISING CLAUSES AND RENTAL PROVISIONS
<TABLE>
<S> <C>
SECTION 5.1 Demise of Facility ...................................... 8
SECTION 5.2 Duration of Lease Term; Quiet
Enjoyment .............................................. 8
SECTION 5.3 Rents and Other Amounts Payable ......................... 8
SECTION 5.4 Obligations of Company Hereunder
Unconditional .......................................... 9
ARTICLE VI
MAINTENANCE, MODIFICATIONS,
TAXES AND INSURANCE
SECTION 6.1 Maintenance and Modifications of
Facility by Company .................................... 9
SECTION 6.2 [Reserved.] ............................................. 10
SECTION 6.3 Taxes, Pilot Payments, Assessments and
Utility Charges ........................................ 10
SECTION 6.4 Insurance Required ...................................... 11
SECTION 6.5 Additional Provisions Respecting
Insurance .............................................. 12
SECTION 6.6 Application of Net Proceeds of
Insurance .............................................. 13
SECTION 6.7 Right of Agency to Pay Taxes, Insurance Premiums
and Other Charges ...................................... 13
SECTION 6.8 Compliance with Article 31-B of
Tax Law ................................................ 14
ARTICLE VII
DAMAGE, DESTRUCTION AND CONDEMNATION
SECTION 7.1 Damage, Destruction or Condemnation of the Facility ..... 15
SECTION 7.2 [Reserved.] ............................................. 16
SECTION 7.3 Condemnation of Company-Owned Property .................. 16
SECTION 7.4 Waiver of Real Property Law
Section 227 ............................................ 16
</TABLE>
-11-
<PAGE>
ARTICLE VIII
SPECIAL COVENANTS
<TABLE>
<S> <C>
SECTION 8.1 No Warranty of Condition or
Suitability by Agency .................................. 16
SECTION 8.2 Hold Harmless Provisions ................................ 16
SECTION 8.3 Right to Inspect Facility ............................... 17
SECTION 8.4 Company to Maintain Its Existence ....................... 17
SECTION 8.5 Qualification in State .................................. 17
SECTION 8.6 Agreement to File Annual Statements
and Provide Information ................................ 17
SECTION 8.7 Books of Record and Account;
Financial Statements ................................... 18
SECTION 8.8 Compliance With Orders,
Ordinances, Etc ........................................ 18
SECTION 8.9 Discharge of Liens and Encumbrances ..................... 19
SECTION 8.10 [Reserved.] ............................................. 19
SECTION 8.11 Depreciation Deductions and
Investment Tax Credit .................................. 19
SECTION 8.12 Employment Opportunities, Notice of Jobs ................ 19
ARTICLE IX
RELEASE OF CERTAIN LAND, ASSIGNMENTS AND
SUBLEASING; MORTGAGE AND PLEDGE OF INTERESTS
SECTION 9.1 Restriction on Sale of Facility;
Release of Certain Land ................................ 20
SECTION 9.2 Removal of Fixture Equipment ............................ 20
SECTION 9.3 Assignment and Subleasing ............................... 21
SECTION 9.4 Mortgage of Agency's and Company's
Interests to Guarantor ................................. 22
SECTION 9.5 [Reserved.] ............................................. 22
SECTION 9.6 Merger of Agency ........................................ 22
ARTICLE X
EVENTS OF DEFAULT AND REMEDIES
SECTION 10.1 Events of Default Defined ............................... 22
SECTION 10.2 Remedies on Default ..................................... 24
SECTION 10.3 Remedies Cumulative ..................................... 25
</TABLE>
-iii-
<PAGE>
<TABLE>
<S> <C>
SECTION 10.4 Agreement to Pay Attorneys' Fees
and Expenses ........................................... 25
SECTION 10.5 No Additional Waiver Implied by One
Waiver ................................................. 25
ARTICLE XI
EARLY-TERMINATION OF FACILITY LEASE AGREEMENT;
OPTION IN FAVOR OF COMPANY
SECTION 11.1 Early Termination of Facility Lease Agreement ........... 26
SECTION 11.2 Conditions to Early Termination of
Facility Lease Agreement ............................... 26
SECTION 11.3 Obligation to Purchase Facility ......................... 26
SECTION 11.4 Conveyance on Purchase .................................. 26
ARTICLE XII
MISCELLANEOUS
SECTION 12.1 Notices ................................................. 27
SECTION 12.2 Binding Effect .......................................... 28
SECTION 12.3 Severability ............................................ 28
SECTION 12.4 Amendments, Changes and Modifications ................... 28
SECTION 12.5 Execution of Counterparts ............................... 28
SECTION 12.6 Applicable Law .......................................... 28
SECTION 12.7 Further Assurances ...................................... 28
SECTION 12.8 Survival of Indemnities ................................. 28
SECTION 12.9 Table of Contents and Section
Headings not Controlling ............................... 28
Exhibit A - Description of Land
Schedule A - Schedule of Definitions
</TABLE>
-iv-
<PAGE>
THIS FACILITY LEASE AGREEMENT, dated as of February 15, 1995 is between the
SUFFOLK COUNTY INDUSTRIAL DEVELOPMENT AGENCY, a public benefit corporation of
the State of New York having its office at 220 Rabro Drive, P.O. Box 6100,
Hauppauge, New York 11788-0099 (the "Agency"), and MELVILLE BIOLOGICS, INC., a
Delaware corporation authorized to do business in New York, having an office at
155 Duryea Road, Melville, New York 11747 (the "Company").
R E C I T A L S
All capitalized terms used in this Facility Lease Agreement and not
otherwise defined shall have the meanings assigned thereto in the Schedule of
Definitions attached hereto as Schedule A.
Title 1 of Article 18-A of the General Municipal Law of the State of New
York was duly enacted into law as Chapter 1030 of the Laws of 1969 of the State
of New York;
The aforesaid act authorizes the creation of industrial development
agencies for the Public Purposes of the State;
The aforesaid act further authorizes the creation of industrial development
agencies for the benefit of the several counties, cities, villages and towns in
the State and empowers such agencies, among other things, to acquire,
reconstruct, renovate, refurbish, equip, lease, sell and dispose of land and any
building or other improvement, and all real and personal property, including but
not limited to, machinery and equipment deemed necessary in connection
therewith, whether now in existence or under construction, which shall be
suitable for manufacturing, civic, warehousing, research, commercial, recreation
or industrial facilities, in order to advance job opportunities, health, general
prosperity and the economic welfare of the people of the State and to improve
their standard of living;
Pursuant to and in accordance with the provisions of the aforesaid act, the
Agency was created and is empowered under the Act to undertake the providing and
leasing of the Facility;
The Facility shall consist of the acquisition, renovation and improvement
of an existing approximately 89,600 square foot building, on an approximately
10.87 acre parcel of land located at 155 Duryea Road, Melville, Town of
Huntington, Suffolk County, New York, for the purpose of the manufacture,
processing and/or fractionation of blood products and the production of related
biopharmaceutical technologies, including the following, as they relate to the
construction, erection and completion of such building, whether or not any
materials or supplies described below are incorporated into or become an
integral part of such building: (i) all purchases, leases, rentals and other
uses of tools, machinery and equipment in connection with construction, and (ii)
purchases, rentals, uses or consumption of supplies, materials and services of
every kind and description used in connection with construction, and (iii) all
Fixture Equipment, and all other machinery, and other tangible personal property
used in the renovation
<PAGE>
of the Improvements (including installation costs with respect thereto),
installed or placed in, upon or under such Improvements;
The Agency proposes to acquire and lease the Facility to the Company
pursuant to the terms of this Facility Lease Agreement;
The Bank and the Company have entered into the Loan Agreement, pursuant to
which the Bank has agreed to make the Loan to the Company;
The Guarantor has guaranteed the repayment of the Loan pursuant to the
Guaranty Agreement;
In connection with the Guaranty Agreement, the Guarantor and the Company
have entered into the Reimbursement Agreement, pursuant to which the Company has
agreed to reimburse the Guarantor for amounts paid by the Guarantor to the Bank
under the Guaranty Agreement;
The Obligations (as defined in the Reimbursement Agreement) of the Company
under the Reimbursement Agreement will be secured by, among other things, the
Mortgage;
The Company has leased a portion of the Facility to the Guarantor pursuant
to the terms and conditions set forth in the Miles Lease;
The Guarantor has subleased a portion of the Facility back to the Company
pursuant to the terms and conditions set forth in the Miles Sublease;
The Company has agreed with the Agency, on behalf of the Agency and as the
Agency's agent, to acquire, renovate and equip the Facility,
The Agency proposes to lease the Facility to the Company, and the Company
desires to rent the Facility from the Agency, upon the terms and conditions set
forth in this Facility Lease Agreement.
AGREEMENT
For and in consideration of the premises and the mutual covenants
hereinafter contained, the parties hereto do hereby mutually agree as follows:
-2-
<PAGE>
ARTICLE I
[Reserved.]
ARTICLE II
REPRESENTATIONS AND COVENANTS
Section 2.1 Representations and Covenants of Agency. The Agency makes
---------------------------------------
the following representations and covenants as the basis for the undertakings on
its part herein contained:
(a) The Agency is duly established and validly existing under the
provisions of the Act and has full legal right, power and authority to execute,
deliver and perform each of the Agency Documents and the other documents
contemplated thereby. Each of the Agency Documents and the other documents
contemplated thereby has been duly authorized, executed and delivered by the
Agency.
(b) The Agency will cause the Land to be acquired, the Improvements
to be acquired and renovated and the Fixture Equipment to be acquired and
installed and will lease the Facility to the Company pursuant to this Facility
Lease Agreement, all for the Public Purposes of the State.
(c) By resolution adopted on November 23, 1993, and amended and
supplemented by a resolution adopted on December 2, 1994, the Agency determined
that, based upon the review by the Agency of the materials submitted and the
representations made by the Company relating to the Facility, the Facility would
not have a "significant impact" or "significant effect" on the environment
within the meaning of the SEQR Act. By the Approving Resolution, the Agency
authorized the execution, delivery and performance of the Agency Documents.
(d) Neither the execution and delivery of any of the Agency Documents
and the other documents contemplated thereby or the consummation of the
transactions contemplated thereby nor the fulfillment of or compliance with the
provisions of any of the Agency Documents and the other documents contemplated
thereby, will conflict with or result in a breach of or constitute a default
under any of the terms, conditions or provisions of the Act, any other law or
ordinance of the State or any political subdivision thereof or of the Agency's
Certificate of Establishment or By-laws, as amended, or of any corporate
restriction or any agreement or instrument to which the Agency is a party or by
which it is bound, or result in the creation or imposition of any Lien of any
nature upon any of the Property of the Agency under
-3-
<PAGE>
the terms of the Act or any such law, ordinance, Certificate of Establishment,
By-laws, restriction, agreement or instrument, except for Permitted
Encumbrances.
(e) Each of the Agency Documents and the other documents contemplated
thereby constitutes a legal, valid and binding obligation of the Agency
enforceable against the Agency in accordance with its terms.
(f) The Agency has been induced to enter into this Facility Lease
Agreement by the undertaking of the Company to utilize the Facility in Suffolk
County, New York.
Section 2.2 Representations and Covenants of Company. The Company
----------------------------------------
makes the following representations and covenants as the basis for the
undertakings on its part herein contained:
(a) The Company is a business corporation duly organized and validly
existing under the laws of the State of Delaware, is in good standing under the
laws of the State of Delaware and is authorized to do business in the State of
New York and has full legal right, power and authority to execute, deliver and
perform each of the Company Documents and the other documents contemplated
thereby. Each of the Company Documents and the other documents contemplated
thereby has been duly authorized, executed and delivered by the Company.
(b) Neither the execution and delivery of any of the Company
Documents and the other documents contemplated thereby or the consummation of
the transactions contemplated thereby nor the fulfillment of or compliance with
the provisions of any of the Company Documents and the other documents
contemplated thereby, will conflict with or result in a breach of or constitute
a default under any of the terms, conditions or provisions of any law or
ordinance of the State of Delaware or the State of New York or any political
subdivision thereof or of the Company's Certificate of Incorporation, as
amended, or of the Company By-Laws, or any corporate restriction or any
agreement or instrument to which the Company is a party or by which it is bound,
or result in the creation or imposition of any Lien of any nature upon any of
the Property of the Company under the terms of any such law, ordinance,
certificate of Incorporation or By-laws, as amended, restriction, agreement or
instrument, except for Permitted Encumbrances.
(c) The Facility and the design, acquisition, renovation and
equipping and operation thereof will conform with all applicable zoning,
planning, building and environmental laws, ordinances, rules and regulations of
governmental authorities having jurisdiction over the Facility; provided,
however, the Company need not conform if such failure to conform would not have
a material adverse effect on the Agency, the Facility, or the use thereof. The
Company shall defend, indemnify and hold harmless the Agency for expenses,
including reasonable attorney fees, resulting from any failure by the Company to
comply with the provisions of this subsection.
-4-
<PAGE>
(d) The Company shall perform or cause to be performed, for and on
behalf of the Agency each and every obligation of the Agency, if any, under and
pursuant to the Mortgage.
(e) Each of the Agency Documents and the other documents contemplated
thereby constitutes a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms.
(f) The Company will complete the acquisition, renovation and
equipping of the Facility.
(g) The Facility is and will continue to be a "project," as such
quoted term is defined in the Act. The Company will not take any action, or fail
to take any action, which would cause the Facility to not constitute a "project"
as such quoted term is defined in the Act.
ARTICLE III
FACILITY SITE AND TITLE INSURANCE
Section 3.1 Agreement to Convey to Agency. The Company has conveyed
-----------------------------
or has caused to be conveyed to the Agency (i) good and marketable title to the
Land, including any buildings, structures or other improvements thereon, and
(ii) lien-free title to the Fixture Equipment, in each case except for Permitted
Encumbrances and will convey or cause to be conveyed to the Agency lien-free
title to the Fixture Equipment and Improvements acquired after the date hereof,
in each case except for Permitted Encumbrances.
Section 3.2 Title Insurance. The Company has obtained or will
---------------
obtain fee title insurance for the benefit of the Agency in an amount equal to
$10,000,000 insuring fee title to the Land and the Improvements thereon, free of
Liens, except for Permitted Encumbrances.
Section 3.3 Subordination of Facility Lease Agreement. This Facility
-----------------------------------------
Lease Agreement and any and all modifications, amendments, renewals and
extensions thereof is subject and subordinate to the Security Documents
(individually and collectively) and to any and all modifications, amendments,
consolidations, extensions, renewals, replacements and increases thereof.
-5-
<PAGE>
ARTICLE IV
ACQUISITION, RENOVATION AND EQUIPPING OF FACILITY
Section 4.1 Acquisition, Renovation and Equipping of Facility.
-------------------------------------------------
(a) The Company agrees that, on behalf of the Agency, it will acquire,
renovate and equip the Facility.
(b) [Reserved.]
(c) Title to all Fixture Equipment incorporated or installed in the
Improvements shall vest in the Agency immediately upon the Company's obtaining
an interest in or to the Fixture Equipment. The Company shall execute, deliver
and record or file all instruments necessary or appropriate to so vest title to
the Agency and shall take all action necessary or appropriate to protect such
title against claims of any third Persons, except for Permitted Encumbrances.
(d) The Agency hereby appoints the Company its true and lawful agent,
and the Company hereby accepts such agency (i) to acquire, renovate and equip
the Facility, (ii) to make, execute, acknowledge and deliver any contracts,
orders, receipts, writings and instructions with any other Persons, and in
general to do all things which may be requisite or proper, all for constructing
the Improvements and acquiring and installing the Fixture Equipment with the
same powers and with the same validity as the Agency could do if acting on its
own behalf, (iii) to pay all fees, costs and expenses incurred in the
construction of the Improvements and the acquisition and installation of the
Fixture Equipment, and (iv) to ask, demand, sue for, levy, recover and receive
all such sums or money, debts, dues and other demands whatsoever which may be
due, owing and payable to the Agency under the terms of any contract, order,
receipt, or writing in connection with construction and completion of the
Improvements and the acquisition and installation of the Fixture Equipment, and
to enforce the provisions of any contract, agreement, obligation, bond or other
performance security.
(e) The Agency shall enter into, and accept the assignment of, such
contracts as the Company may request in order to effectuate the purposes of this
Section 4.1.
(f) The Company, as agent for the Agency, shall comply with all
provisions of the Labor Law of the State, except as hereinafter noted,
applicable to the acquisition, renovation and equipping of the Facility and
shall include in all construction contracts all provisions which may be required
to be inserted therein by such provisions. In addition, the Company specifically
represents that it will comply with Section 220 of the Labor Law of the State,
except subdivision (3) and Section 220-d thereof, as if such Section was
applicable to the Facility.
-6-
<PAGE>
Section 4.2 [Reserved.]
Section 4.3 Certificates of Completion. To establish the Completion
--------------------------
Date, the Company shall deliver to the Agency certificate signed by an
Authorized Representative of the Company (i) stating that acquisition,
renovation and equipping of the Facility has been completed (ii) stating that
the payment of all labor, services, materials and supplies used in such
acquisition has been made or provided for; and (iii) such certificates as may be
reasonably satisfactory to the Agency, including without limitation, a final
certificate of occupancy, if applicable. The Company agrees to complete the
acquisition, renovation and equipping of the Facility on or before March 1,
1997.
Section 4.4 Completion by Company.
---------------------
(a) The Company agrees to pay in full all costs of acquiring,
renovating and equipping the Facility for the benefit of the Agency. Title to
all portions of the Facility installed or constructed at the Company's cost or
expense shall immediately upon such installation or construction vest in the
Agency and shall be subject to the rights, security interests and liens created
by and granted by the Security Documents and subject to Permitted Encumbrances.
The Company shall execute, deliver and record or file such instruments as the
Agency may request in order to perfect or protect the Agency's title to such
portions of the Facility, subject to Permitted Encumbrances.
(b) The Company shall not be entitled to any reimbursement for such
excess cost or expense from the Agency nor shall it be entitled to any
diminution or abatement of any other amounts payable by the Company under this
Facility Lease Agreement.
Section 4.5 Remedies to be Pursued Against Contractors. Subcontractors
----------------------------------------------------------
Materialmen and their Sureties. In the event of a default by any contractor,
- ------------------------------
subcontractor, materialman or other Person under any contract made by it in
connection with the Facility or in the event of a breach of warranty or other
liability with respect to any materials, workmanship, or performance guaranty,
the Company at its expense, either separately or in conjunction with others, may
pursue any and all remedies available to it and the Agency, as appropriate,
against the contractor, subcontractor, materialman or other Person so in default
and against any surety for the performance of such contract. The Company, in its
own name or in the name of the Agency, may prosecute or defend any action or
proceeding or take any other action involving any such contractor,
subcontractor, materialman or surety or other Person which the Company deems
reasonably necessary, and in such event the Agency, at the Company's expense,
hereby agrees to cooperate fully with the Company and to take all action
necessary to effect the substitution of the Company for the Agency in any such
action or proceeding.
-7-
<PAGE>
ARTICLE V
DEMISING CLAUSES AND RENTAL PROVISIONS
Section 5.1 Demise of Facility. The Agency hereby leases the Facility
------------------
to the Company and the Company hereby takes the Facility from the Agency upon
the terms and conditions of this Facility Lease Agreement.
Section 5.2 Duration of Lease Term; Quiet Enjoyment.
---------------------------------------
(a) The Agency shall deliver to the Company sole and exclusive
possession of the Facility (subject to Sections 3.3, 8.3 and 10.2 hereof) and
the leasehold estate created hereby shall commence on the Closing Date and the
Company shall accept possession of the Facility on the Closing Date.
(b) Except as provided in Section 10.2 hereof, the leasehold estate
created hereby shall terminate at 11:59 p.m. on March 1, 2007 or on such earlier
date as may be permitted by Section 11.1 hereof; provided, however, that this
Facility Lease Agreement shall automatically terminate upon the expiration
and/or termination of the PILOT Agreement.
(c) Except as provided in Sections 3.3, 8.3 and 10.2 hereof, the
Agency shall neither take nor suffer or permit any action to prevent the Company
during the Lease Term from having quiet and peaceable possession and enjoyment
of the Facility and will, at the request of the Company and at the Company's
cost, cooperate with the Company in order that the Company may have quiet and
peaceable possession and enjoyment of the Facility as hereinabove provided.
Section 5.3 Rents and Other Amounts Payable.
-------------------------------
(a) The Company shall pay basic rent in advance to the Agency for the
Facility as follows: One Dollar ($1.00) per year commencing on the Closing Date
and on the first Business Day of each and every February thereafter during the
term of this Facility Lease Agreement.
(b) In addition to the payments of rent pursuant to Section 5.3(a)
hereof, throughout the Lease Term, the Company shall pay to the Agency as
additional rent, within thirty (30) days of receipt of demand therefor, the
expenses of the Agency and the members thereof incurred (i) by reason of the
Agency's ownership or leasing of the Facility or (ii) in connection with the
carrying out of the Agency's duties and obligations under the Agency Documents,
the payment of which is not otherwise provided for under this Facility Lease
Agreement. The Agency does not charge any annual or continuing administrative or
-8-
<PAGE>
management fee beyond any initial administrative fee or fee for services
rendered by the Agency.
(c) The Company, under the provisions of this Section 5.3, agrees to
make the above-mentioned payments in immediately available funds and without any
further notice in lawful money of the United States of America. In the event the
Company shall fail to timely make any payment required in Section 5.3(a) or
5.3(b), the Company shall pay the same together with interest on such payment at
a rate equal to two percent (2%) plus the Prime Rate, but in no event at a rate
higher than the maximum lawful prevailing rate, from the date on which such
payment was due until the date on which such payment is made.
Section 5.4 Obligations of Company Hereunder Unconditional. The
----------------------------------------------
obligations of the Company to make the payments required in Section 5.3 hereof,
and to perform and observe any and all of the other covenants and agreements on
its part contained herein shall be a general obligation of the Company, and
shall be absolute and unconditional irrespective of any defense or any rights of
setoff, recoupment or counterclaim it may otherwise have against the Agency. The
Company agrees it will not (i) suspend, discontinue or abate any payment
required hereunder or (ii) fail to materially observe any of its other covenants
or agreements in this Facility Lease Agreement.
Subject to the foregoing provisions, nothing contained in this Section
shall be construed to release the Agency from the performance of any of the
agreements on its part contained in this Facility Lease Agreement or to affect
the right of the Company to seek reimbursement, and in the event the Agency
should fail to-perform any such agreement, the Company may institute such
separate action against the Agency as the Company may deem necessary to compel
performance or recover damages for non-performance, and the Agency covenants
that it will not, subject to the provisions of Sections 3.3 and 8.3 and Article
X hereof, take, suffer or permit any action which will adversely affect, or
create any defect in its title to the Facility or which will otherwise adversely
affect the rights or estate of the Company hereunder, except upon written
consent of the Company.
ARTICLE VI
MAINTENANCE, MODIFICATIONS, TAXES AND INSURANCE
Section 6.1 Maintenance and Modifications of Facility by Company.
----------------------------------------------------
(a) The Company shall not abandon the Facility or cause or permit any
waste to the Improvements. During the Lease Term, the Company shall not remove
any part of the Facility outside of the jurisdiction of the Agency and shall (i)
keep the Facility in as reasonably safe condition as its operations shall
permit; (ii) make all necessary repairs and replacements to
-9-
<PAGE>
the Facility (whether ordinary or extraordinary, structural or nonstructural,
foreseen or unforeseen); and (iii) operate the Facility in a sound and economic
manner.
(b) The Company from time to time may make any structural additions,
modifications or improvements to the Facility or any part thereof, provided such
actions do not adversely affect the structural integrity of the Facility. All
such additions, modifications or improvements made by the Company shall become a
part of the Facility and the Property of the Agency, subject to Permitted
Encumbrances. The Company agrees to deliver to the Agency all documents which
may be necessary or appropriate to convey to the Agency title to such Property,
subject to Permitted Encumbrances.
Section 6.2 [Reserved.]
Section 6.3 Taxes, Pilot Payments, Assessments and Utility Charges.
------------------------------------------------------
(a) The Company agrees to pay, as the same become due and before any
fine, penalty, interest (except interest which is payable in connection with
legally permissible installment payments) or other cost may be added thereto or
become due or be imposed by operation of law for the non-payment thereof, (i)
all taxes of any kind whatsoever which may at any time be lawfully assessed or
levied against or with respect to the Facility and any machinery, equipment or
other Property installed or brought by the Company therein or thereon,
including, without limiting the generality of the foregoing, any sales or use
taxes imposed with respect to the Facility or any part or component thereof, or
the rental or sale of the Facility or any part thereof; (ii) all utility and
other charges, including service charges, incurred or imposed for or with
respect to the operation, maintenance, use, occupancy, upkeep and improvement of
the Facility; (iii) all assessments and charges of any kind whatsoever lawfully
made by any governmental body for public improvements; provided that, with
respect to special assessments that may lawfully be paid in installments over a
period of years, the Company shall be obligated under this Facility Lease
Agreement to pay only such installments as are required to be paid during the
Lease Term; and (iv) and all PILOT Payments as provided under the PILOT
Agreement.
(b) The Company may in good faith contest any taxes and assessments.
In the event of any such proceedings, the Company may permit the taxes or
assessments so contested to remain unpaid during the period of such proceedings
and any appeal therefrom, provided, however, that (i) neither the Facility nor
any part thereof or interest therein would be in any immediate danger of being
sold, forfeited or lost by reason of such proceedings and (ii) the Company shall
have set aside on its books adequate reserves with respect thereto and shall
have furnished such security, if any, as may be required in such proceedings or
requested by the Agency. The aforesaid right to refrain from paying taxes or
assessments and to reserve for any such contested obligations shall specifically
not apply to PILOT Payments required under the PILOT Agreement. Under all
circumstances PILOT Payments must be paid in accordance with the terms and
provisions as set forth in the PILOT Agreement, and the PILOT Agreement shall
-10-
<PAGE>
govern all rights and obligations of the Company as they pertain to PILOT
Payments, including, but not limited to, the rights of the Company under Section
5 of the PILOT Agreement.
(c) If the Company successfully contests any such taxes or assessments
it shall look solely to the affected Taxing Authorities (and not to the Agency)
for any refunds due or awarded as a result thereof. The provisions of the PILOT
Agreement shall govern the contest and/or credit or refund of all PILOT
Payments.
(d) Within thirty (30) days of receipt of written request therefor,
the Company shall deliver to the Agency official receipts of the affected Taxing
Authorities or other proof reasonably satisfactory to the Agency evidencing
payment of any tax, assessment or PILOT Payment.
Section 6.4 Insurance Required. At all times throughout the Lease
------------------
Term, including, when indicated herein, during the Construction Period, the
Company shall, at its sole cost and expense, maintain or cause to be maintained
insurance against such risks and for such amounts as are customarily insured
against by businesses of like size and type and shall pay, as the same become
due and payable, all premiums with respect thereto, including, but not
necessarily limited to:
(a) All policies of insurance and in such amounts as required to be
obtained and maintained by the company under the Mortgage and the Reimbursement
Agreement.
(b) Workers' compensation insurance, disability benefits insurance and
each other form of insurance which the Company or any permitted Sublessee is
required by law to provide, covering loss resulting from injury, sickness,
disability or death of employees of the Company or any permitted Sublessee who
are located at or assigned to the Facility. This coverage shall be in effect
from and after the Completion Date or on such earlier date as any employees of
the Company, any permitted Sublessee, any contractor or subcontractor first
occupy the Facility.
(c) Insurance protecting the Agency and the Company against loss or
losses from liability imposed by law or assumed in any written contract
(including the contractual liability assumed by the Company under Section 8.2
hereof) and arising from personal injury, including bodily injury or death, or
damage to the property of others, caused by an accident or occurrence with a
limit of liability of not less than $1,000,000 (combined single limit for
personal injury, including bodily injury or death, and property damage),
comprehensive automobile liability, to the extent applicable, including all
owned, non-owned and hired autos with a limit of liability of not less than
$1,000,000 (combined single limit or equivalent for personal injury, including
bodily injury or death, and property damage) and with a blanket excess liability
coverage in an amount not less than $5,000,000 combined single limit or
equivalent protecting the Agency and the Company against any loss or liability
or damage for personal injury, including bodily injury or death, or property
damage. This coverage shall also be in effect during the Construction Period.
-11-
<PAGE>
(d) During the Construction Period (and for at least one year
thereafter in the case of Products and Completed Operations as set forth below),
the Company shall cause the general contractor to carry liability insurance of
the type and providing the minimum limits set forth below:
(i) Workers' compensation and employer's liability with limits
in accordance with applicable law.
(ii) Comprehensive general liability providing coverage for:
Premises and Operations
Products and Completed Operations
Owners Protective
Contractors Protective
Contractual Liability
Personal Injury Liability
Broad Form Property Damage
(including completed operations)
Explosion Hazard
Collapse Hazard
Underground Property Damage Hazard
Such insurance shall have a limit of liability of not less than $1,000,000
(combined single limit for personal injury, including bodily injury or death,
and property damage).
(iii) Comprehensive auto liability, including all owned, non-
owned and hired autos, with a limit of liability of not less than $1,000,000
(combined single limit for personal injury, including bodily injury or death,
and property damage).
(iv) Excess "umbrella" liability providing liability insurance
in excess of the coverages in (i), (ii) and (iii) above with a limit of not less
than $5,000,000.
Section 6.5 Additional Provisions Respecting Insurance.
------------------------------------------
(a) All insurance required by Section 6.4 hereof shall be procured and
maintained in financially sound and generally recognized responsible insurance
companies selected by the entity required to procure the same and authorized to
write such insurance in the State. Such insurance may be written with deductible
amounts comparable to those on similar policies carried by other companies
engaged in businesses similar in size, character and other respects to those in
which the procuring entity is engaged. All policies of insurance required by
Section 6.4 hereof shall provide for at least thirty (30) days' prior written
notice of the restriction, cancellation or modification thereof to the Agency.
The policies evidencing the insurance required by
-12-
<PAGE>
Section 6.4(c) and (d)(ii), (iii) and (iv) hereof shall name the Agency as an
additional named insured.
(b) The policies or certificates (or binders) of insurance required by
Section 6.4(c) and (d)(ii), (iii) and (iv) hereof shall be deposited with the
Agency on or before the Closing Date. Prior to the expiration of each such
policy, the Company shall furnish the appropriate Person with evidence that such
policy has been renewed or replaced or is no longer required by this Facility
Lease Agreement. The Company shall provide such further information with respect
to the insurance coverage required by this Facility Lease Agreement as the
Agency may from time to time reasonably require.
Section 6.6 Application of Net Proceeds of Insurance. Subject to the
----------------------------------------
Security Documents, the Net Proceeds of the insurance required by Section 6.4
hereof shall be applied toward extinguishment or satisfaction of the liability
with respect to which such insurance proceeds may be paid.
Section 6.7 Right of Agency to Pay Taxes, Insurance Premiums and Other
----------------------------------------------------------
Charges. If the Company fails (i) to pay any tax, together with any fine,
- -------
penalty, interest or cost which may have been added thereto or become due or
been imposed by operation of law for nonpayment thereof, or PILOT Payments or
assessment required to be paid by Section 6.3 hereof, (ii) to maintain any
insurance required to be maintained by Section 6.4 hereof, (iii) to pay any
amount required to be paid by any law or ordinance relating to the use or
occupancy of the Facility or by any requirement, order or notice of violation
thereof issued by any governmental person, (iv) to pay any mechanic's Lien which
is recorded or filed against the Facility or any part thereof (unless contested
in accordance with the provisions of Section 8.9(b) hereof), (v) to pay any real
property transfer gains tax, together with any interest and penalties thereon,
which is due and payable by reason of a conveyance of the leasehold estate in
and to the Facility pursuant to a judicial sale in any foreclosure action or by
deed and/or assignment in lieu of foreclosure or (vi) to pay any other amount or
perform any act hereunder required to be paid or performed by the Company
hereunder, the Agency may pay or cause to be paid such tax or PILOT Payments or
assessment or the premium for such insurance or any such other payment or may
perform any such act. No such payment shall be made or act performed by the
Agency until at least thirty (30) days shall have elapsed since notice shall
have been given by the Agency to the Company, and in the case of any tax or
assessment or the amounts specified in paragraphs (iii), (v) and (vi) hereof, no
such payment shall be made in any event if the Company is contesting the same in
good faith to the extent and as permitted by the PILOT Agreement and this
Facility Lease Agreement unless an Event of Default hereunder shall have
occurred and be continuing. No such payment by the Agency shall affect or impair
any rights of the Agency hereunder arising in consequence of such failure by the
Company. The Company shall, on demand, reimburse the Agency for any amount so
paid or for expenses or costs incurred in the performance of any such act by the
Agency pursuant to this Section (which shall include all reasonable legal fees
and disbursements), together with interest thereon from the date of payment of
such amount, expense or cost by the
-13-
<PAGE>
Agency at two percent (2%) in excess of the Prime Rate, but in no event at a
rate higher than the maximum lawful prevailing rate.
Section 6.8 Compliance with Article 31 and Article 31-B of Tax Law.
------------------------------------------------------
(a) The Company shall keep true and complete records pertaining to its
acquisition of title to the fee or the leasehold estate in and to the Facility,
all subsequent transfers of any interests therein or any part thereof and all
changes in the controlling interest (by way of changes in stock ownership,
capital, profits, beneficial interest or otherwise) in the Company or any
related entity which may hereafter own and/or acquire title to the fee or the
leasehold estate in and to the Facility, including, but not limited to, a copy
of the contract of sale, title report, assignment of lease, closing statement,
transferor's affidavit, questionnaire or return, statement of tentative
assessment and any other notices or determinations of tax received from the New
York State Department of Taxation and Finance, transferor's supplemental return,
the date and cost of all "capital improvements" made to the Land, the
Improvements or any part thereof and evidence of (i) the payment of real
property transfer tax imposed by reason of Article 31 of the New York Tax Law
and, (ii) the payment of any real property transfer gains tax imposed by reason
of Article 31-B of the New York Tax Law and the filing of all reports and any
other information or documentation required by the New York State Department of
Taxation and Finance by reason of said Article or any regulations promulgated
thereunder. All such records shall be made available to the Agency for
inspection from time to time upon their request.
(b) If any real property transfer gains tax shall be due and payable
upon the conveyance of the leasehold estate in and to the Facility by the Agency
to the Company pursuant to the Facility Lease Agreement, the Company shall, at
the request of the Agency, (i) provide the Agency with a copy of all such
records and will prepare, execute, deliver and file any affidavits,
questionnaires, returns or supplemental returns required of the Company, as
transferor, including, but not limited to, a statement in affidavit form as to
the "original purchase price" of the fee or the leasehold estate in and to the
Facility and the cost of all "capital improvements" made to the Land, the
Improvements or any part thereof by the Company or any related entity and the
date or dates on which such improvements were made and (ii) pay or cause to be
paid any real property transfer gains tax, together with any interest and
penalties thereon, which may be due and payable by reason of such conveyance.
The Company hereby appoints the Agency its true and lawful agent and
attorney-in-fact (which appointment shall be deemed to be an agency coupled with
an interest), with full power of substitution, to prepare, execute, deliver and
file on its behalf any and all affidavits, questionnaires, returns and
supplemental returns which the Company, as transferor, has failed or refused to
execute and deliver to the Agency within thirty (30) days after notice and
request therefor.
-14-
<PAGE>
ARTICLE VII
DAMAGE, DESTRUCTION AND CONDEMNATION
Section 7.1 Damages, Destruction or Condemnation of the Facility.
----------------------------------------------------
(a) If the Facility or any part or component shall be damaged or
destroyed (in whole or in part) or title to or use of the Facility shall be
taken by Condemnation (in whole or in part) at any time during the Lease Term:
(i) the Agency shall have no obligation to replace, repair,
rebuild, restore or relocate the Facility or acquire, by construction
or otherwise, facilities of substantially the same nature as the
Facility ("Substitute Facilities"); and
(ii) there shall be no abatement or reduction in the amounts
payable by the Company under this Facility Lease Agreement or the
PILOT Agreement (whether or not the Facility is replaced, repaired,
rebuilt, restored or relocated or Substitute Facilities are acquired);
and
(iii) upon the occurrence of such damage destruction or
Condemnation, the Net Proceeds derived from the insurance or the
Condemnation award shall be paid to the Company and applied by the
Company, subject to the terms of the Security Documents.
(b) Any replacements, repairs, rebuilding, restorations or relocations
of the Facility or acquisition of Substitute Facilities by the Company after the
occurrence of such damage, destruction or Condemnation shall be subject to the
following conditions:
(i) the Facility or the Substitute Facilities shall be in
substantially the same condition and value as an operating entity as
existed prior to the damage or destruction;
(ii) the Facility or the Substitute Facilities shall continue to
constitute a "project" as such term is defined in the Act; and
(iii) the Facility or the Substitute Facilities will be subject
to no Liens, other than Permitted Encumbrances.
(c) All such repair, replacement, rebuilding, restoration or
relocation of the Facility shall be effected with due diligence in a good and
workmanlike manner in material compliance with all applicable legal
requirements, shall be promptly and fully paid for by the
-15-
<PAGE>
Company in accordance with the terms of the applicable contracts, and shall
automatically become a part of the Facility as if the same were specifically
provided herein.
Section 7.2 [Reserved.]
Section 7.3 Condemnation of Company-Owned Property. Subject to the
--------------------------------------
terms of the Security Documents, the Company shall be entitled to the proceeds
of any Condemnation award or portion thereof made for damage to or taking of any
Property which, at the time of such damage or taking, is not part of the
Facility.
Section 7.4 Waiver of Real Property Law Section 227. The Company
---------------------------------------
hereby waives the provisions of Section 227 of the Real Property Law of the
State or any law of like import now or hereafter in effect.
ARTICLE VIII
SPECIAL COVENANTS
Section 8.1 No Warranty of Condition or Suitability by Agency. THE
-------------------------------------------------
AGENCY MAKES NO WARRANTY, EITHER EXPRESS OR IMPLIED, AS TO THE CONDITION, TITLE,
DESIGN, OPERATION, MERCHANTABILITY OR FITNESS OF THE FACILITY OR THAT IT IS OR
WILL BE SUITABLE FOR THE COMPANY'S PURPOSES OR NEEDS.
Section 8.2 Hold Harmless Provisions.
------------------------
(a) The Company agrees that the Agency, its directors, members,
officers, agents (except the Company) and employees shall not be liable for and
agrees to defend, indemnify, release and hold the Agency, its directors,
members, officers, agents (except the Company) and employees harmless from and
against any and all (i) liability for loss or damage to Property or injury to or
death of any and all Persons that may be occasioned by, directly or indirectly,
any cause whatsoever pertaining to the Facility or arising by reason of or in
connection with the occupation or the use thereof or the presence of any Person
or Property on, in or about the Facility or the Land or (ii) liability arising
from or expense incurred by the Agency's financing, acquiring, renovating and
equipping, owning and leasing of the Facility, including without limiting the
generality of the foregoing, all claims arising from the breach by the Company
of any of its covenants contained herein, the exercise by the Company of the
authority conferred upon it pursuant to Section 4.1(d) of this Facility Lease
Agreement and all causes of action and reasonable attorneys' fees and any other
expenses incurred in defending any claims, suits or actions which may arise as a
result of any of the foregoing, provided that any such losses, damages,
liabilities or expenses of the Agency are not incurred or do not result from the
gross negligence or intentional or willful wrongdoing of the Agency or any of
its directors, members,
-16-
<PAGE>
agents (except the Company) or employees. The foregoing indemnities shall apply
notwithstanding the fault or negligence in part of the Agency, or any of its
members, directors, officers, agents or employees and irrespective of the breach
of a statutory obligation or the application of any rule of comparative or
apportioned liability. The foregoing indemnities are limited only to the extent
of any prohibitions imposed by law.
(b) Notwithstanding any other provisions of this Facility Lease
Agreement, the obligations of the Company pursuant to this Section 8.2 shall
remain in full force and effect after the termination of this Facility Lease
Agreement until the expiration of the period stated in the applicable statute of
limitations during which a claim, cause of action or prosecution relating to the
matters herein described may be brought and payment in full or the satisfaction
of such claim, cause of action or prosecution relating to the matters herein
described and the payment of all expenses and charges incurred by the Agency, or
its respective members, directors, officers, agents and employees, relating to
the enforcement of the provisions herein specified.
(c) In the event of any claim against the Agency or its respective
members, directors, officers, agents or employees by any employee or contractor
of the Company or anyone directly or indirectly employed by any of them or
anyone for whose acts any of them may be liable, the obligations of the Company
hereunder shall not be limited in any way by any limitation on the amount or
type of damages, compensation, disability benefits or other employee benefit
acts.
Section 8.3 Right to Inspect Facility. The Agency and the duly
-------------------------
authorized agents of either of them shall have the right at all reasonable times
to inspect the Facility.
Section 8.4 Company to Maintain Its Existence. The Company agrees that
---------------------------------
during the Lease Term it will maintain its existence, will not dissolve,
liquidate or otherwise dispose of substantially all of its assets and will not
consolidate with or merge into another corporation or permit one or more
corporations to consolidate with or merge into it.
Section 8.5 Qualification in State. The Company throughout the Lease
----------------------
Term shall continue to be duly authorized to do business in the State.
Section 8.6 Agreement to File Annual Statements and Provide
-----------------------------------------------
Information. The Company shall file with the New York State Department of
- -----------
Taxation and Finance an annual statement of the value of all sales and use tax
exemptions claimed in connection with the Facility in compliance with Section
874(8) of the New York State General Municipal Law. The Company shall submit a
copy of such annual statement to the Agency at the time of filing with the
Department of Taxation and Finance. The Company further agrees whenever
requested by the Agency to provide and certify or cause to be provided and
certified such information concerning thee Company, its finances, its operations
and its affairs necessary to enable the Agency to make any report required by
law, governmental regulation or any of the Agency Documents or Company
Documents.
-17-
<PAGE>
Section 8.7 Books of Record and Account: Financial Statements. The
-------------------------------------------------
Company at all times agrees to maintain proper accounts, records and books in
which full and correct entries shall be made, in accordance with generally
accepted accounting principles, of all transactions and events relating to the
business and affairs of the Company. The Company shall furnish to the Agency
within thirty (30) days of their filing, copies of all reports, if any, filed
with the Securities and Exchange Commission, pursuant to the Securities Exchange
Act of 1934, as amended, relative to the Company.
Section 8.8 Compliance With Orders Ordinances Etc.
--------------------------------------
(a) The Company, throughout the Lease Term, agrees that it will
promptly comply, and cause any sublessee or occupant of the Facility to comply,
with all statutes, codes, laws, acts, ordinances, orders, judgments, decrees,
injunctions, rules, regulations, permits, licenses, authorizations, directions
and requirements, ordinary or extraordinary, which now or at any time hereafter
may be applicable to the Facility or any part thereof or to the acquisition,
renovation and equipping thereof, or to any use, manner of use or condition of
the Facility or any part thereof, of all federal, state, county, municipal and
other governments, departments, commissions, boards, courts, authorities,
officials and officers and companies or associations insuring the premises
having jurisdiction of the Facility or any part thereof, or to the acquisition,
renovation and equipping thereof, or to any use, manner of use or condition of
the Facility or any part thereof; provided, however, the Company need not comply
if such failure to comply would not have a material adverse effect on the
Agency, the Facility, or the use thereof.
(b) [Reserved.]
(c) Notwithstanding the provision of subsection (a) hereof, the
Company may in good faith contest the validity or the applicability of any
requirement of the nature referred to in such subsection (a) by appropriate
legal proceedings conducted in good faith and with due diligence. In such event,
the Company may fail to comply with the requirement or requirements so contested
during the period of such contest and any appeal therefrom. If at any time the
then existing use or occupancy of the Facility shall, pursuant to any zoning or
other law, ordinance or regulation, be permitted only so long as such use or
occupancy shall continue, the Company shall use its best efforts to not cause or
permit such use or occupancy to be discontinued without the prior written
consent of the Agency.
(d) Notwithstanding the provisions of this Section 8.8, if, because of
a breach or violation of the provisions of subsection (a) hereof (without giving
effect to subsection (c) hereof), the Agency, or any of its members, directors,
officers, agents, or employees, shall be subject to or threatened with a fine,
liability, penalty, expense, damages or imprisonment, then, upon notice from the
Agency, the Company shall immediately provide legal protection and/or pay
amounts necessary in the reasonable opinion of the Agency and its members,
directors, officers, agents and employees deem sufficient, to the extent
permitted by applicable law, to remove the threat of such fine, liability,
expense or imprisonment.
-18-
<PAGE>
Section 8.9 Discharge of Liens and Encumbrances.
-----------------------------------
(a) The Company, throughout the Lease Term, shall not permit or create
or suffer to be permitted or created any Lien, except for Permitted
Encumbrances, upon the Facility or any part thereof by reason of any labor,
services or materials rendered or supplied or claimed to be rendered or supplied
with respect to the Facility or any part thereof. Mechanics' Liens shall be
discharged or bonded within sixty (60) days of the filing or perfection thereof.
(b) Notwithstanding the provisions of subsection (a) hereof, the
Company may in good faith contest any such Lien. In such event, the Company may
permit the items so contested to remain undischarged and unsatisfied during the
period of such contest and any appeal therefrom, unless the Agency shall notify
the Company that by nonpayment of any such item or items, the Agency, or its
officers, members, directors, agents or employees shall be subject to or
threatened with a fine, liability, penalty, expense or damages, in which event
the Company shall promptly secure payment of all such unpaid items by filing a
bond, in form and substance reasonably satisfactory to the Agency, thereby
causing such Lien to be removed or by taking such other actions as may be
reasonably satisfactory to the Agency to protect its interests.
Section 8.10 [Reserved.]
Section 8.11 Depreciation Deductions and Investment Tax Credit. The
-------------------------------------------------
parties agree that, as between them, the Company shall be entitled to all
depreciation deductions with respect to any depreciable property comprising a
part of the Facility and to any investment credit with respect to any part of
the Facility.
Section 8.12 Employment Opportunities, Notice of Jobs. The Company
----------------------------------------
covenants and agrees that, in consideration of the participation of the Agency
in the transactions contemplated herein, it will, except as otherwise provided
by collective bargaining contracts or agreements to which it is a party, cause
any new employment opportunities created in connection with the Facility to be
listed with the New York State Department of Labor, Community Services Division
and with the administrative entity of the service delivery area created pursuant
to the Job Training Partnership Act (PL 97-300) in which the Facility is located
(collectively, the "Referral Agencies"). The Company also agrees that it will,
except as otherwise provided by collective bargaining contracts or agreements to
which it is a party, first consider for such new employment opportunities
persons eligible to participate in federal job training partnership (PL 97-300)
programs who shall be referred by the Referral Agencies.
-19-
<PAGE>
ARTICLE IX
RELEASE OF CERTAIN LAND; ASSIGNMENTS AND SUBLEASING;
MORTGAGE AND PLEDGE OF INTERESTS
Section 9.1 Restriction on Sale of Facility: Release of Certain Land.
--------------------------------------------------------
(a) Except as otherwise specifically provided in this Article IX and
in Article X and Article XI hereof, the Agency shall not sell, convey, transfer,
encumber, grant a Lien upon or otherwise dispose of the Facility or any part
thereof or any of its rights therein, including, without limitation, its rights
under this Facility Lease Agreement, without the prior written consent of the
Company. The Agency shall, at the request of the Company grant Permitted
Encumbrances and shall execute and deliver documents and instruments to grant
such Permitted Encumbrances, which documents and instruments shall be in form
and substance reasonably satisfactory to the Agency.
(b) The Agency and the Company from time to time may release from the
provisions of this Facility Lease Agreement and the leasehold estate created
hereby any part of, or interest in, the Land which is not necessary, desirable
or useful for the Facility. In such event, the Agency, at the Company's sole
cost and expense, shall execute and deliver any and all instruments necessary or
appropriate to so release such part of, or interest in, the Land and convey such
title thereto or interest therein to the Company.
(c) No conveyance of any part of, or interest in the Land effected
under the provisions of this Section 9.1 shall entitle the Company to any
abatement or diminution of the rents payable by it under this Facility Lease
Agreement.
Section 9.2 Removal of Fixture Equipment.
----------------------------
(a) The Agency shall not be under any obligation to remove, repair or
replace any inadequate, obsolete, worn out, unsuitable, undesirable or
unnecessary item of Fixture Equipment. Subject to the terms of the Security
Documents, in any instance where the Company determines that any item of Fixture
Equipment has become inadequate, obsolete, worn out, unsuitable, undesirable or
unnecessary, the Company, may remove such items from the Facility and may sell,
trade-in, exchange or otherwise dispose of the same, as a whole or in part,
provided that such removal will not materially impair the operation of the
Facility for the purpose for which it is intended or change the nature of the
Facility so that it does not constitute a "project" under the Act.
(b) The Agency shall execute and deliver to the Company all
instruments necessary or appropriate to enable the Company to sell or otherwise
dispose of any such item of Fixture Equipment. The Company shall pay any costs
(including reasonable counsel fees)
-20-
<PAGE>
incurred in transferring title to any item of Fixture Equipment removed pursuant
to this Section 9.2.
(c) The removal of any item of Fixture Equipment pursuant to this
Section shall not entitle the Company to any abatement or diminution of the
rents payable by it under this Facility Lease Agreement or any abatement or
diminution of the amounts payable by it under the PILOT Agreement.
Section 9.3 Assignment and Subleasing.
-------------------------
(a) This Facility Lease Agreement may not be assigned, in whole or in
part, and the Facility may not be subleased, in whole or in part (except
pursuant to the Miles Lease and the Miles Sublease), without the prior written
consent of the Agency in each instance, which consent shall not be unreasonably
withheld. Any assignment or sublease shall be on the following conditions, as of
the time of such assignment or sublease:
(i) no assignment or sublease shall relieve the Company from
primary liability for any of its obligations hereunder;
(ii) the assignee or sublessee shall assume the obligations of
the Company hereunder to the extent of the interest assigned or
subleased;
(iii) the Company shall, within ten (10) days after the delivery
thereof, furnish or cause to be furnished to the Agency a true and
complete copy of such assignment or sublease and the instrument of
assumption;
(iv) neither the validity nor the enforceability of this
Facility Lease Agreement shall be adversely affected thereby; and
(v) the Facility shall continue to constitute a "project" as
such quoted term is defined in the Act.
(b) If the Agency shall so request, as of the purported effective date
of any assignment or sublease pursuant to subsection (a) of this Section 9.3,
the Company at its cost shall furnish the Agency, with an opinion, in form and
substance satisfactory to the Agency of Transaction Counsel as to item (v)
above.
(c) Notwithstanding anything to the contrary contained herein, the
Company may, without any further consent of the Agency, condominiumize all or
any portion of the Facility, including the fee therein. The Agency agrees to
cooperate with the Company in connection with such condominiumization of the
Facility and agrees to execute and deliver all such instruments as are
reasonably required to effectuate such condominiumization. The
-21-
<PAGE>
Company hereby agrees to pay all costs and expenses of the Agency, including,
without limitation, all reasonable legal fees and expenses in connection
therewith.
Section 9.4 Mortgage of Agency's and Company's Interests to Guarantor.
---------------------------------------------------------
The Agency and the Company shall mortgage and grant a security interest in their
respective interests in the Facility (other than Unassigned Rights) to the
Guarantor as security for the Obligations (as defined in the Reimbursement
Agreement). Notwithstanding the foregoing, all indemnities herein contained
shall subsequent to such mortgage, pledge and assignment continue to run to the
Agency for its benefit.
Section 9.5 [Reserved.]
Section 9.6 Merger of Agency.
----------------
(a) Nothing contained in this Facility Lease Agreement shall prevent
the consolidation of the Agency with, or merger of the Agency into, or transfer
of title to the entire Facility to any other public benefit corporation or
political subdivision which has the legal authority to own and lease the
Facility, provided that upon any such consolidation, merger or transfer, the due
and punctual performance and observance of all the agreements and conditions of
this Facility Lease Agreement to be kept and performed by the Agency shall be
expressly assumed in writing by the public benefit corporation or political
subdivision resulting from such consolidation or surviving such merger or to
which the Facility shall be transferred.
(b) Within thirty (30) days after the consummation of any such
consolidation, merger or transfer of title, the Agency shall give notice thereof
in reasonable detail to the Company and shall furnish to the Company, at the
sole cost and expense of the Company, a favorable opinion of Independent Counsel
as to compliance with the provisions of Section 9.6(a) hereof. The Agency
promptly shall furnish such additional information with respect to any such
transaction as the Company may reasonably request.
ARTICLE X
EVENTS OF DEFAULT AND REMEDIES
Section 10.1 Events of Default Defined.
-------------------------
(a) The following shall be "Events of Default" under this Facility
Lease Agreement:
(i) the failure by the Company to pay or cause to be paid on the
date due, the amount specified to be paid pursuant to Section 5.3
hereof, within ten (10) days after written notice;
-22-
<PAGE>
(ii) the failure by the Company to observe and perform any
covenant contained in Sections 8.4 and 9.3 hereof;
(iii) the failure by the Company to pay or cause to be paid on
the dates due, subject to any applicable grace periods contained
therein the amounts specified to be paid pursuant to the PILOT
Agreement;
(iv) any representation or warranty of the Company herein or in
any of the Company Documents shall prove to have been false or
misleading in any material respect;
(v) the failure by the Company to observe and perform any
covenant, condition or agreement hereunder or under the PILOT
Agreement on its part to be observed or performed (except obligations
referred to in 10.1(a)(i), (ii) and (iii)) for a period of thirty (30)
days after written notice, specifying such failure and requesting that
it be remedied, given to the Company by the Agency; provided, however,
if such remedy cannot be completed within thirty (30) days, so long as
the Company has undertaken, within thirty (30) days following such
notice, all steps reasonably necessary to effectuate such cure and is
diligently continuing in good faith to pursue and/or prosecute such
cure, including, without limitation, securing performance bonds or
other security, as provided in this Facility Lease Agreement, the
Company shall not be deemed to be in default hereunder;
(vi) the dissolution or liquidation of the Company; or the
failure by the Company generally to pay its debts as they become due;
or an assignment by the Company for the benefit of creditors; the
commencement by the Company (as the debtor) of a case in bankruptcy or
any proceeding under any other insolvency law; or the commencement of
a case in Bankruptcy or any proceeding under any other insolvency law
against the Company (as the debtor) and a court having jurisdiction in
the premises enters a decree or order for relief against the Company
as the debtor in such case or proceeding, or such case or proceeding
is consented to by the Company or remains undismissed for sixty (60)
days, or the Company consents to or admits the material allegations
against it in any such case or proceeding; or a trustee, receiver or
agent (however named) is appointed or authorized to take charge of
substantially all of the property of the Company for the purpose of
enforcing a lien against such Property or for the purpose of general
administration of such Property for the benefit of creditors;
(vii) the occurrence and continuation of an Event of Default
under the Equipment Lease Agreement; or
-23-
<PAGE>
(viii) the failure of the Company to observe, perform or comply,
subject to any applicable grace periods contained therein, with any
provision or covenant contained in the Environmental Compliance and
Indemnification Agreement.
(b) Notwithstanding the provisions of Section 10.1(a), if by reason of
force majeure any party hereto shall be unable in whole or in part to carry out
- -------------
its obligations under Sections 4.1 and 6.1 of this Facility Lease Agreement and
if such party shall give notice and full particulars of such force majeure in
-------------
writing to the other party, within a reasonable time after the occurrence of the
event or cause relied upon, such obligations under this Facility Lease Agreement
of the party giving such notice (and only such obligations), so far as they are
affected by such force majeure, shall be suspended during continuance of the
-------------
inability, which shall include a reasonable time for the removal of the effect
thereof. The term "force majeure" as used herein shall include, without
-------------
limitation, acts of God, strikes, lockouts or other industrial disturbances,
acts of public enemies, acts, priorities or orders of any kind of the government
of the United States of America or of the State or any of their departments,
agencies, governmental subdivisions, or officials, any civil or military
authority, insurrections, riots, epidemics, landslides, lightning, earthquakes,
fire, hurricanes, storms, floods, washouts, droughts, arrests, restraint of
government and people, civil disturbances, explosions, breakage or accident to
machinery, transmission pipes or canals, shortages of labor or materials or
delays of carriers, partial or entire failure of utilities, shortage of energy
or any other cause or event not reasonably within the control of the party
claiming such inability and not due to its fault. The party claiming such
inability shall remove the cause for the same with all reasonable promptness. It
is agreed that the settlement of strikes, lockouts and other industrial
disturbances shall be entirely within the discretion of the party having
difficulty, and the party having difficulty shall not be required to settle any
strike, lockout and other industrial disturbances by acceding to the demands of
the opposing party or parties.
Section 10.2 Remedies on Default.
-------------------
(a) Whenever any Event of Default shall have occurred, the Agency may
take, to the extent permitted by law, any one or more of the following remedial
steps:
(i) declare, by written notice to the Company, to be immediately
due and payable, whereupon the same shall become immediately due and
payable: (A) all unpaid installments of rent payable pursuant to
Section 5.3 hereof, (B) all unpaid and past due payments in lieu of
taxes pursuant to the PILOT Agreement and (C) all other payments due
under this Facility Lease Agreement; provided, however, that if an
Event of Default specified in Section 10.1(a)(vii) hereof shall have
occurred, such installments of rent and other payments due under this
Facility Lease Agreement shall become immediately due and payable
without notice to the Company or the taking of any other action by the
Agency;
-24-
<PAGE>
(ii) terminate this Facility Lease Agreement, reconvey the
Facility to the Company and terminate the PILOT Agreement. The Agency
shall have the right to execute an appropriate deed with respect to
the Facility and to place the same on record in the SuffoLk County
Clerk's Office, at the expense of the Company and in such event the
Company waives delivery and acceptance of such deed and the Company
hereby appoints the Agency its true and lawful agent and attorney-in-
fact (which appointment shall be deemed to be an agency coupled with
an interest), with full power of substitution to file on its behalf
all affidavits, questionnaires and other documentation necessary to
accomplish the recording of such deed; or
(iii) take any other action at law or in equity which may appear
necessary or desirable to collect the payments then due or thereafter
to become due hereunder and under the PILOT Agreement, and to enforce
the obligations, agreements or covenants of the Company under this
Facility Lease Agreement and under the PILOT Agreement.
(b) No action taken pursuant to this Section 10.2 shall relieve the
Company from its obligation to make all payments required by Section 5.3 hereof.
Section 10.3 Remedies Cumulative. No remedy herein conferred upon or
-------------------
reserved to the Agency is intended to be exclusive of any other available
remedy, but each and every such remedy shall be cumulative and in addition to
every other remedy given under this Facility Lease Agreement or now or hereafter
existing at law or inequity. No delay or omission to exercise any right or power
accruing upon any default shall impair any such right or power or shall be
construed to be a waiver thereof, but any such right and power may be exercised
from time to time and as often as may be deemed expedient. In order to entitle
the Agency as appropriate, to exercise any remedy reserved to it in this Article
X, it shall not be necessary to give any notice, other than such notice as may
be herein expressly required in this Facility Lease Agreement.
Section 10.4 Agreement to Pay Attorneys' Fees and Expenses. In the
---------------------------------------------
event the Company should default under any of the provisions of this Facility
Lease Agreement and the Agency should employ attorneys or incur other expenses
for the collection of amounts payable hereunder or the enforcement of
performance or observance of any obligations or agreements on the part of the
Company herein contained, the Company shall, on demand therefor, pay to the
Agency the reasonable fees of such attorneys and such other reasonable expenses
so incurred.
Section 10.5 No Additional Waiver Implied by One Waiver. In the event
------------------------------------------
any agreement contained herein should be breached by any party and thereafter
waived by any other party, such waiver shall be limited to the particular breach
so waived and shall not be deemed to waive any other breach hereunder.
-25-
<PAGE>
ARTICLE XI
EARLY TERMINATION OF FACILITY LEASE AGREEMENT;
OPTION IN FAVOR OF COMPANY
Section 11.1 Early Termination of Facility Lease Agreement. The
---------------------------------------------
Company shall have the option to terminate this Facility Lease Agreement at any
time and upon filing with the Agency a certificate signed by an Authorized
Representative of the Company stating the Company's intention to do so pursuant
to this Section and the date upon which such payments required by Section 11.2
hereof shall be made (which date shall not be less than 10 nor more than 90 days
from the date such certificate is filed) and upon compliance with the
requirements set forth in Section 11.2 hereof.
Section 11.2 Conditions to Early Termination of Facility Lease
-------------------------------------------------
Agreement. In the event the Company exercises its option to terminate this
- ---------
Facility Lease Agreement in accordance with the provisions of Section 11.1
hereof, the Company shall make the following payments:
(a) To the Agency or the Taxing Authorities (as such term is defined
in the PILOT Agreement), as appropriate pursuant to the PILOT Agreement: all
amounts due and payable under the PILOT Agreement as of the date of the
conveyance described in Section 11.3 hereof.
(b) To the Agency: an amount certified by the Agency sufficient to pay
all reasonable unpaid fees and expenses of the Agency incurred under the Agency
Documents.
Section 11.3 Obligation to Purchase Facility. Upon termination or
-------------------------------
expiration of the Lease Term, in accordance with Sections 5.2 or 11.1 hereof,
the Company shall purchase the Facility from the Agency for the purchase price
of One Dollar ($1.00) plus all unpaid payments in lieu of taxes pursuant to the
PILOT Agreement through the date upon which this Facility Lease Agreement
terminates or expires. The Company shall purchase the Facility by giving written
notice to the Agency (which may be contained in the certificate referred to in
Section 11.1 hereof) (i) declaring the Company's election to purchase and (ii)
fixing the date of closing such purchase, which shall be the date on which this
Facility Lease Agreement is to be terminated. The rights and obligations of the
Company under this Section 11.3 shall survive the expiration or termination of
this Facility Lease Agreement.
Section 11.4 Conveyance on Purchase. At the closing of any purchase of
----------------------
the Facility pursuant to Section 11.3 hereof, the Agency shall, upon receipt of
the purchase price, deliver to the Company all necessary documents (i) to convey
to the Company title to the Facility, as the Facility exists, subject only to
the following: (A) any Liens to which title to the Facility was subject when
conveyed to the Agency, (B) any Liens created at the request of the
-26-
<PAGE>
Company or to the creation of which the Company consented, (C) any Permitted
Encumbrances, including, without limitation, the lien of the Mortgage, if not
previously discharged, and (D) any Liens resulting from the failure of the
Company to perform or observe any of the agreements on its part contained in
this Facility Lease Agreement or arising out of an Event of Default hereunder,
and (ii) to release and convey to the Company all of the Agency's rights and
interest in and to any rights of action or any Net Proceeds of insurance or
Condemnation awards with respect to the Facility (but not including any
Unassigned Rights). Upon the conveyance of the Facility by the Agency to the
Company pursuant to this Article XI, the PILOT Agreement shall terminate. The
rights and obligations of the Company and the Agency under this Section 11.4
shall survive the expiration or termination of this Facility Lease Agreement.
ARTICLE XII
MISCELLANEOUS
Section 12.1 Notices. All notices, certificates and other
-------
communications hereunder shall be in writing, shall be deemed to have been duly
given when delivered or if not yet delivered shall be deemed effective at 12:00
p.m. on the third Business Day after mailing, and shall be either delivered
personally or sent by certified mail, postage prepaid, return receipt requested,
addressed as follows or to such other address as any party may specify in
writing to the other:
To the Agency:
Suffolk County Industrial
Development Agency
220 Rabro Drive
P.O. Box 6100
Hauppauge, New York 11788-0099
Attention: Administrative Director
To the Company:
Melville Biologics, Inc.
155 Duryea Road
Melville, New York 11747
Attention: President
-27-
<PAGE>
A copy of any notice sent by either the Company or the Agency pursuant
to Article X or Article XI hereof shall also be sent to the Guarantor at the
following address:
Miles Inc.
One Mellon Center
53rd Floor, 500 Grant Street
Pittsburgh, Pennsylvania 15219-2507
Attention: Mr. Jon R. Wyne, Senior Vice
President and Treasurer
Section 12.2 Binding Effect. This Facility Lease Agreement shall inure
--------------
to the benefit of and shall be binding upon the parties and their respective
successors and assigns.
Section 12.3 Severability. In the event any provision of this Facility
------------
Lease Agreement shall be held invalid or unenforceable by any court of competent
jurisdiction, such holding shall not invalidate or render unenforceable any
other provision hereof.
Section 12.4 Amendments, Changes and Modifications. This Facility
-------------------------------------
Lease Agreement may not be amended, changed, modified, altered or terminated
except in a writing executed by the parties hereto.
Section 12.5 Execution of Counterparts. This Facility Lease Agreement
-------------------------
may be executed in several counterparts, each of which shall be an original and
all of which shall constitute but one and the same instrument.
Section 12.6 Applicable Law. This Facility Lease Agreement shall be
--------------
governed exclusively by the applicable laws of the State without regard or
reference to its conflict of laws principles.
Section 12.7 Further Assurances. The Agency and the Company shall
------------------
execute and deliver all instruments and shall furnish all information necessary
or appropriate to perfect or protect any security interest created or
contemplated by this Facility Lease Agreement and the Security Documents.
Section 12.8 Survival of Indemnities. All indemnities shall survive
-----------------------
any termination or expiration of this Facility Lease Agreement.
Section 12.9 Table of Contents and Section Headings not Controlling.
------------------------------------------------------
The Table of Contents and the headings of the several Sections in this Facility
Lease Agreement have been prepared for convenience of reference only and shall
not control or affect the meaning of or be taken as an interpretation of any
provision of this Facility Lease Agreement.
-28-
<PAGE>
IN WITNESS WHEREOF, the Agency and the Company have caused this
Facility Lease Agreement to be executed in their respective names by their duly
authorized officers, all as of February 15, 1995.
SUFFOLK COUNTY INDUSTRIAL
DEVELOPMENT AGENCY
By /s/ Bruce E. Ferguson
--------------------------------
Name: Bruce E. Ferguson
Title: Administrative Director
MELVILLE BIOLOGICS, INC.
By /s/ Thomas R. Ostermueller
--------------------------------
Name: Thomas R. Ostermueller
Title: President and CEO
-29-
<PAGE>
STATE OF NEW YORK)
: ss.:
COUNTY OF SUFFOLK)
On this 27th day of February, 1995, before me personally came Bruce E.
Ferguson, to me known, who, being by me duly sworn, did depose and say that he
resides at Ziemacki Lane, Jamesport, New York; that he is the Administrative
Director of the Suffolk County Industrial Development Agency, the public benefit
corporation of the State of New York described in and which executed the within
Facility Lease Agreement; and that he signed his name thereto by order of the
members of said public benefit corporation.
/s/ Anthony J. Catapano
-----------------------------------
Notary Public
[SEAL]
-30-
<PAGE>
STATE OF NEW YORK)
ss.:
COUNTY OF NEW YORK)
On this 28th day of February, 1995, before me personally came Thomas
R. Ostermueller, to me known, who, being by me duly sworn, did depose and say
that he resides at 35 Fallowfield Road, Fairfield, Connecticut 06430; that he is
the President and CEO of Melville Biologics, Inc., the business corporation
described in and which executed the within Facility Lease Agreement; and that he
signed his name thereto by order of the Board of Directors of said corporation.
/s/ Margaret Williams
------------------------------
Notary Public
[NOTARY SEAL APPEARS HERE]
-31-
<PAGE>
EXHIBIT A
LEGAL DESCRIPTION OF REAL PROPERTY
ALL that certain plot, piece or parcel of land, situate, lying and
being at Melville, in the Town of Huntington, County of Suffolk and State of New
York, bounded and described as follows:
BEGINNING at a point on the new Northerly side of Duryea Road, distant
783.40 feet, Easterly as measured along said Northerly side of Duryea Road, from
the Southeasterly end of a connecting line, having a length of 52.23 feet,
connecting the said Northerly side of Duryea Road and the Easterly side of New
York State Route 110; said point of beginning also being where the Southeast
corner of the land now or formerly of Duryea intersects the said Northerly
side of Duryea Road;
RUNNING THENCE North 4 degrees 54 minutes 38 seconds East, 1047.70
feet, to the land now or formerly of Abramoske;
THENCE along said last mentioned land tile following two courses and
distances:
1. South 85 degrees 14 minutes 32 seconds East, 132.22 feet;
2. South 84 degrees-32 minutes 47 seconds East, 321.30 feet, to land
now or formerly of Brand;
THENCE along said last mentioned land, the following two courses and
distances:
1. South 5 degrees 38 minutes 21 seconds West, 280.65 feet;
2. South 4 degrees 54 minutes 38 seconds West, 772.18 feet, to the
new Northerly side of Duryea Roads
THENCE along said Duryea Road, North 84 degrees 05 minutes 47 seconds
West, 450.00 feet, to the point or place of BEGINNING.
-32-
<PAGE>
SCHEDULE A
SCHEDULE OF DEFINITIONS
"Act" means, collectively, Title 1 of Article 18-A of the General
---
Municipal Law of the State enacted into law as Chapter 1030 of the Laws of 1969
of the State, as amended together with Chapter 675 of the Laws of 1975 of the
State, as amended.
"Agency" means the (i) SuffoLk County Industrial Development Agency,
------
its successors and assigns, and (ii) any local governmental body resulting from
or surviving any consolidation or merger to which the Agency or its successors
may be a party.
"Agency Documents" means this Facility Lease Agreement, the
----------------
Environmental Compliance and Indemnification Agreement, the PILOT Agreement and
the Mortgage.
"Approving Resolution" means the resolution adopted by the Agency on
--------------------
February 27, 1995 authorizing the execution, delivery and performance of the
Agency Documents, as such resolution may be amended and supplemented from time
to time.
"Authorized Representative" means, in the case of the Agency, the
-------------------------
Chairman, the Vice Chairman, the Secretary, the Assistant Secretary or the
Administrative Director of the Agency; in the case of the Company, its
President, the Treasurer, the Secretary and any Vice President; and, in the case
of both, such additional persons as, at the time, are designated to act on
behalf of the Agency or the Company, as the case may be, by written certificate
furnished to the Agency or Company, as the case may be, containing the specimen
signature of each such person and signed on behalf of (i) the Agency by the
Chairman, the Vice Chairman, the Secretary, the Assistant Secretary or the
Administrative Director of the Agency, or (ii) the Company by the President, the
Treasurer, the Secretary or any Vice President of the Company.
"Bank" shall mean (i) PNC Bank, N.A., a national banking association
----
or (ii) its successors or assigns, or (iii) any surviving, resulting or
transferee banking institution authorized to do business in the State.
"Bill of Sale" means the Bill of Sale given by the Company to the
------------
Agency with respect to the Fixture Equipment, dated the Closing Date as the same
may be amended from time to time.
"Business Day" means any day other than a Saturday, a Sunday, a legal
------------
holiday or a day on which banking institutions in New York, New York or any city
in which the principal office of the Bank is located are authorized by law or
executive order to remain closed.
"Closing Date" means the date of delivery of the Deed.
------------
"Company" means Melville Biologics, Inc., a business corporation duly
-------
organized and validly existing under the laws of the State of Delaware, and its
successors and assigns.
<PAGE>
"Company Documents" means the Bill of Sale, the Deed, the Facility
-----------------
Lease Agreement, the Mortgage, the Environmental Compliance and Indemnification
Agreement, the Reimbursement Agreement, the Processing Agreement the Miles
Lease, the Miles Sublease and the PILOT Agreement.
"Completion Date" means the date of completion of the Facility as
---------------
certified to pursuant to Section 4.3 of this Facility Lease Agreement.
"Condemnation" means the taking of title to, or the use of, Property
------------
under the exercise of the power of eminent domain by any governmental entity or
other Person acting under governmental authority.
"Construction Period" means the period (a) beginning on the date of
-------------------
commencement of acquisition, renovation and equipping of the Facility, which
date shall not be prior to December 2, 1994, and (b) ending on the Completion
Date.
"Deed" means the Deed given by the Company to the Agency with respect
----
to the Land and the existing improvements thereon, dated the Closing Date.
"Environmental Compliance and Indemnification Agreement" means the
------------------------------------------------------
Environmental Compliance and Indemnification Agreement dated as of February 15,
1995 by and between the Agency and the Company.
"Equipment Lease Agreement" means a certain Equipment Lease Agreement
-------------------------
to be entered into after the Closing Date, by and between the Agency, as lessor,
and the Company, as lessee, with the consent of the Guarantor, providing for the
lease by the Agency to the Company of certain equipment and personal property
not constituting part of the Fixture Equipment.
"Event of Default" when used with respect to this Facility Lease
----------------
Agreement, means any of the events defined as Events of Default by Section 10.1
of this Facility Lease Agreement.
"Facility" means the Land, the Improvements and this Fixture Equipment
--------
leased to the Company under this Facility Lease Agreement.
"Facility Lease Agreement" means this Facility Lease Agreement, dated
------------------------
as of February 15, 1995, by and between the Agency, as lessor, and the Company,
as lessee, with respect to the Facility, as the same may be amended from time to
time.
"Fixture Equipment" means all machinery, apparatus, equipment,
-----------------
fittings, appliances, building materials (to the extent they are fixtures) and
all other fixtures of every kind and nature whatsoever, and regardless of
whether the same may now or hereafter be attached or affixed to the Land or
Improvements, including, without limitation, all electrical,
-2-
<PAGE>
antipollution, heating, lighting, incinerating, power, air conditioning,
plumbing, lifting, cleaning, fire prevention, fire extinguishing, refrigerating,
ventilating and communication machinery, apparatus, equipment, fittings,
appliances and fixtures, and all engines, pipes, pumps, tanks, motors, conduits,
ducts, compressors, elevators and escalators, and all articles of personal
property and goods of every kind and nature whatsoever, now or hereafter affixed
to, attached to, placed upon, or used or usable in any way in connection with
the use, enjoyment, occupancy or operation of the Land or Improvements to the
extent that an interest in any of the foregoing property arises under applicable
real property law.
"Guarantor" means Miles Inc., a business corporation duly established
---------
under the laws of the State of Indiana with an office at 400 Morgan Lane, West
Haven, Connecticut 06516.
"Guaranty Agreement" means the Guaranty Agreement, dated February 7,
------------------
1995 given by the Guarantor to the Bank as security for the Loan, as the same
may be modified, amended, renewed or extended from time to time.
"Improvements" means all those buildings, improvements, structures and
------------
other related facilities (i) affixed or attached to the Land and (ii) not part
of the Fixture Equipment, all as they may exist from time to time.
"Land" means the property leased by the Agency to the Company pursuant
----
to this Facility Lease Agreement and more particularly described in Exhibit A
attached thereto.
"Lease Term" means the duration of the leasehold estate created in the
----------
Facility Lease Agreement as specified in Section 5.2 of this Facility Lease
Agreement.
"Lien" means any interest in Property securing an obligation owed to a
----
Person whether such interest is based on the common law, statute or contract,
and including but not limited to, the security interest arising from a mortgage,
encumbrance, pledge, conditional sale or trust receipt or a lease, consignment
or bailment for security purposes. The term "Lien" includes reservations,
exceptions, encroachments, easements, rights-of-way, covenants, conditions,
restrictions, leases and other similar title exceptions and encumbrances,
including but not limited to mechanics', materialmen's, warehousemen's,
carriers' and other similar encumbrances, affecting real property. For the
purposes of this definition, a Person shall be deemed to be the owner of any
Property which it has acquired or holds subject to a conditional sale agreement
or other arrangement pursuant to which title to the Property has been retained
by or vested in some other Person for security purposes.
"Loan" means the loan in the amount of $10,000,000 by the Bank to the
----
Company pursuant to the terms of the Loan Agreement.
"Loan Agreement" means the Loan Agreement, dated February 7, 1995
--------------
between the Company and the Bank for a $10,000,000 unsecured loan facility to
make the Loan.
-3-
<PAGE>
"Miles Lease" means a certain lease agreement, dated February 7, 1995,
-----------
between the Company, as lessor, and Miles Inc., as lessee, as amended from time
to time, a memorandum of which has been recorded in the Suffolk County Clerk's
Office.
"Miles Sublease" means a certain sublease agreement, dated February 7,
--------------
1995, between Miles Inc., as sublessor, and the Company, as sublessee, as
amended from time to time, a memorandum of which has been recorded in the
Suffolk County Clerk's Office.
"Mortgage" means the Mortgage, Security Agreement and Fixture Filing,
--------
dated as of February 15, 1995 with respect to the Facility given by the Agency
and the Company to the Guarantor as security for the Obligations (as defined in
the Reimbursement Agreement) as the same may be modified, amended, renewed or
extended from time to time.
"Net Proceeds" means so much of the gross proceeds with respect to
------------
which that term is used as remain after payment of all expenses, costs and taxes
(including attorneys' fees) incurred in obtaining such gross proceeds.
"Permitted Encumbrances" means (i) exceptions to title set forth in
----------------------
the Title Report, (ii) the Mortgage, (iii) the Facility Lease Agreement, (iv)
utility, access and other easements and rights-of-way, restrictions and
exceptions that do not materially impair the utility or the value of the
Property affected thereby for the purposes for which it is intended, (v) Liens
which are approved in writing by the Agency, the Company and the Guarantor, (vi)
Liens for taxes not yet delinquent, (vii) the Miles Lease, (viii) the Miles
Sublease, (ix) the Reimbursement Agreement, (x) the Processing Agreement, (xi)
any rights-of New York Blood Center, Inc. under the Sewer Agreement listed in
Schedule B of the Title Report and (xii) inchoate mechanics liens.
"Person" or "Persons" means an individual, partnership, corporation,
------ -------
trust or unincorporated organization, and a government or agency or political
subdivision or branch thereof
"PILOT Agreement" means the Payment-in-Lieu-of-Tax Agreement, dated as
---------------
of February 15, 1995, between the Company and the Agency, as amended from time
to time.
"PILOT Payments" means any and all payments in lieu of taxes as
--------------
provided under the PILOT Agreement.
"Prime Rate" means the rate designated by the Bank from time to time
----------
as its "prime rate", whether or not such rate is the lowest rate of interest
charged by the Bank to its commercial customers.
"Processing Agreement" means the Agreement for Custom Processing,
--------------------
dated February 7, 1995, between the Company and the Guarantor with respect to
certain operations at the Facility.
-4-
<PAGE>
"Property" means any interest in any kind of property or asset,
--------
whether real, personal or mixed, or tangible or intangible.
"Public Purposes" shall mean the State's objective to create
---------------
industrial development agencies for the benefit of the several counties, cities,
villages and towns in the State and to empower such agencies, among other
things, to acquire, construct, reconstruct, lease, improve, maintain, equip and
sell land and any building or other improvement, and all real and personal
properties, including, but not limited to, machinery and equipment deemed
necessary in connection therewith, whether or not now in existence or under
construction, which shall be suitable for manufacturing, warehousing, research,
commercial, recreation or industrial facilities, including industrial pollution
control facilities, in order to advance job opportunities, health, general
prosperity and the economic welfare of the people of the State and to improve
their standard of living.
"Reimbursement Agreement" means the Reimbursement and Security
-----------------------
Agreement, dated February 7, 1995 between the Company and the Guarantor, as
modified, amended and in effect from time to tine.
"Schedule of Definitions" means the words and terms set forth in this
-----------------------
Schedule of Definitions attached to the Lease Agreement, as the same may be
amended from time to time.
"Security Documents" means, collectively, the Mortgage, the
------------------
Reimbursement Agreement, the Processing Agreement, the Miles Lease and the Miles
Sublease.
"SEQR Act" means the State Environmental Quality Review Act and the
--------
regulations thereunder.
"State" means the State of New York.
-----
"Substitute Facilities" shall have the meaning assigned thereto in
---------------------
Section 7.1 of the Facility Lease Agreement.
"Taxing Authorities" shall have the meaning assigned thereto in the
------------------
PILOT Agreement.
"Title Report" means Certificates of Title No. 141-S-6382-AMD issued
------------
by First American Title Insurance Company of New York to the Agency on November
1, 1994 and redated and recertified on February 28, 1995.
"Transaction Counsel" means the law firm of Nixon, Hargrave, Devans &
-------------------
Doyle.
-5-
<PAGE>
"Unassigned Rights" means the rights of the Agency and moneys payable
-----------------
pursuant to and under Sections 5.3, 6.4(c) and (d) (ii), (iii) and (iv), 6.7,
8.2, 10.2, 10.4 and 11.2 of the Facility Lease Agreement.
-6-
<PAGE>
EXHIBIT 10.19
LEASE AGREEMENT
THIS LEASE AGREEMENT (this "Lease") made and entered into this 7th day
of February, 1995 (the "Effective Date"), by and between MELVILLE BIOLOGICS,
INC., a Delaware corporation ("Lessor"), and MILES INC., an Indiana corporation
("Lessee").
RECITALS
A. Lessor and Lessee have entered into an Agreement for Custom
Processing of even date herewith (the "Processing Agreement") pursuant to which
Lessor has agreed to fractionate certain quantities of Miles Input (as defined
in the "Processing Agreement") (the "Processing and Fractionation Operation") at
the Demised Premises (as hereinafter defined).
B. The Processing Agreement provides for an initial term ending (i)
if the Start-Up Period (as defined in the Processing Agreement) has been
initiated before December 31, 1995, on December 31, 1997, or (ii) if the Start-
Up Period has been initiated after December 31, 1995, on the second anniversary
of the date of commencement of the Start-Up Period, or June 30, 1998, whichever
is earlier; one renewal term of one year; and an additional renewal term of one
year.
C. Lessee has agreed to guarantee to PNC Bank, N.A. (the "Bank") the
prompt payment of certain amounts in connection with financing provided by the
Bank to Lessor to be used in the Processing and Fractionation Operation and in
the MBI General Operations (as defined in the Reimbursement Agreement referred
to below).
D. Lessor and Lessee have entered into a Reimbursement and Security
Agreement of even date herewith (the "Reimbursement Agreement") pursuant to
which Lessor has agreed to reimburse Lessee for any amount paid or incurred by
Lessee under its guaranty.
E. In order to secure Lessor's obligations to Lessee under the
Reimbursement Agreement, Lessor has granted to Lessee a security interest in
certain collateral used in the Processing and Fractionation Operation and a
mortgage of even date herewith (the "Mortgage") on the Subject Property (as
hereinafter defined). (The Reimbursement Agreement, the Mortgage and all other
documents relating to Lessor's obligations to Lessee in respect of Lessee's
guaranty are hereinafter collectively referred to as the "Loan Documents").
F. Lessor and Lessee have entered into this Lease in order to ensure
continuation of the Processing and Fractionation Operation at the Demised
Premises in accordance with the terms and conditions of the Processing Agreement
(including those related to a Miles Takeover (as defined in the Processing
Agreement)) and to serve as
<PAGE>
additional security for Lessor's obligations under the Reimbursement Agreement
and the Processing Agreement.
G. In order to facilitate performance by Lessor of its obligations
under the Processing Agreement to operate the Processing and Fractionation
Operation. Lessee has granted to Lessor a sublease of the Demised Premises
pursuant to a Sublease Agreement of even date herewith (the "Sublease").
NOW, THEREFORE, it is hereby agreed as follows:
1. Demise of Premises. For and in consideration of the covenants,
------------------
conditions and agreements hereinafter contained, Lessor does hereby demise and
lease to Lessee, and Lessee does hereby accept and take from Lessor, (i) a
building containing approximately 89,600 square feet of space (the "Building")
but not including the area indicated on Exhibit 1 attached hereto as the "Lessor
- -----------------
Retained Area", (ii) all mechanical, electrical, lighting, plumbing, sewage,
refrigeration and HVAC systems and other fixtures attached thereto, except those
that service exclusively the Lessor Retained Area (the "Fixtures"), (iii) all
equipment used or to be used in the Processing and Fractionation Operation (the
"Equipment") and (iv) the real property (the "Real Property") on which the
Building is located at 155 Duryea Road, Melville, Suffolk County, New York and
more particularly described on Exhibit 2 attached hereto (the Building (other
than the Lessor Retained Area), the Fixtures, the Equipment and the Real
Property are collectively referred to as the demised Premises" and the Building
(including the Lessor Retained Area), the Fixtures, the Equipment and the Real
Property are collectively referred to as the "Subject Property").
2. Right to Use Common Areas. So long as Lessor is performing its
-------------------------
obligations under this Lease in all material respects, Lessor shall have (i) at
all times the right to use the areas included in the Demised Premises and
indicated on Exhibit 1 as the "Common Areas" in order (x) to conduct its
businesses other than the Processing and Fractionation Operation, (y) to fulfill
its obligations under this Lease and (z) so long as no Miles Takeover has
occurred, to conduct the Processing and Fractionation Operation and fulfill its
obligations under the Processing Agreement and (ii) at the times set forth on
Exhibit 3 (or such other times as Lessor and Lessee may mutually agree), the
right to use the Equipment listed on Exhibit 3. In the event of a termination of
the Sublease as the result of a Miles Takeover, Lessor and Lessee will cooperate
to allocate use of the Common Areas in a reasonable manner so as to permit each
party to operate its business on the Subject Property and to perform its
obligations under this Lease.
3. Term. The term of this Lease (the "Lease Term") shall commence on
----
the Effective Date and shall end upon the expiration or earlier termination of
the Term of the Processing Agreement (as defined therein). It is expressly
agreed that the Lease Term shall include the period of any Miles Takeover under
the Processing Agreement.
-2-
<PAGE>
4. Use of Premises. Lessee shall use and occupy the Demised Premises
---------------
for the conduct of the Processing and Fractionation Operation, and for no other
purpose, except to the extent that Lessee may elect to perform Lessor's
obligations under this Lease pursuant to Section 13a hereof.
5. Rental. The rental under this Lease shall be one dollar per
------
annum, plus the payments to be made by Lessee to Lessor under the Processing
Agreement, which together shall constitute the sole rental payments under this
Lease, and no other rental payments shall be required.
6. Expenses.
--------
a. Except as specifically set forth elsewhere in this Lease,
Lessor shall be responsible for each and every expense associated with the
Subject Property, including, without limitation, those hereinafter enumerated.
b. Lessor shall pay, before any fine, penalty, interest or cost
attaches thereto, all municipal, school and county taxes and assessments,
general or special, levied and assessed against the Subject Property; provided,
however, that if by law any such taxes, assessments or other charges may be paid
in installments (whether or not interest shall accrue on the unpaid balance
thereof), Lessor may pay the same in installments (together with accrued
interest on the unpaid balance thereof as the same respectively become due,
before any fine, penalty or cost attaches thereto. Nothing in this Section 6b
shall require the payment or discharge of any tax or assessment so long as
Lessor shall, after complying with each of the following conditions, in good
faith and at its own expense, contest the same or the validity thereof by
appropriate legal proceedings diligently pursued. Before commencing any such
proceedings, Lessor shall: (i) notify Lessee in writing of its intent to do so;
(ii) ascertain that such proceedings will operate to prevent the collection
thereof or other realization thereon and the sale or forfeiture of the Demised
Premises or any part thereof to satisfy the same; and (iii) provide security
reasonably to Lessee assuring the discharge of Lessor's obligation under this
Section 6b and of any additional interest, charge, penalty or expense arising
from or incurred as a result of such contest. Notwithstanding the foregoing, if
at any time payment of any tax or assessment shall become necessary to prevent a
lien foreclosure sale of the Demised Premises or any portion thereof because of
nonpayment of such tax or assessment, then Lessor shall pay the same in
sufficient time to prevent the foreclosure sale.
c. Lessor shall arrange for and pay as and when due and payable
all charges for the provision of HVAC, refrigeration, fuel, gas, electricity,
water, sewerage, telephone, rubbish removal, security services and any and all
other utility services to the Subject Property.
d. Lessor shall obtain and keep in force during the Lease Term
all risk property insurance covering fire and extended coverage, vandalism and
malicious mischief,
-3-
<PAGE>
sprinkler leakage and all other perils of direct physical loss or damage (which
other perils of direct physical loss or damage would be generally insured
against by prudent property owners operating industrial facilities of a similar
type to, and located in the general area of, the Subject Property) insuring the
Building, the Fixtures and the Equipment for the full replacement value thereof;
general liability insurance as set forth in the Processing Agreement; worker's
compensation insurance; and such other insurance, all in such amounts and upon
such other terms, as is generally maintained by prudent property owners
operating industrial facilities of a similar type to, and located in the general
area of, the Subject Property. Each policy for property or liability insurance
will show Lessee as an additional insured as its interest may appear and will
require that the insurer agree to give Lessee at least 15 days notice prior to
the cancellation, reduction or termination of any such policy. Lessor, upon
request, shall furnish Lessee certificates of all such insurance.
7. No Assignment. Lessee shall not assign this Lease, sublet the
-------------
Demised Premises or any part thereof or mortgage its interest therein without
the prior written consent of Lessor; provided, that Lessee may assign this Lease
without Lessor's consent to any person or entity to whom Lessee is entitled to
assign its rights and obligations under the Processing Agreement.
8. Compliance with Laws.
--------------------
a. Lessee shall perform, fully obey and comply with all the
ordinances, rules, regulations and laws of all public authorities relating to
the use and occupancy of the Demised Premises and the cleanliness, safety or
operation thereof, and Lessee shall not use or occupy, or suffer or permit any
person or body to use or occupy the Demised Premises, or any part thereof, for
any purpose or use in violation of any law, statute or ordinance, whether
federal, state or municipal, during the Lease Term; provided, however, that
these covenants will not be deemed to have been breached if any failure to so
comply would not have a material adverse effect on the Demised Premises or the
Processing and Fractionation Operation.
b. Lessor shall perform, fully obey and comply with all the
ordinances, rules, regulations and laws of all public authorities relating to
the use and occupancy of the Subject Property and the cleanliness, safety or
operation thereof, and Lessor shall not use or occupy, or suffer or permit any
person or body to use or occupy the Subject Property, or any part thereof, for
any purpose or use in violation of any law, statute or ordinance, whether
federal, state or municipal, during the Lease Term; provided, however, that
these covenants will not be deemed to have been breached if any failure to so
comply would not have a material adverse effect on the Demised Premises or the
Processing and Fractionation Operation.
-4-
<PAGE>
9. Environmental Matters.
---------------------
a. For purposes of this Lease:
(i) The term "Environmental Laws" means any and all
federal, state or local laws, statutes, rules, regulations,
ordinances, interstate compacts or judicial or administrative decrees,
orders, decisions or permits relating to emissions, discharges,
releases or threatened releases of pollutants, contaminants or
Hazardous Substances into the environment (including, without
limitation, ambient air, surface water, ground water or subsurface
strata); or otherwise relating to the use, storage, treatment,
transportation, manufacture, refinement, handling, production or
disposal of such pollutants, contaminants or Hazardous Substances.
(ii) The term "Hazardous Substances means any and all
elements, compounds, chemical mixtures, contaminants, pollutants or
other substances identified as "Hazardous Substances," "Hazardous
Wastes," "Pollutants" or "Contaminants" under the Comprehensive
Environmental Response, Compensation and Liability Act, as amended, 42
U.S.C. 9601 et seq.; or regulated under Article 13, Title XIII of the
New York Public Health Law or Article 27, Title 15 of the New York
Environmental Conservation Law or any comparable or similar New York
state or local statutes, laws, rules or regulations; and any used or
unused petroleum products.
b. Lessor shall:
(i) Not cause or permit any Hazardous Substance to be
placed, held, located, released, spilled, transported or disposed of
on, under, at or from the Subject Property or any real estate
contiguous thereto in contravention of any Environmental Law;
(ii) Contain at, remove from the Subject Property or
perform any other remedial action regarding the Hazardous Substance
(except for any Hazardous Substance to the extent present as the
result of the negligence or willful misconduct of Lessee, its
officers, employees or agents), at Lessor's sole cost and expense, if,
as and when such containment, removal or other remedial action is
required under any Environmental Law and perform any containment,
removal or remediation of any kind of any Hazardous Substance in
compliance with all Environmental Laws;
(iii) Not permit any subtenant or occupant of the Subject
Property to engage in any activity that could result in any liability,
cost or expense to any such subtenant or occupant, Lessee, Lessor or
any other owner
-5-
<PAGE>
of the Subject Property or any portion thereof or the creation of a
lien on the Subject Property or any portion thereof under any
Environmental Law;
(iv) Provide Lessee with written notice (and a copy as may
be applicable) of any of the following within ten days thereof: (a)
Lessor's obtaining actual knowledge or notice of any kind of the
presence, or any actual or threatened release, of any Hazardous
Substance on, under. at or from the Subject Property not authorized or
permitted under Environmental Laws; (b) Lessor's receipt or
submission. or Lessor's obtaining actual knowledge or notice of any
kind, of any report, citation, notice or other communication from or
to any federal, state or local government or quasigovernmental
authority regarding any Hazardous Substance in any way materially
adversely affecting the Subject Property; or (c) Lessor's obtaining
actual knowledge or notice of any kind of the incurrence of any cost
or expense by any federal, state or local governmental or
quasigovernmental authority or any private party in connection with
the assessment, monitoring, containment, removal or remediation of any
kind of any Hazardous Substance on, under, at or from the Subject
Property, or of the recording of any lien on the Subject Property in
connection with any such action or Hazardous Substance on, under or at
the Subject Property; and
(v) Indemnify, defend and hold Lessee and its officers,
employees and agents harmless from any claims, judgments, damages,
fines, penalties, costs, liabilities (including sums paid in
settlement of claims) or loss (including reasonable attorneys' fees,
consultants' fees, experts' fees and costs incurred, in connection
with any investigation of site conditions or any cleanup, remedial,
removal or restoration work required by any federal, state or local
governmental agency or political subdivision) which arise during or
after the Lease Term (a) in connection with the presence or suspected
presence of Hazardous Substances in the soil, groundwater, or soil
vapor on or under the Subject Property, except to the extent that such
toxic or Hazardous Substances are present as the result of the
negligence or willful misconduct of Lessee, its officers, employees or
agents, or (b) from Lessor's failure to comply with this Section 9.
c. In the event that the Sublease is terminated as the result of
a Miles Takeover, Lessee shall:
(i) Not cause or permit any Hazardous Substance to be
placed, held, located, released, spilled, transported or disposed of
on, under, at or from the Subject Property or on any real estate
contiguous thereto in contravention of any Environmental Law;
-6-
<PAGE>
(ii) Contain or remove and perform any other remedial
action regarding, any Hazardous Substance placed, released, spilled or
disposed of on, under, at or from the Subject Property by such Lessee
or its contractors, agents employees, officers or directors, if, as
and when: (1) such containment, removal or other action is required
under any Environmental Law and perform any containment, removal or
remediation of any kind of any Hazardous Substance in compliance with
all Environmental Laws; or (2) such containment, removal or other
action, if not required under any Environmental Laws and the total
cost of which would exceed Five Thousand Dollars ($5,000) for any
individual containment, removal or other action or the aggregate of
all such containment, removal or other action at any one time, is
requested by Lessor and perform any containment, removal or
remediation of any kind of any Hazardous Substance in compliance with
all Environmental Laws. Any containment, removal or other action
required or requested under this paragraph shall be completed prior to
the expiration of the Lease term or if it cannot reasonably be
completed within the Lease term, such containment removal or other
action shall be completed as expeditiously as practicable;
(iii) Not permit any subtenant or occupant of the Subject
Property to engage in any activity that could result in any liability,
cost or expense to any such subtenant or occupant, Lessee, Lessor or
any other owner of the Subject Property or any portion thereof or the
creation of a lien on the Subject Property or any portion thereof
under any Environmental Law; and
(iv) Indemnify, defend and hold Lessor and its officers,
employees and agents harmless from any claims, judgments, damages,
fines, penalties, costs, liabilities (including sums paid in
settlement of claims) or loss including reasonable attorneys' fees,
consultants' fees and experts' fees which arise during or after the
Lease Term as the result of Lessee's failure to comply with this
Section 9.
10. Maintenance and Repairs. Lessor shall make and pay for all
-----------------------
maintenance and repairs, structural or otherwise, to the Subject Property
(including the Demised Premises); provided, however, that Lessee shall pay for
all such maintenance and repairs caused by the negligence or willful misconduct
of Lessee, its officers, employees or agents.
11. Termination: Rejection by Lessor.
--------------------------------
a. This Lease may not be terminated by either party, except that
this Lease automatically terminates (i) at the end of the Term (as defined in
the Processing Agreement) or (ii) on the date on which the Processing Agreement
terminates as the result of a rightful termination of the Processing Agreement
by either party pursuant to its terms. In no event will Lessee be obligated to
make any payments to Lessor as a result of rightful
-7-
<PAGE>
termination of the Processing Agreement and this Lease by Lessor other than the
payments if any, called for by the Processing agreement.
b. In the event Lessor or any successor to Lessor, including
without limitation any trustee appointed or elected under any provision of the
United States Bankruptcy Code, 11 U.S.C. Section 101 et. sag. (the "Code"),
-- ---
rejects this Lease under Section 365 of the Code, Lessee shall, in its sole and
absolute discretion, be entitled to (i) treat this Lease as terminated by virtue
of a breach of this Lease by Lessor or (ii) retain all of its rights under this
Lease, whether expressly set forth herein or in the Processing Agreement, all of
which rights are hereby acknowledged and stipulated to be appurtenant to the
Demised Premises, for the balance of the Lease Term including any renewals or
extensions thereof; provided, that in the event Lessee elects to retain its
rights under this Section 11(b)(ii), any rejection of the Processing Agreement
shall not result in an early termination of the Lease Term and Lessee shall
retain all rights to effect a Miles Takeover (as defined in the Processing
Agreement) under the terms and provisions of this Lease for the full Lease Term.
12. Quiet Enjoyment. Lessor covenants that, if Lessee shall
---------------
faithfully and fully discharge obligations set forth herein, Lessee shall have
and enjoy, during the Lease Term, the quiet and undisturbed possession of the
Demised Premises.
13. Non-Performance.
---------------
a. If Lessor shall be in default in the performance of any of
its material obligations hereunder, Lessee may, but is not obligated to, after
ten days' written notice to Lessor or such shorter notice as may be appropriate
in an emergency situation, perform the same for the account of Lessor, and the
cost thereof shall be deducted and recouped from amounts otherwise payable by
Lessee to Lessor as rent hereunder and as payments under the Processing
Agreement. Lessor shall promptly reimburse Lessee for any costs incurred by
Lessee under this Section 13a which exceed such amounts otherwise payable by
Lessee to Lessor.
b. If Lessee shall be in default in the performance of any of
its material obligations hereunder, Lessor may, but is not obligated to, after
ten days' written notice to Lessee or such shorter notice as may be appropriate
in an emergency situation, perform the same for the account of Lessee. Lessee
shall promptly reimburse Lessor for any costs incurred by Lessor under this
Section 13b.
14. Termination of Sublease. In the event that the Sublease
-----------------------
terminates as the result of a Miles Takeover under the Processing Agreement,
Lessor and Lessee specifically agree that, as part of the rights granted to
Lessee under this Lease, Lessee has the rights with respect to a Miles Takeover
set forth in the Processing Agreement.
-8-
<PAGE>
15. Indemnification.
---------------
a. Lessor hereby indemnifies and holds Lessee harmless from and
against any and all claims, demands, liabilities and expenses, including
reasonable attorneys' fees, arising from Lessor's use of the Subject Property or
from any act permitted, or any omission to act, in or about the Subject Property
by Lessor or its agents, employees or contractors, or from any breach or default
by Lessor of this Lease, except to the extent caused by Lessee's negligence or
willful misconduct. In the event any action or proceeding shall be brought
against Lessee by reason of any such claim, Lessor shall defend the same at
Lessor's expense by counsel reasonably satisfactory to Lessee.
b. In the event that the Sublease is terminated as the result of
a Miles Takeover, Lessee hereby indemnifies and holds Lessor harmless from and
against any and all claims, demands, liabilities and expenses, including
reasonable attorneys' fees, arising from Lessee's use of the Subject Property or
from any act permitted, or any omission to act, in or about the Subject Property
by Lessee or its agents, employees or contractors, or from any breach or default
by Lessee of this Lease, except to the extent caused by Lessor's negligence or
willful misconduct. In the event any action or proceeding shall be brought
against Lessor by reason of any such claim, Lessee shall defend the same at
Lessee's expense by counsel reasonably satisfactory to Lessor.
16. Mortgagees: Subordination and Non-Disturbance.
---------------------------------------------
a. Lessor shall require any party with whom Lessor executes a
mortgage on the Building or Land, and any landlord of a ground lease on the
Land, during the Lease Term, including all renewals and extensions, to recognize
and affirm this Lease and to agree to waive any right such party may have as
mortgagee or ground lessor to terminate this Lease in the event of foreclosure
except as specifically provided in Section 11. Lessor shall require any and all
such mortgagees and ground lessors to execute and deliver to Lessee an agreement
to such effect. In the event such mortgagee or ground lessor or any affiliate or
nominee thereof (in any case, "Mortgagee") shall succeed to the interest of
Lessor in the Building or the Land, or shall acquire the right to possession of
the Building or the Land, such Mortgagee shall not be (i) liable for any act or
omission of the party named above as Lessor under this Lease or (ii) liable for
the performance of Lessor's covenants hereunder which arise and accrue prior to
such Mortgagee succeeding to the interest of Lessor hereunder or acquiring
possession.
b. If and at such time as Lessee agrees under the Reimbursement
Agreement to subordinate the Mortgage in whole or in part to a subsequent
mortgage granted by Lessor encumbering the Building or the Land, this Lease
shall be subordinate to such subsequent mortgagee and Lessee agrees to execute
and deliver any instruments which may be required to effect further such
subordination and to effect Lessee's attornment to the Mortgagee thereof, but
---
only if the Mortgagee thereof executes a written non-disturbance agreement in
- -------
form reasonably acceptable to Lessee which shall provide that Mortgagee shall
-9-
<PAGE>
recognize this Lease, and in the event of any default under such mortgage or any
foreclosure action, forced sale, or other proceeding in connection therewith,
the rights of Lessee under this Lease and Lessee's possession of the Demised
Premises shall not be disturbed, Lessee shall not be named as a defendant in any
such proceedings, and in the event the holder of such mortgage becomes owner of
the Building or the Land, such holder shall accept Lessee as tenant under this
Lease.
17. Recordation. The parties shall join in the execution of a
-----------
memorandum of lease in the form attached hereto as Exhibit 4 for the purpose of
recordation of this Lease. Any recording costs shall be borne by Lessor.
18. Alterations and Repairs. So long as the Sublease is in effect,
-----------------------
Lessee shall not, without the prior written consent of Lessor, make any
alteration, modification, addition or repair to the Demised Premises except to
the extent necessary in connection with Lessee's fulfillment of Lessor's
obligations under this Lease under the circumstances set forth in Section 13a.
If the Sublease is terminated as the result of a Miles Takeover, Lessee may make
such alterations, modifications, additions and repairs to the Demised Premises
as it may deem necessary or appropriate to perform the Processing and
Fractionation Operation as set forth in the Processing Agreement; provided,
however, that Lessee shall not, without the prior written consent of Lessor, (i)
make any structural alteration, modification or addition to the Demised
Premises, (ii) make any alteration, modification, addition or repair to the
Common Areas except to the extent necessary in connection with Lessees
fulfillment of Lessor's obligations under this Lease under the circumstances set
forth in Section 13a or (iii) make any alteration, modification, addition or
repair to the Demised Premises or the Common Areas which might violate any of
the terms of Lessor's product licenses and/or establishment license.
19. Condition of Leased Premises. Lessor leases, and Lessee accepts,
----------------------------
the Demised Premises in its "as is" condition when delivered by Lessor to
Lessee. During the Lease Term Lessor shall keep the Demised Premises, or cause
them to be kept, in good condition and order and in a tenantable state of repair
and will make or cause to be made, as and when necessary, all repairs, renewals
and replacements, structural and nonstructural, exterior and interior, foreseen
and unforeseen, ordinary and extraordinary; provided, however, that Lessee shall
pay for all such maintenance, repairs, renewals and replacements caused by the
negligence or willful misconduct of Lessee, its officers, employees or agents.
20. Estoppel. Either party shall, at any time and from time to time,
--------
upon written request from the other party, execute, acknowledge and deliver to
the other party a written statement certifying that this Lease is in full force
and effect and unmodified (or if modified, stating the nature of such
modification) and certifying that there are not, to such party's knowledge, any
defaults on the part of the other party hereunder, or specifying such defaults
if any are claimed. Failure of the party receiving such request to deliver such
statement within 15 days of receipt thereof shall be conclusive upon the party
receiving such
-10-
<PAGE>
request that this Lease is in full force and effect and unmodified, and that
there are no defaults in the other party's performance hereunder.
21. Notices. All notices required or desired to be given hereunder
-------
shall be in writing and shall for the purpose of this Lease be deemed to have
been duly given:
a. To Lessor, if a copy thereof is hand delivered, mailed by
registered or certified mail, postage prepaid, or delivered by reputable courier
service, addressed to Lessor at 155 Duryea Road, Melville, New York 11747,
Attention: Thomas R. Ostermueller, President and Chief Executive Officer, or to
such other address as Lessor may from time to time designate in writing to
Lessee.
b. To Lessee, if a copy thereof is hand delivered, mailed by
registered or certified mail, postage prepaid, or delivered by reputable courier
service, addressed to Lessee at Miles Inc., One Mellon Center, 53rd Floor, 500
Grant Street, Pittsburgh, Pennsylvania 15219-2507, Attention: Mr. Jon R. Wyne,
Senior Vice President and Treasurer, and Mr. Roger W. Heins, with a copy to: Law
Department, Pharmaceutical Division, Miles Inc., 400 Morgan Lane, West Haven,
Connecticut 06516 or to such other address as Lessee may from time to time
designate in writing to Lessor.
All notices shall be served by hand delivery or by prepaid registered
or certified mail or courier service and shall be effective on the date of
delivery if they are hand-delivered or delivered by courier service or three
days after posting if mailed.
22. Successors and Assigns. The covenants, agreements and conditions
----------------------
contained in this Lease shall run with the Demised Premises and shall be binding
upon and inure to the benefit of the parties hereto and any person to whom such
party's rights and obligations under the Processing Agreement may be assigned in
accordance with the terms thereof.
23. Entire Agreement. This Lease, the Sublease, the Processing
----------------
Agreement and the Loan Documents and the exhibits and schedules to each such
document (including without limitation the Reimbursement Agreement and the
Mortgage) constitute one single agreement between Lessor and Lessee, although
they have been executed as separate documents for convenience and ease of
reference, and together with such documents constitute the complete and entire
agreement between the parties hereto with respect to the transactions
contemplated herein and supersede all previous written or oral negotiations,
commitments, memoranda, understandings and any prior agreement between Lessor
and Lessee or their parents, subsidiaries or affiliated entities concerning the
subject matter hereof. This Lease may not be amended, modified, released,
surrendered or discharged, in whole or in part, except by an instrument in
writing signed by the parties hereto, their successors or assigns.
-11-
<PAGE>
24. Captions. The captions of the sections of this Lease are used
--------
solely for convenience of reference and shall not control or affect the meaning
or interpretation of any provision.
25. Waiver of Breach. The waiver of any breach of any term, covenant
----------------
or condition herein contained must be in writing and shall not be deemed to be a
waiver of any subsequent breach of the same or of any other term covenant or
condition herein contained
26. Separation of Premises. If Lessor is able and desires in its
----------------------
sole and absolute discretion to do so, Lessor may separate, as a condominium or
otherwise, the premises on which the Processing and Fractionation Operation is
solely conducted (the "Fractionation Premises") from the property which Lessor
uses to conduct the MBI General Operations (the "Melville Premises"). Upon
completion of such separation in accordance with documentation in form and
substance reasonably satisfactory to Lessee and in compliance with all
applicable laws, this Lease and the Sublease will be appropriately amended to
provide that the premises leased to Lessee, and then subleased to Lessor, will
consist of the separate Fractionation Premises and the Equipment and that Lessee
will have the right to use areas common to the Fractionation Premises and the
Melville Premises as if Lessee were the owner of the Fractionation Premises;
provided, that Lessor and Lessee will each be entitled to utilize the Equipment
set forth on Exhibit 3 at the times set forth on Exhibit 3.
27. Counterparts. This Lease may be executed in several
------------
counterparts, each of which will be deemed to be an original, and in each case
such counterparts together will constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
have executed this Lease on the day and year first above written.
MELVILLE BIOLOGICS, INC.
By: /s/ Thomas R. Ostermueller
--------------------------------
President & CEO
MILES INC.
By: /s/ Jon Wyne
--------------------------------
Sr. Vice. President & Treasurer
-12-
<PAGE>
Exhibit 1
Key:
Blue = Lessor Retained Area
Green = Common Areas
-13-
<PAGE>
[FLOOR PLAN APPEARS HERE]
<PAGE>
[FLOOR PLAN APPEARS HERE]
<PAGE>
[MECHANICAL EQUIPMENT ROOM FLOOR PLAN APPEARS HERE]
<PAGE>
ALL that certain plot, piece or parcel of land, situate, lying and
being at Melville, in the Town of Huntington, County of Suffolk and State of New
York, bounded and described as follows:
BEGINNING at a point on the new Northerly side of Duryea Road, distant
783.40 feet, Easterly as measured along said Northerly side of Duryea Road, from
the Southeasterly end of a connecting line, having a length of 52.23 feet,
connecting the said Northerly side of Duryea Road and the Easterly side of New
York State Route 110; said point of beginning also being where the Southeast
corner of the land now or formerly of Duryea intersects the said Northerly side
of Duryea Road;
RUNNING THENCE North 4 degrees 54 minutes 38 seconds East, 1047.70
feet, to the land now or formerly of Abramoske;
THENCE along said last mentioned land the following two courses and
distances:
1. South 85 degrees 14 minutes 32 seconds East, 132.22 feet;
2. South 84 degrees 32 minutes 47 seconds East, 321.30 feet, to land
now or formerly of Brand;
THENCE along said last mentioned land, the following two courses and
distances:
1. South 5 degrees 38 minutes 21 seconds West, 280.65 feet;
2. South 4 degrees 54 minutes 38 seconds West, 772.18 feet, to the
new Northerly side of Duryea Road;
THENCE along said Duryea Road, North 84 degrees 5 minutes 47 seconds
West, 450.00 feet, to the point or place of BEGINNING.
EXHIBIT 2
<PAGE>
MELVILLE BIOLOGICS
LIST OF COMMONLY USED EQUIPMENT
-------------------------------
[A] ROOM 113 -- CRACKING ROOM *
1) INLET CONVEYOR
2) LIQUID NITROGEN (N\\2\\) DIPPING CONVEYOR
3) SHUCKING (PLASTIC REMOVAL TABLE)
[B] ROOM 112 -- POOLING ROOM *
1) TWO (2) POOLING THAW TANKS
[C] ROOM 111
1) PARTS WASHER (SCHLUTER) TANK
NOTE:
* THIS EQUIPMENT TO BE PURCHASED IN THE NEAR FUTURE
This equipment will be used two days per week for the Processing and
Fractionation Operation and five days per week for the MBI General Operations.
EXHIBIT 3
<PAGE>
MEMORANDUM OF LEASE
Pursuant to (S) 291-c of New York Real Property Law, the parties hereby
file this Memorandum of Lease as follows:
1. The name and address of the LANDLORD in the Lease Agreement is as
follows: MELVILLE BIOLOGICS, INC., 155 Duryea Road, Melville, NY 11747.
2. The name and address of the TENANT in the Lease Agreement is as
follows: MILES INC., One Mellon Center, 53rd Floor, 500 Grant Street,
Pittsburgh. PA 15219-2507.
3. The Lease Agreement is dated ______________ __ , 1995.
4. The Demised Premises consists of (a) a building located at 155 Duryea
Road, Melville, Suffolk County, New York (the "Building"), but not including the
area indicated on Exhibit A attached hereto as the "Lessor Retained Area," (b)
all mechanical, electrical, lighting, plumbing, sewerage, refrigeration and HVAC
systems and other fixtures attached thereto except those that service
exclusively the Lessor Retained Area, (c) all equipment used or to be used in
the Processing and Fractionation Operation (as that phrase is defined in the
Lease Agreement), and (d) the real property on which the Building is located,
more particularly described on the attached Exhibit B.
EXHIBIT 4
<PAGE>
5. The term of the Lease Agreement commences as of the date hereof and
terminates at the end of the term of the Agreement for Custom Processing between
Landlord and Tenant and dated of even date herewith, which shall be no later
than June 30, 1998; provided, however, that the term shall be automatically
extended for one (1) additional year (the "Automatic Renewal Period") unless
Tenant gives Landlord written notice on or before July 1, 1996 of cancellation
of the Automatic Renewal Period. If the term is extended to include the
Automatic Renewal Period, the term will be extended up to one (1) additional
year, unless either party notifies the other no later than July 1, 1997 that the
term will not be extended.
6. This Memorandum of Lease may be executed in several counterparts, each
of which will be deemed to be an original, and in each case such counterparts
together will constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Memorandum of Lease as
of the __________________day _______________of , 1995.
LANDLORD:
MELVILLE BIOLOGICS, INC.
By:________________________
Title:
TENANT:
MILES INC.
By:________________________
Title:
EXHIBIT 4
<PAGE>
ACKNOWLEDGMENT
STATE OF_____________________)
) SS:
COUNTY OF____________________)
On this, the ______day of_____________ , 1995, before me, a Notary
Public, personally appeared , to me known, who, being by me personally sworn,
did depose and say that s(he) resides at __________________________that (s)he is
the _________________ of Melville Biologics, Inc., a Delaware corporation, the
corporation described in and which executed the foregoing instrument by
authority of the Board of Directors of said corporation and that (s)he signed
(his)(her) name thereto by like authority.
IN WITNESS WHEREOF, I hereunto set my hand and official seal the day
and year first above written.
_______________________________________
Notary Public
My Commission Expires:
EXHIBIT 4
<PAGE>
ACKNOWLEDGMENT
STATE OF_____________________)
) SS:
COUNTY OF____________________)
On this, the _____ day of_____________ , 1995, before me, a Notary
Public, personally appeared___________________, to me known, who, being by me
personally sworn, did depose and say that s(he) resides at____________________ ,
that (s)he is the __________________ of Miles Inc., an Indiana corporation, the
corporation described in and which executed the foregoing instrument by
authority of the Board of Directors of said corporation, and that (s)he signed
(his)(her) name thereto by like authority.
IN WITNESS WHEREOF, I hereunto set my hand and official seal the day
and year first above written.
______________________________________
Notary Public
My Commission Expires:
EXHIBIT 4
<PAGE>
[Insert drawing.]
EXHIBIT A
<PAGE>
ALL that certain plot, piece or parcel of land, situate, lying and
being at Melville, in the Town of Huntington, County of Suffolk and State of New
York, bounded and described as follows:
BEGINNING at a point on the new Northerly side of Duryea Road, distant
783.40 feet, Easterly as measured along said Northerly side of Duryea Road, from
the Southeasterly end of a connecting line, having a length of 52.23 feet,
connecting the said Northerly side of Duryea Road and the Easterly side of New
York State Route 110: said point of beginning also being where the Southeast
corner of the land now or formerly of Duryea intersects the said Northerly side
of Duryea Road;
RUNNING THENCE North 4 degrees 54 minutes 38 seconds East, 1047.70
feet, to the land now or formerly of Abramoske;
THENCE along said last, mentioned land the following two courses and
distances:
1. South 85 degrees 14 minutes 32 seconds East, 132.22 feet;
2. South 84 degrees 32 minutes 47 seconds East, 321.30 feet, to land now
or formerly of Brand;
THENCE along said last mentioned land, the following two courses and
distances:
1. South 5 degrees 38 minutes 21 seconds West, 280.65 feet;
2. South 4 degrees 54 minutes 38 seconds West, 772.18 feet, to the new
Northerly side of Duryea Road;
THENCE along said Duryea Road, North 84 degrees 5 minutes 47 seconds West,
450.00 feet, to the point or place of BEGINNING.
EXHIBIT B
<PAGE>
EXHIBIT 10.20
SUBLEASE AGREEMENT
THIS SUBLEASE AGREEMENT (this "Sublease") made and entered into this 7th
day of February, 1995 (the "Effective Date"), by and between MILES INC., an
Indiana corporation ("Sublessor") and MELVILLE BIOLOGICS, INC., a Delaware
corporation ("Sublessee").
RECITALS
A. Sublessor and Sublessee have entered into an Agreement for Custom
Processing of even date herewith (the "Processing Agreement") pursuant to which
Sublessee has agreed to fractionate certain quantities of Miles Input (as
defined in the Processing Agreement) (the "Processing and Fractionation
Operation") at the Demised Premises (as hereinafter defined).
B. Sublessor has agreed to guarantee to PNC Bank, N.A. (the "Bank") the
prompt payment of certain amounts in connection with financing provided by the
Bank to Sublessee to be used in the Processing and Fractionation Operation and
in the MBI General Operations (as defined in the Reimbursement Agreement
referred to below).
C. Sublessor and Sublessee have entered into a Reimbursement and Security
Agreement of even date herewith (the "Reimbursement Agreement") pursuant to
which Sublessee has agreed to reimburse Sublessor for any amount paid or
incurred by Sublessor under its guaranty.
D. In order to secure Sublessee's obligations to Sublessor under the
Reimbursement Agreement, Sublessee has granted to Sublessor a security interest
in certain collateral used in the Processing and Fractionation Operation and a
mortgage of even date herewith (the "Mortgage") on the property on which the
Demised Premises are located. (The Reimbursement Agreement, the Mortgage and
all other documents relating to Sublessee's obligations to Sublessor in respect
of Sublessor's guaranty are hereinafter collectively referred to as the "Loan
Documents".)
E. Sublessee, as Lessor, and Sublessor, as Lessee, have entered into a
Lease Agreement of even date herewith attached hereto as Exhibit 1 (the "Prime
Lease") in order to ensure continuation of the Processing and Fractionation
Operation at the Demised Premises in accordance with the terms and conditions of
the Processing Agreement (including those related to a Miles Takeover (as
defined in the Processing Agreement)) and to serve as additional security for
Sublessee's obligations under the Reimbursement Agreement and the Processing
Agreement.
F. The parties intend that Sublessee shall operate the Processing and
Fractionation Operation at the Demised Premises unless and until one of certain
events specified in the Processing Agreement occurs, and the parties have
entered into this Sublease
<PAGE>
Agreement in order to facilitate performance by Sublessee of its obligations
under the Processing Agreement to operate the Processing and Fractionation
Operation.
NOW, THEREFORE, it is hereby agreed as follows:
1. Demise of Premises; Rental.
--------------------------
a. For and in consideration of the covenants, conditions and
agreements hereinafter contained, Sublessor does hereby demise and lease to
Sublessee, and Sublessee does hereby accept and take from Sublessor (i) a
building containing approximately 89,600 square feet of space (the "Building")
but not including the area indicated on Exhibit 2 attached hereto as the "Lessor
- -----------------
Retained Area", (ii) all mechanical, electrical, lighting, plumbing, sewage,
refrigeration and HVAC systems and other fixtures attached thereto, except those
that service exclusively the Lessor Retained Area (the "Fixtures"), (iii) all
equipment used or to be used in the Processing and Fractionation Operation (the
"Equipment") and (iv) the real property (the "Real Property") on which the
Building is located at 155 Duryea Road, Melville, Suffolk County, New York and
more particularly described on Exhibit 3 attached hereto (the Building (other
than the Lessor Retained Area), the Fixtures and the Real Property are
collectively referred to as the "Demises Premises".)
b. The rental under this Sublease shall be one dollar per annum.
2. Term. The term of this Sublease (the "Sublease Term") shall commence
----
on the Effective Date and terminate on the earlier of (i) the termination or
expiration of the term of the Prime Lease or (ii) the date of a Miles Takeover
(as defined in the Processing Agreement).
3. Covenants of Sublessee. The provisions of the Prime Lease are
----------------------
incorporated into this Sublease as fully as if completely rewritten herein, and
the Sublessee agrees, with respect to the Demises Premises, to be bound to the
Sublessor by all of the terms of the Prime Lease and to assume toward Sublessor
and perform all of the obligations and responsibilities that Sublessor by the
Prime Lease assumes toward the Lessor thereunder (other than the obligation to
pay rent). Sublessor and Sublessee agree that Sublessor shall have no duty to
Sublessee to perform any of the duties or obligations of the Lessor under the
Prime Lease.
4. Alterations to the Demised Premises. Sublessor agrees that Sublessee
-----------------------------------
may, as its own expense, from time to time during the term hereof, make such
alterations, additions and changes, including structural changes, in and to the
Demised Premises as it finds necessary or convenient for its purposes; provided,
however, that Sublessee will make no such alteration, addition or change which
could have a material adverse effect on the conduct of the Processing and
Fractionation Operation in the manner contemplated by the Processing Agreement,
including a Miles Takeover.
-2-
<PAGE>
5. No Assignment. Sublessee agrees not to assign this Sublease or to
-------------
sublet the Demised Premises or any part thereof without the prior written
consent of Sublessor, which consent shall not unreasonably be withheld;
provided, that Sublessee may assign this Sublease without Sublessor's consent to
any person or entity to whom Sublessee is entitled to assign its rights and
obligations under the Processing Agreement.
6. Entire Agreement. This Sublease, the Lease, the Processing Agreement
----------------
and the Loan Documents and the exhibits and schedules to each such document
(including without limitation the Reimbursement Agreement and the Mortgage)
constitute one single agreement between Sublessor and Sublessee, although they
have been executed as separate documents for convenience and ease of reference,
and together such documents constitute the complete and entire agreement between
the parties hereto with respect to the transactions contemplated herein and
supersede all previous written or oral negotiations, commitments, memoranda,
understandings and any prior agreement between Sublessor and Sublessee or their
parents, subsidiaries or affiliated entities concerning the subject matter
hereof. This Sublease shall not be modified, changed or altered in any respect
except in writing.
7. Binding Effect. The covenants, agreements and obligations herein
--------------
contained shall extend to, bind and inure to the benefit of the parties hereto,
their successors and permitted assigns.
8. Notices. All notices required or desired to be given hereunder shall
-------
be in writing and shall for the purpose of this Sublease be deemed to have been
duly given:
(a) To Sublessor, if a copy thereof is hand delivered, mailed by
registered or certified mail, postage prepaid, or delivered by reputable courier
service, addressed to Sublessor at Miles Inc., One Mellon Center, 53rd Floor,
500 Grant Street, Pittsburgh, Pennsylvania 15219-2507, Attention: Mr. Jon R.
Wyne, Senior Vice President and Treasurer, and Mr. Roger W. Heins, with a copy
to: Law Department, Pharmaceutical Division, Miles, Inc., 400 Morgan Lane, West
Haven, Connecticut 06516 or to such other address as Sublessor may from time to
time designate in writing to Sublessee.
(b) To Sublessee, if a copy thereof is hand delivered, mailed by
registered or certified mail, postage prepaid, or delivered by reputable courier
service, addressed to Sublessee at 155 Duryea road, Melville, New York 11747,
Attention: Thomas R. Ostermueller, President and Chief Executive Officer, or to
such other address as Sublessee may from time to time designate in writing to
Sublessor.
All notices shall be served by hand delivery or by prepaid registered or
certified mail or courier service and shall be effective on the date of delivery
if they are hand-delivered or delivered by courier service or three days after
posting if mailed.
-3-
<PAGE>
9. Recordation. The parties shall join in the execution of a memorandum
-----------
of lease in the form attached hereto as Exhibit 4 for the purpose of recordation
of this Sublease. Any recording costs shall be borne by Sublessee.
10. Quiet Enjoyment. Sublessor covenants that, if Sublessee shall
---------------
faithfully and fully discharge its obligations set forth herein, Sublessee shall
have and enjoy, during the Sublease Term, the quiet and undisturbed possession
of the Demised Premises.
11. Counterparts. This Sublease may be executed in several counterparts,
------------
each of which will be deemed to be an original, and in each case such
counterparts together will constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound have
executed this Sublease on the day and year first above written.
MILES INC.
By: /s/ Jon Wyne
--------------------------------
Sr. Vice President & Treasurer
MELVILLE BIOLOGICS, INC.
By: /s/ Thomas R. Ostermueller
--------------------------------
PRESIDENT & CEO
-4-
<PAGE>
[See Lease Agreement filed as Exhibit 10.19 to the Registration Statement]
Exhibit 1
<PAGE>
EXHIBIT 2
Key:
Blue = Lessor Retained Area
Green = Common Areas
<PAGE>
[FLOOR PLAN APPEARS HERE]
[Blue - Lessor Retined Aarea]
[Green - Common Areas]
<PAGE>
[FLOOR PLAN APPEARS HERE]
[Blue - Lessor Retained Area]
[Green - Common Areas]
<PAGE>
[FLOOR PLAN OF MECHANICAL EQUIPMENT ROOM APPEARS HERE]
<PAGE>
ALL that certain plot, piece or parcel of land, situate, lying and
being at Melville, in the Town of Huntington, County of Suffolk and State of New
York, bounded and described as follows:
BEGINNING at a point on the new Northerly side of Duryea Road, distant
783.40 feet, Easterly as measured along said Northerly side of Duryea Road, from
the Southeasterly end of a connecting line, having a length of 52.23 feet,
connecting the said Northerly side of Duryea Road and the Easterly side of New
York State Route 110: said point of beginning also being where the Southeast
corner of the land now or formerly of Duryea intersects the said Northerly side
of Duryea Road;
RUNNING THENCE North 4 degrees 54 minutes 38 seconds East, 1047.70
feet, to the land now or formerly of Abramoske;
THENCE along said last, mentioned land the following two courses and
distances:
1. South 85 degrees 14 minutes 32 seconds East, 132.22 feet;
2. South 84 degrees 32 minutes 47 seconds East, 321.30 feet, to land
now or formerly of Brand;
THENCE along said last mentioned land, the following two courses and
distances:
1. South 5 degrees 38 minutes 21 seconds West, 280.65 feet;
2. South 4 degrees 54 minutes 38 seconds West, 772.18 feet, to the
new Northerly side of Duryea Road;
THENCE along said Duryea Road, North 84 degrees 5 minutes 47 seconds
West, 450.00 feet, to the point or place of BEGINNING.
EXHIBIT 3
<PAGE>
MEMORANDUM OF SUBLEASE
----------------------
Pursuant to (S) 291-c of New York Real Property Law, the parties
hereby file this Memorandum of Sublease as follows:
1. The name and address of the SUBTENANT in the Sublease Agreement
is as follows: MELVILLE BIOLOGICS, INC., 155 Duryea Road, Melville, NY 11747.
2. The name and address of the SUBLANDLORD in the Sublease Agreement
is as follows: MILES INC., One Mellon Center, 53rd Floor, 500 Grant Street,
Pittsburgh. PA 15219-2507.
3. The Sublease Agreement is dated ______________ __ , 1995.
4. The Subleased Premises consists of (a) a building located at 155
Duryea Road, Melville, Suffolk County, New York (the "Building"), but not
including the area indicated on Exhibit A attached hereto as the "Lessor
Retained Area," (b) all mechanical, electrical, lighting, plumbing, sewerage,
refrigeration and HVAC systems and other fixtures attached thereto except those
that service exclusively the Lessor Retained Area, (c) all equipment used or to
be used in the Processing and Fractionation Operation (as that phrase is defined
in the Lease Agreement), and (d) the real property on which the Building is
located, more particularly described on the attached Exhibit B.
EXHIBIT 4
<PAGE>
5. The term of the Sublease Agreement commences as of the date
hereof and terminates on the earlier of (i) the termination or expiration of
that certain Lease dated of even date herewith between Subtenant as Landlord and
Sublandlord as Tenant (including any extension of the term as therein provided),
a Memorandum of which has been recorded immediately prior hereto, or (ii) the
date of a Miles Takeover (as defined in the Agreement for Custom Processing
between Sublandlord and Subtenant and dated of even date herewith).
6. This Memorandum of Sublease may be executed in several
counterparts, each of which will be deemed to be an original, and in each case
such counterparts together will constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Memorandum of
Sublease as of the __________________day _______________of , 1995.
SUBTENANT:
MELVILLE BIOLOGICS, INC.
By:___________________________
Title:________________________
SUBLANDLORD:
MILES INC.
By:___________________________
Title:________________________
EXHIBIT 4
<PAGE>
ACKNOWLEDGMENT
STATE OF_____________________)
) SS:
COUNTY OF____________________)
On this, the ______day of_____________ , 1995, before me, a Notary Public,
personally appeared , to me known, who, being by me personally sworn, did depose
and say that s(he) resides at __________________________that (s)he is the
_________________ of Melville Biologics, Inc., a Delaware corporation, the
corporation described in and which executed the foregoing instrument by
authority of the Board of Directors of said corporation and that (s)he signed
(his)(her) name thereto by like authority.
IN WITNESS WHEREOF, I hereunto set my hand and official seal the day and
year first above written.
______________________________
Notary Public
My Commission Expires:
EXHIBIT 4
<PAGE>
ACKNOWLEDGMENT
STATE OF_____________________)
) SS:
COUNTY OF____________________)
On this, the _____ day of_____________ , 1995, before me, a Notary Public,
personally appeared___________________, to me known, who, being by me personally
sworn, did depose and say that s(he) resides at____________________ , that (s)he
is the __________________ of Miles Inc., an Indiana corporation, the corporation
described in and which executed the foregoing instrument by authority of the
Board of Directors of said corporation, and that (s)he signed (his)(her) name
thereto by like authority.
IN WITNESS WHEREOF, I hereunto set my hand and official seal the day and
year first above written.
_________________________________
Notary Public
My Commission Expires:
EXHIBIT 4
<PAGE>
[Insert drawing.]
EXHIBIT 4
<PAGE>
ALL that certain plot, piece or parcel of land, situate, lying and
being at Melville, in the Town of Huntington, County of Suffolk and State of New
York, bounded and described as follows:
BEGINNING at a point on the new Northerly side of Duryea Road, distant
783.40 feet, Easterly as measured along said Northerly side of Duryea Road, from
the Southeasterly end of a connecting line, having a length of 52.23 feet,
connecting the said Northerly side of Duryea Road and the Easterly side of New
York State Route 110: said point of beginning also being where the Southeast
corner of the land now or formerly of Duryea intersects the said Northerly side
of Duryea Road;
RUNNING THENCE North 4 degrees 54 minutes 38 seconds East, 1047.70
feet, to the land now or formerly of Abramoske;
THENCE along said last, mentioned land the following two courses and
distances:
1. South 85 degrees 14 minutes 32 seconds East, 132.22 feet;
2. South 84 degrees 32 minutes 47 seconds East, 321.30 feet, to land
now or formerly of Brand;
THENCE along said last mentioned land, the following two courses and
distances:
1. South 5 degrees 38 minutes 21 seconds West, 280.65 feet;
2. South 4 degrees 54 minutes 38 seconds West, 772.18 feet, to the
new Northerly side of Duryea Road;
THENCE along said Duryea Road, North 84 degrees 5 minutes 47 seconds
West, 450.00 feet, to the point or place of BEGINNING.
EXHIBIT B
<PAGE>
EXHIBIT 10.21
SECURITY AGREEMENT
------------------
THIS AGREEMENT is made and entered into as of this 22d day of December,
1997, by and between V.I. Technologies, Inc. (formerly known as Melville
Biologics, Inc.), a Delaware corporation with offices at 155 Duryea Road,
Melville, New York 11747 ("Debtor") and Bayer Corporation (formerly known as
Miles, Inc.), an Indiana corporation with offices at 400 Morgan Lane, West
Haven, Connecticut 06516 ("Bayer").
RECITALS
--------
A. Bayer and Debtor entered into an Agreement for Custom Processing dated
as of February 7, 1995, as amended and restated pursuant to the First Amended
and Restated Agreement for Custom Processing dated January 24, 1996 (as further
amended according to the Modification Agreement described below, or as may be
amended at any time, the "Processing Agreement"), pursuant to which Debtor
agreed to process and fractionate certain quantities of Miles (now Bayer) Input
as defined in the Processing Agreement (hereinafter "Processing and
Fractionation Operation").
B. Bayer and Debtor entered into a Reimbursement and Security Agreement
dated as of February 7, 1995 relative to a Guaranty by Bayer of a PNC Bank, N.A.
loan to Debtor, as described therein. Said PNC loan is being paid off in
conjunction with entry into the Loan Documents (as defined below); said Guaranty
is being terminated and the related Mortgage, Security Agreement and Fixture
Filing from Debtor and Suffolk County Industrial Development Agency ("SCIDA") to
Bayer dated as of February 15, 1995 (the "1995 Mortgage") is being amended
accordingly; and said Reimbursement and Security Agreement is accordingly being
superseded by this Security Agreement. This Security Agreement will secure
Debtor's obligations to Bayer under the Processing Agreement, as provided below.
C. Bayer and Debtor are entering into a Modification Agreement dated as of
December 22, 1997 in conjunction with this Agreement, relative to the foregoing
and related matters.
D. Debtor is securing a loan from The Chase Manhattan Bank ("Bank") and
entering into a Credit Agreement dated the date hereof and related agreements
with the Bank (the "Loan Documents") and Bank, Bayer and Debtor are entering
into an Intercreditor Agreement (the "Intercreditor Agreement"), dated the date
hereof, regarding their relative rights in collateral furnished by Debtor to
Bank for said loan, and to Bayer under this Agreement.
<PAGE>
PROVISIONS
----------
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and with the intent to be legally
bound hereby, Debtor and Bayer agree as follows:
1. Superseding Agreement. This Agreement amends and restates in its entirety
---------------------
and supersedes said Reimbursement and Security Agreement, and continues without
impairment the security interest granted thereunder, as applicable.
2. Security Interest. As security for the Obligations (as defined in paragraph
-----------------
5) of Debtor under the Processing Agreement, Debtor does hereby sell, assign,
transfer and set over unto Bayer and grants to Bayer a duly perfected security
interest in and lien on the following collateral, wherever located, now existing
or hereafter acquired, arising or coming into existence (such collateral being
hereafter referred to, collectively, as the "Collateral") until all such
Obligations have been fully repaid or performed:
(a) that portion of Debtor's now owned or acquired in the future equipment
("Equipment"), as such term is defined in the Pennsylvania Uniform Commercial
Code (13 PA. Cons. Stat. Ann. (S)9101, et seq.) ("Pa. U.C.C.") which includes
only the Equipment set forth on Schedule 2(a) attached hereto and incorporated
by reference and all other Equipment and fixtures, furniture and accessories
necessary, appropriate or useful in the Processing and Fractionation Operation,
and all additions, accessions and attachments to all Equipment, replacements
thereof, and substitutions and spare parts therefor.
(b) that portion of Debtor's now owned or acquired in the future inventory
("Inventory"), as such term is defined in the Pa. U.C.C., which includes only
Inventory that is necessary, appropriate or useful in the Processing and
Fractionation Operation, including but not limited to, plasma and plasma
products which are the subject of the Processing Agreement which may or may not
be approved by the FDA (as defined in the Processing Agreement), and Bayer Input
to the extent any and all of Bayer Input may become Inventory notwithstanding
that Bayer Input is and at all times shall remain the sole and exclusive
property of Bayer;
(c) that portion of Debtor's now owned or acquired or arising in the future
general intangibles ("Intangibles"), as such term is defined in the Pa. U.C.C.,
which includes only Intangibles that are necessary, appropriate or useful in the
Processing and Fractionation Operation, including but not limited to, the
patents, licenses, permits, regulatory approvals and applications for any
patent, license, permit or regulatory approval set forth on Schedule 2(c)
attached hereto and incorporated by reference and all other Intangibles
necessary, appropriate or useful in the Processing and Fractionation Operation,
but specifically excluding any other Intangibles that are not now or in the
future necessary, appropriate or useful in the Processing and Fractionation
operation;
2
<PAGE>
(d) all of Debtor's now owned or acquired or arising in the future accounts
("Accounts"), as such term is defined in the Pa. U.C.C., arising from sales of
Inventory or of other plasma or plasma products processed in the Processing and
Fractionation Operation including, but not limited to, contracts, contract
rights, monies, notes, bills, drafts, acceptances, choses in action, and all
other debts, obligations and liabilities in whatever form, owing to Debtor by
any person, firm or entity, arising from such sales by or services rendered in
the Processing and Fractionation Operation by Debtor, or otherwise established
or created in favor of Debtor, all guarantees, collateral and securities
therefor, and all right, title and interest of Debtor in and to the goods
(including Inventory) and services which gave rise thereto, including the rights
of reclamation and stoppage in transit and the right to returned goods and all
other rights or remedies of an unpaid seller of goods or services; and
(e) all proceeds and products of the foregoing necessary, appropriate or
useful in the Processing and Fractionation Operation in whatever form, now or in
the future, the same may be, including, but not limited to, insurance proceeds.
3. Collateral Assignment.
---------------------
(a) In addition to the security interest in the Intangibles granted to
Bayer pursuant to Section 2 above, Debtor does hereby sell, assign, transfer and
set over to Bayer all right, title and interest of Debtor in, to and under (i)
the licenses, permits and regulatory approvals, and all applications for any
license, permit or regulatory approval, relating to the Processing and
Fractionation Operation to the extent they are assignable and, to the extent FDA
prior approval is required, such assignment is approved by the FDA, now or in
the future listed, or which should be listed, on Schedule 2(c) to this Agreement
(the "Licenses and Permits"), and (ii) all contracts, agreements, understandings
or arrangements, whether oral or written, between or among Debtor and any other
person, entity or governmental unit or agency relating to the Processing and
Fractionation Operation ("Fractionation Contracts"), all of which are listed on
schedule 3(a) attached hereto and incorporated by reference. This collateral
assignment is intended as an absolute assignment and shall continue in full
force and effect until all Obligations are satisfied in full; provided, however
that until the occurrence of an event of default under this Agreement or the
Processing Agreement and Bayer's decision, in its sole and absolute discretion,
to effectuate a Bayer Takeover (as defined in the Processing Agreement), Debtor
shall exercise and perform all rights, duties and obligations and retain all
responsibilities under all of the Licenses and Permits and the Fractionation
Contracts. Nothing contained in this Agreement shall be construed to obligate
Bayer to assume, discharge or perform any right, duty, obligation or
responsibility of Debtor under the Licenses and Permits or the Fractionation
Contracts. In the event of a Bayer Takeover, Bayer may, in its sole and
absolute discretion, exercise Debtor's rights under some or all of the Licenses
and Permits or the Fractionation Contracts.
(b) It is the intention of the parties that, to the fullest extent
permissible by law, the foregoing collateral assignment shall permit and enable
Bayer, in the event of a Bayer Takeover, to immediately and without interruption
operate and conduct the Processing and Fractionation Operation including the
right to operate under all Licenses and Permits and obtain the benefit of
3
<PAGE>
the Fractionation Contracts now or then in effect. If for any reason whatsoever
this collateral assignment shall be ineffective or result in any delay in Bayer
implementing a Bayer Takeover, then Debtor hereby authorized Bayer, in its name
or in the name of Debtor, to amend, modify, supplement or apply for the transfer
to Bayer of any and all Licenses and Permits or Fractionation Contracts now or
in the future in effect, and Debtor does hereby appoint Bayer, or any designee
of Bayer, as the attorney in fact for Debtor with full authority and power to
execute, file and take all other action necessary to amend, modify, supplement
or transfer to Bayer the Licenses and Permits or Fractionation Contracts,
subject to liens under the Loan Documents and to the Intercreditor Agreement,
and to otherwise carry out the full intent and purpose of this Agreement and the
Bayer Takeover; provided, however, that in the event Bayer exercises any right
or remedy under this sentence, Bayer will use reasonable efforts to exercise any
such right or remedy in a manner that does not interfere with the Debtor's
general operations. Bayer shall transfer back to Debtor all Licenses, Permits
and Fractionation Contracts so transferred to Bayer, when no longer required for
a Bayer Takeover.
4. Additional Assurances. As additional collateral for Debtor's Obligations,
---------------------
Debtor shall do and perform or has done or performed the following:
(a) if and to the extent any of the Intangibles in which Bayer is now or in
the future being granted a security interest pursuant to this Agreement consist
of patents or registered trademarks or trade names, Debtor shall execute and
deliver to Bayer a collateral assignment, security agreement or other document
or instrument, in form and substance satisfactory to Bayer, and file or cause to
be filed such document or instrument with the Patent and Trademark Office or any
other office where any such document or instrument must be filed or recorded to
duly perfect Bayer's security interest under this Agreement.
(b) executed, recorded and delivered, and caused SCIDA to execute, record
and deliver, to Bayer the 1995 Mortgage, granting Bayer a mortgage on the
premises known as 155 Duryea Road, Melville, New York 17747 (the "Mortgaged
Premises"), as amended by the Amendment to Mortgage and Security Agreement dated
as of December 22, 1997 (as so amended, the "Mortgage") subject to the
subordination of such lien in favor of Bank in accordance with the Intercreditor
Agreement.
(c) executed and delivered, and caused SCIDA to execute and deliver, a
Security Agreement, dated as of May 1, 1996, granting Bayer, inter alia, a
security interest in the Equipment (as defined in such Security Agreement) and a
collateral assignment of the Equipment Lease Agreement (as defined in such
Security Agreement), as amended by the Security Amendment Agreement dated as of
December 22, 1997, together with UCC-1 financing statements in favor of Bayer,
subject to the subordination of such security interest in favor of Bank in
accordance with the Intercreditor Agreement;
(d) executed and delivered to Bayer a Lease, as amended by the Modification
Agreement, dated as of December 22, 1997 in the forms attached hereto as Exhibit
"B" (the "Lease");
4
<PAGE>
(e) executed and delivered to Bayer a Sublease, as amended by the
Modification Agreement, dated as of December 22, 1997 in the forms attached
hereto as Exhibit "C" (the "Sublease");
(f) delivered to Bayer a true, correct and complete copy (including all
schedules, exhibits, amendments and modifications), as executed, of that certain
Amended and Restated Transfer Agreement, by and between New York Blood Center,
Inc. and Debtor, dated December 9, 1994;
(g) deliver to Bayer, in form and substance satisfactory to Bayer, a true
and correct copy, as executed, of the Loan Documents by and between Chase and
Debtor.
5. Obligations Secured. The obligations secured under this Agreement are as
-------------------
follows (collectively, the "Obligations"):
(a) all obligations of Debtor to make payments to Bayer under or pursuant
to this Agreement or the Processing Agreement;
(b) all obligations of Debtor to Bayer under the Processing Agreement
including, without limitation, the enforceability of the Bayer Takeover and any
liquidated or unliquidated damages arising from any breach or default by Debtor
of any of the terms, conditions, representations, warranties, covenants or other
provisions of the Processing Agreement;
(c) all obligations of Debtor to Bayer under the Mortgage, the Lease and
the Sublease;
(d) all costs and expenses incurred by Bayer in the collection of the
Obligations, including, but not limited to, reasonable attorney's fees;
(e) all costs and expenses of Bayer incurred in the protection,
preservation, taking possession of and sale of any of the Collateral including,
but not limited to, the exercise of a Bayer Takeover, the payment of any filing
or recording fees or taxes, taxes, levies, assessments, premiums of insurance
on, repairs to, or maintenance or storage of the Equipment, Inventory or
Intangibles, and any and all other out-of-pocket expenses of Bayer in connection
with this Agreement or with the Collateral including, but not limited to, the
cost of repair, if any, to realty or other Equipment to which the Equipment is
or has become affixed and expenses in connection with any security therefor; and
(f) all costs and expenses of Bayer incurred in preparing any of the
Collateral for sale or other disposition, including repairing, handling and
transporting, or in connection with the sale or other disposition of any of the
Collateral, including the collection or liquidation of Intangibles, and the
collection of any amount arising from a sale or other disposition of any of the
Collateral.
6. Covenants. Debtor covenants and agrees that:
---------
5
<PAGE>
(a) Debtor has unencumbered title to all Collateral (including, but not
limited to the Licenses and Permits and the Fractionation Contracts) now in
existence and will obtain and maintain unencumbered title to any and all
Collateral acquired in the future except for (i) encumbrances contemplated by
the Loan Documents and the Intercreditor Agreement, (ii) interests of SCIDA as
fee owner of the property subject to the Mortgage, Lease and Sublease and as
lessor under the Equipment Lease and (iii) permitted liens and Permitted Liens
as provided under (b) below;
(b) Debtor will keep all Collateral free and clear of all other liens
whatsoever, except (i) to any extent Chase may have any security interest
therein under the Loan Documents, subject to said Intercreditor Agreement and
(ii) for any permitted liens to which Bayer shall have given its prior written
consent, which shall include all Permitted Liens as permitted under said Credit
Agreement;
(c) without the prior written consent of Bayer, Debtor will not sell,
assign or transfer (except for sales in the ordinary course of business),
otherwise dispose of, encumber, or create any other security interest in the
Collateral or any part of the Collateral;
(d) without the prior written consent of Bayer, Debtor will not affix the
Equipment or permit the Equipment to be affixed to real estate or otherwise to
become a fixture, except to the extent the Equipment is presently affixed to the
Mortgaged Premises;
(e) Debtor will keep the Equipment, the Inventory and the interest of Bayer
therein, fully insured, subject to Section 5 of the Mortgage, to the extent
applicable, for replacement value against loss or damage by fire, theft and such
other risks as would generally be insured against by prudent property owners
operating industrial facilities of a similar type to, and located in the general
area of, the Property, under an insurance policy or policies containing a
standard non-contributory lender's loss payee clause in favor of Bayer, written
by an insurance company or companies reasonably acceptable to Bayer, and, in the
event the Equipment or Inventory shall at any time not be fully insured as
required by this Agreement, Bayer, upon 20 days prior notice to Debtor, unless
there shall have been a lapse or termination of insurance, in which case no
notice shall be required, at its option (but without any obligation to do so),
may cause the same to be so insured, and upon demand, Debtor will reimburse
Bayer for the cost of any such insurance paid for by Bayer;
(f) any insurance proceeds received as a result of a casualty loss shall be
held as additional security for the payment of the Obligations and, subject to
Section 4 of the Mortgage, to the extent applicable, applied to repair and
replacement of the Equipment or Inventory affected, with any balance to Debtor
and, subject to the Intercreditor Agreement, the Senior Obligations referred to
therein;
(g) Debtor will pay all costs of filing or recording any financing,
continuation or termination statements, and all other costs and expenses
relating to perfecting, maintaining, documenting or otherwise preserving the
security interests or other rights granted under or pursuant to this Agreement,
the Lease, the Sublease and the Processing Agreement;
6
<PAGE>
(h) Debtor will promptly notify Bayer of any change in the Debtor's places
of business or of the location of any of the Collateral;
(i) without the prior written consent of Bayer, Debtor will not agree to
any modification of, or substitution for, any contract or obligation which
materially and adversely affects the security interests granted under this
Agreement including, without limitation, the Licenses and Permits, the
Fractionation Contracts and the Loan Documents;
(j) a carbon, photographic or other reproduction of (i) this Agreement, or
(ii) a financing statement, is sufficient as a financing statement;
(k) Debtor will at all times conduct its affairs and operate its business
in compliance with all applicable laws, rules and regulations, including,
without limitation, the terms and conditions of all Licenses and Permits, any
applicable Food and Drug Administration regulations and environmental laws and
regulations, and Debtor will promptly notify Bayer of any notice of any alleged
violation or investigation into any alleged violation of any of the Licenses and
Permits or any other law, rule or regulation by any governmental entity;
provided, however, that Debtor's failure to comply with such laws, rules and
regulations shall not constitute a default under this Agreement if such failure
would not have a material adverse effect on Debtor, or the Processing and
Fractionation Operation;
(l) Debtor will promptly and faithfully prosecute all applications and keep
and perform, or cause to be prosecuted, kept or performed in all respects, all
the terms, covenants and conditions required to be performed or observed by
Debtor to preserve, maintain and comply with any of the Licenses and Permits
which may now or in the future affect the Processing and Fractionation
Operation, and Debtor will not do or permit anything to be done which would or
could materially impair or tend to materially impair Bayers' rights in or to the
Licenses and Permits and the Fractionation Contracts, including all rights
granted under this Agreement and the Bayer Takeover under the Processing
Agreement, or which could be grounds for any person, entity or governmental unit
or agency declaring a default, forfeiture, itemization, cancellation, breach, or
penalty under any of the Licenses and Permits or the Fractionation Contracts;
(m) Debtor will: (i) not change its name, merge with any other entity or
change its form of organization; (ii) keep all Collateral located only at the
site of the Processing and Fractionation Operation (said site being the Property
at 155 Duryea Road, Melville, New York 11747) or at the Debtor's chief office
which is at the Property, or at such other location as Bayer may consent to in
writing, which consent shall not be unreasonably withheld or delayed; and (iii)
not change or move the location of its chief office or the location of the
Processing and Fractionation Operation or any Collateral, without in each case
first obtaining the prior written consent of Bayer, which consent shall not be
unreasonably withheld or delayed; and
(n) Debtor will pay, before any fine, penalty, interest or cost attaches
thereto, all taxes, assessments and other charges upon the Collateral, or
relating to the Processing and Fractionation Operation or any of the Collateral,
or upon this Agreement, other than taxes solely
7
<PAGE>
attributable to Bayer's interest in the Collateral or its rights under the
Processing Agreement; provided, however, that if by law any such taxes,
assessments or other charges may be paid in installments (whether or not
interest shall accrue on the unpaid balance thereof), the Debtor may pay the
same in installments (together with accrued interest on the unpaid balance
thereof) as the same respectively become due, before any fine, penalty or cost
attaches thereto; provided further that nothing in this Section 6(n) shall
require the payment or discharge of any tax or assessment so long as Debtor
shall, after complying with each of the following conditions, in good faith and
at its own expense, contest the same or the validity thereof by appropriate
legal proceedings diligently pursued. Before commencing any such proceeding,
Debtor shall: (i) notify Bayer in writing of its intent to do so; (ii) ascertain
that such proceedings will operate to prevent the collection thereof or other
realization thereon; and (iii) provide security reasonably satisfactory to Bayer
assuring the discharge of Debtor's obligation under this Section 6(n) and of any
additional interest, charge, penalty or expense arising from or incurred as a
result of such contest. Notwithstanding the foregoing, if at any time payment of
any tax or assessment shall become necessary to prevent a lien foreclosure sale
of the Mortgaged Premises or any portion thereof because of nonpayment of such
tax or assessment, the Debtor shall pay the same in sufficient time to prevent
the foreclosure sale.
7. Representations and Warranties. Debtor represents and warrants to Bayer
------------------------------
that:
(a) Debtor is a corporation validly formed and duly organized and existing
in good standing under the laws of the State of Delaware;
(b) Debtor is qualified to do business in New York and in each state where
the Processing and Fractionation Operation is located and in all other
jurisdictions where the Collateral is or will be located;
(c) Debtor has all power, corporate and otherwise, necessary to execute and
deliver this Agreement, the Processing Agreement, the Mortgage, the Security
Agreement, the Intercreditor Agreement, the Modification Agreement, the Lease
and the Sublease. Debtor is duly authorized to enter into this Agreement, to
grant to Bayer security interests in the Collateral and to carry out all of the
transactions and acts contemplated by this Agreement, the Processing Agreement,
the Lease and the Sublease;
(d) this Agreement, the Processing Agreement, the Mortgage, the Security
Agreement, the Intercreditor Agreement, the Modification Agreement, the Lease,
the Sublease and the Loan Documents have been duly executed and delivered by
Debtor to Bayer (except for the Loan Documents, which have been delivered to
Chase), and each constitutes a legal, valid and binding obligation of Debtor,
enforceable against Debtor in accordance with its terms;
(e) the execution and delivery of this Agreement, the Mortgage, the
Security Agreement, the Intercreditor Agreement, the Modification Agreement, the
Processing Agreement, the Lease, the Sublease and the Loan Documents, and
performance of the obligations thereunder, does not and will not: (i) violate
or contravene any provision of Debtor's certificate of incorporation or by-laws;
(ii) result in any breach of any of the terms and provisions of, or
8
<PAGE>
constitute (with or without the giving of notice of the passage of time or both)
a default under, or give rise to the right to accelerate, terminate or cancel,
any material indenture, agreement or other instrument to which the Debtor is a
party or by which it or any of its properties are bound; (iii) result in the
creation or imposition of any lien, charge or encumbrance upon any of Debtor's
properties pursuant to the terms of any such indenture, agreement or other
instrument (other than as contemplated in this Agreement); (iv) violate any
applicable statute or regulation; or (v) violate any order, writ, injunction or
decree which names the Debtor as a party or which is specifically directed to it
or its property and which has been issued by any court or by any federal or
state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over Debtor or its properties;
(f) Debtor is or will be when the Collateral is acquired and at all times
thereafter will be the owner of the Collateral, free and clear of any liens,
claims and encumbrances, other than the liens or security interests granted to
Bayer under this Agreement and except as provided under Section 6(b) of this
Agreement;
(g) set forth on Schedule 2(c) to this Agreement are all Licenses and
Permits and other Intangibles, and set forth on Schedule 3(a) are all
Fractionation Contracts that are necessary, or will be used or useful in the
Processing and Fractionation Operation, and Debtor will, from time to time,
amend such Schedules so that they shall at all times list all such Licenses and
Permits and Fractionation Contracts, whether now in existence or acquired in the
future.
8. Defaults. As used in this Agreement, the term "default" means (i) an Event
--------
of Default under the Processing Agreement which has occurred and is continuing,
(ii) the failure to pay, when due upon demand, any Obligations, (iii) a failure
by Debtor to duly perform and observe any other agreement or covenant contained
in this Agreement and the same shall remain uncured for 30 days after receipt by
Debtor of notice thereof; provided, however, if such matter cannot reasonably be
cured within 30 days, Debtor shall not be in default hereunder so long as Debtor
has commenced the cure within the 30 day period and is diligently pursuing the
same to completion, or (iv) any representation or warranty of Debtor contained
in this Agreement shall be materially false as of the date made. In the event
of any such default Bayer will be entitled, at its option, without notice, to
enforce its rights or remedies under this Agreement or under the Processing
Agreement.
9. Further Agreements. The undersigned further agrees that after a default
------------------
under this Agreement:
(a) in addition to any other rights or remedies provided or referenced in
this Agreement, Bayer shall have all of the rights and remedies provided by law
or at equity;
(b) all of Bayers' rights and remedies shall be cumulative and may be
exercised by Bayer in any order or fashion and without the need to pursue or
exhaust any right or remedy (whether against Debtor or any other party or
whether against any portion of the Collateral or any other property) as a
condition to enforcing or pursuing any other right or remedy; and
9
<PAGE>
(c) failure by Bayer to enforce promptly any of its rights or remedies
shall not be deemed a waiver of such rights or remedies or of any default under
this Agreement.
10. Notices. All notices, demands, requests, consents or approvals required
-------
under this Agreement must be in writing and will be conclusively deemed to have
been received by a party hereto and to be effective on the day on which
delivered personally to such party or on the next business day if sent by
overnight courier service, return receipt requested, addressed to such party at
the address set forth below or to such other address as any party may give to
the other in writing for such purpose:
To Debtor: 155 Duryea Road
Melville, New York 11747
Attention: Chief Financial Officer
Phone: (516) 752-7314
Fax: (516) 752-8754
To Bayer: Bayer Corporation
100 Bayer Road
Building 4
Pittsburgh, PA 15205-9741
Attention: Mr. Jon R. Wyne
Senior Vice President and Treasurer
and
Roger W. Heins, Director-Treasury Services
Phone: (412) 777-5717
Fax: (412) 778-4412
with a copy to: Pharmaceutical Division
Bayer Corporation
400 Morgan Lane
West Haven, Connecticut 06516
Attention: Law Department
Phone: (203) 939-2401
Fax: (203) 937-2795
All such communications will be conclusively deemed to have been received by a
party hereto and to be effective when so delivered personally, or if sent by
overnight courier service, on the day after deposit thereof with such service.
11. Further Assurances and Covenants. Debtor, at its cost, and without expense
--------------------------------
to Bayer, shall:
(a) within ten (10) days after receipt of a request therefor from Bayer,
deliver to Bayer a written statement, duly acknowledged, setting forth the
outstanding amount due under
10
<PAGE>
the Loan Documents, and to the best of Debtor's knowledge any offsets or
defenses, if any, which Debtor has, or believes it may have, under the Loan
Documents; and
(b) execute such further documents, provide such further assurances, and
take such other actions as may be reasonably requested by Bayer for the purposes
of further evidencing, perfecting, carrying out and/or confirming this Agreement
and for all other purposes contemplated by this Agreement, including but not
limited to perfecting or continuing the perfection of any security interest or
collateral assignment granted under or pursuant to this Agreement.
12. Successors and Assigns. This Agreement will be binding upon and inure to
----------------------
the benefit of Debtor and Bayer and their respective successor and assigns and
neither party may assign this Agreement in whole or in part without the prior
written consent of the other party.
13. Modifications. No modification or waiver of any provision of this
-------------
Agreement nor consent to any departure by Debtor therefrom will in any event be
effective unless the same is in writing, specifically refers to this Agreement
and is signed by both parties, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
14. Severability. If fulfillment of any provision hereof or any transaction
------------
related hereto or of any provision of this Agreement, at the time performance of
such provision is due, involves transcending the limit of validity prescribed by
law, then ipso facto, the obligation to be fulfilled will be reduced to the
limit of such validity; and if any clause or provision contained in this
Agreement, other than the provisions hereof pertaining to repayment of the
Obligations operates or would prospectively operate to invalidate this Agreement
in whole or in part, then such clause or provision only will be void, as though
not herein contained, and the remainder of this Agreement will remain operative
and in full force and effect; and if such provision pertains to repayment of the
Obligations, then, at the option and sole discretion of Bayer, all of the
Obligations of Debtor to Bayer will become immediately due and payable.
15. Gender, etc. Unless the context clearly requires otherwise, whenever used
------------
herein, the singular number will include the plural, the plural the singular and
the use of the masculine, feminine or neuter gender will include all genders.
16. Headings. The headings in this Agreement are for convenience only and will
--------
not limit or otherwise affect any of the terms hereof.
17. Governing Law and Jurisdiction. This Agreement will be interpreted and the
------------------------------
rights and liabilities of the parties hereto determined in accordance with the
laws of the Commonwealth of Pennsylvania. The undersigned hereby agrees and
consents to the jurisdiction of any state or federal court located within any
county in Pennsylvania where Bayer chooses.
11
<PAGE>
18. Intercreditor Agreement. The parties agree that, in case of any conflict
------------------------
between the provisions of this Agreement and the Intercreditor Agreement, the
Intercreditor Agreement shall control.
12
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed and delivered this
Security Agreement as of the day and year first set forth above.
V.I. TECHNOLOGIES, INC.
By: /s/ Joanne Leonard
-----------------------
Name: Joanne Leonard
Title: Vice President, CFO
BAYER CORPORATION
By: /s/ Jack Ryan
-----------------------
Name: Jack Ryan
Title: Vice President
13
<PAGE>
EXHIBIT 10.22
LEASE
Between
THE TRUSTEES OF COLUMBIA UNIVERSITY
IN THE CITY OF NEW YORK
as Landlord,
and
MELVILLE BIOLOGICS, INC.,
as Tenant
Dated as of June 21, 1996
<PAGE>
Table of Contents
-----------------
ARTICLE 1
Demised Premises/Term................................................ 1
ARTICLE 2
Ground Lease......................................................... 2
ARTICLE 3
Rent................................................................. 3
ARTICLE 4
Use of Demised Premises.............................................. 5
ARTICLE 5
Demised Premises "As Is"............................................. 10
-i-
<PAGE>
ARTICLE 6
Operating Covenants; Signs........................................... 10
ARTICLE 7
Window Cleaning...................................................... 12
ARTICLE 8
Legal Requirements/Environmental Legal Requirements.................. 12
ARTICLE 9
Access to Demised Premises........................................... 15
ARTICLE 10
Default.............................................................. 16
ARTICLE 11
Remedies/Damages..................................................... 19
ARTICLE 12
Eminent Domain....................................................... 22
-ii-
<PAGE>
ARTICLE 13
Quiet Enjoyment....................................................... 23
ARTICLE 14
No Waiver............................................................. 23
ARTICLE 15
Waiver of Trial....................................................... 24
ARTICLE 16
Inability to Perform.................................................. 24
ARTICLE 17
Fees and Expenses..................................................... 25
ARTICLE 18
Estoppel.............................................................. 25
ARTICLE 19
Surrender............................................................. 26
ARTICLE 20
Subordination/Attornment.............................................. 27
-iii-
<PAGE>
ARTICLE 21
Consents............................................................. 28
ARTICLE 22
[Intentionally Deleted].............................................. 29
ARTICLE 23
Assignment and Subletting............................................ 29
ARTICLE 24
Bankruptcy........................................................... 35
ARTICLE 25
Alterations.......................................................... 37
ARTICLE 26
Services............................................................. 41
-iv-
<PAGE>
ARTICLE 27
Windows; Machinery........................................................ 46
ARTICLE 28
Insurance................................................................. 46
ARTICLE 29
Notices................................................................... 49
ARTICLE 30
Non-Liability/Indemnification............................................. 50
ARTICLE 31
Casualty.................................................................. 51
ARTICLE 32
Maintenance/Repairs....................................................... 53
-v-
<PAGE>
ARTICLE 33
Additional Rent...................................................... 53
ARTICLE 34
Parking.............................................................. 58
ARTICLE 35
Broker............................................................... 58
ARTICLE 36
Security Deposit..................................................... 59
ARTICLE 37
Miscellaneous........................................................ 60
<PAGE>
ARTICLE 38
Renewal Option....................................................... 62
ARTICLE 39
Expansion Right...................................................... 64
ARTICLE 40
Intentionally Deleted................................................ 65
ARTICLE 41
REA/Security......................................................... 65
ARTICLE 42
Index of Definitions................................................. 66
ARTICLE 43
Termination Right.................................................... 70
ARTICLE 44
Equity Participation................................................. 71
ARTICLE 45
Human and Animal Research............................................ 72
-vii-
<PAGE>
ARTICLE 46
Payment for Tenant's Work............................................ 72
ARTICLE 47
Additional Provisions................................................ 73
ARTICLE 48
Additional Work...................................................... 74
-viii-
<PAGE>
EXHIBITS
--------
A. Floor Plan/Demised Premises
B. Plans and Specifications
C. Cleaning Specifications
D. Fourth Floor Expansion Space
E. Proposed Autoclave and Glassware Specifications
-ix-
<PAGE>
LEASE
-----
LEASE ("Lease"), dated as of June 21, 1996, by and between THE
-----
TRUSTEES OF COLUMBIA UNIVERSITY IN THE CITY OF NEW YORK, having an address c/o
Executive Director, Audubon Research Park, 3960 Broadway, New York, New York
10032 ("Landlord") and MELVILLE BIOLOGICS, INC., having an address at 155 Duryea
--------
Road, Melville, New York 11747 ("Tenant").
------
WITNESSETH:
WHEREAS, The City of New York, as landlord (the "City") and the New
----
York City Economic Development Corporation ("EDC"), as tenant, entered into that
---
certain Agreement of Lease, dated as of November 20, 1992, covering the premises
described therein which was assigned by EDC to Landlord by assignment, dated as
of November 20, 1992 (such Agreement of Lease, as so assigned, being hereinafter
the "Ground Lease");
------------
WHEREAS, Tenant desires to let the space located in the Audubon
Business and Technology Center in the building known as the Mary Woodard Lasker
Building (the "Building") at 3960 Broadway, in the City, County and State of New
--------
York (the Building and the land on which it is located hereinafter, together,
being the "Premises"), shown by the area cross hatched on the floor plan annexed
--------
hereto and made a part hereof as Exhibit A (the "Demised Premises") comprising
---------------
approximately 10,958 rentable square feet located on the fifth floor of the
Building, and Landlord desires to let the Demised Premises to Tenant;
NOW, THEREFORE, in consideration of the mutual obligations of the
parties hereto, the adequacy of which is hereby acknowledged, the parties for
themselves and their permitted successors and assigns, hereby covenant and agree
as follows:
ARTICLE 1
---------
Demised Premises/Term
---------------------
Section 1.01 Subject to the terms and conditions set forth in the
------------
Ground Lease and that certain Reciprocal Easement Agreement, dated as of
November 20, 1992, among Landlord, the City and EDC (the "REA") and the
---
resolution of the New York City Board of Estimate (Calendar Number 6) adopted on
August 16-17, 1990 (the "Special Permit") (copies of which Ground Lease, Special
--------------
Permit and REA Tenant acknowledges having received and read), Landlord hereby
leases to Tenant and Tenant hereby hires from Landlord, upon and subject to the
terms, covenants, provisions and conditions of this Lease, the Demised Premises.
-1-
<PAGE>
Section 1.02 The Demised Premises are leased for a term (the "Term")
------------ ----
to commence on the date hereof ("Commencement Date) and to expire on the last
-----------------
day of the calendar month in which occurs the day immediately preceding the
fifth anniversary of the Rent Commencement Date (as hereinafter defined) (the
"Expiration Date") or on such earlier date upon which the Term may expire or be
- ----------------
cancelled or terminated pursuant to the provisions of this Lease or pursuant to
law.
Section 1.03 Subject to the provisions of Section 25.07(a)(iii), the
------------
"Rent Commencement Date" shall be the earlier to occur of (a) November 1, 1996
----------------------
or (b) if Tenant completes construction of the Tenant's Work (as hereinafter
defined) prior to November 1, 1996, the date Tenant or anyone claiming under or
through Tenant shall occupy any part of the Demised Premises for the purposes
set forth in Article 4 hereof. Landlord and Tenant shall execute a written
amendment to this Lease prepared by Landlord and reasonably satisfactory to
Landlord and Tenant setting forth such date (provided, however, that failure by
either party to execute or deliver such amendment shall not impair the
effectiveness of the provisions of this paragraph).
ARTICLE 2
---------
Ground Lease
------------
Section 2.01
------------
A. This Lease is subject and subordinate to the Ground Lease. Except
to the extent inconsistent with or modified by the terms of this Lease or to the
extent applicable only to the relationship between the City and Landlord, all of
the terms and provisions of the Ground Lease applicable to the Demised Premises
and to subtenants, including, without limitation, the provisions of Section
10.03 (Required Sublease Clauses), Section 10.04 (Subtenant Non-Disturbance) and
Section 23.03 (New Building Space Leasing Requirements), shall be binding upon
Tenant.
B. Landlord represents and warrants to Tenant that: (1) the Ground
Lease is in full force and effect and has not been amended; (2) to the best
knowledge of Landlord after due inquiry to the parties required to receive
notices for Landlord pursuant to the Ground Lease, Landlord has not received any
notice of default from the City which has not been cured by Landlord as of the
date hereof; and (3) to the best knowledge of Landlord after due inquiry to the
parties responsible for sending (on behalf of Landlord) notices of default with
respect to the Ground Lease, Landlord has not issued any notices of default to
the City pursuant to the Ground Lease.
-2-
<PAGE>
ARTICLE 3
---------
Rent
----
Section 3.0 Tenant shall pay to Landlord, without notice or demand,
-----------
in lawful money of the United States, by check drawn on a bank which is a member
of the New York Clearinghouse Association, at the address set forth above or at
such other address as Landlord may by notice designate, without any set off or
deduction whatsoever, the following:
(i) annual fixed rent ("Fixed Rent") and annual fixed repayment
----------
("Fixed Repayment") in the amounts set forth in Section 3.02, Section 3.03
---------------
and Section 3.04 below, in monthly installments in advance on the Rent
Commencement Date and, thereafter, on the first day of each month or
portion thereof during the Term; and
(ii) additional rent ("Additional Rent") consisting of all other sums
---------------
of money that shall become due from and payable by Tenant to Landlord
hereunder when same shall be due and payable hereunder.
Tenant agrees that Landlord shall have the same remedies for any
default in payment of Additional Rent or Fixed Repayment as it has for a
default in payment of Fixed Rent.
Section 3.02 From the Rent Commencement Date through the last day of the
------------
month in which the third anniversary of the Rent Commencement Date occurs, Fixed
Rent shall be payable at the rate of $197,244.00 per annum in equal monthly
installments of $16,437.00.
Section 3.03 Thereafter Fixed Rent shall be payable as follows:
------------
(i) For the period commencing on the first day of the month
immediately following the month in which the third anniversary of the Rent
Commencement Date shall occur (the "Rent Adjustment Date") and ending on
--------------------
the day immediately preceding the first anniversary of the Rent Adjustment
Date, at the rate of $207,106.20 per annum in equal monthly installments of
$17,258.85; and
(ii) for the period commencing on the first anniversary of the Rent
Adjustment Date and ending on the Expiration Date, at the rate of
$217,461.48 per annum in equal monthly installments of $18,121.79.
Section 3.04 Fixed Repayment shall be payable in equal monthly
------------
installments commencing on the first day of the month following the date which
is thirty days from the date on which Landlord's lending institution (the
"Lender") advances the Loan (as hereinafter defined) to Landlord, in an amount
------
equal to the sum of (a) one-twelfth of the annual principal and interest payment
of a $1,500,000 self-amortizing loan (the "Loan") amortizing on a straight line
----
basis over ten (10) years at an interest rate (the "Interest Rate") to be
-------------
determined by Lender and charged by the Lender to Landlord and (b) one-one
hundred and twentieth of the amount of all closing costs (the "Closing Costs")
-------------
imposed by the Lender with respect to Landlord
-3-
<PAGE>
obtaining the Loan. The portion of such monthly installment amount described in
clause (a) of the preceding sentence may be adjusted as provided in Section
25.07 hereof. By way of illustration, if the amount of the loan is $1,500,000
and the Interest Rate is 6.50% then the annual Fixed Repayment shall be
$204,386.40, payable in equal monthly installments of $17,032.20. At such time
as Landlord's lending institution shall determine the Interest Rate to charge
Landlord, Landlord and Tenant shall enter into a written agreement setting forth
the exact amount of the monthly installment of Fixed Repayment. Fixed Repayment
constitutes agreed upon consideration payable by Tenant for Landlord's paying
for a portion of the cost of improvements made in the Demised Premises to
prepare the Demised Premises for Tenant's occupancy substantially in accordance
with the plans and specifications (the "Plans and Specifications") listed on
------------------------
Exhibit B annexed hereto and made a part hereof ("Tenant's Work") and related
-------------
costs such as architectural and engineering fees. If Tenant does not elect to
exercise its right to renew the term of this Lease as provided in Article 38
hereof, Tenant's obligation to pay monthly installments of Fixed Repayment
shall, subject to Article 43, cease upon the expiration date of the initial
Term. Landlord agrees that the funds which will constitute the Construction
Loan (as defined in Section 25.07(b) hereof) shall be available for disbursement
pursuant to Article 46 hereof no later than July 1, 1996. If it is commercially
----------
reasonable for Landlord to hold the proceeds of the Construction Loan in an
interest bearing account prior to disbursement to Tenant, which determination
shall be made in Landlord's sole and absolute discretion then the interest
earned thereon shall be applied to reduce the amount of monthly Fixed Repayment,
as set forth in Section 25.07 hereof.
Section 3.05 Notwithstanding anything contained in this Article 3 to the
------------
contrary, Tenant shall pay to Landlord upon execution of this Lease the first
monthly installment of Fixed Rent payable hereunder.
Section 3.06 If Tenant shall fail to pay any rent when due and such
------------
failure shall continue for a period of ten (10) days after the same shall have
become due and payable, such unpaid amount shall bear interest at a per annum
---------
rate equal to two percent plus the per annum rate charged from time to time by
---------
Citibank, N.A. as its "prime rate" of interest (the "Default Interest Rate"),
-------- ---------------------
calculated on the basis of actual days elapsed, based on a 360-day year, from
the due date of such rent to the date of payment, and such interest shall be
deemed Additional Rent.
Section 3.07 If by reason of any of the provisions of this Lease, Tenant's
------------
obligation to pay Fixed Rent and Fixed Repayment shall commence on a day other
than the first day of a month, Fixed Rent and Fixed Repayment for such month
shall be prorated on a per diem basis, and Landlord shall credit the excess
--------
amount paid on account of Fixed Rent and Fixed Repayment upon the execution of
this Lease on a per diem basis toward the payment of the installment of Fixed
--------
Rent and Fixed Repayment due and payable hereunder for the next succeeding
calendar month.
-4-
<PAGE>
Section 3.08 If any of the rent payable under the terms of this Lease
------------
shall be or become uncollectible, reduced or required to be refunded because of
any legal rent restriction, Tenant shall enter into such agreement(s) and take
such other steps (without additional expense to Tenant) as Landlord may
reasonably request and as may be legally permissible to permit Landlord to
collect the maximum rents which from time to time during the continuance of such
legal rent restriction may be legally permissible (and not in excess of the
amounts reserved therefor under this Lease). Upon the termination of such legal
rent restriction, (a) the rents shall become and thereafter be payable in
accordance with the amounts reserved herein for the periods following such
termination, and (b) Tenant shall pay to Landlord, to the maximum extent legally
permissible, an amount equal to (i) the rents which would have been paid
pursuant to this Lease but for such legal rent restrictions, less (ii) the rents
and payments in lieu of rents paid by Tenant during the period such legal
restriction was in effect.
Section 3.09 The term "rent" or "rents" as used herein shall mean all
------------
amounts described in Sections 3.01, 3.02, 3.03 and 3.04 above.
ARTICLE 4
---------
Use of Demised Premises
-----------------------
Section 4.1 Subject to and in accordance with the Ground Lease, the REA,
-----------
the Special Permit, and this Lease, Tenant shall use and occupy the Demised
Premises only as laboratory and office space for (i) biomedical research and
development and (ii) such ancillary use as may be permitted by Section 4.03
hereof, and for no other purpose. Prior to taking occupancy of the Demised
Premises, Tenant shall submit to Landlord for approval, Tenant's Regulatory
Compliance Plan (the "Plan") which Plan shall (i) identify those activities of
----
and materials to be used by Tenant which are or may be subject to Environmental
Legal Requirements or Legal Requirements and (ii) detail Tenant's plans and
procedures for compliance with Environmental Legal Requirements and Legal
Requirements as to each specific regulated material and activity. From time to
time, at any time during the Term, Tenant shall revise the Plan to reflect any
changes in its activities, materials, Environmental Legal Requirements or Legal
Requirements. All such revisions shall be subject to Landlord's prior review and
approval, which approval shall not be unreasonably withheld or delayed. Landlord
represents and warrants to Tenant that Tenant's use of the Demised Premises for
laboratory and office space for biomedical research and development is not
prohibited under the terms of the Ground Lease, the Special Permit or the REA.
Section 4.02 A. Tenant shall not use, occupy, suffer or permit the
------------
Demised Premises, or any part thereof, to be used in any manner, or suffer or
permit anything to be brought into or kept therein, which would (a) violate any
of the provisions of the Ground Lease, the Special Permit, the REA, any other
Superior Lease or any Superior Mortgage of which Tenant has received a
-5-
<PAGE>
copy, including, without limitation the provisions of Section 23.02 (Prohibited
Uses) of the Ground Lease, (b) violate any Environmental Legal Requirement,
Legal Requirement or Insurance Requirement, (c) constitute an extra-hazardous
condition so as to increase the risks involved in Tenant's operations beyond the
level of risk normally attendant upon the operation of comparable laboratory
space for the use permitted under Section 4.01 above, (d) make void or voidable
any insurance policy then in force with respect to any portion of the Premises
or the Demised Premises, provided, however that Landlord does not obtain any
such policy which would prohibit Tenant's occupancy of the Demised Premises for
the use set forth in Section 4.01 hereof, (e) make it impossible or difficult to
obtain any of the insurance coverage required to be maintained pursuant to this
Lease or Article 7 of the Ground Lease, (f) cause, or be likely to cause, injury
or damage to the Premises or any part thereof or to any Building Equipment, (g)
constitute a public or private nuisance, (h) violate any certificate of
occupancy which may now exist or hereafter be obtained for the Demised Premises
or the Premises, (i) emit or discharge noxious or objectionable noise, fumes,
vapors or odors into the Building or the Building Equipment, or which can be
detected outside of the Demised Premises, (j) cause any vibration that will
cause, or is likely to cause, damage to the Demised Premises and/or the
Building, or which would unreasonably disturb other tenants or occupants of the
Building or any other persons immediately outside of the Demised Premises; (k)
impair or interfere with the effectiveness or accessibility of the Building
Equipment or any Building service, (l) impair or interfere with the use of any
area of the Building by, or occasion unreasonable discomfort, annoyance or
inconvenience to, Landlord or any other occupant or tenant, (m) interfere with
access to the Demised Premises by fire prevention personnel and/or equipment,
(n) cause Tenant to default in any of its obligations under this Lease or (o)
cause Landlord to be in default of any of its obligations under the Ground Lease
or the REA.
B. In the event that Landlord shall at any time obtain a certificate of
occupancy for the Demised Premises or the Premises which prohibits Tenant's use
of the Demised Premises for the uses set forth in Section 4.01 hereof, the
Tenant shall have the right to terminate this lease upon thirty (30) days prior
written notice to Landlord. Upon the expiration of such thirty (30) day period,
this Lease shall expire as fully and completely as if such date were the date
set forth in this Lease as the date of the expiration of the term of this Lease
and Tenant shall on or before such date, quit, surrender and vacate the Demised
Premises in accordance with Article 19 hereof. In the event that the certificate
of occupancy for the Premises or Demised Premises is modified or invalidated by
any governmental entity or Legal Requirement so that Tenant may not lawfully
occupy the Demised Premises for the uses set forth in Section 4.01 hereof,
------------
Tenant may contest the modification or invalidation of the certificate of
occupancy by such government entity, provided that: (i) no Event of Default
shall have occurred and be continuing (including, without limitation, the
payment by Tenant of all amounts due Landlord pursuant to the terms of this
Lease during such contest), (ii) Landlord shall not be subject to criminal
penalty or civil or criminal forfeiture as a result thereof, (iii) Tenant shall
promptly commence legal proceedings contesting the same and diligently pursue
such proceedings to their conclusion, (iv) Tenant shall indemnify Landlord
against any and all loss in connection with such contest, (v) if Landlord deems
it to be necessary, in Landlord's sole and absolute discretion, Tenant shall
deposit with Landlord as additional security such amounts determined by
Landlord, in its reasonable
-6-
<PAGE>
discretion, to be necessary to secure Landlord against all loss in connection
with such contest, (vi) such contest and Tenant's failure to vacate the Demised
Premises shall not result in a default under any Superior Mortgage or Superior
Lease, and (vii) such contest and Tenant's failure to vacate the Demised
Premises shall not adversely affect the occupancies of other tenants in the
Building. Landlord agrees not to alter the certificate of occupancy for the
Premises or Demised Premises so as to render Tenant's use of the Demised
Premises for the purposes set forth in Section 4.01 unlawful unless required to
do so by any governmental entity or Legal Requirement.
Section 4.03 Tenant shall be permitted to use a portion of the Demised
------------
Premises for the following ancillary use: Development of new products from blood
as set forth in the Plan as approved by Landlord.
Section 4.04
------------
A. Tenant acknowledges that no temporary or permanent certificate of
occupancy has been issued for the Demised Premises. Tenant shall upon completion
of Tenant's Work obtain a temporary certificate of occupancy for the Demised
Premises. Landlord shall cooperate, at no cost to Landlord, with Tenant in
connection with Tenant's obtaining of a temporary certificate of occupancy for
the Demised Premises (the "TCO") (including, but not limited to, signing any
---
forms and/or assisting in obtaining the City's signature as may be necessary in
order for Tenant to obtain the TCO). Landlord shall be responsible for remedying
any Building conditions and/or curing any violations affecting the Building
which would prevent the issuance of the TCO. Landlord makes no representation
and shall have no liability to Tenant with respect to the permissibility of
Tenant's use and occupancy of the Demised Premises under applicable zoning
ordinances and regulations. If an amendment to a certificate of occupancy, a new
certificate of occupancy or a zoning variance is required as a result of
Tenant's use and/or occupancy of the Demised Premises, then Tenant shall, at
Tenant's sole cost and expense, obtain such amended certificate of occupancy,
new certificate of occupancy or zoning variance for the Building and the Demised
Premises. If Landlord determines, in its sole and exclusive judgment, that the
Demised Premises may not be lawfully occupied by Tenant, then Landlord may, upon
thirty (30) days written notice to Tenant (which notice shall set forth the
reasons that Tenant's occupancy is unlawful), cancel this Lease provided, that
if Tenant shall within ten (10) days from the date Landlord renders its notice
to Tenant, provide Landlord with evidence that Tenant is lawfully occupying the
Demised Premises in Landlord's sole and exclusive judgement, then this Lease
shall continue in full force and effect. In the event that the certificate of
occupancy for the Premises or Demised Premises is modified or invalidated by any
governmental entity or Legal Requirement so that Tenant may not lawfully occupy
the Demised Premises for the uses set forth in Section 4.01 hereof, Tenant may
contest the modification or invalidation of the certificate of occupancy by such
government entity, provided that: (i) no Event of Default shall have occurred
and be continuing (including, without limitation, the payment by Tenant of all
amounts due Landlord pursuant to the terms of this Lease during such contest),
(ii) Landlord shall not be subject to criminal penalty or civil or criminal
forfeiture as a result thereof, (iii) Tenant shall promptly commence legal
proceedings contesting the same and diligently pursue
-7-
<PAGE>
such proceedings to their conclusion, (iv) Tenant shall indemnify Landlord
against any and all loss in connection with such contest, (v) if Landlord deems
it to be necessary, in Landlord's sole and absolute discretion, Tenant shall
deposit with Landlord as additional security such amounts determined by
Landlord, in its reasonable discretion, to be necessary to secure Landlord
against any and all loss in connection with such contest, (vi) such contest and
Tenant's failure to vacate the Demised Premises shall not result in a default
under any Superior Mortgage or Superior Lease, and (vii) such contest and
Tenant's failure to vacate the Demised Premises shall not adversely affect the
occupancies of other tenants in the Building.
B. Landlord hereby agrees that it shall renew the existing
temporary certificate of occupancy for the Building on an ongoing basis and/or
obtain a permanent certificate of occupancy for the Building.
Section 4.05 A. Tenant shall have access in common with all other
------------
tenants, licensees and other occupants of the Building to all areas of the
Building designated as common areas by Landlord. In addition, Tenant shall have
access to and be permitted to use on a "first come-first served" basis, subject
to such reasonable rules and regulations applicable to all tenants, licensees
and other occupants of the Building as Landlord may from time to time reasonably
promulgate, such facilities to be constructed at a later date and located within
the Building as Landlord shall from time to time designate, such as (by way of
example only) conference room(s), copying room(s) and/or a lunch room.
B. Tenant shall have the right to scheduled use of the
shared conference room located in the Building. The parties acknowledge that the
Fixed Rent includes Tenant's use of the conference room and that no additional
fees shall be due and payable by Tenant for its use of such conference room.
Landlord shall have a representative of Landlord in the Building to administer
the scheduling and use of the conference room. Tenant shall be permitted to use
such conference room on a first come first served basis, upon Tenant's delivery
of notice to Landlord's representative. Landlord represents and warrants that
the conference room shall be ready and available for Tenant's use as of the
Commencement Date. To the extent that the conference room is not available to
Tenant on more than five (5) consecutive business days, Landlord shall try to
accommodate Tenant by providing a conference room at an off-site facility which
is in reasonably close proximity to the Building.
Section 4.06 Promptly after the Commencement Date, Landlord shall provide
------------
Tenant and Tenant's employees with identification cards permitting Tenant and
Tenant's employees to enter on and use certain campus facilities of Landlord on
a regular basis, in accordance with the rules and regulations of Landlord,
including, without limitation, requirements for payment of Landlord's applicable
fees and charges therefor, as Landlord may from time to time promulgate. To the
extent that such rules and regulations are in writing, Landlord hereby agrees to
forward such rules and regulations to Tenant. Failure of Tenant or Tenant's
employees to abide by such rules and regulations may result in the revocation of
any and all privileges accorded by Landlord
-8-
<PAGE>
from time to time to the holders of such identification cards.
ARTICLE 5
---------
Demised Premises "As Is"
------------------------
Section 5.01 Tenant has inspected the Demised Premises and, except as
------------
otherwise provided herein, Tenant accepts same in "as is" condition as of the
date hereof.
Section 5.02 Except as is otherwise provided in this Lease, neither
------------
Landlord nor Landlord's agents have made, nor do they make, any representations
or promises regarding the physical condition of the Premises or the Demised
Premises, the rents, leases, operating expenses or any other matter or thing
affecting or related to the Demised Premises or the Premises. All understandings
and agreements heretofore made between the parties are merged with this Lease,
which alone fully and completely expresses the agreement and understanding of
the parties hereto.
ARTICLE 6
---------
Operating Covenants; Signs
--------------------------
Section 6.01 As an additional inducement to Landlord to enter into this
------------
Lease, Tenant covenants and agrees that it shall:
(a) conduct its operations in an orderly and proper manner in
accordance with Article 4 hereof;.
(b) take all reasonable measures to minimize the noise level of
Tenant's operations in the Demised Premises;
(c) apply for, secure, maintain and deliver to Landlord, and comply
with all licenses, approvals or permits which may be required for the
conduct by Tenant of its business and operations in the Demised Premises in
accordance with the permitted use hereunder, and pay, if, as and when due,
all license and permit fees and charges of a similar nature in connection
therewith, and deliver copies of all such licenses, approvals and permits,
and all renewals thereof to Landlord. In no event shall Tenant's failure to
procure or maintain any such license, approval or permit relieve Tenant of
any of its obligations hereunder;
(d) maintain the interior of the Demised Premises in a clean, orderly,
safe and sanitary condition and state of repair at all times as required
under the terms of this Lease;
-9-
<PAGE>
(e) paint the Demised Premises as and when in the reasonable judgment
of Landlord may be necessary in order to maintain the appearance of the
Demised Premises;
(f) not bring into or have delivered from the street to the Demised
Premises any stock, supplies merchandise or other items or materials in
such a manner as would block the surrounding sidewalks and streets or the
Building hallways, fire exits, lobbies or other areas set aside for the
common use of tenants of and/or visitors to the Building;
(g) comply with all Environmental Legal Requirements and Legal
Requirements applicable to or arising from Tenant's use or occupancy of the
Demised Premises, including but not limited to those pertaining to equal
opportunity and affirmative action, in the use and operation of the Demised
Premises and in connection with any construction, maintenance or alteration
undertaken by Tenant at the Demised Premises;
(h) not use, except to identify Tenant's address (i) as part of its
mailing address on letterhead and other similar materials or (ii) for
purposes of Tenant's publications, the name of Landlord or Columbia
University or any of its officers, trustees, agents, employees, students or
faculty members for any purpose whatsoever without receiving the prior
written approval of Landlord. Without limiting the generality of the
foregoing, Tenant shall not conduct its operations at the Demised Premises
under any name which includes the word "Columbia", or otherwise hold itself
or its business out as having any affiliation with Landlord or Columbia
University or Columbia-Presbyterian Medical Center;
(i) comply strictly with the Plan (as defined in Section 4.01 hereof);
(j) not use biohazardous agents requiring a degree of containment in
excess of that described as National Institutes of Health Biosafety Level
2, as defined in the U.S. Department of Health and Human Services, Public
Health Service, Centers for Disease Control and National Institutes of
Health, Biosafety in Microbiological and Biomedical Laboratories, dated
--------------------------------------------------------
May, 1988 and any updates or revisions thereto (the "DHH Specifications");
------------------
(k) conduct all scientific research and development activities in
conformity with at least the minimum practices, equipment and facilities
recommended for such activities in the DHH Specifications; and
(l) not use or permit the use of any human subjects or live and/or
whole dead animals (including, without limitation, live and/or whole dead
mice or rats) on or at the Demised Premises for any research purposes.
-10-
<PAGE>
Section 6.02 Tenant shall not, without the prior written consent of Owner,
------------
exhibit, inscribe, paint, affix, place or permit any sign, insignia,
advertisement, awning, canopy, banner, flag, pennant, aerial, antenna lettering,
notice or other object on any part of the outside or inside of the Demised
Premises or the Premises or on corridor walls which would be visible from the
public areas or from the surrounding streets and sidewalks. Landlord may
withhold its consent to any sign proposed by Tenant for any reason, or for no
reason. In the event of the violation of any of the provisions of this Section
by Tenant, Landlord, with or without notice to Tenant, may remove such object
without any liability, and may charge the expense incurred in such removal to
Tenant as Additional Rent. Each such object consented to by Landlord shall, to
Landlord's satisfaction, be kept clean and in good order and repair and
appearance by and at the expense of Tenant, including, whenever necessary in
Landlord's judgment, the replacement thereof with materials approved by
Landlord. Notwithstanding anything to the contrary contained herein, Landlord's
consent shall not be required for professional quality interior signs relating
to or describing Tenant's business or operations, provided that such signs are
not visible from the public areas or from surrounding streets or sidewalks.
Section 6.03 Landlord shall cause Tenant's name, and the names of
------------
permitted subtenants or assignees, if any, and office location to be listed in a
lobby sign board in plain view. Tenant's name, and names of permitted subtenants
or assignees, if any, and office location shall also be posted in all locations
designated by the Landlord for such purpose. Tenant shall also have the right to
place an identifying sign on its office door and shall have the right to affix
an identifying sign on the wall of the fifth floor elevator landing, subject to
Landlord's approval of the size, materials and design of same.
ARTICLE 7
---------
Window Cleaning
---------------
Section 7.01 Tenant shall not clean or require, permit, suffer or allow
------------
any window in the Demised Premises to be cleaned from the outside in violation
of Legal Requirements.
ARTICLE 8
---------
Legal Requirements/Environmental Legal Requirements
---------------------------------------------------
Section 8.01 Tenant, at its sole cost and expense, shall comply with all
------------
Legal Requirements applicable to the Demised Premises and the use and occupancy
of the Demised Premises and the Building by Tenant. The term "Legal
-----
Requirements" shall mean any and all laws, statutes, ordinances, orders, rules,
- ------------
regulations, directives and requirements (including, without limitation,
building codes, zoning regulations and ordinances) of all federal, state,
county, city and borough departments, bureaus, boards, agencies, offices,
commissions and other subdivisions thereof, or of any other governmental, public
or quasi-public authority whether now
-11-
<PAGE>
or hereafter in force, and all requirements, obligations and instruments of
record that may be applicable to this Lease, the Premises or the Demised
Premises or any part thereof.
Section 8.02. The term "Hazardous Materials" shall mean any flammable,
------------
explosive, radioactive, chemical or infectious materials, hazardous (or
biohazardous) materials or wastes, hazardous or toxic substances, pollutants,
gas, vapor, radiation, chemical or related materials, asbestos or any material
containing asbestos, or any other substance or materials as defined in or
regulated by any Environmental Legal Requirements. "Environmental Legal
-------------------
Requirements" shall mean (a) any and all policies and procedures of Landlord
- ------------
(including, without limitation, Landlord's Joint Radiation Safety Committee and
Landlord's Office of Environmental Health and Safety) governing the use,
handling or disposal of Hazardous Materials by its tenants, contractors,
employees or researchers, now or hereafter in effect, provided, however, that
(i) Landlord, to the extent such policies and procedures are in writing, shall
forward them to Tenant (ii) Landlord shall endeavor to apply such policies and
procedures in a non-discriminatory manner and (iii) such policies and procedures
shall not materially increase Tenant's financial obligations or materially
decrease Tenant's rights pursuant to this Lease, and (b) any effective,
applicable federal, state or local statute, code, ordinance, rule or regulation,
any judicial or administrative order (whether or not on consent) or judgment
applicable to Tenant including, without limitation, any judgment or settlement
based on common law theories, and any provisions or condition of any permit,
license, franchise, concession, agreement or other authorization to which Tenant
is a party or of which Tenant has actual knowledge or which affects the Demised
Premises and/or the Building and is binding on Tenant relating to (i) the
protection of the environment, the safety and health of persons (including
employees) or the public welfare from actual or potential exposure (or effects
of exposure) to any actual or potential release, discharge, disposal or emission
(whether past or present) of any Hazardous Materials or (ii) the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of any Hazardous Materials, including, but not limited to, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980
("CERCLA"), as amended by the Superfund Amendments and Reauthorization Act of
1986, 42 U.S.C. (S)9601 et. seq., the Solid Waste Disposal Act, as amended by
--- ----
the Resource Conservation and Recovery Act of 1976, as amended by the Solid and
Hazardous Waste Amendments of 1984, 42 U.S.C. (S)6901 et seq., the Federal Water
-- ----
Pollution Control Act, as amended by the Clean Water Act of 1977, 33 U.S.C.
(S)1251 et seq., the Toxic Substances Control Act of 976, 15 U.S.C. (S)2601 et
-- ---- --
seq., the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C.
- ----
(S)1101 et seq., the Clean Air act of 1966, as amended, 42 U.S.C. (S)7401 et
-- ---- --
seq., the National Environmental Policy Act of 975, 42 U.S.C. (S)4321 et seq.,
- ---- -- ----
the Rivers and Harbours Act of 1899, 33 U.S.C. (S)401 et seq., the Endangered
-- ----
Species Act of 1973, as amended, 16 U.S.C. (S)1531 et seq., the Occupational
-- ----
Safety and Health Act of 1970, as amended, 29 U.S.C. (S)651 et seq., and the
-- ----
Safe Drinking Water Act of 1974, as amended, 42 U.S.C. (S)300 et seq., the
-- ----
Atomic Energy Act of 1954, 42 U.S.C.A. (S)2011 et seq., Article 27, (S)15 of the
-- ----
New York State Environmental Conservation Law, Title IV, Article 175 of the New
York City Health Code and all rules, regulations and guidance documents
promulgated or published thereunder.
-12-
<PAGE>
Section 8.03
------------
A. Tenant represents, warrants and covenants that Tenant and the Plan are
in compliance with and will comply at all times during the Term with all
Environmental Legal Requirements and all Legal Requirements and Tenant hereby
indemnifies, defends, and holds Landlord harmless from and against all liability
for any and all damages, claims, costs, expenses and fees (including, without
limitation, attorney's fees and disbursements and court costs) that might arise
from (a) Tenant's (i) breach of the foregoing representation, covenant and
warranty; (ii) failure to operate in accordance with the Plan, all Environmental
Legal Requirements or Legal Requirements or (iii) generating, releasing,
handling removal or disposing of any Hazardous Materials which were generated by
or brought into the Demised Premises by Tenant, Tenant's agent or contractor; or
(by) Landlord's cooperation with Tenant or participation in the removal or
disposal of any Hazardous Materials generated by or brought to the Demised
Premises by Tenant. Any amounts hereunder shall be deemed additional Rent and
become due and payable within twenty (20) days after notice thereof, together
with interest at the Default Interest Rate, by Tenant to Landlord.
B. Landlord represents and warrants to Tenant that (a) to the best of
Landlord's knowledge there are no Hazardous Materials in or about the Demised
Premises or the Building except in compliance with Environmental Legal
Requirements; and (b) to the best of Landlord's knowledge as of the date that
possession of the Demised Premises is delivered to Tenant, the Demised Premises
shall be in compliance with all applicable Legal Requirements and Environmental
Legal Requirements.
Section 8.04 In the event that at any time during the Term (including any
------------
Renewal Term) hereof Tenant shall receive notice of any alleged violation of any
Environmental Legal Requirement or any Legal Requirement, including, without
limitation, any Legal Requirement relating to the care and maintenance of
animals, Tenant shall promptly notify Landlord thereof in writing, which notice
shall be accompanied by a copy of such notice of alleged violation.
ARTICLE 9
---------
Access to Demised Premises
--------------------------
Section 9.01 Tenant shall permit Landlord, Landlord's agents and public
------------
utilities servicing the Building to erect, use and maintain, concealed ducts,
pipes and conduits in and through the Demised Premises, provided that (i)
Landlord shall use reasonable efforts to minimize interference with Tenant's use
of the Demised Premises, (ii) that such ducts, pipes and conduits are placed
within the existing walls or appropriately furred, and (iii) Landlord shall give
Tenant such advance notice as is reasonably practicable under the circumstances.
Landlord or Landlord's agents shall have the right on reasonable notice and at
any reasonable time (and, in the event of an emergency, at anytime) to enter the
Demised Premises to examine the same, to show them to prospective purchasers,
mortgagees or lessees of the Building or space therein,
-13-
<PAGE>
and to make such repairs, alterations, improvements or additions as Landlord may
deem reasonably necessary to the Demised Premises or to any other portion of the
Building, or winch Landlord may elect to perform following Tenant's failure to
make repairs or perform any work which Tenant is obligated to make or perform
under this Lease, and Landlord shall be allowed to take all material into and
upon the Demised Premises that may be required therefor without the same
constituting an eviction or constructive eviction of Tenant in whole or in part
and rent shall not abate whatsoever while said repairs, alterations,
improvements or additions are being made, by reason of loss or interruption of
business of Tenant, or otherwise, provided, however, that in the event that as a
result of such repairs, alterations, improvements or additions, Tenant is unable
to utilize the Demised Premises in its entirety, or if Tenant's access thereto
is completely precluded for a period in excess of five (5) consecutive Business
Days, Fixed Rent shall abate from such sixth (6th) consecutive Business Day
until such time as Tenant is no longer prevented from obtaining such access or
until such time as Tenant may again utilize the Demised Premises, as the case
may be.
Section 9.02 Without limiting the generality of the foregoing, Tenant
------------
shall permit Landlord, Landlord's agents and representatives of any entity
responsible for enforcement of Environmental Legal Requirements or Legal
Requirements to enter the Demised premises upon reasonable notice and whenever
reasonably possible, with the accompaniment of a representative of Tenant, for
inspection and monitoring Tenant's activities for compliance with Environmental
Legal Requirements, Legal Requirements and the Plan.
ARTICLE 10
----------
Default
-------
Section 10.01 Each of the following events shall be an "Event of Default"
------------- ----------------
hereunder:
(1) if Tenant shall fail to pay any installment of Fixed Rent or Fixed
Repayment within five (5) days after receipt of written notice from Landlord
that such payment is due (provided, however, if Tenant shall fail to pay any
installment of Fixed Rent or Fixed Repayment within five (5) days of the day
when due in three (3) or more instances during any consecutive twelve (12) month
period, Landlord shall no longer be required to give Tenant any notice provided
herein before such event shall constitute an Event of Default); or
(2) if Tenant shall fail to pay Additional Rent for thirty (30) days
after receipt of written notice from Landlord that such payment is due; or
(3) if Tenant's interest in this Lease shall devolve upon or pass to
any person, whether by operation of law or otherwise, except as expressly
permitted hereby; or
(4) (a) if Tenant shall be unable to, or shall admit in writing its
inability to, pay its debts as they become due; or
-14-
<PAGE>
(b) if Tenant shall commence or institute any case, proceeding
or other action (A) seeking relief on its behalf as debtor, or to
adjudicate it as bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or
its debts under any existing or future law of any jurisdiction,
domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, or (B) seeking appointment
of a receiver, trustee, custodian or other similar official for
it or for all or any substantial part of its property; or
(c) if Tenant shall make a general assignment for the benefit of
creditors; or
(d) if any case, proceeding or other action shall be commenced
or instituted against Tenant (A) seeking to have an order for
relief entered against it as debtor or to adjudicate it a
bankrupt or insolvent, or seeking reorganization, arrangement,
adjustment, winding-up, liquidation, dissolution, composition or
other relief with respect to it or its debts under any existing
or future law of any jurisdiction, domestic or foreign, relating
to bankruptcy, insolvency, reorganization or relief of debtors,
or (B) seeking appointment of a receiver, trustee, custodian or
other similar official for it or for all of any substantial part
of its property, which either (i) results in any such entry of an
order for relief, adjudication of bankruptcy or insolvency or
such an appointment or the issuance or entry of any other order
having a similar effect or (ii) remains undismissed for a period
of sixty (60) days; or
(e) if any case, proceeding or other action shall be commenced
or instituted against Tenant seeking issuance of a warrant of
attachment, execution, distraint or similar process against all
or any substantial part of its property which results in the
entry of an order for any such relief which shall not have been
vacated, discharged, or stayed or bonded pending appeal within
sixty (60) days from the entry thereof; or
(f) if Tenant shall, in writing, consent to, approve of, or
acquiesce in, any of the acts set forth in clauses (b), (c), (d)
or (e) above; or
(g) if a trustee, receiver or other custodian is appointed for
any substantial part of the assets of Tenant which appointment is
not vacated or effectively stayed with thirty (30) business days;
or
(5) if Tenant shall not be in compliance with the Plan and all
Environmental Legal Requirements and such noncompliance shall continue for ten
(10) days after notice by Landlord to Tenant or if such noncompliance is of a
nature that it cannot be completely remedied
-15-
<PAGE>
within said period of ten (10) days and Tenant shall not commence within said
period of ten (10) days, or shall not thereafter diligently prosecute to
completion all steps necessary to remedy such noncompliance; or
(6) if Tenant shall abandon the Demised Premises for a period of one-
hundred twenty (120) days and does not within such one-hundred twenty (120) day
period notify Landlord of its intention to return or, having given such notice,
does not thereafter return within one-hundred twenty (120) days; or
(7) if Tenant shall default in the observance or performance of any
other term, covenant or condition of this Lease on Tenant's part to be observed
or performed and Tenant shall fail to remedy such default within thirty (30)
days after written notice by Landlord to Tenant of such default, or if such
default is of such a nature that it cannot be completely remedied within said
period of thirty (30) days and Tenant shall not commence within said period of
thirty (30) days, or shall not thereafter diligently prosecute to completion,
all steps necessary to remedy such default.
Section 10.02 If an Event of Default (i) described in Section 10.01(4)
-------------
hereof shall occur, or (ii) described in Section 10.01(1), 10.01(2), 10.01(3),
10.01(5), 10.01(6) or 10.01(7) shall occur and Landlord, at any time thereafter,
at its option gives written notice to Tenant stating that this Lease and the
Term shall expire and terminate on the date specified in such notice, which date
shall be at least ten (10) Business Days from the date of such notice, and if,
on the date specified in such notice, Tenant shall have failed to cure the
default which was the basis for the Event of Default, then this Lease and the
Term and all rights of Tenant under this Lease shall expire and terminate as if
the date on which the Event of Default described in clause (i) above occurred or
the date specified in the notice given pursuant to clause (ii) above, as the
case may be, were the Expiration Date and Tenant immediately shall quit and
surrender the Demised Premises. Anything contained herein to the contrary
notwithstanding, if such termination shall be stayed by order of any court
having jurisdiction over any proceeding described in Section 10.01(4) hereof, or
by federal or state statute, then, following the expiration of any such stay, or
if the trustee appointed in any such proceeding, Tenant or Tenant as debtor-in-
possession shall fail to assume Tenant's Obligations under this Lease within the
period prescribed therefor by law of within ninety (90) days after entry of the
order for relief or as may be allowed by the court, or if said Trustee, Tenant
or Tenant as debtor-in-possession shall fail to provide adequate protection of
Landlord's right, title and interest in and to the Demised Premises or adequate
assurance of the complete and continuous future performance of Tenant's
obligations under this Lease as provided in Article 24 (Bankruptcy), Landlord,
to the extent permitted by law or by leave of the court having jurisdiction over
such proceeding, shall have the right, at its election, to terminate this Lease
on five (5) days' notice to Tenant, Tenant as debtor-in-possession or said
trustee, and upon the expiration of said five (5) period, this Lease shall cease
and expire as aforesaid and Tenant, Tenant as debtor-in-possession or said
trustee shall immediately quit and surrender the Demised Premises as aforesaid.
-16-
<PAGE>
Section 10.03 If this Lease shall be terminated as provided in Section
-------------
10.02 hereof, Landlord, without notice, may reenter and repossess the Demised
Premises using such force for that purpose as may be reasonably necessary
without being liable to indictment, prosecution or damages therefor and may
dispossess Tenant by summary proceedings or otherwise.
Section 10.04 If, at any time, (i) Tenant shall comprise two (2) or more
-------------
Persons, or (ii) Tenant's obligations under this Lease shall have been
guaranteed by any person other than Tenant, or (iii) Tenant's interest in this
Lease shall have been assigned, the word "Tenant", as used in Section 10.01,
shall be deemed to mean any one or more of the persons primarily or secondarily
liable for Tenant's obligations under this Lease. Any monies received by
Landlord from or on behalf of Tenant during the pendency of any proceeding of
the types referred to in Section 10.01 shall be deemed paid as compensation for
the use and occupation of the Demised Premises and the acceptance of any such
compensation by Landlord shall not be deemed an acceptance of rent or a waiver
on the part of Landlord of any rights under Section 10.02.
ARTICLE 11
----------
Remedies/Damages
----------------
Section 11.01 If this Lease shall be terminated as provided in Section
-------------
10.02:
(a) Tenant shall quit and peacefully surrender the Demised Premises to
Landlord, and Landlord and its agents may immediately, after the date upon
which this Lease and the Term shall expire and come to an end, reenter the
Demised Premises or any part thereof, without notice, either by summary
proceedings, or by any other applicable action or proceeding, or by such
force as may be reasonably necessary or otherwise (without being liable to
indictment, prosecution or damages therefor), and may repossess the Demised
Premises and dispossess Tenant and any other persons from the Demised
Premises and remove any and all of their property and effects from the
Demised Premises; and
(b) Landlord, at Landlord's option, may relet the whole or any part of
the Demised Premises from time to time, either in the name of Landlord or
otherwise, to such tenant or tenants, for such term or terms ending before,
on or after the Expiration Date, at such rental or rentals and upon such
other conditions, which may include concessions and free rent periods, as
Landlord, in its sole discretion, may determine; provided, however, that
Landlord shall have no obligation to relet the Demised Premises or any part
thereof and shall in no event be liable for refusal or failure to relet the
Demised Premises or any part thereof, or, in the event of any such
reletting, for refusal or failure to collect any rent due upon any such
reletting, and no such refusal or failure shall operate to relieve Tenant
of any liability under this Lease or otherwise affect any such liability,
and Landlord, at Landlord's option, may make such repairs, replacements,
alterations, additions, improvements, decorations and other physical
changes in and to
-17-
<PAGE>
the Demised Premises as Landlord, in its sole discretion, considers
advisable or necessary in connection with any such reletting or proposed
reletting, without relieving Tenant of any liability under this Lease or
otherwise affecting any such liability.
Section 11.02 Tenant, on its own behalf and on behalf of all persons
-------------
claiming through or under Tenant, including all creditors, does further hereby
waive any and all rights which Tenant and all such persons might otherwise have
under any present or future law to redeem the Demised Premises, or to reenter or
repossess the Demised Premises, or to restore the operation of this Lease, after
(a) Tenant shall have been dispossessed by a judgment or by warrant of any court
or judge, or (b) any expiration or termination of this Lease and the Term,
whether such dispossess, expiration or termination shall be by operation of law
or pursuant to the provisions of this Lease. The words "re-enter", "re-entry"
and "re-entered" as used in this Lease shall not be deemed to be restricted to
their technical legal meanings. In the event of a breach or threatened breach by
Tenant, or any persons claiming through or under Tenant, of any term, covenant
or condition of this Lease, Landlord shall have the right to enjoin such breach
or threatened breach and the right to invoke any other remedy allowed by law or
in equity as if re-entry, summary proceedings and other special remedies were
not provided in this Lease for such breach. The right to invoke the remedies
hereinbefore set forth are cumulative and shall not preclude Landlord from
invoking any other remedy allowed at law or in equity.
Section 11.03 If this Lease and the Term shall expire and come to an end
-------------
as provided in Article 10 hereof, or by or under any summary proceeding or any
other action or proceeding, or if Landlord shall re-enter the Demised Premises
as provided in Section 11.01, or by or under any summary proceeding or any other
action or proceeding, then, in any of said events:
(a) Tenant shall pay to Landlord all Fixed Rent, Fixed Repayment and
Additional Rent payable under this Lease by Tenant to Landlord to the date
upon which this Lease and the Term shall have expired and came to an end or
to the date of re-entry upon the Demised Premises by Landlord, as the case
may be;
(b) Tenant shall also be liable for and shall pay to Landlord, as
damages, any deficiency (referred to as "Deficiency") between the rent for
----------
the period which otherwise would have constituted the unexpired portion of
the Term and the net amount, if any, of rents collected under any reletting
effected pursuant to the provisions of Section 11.01 for any part of such
period (first deducting from the rents collected under any such reletting
all of Landlord's reasonable expenses in connection with the termination of
this Lease, Landlord's re-entry upon the Demised Premises and such
reletting, including, but not limited to, all repossession costs, brokerage
commissions, legal expenses, attorneys' fees and disbursements, alteration
costs and other expenses of preparing the Demised Premises for such
reletting); any such Deficiency shall be paid in monthly installments by
Tenant on the days specified in this Lease for payment of installments of
Fixed Rent, Landlord shall be entitled to recover from Tenant each monthly
Deficiency as the same shall arise, and no suit to collect the amount of
the Deficiency for any month shall prejudice Landlord's right to collect
the Deficiency for any subsequent month by a
-18-
<PAGE>
similar proceeding; and
(c) Whether or not Landlord shall have collected any monthly
Deficiency as aforesaid, Landlord shall be entitled to recover from Tenant,
and Tenant shall pay to Landlord, on demand, in lieu of any further
Deficiency as and for liquidated and agreed final damages, a sum equal to
the amount by which Fixed Rent, Fixed Repayment and Additional Rent for the
period which otherwise would have constituted the unexpired portion of the
Term exceeds the then fair and reasonable rental value of the Demised
Premises for the same period, both discounted to present worth at the then
current "base" rate charged by Citibank N.A., or its successor, as of the
date the Lease is terminated, less the aggregate amount of Deficiencies
theretofore collected by Landlord pursuant to the provisions of Section
11.03 for the same period; if, before presentation of proof of such
liquidated damages to any court, commission or tribunal, the Demised
Premises, or any part thereof, shall have been relet by Landlord for the
period which otherwise would have constituted the unexpired portion of the
Term or any part thereof, the amount of rent reserved upon such reletting
shall be deemed, prima facie, to be the fair and reasonable rental value
-----------
for the part of the whole of the Demised Premises so relet during the term
of the reletting.
If the Demised Premises, or any part thereof, shall be relet, together with
other space in the Building, the rents collected or reserved under any such
reletting and the expenses of any such reletting shall be equitably apportioned
for the purposes of this Section 11.03. Tenant shall in no event be entitled to
any rents collected or payable under any reletting, whether or not such rents
shall exceed the Fixed Rent reserved in this Lease. Solely for the purposes of
this Article 11, the term "Fixed Rent" and "Fixed Repayment" as used in this
Section 11.03 shall mean the Fixed Rent and Fixed Repayment in effect
immediately prior to the date upon which this Lease and the Term shall have
expired and come to an end, or the date of re-entry upon the Demised Premises by
Landlord, as the case may be. Nothing contained in Article 10 hereof or this
Article 11 shall be deemed to limit or preclude the recovery by Landlord from
Tenant of the maximum amount allowed to be obtained as damages by any statute or
rule of law, or of any sums or damages to which Landlord may be entitled in
addition to the damages set forth in this Section 11.03.
ARTICLE 12
----------
Eminent Domain
--------------
Section 12.01 A. If the whole or a substantial part of the Demised
-------------
Premises shall be acquired or condemned by eminent domain for any public or
quasi-public purpose, then, and in that event, this Lease shall terminate as of
the date of title vesting in such proceeding.
-19-
<PAGE>
B. If less than a substantial part of the Demised Premises shall be
acquired or condemned by eminent domain for any public or quasi-public purpose,
then, this Lease shall continue in full force and effect, except that the Fixed
Rent shall be equitably adjusted on the date of title vesting in such proceeding
on the basis of the rentable square feet of that portion of the Demised Premises
not acquired or condemned. For purposes hereof "a substantial part of the
Demised Premises" shall be considered to have been taken if 25% or more of the
Demised Premises are acquired or condemned by eminent domain.
C. In the event of any such acquisition or condemnation of all or any
part of the Demised Premises, Landlord shall be entitled to receive the entire
compensation or award for any such acquisition or condemnation. Tenant shall
have no claim against Landlord or the condemning authority for the value of any
unexpired portion of the Term or for Tenant's leasehold interest and Tenant
hereby expressly assigns to Landlord all of its right, title and interest in and
to any such award, and also agrees to execute any and all further documents that
may be required in order to facilitate the collection thereof by Landlord.
Nothing contained in this Section shall be deemed to prevent Tenant from making
a separate claim in any condemnation proceeding for any relocation expenses, if
any, and its leasehold improvements and fixtures.
ARTICLE 13
----------
Quiet Enjoyment
---------------
Section 13.01 Provided that no Event of Default has occurred, Tenant may
-------------
peaceably and quietly enjoy the Demised Premises for the term hereby granted
without molestation or disturbance by or from Landlord or any person claiming
through Landlord, subject to the terms and conditions of this Lease, the REA,
the Special Permit and the Ground Lease and any other Superior Leases and
Superior Mortgages now or hereafter affecting the Demised Premises.
ARTICLE 14
----------
No Waiver
---------
Section 14.01 The failure of Landlord to seek redress for violation of, or
-------------
to insist upon the strict performance of, any covenant or condition of this
Lease shall not prevent a subsequent act, which would have originally
constituted a violation, from having all of the force and effect of an original
violation. The receipt by Landlord of Fixed Rent, Fixed Repayment or Additional
Rent with knowledge of the breach of any covenant of this Lease shall not be
deemed a waver of such breach. No provision of this Lease shall be deemed to
have been waived by Landlord, unless such waiver be in writing signed by
Landlord. No payment by Tenant or receipt by Landlord of a lesser amount than
the monthly Fixed Rent, Fixed Repayment or Additional Rent shall be deemed to be
other than on account of the earliest stipulated Fixed Rent, Fixed Repayment or
Additional Rent, or as Landlord may elect to apply same, nor shall any
-20-
<PAGE>
endorsement or statement on any check or any letter accompanying any check or
payment as Fixed Rent, Fixed Repayment or Additional Rent be deemed an accord
and satisfaction, and Landlord may accept such check or payment without
prejudice to Landlord's right to recover the balance of such Fixed Rent, Fixed
Repayment or Additional Rent or pursue any other remedy in this Lease provided.
Any executory agreement hereafter made shall be ineffective to change, modify,
discharge or effect an abandonment of this Lease in whole or in part unless such
executory agreement is in writing and signed by the party against whom
enforcement of the change, modification, discharge or abandonment is sought.
ARTICLE 15
----------
Waiver of Trial
---------------
Section 15.01 The respective parties hereto shall and they hereby do waive
-------------
trial by jury in any action, proceeding or counterclaim brought by either of the
parties hereto against the other (except for personal injury or property damage)
on any matters whatsoever arising out of or in any way connected with this
Lease, the relationship of Landlord and Tenant, Tenant's use or occupancy of the
Demised Premises, or for the enforcement of any remedy under any statute,
emergency of otherwise. If Landlord commences any summary proceeding against
Tenant, Tenant will not interpose any counterclaim of whatever nature or
description in any such proceeding (unless failure to interpose such
counterclaim would preclude Tenant from asserting in a separate action the claim
which is the subject of such counterclaim), and will not seek to consolidate
such proceeding with any other action which may have been or will be brought in
any other court by Tenant.
ARTICLE 16
----------
Inability to Perform
--------------------
Section 16.01 This Lease and the obligation of Tenant to pay rent
-------------
hereunder and perform all of the other covenants and agreements hereunder on the
part of Tenant to be performed shall in no wise be affected, impaired or excused
because Landlord is unable to fulfill any of its obligations under this Lease
expressly or impliedly to be performed by Landlord or because Landlord is unable
to make, or is delayed in making any repairs, additions, alterations,
improvements or decorations or is unable to supply or is delayed in supplying
any equipment or fixtures, if Landlord is prevented or delayed from so doing by
reason of Force Majeure (as defined in Section 31.02 hereof) or by reason of any
Environmental Legal Requirements or Legal Requirements, provided, however, that
in the event that as a result of such inability of Landlord, Tenant is unable to
utilize the Demised Premises in its entirety, or if Tenant's access thereto is
completely precluded for a period in excess of five (5) consecutive Business
Days, Fixed Rent shall abate from such sixth (6th) consecutive Business Day
until such time as Tenant is no longer prevented from obtaining such access or
until such time as Tenant may again utilize
-21-
<PAGE>
the Demised Premises, as the case may be.
ARTICLE 17
----------
Fees and Expenses
-----------------
Section 17.01 If Tenant shall default in the observance or performance of
-------------
any term, covenant or provision of this Lease, Landlord may (but shall not be
obligated to) immediately (or at any time thereafter) after fifteen (15) days'
written notice to Tenant, perform the obligation of Tenant hereunder, provided,
however, that Tenant shall have the right to cure such default within such
fifteen (15) day period. If Landlord shall pay or incur any cost or expense in
connection with such performance (including attorney's fees, disbursements and
court costs), such sums so paid or incurred, together with interest at the
Default Interest Rate, shall be deemed Additional Rent hereunder and shall be
paid by Tenant to Landlord with five (5) days after receipt of written demand
therefor accompanied with a bill setting forth the amount thereof.
ARTICLE 18
----------
Estoppel
--------
Section 18.01 Tenant, within ten (10) days of Landlord's notice requesting
-------------
same, shall, from time to time and at any time upon at least ten (10) days'
notice from Landlord, execute and deliver to Landlord or any person designated
by Landlord, a statement certifying that (i) this Lease is in full force and
effect and is unmodified (or if modified, stating the modifications), (ii) the
dates through which Fixed Rent, Fixed Repayment and Additional Rent have been
paid, (iii) whether it has received notice of any Event of Default hereunder,
(iv) whether Landlord is in default hereunder and (v) such further facts and
information with respect to this Lease as Landlord may reasonably request.
Section 18.02 Landlord, within ten (10) days of Tenant's notice requesting
-------------
same, shall, from time to time and at any time upon at least ten (10) days'
notice from Tenant, execute and deliver to Tenant or any person designated by
Tenant, a statement certifying that (i) this Lease is in full force and effect
and is unmodified (or if modified, stating the modifications), (ii) the dates
through which Fixed Rent, Fixed Repayment and Additional Rent have been paid,
and (iii) such further facts and information with respect to the Lease as Tenant
may reasonably request.
ARTICLE 19
----------
Surrender
---------
Section 19.01 Upon the expiration or earlier termination of the Term,
-------------
Tenant shall quit
-22-
<PAGE>
and surrender to Landlord, the Demised Premises broom clean, in good order and
condition and Tenant shall remove all of Tenant's Property and any Alterations
(as defined in Section 25.01 hereof) that Landlord has not previously given
Tenant permission to leave in the Demised Premises and Tenant shall repair and
restore the Demised Premises to the condition existing prior to the making of
such Alteration or the installation of such Tenant's Property and repair any
damage to the Demised Premises caused by such removal and restoration. Tenant
shall remove all Hazardous Materials for which Tenant is responsible pursuant to
this Lease in accordance with all applicable Environmental Legal Requirements.
Notwithstanding anything to the contrary contained herein, Tenant shall not be
required to (a) remove any Alteration made to the Demised Premises as part of
Tenant's Work and (b) restore the Demised Premises to the condition existing
prior to the construction of Tenant's Work.
Section 19.02 If the Demised Premises are not surrendered upon the
-------------
termination of this Lease, Tenant hereby indemnifies Landlord against any and
all loss, cost, expense or liability resulting from the delay by Tenant in so
surrendering the Demised Premises, including any claims made by any succeeding
tenant or prospective tenant founded upon such delay.
Section 19.03 In the event Tenant remains in possession of the Demised
-------------
Premises after the termination of this Lease without the execution of a new
lease, Tenant, at the option of Landlord, shall be deemed to be occupying the
Demised Premises as a tenant from month-to-month, at a monthly rental equal to
the sum of (i) two times the sum of (a) the monthly installment of Fixed Rent
payable during the last month of the Term, and (b) one-twelfth (1/12th) of the
Additional Rent payable during the last year of the Term; and (ii) the monthly
installment (at such time) of Fixed Repayment (provided, however, that no
monthly installment of Fixed Repayment shall be due and payable by Tenant for
any period after the 10-year amortization period described in Section 3.04
hereof), subject to all of the other terms of this Lease insofar as the same are
applicable to a month-to-month tenancy. Notwithstanding the foregoing, in the
event that Tenant remains in possession of the Demised Premises after the
termination of this Lease without the execution of a new lease, for a period in
excess of three (3) months, then for such period commencing with the fourth
month, the calculation of the monthly rental payable by Tenant under clause (i)
of the preceding sentence shall be made by multiplying three times the sum of
the amounts described in subclauses (a) and (b) of such clause.
ARTICLE 20
----------
Subordination/Attornment
------------------------
Section 20.01 Subject to the provisions of Section 10.04 of the Ground
-------------
Lease, this Lease shall be subject and subordinate to the Ground Lease, any
other Superior Lease and to any Superior Mortgage. This section shall be self-
operative and no further instrument of subordination shall be required;
provided, however, that if confirmation of such subordination is requested,
Tenant shall promptly execute and deliver a certificate to this effect to
Landlord.
-23-
<PAGE>
Section 20.02 If, at any time prior to the termination of this Lease, any
-------------
Superior Lessor or Superior Mortgagee or any person, or any Superior Lessor's or
Superior Mortgagee's or such person's successors or assigns (Superior Lessor,
Superior Mortgagee and any such person or successor or assign being herein
collectively referred to as "Successor Owner") shall succeed to the rights of
---------------
Landlord under this Lease through possession or foreclosure or delivery of a new
lease or deed or otherwise, Tenant agrees, at the election and upon request of
any such Successor Owner, from time to time, to fully and completely attorn to
and recognize any such Successor Owner, as Tenant's landlord under this Lease
upon the then executory terms of this Lease; provided such Successor Owner shall
agree in writing to accept Tenant's attornment. The foregoing provisions of
this Section shall inure to the benefit of any such Successor Owner, shall apply
notwithstanding that, as a matter of law, this Lease may terminate upon the
termination of a Superior Lease, shall be self-operative upon any such demand,
and no further instrument shall be required to give effect to said provisions.
Tenant, however, upon demand of any such Successor Owner, shall execute, from
time to time, instruments to evidence and confirm the foregoing provisions of
this section, satisfactory to any such Successor Owner, acknowledging such
attornment and setting forth the terms and conditions of its tenancy and Tenant
hereby constitutes and appoints Landlord attorney-in-fact for Tenant to execute
any such instrument for and on behalf of Tenant, such appointment being coupled
with an interest. Upon such attornment, this Lease shall continue in full force
and effect as a direct lease between such Successor Owner and Tenant upon all of
the then executory terms of this Lease, except that such Successor Owner shall
not be (a) liable for any previous act or omission or negligence of Landlord
under this Lease; (b) subject to any counterclaim, defense or offset, which
heretofore shall have accrued to Tenant against this Lease or by any previous
prepayment of more than one month's rent, unless such modification or prepayment
shall have been approved in writing by the Superior Lessor or Superior Mortgagee
through or by reason of which the Successor Owner shall have succeeded to the
rights of Landlord under this Lease; (d) liable for any security deposited
pursuant to this Lease unless such security has actually been delivered to
Successor Owner; (e) obligated to repair the Demised Premises or the Building or
any part thereof, in. the event of total or substantial damage, beyond such
repair as can reasonably be accomplished from the net proceeds of insurance
actually made available to Successor Owner; or (f) obligated to repair the
Demised Premises or the Building or any part thereof, in the event of partial
condemnation, beyond such repair as can reasonably be accomplished from the net
proceeds of any award actually made available to Successor Owner, as
consequential damages allocable to the part of the Demised Premises or the
Building not taken. Nothing contained in this Section 20.02 shall be construed
to impair any right otherwise exercisable by any such Successor Owner.
Section 20.03 As applied to the City, any conflict between the provisions
-------------
of Section 20.01 above and Section 10.04 of the Ground Lease shall be resolved
in favor of Section 10.04 of the Ground Lease.
Section 20.04 Landlord shall use reasonable efforts to obtain a non-
-------------
disturbance agreement on terms and conditions reasonably acceptable to the
parties thereto from the holder of any future Superior Mortgage or Superior
Lease. Landlord shall, upon request from Tenant, take appropriate action to
obtain such a non-disturbance agreement from the City pursuant to Section
-------
-24-
<PAGE>
10.04 of the Ground Lease.
- -----
ARTICLE 21
----------
Consents
--------
Section 21.01 Tenant hereby waives any claim against Landlord which it may
-------------
have based upon any assertion that Landlord has unreasonably withheld or
unreasonably delayed any requested consent, and Tenant agrees that its sole
remedy shall be an action or proceeding to enforce any such provision or for
specific performance, injunction or declaratory judgment. In the event of such a
determination, the requested consent shall be deemed to have been granted;
however, Landlord shall have no liability to Tenant for its refusal or failure
to give such consent. The sole remedy for Landlord's unreasonably withholding or
delaying of consent shall be as provided in this section. The foregoing
limitations shall not, however, be applicable if it is determined in any action
or proceeding that Landlord has willfully and arbitrarily withheld its consent
in bad faith and without any business justification, provided, however, that in
no event shall Tenant be entitled to receive any damages other than actual
damages incurred by Tenant due to Landlord's withholding consent.
ARTICLE 22
----------
[Intentionally Deleted]
ARTICLE 23
----------
Assignment and Subletting
-------------------------
Section 23.01 Neither this Lease nor the term and estate hereby granted
-------------
shall be assigned, mortgaged, pledged, encumbered or otherwise transferred by
Tenant, by operation of law or otherwise, and neither the Demised Premises, nor
any part thereof, nor any of the Tenant's Property shall be encumbered or sublet
or used or occupied or permitted to be used or occupied, or utilized for desk
space or for mailing privileges by anyone other than Tenant and its employees,
except as set forth in Section 23.02 hereof. For purposes of this Section 23.01,
------------- -------------
(a) the issuance of interests in any entity, or the transfer of interests in any
entity (whether stock, partnership interest or otherwise) to any person or group
of related persons, whether in a single transaction or a series of related or
unrelated transactions, in such quantities that after such issuance or transfer,
as the case may be, such transferee shall have control (as hereinafter defined)
of such entity, shall be deemed an assignment, except that the transfer of the
outstanding capital stock of any corporate Tenant by persons or parties (other
than persons or parties owning 5% of more of the voting stock of such
corporation) through the "over-the-counter" market or any recognized national
securities exchange, shall not be included
-25-
<PAGE>
in the calculation of such transfer of control, (b) a "take-over agreement"
pursuant to which one or more persons shall agree to assume the Obligations of
Tenant hereunder in consideration of Tenant leasing space in another building
shall be deemed an assignment of this Lease, and (c) a modification or amendment
of a sublease which decreases the rent, extends the term or increases or
decreases the subleased space shall be deemed a sublease. For the purposes of
the preceding sentence, stock ownership shall be determined in accordance with
the principles set forth in Section 544 of the Internal Revenue Code of 1986, as
the same existed on January 1, 1987. For the purposes hereof, "control" shall
mean with respect to any corporation, partnership or other business entity, the
possession of the power directly or indirectly to direct or cause the direction
of management and policy of such corporation, partnership or other business
entity, whether through the ownership of voting securities, by contract, common
directors or officers, the contractual right to manage the business affairs of
any such corporation, partnership or business entity, or otherwise. Any person
or legal representative of Tenant, to whom Tenant's interest under this Lease
passes by operation of law or otherwise, shall be bound by the provisions of
this Article 23.
----------
Section 23.02 A. Tenant may, upon ten (10) days prior written notice to
-------------
Landlord, assign this Lease to a Related Entity (as hereinafter defined) or
permit any corporation(s) or other business entity or entities that directly or
indirectly control, are controlled by, or under common control with, Tenant (any
such corporation or entity being hereinafter referred to as "Related Entity") to
sublet, occupy or use (any such subletting, occupancy or use being hereinafter
called a "letting") all or part of the Demised Premises for any of the purposes
permitted to Tenant hereunder provided that (a) Tenant shall not be in default
beyond any applicable grace period in the performance of any of its obligations
under this Lease, and (b) prior to the effective date of such letting or
assignment Landlord shall have been provided with proof reasonably satisfactory
to it that such sublessee or assignee is a Related Entity. In the event of an
assignment of this Lease to a Related Entity, Tenant shall remain fully liable
for the performance of all of Tenant's obligations hereunder and Tenant and
assignee shall enter into an instrument of assignment and assumption in form and
substance reasonably satisfactory to Landlord. Within ten (10) days after the
commencement of the term of any such letting or the date of such assignment, as
the case may be, notice of such commencement or assignment and a duplicate
original of such sublease or assignment shall be delivered by Tenant to
Landlord. If at any time such sublessee, occupant, user or assignee shall cease
to be a Related Entity of Tenant, said letting or assignment shall be null and
void as of the date of cessation of such relationship and such sublessee,
occupant, user or assignee shall vacate the Demised Premises within sixty (60)
days of such date. Each such sublease or assignment shall be and shall provide
that it is subject and subordinate to all of the terms, provisions and
agreements of this Lease and the Ground Lease;
B. Tenant may, upon ten (10) days prior written notice,
assign this Lease to or effect a letting to a Successor Corporation (as
hereinafter defined) of Tenant, any such letting to be for all or part of the
Demised Premises for any of the purposes permitted to Tenant hereunder, provided
that (a) Tenant shall not be in default beyond any applicable grace period in
the
-26-
<PAGE>
performance of any of its obligations under this Lease, (b) prior to the
effective date of such letting or assignment, Landlord shall have been provided
with proof reasonably satisfactory to it that such lessee or assignee is a
Successor Corporation, and (c) after any merger or consolidation described in
the next succeeding sentence of this paragraph, the assets, capitalization and
net worth of such Successor Corporation shall be greater than or equal to the
assets, capitalization and net worth of Tenant at the commencement of the Term
or immediately prior to such merger or consolidation, whichever is greater. A
"Successor Corporation", as such term is used in this Section 23.02B, shall mean
--------------
a corporation into which or with which Tenant is merged or consolidated in
accordance with applicable statutory provisions for the merger or consolidation
of corporations, provided that by operation of law or by effective provisions
contained in the instrument of merger or consolidation, the liabilities of
Tenant under this Lease are assumed by the corporation surviving such merger or
consolidation. Within ten (10) days after the commencement of the term of any
such letting or the date of such assignment, as the case may be, notice of such
commencement or assignment and duplicate originals of any instruments with
respect to such transaction shall be delivered to Landlord by Tenant or the
Successor Corporation, as appropriate. Any such letting or assignment shall be
subordinate to all of the terms, provisions and agreements of this Lease and the
Ground Lease.
C. Except as expressly permitted pursuant to any other provision of this
Article 23, (i) if at any time, Tenant desires to sublet all or substantially
- ----------
all of the Demised Premises for a term ending within sixty (60) days of the
Expiration Date, or to assign its interest in this Lease, Tenant shall send a
notice (the "Subleasing Notice") to Landlord and shall be deemed to have granted
-----------------
to Landlord the option, with respect to any such portion of the Demised Premises
which Tenant proposes to sublet or assign pursuant to this Article 23 (or any
----------
proposed or actual sublet, assignment or occupancy which Tenant undertakes in
violation of the provisions of this Article 23 regardless of when and how
----------
Landlord receives notice of such proposed or actual sublet, assignment or
occupancy), an option (the "Recapture Right") to be exercised by notice given to
---------------
Tenant within thirty (30) business days after receipt of the Subleasing Notice
or thirty (30) business days after Landlord has been made aware of any proposed
or actual sublet, assignment or occupancy undertaken by Tenant in violation of
the provisions of this Article 23, to terminate this Lease on the terms and
conditions hereinafter set forth with respect only to the portion of the Demised
Premises which is subject to any such proposed or actual subletting, assignment
or occupancy (the "Recaptured Area"). In the event that Landlord exercises the
---------------
Recapture Right then, as to the Recaptured Area:
(a) Tenant shall vacate and surrender the Recaptured Area on or before
the day immediately preceding the proposed commencement date of the
proposed assignment, sublease or occupancy and the Lease shall terminate
with respect to such Recaptured Area on such proposed commencement date as
if such date were the Expiration Date;
(b) from and after such date of termination, this Lease shall be
deemed amended to (1) eliminate the Recaptured Area from the Demised
Premises, (2) reduce the Fixed Rent payable hereunder by an amount equal
to the Fixed Rent payable with respect to the Recaptured Area immediately
prior to such termination, (3) reduce any
-27-
<PAGE>
Additional Rent to reflect the elimination of the Recaptured Area from the
Premises and (4) make such other changes as are appropriate to reflect the
elimination of the Recaptured Area from the Demised Premises. Landlord and
Tenant shall execute a written amendment to this Lease prepared by Landlord
and reasonably satisfactory to Landlord and Tenant setting forth the
foregoing modifications (provided, however, that failure by either party to
execute or deliver such amendment shall not impair the effectiveness of the
provisions of this paragraph);
(c) Landlord may, and shall have no liability to Tenant if Landlord
shall, sublease the Recaptured Area (or any part thereof) to Tenant's
prospective subtenant, assignee or occupant or to any other Person for all
or any portion of the term of the proposed subletting, assignment or
occupancy; and
(d) Landlord, at its expense, shall make such alterations as may be
required to separate physically the Recaptured Area from the remainder of
the Demised Premises and to comply with all Legal Requirements and
Insurance Requirements (unless the same would have been the responsibility
of the sublessee pursuant to the proposed assignment, sublease or
occupancy), and, at Landlord's expense (unless the same would have been the
responsibility of Tenant pursuant to the proposed assignment, sublease or
occupancy agreement), shall repair or restore to tenantable condition any
part of the remainder of the Demised Premises which is damaged by such
separation. If required by Legal Requirements and Insurance Requirements,
Landlord shall afford Tenant and its agents, tenants, undertenants, or
licensees reasonably appropriate means of ingress to and egress from the
Recaptured Area, and, if required by Legal Requirements, and Insurance
Requirements, Tenant shall afford Landlord and its agents, undertenants and
licensees reasonably appropriate means of ingress to and egress from the
remainder of the Demised Premises; and
(e) on or prior to the Expiration Date, Tenant shall restore, or
reimburse Landlord for its restoration cost with respect to, the Recaptured
Area to the condition required by this Lease and/or the Ground Lease,
except as otherwise set forth herein, including removal of any alterations
made in the Recaptured Area by any party to the extent required by this
Lease and/or the Ground Lease.
D. If at any time Tenant desires to sublet all or any portion of the
Demised Premises or to assign its interest in this Lease (other than a sublet or
assignment to a Related Entity as set forth in Section 23.02A or a Successor
--------------
Corporation as set forth in Section 23.02B hereof) and Landlord has elected not
to exercise its Recapture Right as set forth in Paragraph B above, Tenant shall
submit to Landlord the name and address of the proposed sublessee or assignee,
its proposed use of the Demised Premises or portion thereof proposed to be
subleased, a reasonably detailed description of such proposed sublessee's or
assignee's business and any other information about such proposed sublessee or
assignee reasonably requested by Landlord. Landlord agrees not to unreasonably
withhold or delay its consent to any such subletting or assignment by Tenant,
provided that the following conditions shall have been satisfied:
-28-
<PAGE>
(a) The use which the proposed assignee or subtenant intends for the
Demised Premises shall be that permitted by Article 4 hereof;
---------
(b) In the reasonable judgment of Landlord, the proposed assignee or
subtenant (i) is of good character; and (ii) is of substantial means and
finances and in a position to finance satisfactorily its business;
(c) The proposed assignment or sublease shall require the assignee or
subtenant to undertake to operate its business in the Demised Premises with
policies substantially similar to Tenant;
(d) In the reasonable judgment of Landlord, the proposed assignment or
subletting shall not adversely affect the Building or the interest of
Landlord therein;
(e) Tenant shall not have advertised or publicized in any way the
availability of the demised premises without Landlord's consent, and no
advertisement or other publicity shall state the proposed rental;
(f) The proposed assignment contains an acceptance of such assignment
by the assignee pursuant to which such assignee assumes and agrees to
perform, directly for the benefit of Landlord, all of the terms, covenants
and conditions of this lease on Tenant's part to be performed;
(g) Tenant shall pay to Landlord Landlord's reasonable administrative
costs, attorneys' fees, disbursements and any reasonable costs that may be
incurred by Landlord in connection with such assignment or subletting,
including, without limitation, the costs of making investigations as to the
acceptability of the proposed assignee or subtenant;
(h) The proposed assignment or sublease shall prohibit any further
assignment or subletting by the assignee or subtenant, as the case may be;
(i) Tenant shall not be in default beyond the expiration of any
applicable notice and cure periods in the performance of any of its
obligations under this Lease either at the time Landlord's consent to such
assignment or subletting is requested or upon the proposed effective date
of any such assignment or subletting;
(j) The proposed assignee or subtenant shall not then be a tenant of
any space in any building owned by Landlord, any related corporation of
Landlord or The Presbyterian Hospital in the City of New York
("Presbyterian") or a related corporation of any such tenant, nor a party
------------
who dealt with landlord or Landlord's agent, a related corporation of
Landlord or its agent, or Presbyterian or any agent of Presbyterian (either
directly or through a broker) for the rental of any space in any building
owned by Landlord, a related corporation of Landlord or Presbyterian within
the six (6) months immediately preceding Tenant's request for Landlord's
consent;
-29-
<PAGE>
(k) The proposed assignee or subtenant shall not be a person then
negotiating with Landlord or Landlord's agent, a related corporation of
Landlord or its agent or Presbyterian or any agent of Presbyterian (either
directly or through a broker) for the rental of any space in any building
owned by Landlord, a related corporation of Landlord or Presbyterian; and
(l) The proposed assignee or subtenant shall not be an employee of (1)
Landlord (2) a related corporation of Landlord, or (3) Presbyterian.
Within ten (10) business days after the commencement of the term of any such
subletting, or within ten (10) business days after the effective date of any
such assignment, notice of such commencement on effective date and a duplicate
original of such sublease or assignment shall be delivered by Tenant to
Landlord.
Notwithstanding anything to the contrary contained herein, if (1) Tenant
shall sublet the Demised Premises or any portion thereof for rents, additional
charges or other consideration which, after deducting from the amount of such
rents, charges or other consideration, any brokerage commissions, actual and
reasonable costs for labor and materials in preparing the space for subletting,
and attorneys' fees and disbursements reasonably incurred by Tenant for such
subletting (the "Deductions"), shall, for any period, exceed the rents
----------
(excluding the Fixed Repayment) payable for the subleased space under this Lease
for the same period (computed on a per square foot basis in the event of a
subletting of less than the whole of the Demised Premises), or (2) Tenant shall
assign its interest in this Lease for consideration (other than assumption by
the assignee of Tenant's obligations hereunder) which exceeds any Deductions
applicable thereto, then Tenant shall pay to Landlord, as Additional Rent,
within ten (10) days after the date or dates on which such rents, charges and
other consideration shall be payable to Tenant, one-half of any such excess.
Tenant hereby indemnifies Landlord against liability from any claims that
may be made against Landlord by any proposed assignee or sublessee by reason of
Landlord's failure to consent in accordance with this Lease to any assignment or
subletting or by any broker, finder or similar person claiming a commission or
similar compensation in connection with any assignment or subletting or any
proposed assignment or subletting.
Section 23.03 In the event that Landlord grants its consent to any
-------------
assignment or subletting, Tenant shall not be released from and shall remain
fully liable for the performance of all of Tenant's obligations hereunder,
including without limitation, the payment of rent hereunder. Landlord's consent
to any assignment, mortgaging or subletting in any specific instance shall not
constitute a waiver of the provisions of this Article as to any future or
further assignment, mortgaging or subletting.
Section 23.04 If Tenant's interest in this Lease is assigned or the
-------------
Demised Premises or any portion thereof are sublet in violation of the
provisions of this Article 23, such assignment or sublease shall be void and of
no force and effect against Landlord, provided however, that
-30-
<PAGE>
Landlord may collect an amount equal to the then Fixed Rent and all other
Additional Rent from the assignee sublessee as a fee for its use and occupancy.
ARTICLE 24
----------
Bankruptcy
----------
Section 24.01 In the event this Lease becomes subject to the provisions of
-------------
the Bankruptcy Code, the rights and obligations of the parties hereunder shall
be governed by the Bankruptcy Code as in effect on the date it becomes so
subject.
Section 24.02 If this Lease is assigned to any person pursuant to the
-------------
provisions of the Bankruptcy Code, all monies or other consideration payable or
otherwise to be delivered in connection with such assignment shall be paid or
delivered to Landlord, shall be and remain the exclusive property of Landlord
and shall not constitute property of Tenant or of the estate of Tenant within
the meaning of the Bankruptcy Code. Any and all monies or other consideration
constituting Landlord's property under the preceding sentence not paid or
delivered to Landlord shall be held in trust for the benefit of Landlord and
shall be promptly paid to or turned over to Landlord.
Section 24.03 If Tenant assumes this Lease and proposes to assign the same
-------------
pursuant to the provisions of the Bankruptcy Code to any person or entity who
shall have made a bona fide offer to accept an assignment of the Lease on terms
---- ----
acceptable to the Tenant, then notice of such proposed assignment shall be given
to Landlord by Tenant no later than twenty (20) days after receipt by Tenant,
but in any event no later than ten (10) days prior to the date that Tenant shall
make application to a court of competent jurisdiction for authority and approval
to enter into such assignment and assumption. Such notice shall set forth (a)
the name and address of such person, (b) all of the terms and conditions of such
offer, and (c) adequate assurance of future performance by such person under the
Lease, including, without limitation, the assurance referred to in Section
365(b)(3) of the Bankruptcy Code. Subject to any requirements of the Bankruptcy
Code, Landlord shall have the prior right and option, to be exercised by notice
to Tenant given at any time prior to the effective date of such proposed
assignment, to accept an assignment of this Lease upon the same terms and
conditions and for the same consideration if any, as the bona fide offer made by
---- ----
such person, less any brokerage commissions which would otherwise be payable by
Tenant out of the consideration to be paid by such person in connection with the
assignment of this Lease. The term "adequate assurance of future performance" as
used in this Lease shall mean that any assignee proposed pursuant to this
Section shall, among other things, (a) deposit with Landlord on the assumption
of this Lease an amount equal to the then annual Fixed Rent and Fixed Repayment
payable hereunder (the "Assignee Security") as security for the faithful
-----------------
performance and observance by such assignee of the terms and obligations of this
Lease, which sum shall be held and applied as set forth in Section 24.04, (b)
furnish Landlord with financial statements of such assignee for the prior three
(3) fiscal years, as finally determined after an audit and certified as correct
by a certified public accountant, which
-31-
<PAGE>
financial statements shall show a net worth equal to at least one-half (1/2) the
Fixed Rent and Fixed Repayment then payable by Tenant at the time of the
proposed assignment for each of such three (3) years, (c) grant to Landlord a
security interest in such property of the proposed assignee as Landlord shall
deem necessary to secure such assignee's future performance under this Lease,
and (d) provide such other information or take such action as Landlord, in its
reasonable judgment shall determine is necessary to provide adequate assurance
of the performance by such assignee of its obligations under the Lease.
Section 24.04 If an assignee under Section 24.03 defaults in respect of
-------------
any of the terms, provisions and conditions of this Lease, including, but not
limited to, the payment of rent, Landlord may apply or retain the whole or any
part of the Assignee Security so deposited to the extent required for the
payment of any rent as to which assignee is in default or offer any sum which
Landlord may expend or may be required to expend by reason of assignee's default
in respect of any of the terms, covenants and conditions of this Lease,
including, but not limited to, any damages or deficiency in the reletting of the
Demised Premises, whether such damage or deficiency accrued or accrues before or
after summary proceedings or other re-entry by Landlord. If Landlord applies or
retains any part of the Assignee Security so deposited, assignee, upon demand,
shall deposit with Landlord the amount so applied or retained so that Landlord
shall have the full deposit on hand at all times during the Term. If assignee
shall fully and faithfully comply with all of the terms, provisions, covenants
and conditions of this Lease, the Assignee Security shall be returned to
assignee after the Expiration Date and after delivery of possession of the
entire Demised Premises to Landlord. In the event of a sale or leasing of the
Premises or the Building, Landlord shall have the right to transfer the Assignee
Security to the vendee or lessee and Landlord shall thereupon be released by
assignee from all liability for the return of such security; and assignee shall
look solely to the new landlord for the return of said Assignee Security. The
provisions hereof shall apply to every transfer or assignment made of the
Assignee Security to a new landlord. Assignee will not assign or encumber or
attempt to assign or encumber the monies deposited herein as Assignee Security
and neither Landlord nor its successors or assigns shall be bound by any such
assignment, encumbrance, attempted assignment or attempted encumbrance.
ARTICLE 25
----------
Alterations
-----------
Section 25.01 (a) Tenant shall make no changes, additions or alterations
-------------
("Alterations") in on or to the Demised Premises without the prior written
-----------
consent of Landlord, which consent shall not be unreasonably withheld or delayed
provided such alterations are non-structural and do not affect any of the
Building systems. Notwithstanding anything to the contrary contained herein,
Landlord's consent shall not be required with respect to any Alterations which
(i) are
-32-
<PAGE>
non-structural and do not affect any of the Building systems and (ii) cost less
than $25,000.00 to perform provided, however, that Tenant shall notify Landlord
of such Alterations prior to Tenant's undertaking to perform such Alterations.
(b) Tenant hereby covenants and agrees that Tenant shall, at Tenant's sole
cost and expense, perform Tenant's Work in accordance with the Plans and
Specifications, which Plans and Specifications have been approved by Landlord,
as the same may be amended by Change Order(s) pursuant to Section 25.07(a)
hereof. Tenant's Work shall be performed in accordance with all of the terms and
conditions of this Lease. Prior to commencing Tenant's Work Tenant shall obtain
all licenses, permits and approvals required by all applicable Legal
Requirements.
Section 25.02 (a) If Landlord shall consent to any Alterations proposed by
-------------
Tenant, then such Alterations, shall be completed strictly in accordance with
plans and specifications approved by Landlord and Landlord's Construction
Requirements, a copy of which Construction Requirements will be delivered to
Tenant upon request therefor, at Tenant's sole cost and expense, in a good and
first-class workmanlike manner, using good quality materials and equipment which
shall be at least equal in quality to the standards for the Building then
established by Landlord, and in accordance with all Legal Requirements and the
terms of this Lease and the Ground Lease, and shall be commenced promptly after
approval is received and thereafter prosecuted diligently to completion. Any
Alterations for which consent has been received shall be performed strictly in
accordance with the approved plans and specifications therefor, and no
amendments or additions thereto shall be made without the prior consent of
Landlord. Tenant shall pay to Landlord as Additional Rent Landlord's out-of-
pocket expenses (including the fees of Landlord's architect and engineer) for
reviewing said plans and specifications (other than the Plans and Specifications
for Tenant's Work, for which no fee shall apply) and inspecting the Alterations,
in an amount not to exceed $500.00 for each such review.
(b) Tenant shall coordinate its construction with Landlord and with other
tenants in the Building so that it will not unreasonably interfere with or delay
the completion of any other construction work in the Building, and, to that end,
Tenant and its contractors and subcontractors shall use only the Demised
Premises for the performance of Tenant's Alterations.
Section 25.03 Tenant shall use only duly licensed, reputable contractors
-------------
reasonably approved in advance by Landlord to perform any Alterations. Each such
contractor shall (i) carry such workers' compensation, general liability,
personal and property insurance as Landlord shall require and (ii) (a) with
respect to any Alterations costing less than $50,000.00, reasonable assurance in
writing, satisfactory to Landlord, that Tenant has the financial ability to
complete such Alterations and (b) with respect to any Alterations costing more
than $50,000.00 prior to the Commencement of any such Alterations, if requested
by Landlord, furnish Landlord with payment and performance bonds at least equal
to 125% of the full amount of the reasonably estimated costs (as determined by
Landlord) of the Alterations to be made.
-33-
<PAGE>
Section 25.04 Tenant agrees that it will not at any time prior to or
-------------
during the Term, either directly or indirectly, employ or permit the employment
of any contractor, mechanic or laborer, or permit any materials in the Demised
Premises, if the use of such contractor, mechanic or laborer or such materials
would, in Landlord's reasonable opinion, create any strike or jurisdictional
dispute with other contractors, mechanics or laborers engaged by Tenant,
Landlord, the City or other tenants, or would in any way unreasonably disturb
the construction, maintenance, cleaning, repair, management, security or
operation of the Building or any part thereof. In the event of any interference
or conflict, Tenant, upon demand of Landlord, shall cause all contractors,
mechanics or laborers, or all materials causing such interference, difficulty or
conflict, to leave or be removed from the Building immediately.
Section 25.05 No approval of plans or specifications by Landlord or
-------------
consent by Landlord allowing Tenant to make Alterations in the Demised Premises
shall in any way be deemed to be an agreement by Landlord that the contemplated
Alterations comply with any Legal Requirements or Insurance Requirements or any
certificate of occupancy for the Building nor shall it be deemed to be a waiver
by Landlord of the compliance by Tenant with any of the terms of this Lease.
Nothing in this Lease shall be deemed or construed in any way as constituting
the consent or request of Landlord, express or implied, by inference or
otherwise, to any contractor, subcontractor, laborer or materialman for the
performance of any labor or the furnishing of any materials for any Alteration
to, or repair of, the Demised Premises, the Building or any part thereof, nor as
giving Tenant any right, power or authority to contract for or permit the
rendering of any services or the furnishing of any materials that would give
rise to the filing of any mechanic's liens against Landlord's interest in the
Demised Premises, the Building or the Premises. Notice is hereby given that
neither Landlord nor Landlord's agents, nor any Superior Lessor or Superior
Mortgagee shall be liable for any labor or materials furnished or to be
furnished to Tenant upon credit, and that no mechanic's or other lien for.such
labor or materials shall attach to or affect any estate or interest of Landlord
or any Superior Lessor or Superior Mortgagee in and to the Demised Premises or
the Premises. If any mechanic's lien is filed against the Demised Premises or
the Premises for work claimed to have been done for, or material furnished to,
Tenant, such lien shall be discharged, within thirty (30) days of the date of
filing, at Tenant's expense by payment or by filing the bond required by law.
Section 25.06 Prior to commencing any Alteration, Tenant shall deliver to
-------------
Landlord certificates evidencing additional insurance of such types and in such
amounts as Landlord or the Insurance Requirements shall reasonably require
Tenant or any contractor to maintain. The policies of such additional insurance
shall name Landlord, the City, EDC, UDC and such other Persons as Landlord shall
reasonably require as additional insureds, as their interests may appear.
Section 25.07 (a) For purposes of this Lease, the following terms shall
-------------
have the following meanings:
(i) "substantial completion", "substantially complete" or
similar words
-34-
<PAGE>
to that effect shall mean Tenant's completion of Tenant's Work
substantially in accordance with the Plans and Specifications and all
Change Orders (as hereinafter defined) but for minor "punch list"
items which would not interfere with Tenant's ability to occupy the
Demised Premises and conduct its business therein for the purposes set
forth in this Lease.
(ii) "Plans and Specifications" shall mean the Plans and
Specifications for Tenant's Work submitted to and approved by Landlord
a list of which is annexed hereto as Exhibit B and made a part hereof.
(iii) "Change Order" shall mean any change in the Plans and
Specifications requested by Tenant and approved by Landlord and any
increase or reduction in the cost of Tenant's Work approved by
Landlord. The cost of any such Change Order shall be agreed upon by
the parties at the time of its approval. Upon substantial completion
of Tenant's Work, the Construction Loan (as hereinafter defined) shall
be adjusted to reflect the net amount of all such Change Orders and
any earned interest on the Construction Loan pursuant to Section 3.04
------------
hereof and the monthly Fixed Repayment shall be adjusted to an amount
equal to one-twelfth of the annual principal and interest payments of
a self amortizing loan in the amount of $1,500,000.00 as adjusted by
the net amount of all such Change Orders and earned interest
amortizing on a straight line basis over ten (10) years at the
Interest Rate plus one-one hundred and twentieth of the Closing Costs
as described in Section 3.04 hereof. In the event that Landlord shall
approve in writing a Change Order which is estimated (as expressly set
forth in such Change Order) to delay the substantial completion of
Tenant's Work beyond November 1, 1996, then the Rent Commencement Date
shall be deemed to be the earlier to occur of (a) such new estimated
substantial completion date or (b) the date Tenant or anyone claiming
under or through Tenant shall occupy any part of the Demised Premises
for the purposes set forth in Article 4 hereof.
(b) Landlord and Tenant hereby agree that the cost of designing,
constructing and performing Tenant's Work in accordance with the Plans
and Specifications shall be paid as follows: (i) $320,000.00 (the
"Grant") shall be paid outright by Landlord and (ii) $1,500,000 shall
------
be paid in the form of a loan from Landlord to Tenant (the
"Construction Loan") which shall be repaid to Landlord as set forth in
------------------
Section 3.04 hereof. The Grant and the Construction Loan shall be
disbursed as set forth in Article 46.
----------
ARTICLE 26
----------
Services
--------
Section 26.01 Landlord shall provide 24-hour, 7-day-a-week access to the
-------------
Building and
-35-
<PAGE>
unlimited passenger elevator service to the Demised Premises. Landlord shall
provide freight elevator service on Business Days from 8 a.m. to 4 p.m. If
Tenant shall require freight elevator service during any other time, Landlord
shall furnish same provided that Tenant gives Landlord advance notice and that
Tenant pays, on demand, as Additional Rent, Landlord's then established charges
(applicable to all tenants of the Building) therefor. Landlord shall employ a
security service to guard the main entrances to the Building 24 hours a day, 7
days a week, provided however Landlord shall have no responsibility or liability
with respect to the action or inaction of such security service. Landlord shall
provide an elevator security card system intended to limit access to the Demised
Premises from the elevators to individuals presenting designated security cards
but Landlord shall not be a guarantor of the efficacy of such system and shall
not he liable for mechanical or other failure of such system.
Section 26.02 (a) Landlord shall provide electric energy to the Demised
-------------
Premises. Tenant shall pay Landlord for electricity consumed by Tenant in the
Demised Premises as shown on a submeter installed and maintained by Landlord.
Landlord will permit the electrical risers, feeders and wiring in the Building
serving the Demised Premises to be used by Tenant for such purpose to the extent
that they are available, suitable, safe and within the plan and design
capacities of the Building. Tenant shall not be required to pay Landlord more
than the amount calculated by applying to the measured demand and/or usage of
electrical current in or furnished to the Demised Premises, the average rate per
unit of measurement, inclusive of applicable taxes, surcharges, time of day and
other charges, payable by Landlord for electrical current furnished to the
Building by the utility company serving the Building. Should any tax or charge
in the nature of a tax be imposed upon Landlord's receipts from the sale or
resale of electrical current to the Demised Premises, then the pro rata share
thereof allocable to the electrical current furnished to the Demised Premises
shall be passed on to and paid by Tenant. Bills for Tenant's usage of electrical
current shall be paid within ten (10) business days of receipt thereof by Tenant
as Additional Rent hereunder. If due to any change in Legal Requirements,
Landlord shall not be permitted to provide electric energy to the Demised
Premises, then this Lease shall not be affected and Tenant shall arrange to
obtain electric energy directly from the public utility company furnishing
electrical service to the Building. In such event Tenant shall no longer pay
Landlord for electricity consumed. During the period from the Commencement Date
to the Rent Commencement Date, provided that no Event of Default shall have
occurred and be continuing, Landlord shall provide electrical energy to the
Demised Premises in accordance with the terms hereunder free of charge.
(b) Tenant's use of electrical energy shall never exceed the capacity of
the then existing risers or wiring installation, in each case. Landlord hereby
represents that current capacity of the existing risers is not less than 15
watts per usable square foot. In order to insure that such electrical capacity
is not exceeded and to avert possible adverse effect upon the Building's
electrical system, Tenant shall not, without the prior written consent of
Landlord, make or perform or permit any alteration to wiring installations or
other electrical facilities in or serving the Demised Premises or any additions
to the electrical fixtures, machines or
-36-
<PAGE>
equipment or appliances in the Demised Premises. Without limiting the generality
of the foregoing, Landlord shall not consent to any such alteration or
installation if, in Landlord's judgment, the same is unnecessary or will cause
permanent damage or injury to the Building, the Building Equipment or the
Demised Premises or will cause or create a hazardous condition or entail
excessive or unreasonable alterations, repairs or expense or excessively
interfere with or disturb other tenants or occupants. Only rigid conduit or such
other wiring or conduit as shall not violate Legal Requirements will be allowed.
(c) The Building electrical system shall include such emergency generator
back-up power in the event of a loss of power or service as Landlord shall
determine, which shall be provided by and maintained by Landlord at Landlord's
sole cost and expense.
(d) Landlord shall have no liability to Tenant for any loss, damage or
expense which Tenant may sustain or incur by reason of any change, failure,
inadequacy or defect in the supply or character of the electrical energy or
emergency generator back-up power furnished to the Demised Premises or if the
quantity or character of the electrical energy is no longer available or
suitable for Tenant's requirements, except for any actual damage suffered by
Tenant by reason of any such failure, inadequacy or defect caused by Landlord's
negligence, and then only after actual notice thereof.
Section 26.03 (a) Landlord shall make available from the public water
-------------
supply to a point or points at or near the Demised Premises selected by Landlord
such quantities of domestic cold and hot water as Landlord, in its sole and
reasonable judgment, deems adequate for normal laboratory and ordinary lavatory,
cleaning and drinking purposes. In the event that the Tenant requires hot or
cold water for any purposes other than those specified in the preceding
sentence, including, but not limited to high volume laboratory usage, Tenant
shall pay Landlord, as Additional Rent, for water consumed, as shown on separate
submeters for cold and hot water maintained by Tenant, at Tenant's expense (and
installed by Landlord if no such submeters are in place or if there are existing
submeters for the Demised Premises that are broken), together with all sewer
charges and any other rent, tax, levy or charge based thereon which now or
hereafter is assessed, imposed or a lien upon the Demised Premises or the
Premises, within ten (10) business days after bills are rendered. Payment for
cold water shall be at the rate charged by the City for cold water. Payment for
hot water shall be at three (3) times such rate. Landlord shall have no
liability to Tenant for any loss, damage or expense which Tenant may sustain or
incur if the quantity or character of water service changes or is no longer
available or suitable for Tenant's purposes. During the period from the
Commencement Date to the Rent Commencement Date, provided that no Event of
Default shall have occurred and be continuing, Landlord shall provide hot and
cold water to the Demised Premises in accordance with the terms hereunder free
of charge.
-37-
<PAGE>
(b) Tenant shall notify Landlord, within ten (10) days after the
Commencement Date, of the water meter number of each water meter serving the
Demised Premises and whether such meter is for hot water or cold water. If any
such meter is installed subsequent to the taking of possession by Tenant, then
Tenant shall notify Landlord of such information within ten (10) days after such
installation.
Section 26.04 Landlord shall make available to a point or points at or
-------------
near the Demised Premises such piping, systems, equipment and facilities as
Landlord, in its reasonable judgment, deems adequate to provide gas service for
normal laboratory consumption. Tenant shall pay Landlord, as Additional Rent,
for gas consumed, as shown on a submeter, installed and maintained (and
replaced, if necessary) by Landlord. The rates charged by Landlord therefor
shall not exceed the rates charged by the utility company providing such
service. Payment for gas consumed by Tenant in the Demised Premises shall be
made by Tenant to Landlord within ten (10) business days of Tenant's receipt of
Landlord's bill therefor. Tenant shall make no alteration, addition or repair to
the gas connection, installations, equipment and/or facilities without the prior
written consent of Landlord in each instance. Landlord shall have no liability
to Tenant for any loss, damage or expense which Tenant may sustain or incur if
the quantity or character of the gas service is changed or is no longer
available or suitable for Tenant's requirements.
Section 26.05 Landlord shall supply hot water for heat, chilled water from
-------------
May 1 through October 31 of each calendar year during the Term, condenser water
from November 1 through April 30 of each calendar year during the Term and
ventilation ("HVAC") to the Demised Premises through existing Building risers,
radiators and air handlers and additional HVAC equipment that may be installed
as part of Tenant's Work (subject to the requirements set forth in Article 25
hereof) during appropriate seasons as may reasonably be required by Tenant for
ambient heating and cooling seven days a week, 24 hours a day. If Tenant shall
require additional chilled water, condenser water or hot water in excess of that
which Landlord deems reasonably adequate for the purposes set forth above,
Landlord shall furnish same at Landlord's then established rates and same shall
be payable by Tenant as Additional Rent within ten (10) business days after
receipt by Tenant of a bill therefor. Any HVAC equipment supplementing that
described in the first sentence of this Section 26.05 shall be installed and
maintained by Tenant at Tenant's sole cost and expense.
Section 26.06 Tenant shall, at Tenant's sole cost and expense, keep the
-------------
Demised Premises free from vermin, rodents or anything of a similar nature. If
Tenant fails to keep the Demised Premises free from vermin, Landlord shall have
the right, after reasonable notice, if practicable, at Tenant's sole cost and
expense, to take any and all measures deemed necessary or desirable by Landlord
to eradicate all vermin from the Demised Premises. In lieu of the foregoing
provisions with respect to infestation control, Landlord, at its option, may
select an exterminator to perform such services on behalf of Tenant. If Landlord
does so, Tenant agrees to use such exterminator to the exclusion of all other
exterminators, equipment or services. Tenant shall pay the charges therefor for
such exterminator, provided, however, that such exterminators' charges are
commercially competitive.
-38-
<PAGE>
Section 26.07 Landlord shall provide cleaning services in accordance with
-------------
the specifications annexed hereto as Exhibit C and made a part hereof. Landlord
shall, as part of said cleaning services, remove Tenant's normal accumulations
of non-Hazardous Materials, rubbish and waste paper. Subject to the provisions
of Section 26.09 hereof, Landlord shall provide reasonable storage in the
basement of the Building for Tenant's Hazardous Materials in reasonable
quantities for reasonable periods of time prior to the removal of such Hazardous
Materials from the Building. Notwithstanding any provision to the contrary
contained herein, in the event that at any time during the term of this Lease
Landlord shall build any storage space in the basement of the Building which is
made available to tenants in the Building, Tenant shall have the right to use
and occupy an area equal to one-fifth of such available space, at no additional
cost to Tenant, provided that Tenant's use of such space is for storage purposes
only. It is hereby understood and agreed that Landlord has no obligation to
build any such storage space.
Section 26.08 Landlord shall supply compressed air and vacuum air to a
-------------
point or points at the Demised Premises in quantities which Landlord deems
reasonably adequate for normal laboratory purposes. If Tenant shall require
additional compressed air and vacuum air in excess of that which Landlord deems
reasonably adequate for the purposes set forth herein, Landlord shall furnish
same at Landlord's then established rates and same shall be payable on demand by
Tenant as Additional Rent hereunder.
Section 26.09 Tenant shall be responsible for the proper storage and
-------------
removal from the Demised Premises and the Building and the dispose of all of
Tenant's Hazardous Materials. Tenant shall contract for the disposal of
Hazardous Materials, at Tenant's cost and expense, with vendors approved by
Landlord, in its sole and absolute discretion. In contracting with any such
vendor, Landlord shall endeavor to ensure that Tenant shall receive the benefit
of any volume discount granted to Landlord by such vendor.
Section 26.10 Tenant shall have the right to use on a non-exclusive, first
-------------
come-first serve basis, together with other tenants and occupants of the
Building, Landlord's autoclave facility and glassware washer located in the
basement of the Building. Landlord shall be responsible for ensuring that such
autoclave facility and glassware washer are operational and functional as of the
date the Tenant occupies the Demised Premises for the conduct of its business
after the completion of Tenant's Work. Tenant hereby agrees to pay Landlord's
standard established fees applicable to all tenants of the Building for such
use, which fees shall be in the form of (i) an hourly access fee and (ii) a fee
on an hourly basis for any personnel of Landlord used by Tenant in the facility.
Landlord shall employ trained personnel who shall be available for Tenant's
nonexclusive first come-first serve use of the autoclave facility and glassware
washer. Attached hereto as Exhibit E are the proposed specifications for the
---------
autoclave facility and the glassware washer (collectively, the "Autoclave and
-------------
Glassware Specifications"). Tenant understands and acknowledges that the
- ------------------------
Autoclave and Glassware Specifications may be changed at any time by Landlord in
its sole and absolute discretion, provided, however, in the event that Landlord
shall change the Autoclave and Glassware Specifications, Landlord shall endeavor
to provide an autoclave facility and glassware washer similar to the autoclave
facility and glassware washer
-39-
<PAGE>
described in the Autoclave and Glassware Specifications.
ARTICLE 27
----------
Windows; Machinery
------------------
Section 27.01 (a) If at any time any windows of the Demised Premises are
-------------
temporarily closed, darkened or bricked up (or permanently closed, darkened or
bricked up, if required by law) for any reason whatsoever including, but not
limited to, Landlord's own acts, Landlord shall not be liable for any damage
Tenant may sustain thereby and Tenant shall not be entitled to any compensation
therefor nor abatement or diminution of rent nor shall the same release Tenant
from its obligations hereunder nor constitute an eviction.
(b) Tenant shall not move any safe, heavy machinery, heavy equipment, bulky
matter, or fixtures into or out of the Building without Landlord's prior written
consent, which consent shall not be unreasonably withheld. If such safe,
machinery, equipment, bulky matter or fixtures require special handling, all
work in connection therewith shall comply with all Legal Requirements applicable
thereto and shall be done during such hours as Landlord may reasonably
designate.
ARTICLE 28
----------
Insurance
---------
Section 28.01 Tenant shall, at Tenant's sole cost and expense, obtain and
-------------
maintain the following types of insurance in not less than the indicated amounts
with insurance carriers reasonably acceptable to Landlord:
(a) Workers' Compensation and Employer's Liability insurance with respect
to all persons employed by Tenant at the Demised Premises (including, during the
period during which any Alterations are being constructed, Tenant shall cause
its contractors and its subcontractors to obtain such insurance for its
employees, all contractors and subcontractors) with a limit of liability in
accordance with applicable law in the case of Workers' Compensation and with a
limit of liability of not less than the following in the case of Employer's
Liability:
Bodily Injury by Accident - $100,000 each accident;
Bodily Injury by Disease - $500,000 policy limit;
Bodily Injury by Disease - $100,000 each employee;
(b) Comprehensive or commercial general liability (bodily injury and
property
-40-
<PAGE>
damage) with a combined single limit of liability for bodily injury and property
damage of $2,000,000 per occurrence;
(c) "All risk" property insurance (which includes coverage for plate glass
breakage and water damage) which provides coverage for all property of Tenant,
including Tenant's Work and all Alterations, within the Demised Premises in an
amount equal to the replacement cost of such property; and
(d) Such different or the same types of insurance set forth above in such
amounts as may from time to time be reasonably required by Landlord against such
other insurable hazards as at the time are commonly insured against in the case
of premises similarly situated.
Section 28.02 (a) All insurance shall be written in form and substance
-------------
reasonably satisfactory to Landlord, and issued by companies licensed to do
business in New York State and authorized to issue such policies that have a
"Best's" rating of B+11 or better or another rating acceptable to Landlord. All
policies of insurance procured by Tenant shall contain endorsements providing
that (a) such policies may not be reduced or cancelled (including for non-
payment of premium) or allowed to lapse with respect to Landlord, the City, EDC,
UDC or any other Superior Lessor or any Superior Mortgagee, or materially
changed or amended, except after sixty (60) days prior notice from the insurance
company by registered mail to (i) Tenant, (ii) Landlord at the address provided
for in Article 29, (iii) Landlord in care of the Director of Risk Management,
Columbia University 475 Riverside Drive, Suite 401, New York, New York, 10115,
and (iv) the City, EDC, UDC, any other Superior Lessor and any Superior
Mortgagee of which Tenant has notice, and (b) Tenant shall be solely responsible
for the payment of premiums therefor notwithstanding that Landlord is named as
an additional insured. On or before the Commencement Date, duly executed
certificates of insurance (specifying each of the coverages enumerated above and
including evidence of the waivers of subrogation required pursuant to
Subparagraph (d), together with reasonably satisfactory evidence of payment of
the premiums therefor, shall be delivered to Landlord in care of the following
addresses: (x) Executive Director, Audubon Research Park, PH 1525 East, 630 West
168th Street, New York, New York 10032 and (y) Director of Risk Management,
Columbia University, 475 Riverside Drive, Suite 401, New York, New York 10115.
Certificates evidencing any endorsements to any such policies shall also be so
delivered upon issuance thereof and a certificate evidencing each renewal or
replacement of a policy shall be so delivered at least sixty (60) days prior to
the expiration of such policy. Notwithstanding the foregoing requirements for
delivery of certificates of insurance, certificates evidencing any endorsement
and certificates of renewals and replacements, in any instance where Landlord or
a Superior Lessor or Superior Mortgagee shall so require, an original policy or
endorsement or renewal or replacement policy, as the case may be, shall be
delivered in addition to or in place of such certificate(s). Tenant shall not
carry any separate or additional insurance concurrent in form or contributing in
the event of any loss or damage with any insurance required to be maintained by
Tenant under this Lease. Notwithstanding the previous sentence, Tenant shall be
permitted to carry a blanket or additional insurance policy which provides
coverage in excess
-41-
<PAGE>
of the amounts required under this Article 28, so long as such policy complies
with the requirements of Subparagraph (b) below. Further, all policies of
insurance procured by Tenant shall be written as primary policies covering the
Demised Premises occupied by Tenant not contributing with nor in excess of
coverage that Landlord may carry.
(b) All insurance procured by Tenant under this Article 28, except for the
Worker's Compensation and Employer's Liability insurance described in Section
28.01(a) and the "all-risk" property insurance described in Section 28.01(c),
shall name Landlord, Tenant, the City, EDC, UDC and any other Superior Lessor
and any Superior Mortgagee as additional insureds, as their respective interests
may appear, and shall contain an endorsement that each of Landlord, the City,
EDC, UDC and any other Superior Lessor and any Superior Mortgagee, although
named as additional insureds, nevertheless shall be entitled to recover under
said policies any loss or damages occasioned to it, its agents, employees,
contractors, directors, shareholder, partners, trustees and principals
(disclosed or undisclosed) by reason of the negligence or tortious acts of
Tenant, its servants, agents employees and contractors.
(c) Tenant covenants that (a) Tenant shall pay all premiums due on policies
required to be maintained by the terms of this Lease, and (b) Tenant shall not
violate, or permit the violation of, any term or condition of such policies, and
shall maintain the policies in full force and effect throughout the Term.
(d) Each Party agrees to use its best efforts to include in each of its
insurance policies a waiver of the insurer's right of subrogation against the
other party, or if such waiver should be unobtainable or unenforceable (a) an
express agreement that such policy shall not be invalidated if the insured
waives or has waived before the casualty the right of recovery against any party
responsible for a casualty covered by the policy, or (b) any other form of
permission for the release of the other party. If such waiver agreement or
permission shall not be, or shall cease to be obtainable without additional
charge or at all, such party shall so notify the other party promptly after
learning thereof. In such case, if the other party shall agree in writing to
pay the insurer's additional charge therefor, such waiver, agreement or
permission shall (if obtainable) be included in the policy. As long as Tenant's
casualty insurance policies include the waiver of subrogation or agreement or
permission to release liability referred to above, Tenant, to the extent that
such insurance is in force and collectible, hereby waives (a) any obligation on
the part of Landlord to make repairs to the Tenant's Property necessitated or
occasioned by fire or other insured casualty, and (b) any right of recovery
against Landlord, and any of Landlord's employees, agents or contractors, for
any loss occasioned by fire or other insured casualty.
(e) Landlord hereby agrees to maintain throughout the Term "all risk"
property insurance for the Building as required by the Ground Lease.
-42-
<PAGE>
ARTICLE 29
----------
Notices
-------
Section 29.01 Any bill, notice, request or other communication given
-------------
or made hereunder shall be in writing and either (a) sent by registered or
certified mail, return receipt requested, postage prepaid, or (b) delivered in
person or by overnight courier, with receipt acknowledged to, in the case of
Tenant, the address given at the beginning of this Lease, Attention: Joanne M.
Leonard, Vice President and Chief Financial Officer, and, in the case of
Landlord, to Executive Director, Audubon Research Park, PH 1525 East, 630 West
168th Street, New York, New York, 10032, or to such other address for such party
as said party shall hereafter designate by Notice given to the other party
pursuant to this Section 29.01. Each notice mailed shall be deemed given on the
fifth day following the date of mailing the same and each notice delivered in
person or by overnight courier shall be deemed given when delivered. Copies of
notices given to Landlord pursuant to the provisions of this Lease shall be sent
by registered or certified mail, postage prepaid and return receipt requested to
(i) Office of the General Counsel, Columbia University, 535 West 116th Street,
110 Low Memorial Library, New York, New York, 10027, Attention: Deputy General
Counsel, and (ii) Rosenman & Colin LLP, 575 Madison Avenue, New York, New York,
10022, Attention: Donald H. Siskind, counsel to Landlord.
ARTICLE 30
----------
Non-Liability/Indemnification
-----------------------------
Section 30.01 Neither Landlord nor Landlord's agents, officers,
-------------
directors, shareholders, partners, trustees or principals (disclosed or
undisclosed), nor the City, any other Superior Lessor, EDC, UDC or any Superior
Mortgagee shall be liable to Tenant or Tenant's agents, employees, contractors,
invitees, customers, concessionaires or licensees or any other occupant of the
Demised Premises, and Tenant shall indemnify Landlord and hold Landlord harmless
from and against any liabilities in connection with or arising from any injury
to Tenant or to any other Persons or any damage to, or loss (by theft or
otherwise) of, any of Tenant's Property or the property of any other Person,
irrespective of the cause of such injury, damage or loss, except to the extent
due to the gross negligence or wilful misconduct of Landlord or Landlord's
agents without contributory negligence on the part of Tenant, or its employees,
agents, contractors, invitees, customers, concessionaires, licensees or other
occupants of the Building. Tenant waives, to the full extent permitted by law,
any right it might otherwise have to claim consequential damages in connection
with the negligence of Landlord or Landlord's agents. Any Building employee to
whom any property shall be entrusted by or on behalf of Tenant shall be deemed
to be acting as Tenant's agent with respect to such property, and neither
Landlord nor Landlord's agents shall be liable for any loss or damage to any
such property by theft or otherwise.
-43-
<PAGE>
Section 30.02 Neither (a) performance by Landlord, Tenant or others
-------------
of any repairs or improvements to the Demised Premises, (b) failure of Landlord
or others to make any such repairs or improvements, (c) damage to equipment, the
Demised Premises or Tenant's Property, (d) any injury to any Persons caused by
other Persons in the Building, or by operations in the construction of any
private, public or quasi-public work, or by any other cause, (e) latent defect
in the Building or Building Equipment, nor (f) injury to or interruption of
Tenant's business or operations by reason of any of the events or occurrences
referred to in the foregoing subdivisions (a) through (f) shall impose any
liability on Landlord to Tenant, unless Landlord or Landlord's agents, employees
or contractors shall have acted in a grossly negligent manner.
Section 30.03 Tenant hereby indemnifies Landlord in connection with
-------------
or arising from (a) any default by Tenant in the performance of any of the terms
of this Lease on Tenant's part to be performed, (b) the use or occupancy or
manner of use or occupancy of the Demised Premises by Tenant or any Person
claiming under Tenant, (c) any Alterations or improvements made to the Demised
Premises by Tenant or any other Person (other than Landlord or Landlord's
agents), (d) any acts, omissions or negligence of Tenant or any Person claiming
under Tenant, or the contractors, agents, employees, invitees or licensees of
Tenant or any such Person, in the Demised Premises, the Building or the Premises
either prior to, during or after the expiration of the Term of this lease, (e)
the use of the Building lobby or corridors for ingress and egress to and from
the Demised Premises by Tenant, or the contractors, agents, employees, invitees
or licensees of Tenant, whether or not in violation of the provisions of this
Lease or (f) any failure by Tenant or its agents, contractors, employees or
licensees to comply with any Environmental Legal Requirement or Legal
Requirement.
Section 30.04 Tenant shall pay to Landlord as Additional Rent, within
-------------
ten (10) days following receipt by Tenant of bills or statements therefor
evidencing the costs, sums equal to all losses, costs, liabilities, claims,
damages, fines, penalties and expenses referred to in this Article 30, together
with interest at the Default Interest Rate. Tenant shall have the right to
contest the payment of such sums provided that Tenant first makes such payment
to Landlord. If it is finally determined by judicial process or arbitration that
all or a portion of such sums were not due to Landlord, Tenant shall promptly
receive a refund for such sums paid.
Section 30.05 To the extent that any liability is imposed upon
-------------
Landlord as a matter of law, Tenant shall look solely to Landlord's estate and
interest in the Building for the satisfaction of any right of Tenant for the
collection of a judgment or other judicial process or arbitration award
requiring the payment of money by Landlord and no other property or assets of
Landlord, Landlord's agents, officers, directors, partners, joint venturers,
trustees or principals (disclosed or undisclosed) or affiliates shall be subject
to levy, lien execution, attachment or other enforcement procedure for the
satisfaction of Tenant's rights and remedies under or with respect to this
Lease, the relationship of Landlord and Tenant hereunder or under law, or
Tenant's use and occupancy of the Demised Premises or any other liability of
Landlord to Tenant.
-44-
<PAGE>
ARTICLE 31
----------
Casualty
--------
Section 31.01 Tenant shall notify Landlord immediately if all or any
-------------
portion of the Demised Premises are damaged or destroyed by fire or other
casualty, and this Lease shall remain in full force and effect without abatement
of rent hereunder, except as set forth below.
Section 31.02 (a) If all or any portion of the Demised Premises are
-------------
damaged or rendered unusable by fire or other casualty, the damages thereto
shall be promptly repaired by and at the expense of Tenant and, provided that
Tenant continuously and diligently prosecutes such repairs to completion, Fixed
Rent and Additional Rent shall be abated from the date of the occurrence of such
casualty to the date of substantial completion with respect to the portion of
the Demised Premises so unusable based upon the relationship that the square
footage of the unusable portion of the Demised Premises bears to the total
square footage of the Demised Premises.
(b) (i) If the Building is so damaged that the Demised Premises is
totally or partially unusable or access thereto is not possible, then, Landlord
shall within thirty (30) days after such damage, cause its architect to deliver
to Tenant a certification as to the estimated period within which Landlord shall
be able to restore such portion of the Building so damaged. If (i) the time
period set forth in the architects certificate shall exceed one hundred eighty
(180) days from the date of such damage, (ii) the time period set forth in such
certificate is less than one hundred eighty (180) days, but Landlord fails to
complete such restoration within two hundred and ten (210) days, subject to
delay by reason of Force Majeure (as hereinafter defined), or (iii) if the
Building is so damaged that the Demised Premises is totally unusable or access
thereto is not possible and such damage occurs during the last year of the Term,
Tenant may terminate the Lease by notice to Landlord given within thirty (30)
days after either Tenant's receipt of such certification or the termination of
such two hundred and forty day period as adjusted by reason of Force Majeure, as
the case may be, specifying a date for the expiration of the Lease, which date
has not be more than sixty (60) days after the giving of such notice. Upon the
date specified in such notice the term of this Lease shall expire as fully and
completely as if such date were the date set forth above for the expiration of
this Lease and Tenant shall forthwith quit, surrender and vacate the premises,
without prejudice, however, to Landlord's rights and remedies against Tenant
under the Lease provisions in effect prior to such termination. Any Fixed Rent,
Fixed Repayment and Additional Rent and all other sums and charges payable by
Tenant hereunder owing shall be paid up to the date of such casualty and any
payments of Fixed Rent, Fixed Repayment and Additional Rent and other sums and
charges payable by Tenant hereunder made by Tenant which were on account of any
period subsequent to such date be returned to Tenant. For purposes of this
Lease, "Force Majeure" shall be deemed to mean any and all causes beyond
-------------
Landlord's reasonable control, including delays caused by Tenant, other tenants,
governmental restriction, regulation or control, labor dispute, accident,
mechanical breakdown, shortage or inability to obtain labor, fuel, steam, water,
electricity or materials, acts
-45-
<PAGE>
of God, enemy action, civil commotion, fire, other casualty or the conditions of
supply and demand which have been or are affected by war or other emergency.
(ii) In the event that Tenant does not terminate this Lease as set
forth in Section 31.02(b)(i) hereof, Landlord shall promptly restore such
-------------------
portion of the Building so damaged at Landlord's expense and Fixed Rent shall be
abated from the date of occurrence of such casualty to the date of substantial
completion of such restoration with respect to the portion of the Demised
Premises so unusable based upon the relationship that the square footage of the
unusable portion of the Demised Premises bears to the total square footage of
the Demised Premises.
ARTICLE 32
----------
Maintenance/Repairs
-------------------
Section 32.01 Landlord shall maintain, repair and keep in good order
-------------
and condition at Landlord's expense, the public portions of the Building,
interior and exterior and the Building Equipment and the Building systems.
Tenant shall maintain, repair and keep in good order and condition, at Tenant's
cost and expense, the Demised Premises and all improvements thereto, including
without limitation, lighting, custom plumbing, if any (serving the Demised
Premises only), window glass, electrical installations and supplemental HVAC, if
any, serving the Demised Premises, during the Term.
Section 32.02 Landlord shall have the option at any time to
-------------
reasonably require Tenant to enter into a maintenance contract or contract with
a contractor or contractors reasonably chosen by the Landlord or with Landlord
directly for the provision of maintenance and repair and heavy cleaning services
which are Tenant's obligation under this Article 32. The fee or fees payable by
Tenant under any such contract shall not exceed Landlord's actual cost therefor.
ARTICLE 33
----------
Additional Rent
---------------
Section 33.01 In addition to any other amounts that may become due
-------------
and payable by Tenant to Landlord under this Lease, Tenant shall pay to Landlord
on demand as Additional Rent hereunder, Tenant's Proportionate Share
(hereinafter defined) of the amount by which any PILOT payment attributable to
the Premises under Section 3.06 of the Ground Lease (or payment for services
rendered in lieu thereof (or any portion thereof) pursuant to the Ground Lease
or any separate agreement between Landlord and the City) and payments of
Impositions and Taxes (as defined in the Ground Lease) under Article 4 of the
Ground Lease due and payable by Landlord in any PILOT year (hereinafter defined)
or Tax Year (as defined in the Ground Lease) exceed the amount of the PILOT
payment and the amount of the payments for
-46-
<PAGE>
Impositions and Taxes for the Base Year (hereinafter defined).
Section 33.02 Tenant's Proportionate Share shall be 22 %.
-------------
Section 33.03 The term "Base year" shall mean the first year in which
-------------
Landlord is obligated to make any PILOT payment or payment of Impositions or
Taxes under the Ground Lease. The term "PILOT Year" shall mean each twelve (12)
month period, commencing on the first day of July of each such period occurring
during the Term hereof or such other 12 month period as may hereafter be adopted
as the fiscal year for PILOT payment purposes by the City of New York.
Section 33.04 In the event that Landlord shall become the fee owner
-------------
of the land which is a part of the Premises (the "Real Property") and shall no
longer be obligated to make payments under the Ground Lease as described in
Section 33.01 hereof, then the following provisions of this Section 33.04 and
Sections 33.05 and 33. 06 shall apply:
(a) The term "Landlord's Statement" shall mean an instrument
containing a computation of Additional Rent due pursuant to the provisions of
this Article 33 furnished by Landlord to Tenant.
(b) The term "Base Tax Year" shall mean the first Tax Year (as defined
in subparagraph (d) below) for which Landlord is Obligated to pay Taxes as fee
owner of the Real Property.
(c) The term "Taxes" shall mean (i) all real estate taxes, assessments
(special or otherwise), sewer and water rents, rates and charges and any other
governmental levies, impositions or charges of a similar or dissimilar nature,
whether general, special, ordinary, extraordinary, foreseen or unforeseen, all
computed without taking into account any exemption or abatement due to
Landlord's tax exempt status, which may be assessed, levied or imposed upon all
or any part of the Real Property, whether or not the same constitute one or more
tax lots, and whether levied by the City of New York or any other taxing
authority, and (ii) any expenses (including reasonable attorneys' fees and
disbursements and experts' and other witness' fees) incurred by Landlord in
contesting any of the foregoing or the assessed valuation of all or any part of
the Real Property, provided, however, that such expenses shall not exceed the
amount of any refund or any reduction in assessed valuation; but "Taxes" shall
not include (a) any net income, franchise, "value added', inheritance or estate
tax imposed upon Landlord, the Demised Premises or the Real Property, except to
the extent set forth in the last sentence of this subsection, or (b) any
interest or penalties incurred by Landlord as a result of Landlord's late
payment of Taxes, except for interest payable in connection with the installment
payments of assessments pursuant to the next sentence. If by law, any assessment
may be divided and paid in annual installments, then, provided the same is not
prohibited under the terms of any Superior Lease or Superior Mortgage, for the
purposes of this Article, (x) such assessment shall be deemed to have been so
divided and to be payable in the maximum number of annual installments permitted
by law and (y) there shall be deemed included in Taxes for each Tax Year
-47-
<PAGE>
the annual installment of such assessment becoming payable during such Tax Year,
together with interest payable during such Tax Year on such annual installment
and on all installments thereafter becoming due as provided by law, all as if
such assessment had been so divided. If at any time after the date hereof the
methods of taxation prevailing at the date hereof shall be altered so that in
lieu of or as an addition to or as a substitute for the whole or any part of the
taxes, assessments, rents, rates, charges, levies or impositions now assessed,
levied or imposed upon all or any part of the Real Property, there shall be
assessed, levied or imposed (a) a tax, assessment, levy, imposition or charge
based on the income or rents received therefrom whether or not wholly or
partially as a capital levy or otherwise, or (b) a tax, assessment, levy,
imposition or charge measured by or based in whole or in part upon all or any
part of the Real Property and imposed upon Landlord, or (c) a license fee
measured by the rents, or (d) a net income, franchise, "value added",
inheritance, estate or other tax, assessment, levy, imposition, charge or
license fee however described or imposed, then all such taxes, assessments
levies, impositions, charges or license fees or the part thereof so measured or
based shall be deemed to be Taxes; provided that any tax, assessment, levy,
imposition or charge imposed on income from the Real Property shall be
calculated as if the Real Property were the only asset of Landlord.
(d) The Term "Tax Year" shall mean the twelve (12) month period
commencing July 1 of each year, or such other period of twelve (12) months as
may be duly adopted as the fiscal year for real estate tax purposes in The City
of New York.
(e) The term "Commercial Portion" shall mean the portion of the
Building not used or held for university purposes or as common areas.
(f) The term "Commercial Portion Taxes" payable for a Tax Year shall
mean 100% of the Taxes payable for such Tax Year.
Section 33.05 (a) Tenant shall pay as Additional Rent for each Tax
-------------
Year all or any portion of which shall be within the term of this Lease, a sum
("Tenant's Tax Payment") equal to Tenant's Proportionate Share of the amount by
which the Commercial Portion Taxes payable for such Tax Year exceed the
Commercial Portion Taxes payable for the Base Tax Year, as finally adjusted and
determined. Tenant's Tax Payment for each Tax Year shall be due and payable, in
advance, on the first day of each July during each Tax Year, based upon the
Landlord's Statement furnished prior to or after the commencement of such Tax
Year, until such time as a new Landlord's Statement shall become effective. If a
Landlord's Statement is furnished to Tenant after the commencement of a Tax Year
in respect of which such Landlord's Statement is rendered, Tenant shall, within
fifteen (15) days thereafter, pay to Landlord an amount equal to the amount of
any underpayment of Tenant's Tax Payment with respect to such Tax Year as stated
in the Landlord's Statement. In the event of an overpayment, Landlord shall
either pay to Tenant, or, at Landlord's election, credit against subsequent
payments under this Section 33.05, the amount of Tenant's overpayment as stated
in the Landlord's Statement. If there shall
-48-
<PAGE>
be any increase in Taxes for any Tax Year, whether during or after such Tax
Year, or if there shall be any decrease in the Taxes for any Tax Year during or
after such Tax Year, Landlord may furnish a revised Landlord's Statement for
such Tax Year, and Tenant's Tax Payment for such Tax Year shall be adjusted and
paid or credited or refunded, as the case may be, substantially in the same
manner as provided in the preceding sentence. If at any time after the date
hereof, Taxes are required to be paid (either to the appropriate taxing
authorities or as tax escrow payments to a Superior Lessor or Superior
Mortgagee) on any other date or dates than as presently required, the Tenants
Tax Payments shall be correspondingly accelerated or revised so that said
Tenant's Tax Payments are due at least thirty (30) days prior to the date
payments are due to the taxing authorities or a Superior Lessor or Superior
Mortgagee. The benefit of any discount for any early payment or prepayment of
Taxes and of any tax exemption or abatement relating to all or any part of the
Real Property (due to Landlord's tax exempt status) shall accrue to the benefit
of Landlord and Tenant (in the case of any tax exemption or abatement), and
Taxes shall be computed by taking into account any such exemption or abatement.
(b) Only Landlord shall have the right to institute tax reduction or
other proceedings to reduce the assessed valuation of the Real Property. If
Landlord shall receive a refund of Taxes for any Tax Year after the Base Tax
Year, and if such refund shall be attributable to the Commercial Portion,
Landlord shall either pay to Tenant or, at Landlord's election, credit against
subsequent payments under this Section 33.05 Tenant's Proportionate Share of any
part of such refund attributable to the Commercial Portion, not to exceed
Tenant's Tax Payment paid for the Tax Year for which such refund was received;
provided, however, that Tenant shall be entitled to receive any portion of any
refund received by Landlord, or receive the benefit of any abatement or
reduction in Taxes, attributable, in whole or in part, to Landlord's tax exempt
status. Nothing herein shall obligate Landlord to file any application or
institute any proceeding seeking a reduction in Taxes or assessed valuation.
(c) Tenant's Tax Payment and any credits with respect thereto as
provided in this Section 33.05 shall be made as provided in this Section 33.05
regardless of the fact that Tenant may be exempt, in whole or in part, from the
payment of any taxes by reason of Tenant's diplomatic or other tax exempt status
or for any other reason whatsoever.
(d) Tenant shall pay to Landlord, within ten (10) business days after
receipt of a bill therefor, as Additional Rent, any occupancy tax or rent tax
now in effect or hereafter enacted and payable with respect to the Demised
Premises or this Lease, if payable by Landlord in the first instance or
hereafter required to be paid by Landlord.
(e) If only a portion of a Tax Year shall be included within the Term,
any Additional Rent under this Section 33.05 for such Tax Year shall be
apportioned in the ratio which the number of days in such Tax Year which occur
during the Term bears to the total number of days in such Tax Year. In the event
of a termination of this Lease, any Additional Rent under this Section 33.05
shall be paid or adjusted within 30 days after the submission of Landlord's
Statement. In no event shall Fixed Rent or Fixed Repayment ever be reduced by
operation of this Section 33.05 and the rights and obligations of Landlord and
Tenant under the provisions
-49-
<PAGE>
of this Section 33.05 with respect to any Additional Rent shall survive the
termination of this Lease.
Section 33.06 (a) Landlord's failure to render Landlord's Statements
-------------
with respect to any Tax Year shall not prejudice Landlord's right to thereafter
render a Landlord's Statement with respect thereto or with respect to any
subsequent Tax Year nor shall the rendering of a Landlord's Statement prejudice
Landlord's right to thereafter render a corrected Landlord's Statement for that
Tax Year. Nothing herein contained shall restrict Landlord from issuing a
Landlord's Statement at any time there is an increase in Taxes during any Tax
Year or any time thereafter.
(b) Each Landlord's Statement shall be conclusive and
binding upon Tenant unless within sixty (60) days after receipt of such
Landlord's Statement, Tenant shall notify Landlord that it disputes the
correctness of Landlord's Statement, specifying the particular respects in which
such Landlord's Statement is claimed to be incorrect. Pending the resolution of
such dispute, Tenant shall pay Tenant's Tax Payment in accordance with the
applicable Landlord's Statement, without prejudice to Tenant's position. If such
dispute is ultimately determined in Tenant's favor, Landlord shall promptly
after such determination pay to Tenant any amount so overpaid by Tenant.
Section 33.07 In the event that pursuant to the Ground Lease and the
-------------
REA, Landlord becomes the owner of any additional real property treated, for
purpose of Taxes, as part of the Real Property, appropriate adjustments with
respect to Tenant's obligations pursuant to this Article 33 shall be made and
Tenant shall be liable for payments under this Article 33, as so adjusted.
ARTICLE 34
----------
Parking
-------
Section 34.01 Tenant and its employees, clients, visitors and agents
-------------
shall have the right seven days a week, twenty-four hours a day to the use of
six (6) valet parking spaces (which parking spaces shall not be specifically
dedicated to Tenant and the locations of which may be changed daily) at no cost
to Tenant and up to fourteen (14) additional valet parking spaces which will be
available on advance request therefor and upon payment by Tenant to Landlord
monthly of Landlord's standard rates (which Landlord estimates will be
approximately $130 per space per month). All such spaces ("Tenant's Parking
Spaces") are located in the lot adjacent to the Building until such time as
Landlord begins construction of a new building to be erected on such lot.
Landlord shall give Tenant sixty (60) days' written notice in advance of
commencing such construction and Tenant shall have removed all vehicles from
such lot on or before the date set forth in such notice. From and after the
date of such notice, Landlord shall use reasonable efforts to provide reasonably
equivalent and suitable substitute temporary parking space for
-50-
<PAGE>
Tenant's use and agrees that Tenant's Parking Spaces shall be made available at
a permanent location convenient to the Building, if, as and when same are
constructed, on the same terms and conditions as set forth herein. Each such
lot that Tenant shall use shall have valet parking services, which shall be
provided to Tenant, during hours to be determined by Landlord in its sole and
absolute discretion. The use of all such parking spaces shall at all times be
subject to Landlords reasonable rules, regulations and procedures.
ARTICLE 35
----------
Broker
------
Section 35.01 Each party represents, warrants and covenants to the
-------------
other party that there is no broker, finder, consultant or similar person
entitled to a commission, fee or other compensation in connection with the
consummation of the Lease and no conversations or prior negotiations were had by
such party or anyone acting on behalf of such party with any broker, finder, or
consultant or similar person concerning the renting of the Demised Premises.
Each party shall indemnify the other party against all costs, expenses, losses,
damages and liabilities, including attorneys' fees and costs, arising from any
claims for brokerage commissions, finder's fees or other compensation resulting
from or arising out of any conversations, negotiations or actions had by the
indemnifying party or anyone acting on behalf of the indemnifying party with any
broker, finder, consultant or similar person. The other party shall have no
liability for brokerage commissions arising out of an assignment or sublease by
the indemnifying party and the indemnifying party shall indemnify the other
party against all liability for brokerage commissions arising out of any such
assignment or sublease. The provisions of this Article 35 shall survive the
termination or expiration of this Lease.
ARTICLE 36
----------
Security Deposit
----------------
Section 36.01 Tenant has deposited with Landlord the sum of
-------------
$65,748.00 as security for the full and faithful performance and observance by
Tenant of the terms, provisions and covenants of this Lease. In the event Tenant
fails to perform any of its obligations hereunder, Landlord may use, apply or
retain the whole or any part of such security to the extent required for the
payment of any amounts as to which Tenant is in default or of any amounts which
Landlord may expend or my be required to expend by reason of Tenant's default,
including, without limitation any damages or deficiency in reletting the Demised
Premises. In the event that Tenant shall have fully and faithfully complied with
all of the terms, covenants and conditions of this Lease, such security shall be
returned to Tenant after the Expiration Date and delivery of the Demised
Premises to Landlord in the condition required hereunder.
-51-
<PAGE>
Section 36.02 In the event of a sale or lease of the Premises and the
-------------
Building, Landlord shall have the right to assign or transfer the security to
the purchaser or lessee, as the case may be, whereupon Landlord shall be
released by Tenant from all liability for the return of such security. Tenant
covenants that it will not attempt to assign, assign or otherwise attempt to
encumber or encumber such security and that neither Landlord nor any successor
or assign of Landlord shall be bound by any such assignment or attempted
assignment, encumbrance or attempted encumbrance.
Section 36.03 In the case of every use, application or retention by
-------------
Landlord of all or any part of the security deposited pursuant to Section 36.01,
Tenant shall, on demand, pay to Landlord the sum so used, applied or retained
which shall be added to the security deposited hereunder so that the same shall
be replenished to its former amount, and any failure by Tenant to pay such sum
on demand shall constitute an Event of Default under this Lease.
Section 36.04 Landlord agrees that the security deposited hereunder
-------------
shall earn interest at a passbook savings rate. The interest accrued with
respect thereto shall be added to and constitute a part of the security
deposited hereunder, to be held and disposed of by Landlord in accordance with
the terms of this Article 36. All security deposited and not used, applied, or
retained pursuant to the terms of this Article 36 with respect to a default plus
any interest payable with respect to the sum deposited by Tenant on account of
the security deposited hereunder shall be paid to Tenant promptly after the
Expiration Date, less an amount equal to one percent (1%) per annum for
--- -----
Landlord's administrative costs in connection with the security deposited
hereunder.
Section 36.05 Tenant shall, concurrently with execution and delivery
-------------
of the Lease, and thereafter at any time upon request by Landlord, deliver to
Landlord a fully completed Form W-9 (Request for Taxpayer Identification Number
and Certification).
ARTICLE 37
----------
Miscellaneous
-------------
Section 37.01 Landlord shall have the right to erect a gate, chain or
-------------
other obstruction or to close off any portion of the Premises to the public at
any time to the extent necessary to prevent a dedication thereof for public use,
provided that such gate, chain or obstruction shall not prevent Tenant's ingress
to or egress from the Demised Premises.
Section 37.02 The submission by Landlord to Tenant of this Lease in
-------------
draft form shall be deemed submission solely for Tenant's consideration and not
for acceptance and execution. Such submission shall have no binding force and
effect, shall not constitute an option for the leasing of the Demised Premises,
and shall not confer any rights or impose any obligations upon either party. The
submission by Landlord of this Lease for execution by Tenant and the actual
execution and delivery thereof by Tenant to Landlord shall similarly have no
binding force and
-52-
<PAGE>
effect on Landlord unless and until Landlord shall have executed this Lease and
a counterpart thereof shall have been delivered to Tenant.
Section 37.03 This Lease contains the entire agreement between the
-------------
parties and all prior negotiations and agreements are merged into this Lease.
This Lease may not be changed, modified abandoned or discharged, in whole or in
part, nor may any of its provisions be waived except by a written instrument
which (a) expressly refers to this Lease, (b) is executed by both parties hereto
and (c) is permissible under any Superior Mortgage, the Ground Lease and any
other Superior Lease.
Section 37.04 No vault, vault space or area is leased hereunder.
-------------
Section 37.05 If an excavation shall be made upon land adjacent to
-------------
the Building or shall be authorized to be made, Tenant shall afford the person
so authorized or so making to enter upon the Demised Premises for the purpose of
performing such work as such person shall deem necessary to preserve any wall or
the Building of which the Demised Premises are a part from damage and to support
same by proper foundation without claim for damage, indemnity or abatement of
rent, provided, however, that: (i) with respect to any excavation work being
performed solely by Landlord on land adjacent to the Building, Landlord shall be
liable for any damage to the Demised Premises caused by the gross negligence of
Landlord or Landlord's agent in performing such excavation; and (ii) to the
extent that such excavation work results in Tenant being unable to utilize the
Demised Premises in its entirety or if Tenant's access thereto is completely
precluded for a period in excess of five (5) consecutive Business Days, Fixed
Rent shall abate from such sixth (6th) consecutive Business Day until such time
as Tenant is no longer prevented from obtaining such access or until such time
as Tenant may again utilize the Demised Premises, as the case may be.
Section 37.06 If any of the provisions of this Lease, or the
-------------
application thereof to any person or circumstance, shall, to any extent, be
invalid or unenforceable, the remainder of this Lease, or the application of
such provision or provisions to persons or circumstances other than those as to
whom or which it is held invalid or unenforceable, shall not be affected
thereby, and every provision of this Lease shall be valid and enforceable to the
fullest extent permitted by law.
Section 37.07 For the purposes of this Lease and all agreements
-------------
supplemental to this Lease, unless the context otherwise requires:
(a) Reference to "termination of the Lease" and words of like import
------------------------
includes expiration or sooner termination of this Lease and the Term and the
estate hereby granted or cancellation of this Lease pursuant to any of the
provisions of this Lease or to law. Upon the termination of this Lease, the term
and estate granted by this Lease shall end at noon of the date of termination as
if such date were the Expiration Date and neither party shall have any further
obligation or liability to the other after such termination except (i) as shall
be expressly provided for in this Lease, and (ii) for such obligations as by
their nature or under the circumstances can
-53-
<PAGE>
only be, or by the provisions of this Lease, may be, performed after such
termination and, in any event, unless expressly otherwise provided in this
Lease, any liability for a payment (which shall be apportioned as of such
termination) which shall have accrued to or with respect to any period ending at
the time of termination shall survive the termination of this Lease.
(b) The words "Tenant hereby indemnifies Landlord" and words of
----------------------------------
similar import shall mean that Tenant hereby agrees to and hereby does
indemnify, defend, and hold and save Landlord, Landlord's agents, New York
State, the City, EDC, UDC and any other Superior Lessor or any Superior
Mortgagee and their respective agents, employees, contractors, officers,
directors, shareholders, partners, trustees and principals (disclosed or
undisclosed), successors and assigns harmless from and against any and all cost,
liability, claim, damage, fine, penalty and expense, including, without
limitation, reasonable attorneys' fees and disbursements.
(c) Each term, covenant, agreement, obligation or other provision of
this Lease on Tenant's part to be performed shall be deemed and construed as a
separate and independent covenant of Tenant, not dependent upon any of the other
terms of the Lease. This Lease shall be construed without regard to any
presumption or other rule requiring construction against the party causing this
Lease to be drafted. In the event of any action, suit, arbitration, dispute or
proceeding affecting the terms of this Lease, no weight shall be given to any
deletions or striking out of any of the terms of this Lease contained in any
draft of this Lease and no such deletion or strike out shall be entered into
evidence in any such action, suit, arbitration, dispute or proceeding nor used
to interpret the intent of the parties nor given any weight whatsoever.
ARTICLE 38
----------
Renewal Option
--------------
Section 38.01 Provided that both at the time of the exercise of the
-------------
option contained in this Section 38.01 and at the time of the commencement of
the Renewal Term, no Event of Default shall have occurred and be continuing,
Tenant shall have the right to renew the term of this Lease for an additional
term of three (3) years, four (4) years or five (5) years (the "Renewal Term")
------------
commencing on the day immediately following the Expiration Date and ending on
(i) the last day of the month in which occurs the day immediately preceding the
eighth anniversary of the Rent Commencement Date, with respect to a three year
Renewal Term; (ii) the last day of the month in which occurs the day immediately
preceding the ninth anniversary of the Rent Commencement Date, with respect to a
four year Renewal Term; (iii) the last day of the month in which occurs the day
immediately preceding the tenth anniversary of the Rent Commencement Date, with
respect to a five year Renewal Term; ((i), (ii) or (iii) herein after referred
to as the "Renewal Term Expiration Date"), upon the same terms and conditions of
----------------------------
this Lease except as set forth in Section 38.02 hereof. If Tenant so elects to
renew the Term for the Renewal Term, Tenant shall give notice to Landlord of
such election on or before the date which is six (6) months prior to the
commencement of the Renewal Term. Such notice from Tenant shall specify the
length of such Renewal Term, it being hereby agreed that Tenant shall only
-54-
<PAGE>
have the right to renew the Term for a full three (3) year, four (4) year or
five (5) year period.
Section 38.02 In the event that Tenant timely exercises such right
-------------
and provided that no Event of Default shall have occurred and then be continuing
hereunder, the Expiration Date of this Lease shall be automatically extended for
the Renewal Term as if the Renewal Term had been originally included in the
Term, provided, however, that (i) the Fixed Repayment shall continue to be due
and payable monthly throughout the Renewal Term at the same rate as provided in
Section 3.04 hereof (as the same may have been adjusted pursuant to Sections
- ------------
25.07 and 43.01 hereof); (ii) the terms of this Lease relating to Tenant's Work
(other than the Fixed Repayment) shall not be applicable to the Renewal Term;
(iii) Tenant shall have no right to renew the term of this Lease for any period
beyond the Renewal Term; (iv) Article 43 of this Lease shall be null and void
and of no further force or effect upon Tenant's election to renew this Lease for
the Renewal Term; and (v) annual Fixed Rent shall be as follows:
Period Amount
------ ------
Renewal Term Year 1 $252,033.96 per annum, payable in
equal monthly installments of
$21,002.83 each;
Renewal Term Year 2 $259,594.92 per annum, payable in
equal monthly installments of
$21.632.91 each;
Renewal Term Year 3 $267,382.80 per annum, payable in
equal monthly installments of
$22,281.90 each;
Renewal Term Year 4 $275,404.32 per annum, payable in
(if applicable) equal monthly installments of
$22,950.36 each; and
Renewal Term Year 5 $283,666.44 per annum, payable in
(if applicable) (if applicable) equal monthly installments of
$23,638.87 each.
-55-
<PAGE>
ARTICLE 39
----------
Expansion Right
---------------
Section 39.01 A. Provided that no Event of Default shall have
-------------
occurred and be continuing, in the event that Landlord shall have a bona fide
third party (the "Third Party") apply to rent some or all of the space on the
-----------
fourth floor of the Building as shown by cross-hatching on Exhibit D annexed
hereto and made a part hereof (the "Expansion Space") at any time during the
---------------
Term, Tenant shall have a right to lease all of the Expansion Space on the terms
provided in this Lease, except that Fixed Rent shall be as set forth in clause B
of this Section 39.01. Landlord shall give Tenant written notice of such Third
-------------
Party's application for some or all of the Expansion Space. Landlord shall have
no obligations to perform work or pay for work or loan money to Tenant to
perform work in such space. Tenant shall have thirty (30) days from the date of
receipt of the notice from Landlord to give Landlord written notice of its
exercise of such right, as to which period time shall be of the essence. If
----------------------------
Tenant shall exercise its right within such thirty (30) day period, by amendment
hereto such space shall be added to the Demised Premises on the terms and
conditions set forth herein except that necessary modifications to this Lease,
including, without limitation, the Fixed Rent and Tenant's Proportionate Share,
shall be included in such amendment. Landlord and Tenant hereby agree to act in
good faith to promptly execute and deliver such amendment. In the event that
Tenant shall not exercise its right within such thirty (30) day period and
Landlord rents the Expansion Space to such Third Party or to any other party
applying to rent the same, then at such time, if any, as the Expansion Space
again becomes available for renting during the Term, Tenant shall have the right
to lease the Expansion Space as the terms and conditions set forth in this
Subparagraph A. In the event that Tenant shall not exercise such right within
thirty (30) days after notice from Landlord, as to which period time shall be of
----------------
the essence, then Tenant shall have no further rights with respect to the
- -----------
Expansion Space.
B. Tenant shall pay Fixed Rent for the Expansion Space
as follows:
(a) For the period commencing on the date ("Expansion
---------
Space Commencement Date") which is the earlier to occur of (x) ten (10) days
- -----------------------
after Tenant gives notice of exercise of its right to lease such space hereunder
or (y) the date that the amendment is executed by and delivered to both parties
thereto, through the Expiration Date, at the same rate per square foot as Tenant
shall be paying for the original Demised Premises. In the event that during such
period the Fixed Rent for the Demised Premises shall increase pursuant to this
Lease, then Tenant shall pay such increased rate per square foot for the
Expansion Space.
(b) Fixed Rent shall be paid in accordance with the
terms of this lease, including, without limitation, Article 3 hereof.
-56-
<PAGE>
Section 39.02 Provided that no Event of Default shall have occurred
-------------
and be continuing, at such time as Landlord shall commence the leasing of the
building known or to be known as the Audubon Business and Technology Center
Phase II ("Audubon II") to bonafide third parties, Tenant shall have the right
----------
to all of the rentable space on the fifth floor of Audubon II (the "Fifth
-----
Floor") on terms and conditions set forth in this Section 39.02. Landlord shall
- ----- -------------
give Tenant written notice (the "Fifth Floor Notice") that such leasing has
------------------
commenced, setting forth the terms and conditions (including the rental rate per
rentable square foot which shall be at a rate comparable to the rate offered to
other tenants, and the term of the letting) of the leasing of the Fifth Floor
offered to Tenant. Tenant shall have thirty (30) days from the date of receipt
of the notice from Landlord to give Landlord written notice of its exercise of
such right, as to which period time shall be of the essence. If Tenant shall
----------------------------
exercise such right within the requisite time period, Landlord and Tenant shall
enter into a lease of the Fifth Floor substantially similar to the terms and
conditions of this Lease, which lease shall incorporate the terms and conditions
set forth in the Fifth Floor Notice as well as other terms and conditions as
agreed to by Landlord and Tenant. In the event that Tenant shall not exercise
such right within the requisite time period then Tenant shall have no further
rights with respect to the Fifth Floor.
ARTICLE 40
----------
Intentionally Deleted
---------------------
ARTICLE 41
----------
REA/Security
------------
Section 41.01 Tenant acknowledges that pursuant to the REA, the City,
-------------
EDC and Landlord have granted each other certain mutual easements for access,
ingress and egress in and to the Premises in order to conduct and perform
certain maintenance, repair and security obligations which are common to the
parties thereto. In particular, the City, EDC and Landlord have agreed to devise
and implement an integrated security system for certain areas of the Premises
from which tenants of the Building will derive some benefit.
Section 41.02 The parties hereto expressly understand and agree that
-------------
Landlord's obligations under the REA, including, without limitation, those
relating to the provision of security under Section 4.02 of the REA, shall not
(i) create (or create the inference of or be deemed to create) an affirmative
obligation on Landlord's part or on the part of the City or EDC to provide any
security, alarm or other system or protection to Tenant hereunder or thereunder
or (ii) create or imply any right of Tenant under this Lease or the REA to
receive any such security. Tenant shall have no claim against Landlord,
Landlord's agents, the City or EDC nor shall Landlord, Landlord's agents, the
City or EDC be liable to Tenant for any injury to persons or property arising
from Landlord's action or failure to act in connection with its obligations
under the REA.
-57-
<PAGE>
ARTICLE 42
----------
Index of Definitions
--------------------
"Additional Rent", "Fixed Rent", and "rent" shall have the
--------------- ---------- ----
meanings set forth in Article 3.
"Additional Work" shall have the meaning set forth in Article 48.
---------------
"Alterations" shall have the meaning set forth in Section 25.01.
-----------
"Assignee Security" shall have the meaning set forth in Section 24.03.
-----------------
"Audubon II" shall have the meaning set forth in Section 39.02.
----------
"Autoclave Specifications" shall have the meaning set forth in
------------------------
Section 26.10.
"Base Year" shall have the meaning set forth in Section 33.03.
---------
"Broker" shall have the meaning set forth in Section 35.01.
------
"Building Equipment" shall mean all machinery, apparatus, equipment,
------------------
personal property, fixtures and systems of every kind and nature whatsoever now
or hereafter attached to or used in connection with the operation of maintenance
of the Building, including all electrical, heating, mechanical, sanitary,
sprinkler, utility, sewage, drainage, power, plumbing, cleaning, fire
prevention, refrigeration, ventilating, air cooling, air conditioning, elevator,
communication (including telephone, telegraph, teleregister, and pneumatic tube
dispatch) and escalator systems, apparatus and equipment and any and all
renewals and replacements of any thereof, whether presently installed or
installed after the date of this lease, but excluding, however, (i) Tenant's
Property, (ii) property of any other tenant, (iii) property of contractors
servicing the Building and (iv) improvements for water, gas, steam and
electricity and other similar equipment owned by any public utility company or
any governmental agency or body.
"Building" shall have the meaning set forth in the recitals.
--------
"Business Days" shall mean weekdays, other than those weekdays
-------------
which are legal holidays observed by the City of New York.
"City" shall mean the City of New York.
----
"Commencement Date" shall have the meaning set forth in Section 1.03.
-----------------
-58-
<PAGE>
"Construction Loan" shall have the meaning set forth in Section
-----------------
25.07.
"Default-Interest Rate" shall have the meaning set forth in
---------------------
Section 3.05.
"Deficiency" shall have the meaning set forth in Section 11.03.
----------
"Demised Premises" shall have the meaning set forth in the recitals.
----------------
"DHH Specifications" shall have the meaning set forth in Section 6.01.
------------------
"EDC" shall have the meaning set forth in the recitals.
---
"Environmental Legal Requirements" shall have the meaning set forth
--------------------------------
in Section 8.02.
"Event of Default" shall have the meaning set forth in Section 10.01.
----------------
"Expansion Space" shall have the meaning set forth in Article 39.
---------------
"Expansion Space Commencement Date" shall have the meaning set
---------------------------------
forth in Article 39.
"Expiration Date" shall have the meaning set forth in Section 1.02.
---------------
"Fifth Floor" shall have the meaning set forth in Section 39.02.
-----------
"Fifth Floor Notice" shall have the meaning set forth in Section
------------------
39.02.
"Force Majeure" shall have the meaning set forth in Section 31.02(b).
-------------
"Grant" shall have the meaning set forth in Section 25.07.
-----
"Ground Lease" shall have the meaning set forth in the recitals.
------------
"Hazardous Materials" shall have the meaning set forth in
-------------------
Section 8.01.
"Insurance Requirements" shall mean all requirements of the Ground
----------------------
Lease or of any insurance policy covering or applicable to all or any part of
the Premises, the Demised Premises, the Building or the use thereof to the
extent applicable to Tenant's use or occupancy thereof, all requirements of the
issuer of any such policy of which Tenant has been notified in writing and all
orders, rules, regulations, recommendations and other requirements of the New
York Board of Fire Underwriters or the Insurance Service Organization or any
other body exercising the same or similar functions and having jurisdiction or
cognizance of all or any part of the Premises, the Demised Premises or the
Building.
"Interest Rate" shall have the meaning set forth in Section 3.04.
-------------
-59-
<PAGE>
"Landlord" shall mean only the owner at the time in question of the
--------
present Landlord's interest in the Lease or the Building and in the event of a
sale or transfer of the Building (by operation of law or otherwise): (a) the
grantor or other transferor, as the case may be, shall be (to the extent of the
interest in or portion of the Building or the Lease sold or transferred)
automatically and entirely released and discharged, from and after the date of
such sale or other transfer of all liability in respect of the performance of
any of the terms of this Lease on the part of Landlord thereafter to be
performed; (b) the purchaser or other transferee (collectively "Transferee")
----------
shall be deemed to have assumed and agreed to perform, during and in respect of
the Transferee's period of ownership of the Landlord's interest under this
Lease, all of the terms of this Lease on the part of the Landlord to be
performed; and (c) the Transferee shall have all rights of the Landlord under
this Lease.
"Legal Requirements" shall have the meaning set forth in Section 8.01.
------------------
"Person" shall mean any individual, corporation, partnership, joint
------
venture, estate, trust, unincorporated association, any federal, state, county
or municipal government, or any bureau, department or agency thereof and any
fiduciary acting in such capacity on behalf of any of the foregoing.
"PILOT Year" shall have the meaning set forth in Section 33.03.
----------
"Plan" shall have the meaning set forth in Section 4.01.
----
"Premises" shall have the meaning set forth in the recitals.
--------
"REA" shall have the meaning set forth in Section 1.01.
---
"Rent Adjustment Date" shall have the meaning set forth in
--------------------
Section 3.03.
"Renewal Term" shall have the meaning set forth in Section 38.01.
------------
"Renewal Term Expiration Date" shall have the meaning set forth
----------------------------
in Section 38.01.
"Special Permit" shall have the meaning set forth in Section 4.01.
--------------
"Successor Owner" shall have the meaning set forth in Section 20.02.
---------------
"Superior Lessor" shall mean the City or any other lessor under
---------------
any other Superior Lease.
"Superior Lease" shall mean all present and future ground leases,
--------------
operating leases, superior leases, overriding leases and underlying leases,
including, without limitation, the Ground Lease, covering all or any part of the
Demised Premises and all renewals, modifications, replacements and extensions of
any of the above, provided that Tenant has received a true and
-60-
<PAGE>
correct copy of any such instrument.
"Superior Mortgage" shall mean all mortgages and building loan
-----------------
agreements, including, without limitation, leasehold mortgages and spreader and
consolidation agreements, which may now or hereafter affect the Premises, the
Building, the Demised Premises or any Superior Lease and all renewals,
modifications, replacements and extensions of any of the above, provided that
Tenant has received a true and correct copy of any such instrument.
"Superior Mortgagee" shall mean the holder of any Superior Mortgage.
------------------
"Tax Year" and "Taxes" and "Impositions" shall have the meanings given
-------- ----- -----------
them in the Ground Lease or as set forth in Section 33.04, as applicable.
"Tenant" shall have the meaning set forth in the recitals and,
------
as applicable, the meaning set forth in Section 10.04.
"Tenant's Parking Spaces" shall have the meaning set forth in
-----------------------
Section 34.01.
"Tenant's Property" shall mean all fixtures, trade fixtures, stock-in-
-----------------
trade, furniture, partitions and other property (i) installed, leased or
purchased at the sole expense of Tenant, (ii) with respect to which Tenant has
not been granted any credit or allowance by Landlord, and (iii) which are
removable without material damage to the Demised Premises.
"Tenant's Proportionate Share" shall have the meaning set forth in
----------------------------
Section 33.02.
"Tenant's Work" shall have the meaning set forth in Section 3.04.
-------------
"Term" shall have the meaning set forth in Section 1.02.
----
"Termination Date" shall have the meaning set forth in Section 43.01.
----------------
"Termination Notice" shall have the meaning set forth in
------------------
Section 43.01.
"Termination Payment" shall have the meaning set forth in
-------------------
Section 43.01.
"Third Party" shall have the meaning set forth in Section 39.01.
-----------
"UDC" shall mean the New York State Urban Development Corporation.
---
"Warrant" shall have the meaning set forth in Article 44.
-------
-61-
<PAGE>
ARTICLE 43
----------
Termination Right
-----------------
Section 43.01 Notwithstanding any provision in this Lease to the
-------------
contrary, Tenant shall have the right to terminate this Lease as of a date
("Termination Date") on or after the third anniversary of the Commencement Date,
----------------
but prior to the Expiration Date of the initial five year Term, upon not less
than six (6) months' prior written notice (the "Termination Notice") to
------------------
Landlord, which notice may be given at any time on or after the date which is
thirty (30) months following the Commencement Date and which Termination Notice
shall specify the Termination Date. Tenant shall, at the time of the giving of
the Termination Notice, pay to Landlord an amount ("Termination Payment") equal
-------------------
to the product obtained by multiplying (i) the annual Fixed Repayment by (ii) a
fraction the numerator of which is the number of months (including any partial
months) remaining in the initial five year Term and the denominator of which is
12.
Section 43.02 Upon (i) the giving by Tenant to Landlord of the
-------------
Termination Notice and (ii) the payment of the Termination Payment, and provided
that at the time of giving of the Termination Notice and on the Termination Date
there shall be no Event of Default: (a) this Lease shall expire on the date
specified in such notice as fully and Completely as if such date were the date
set forth in this Lease as the date of the expiration of the term of this Lease;
(b) all Fixed Rent, Additional Rent and Fixed Repayment shall be apportioned to
such Termination Date (an no further payments of Fixed Rent, Additional Rent and
Fixed Repayment shall thereafter be due); and (c) Tenant shall; on or before the
Termination Date, quit, surrender and vacate the Demised Premises in accordance
with Article 19 hereof, but such action by Tenant shall be without prejudice to
or effect upon Landlord's rights that shall have then accrued under this Lease.
Section 43.03 Upon Tenant's exercise of its option to renew the Term
-------------
of this Lease as set forth in Article 38 of this Lease, the provisions of this
----------
Article 43 shall be null and void and no further force and effect.
- ----------
ARTICLE 44
----------
Equity Participation
--------------------
Section 44.01 As further consideration for Landlord entering into
-------------
this Lease, Tenant has delivered to Landlord that certain Warrant for the
Purchase of Shares of Common Stock, dated June 21, 1996 (the "Warrant"), in form
-------
satisfactory to Landlord, including, without limitation, provisions for
piggyback registration rights with respect to the shares of common stock issued
upon the exercise of the Warrant, whereby Landlord shall have the option,
exercisable at any time during the term hereof (including the Renewal Term), to
purchase 10,000 shares of common stock of Tenant for the purchase price of $1.00
per share. Tenant hereby acknowledges that the delivery to Landlord of such
Warrant or the exercise by Landlord of any rights pursuant
-62-
<PAGE>
to such Warrant does not and will not create any partnership or joint venture
between the parties and does not and will not diminish any of the rights of
Landlord, as landlord, pursuant to this Lease.
ARTICLE 45
----------
Human and Animal Research
-------------------------
Section 45.01 A. Human subjects and live and whole dead animals
-------------
(including, without limitation, live and whole dead mice and rats) may not be
used in research at the Building by Tenant or any assignee, subtenant, licensee,
agent, employee or contractor of Tenant.
B. In the event that Tenant at any time during the
Term (including any Renewal Term) shall desire to (a) use or permit the use of
human subjects or live or whole dead animals for research at the Building or (b)
use or permit the use of any of the facilities of Landlord to house any live or
whole dead animals, Tenant shall forward a request with appropriate back- up
documentation, including, without limitation, a detailed description of Tenant's
proposed research, to Landlord at the address set forth in Article 29 hereof.
Upon receipt of such notice and back-up documentation, Landlord shall review
such request, provided, however, that Landlord shall, in its sole and absolute
discretion, have no obligation to consent to Tenant's request.
ARTICLE 46
----------
Payment for Tenant's Work
-------------------------
Section 46.01 Provided that Tenant shall not be in default hereunder
-------------
(or if Tenant shall be in default, such default shall have been cured so as not
to become an Event of Default), Landlord shall pay Tenant not more often than
monthly, up to a maximum aggregate amount of the Grant and the Construction
Loan, for amounts actually incurred by Tenant to install or construct Tenant's
Work. As a condition precedent to each such payment, Landlord shall receive (i)
a requisition from either (a) the Tenant's construction manager for work and
materials incorporated into the Demised Premises covering all services, labor
and materials theretofore furnished in connection with Tenant's Work or (b)
Tenant's architect, engineer or Tenant's representative observing the
performance of Tenants Work for services provided in connection with Tenant's
Work, at least equal in amount to the portion of the Grant and/or the
Construction Loan that is being applied for, (ii) if the requisition is for work
set forth in Subparagraph (i)(a) above, (1) a certificate from the Tenant's
architect that the work for which payment is requested has been completed, and
(2) a certificate from the Tenants construction manager that all prior payments
made by Landlord to Tenant have been for payments made by Tenant to contractors
-63-
<PAGE>
and/or subcontractors for performance of the Tenant's Work, and provided,
--------
further, that if the requisition is for work set forth in Subparagraph (i)(a)
- -------
above, (x) all Tenant's Work theretofore completed shall have been constructed
in accordance with the Plans and Specifications therefor, and Landlord and
Tenant shall have agreed in writing to that effect, and (y) Landlord shall have
received copies of all required approvals, permits and certificates for the
Tenant's Work from all governmental authorities having jurisdiction. It is
expressly understood that the requirements of this Article 46 are solely for the
----------
benefit of Landlord and Tenant and that no contractor, subcontractor,
materialman or other person (including, without limitation, Tenant's architect)
shall have or acquire any claim against Landlord as a result of any failure of
Landlord actually to obtain the evidences, certifications or other documentation
provided for herein. No portion of the Grant or the Construction Loan shall vest
in Tenants and under no circumstances shall Tenant sell, transfer, assign,
pledge, hypothecate, or otherwise encumber all or any portion of the Grant or
the Construction Loan or any purported interest therein. Landlord hereby agrees
that the Grant shall be completely disbursed prior to Landlord's disbursing
proceeds of the Construction Loan to Tenant pursuant to this Article 46.
ARTICLE 47
----------
Additional Provisions
---------------------
Section 47.01 Landlord represents and warrants to Tenant that on the
-------------
Commencement Date (x) the plumbing, heating, electrical, lighting, fire
protection and all other systems in the Building up to the Demised Premises
shall be in working order and repair, provided, however, that Tenant shall be
solely responsible (with appropriate consent of Landlord if required) for
installing and maintaining all such systems within the Demised Premises in
working order; (y) the Demised Premises will be in vacant and broom-clean
condition; and (z) there will be no leaks in the ceilings of the Demised
Premises. Notwithstanding anything contained in this Lease to the contrary,
Landlord agrees that, promptly after the substantial completion of Tenant's
Work, upon notice by Tenant, Landlord shall provide the cleaning services in
accordance with the specifications annexed hereto as Exhibit C at no charge to
Tenant.
Section 47.02 Landlord represents and warrants to Tenant (i) that
-------------
except as may be provided in the Ground Lease, the REA or the Special Permit,
Landlord has the full right and lawful authority to lease the Demised Premises
to Tenant upon the terms and conditions set forth in this Lease and no joinder,
approval or consent of any other party is required with respect to Landlord's
rights and authority to enter into this Lease and to perform its obligations
hereunder and (ii) that as of the date hereof, the only Superior Leases and
Superior Mortgages encumbering the Building is the Ground Lease and the only
other matters to which this Lease is subject and subordinate are the REA and the
Special Permit, that to the best of Landlord's knowledge, no defaults by any
parties exist under any such documents and that true, correct and complete
copies of such documents have been given to Tenant.
-64-
<PAGE>
Section 47.03 Landlord hereby waives any express, implied or
-------------
statutory lien against Tenant's Property.
Section 47.04 Landlord shall endeavor to apply all policies and
-------------
procedures of Landlord (including, without limitation, Landlord's Joint
Radiation Safety Committee and Landlord's Office of Environmental Health and
Safety) in such a manner as not to discriminate against Tenant.
ARTICLE 48
----------
Additional Work
---------------
Section 48.01 As part of Tenant's Work, Tenant hereby agrees to
-------------
repair the sprinklers and level the floors in the Demised Premises (the
"Additional Work"). Landlord shall reimburse Tenant for such Additional Work up
- ----------------
to a maximum amount of $20,000.00, in accordance with Article 46 hereof. Tenant
acknowledges that such amount is included in, and is not in addition to, the
Grant.
IN WITNESS WHEREOF, the parties hereto have executed this Lease on the
day and year first above written.
LANDLORD: THE TRUSTEE; OF COLUMBIA UNIVERSITY IN THE
- -------- CITY OF NEW YORK
By: [Signature Illegible]
--------------------------------------
Name:
Title:
TENANT: MELVILLE BIOLOGICS, INC.
- ------
By: /s/ Joanne Leonard
------------------------------------
Name: Joanne Leonard
Title: Vice President, CFO
[Duly authorized officer]
-65-
<PAGE>
Exhibit A
[Floor Plan Appears Here]
<PAGE>
Exhibit B
List of Drawings:
- ----------------
Number Revision Date Title
T-0 06/05/96 Title Sheet
T-1 06/05/96 Specifications & Abbreviations
T-2 06/05/96 Specifications
T-3 06/05/96 Specifications
A-1 06/05/96 5th Floor Plan
A-2 06/05/96 5th Floor Reflected Ceiling Plan
A-3 06/05/96 Interior Elevations
A-4 06/05/96 Interior Elevations and Cabinet Details
A-5 06/05/96 Cabinet Details
A-6 06/05/96 Lab Bench Elevations
A-7 06/05/96 Lab Bench Elevations
A-8 06/05/96 Construction Details
A-9 06/05/96 Room Finish Schedule
A-10 06/05/96 Door Schedule and Details
F-1 06/05/96 5th Floor Furniture and Equipment Plan
M-1 06/05/96 HVAC Fifth Floor Plan
M-2 06/05/96 HVAC Schedules, Details and Notes
M-3 06/05/96 HVAC Specifications Sheet #1
M-4 06/05/96 HVAC Specifications Sheet #2
E-1 06/05/96 Symbol List, General Notes, and Riser Diagram
E-2 06/05/96 Fifth Floor Lighting Plan
E-3 06/05/96 Fifth Floor Power and Signals Plan
E-4 06/05/96 Electrical Schedules
E-5 06/05/96 Electrical Specifications
P-1 06/05/96 Plumbing Symbols, Notes, Details and Part Risers
-B-1-
<PAGE>
P-2 06/05/96 Plumbing Specifications
P-2A 06/05/96 Plumbing Specifications
P-3 06/05/96 Fifth Floor Plumbing Plan
SP-1 06/05/96 Sprinkler Notes, Details and Riser Diagram
SP-2 06/05/96 Fifth Floor Sprinkler Plan
SP-3 06/05/96 Sprinkler Specifications
-B-2-
<PAGE>
EXHIBIT C
Cleaning Specifications
-----------------------
AUDUBON BUSINESS AND TECHNOLOGY CENTER
- --------------------------------------------------------------------------------
GENERAL
a. Bathrooms and restrooms
Daily:
- Wash all mirrors
- Wash all basins and hardware
- Wash urinals
- Wash toilet seats using disinfectant in water
- Wash toilet bowls
- Damp-wipe, clean and disinfect all tile surfaces
b. Dusting
(1) All furniture, business equipment and appliances, windowsills and the
like will be dusted daily with a chemically treated cloth. Desks and
tables not cleared of paper and work materials will only be dusted
where surface is exposed.
(2) Monthly:
Pipes, ledges, ceiling, moldings, picture frames and anything
decorative above hand-high areas will be cleaned.
c. Dust-mopping floors
(1) Daily: All noncarpeted floor areas will be dust-mopped with a treated
yarn dust mop. Floor-dusting will be done after furniture has been
dusted.
d. Waste paper
(1) Waste baskets to be emptied daily.
e. Vacuuming
(1) All rugs and carpets in office areas, as well as public spaces, are to
be vacuumed daily in all traffic areas. Corners, hard-to-reach places,
and areas under desks,
-C-1-
<PAGE>
tables and chairs will be vacuumed weekly, using accessory tools as
required.
f. Carpet cleaning
(1) semiannually: All carpeted areas in public corridors will be shampooed
once every six months.
g. Stairways and landings
(1) All stairways and landings will be dust-mopped with a treated yarn
dust mop daily. Railings, ledges, and equipment will be dusted weekly.
Spot cleaning of walls and doors will be done weekly; these areas will
be damp-mopped weekly and scrubbed when necessary.
h. wet mopping
(1) daily, as needed: Floors will be scrubbed or wet-mopped whenever
required to prevent a build-up of wax.
i. Tile floors
(1) Waxing and buffing will only be done on an as-needed basis.
j. Water coolers or fountains
(1) Water coolers or fountains will be cleaned and polished daily.
k. Spot cleaning of vertical surfaces
(1) Walls and woodwork will be spot-cleaned weekly.
l. Entrance lobby
(1) daily: The entrance lobby will be cleaned daily. Lobby glass and metal
will be cleaned and dusted daily. The lobby floor and entranceways
will be cleaned nightly. Directory board glass will be damp-cleaned
and wiped.
m. Polishing
(1) monthly: Door plates, kick plates, and brass and metal fixtures within
the building will be wiped daily and polished monthly.
-C-2-
<PAGE>
n. Light fixtures-periodically
(1) annually: the exterior of all light fixtures will be dusted as needed.
The entire light fixture will be washed annually.
o. Venetian blinds
(1) weekly, annually: Venetian blinds will be dusted weekly and washed
annually.
p. Walls, woodwork and partitions
(1) weekly, quarterly, semi-annually: Finger and hand prints, spots and
other grimy areas will be removed weekly using a damp cloth or sponge.
All walls and ceilings will be brushed down with an approved wall
duster or a vacuum cleaner every three months. Partitions of wood or
steel will be washed with a neutral soap every six months.
q. Glass partitions and doors
(1) weekly: All glass partitions and doors will be damp-cleaned weekly or
as needed.
r. HVAC grills
(1) monthly: All areas around HVAC outlet and return air grill will be
cleaned once a month.
Window Washing
Inside and outside window washing will be scheduled four times a year
(quarterly). However, first-floor windows will be washed outside once a
month, unless the space is occupied by retail tenants.
Trash Removal
(1) daily:
a. Trash will be removed from the premises daily between the hours
of 10:00 p.m. and 7:00 a.m., Monday through Friday.
b. Trash pickup will be scheduled through the building engineer or
management.
-C-3-
<PAGE>
EXHIBIT D
[FLOOR PLAN APPEARS HERE]
<PAGE>
Exhibit E
[Floor Plan Appears Here]
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
EXHIBIT 10.23
EXECUTION COPY
SETTLEMENT AGREEMENT
--------------------
This Agreement is effective as of July 1, 1997 by and between Bayer
Corporation, an Indiana corporation ("Bayer"), and V.I. Technologies, Inc., a
-----
Delaware corporation ("Vitex").
-----
WHEREAS, Vitex and Bayer entered into a First Amended and Restated
Agreement for Custom Processing dated January 24, 1996 (the "Custom Processing
-----------------
Agreement"), pursuant to which Bayer agreed to supply plasma to Vitex and Vitex
- ---------
agreed to custom fractionate that plasma in accordance with the terms and
conditions of the Custom Processing Agreement;
WHEREAS, Bayer has claimed Vitex has an obligation to Bayer and whereas
Bayer has determined such obligation arises from that certain potential
Catastrophic Loss (as such term is defined in the Custom Processing Agreement),
relative to approximately 43,520 liters of plasma (pools 9630 through 9634)
supplied by Bayer (the "Plasma") which Vitex has informed Bayer have been
------
exposed to ethylene glycol during Vitex's fractionation process;
WHEREAS, there are certain sums due and payable to Bayer from Vitex
pursuant to Section 6.4(b) and the other applicable provisions of the Custom
Processing Agreement and Vitex has agreed to a schedule for the repayment to
Bayer of such obligations upon the terms, covenants and conditions hereinafter
set forth;
WHEREAS, Vitex and Bayer have been fully, separately and independently
advised of their respective legal rights, remedies, privileges and obligations
arising out of the Custom Processing Agreement by counsel of their selection,
and each having, in addition thereto, made independent inquiry and investigation
with respect to the same; and
WHEREAS, each party warrants and represents to the other that such party
fully understands all the terms, covenants, conditions, provisions and
obligations incumbent upon that party by virtue of this Settlement Agreement to
be performed or contemplated by it hereunder, and believes the same to be fair,
just, reasonable and in its best interest;
NOW THEREFORE, for good and valuable consideration, the sufficiency and
receipt of which are hereby acknowledged, Vitex and Bayer agree as follows:
1. Payment; Insurance Proceeds.
---------------------------
(a) Payment. The parties hereto agree that Vitex will pay, or cause to be
-------
paid, (i) the aggregate amount of $4,100,000 (the "Aggregate Amount") to Bayer
----------------
or its designee in twenty-four (24) equal monthly installments commencing on
July 1, 1997 and ending on June 30, 1999, and (ii) in addition to payments of
the Aggregate Amount, interest on the unpaid balance of the Aggregate Amount
accruing from the date hereof calculate at a rate per annum equal to the sum of
(x) the United States prime rate (as such rate is posted in the Wall Street
<PAGE>
EXECUTION COPY
Journal on the date of any such payment), plus (y) (A) 2% per annum for all
periods before July 1, 1998 and (B) 3% per annum for all periods on or after
July 1, 1998. Payments to be made under this Settlement Agreement shall be
credited against future processing charges in accordance with Section 5.4 of the
Custom Processing Agreement and in accordance with Exhibit A, attached hereto;
provided, however, that, if for any reason, there are insufficient processing
charges owed by Bayer to Vitex against which to credit payments under this
Settlement Agreement for any given month then such payments shall be made on the
final day of such monthly period by wire transfer of immediately available funds
to the account specified below (or as otherwise directed by Bayer):
Mellon Bank
Pittsburgh, Pennsylvania
ABA #043 000 261
For credit to the account of
Bayer Corporation
Account #116-3910
If the date of any payment to be made hereunder falls on a legal holiday in the
State of New York, payment shall be made on the next succeeding day which is not
a legal holiday. Other than as provided for in this Section 1 or in some future
agreement between the parties, Bayer acknowledges and agrees that no other
compensation or payment is owed, or will be owed, to it by Vitex or its
affiliates for forgoing any rights or fulfilling any obligations under the
Custom Processing Agreement; provided however that the Custom Processing
Agreement will continue and remain valid and binding obligations of the parties
as set our in Section 2.
(b) Insurance Proceeds. If Vitex receives any payments pursuant to its
------------------
policies of insurance covering the Catastrophic Loss of the Plasma, it will
immediately notify Bayer of the amount of such insurance proceeds and shall
immediately pay such monies to Bayer in the manner provided in Section 1(a)
hereof; provided, that Vitex shall be entitled to retain any excess insurance
proceeds after payment in full to Bayer of the entire unpaid balance of the
Aggregate Amount together with all interest to the date of such payment
calculated in accordance with Section 1(a) hereof. The amount of any such
monies paid to Bayer shall reduce the unpaid balance of the Aggregate Amount
resulting in a pro rata reduction in the remaining monthly installment payments.
(c) Prepayments. Vitex shall have the right to prepay all or any portion
-----------
of the unpaid balance of the Aggregate Amount, together with all interest to the
date of such payment calculated in accordance with Section 1(a) hereof, without
premium or penalty. If Vitex makes a partial payment pursuant to this Section
1(c), then subsequent payments shall be made in the same manner that subsequent
payments are to be made pursuant to the last sentence of Section 1(b) hereof.
2. Continuation of the Custom Processing Agreement. Except as expressly
-----------------------------------------------
modified by this Settlement Agreement, the parties hereby confirm and ratify in
all respects their
-2-
<PAGE>
EXECUTION COPY
respective rights and obligations under the Custom Processing Agreement.
Notwithstanding any claims of the parties to the contrary, the Custom Processing
Agreement is and remains the valid and binding obligations of the parties, is
enforceable in accordance with its terms (including all payment terms), has not
been modified (except as expressly provided in this Settlement Agreement) and is
in full force and effect and shall remain in full force and effect unless and
until an agreement further modifying the Custom Processing Agreement is executed
and delivered by the parties hereto and then only to the extent such an
agreement expressly modifies the same.
3. Plasma. Upon execution of this Settlement Agreement, the right, title
------
and interest in the Plasma shall pass from Bayer to Vitex; provided, however,
that Vitex shall provide Bayer with any proceeds from its sale of the Plasma in
the same manner as insurance proceeds are treated pursuant to Section 1(b)
hereof.
4. Covenant of Vitex. Vitex hereby covenants and warrants that is shall
-----------------
not sell the Plasma where the intended use of the Plasma (i) is for any use
other than for purely diagnostic purposes or (ii) is for therapeutic purposes of
any kind. Vitex hereby agrees that it shall require any purchaser of any of the
Plasma to agree in writing (i) not to use the Plasma for any use other than for
purely diagnostic purposes (including the explicit covenant not to use the
Plasma for therapeutic purposes of any kind), and (ii) not to resell the Plasma
without requiring similar restrictions from any subsequent purchaser.
5. Representations. Bayer and Vitex each severally represent and warrant
---------------
to the other that (i) the execution, delivery and performance of this Settlement
Agreement by such entity does not conflict with, breach, violate or cause a
default under any contract, agreement, instrument, order, judgment or decree to
which such entity is a party or by which it is bound, and (ii) upon the
execution and delivery of this Settlement Agreement by the parties hereto, this
Settlement Agreement shall be the valid and binding obligation of such entity.
Each party hereby severally acknowledges and represents that such party has
consulted with independent legal counsel regarding its rights and obligations
under this Settlement Agreement and that such party fully understands the terms
and conditions contained herein.
6. Expenses. Except as otherwise specifically provided in this Settlement
--------
Agreement, each party hereto shall pay its own expenses incident to this
Settlement Agreement and the transactions contemplated hereby, including legal
fees and disbursements. The provisions of this Section 6 shall survive any
termination of this Settlement Agreement.
7. Mutual Release.
--------------
(a) Each of Bayer and Vitex, on behalf of itself and its attorneys,
administrators, successors and assigns, hereby mutually and unconditionally
fully releases and forever discharges each and every other party hereto and
their respective predecessors, successors, assignees, shareholders,
subsidiaries, affiliates, officers, directors, partners, employees, agents and
attorneys, past and present, from any and all claims, demands, liens,
agreements, contracts, covenants, actions, suits, causes of action, obligations,
controversies,
-3-
<PAGE>
EXECUTION COPY
debts, costs, expenses, damages, judgments, orders and liabilities of whatever
kind or nature, in law or equity, by statute or otherwise, whether now known or
unknown, vested or contingent, suspected or unsuspected, and whether or not
concealed or hidden, which have existed or may have existed, or which do exist
arising from any matter relating to the Custom Processing Agreement, except as
otherwise provided for in this Settlement Agreement (collectively, the
"Claims").
------
(b) Except as otherwise provided for in this Settlement Agreement, it is
the intention of each of Bayer and Vitex in executing this Settlement Agreement
that this Settlement Agreement shall be effective as a bar to each and every
Claim hereinabove mentioned or implied, and each of Bayer and Vitex hereby
knowingly and voluntarily waives any and all Claims. Each of Bayer and Vitex
expressly consents that this Settlement Agreement shall be given full force and
effect according to each and all of its express terms and provisions, including
those relating to unknown and unsuspected claims, demands, charges and causes of
action (notwithstanding any statute that expressly limits the effectiveness of a
general release of the unknown, unsuspected and unanticipated claims), if any,
as well as those relating to any other claims, demands and causes of action
hereinabove mentioned or implied. Each of Bayer and Vitex acknowledges this
release and that without such waiver and release, the other parties would not
have entered into this Settlement Agreement.
(c) Each of Bayer and Vitex understands and agrees that this Settlement
Agreement is not intended to be and shall not be deemed, construed or treated in
any respect as an admission of liability by any person or entity for any
purpose.
(d) Each of Bayer and Vitex further acknowledges that it has entered this
Settlement Agreement freely and without coercion.
8. Indemnification: Procedure for Claims By Third Parties.
------------------------------------------------------
(a) Indemnification. Vitex hereby agrees to indemnify Bayer, Bayer's
---------------
Affiliates and their respective directors, officers, employees, agents,
successors and assigns and hold them harmless against any and all Losses arising
from or relating to any breach of any of the representations or warranties made
by Vitex in this Settlement Agreement, any breach of the covenants and
agreements made by Vitex in this Settlement Agreement and any claims by any
governmental agency, corporation or other person or entity against Bayer or
Bayer's Affiliates by virtue of the use or sale of the Plasma by Vitex. "Losses"
------
means any and all damages, costs, liabilities, losses, judgments, claims,
penalties, fines, expenses or other costs (including attorney's fees).
"Affiliate" of Bayer means any corporation or other entity or person
- ----------
controlling, controlled by or under common control with Bayer, where "control"
means either (i) the ownership of 50%+ of the equity interests of any
corporation or other entity or person, or (ii) the possession, directly or
indirectly, of the power to direct the management and policies of a corporation
or other entity or person whether through the ownership of voting securities,
contract or otherwise.
-4-
<PAGE>
EXECUTION COPY
(b) Procedure for Claims by Third Parties. (i) If Bayer asserts a right of
-------------------------------------
indemnification provided for under this Settlement Agreement in respect of,
arising out of or involving a claim or demand made by any governmental agency,
corporation or other person or entity against Bayer (a "Third Party Claim"),
-----------------
Bayer shall notify Vitex in writing of the Third Party Claim within ten business
days after receipt by Bayer of written notice of the Third Party Claim. As part
of such notice, Bayer shall furnish Vitex with copies of any pleadings,
correspondence or other documents relating thereto that are in Bayer's
possession. Bayer's failure to notify Vitex of any such matter within the time
frame specified above shall not release Vitex, in whole or in part, from its
obligations under this Section 8 except to the extent that Vitex's ability to
defend against such claim is actually prejudiced thereby. Vitex agrees (and, at
such time as Vitex acknowledges its Liability under this Section 8 with respect
to such Third Party Claim and demonstrates to Bayer's sole satisfaction that it
can actually pay such Liability, Vitex shall have the sole and exclusive right)
to defend against, settle or compromise such Third Party Claim at the expense of
Vitex. Bayer shall have the right (but not the obligation) to participate in the
defense of such claim through counsel selected by it. If Vitex has not yet
acknowledged its Liability under this Section 8 with respect to such Third Party
Claim, then Vitex and Bayer shall cooperate in defending against such Third
Party Claim at Vitex's expense, and neither party shall have the right, without
the other's consent, to settle or compromise any such Third Party Claim.
"Liability" means any liability or obligation (whether known or unknown,
---------
absolute or contingent, liquidated or unliquidated or due or to become due).
9. Specific Performance. The parties hereto agree that money damages
--------------------
would be an inadequate remedy for any breach of Section 4 hereof. In the event
Vitex breaches or threatens to breach Section 4 hereof, Bayer, its subsidiaries
or its successors or assigns may, in addition to other available rights and
remedies, apply to any court of competent jurisdiction for specific performance
and/or injunctive relief in order to enforce, or prevent any violation of, any
of the provisions of this Settlement Agreement (without posting a bond or other
security).
10. Governing Law, Jurisdiction, Venue and Service of Process. All issues
---------------------------------------------------------
related to this Settlement Agreement shall be governed by the internal laws (and
not the laws of conflict) of the State of New York. In connection with any
action relating to this Settlement Agreement, Bayer and Vitex hereby irrevocably
waive any and all objections of lack of personal jurisdiction over them by any
New York state court or any federal court sifting in New York. Bayer and Vitex
also irrevocably waive any objection to the laying of venue (based upon forum
-----
non conveniens or otherwise) in the New York Supreme Court, New York County or
- --- ----------
in the United States District Court for the Southern District of New York. Bayer
and Vitex expressly consent to the service of any process by mail at their
respective addresses. If Vitex shall fail to appear in the subject action or
proceeding or to answer such summons, complaint or other process within thirty
(30) days after the delivery and receipt thereof, Vitex shall be deemed in
default in answering or appearing in connection with such action or proceeding
and judgment may be entered by Bayer against Vitex for the requested damages and
such other relief as may be demanded in any summons, complaint or other process
so served.
-5-
<PAGE>
EXECUTION COPY
11. Severability. Whenever possible, each provision of this Settlement
------------
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Settlement Agreement is held to be
prohibited by or invalid under applicable law, such provisions will be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of, or further limiting the scope of, this Settlement
Agreement.
12. Entire Agreement. This Settlement Agreement constitutes the entire
----------------
agreement and understanding between the parties hereto with respect to the
subject matter contained herein.
13. No Strict Construction. The language used in this Settlement
----------------------
Agreement will be deemed to be the language chosen by the parties hereto to
express their mutual intent, and no rule of strict construction will be applied
against any person.
14. Waiver; Amendment. This Settlement Agreement may only be amended by
-----------------
a, writing executed by all parties. No waiver under this Settlement Agreement
will be effective against any party unless such waiver is in a writing executed
by such party. The failure of a party at any time to enforce its rights under
this Settlement Agreement shall not be deemed a waiver of such rights and shall
not be construed as having created a custom in any way or manner contrary to the
specific provisions of this Settlement Agreement or as having in any way or
manner modified this Settlement Agreement. All rights and remedies of any of the
parties are cumulative and concurrent and the exercise of one right or remedy
shall not be deemed a waiver or release of any other right or remedy.
15. Binding Effect. This Settlement Agreement shall inure to the benefit
--------------
of, and shall be binding upon, the respective successors and assigns of the
parties hereto. Vitex has no right to assign any of its rights or obligations
hereunder without the prior written consent of Bayer.
16. Counterparts. This Settlement Agreement may be executed in
------------
counterparts, each of which when so executed and delivered shall be an original
and when taken together shall constitute one and the same agreement.
17. Headings. The headings contained in this Settlement Agreement are for
--------
reference purposes only and shall not affect in any way the meaning or
interpretation of this Settlement Agreement or of any term or provision hereof.
18. Confidentiality. Bayer and Vitex shall not reveal the terms of this
---------------
Settlement Agreement, or distribute a copy of it, to anyone. Notwithstanding the
foregoing, (i) the parties may disclose the terms of this Settlement Agreement,
or distribute a copy of it, if compelled to do so by a subpoena or court order
or as required by law or any administrative authority to which such party is
subject and (ii) the parties may disclose the terms of this Settlement Agreement
on a confidential basis to their respective directors, officers, employees,
attorneys, lenders, insurance carriers and financial consultants. Additionally,
the parties may
-6-
<PAGE>
EXECUTION COPY
submit this Settlement Agreement to any court or administrative body in
conjunction with any judicial or quasi judicial proceeding to which this
Settlement Agreement may be relevant.
BAYER CORPORATION
Dated: 7/22/97 By: /s/ Jack Ryan
-----------------------------
Name: Jack Ryan
Its: Vice President
STATE OF CALIFORNIA )
COUNTY OF ALAMEDA ) ss.:
On this 22nd day of July, 1997, there appeared before me Jack Ryan,
personally known to me, who acknowledged that he signed the foregoing Settlement
Agreement as his voluntary act and deed on behalf and with full authority of
Bayer Corporation.
/s/ Barbara Cantora
-----------------------------
Notary Public
V.I. Technologies, Inc.
Dated:7/25/97 By: /s/ Joanne Leonard
-----------------------------
Name: Joanne Leonard
Its: Vice President, CFO
STATE OF NEW YORK )
COUNTY OF SUFFOLK ) ss.:
On this 25th day of July, 1997, there appeared before me Joanne Leonard,
personally known to me, who acknowledged that she signed the foregoing
Settlement Agreement as her voluntary act and deed on behalf and with full
authority of V.I. Technologies, Inc.
/s/ Laurie J. Nunez
-----------------------------
Notary Public
-7-
<PAGE>
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
EXECUTION COPY
Attachment A
------------
The amount to be paid by VITEX under the Settlement Agreement for the
replacement cost of the Bayer Input is $4.1 million (the "Replacement Cost"). As
a result of the Catastrophic Loss of the Bayer Input, the Replacement Cost shall
be credited against future processing charges effective July 1, 1997 through
June 30, 1999 (the "Period") on a pro-rata basis per liters processed as set
forth in Section 4 of the Custom Processing Agreement. The following formula
shall be used in determining a New Base Processing Fee per liter effective July
1, 1997: Current Base Processing Fee during the Period, less the Replacement
Cost divided by liters processed during the Period, *********. Hence, the New
Base Processing Fee shall be calculated as follows:
<TABLE>
<CAPTION>
Current Base Replacement New Base
Period Processing Fee Cost Adjustment* Processing Fee
- ----------------------------------------------------------------------
<S> <C> <C> <C>
7/1/97-12/31/97 ******** ******** ********
1/1/98-12/31/98 ******** ******** ********
1/1/99-06/30/99 ******** ******** ********
</TABLE>
- ---------------------------
* Replacement Cost divided by ******* liters processed.
-8-
<PAGE>
EXHIBIT 10.29
EXECUTION COPY
- --------------------------------------------------------------------------------
V.I. TECHNOLOGIES, INC.
--------------------------------------------------
CREDIT AGREEMENT
Dated as of December 22, 1997
--------------------------------------------------
THE CHASE MANHATTAN BANK,
as Lender
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
<S> <C>
SECTION 1. DEFINITIONS..................................................... 1
1.1 Defined Terms...................................................... 1
1.2 Other Definitional Provisions...................................... 16
SECTION 2. AMOUNT AND TERMS OF COMMITMENT.................................. 17
2.1 Term Loan.......................................................... 17
2.2 Procedure for Term Loan Borrowing.................................. 17
2.3 Repayment of Loan; Evidence of Debt................................ 17
2.4 Optional Prepayments............................................... 18
2.5 Conversion and Continuation Options................................ 18
2.6 Interest Rates and Payment Dates................................... 19
2.7 Computation of Interest and Fees................................... 19
2.8 Inability to Determine Interest Rate............................... 20
2.9 Illegality......................................................... 20
2.10 Requirements of Law............................................... 20
2.11 Taxes............................................................. 21
2.12 Indemnity......................................................... 22
SECTION 3. REPRESENTATIONS AND WARRANTIES.................................. 22
3.1 Financial Condition................................................ 23
3.2 No Change.......................................................... 23
3.3 Corporate Existence; Compliance with Law........................... 23
3.4 Corporate Power; Authorization; Enforceable Obligations............ 24
3.5 No Legal Bar....................................................... 24
3.6 No Material Litigation............................................. 24
3.7 No Default......................................................... 24
3.8 Ownership of Property; Liens....................................... 24
3.9 Intellectual Property.............................................. 24
3.10 No Burdensome Restrictions........................................ 25
3.11 Taxes............................................................. 25
3.12 Federal Regulations............................................... 25
3.13 ERISA............................................................. 25
3.14 Investment Company Act; Other Regulations......................... 26
3.15 Purpose of Loan................................................... 26
3.16 Subsidiaries...................................................... 26
3.17 Environmental Matters............................................. 26
3.18 Information....................................................... 26
3.19 Material Agreements............................................... 27
</TABLE>
- i -
<PAGE>
<TABLE>
<S> <C>
SECTION 4. CONDITIONS PRECEDENT............................................ 27
4.1 Conditions to the Loan............................................. 27
SECTION 5. AFFIRMATIVE COVENANTS........................................... 30
5.1 Financial Statements............................................... 30
5.2 Certificates; Other Information.................................... 31
5.3 Payment of Obligations............................................. 32
5.4 Conduct of Business and Maintenance of Existence................... 32
5.5 Maintenance of Property; Insurance................................. 32
5.6 Inspection of Property; Books and Records; Discussions............. 32
5.7 Notices............................................................ 32
5.8 Environmental Laws................................................. 33
5.9 Further Assurances................................................. 34
5.10 Additional Collateral............................................. 34
SECTION 6. NEGATIVE COVENANTS.............................................. 35
6.1 Financial Condition Covenants...................................... 35
6.2 Limitation on Indebtedness......................................... 36
6.3 Limitation on Liens................................................ 37
6.4 Limitation on Guarantee Obligations................................ 38
6.5 Limitation on Fundamental Changes.................................. 38
6.6 Limitation on Sale of Assets....................................... 39
6.7 Limitation on Dividends............................................ 39
6.8 Limitation on Capital Expenditures................................. 39
6.9 Limitation on Investments, Loans and Advances...................... 40
6.10 Limitation on Optional Payments and Modifications of Certain
Instruments....................................................... 40
6.11 Limitation on Transactions with Affiliates........................ 41
6.12 Limitation on Sales and Leasebacks................................ 41
6.13 Limitation on Changes in Fiscal Year, Tax Status and Accounting... 41
6.14 Limitation on Negative Pledge Clauses............................. 41
6.15 Limitation on Lines of Business................................... 41
SECTION 7. EVENTS OF DEFAULT............................................... 41
SECTION 8. MISCELLANEOUS................................................... 44
8.1 Amendments and Waivers............................................. 44
8.2 Notices............................................................ 45
8.3 No Waiver; Cumulative Remedies..................................... 45
8.4 Survival of Representations and Warranties......................... 45
8.5 Payment of Expenses and Taxes...................................... 45
8.6 Successors and Assigns; Participations and Assignments............. 46
</TABLE>
- ii -
<PAGE>
<TABLE>
<S> <C>
8.7 Set-Off............................................................ 48
8.8 Counterparts....................................................... 48
8.9 Severability....................................................... 48
8.10 Integration....................................................... 48
8.11 GOVERNING LAW..................................................... 48
8.12 Submission To Jurisdiction; Waivers............................... 48
8.13 Acknowledgements.................................................. 49
8.14 WAIVERS OF JURY TRIAL............................................. 49
8.15 Confidentiality................................................... 49
8.16 Section Headings.................................................. 50
</TABLE>
SCHEDULES
Schedule 3.6 Litigation
Schedule 3.11 Tax Matters
Schedule 3.17(c) Environmental Matters
Schedule 6.2(b) Outstanding Indebtedness
Schedule 6.3(f) Existing Liens
Schedule 6.4(a) Guarantee Obligations
EXHIBITS
Exhibit A Form of Borrower Mortgage
Exhibit B Form of Guarantee and Collateral Agreement
Exhibit C Form of Intercreditor Agreement
Exhibit D Form of Note
Exhibit E Form of Closing Certificate
Exhibit F Form of Opinion of Crummy, Del Deo, Dolan, Griffinger & Vecchione
Exhibit G Form of Assignment and Acceptance
- iii -
<PAGE>
CREDIT AGREEMENT, dated as of December 22, 1997, between V.I.
TECHNOLOGIES, INC., a Delaware corporation (the "Borrower"), and THE CHASE
--------
MANHATTAN BANK, a New York banking corporation (the "Lender").
------
The parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following terms
-------------
shall have the following meanings:
"ABR": for any day, a rate per annum (rounded upwards, if
---
necessary, to the next 1/16 of 1%) equal to the greatest of (a) the Prime
Rate in effect on such day and (b) the Federal Funds Effective Rate in
effect on such day plus 1/2 of 1%. For purposes hereof: "Prime Rate"
----------
shall mean the rate of interest per annum publicly announced from time to
time by the Lender as its prime rate in effect at its principal office in
New York City (the Prime Rate not being intended to be the lowest rate of
interest charged by the Lender in connection with extensions of credit to
debtors); and "Federal Funds Effective Rate" shall mean, for any day, the
----------------------------
weighted average of the rates on overnight federal funds transactions with
members of the Federal Reserve System arranged by federal funds brokers, as
published on the next succeeding Business Day by the Federal Reserve Bank
of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations for the day of such
transactions received by the Lender from three federal funds brokers of
recognized standing selected by it. Any change in the ABR due to a change
in the Prime Rate or the Federal Funds Effective Rate shall be effective as
of the opening of business on the effective day of such change in the Prime
Rate or the Federal Funds Effective Rate, respectively.
"ABR Loans": Loans the rate of interest applicable to which is
---------
based upon the ABR.
"Adjustment Date": each date that is the fifth Business Day
---------------
following receipt by the Lender of (a) the financial statements required to
be delivered pursuant to subsection 5.1(a) or 5.1(b), as applicable, for
the most recently completed fiscal period and (b) the certificate required
to be delivered in connection therewith pursuant to subsection 5.2(b).
"Affiliate": as to any Person, any other Person (other than a
---------
Subsidiary) which, directly or indirectly, is in control of, is controlled
by, or is under common control with, such Person. For purposes of this
definition, "control" of a Person means the power, directly or indirectly,
either to (a) vote 10% or more of the securities having ordinary voting
power for the election of directors of such Person or (b) direct or cause
the direction of the management and policies of such Person, whether by
contract or otherwise.
<PAGE>
2
"Agreement": this Credit Agreement, as amended, supplemented or
---------
otherwise modified from time to time.
"Ampersand": collectively, Ampersand Specialty Materials and
---------
Chemicals II Limited Partnership, Ampersand Specialty Materials and
Chemicals III Limited Partnership, Laboratory Partners I Limited
Partnership, Ampersand Specialty Materials and Chemicals III Companion Fund
Limited Partnership, and Laboratory Partners Companion Fund Limited
Partnership.
"Ampersand Termination Agreement": the Ampersand Termination,
-------------------------------
Discharge and Release, dated December 22, 1997, from Ampersand to the
Borrower.
"Applicable Margin": for each Type of Loan, initially from and
-----------------
after the Closing Date until the first Adjustment Date, 2.75% if such Loan
is a Eurodollar Loan or 0.50% if such Loan is an ABR Loan, provided that
--------
the Applicable Margin shall be adjusted on each Adjustment Date after the
date hereof (such adjustment to remain effective, except as otherwise
provided below, until the next succeeding Adjustment Date) based upon the
ratio of Consolidated EBIT to Consolidated Interest Expense for the most
recent fiscal quarter of the Borrower covered by the financial statements
relating to such Adjustment Date to be equal to the rate per annum set
forth under the relevant column heading below opposite such ratio:
<TABLE>
<CAPTION>
Consolidated EBIT/
Consolidated Interest Expense Eurodollar Loans ABR Loans
----------------------------- ---------------- ---------
<S> <C> <C>
Less than 2.50 to 1.00 2.75% 0.50%
Less than 3.00 to 1.00 but
greater than or equal to
2.50 to 1.00 2.50% 0.25%
Less than 4.00 to 1.00 but
greater than or equal to
3.00 to 1.00 2.25% 0.00%
Greater than or equal to
4.00 to 1.00 1.75% 0.00%
</TABLE>
provided, that if any financial statements are not delivered within the
--------
time periods specified in subsection 5.1, then, for any period from the
date such financial statements were required to be delivered until the
date such financial statements actually are delivered, the Applicable
Margin for Eurodollar Loans shall be 2.75% and the Applicable Margin for
ABR Loans shall be 0.50%.
"Assignee": as defined in subsection 8.6(c).
--------
"Assignment and Acceptance": as defined in subsection 8.6(c).
-------------------------
<PAGE>
3
"Bayer": Bayer Corporation (formerly known as Miles, Inc.), an
-----
Indiana corporation.
"Bayer Documents": the Custom Processing Agreement, the Bayer
---------------
Modification Agreement, the Bayer Guaranty Termination Agreement and the
Bayer Security Documents.
"Bayer Guaranty Termination Agreement": the Bayer Guaranty
------------------------------------
Termination, Discharge and Release, dated as of December 22, 1997, from PNC
to Bayer.
"Bayer Lease Agreement": the Lease Agreement, dated February 7,
---------------------
1995 between the Borrower and Bayer, as amended pursuant to the Bayer
Modification Agreement and as the same may be further amended, supplemented
or otherwise modified in accordance with subsection 6.10.
"Bayer Modification Agreement": the Modification Agreement,
----------------------------
dated as of December 22, 1997 between the Borrower and Bayer.
"Bayer Mortgage": the Mortgage, Security Agreement and Fixture
--------------
Filing, dated as of February 7, 1995 among the Borrower, SCIDA and Bayer,
as amended pursuant to the Bayer Mortgage Amendment and as the same may be
further amended, supplemented or otherwise modified in accordance with
subsection 6.10.
"Bayer Mortgage Amendment": the Amendment to the Mortgage,
------------------------
Security Agreement and Fixture Filing, dated as of December 22, 1997, among
the Borrower, SCIDA and Bayer.
"Bayer/SCIDA Security Agreement": the Security Agreement, dated
------------------------------
as of May 1, 1996, among the Borrower, Bayer and the SCIDA.
"Bayer Security Agreement": the Security Agreement, dated as of
------------------------
December 22, 1997 between the Borrower and Bayer.
"Bayer Security Documents": the collective reference to (a) the
------------------------
Bayer Mortgage and the Bayer Mortgage Amendment, (b) the Bayer Lease
Agreement and the Bayer Modification Agreement, (c) the Bayer Sublease
Agreement and the Bayer Modification Agreement, (d) the Bayer Security
Agreement and (e) the Bayer/SCIDA Security Agreement and the Bayer Security
Modification Agreement.
"Bayer Security Modification Agreement": the Security
-------------------------------------
Modification Agreement, dated as of December 22, 1997, among the Borrower,
Bayer and the SCIDA.
"Bayer Sublease Agreement": the Sublease Agreement, dated as of
------------------------
February 7, 1995 between the Borrower and Bayer, as amended pursuant to the
Bayer
<PAGE>
4
Modification Agreement and as the same may be further amended, supplemented
or otherwise modified in accordance with subsection 6.10.
"Borrower": as defined in the Preamble to this Agreement.
--------
"Borrower Mortgage": the Mortgage to be executed and delivered
-----------------
by the Borrower and SCIDA, substantially in the form of Exhibit A, as the
same may be amended, supplemented or otherwise modified from time to time.
"Business Day": a day other than a Saturday, Sunday or other day
------------
on which commercial banks in New York City are authorized or required by
law to close.
"Capital Expenditures": for any period, the aggregate of all
--------------------
expenditures by the Borrower and its consolidated Subsidiaries during such
period for the acquisition or leasing (pursuant to a Financing Lease) of
fixed or capital assets or additions to equipment (including replacements,
capitalized repairs and improvements during such period) which should be
capitalized under GAAP on a consolidated balance sheet of the Borrower and
its Subsidiaries.
"Capital Stock": any and all shares, interests, participations
-------------
or other equivalents (however designated) of capital stock of a
corporation, any and all equivalent ownership interests in a Person (other
than a corporation) and any and all warrants or options to purchase any of
the foregoing.
"Change of Control": the earlier to occur of (a) at any time
-----------------
prior to the consummation of an Initial Public Offering, the Existing
Holders shall cease to own at least 51% of the aggregate voting power of
all then issued and outstanding Capital Stock of the Borrower, (b) the
acquisition by any Person or "group" (within the meaning of Rule 13d-5
under the Exchange Act) (other than the Existing Holders) of beneficial
ownership (determined in accordance with Rule 13d-3 under the Exchange Act)
of, (i) if the Existing Holders hold less than 51% of the aggregate voting
power of all then issued and outstanding Capital Stock of the Borrower
after the consummation of an Initial Public Offering, 20% or more of the
aggregate voting power of all then issued and outstanding Capital Stock of
the Borrower or (ii) at any time, the power (whether or not exercised) to
elect a majority of the members of the Board of Directors of the Borrower
or (c) the Board of Directors of the Borrower shall not consist of a
majority of Continuing Directors. For purposes of this definition,
"Continuing Directors" shall mean the directors of the Borrower on the
--------------------
Closing Date and each other director, if such other director's nomination
for election to the Board of Directors of the Borrower is recommended by a
majority of the then Continuing Directors (including any directors so
recommended in connection with the consummation of any Collaboration) and
"voting power" means the power under ordinary circumstances to vote for the
------------
election of members of the Board of Directors of the Borrower.
<PAGE>
5
"Change of Control Individuals": a reference to John Barr, Joanne
-----------------------------
Leonard and Bernard Horowitz; each, individually, a "Change of Control
-----------------
Individual".
----------
"Closing Date": the date on which the conditions precedent set
------------
forth in subsection 4.1 shall be satisfied.
"Code": the Internal Revenue Code of 1986, as amended from time
----
to time.
"Collaboration": (a) the business arrangements and agreements
-------------
contemplated by the First Amended and Restated Collaboration Agreement,
dated as of July 22, 1996, by and between American National Red Cross, New
York Blood Center, Inc., and the Borrower, (b) the business arrangements
and agreements contemplated by the Exclusive Distribution Agreement, dated
as of September 11, 1996, by and between the Borrower and United States
Surgical Corporation and (c) any similar arrangements or agreements entered
into by the Borrower or any of its Subsidiaries with the same or any other
Persons (it being understood that no such arrangement or agreement shall
include the transfer of ownership of any assets of the Borrower or any of
its Subsidiaries to such other Persons).
"Collateral": all assets of the Loan Parties, now owned or
----------
hereinafter acquired, upon which a Lien is purported to be created by any
Security Document.
"Commitment": the obligation of the Lender to make the Loan to
----------
the Borrower hereunder on the Closing Date in the principal amount of
$10,750,000.
"Commonly Controlled Entity": an entity, whether or not
--------------------------
incorporated, which is under common control with the Borrower within the
meaning of Section 4001 of ERISA or is part of a group which includes the
Borrower and which is treated as a single employer under Section 414 of the
Code.
"Confirming Bank Letter of Credit Termination": the Confirming
--------------------------------------------
Bank Letter of Credit Termination, dated as of December 22, 1997, from Bank
of Hawaii International Corporation, New York to Ampersand.
"Consolidated Capital Funds": as at the date of determination
--------------------------
thereof, the sum of Consolidated Tangible Net Worth of the Borrower and its
Subsidiaries at such date and the outstanding principal amount of the
Borrower's Subordinated Debt at such date.
"Consolidated Debt Service": for any period, the sum of (i)
-------------------------
Consolidated Interest Expense for such period plus (ii) the aggregate
----
amount of long-term Indebtedness of the Borrower and its Subsidiaries
classified as the current portion thereof on the balance sheet of the
Borrower as at the last day of such period, in each case as determined on a
consolidated basis in accordance with GAAP, provided, that with respect to
--------
the three-month period ending on March 31, 1999, the six-month
<PAGE>
6
period ending on June 30, 1999 and the nine-month period ending on
September 30, 1999, the amount determined pursuant to clause (ii) above for
such periods shall be multiplied by .25, .50 and .75, respectively, for the
purposes of computing Consolidated Debt Service for such periods.
"Consolidated Debt Service Coverage Ratio": for any period, the
----------------------------------------
ratio of (a) Consolidated EBITDA for such period minus (i) Consolidated
-----
Unfunded Capital Expenditures for such period, (ii) income tax payments
paid in cash during such period and (iii) cash dividends and distributions
in respect of the Borrower's Capital Stock to (b) Consolidated Debt Service
for such period, determined on a consolidated basis in accordance with
GAAP.
"Consolidated EBIT": for any period, Consolidated Net Income or
-----------------
Consolidated Net Loss, as the case may be, for such period plus, to the
----
extent deducted in determining such Consolidated Net Income or Consolidated
Net Loss, as the case may be, (i) all income taxes and (ii) Consolidated
Interest Expense, as determined for the Borrower and its Subsidiaries on a
consolidated basis in accordance with GAAP.
"Consolidated EBITDA": for any period, Consolidated Net Income
-------------------
or Consolidated Net Loss, as the case may be, for such period plus, to the
----
extent deducted in determining such Consolidated Net Income or Consolidated
Net Loss, as the case may be, (i) all income taxes, (ii) Consolidated
Interest Expense, (iii) depreciation and amortization expense and (iv) all
other non-cash charges, as determined for the Borrower and its Subsidiaries
on a consolidated basis in accordance with GAAP.
"Consolidated Interest Expense": for any period, total interest
-----------------------------
expense (including that attributable to Financing Leases) of the Borrower
and its Subsidiaries for such period with respect to all outstanding
Indebtedness of the Borrower and its Subsidiaries, whether expensed or
capitalized (including, without limitation, all commissions, discounts and
other fees and charges owed with respect to letters of credit and bankers'
acceptance financing and net costs under interest rate protection
agreements to the extent such net costs are allocable to such period in
accordance with GAAP).
"Consolidated Net Income": for any period, the net income (if
-----------------------
any) of the Borrower and its Subsidiaries determined on a consolidated
basis in accordance with GAAP for such period, including any extraordinary
or non-recurring gain or loss.
"Consolidated Net Loss": for any period, the net loss (if any)
---------------------
of the Borrower and its Subsidiaries determined on a consolidated basis in
accordance with GAAP for such period, including any extraordinary or non-
recurring gain or loss.
<PAGE>
7
"Consolidated Net Worth": as at the date of determination
----------------------
thereof, all items which in conformity with GAAP would be included under
shareholders' equity on a consolidated balance sheet of the Borrower and
its Subsidiaries at such date.
"Consolidated Tangible Net Worth": as of the date of
-------------------------------
determination thereof, Consolidated Net Worth as determined for the
Borrower and its Subsidiaries on a consolidated basis in accordance with
GAAP at such date of determination after deducting therefrom the following
to the extent otherwise included therein:
(a) any surplus resulting from the write-up of assets
subsequent to June 30, 1997;
(b) goodwill, including any amounts (however designated on
the balance sheet) representing the costs of acquisitions in
excess of underlying tangible assets;
(c) patents, trademarks, copyrights;
(d) leasehold improvements not recoverable at the expiration
of a lease; and
(e) deferred charges (including, but not limited to,
unamortized debt discount and expense, organization expenses and
experimental and development expenses, but including prepaid
expenses).
"Consolidated Unfunded Capital Expenditures": for any period, (i)
------------------------------------------
the aggregate amount of Capital Expenditures for such period minus (ii) the
-----
amount thereof funded with the proceeds of Indebtedness incurred to finance
such Capital Expenditures or financed pursuant to a Financing Lease, in
each case determined on a consolidated basis in accordance with GAAP.
"Contractual Obligation": as to any Person, any provision of any
----------------------
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Custom Processing Agreement": the First Amended and Restated
---------------------------
Agreement for Custom Processing, dated as of January 24, 1996, between the
Borrower and Bayer, as amended pursuant to the Bayer Modification Agreement
and as the same may be further amended, supplemented or otherwise modified
in accordance with subsection 6.10.
"Default": any of the events specified in Section 7, whether or
-------
not any requirement for the giving of notice, the lapse of time, or both,
or any other condition, has been satisfied.
<PAGE>
8
"Dollars" and "$": dollars in lawful currency of the United
------- -
States of America.
"Domestic Subsidiary": any Subsidiary of the Borrower organized
-------------------
under the laws of any jurisdiction within the United States.
"Duryea Road Property": that certain real property located at
--------------------
155 Duryea Road, Melville, New York.
"Environmental Laws": any and all foreign, Federal, State, local
------------------
or municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, requirements of any Governmental Authority or other Requirements
of Law (including common law) regulating, relating to or imposing liability
or standards of conduct concerning protection of human health or the
environment, as now or may at any time hereafter be in effect.
"Equipment Lease Modification Agreement": the Equipment Lease
--------------------------------------
Modification Agreement, dated as of December 22, 1997, between the SCIDA
and the Borrower.
"ERISA": the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time.
"Eurocurrency Reserve Requirements": for any day as applied to a
---------------------------------
Eurodollar Loan, the aggregate (without duplication) of the rates
(expressed as a decimal fraction) of reserve requirements in effect on such
day (including, without limitation, basic, supplemental, marginal and
emergency reserves under any regulations of the Board of Governors of the
Federal Reserve System or other Governmental Authority having jurisdiction
with respect thereto) dealing with reserve requirements prescribed for
eurocurrency funding (currently referred to as "Eurocurrency Liabilities"
in Regulation D of such Board) maintained by a member bank of such System.
"Eurodollar Base Rate": with respect to each day during each
--------------------
Interest Period pertaining to a Eurodollar Loan, the rate per annum equal
to the rate at which the Lender is offered Dollar deposits at or about
10:00 A.M., New York City time, two Business Days prior to the beginning of
such Interest Period in the interbank eurodollar market where the
eurodollar and foreign currency and exchange operations in respect of its
Eurodollar Loan are then being conducted for delivery on the first day of
such Interest Period for the number of days comprised therein and in an
amount comparable to the amount of its Eurodollar Loan to be outstanding
during such Interest Period.
"Eurodollar Loans": Loans the rate of interest applicable to
----------------
which is based upon the Eurodollar Rate.
<PAGE>
9
"Eurodollar Rate": with respect to each day during each Interest
---------------
Period pertaining to a Eurodollar Loan, a rate per annum determined for
such day in accordance with the following formula (rounded upward to the
nearest 1/100th of 1%):
Eurodollar Base Rate
----------------------------------------
1.00 - Eurocurrency Reserve Requirements
"Exchange Act": the Securities Exchange Act of 1934, as amended.
------------
"Existing Chase Credit Agreement": the Credit Agreement, dated
-------------------------------
as of June 21, 1996 between the Borrower and the Lender.
"Existing Chase Term Loan": the term loan in the initial principal
------------------------
amount of $5,000,000 made by the Lender to the Borrower pursuant to the
Existing Chase Credit Agreement.
"Existing Holders": collectively, Ampersand and its Affiliates,
----------------
Chase Capital Investors, Inc. and New York Blood Center, Inc.
"Event of Default": any of the events specified in Section 7,
----------------
provided that any requirement for the giving of notice, the lapse of time,
--------
or both, or any other condition, has been satisfied.
"Facility Lease Modification Agreement": the Facility Lease
-------------------------------------
Modification Agreement, dated as of December 22, 1997, between the SCIDA
and the Borrower.
"Financing Lease": any lease of property, real or personal, the
---------------
obligations of the lessee in respect of which are required in accordance
with GAAP to be capitalized on a balance sheet of the lessee.
"FDA": the U.S. Food and Drug Administration or any successor or
---
analogous Governmental Authority.
"Foreign Subsidiary": any Subsidiary of the Borrower organized
------------------
under the laws of any jurisdiction outside the United States of America.
"GAAP": generally accepted accounting principles in the United
----
States of America as in effect from time to time set forth in the opinions
and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and the statements and
pronouncements of the Financial Accounting Standards Board and the rules
and regulations of the Securities and Exchange Commission, or in such other
statements by such other entity as may be in general use by significant
segments of the accounting profession, which are applicable to the
circumstances of the Borrower as of the date of determination, except that
for purposes of Section 6.1, GAAP shall be determined on the basis of such
principles in
<PAGE>
10
effect on the date hereof and consistent with those used in the preparation
of the most recent audited financial statements delivered pursuant to
Section 3.1. In the event that any "Accounting Change" (as defined below)
shall occur and such change results in a change in the method of
calculation of financial covenants, standards or terms in this Agreement,
then the Borrower and the Lender agree to enter into negotiations in order
to amend such provisions of this Agreement so as to equitably reflect such
Accounting Changes with the desired result that the criteria for evaluating
the Borrower's financial condition shall be the same after such Accounting
Changes as if such Accounting Changes had not been made. Until such time as
such an amendment shall have been executed and delivered by the Borrower
and the Lender, all financial covenants, standards and terms in this
Agreement shall continue to be calculated or construed as if such
Accounting Changes had not occurred. "Accounting Changes" refers to changes
in accounting principles required by the promulgation of any rule,
regulation, pronouncement or opinion by the Financial Accounting Standards
Board of the American Institute of Certified Public Accountants or, if
applicable, the Securities and Exchange Commission (or successors thereto
or agencies with similar functions).
"Governmental Authority": any nation or government, any state or
----------------------
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Guarantee and Collateral Agreement": the Guarantee and
----------------------------------
Collateral Agreement, substantially in the form of Exhibit B, to be
executed by the Borrower and its Subsidiaries, as the same may be amended,
supplemented or otherwise modified from time to time.
"Guarantee Obligation": as to any Person (the "guaranteeing
-------------------- ------------
person"), any obligation of (a) the guaranteeing person or (b) another
------
Person (including, without limitation, any bank under any letter of credit)
to induce the creation of which obligation the guaranteeing person has
issued a reimbursement, counterindemnity or similar obligation, in either
case guaranteeing or in effect guaranteeing any Indebtedness, leases,
dividends or other obligations (the "primary obligations") of any other
-------------------
third Person (the "primary obligor") in any manner, whether directly or
---------------
indirectly, including, without limitation, any obligation of the
guaranteeing person, whether or not contingent, (i) to purchase any such
primary obligation or any property constituting direct or indirect security
therefor, (ii) to advance or supply funds (1) for the purchase or payment
of any such primary obligation or (2) to maintain working capital or equity
capital of the primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, (iii) to purchase property, securities or
services primarily for the purpose of assuring the owner of any such
primary obligation of the ability of the primary obligor to make payment of
such primary obligation or (iv) otherwise to assure or hold harmless the
owner of any such primary obligation against loss in respect thereof;
provided, however, that the term "Guarantee Obligation" shall not include
-------- -------
endorsements of instruments for deposit or collection in the ordinary
course of business. The amount of any Guarantee Obligation of any
guaranteeing person shall be deemed to be the lower of (a) an amount equal
to the stated or
<PAGE>
11
determinable amount of the primary obligation in respect of which such
Guarantee Obligation is made and (b) the maximum amount for which such
guaranteeing person may be liable pursuant to the terms of the instrument
embodying such Guarantee Obligation, unless such primary obligation and the
maximum amount for which such guaranteeing person may be liable are not
stated or determinable, in which case the amount of such Guarantee
Obligation shall be such guaranteeing person's maximum reasonably
anticipated liability in respect thereof as determined by the Borrower in
good faith.
"Hazardous Materials": any hazardous materials, hazardous wastes,
-------------------
hazardous or toxic substances, defined or regulated as such in or under any
Environmental Law, including without limitation asbestos, Petroleum
Products and material exhibiting the characteristics of ignitability,
corrosivity, reactivity or extraction procedure toxicity, as such terms are
defined in connection with hazardous materials or hazardous wastes or
hazardous or toxic substances in any Environmental Law.
"Indebtedness": of any Person at any date, (a) all indebtedness
------------
of such Person for borrowed money or for the deferred purchase price of
property or services (other than current trade liabilities incurred in the
ordinary course of business and payable in accordance with customary
practices), (b) any other indebtedness of such Person which is evidenced by
a note, bond, debenture or similar instrument, (c) all obligations of such
Person under Financing Leases, (d) all obligations of such Person in
respect of acceptances issued or created for the account of such Person and
(e) all liabilities secured by any Lien on any property owned by such
Person even though such Person has not assumed or otherwise become liable
for the payment thereof.
"Indemnified Liabilities": as defined in subsection 8.5.
-----------------------
"Initial Public Offering": an initial public offering by the
-----------------------
Borrower of its Capital Stock registered under the Securities Act of 1933,
as amended.
"Insolvency": with respect to any Multiemployer Plan, the
----------
condition that such Plan is insolvent within the meaning of Section 4245 of
ERISA.
"Insolvent": pertaining to a condition of Insolvency.
---------
"Intellectual Property": as defined in subsection 3.9.
---------------------
"Intercreditor Agreement": the Intercreditor Agreement to be
-----------------------
entered into by the Borrower, the Lender and Bayer, substantially in the
form of Exhibit C, as the same may be amended, supplemented or otherwise
modified from time to time.
"Interest Payment Date": (a) as to any ABR Loan, the last day of
---------------------
each month (commencing on the last Business Day of the first full calendar
month following the Closing Date) and the Maturity Date and (b) as to any
Eurodollar Loan,
<PAGE>
12
the last Business Day of each month during which such Eurodollar Loan is
outstanding (commencing on the last Business Day of the first full calendar
month following the Closing Date), the last day of each Interest Period
with respect thereto and the Maturity Date.
"Interest Period": (a) with respect to any Eurodollar Loan:
---------------
(i) initially, the period commencing on the borrowing or
conversion date, as the case may be, with respect to such Eurodollar
Loan and ending one, two, three or six months thereafter, as selected
by the Borrower in its irrevocable notice of borrowing or notice of
conversion, as the case may be, given with respect thereto; and
(ii) thereafter, each period commencing on the last day of
the next preceding Interest Period applicable to such Eurodollar Loan
and ending one, two, three or six months thereafter, as selected by
the Borrower by irrevocable notice to the Lender not less than three
Business Days prior to the last day of the then current Interest
Period with respect thereto;
provided that, all of the foregoing provisions relating to Interest Periods
--------
are subject to the following:
(1) if any Interest Period pertaining to a Eurodollar Loan would
otherwise end on a day that is not a Business Day, such Interest
Period shall be extended to the next succeeding Business Day unless
the result of such extension would be to carry such Interest Period
into another calendar month in which event such Interest Period shall
end on the immediately preceding Business Day;
(2) any Interest Period that would otherwise extend beyond the
date final payment is due on the Loan shall end on such date of final
payment;
(3) any Interest Period pertaining to a Eurodollar Loan that
begins on the last Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the calendar month
at the end of such Interest Period) shall end on the last Business Day
of a calendar month;
(4) the Borrower shall select Interest Periods so as not to
require a payment or prepayment of any Eurodollar Loan during an
Interest Period for such Loan; and
(5) each Eurodollar Loan may have Interest Periods which are
different from the Interest Periods applicable to other Eurodollar
Loans.
"Investment": as defined in subsection 6.9.
----------
<PAGE>
13
"Issuing Bank Letter of Credit Termination": the Issuing Bank
-----------------------------------------
Letter of Credit Termination, dated as of December 22, 1997, from Silicon
Valley Bank to Ampersand.
"Joint Venture": as to the Borrower or any of its Subsidiaries,
-------------
any other Person (other than a Subsidiary) which is engaged in a business
which is related to or complementary to the business of the Borrower and
its Subsidiaries and which is formed after the Closing Date by the Borrower
and one or more other Persons to develop and exploit products originally
developed by or licensed to the Borrower and its Subsidiaries.
"Lender": as defined in the Preamble to this Agreement.
------
"Lien": any mortgage, pledge, hypothecation, assignment, deposit
----
arrangement, encumbrance, lien (statutory or other), charge or other
security interest or any preference, priority or other security agreement
or preferential arrangement of any kind or nature whatsoever (including,
without limitation, any conditional sale or other title retention agreement
and any Financing Lease having substantially the same economic effect as
any of the foregoing).
"Loan": as defined in subsection 2.1.
----
"Loan Documents": this Agreement, the Note and the Security
--------------
Documents.
"Loan Party": the Borrower and each Subsidiary of the Borrower
----------
which is a party to a Loan Document.
"Material Adverse Effect": a material adverse effect on (a) the
-----------------------
business, operations, property, condition (financial or otherwise) or
prospects of the Borrower or the Borrower and its Subsidiaries, taken as a
whole, or (b) the validity or enforceability of this or any of the other
Loan Documents or the rights or remedies of the Lender hereunder or
thereunder.
"Maturity Date": December 31, 2001.
-------------
"Moody's": Moody's Investors Services, Inc.
-------
"Multiemployer Plan": a Plan which is a multiemployer plan as
------------------
defined in Section 4001(a)(3) of ERISA.
"Non-Excluded Taxes": as defined in subsection 2.11.
------------------
"Note": as defined in subsection 2.3(d).
-----
"Participants": as defined in subsection 8.6(b).
------------
<PAGE>
14
"PBGC": the Pension Benefit Guaranty Corporation established
----
pursuant to Subtitle A of Title IV of ERISA.
"Permitted Investments": (a) direct obligations of the United
---------------------
States of America, or of any agency thereof, or obligations guaranteed as
to principal and interest by the United States of America, or of any agency
thereof, in either case maturing not more than 90 days from the date of
acquisition thereof; (b) certificates of deposit or bankers' acceptances
issued by the Lender (or by any bank or trust company organized under the
laws of the United States of America or any state thereof having capital,
surplus and undivided profits of at least $1,000,000,000 and a long-term
debt rating, or being a subsidiary of a bank holding company that has a
long-term debt rating, of A or better by S&P or Moody's) maturing not more
than 90 days from the date of acquisition thereof; (c) commercial paper
rated A-1 or better or P-1 by S&P or Moody's, respectively, maturing not
more than 90 days from the date of acquisition; and (d) money market mutual
funds with assets of at least $2,500,000,000 that invest in obligations of
the type described in clauses (a), (b) or (c) above.
"Person": an individual, partnership, corporation, business
------
trust, limited liability company, joint stock company, trust,
unincorporated association, joint venture, Governmental Authority or other
entity of whatever nature.
"Petroleum Products": gasoline, diesel fuel, motor oil, waste or
------------------
used oil, heating oil, kerosene and any other petroleum products, including
crude oil or any fraction thereof.
"Plan": at a particular time, any employee benefit plan which is
----
covered by ERISA and in respect of which the Borrower or a Commonly
Controlled Entity is (or, if such plan were terminated at such time, would
under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.
"PNC": PNC Bank, National Association.
---
"PNC Letter Agreement": the Letter Agreement, dated February 7,
--------------------
1995 between the Borrower and PNC.
"PNC Term Loan": the term loan in the initial principal amount
-------------
of $10,000,000 made by PNC to the Borrower pursuant to the PNC Letter
Agreement.
"PNC Termination Agreement": the PNC Termination, Discharge and
-------------------------
Release, dated December 22, 1997, from PNC to the Borrower.
"Regulations G, U, and X": Regulations G, U, and X of the Board
-----------------------
of Governors of the Federal Reserve System as in effect from time to time.
<PAGE>
15
"Reorganization": with respect to any Multiemployer Plan, the
--------------
condition that such plan is in reorganization within the meaning of Section
4241 of ERISA.
"Replacement Agreement": as defined in Section 7(j).
---------------------
"Reportable Event": any of the events set forth in Section
----------------
4043(b) of ERISA, other than those events as to which the thirty day notice
period is waived under subsections .13, .14, .16, .18, .19 or .20 of PBGC
Reg. (S)2615.
"Requirement of Law": as to any Person, the Certificate of
------------------
Incorporation and By-Laws or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
"Responsible Officer": the chief executive officer, the
-------------------
president, or the chief financial officer of the Borrower.
"Sale/Leaseback Transaction": as defined in subsection 6.12.
--------------------------
"SCIDA": Suffolk County Industrial Development Agency or any
-----
successor Governmental Authority.
"Security Documents": the collective reference to the Guarantee
------------------
and Collateral Agreement, the Intercreditor Agreement, the Borrower
Mortgage and all other security documents hereafter delivered to the Lender
granting a Lien on any asset or assets of any Person to secure the
obligations and liabilities of the Borrower hereunder and under any of the
other Loan Documents or to secure any guarantee of any such obligations and
liabilities.
"Single Employer Plan": any Plan which is covered by Title IV of
--------------------
ERISA, but which is not a Multiemployer Plan.
"S&P": Standard & Poor's Rating Group.
---
"Subordinated Debt": any unsecured Indebtedness of the Borrower:
-----------------
no part of the principal of which is required to be paid (whether by way of
mandatory sinking fund, mandatory redemption, mandatory prepayment or
otherwise) prior to December 31, 2002; the payment of the principal of and
interest on which and other obligations of the Borrower in respect thereof
are subordinated to the prior payment in full of the principal of and
interest (including post-petition interest) on the Loan and all other
obligations and liabilities of the Borrower to the Lender hereunder on
terms and conditions approved in writing by the Lender; and all other terms
and conditions
<PAGE>
16
which are satisfactory in form and substance to the Lender (as evidenced by
its prior written approval thereof).
"Subsidiary": as to any Person, a corporation, partnership or
----------
other entity of which shares of stock or other ownership interests having
ordinary voting power (other than stock or such other ownership interests
having such power only by reason of the happening of a contingency) to
elect a majority of the board of directors or other managers of such
corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through
one or more intermediaries, or both, by such Person. Unless otherwise
qualified, all references to a "Subsidiary" or to "Subsidiaries" in this
Agreement shall refer to a Subsidiary or Subsidiaries of the Borrower. It
is understood and agreed that any Joint Venture of the Borrower and its
Subsidiaries shall not be a "Subsidiary" of the Borrower for purposes of
this Agreement and the other Loan Documents and any other Person which
enters into a Collaboration with the Borrower or any of its Subsidiaries
shall not, solely by virtue of entering into such Collaboration, become a
"Subsidiary" of the Borrower for purposes of this Agreement and the other
Loan Documents.
"Subsidiary Guarantor": any Subsidiary of the Borrower
--------------------
delivering a guarantee pursuant to the Guarantee and Collateral Agreement.
"Transferee": as defined in subsection 8.6(d).
----------
"Type": as to any Loan, its nature as an ABR Loan or a
----
Eurodollar Loan.
"VITEX Intercreditor Termination Agreement": the VITEX
-----------------------------------------
Intercreditor Termination, Discharge and Release, dated December 22, 1997,
from the Borrower to each of Ampersand and Bayer.
1.2 Other Definitional Provisions. (a) Unless otherwise specified
-----------------------------
therein, all terms defined in this Agreement shall have the defined meanings
when used in the Note or any certificate or other document made or delivered
pursuant hereto.
(b) As used herein and in the Note, and any certificate or other
document made or delivered pursuant hereto, accounting terms relating to the
Borrower and its Subsidiaries not defined in subsection 1.1 and accounting terms
partly defined in subsection 1.1, to the extent not defined, shall have the
respective meanings given to them under GAAP.
(c) The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Section, subsection,
Schedule and Exhibit references are to this Agreement unless otherwise
specified.
<PAGE>
17
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
SECTION 2. AMOUNT AND TERMS OF COMMITMENT
2.1 Term Loan. Subject to the terms and conditions hereof, the
---------
Lender agrees to make a term loan (the "Loan") to the Borrower on the Closing
----
Date in the amount of $10,750,000. The Loan may from time to time be comprised
of (a) Eurodollar Loans, (b) ABR Loans or (c) a combination thereof, as
determined by the Borrower and notified to the Lender in accordance with
subsections 2.2 and 2.5.
2.2 Procedure for Term Loan Borrowing. The Borrower shall give the
---------------------------------
Lender irrevocable written notice (which notice must be received by the Lender
prior to 10:00 A.M., New York City time, (a) three Business Days prior to the
Closing Date, if all or any part of the Loan is to be initially comprised of
Eurodollar Loans, or (b) on the same Business Day as the Closing Date,
otherwise) requesting that the Lender make the Loan on the Closing Date and
specifying (i) whether the Loan is to be initially comprised of Eurodollar
Loans, ABR Loans, or a combination thereof, (ii) the respective amount of each
such Loan (provided that each Eurodollar Loan shall be in a minimum amount of
--------
$500,000 or whole multiple of $100,000 in excess thereof) and (iii) the
respective length of the initial Interest Period for each Eurodollar Loan.
2.3 Repayment of Loan; Evidence of Debt. (a) The Borrower hereby
-----------------------------------
unconditionally promises to pay to the Lender the principal amount of the Loan,
in 16 consecutive quarterly installments, payable on the last day of each March,
June, September and December, commencing on March 31, 1998 (or on such earlier
date on which the Loan becomes due and payable pursuant to Section 7), each of
which installments shall be in an amount equal to 25% of the amount set forth
below for the year in which such installment becomes due, provided, that if any
--------
installment of principal on the Loan would be paid on a day that is not a
Business Day, such payment shall be made on the next succeeding Business Day
unless the result of such extension would be to carry such payment into another
calendar month in which event such payment of principal shall be made on the
immediately preceding Business Day:
Year Amount
---- ------
1998 $2,687,500
1999 $2,687,500
2000 $2,687,500
2001 $2,687,500
The Borrower hereby further agrees to pay interest on the unpaid
principal amount of the Loan from time to time outstanding from the date hereof
until payment in full thereof at the rates per annum, and on the dates, set
forth in subsection 2.6.
<PAGE>
18
(b) The Lender shall maintain an account or accounts on its books in
which (i) the amount of the Loan made hereunder, and the Interest Period if any,
applicable thereto, (ii) the amount of any principal or interest due and payable
or to become due and payable from the Borrower to the Lender hereunder and (iii)
the amount of any sum received by the Lender hereunder from the Borrower is
evidenced.
(c) The entries made pursuant to paragraph (b) above shall, to the
extent permitted by applicable law, be prima facie evidence of the existence and
----- -----
amounts of the obligations of the Borrower therein recorded, absent manifest
error; provided, however, that the failure of the Lender to maintain an account
-------- -------
on its books, or any error therein, shall not in any manner affect the
obligation of the Borrower to repay (with applicable interest) the Loan made to
such Borrower by the Lender in accordance with the terms of this Agreement.
(d) The Borrower agrees that, upon the request of the Lender, the
Borrower will execute and deliver to the Lender a promissory note of the
Borrower evidencing the Loan of the Lender, substantially in the form of Exhibit
D with appropriate insertions as to date and principal amount (the "Note").
----
2.4 Optional Prepayments. The Borrower may on the last day of any
--------------------
Interest Period with respect thereto, in the case of a Eurodollar Loan, or at
any time and from time to time, in the case of an ABR Loan, prepay the Loan, in
whole or in part, without premium or penalty, upon irrevocable written notice to
the Lender on the same Business Day as such optional prepayment is proposed to
be made, specifying the date and amount of prepayment. If any such notice is
given, the amount and type of the Loan specified in such notice shall be
due and payable on the date specified therein, together with any amounts payable
pursuant to subsection 2.12 and, accrued interest to such date on the amount
prepaid. Partial prepayments of the Loan shall be applied to the installments
of principal thereof in the inverse order of their scheduled maturities.
Amounts prepaid on account of the Loan may not be reborrowed. Partial
prepayments shall be in a minimum aggregate principal amount of $100,000 or a
whole multiple thereof, in the case of prepayments of ABR Loans, and $500,000 or
a multiple of $100,000 in excess thereof, in the case of Eurodollar Loans.
2.5 Conversion and Continuation Options. (a) The Borrower may elect
-----------------------------------
from time to time to convert Eurodollar Loans to ABR Loans, by giving the Lender
at least two Business Days' prior irrevocable notice of such election, provided
--------
that any such conversion of Eurodollar Loans may only be made on the last day of
an Interest Period with respect thereto. The Borrower may elect from time to
time to convert ABR Loans to Eurodollar Loans by giving the Lender at least
three Business Days' prior irrevocable notice of such election. Any such notice
of conversion to Eurodollar Loans shall specify the length of the initial
Interest Period therefor. All or any part of any outstanding Eurodollar Loans
or ABR Loans may be converted as provided herein, provided that (i) no ABR Loan
--------
may be converted into a Eurodollar Loan when any Event of Default has occurred
and is continuing and the Lender has determined that such a conversion is not
appropriate, (ii) no ABR Loan may be converted into a Eurodollar Loan after the
date that is one month prior to the date of the final installment of principal
of the Loan and (iii) each Eurodollar Loan shall be in a minimum amount of
$500,000 or a whole multiple of $100,000 in excess thereof.
<PAGE>
19
(b) Eurodollar Loans may be continued as such upon the expiration of
the then current Interest Period with respect thereto by the Borrower giving
notice to the Lender, in accordance with the applicable provisions of the term
"Interest Period" set forth in subsection 1.1, of the length of the next
Interest Period to be applicable to such Loan, provided that no Eurodollar Loan
--------
may be continued as such (i) when any Event of Default has occurred and is
continuing and the Lender has determined that such a continuation is not
appropriate or (ii) after the date that is one month prior to the date of the
final installment of principal of the Loan and provided, further, that if the
-------- -------
Borrower shall fail to give such notice or if such continuation is not permitted
such Eurodollar Loan shall be automatically converted to an ABR Loan on the last
day of such then expiring Interest Period.
2.6 Interest Rates and Payment Dates. (a) Each Eurodollar Loan
--------------------------------
shall bear interest for each day during each Interest Period with respect
thereto at a rate per annum equal to the Eurodollar Rate determined for such day
plus the Applicable Margin.
(b) Each ABR Loan shall bear interest at a rate per annum equal to the
ABR plus the Applicable Margin.
(c) If all or a portion of (i) any principal of the Loan, (ii) any
interest payable thereon and (iii) any other amount payable hereunder shall not
be paid when due (whether at the stated maturity, by acceleration or otherwise),
the principal of the Loan and any such overdue interest, or other amount shall
bear interest at a rate per annum which is (x) in the case of principal, the
rate that would otherwise be applicable thereto pursuant to the foregoing
provisions of this subsection plus 2% or (y) in the case of any such overdue
interest, or other amount, the rate described in paragraph (b) of this
subsection plus 2%, in each case from the date of such non-payment until such
overdue principal, interest or other amount is paid in full (as well after as
before judgment).
(d) Interest shall be payable in arrears on each Interest Payment
Date, provided that interest accruing pursuant to paragraph (c) of this
--------
subsection shall be payable from time to time on demand.
2.7 Computation of Interest and Fees. (a) Interest whenever it is
--------------------------------
calculated shall be calculated on the basis of a 360-day year for the actual
days elapsed. Any change in the interest rate on a Loan resulting from a change
in the ABR or the Eurocurrency Reserve Requirements shall become effective as of
the opening of business on the day on which such change becomes effective. The
Lender shall as soon as practicable notify the Borrower of the effective date
and the amount of each such change in interest rate.
(b) Each determination of an interest rate by the Lender pursuant to
any provision of this Agreement shall be conclusive and binding on the Borrower
in the absence of manifest error. The Lender shall, at the request of the
Borrower, deliver to the Borrower a statement showing the quotations used by the
Lender in determining any interest rate pursuant to subsection 2.6(a).
<PAGE>
20
2.8 Inability to Determine Interest Rate. If prior to the first day
------------------------------------
of any Interest Period with respect to a Eurodollar Loan:
(a) the Lender shall have determined (which determination shall be
conclusive and binding upon the Borrower) that, by reason of circumstances
affecting the relevant market, adequate and reasonable means do not exist
for ascertaining the Eurodollar Rate for such Interest Period, or
(b) the Lender determines that the Eurodollar Rate for such Interest
Period will not adequately and fairly reflect the cost to the Lender (as
conclusively certified by the Lender) of making or maintaining such
Eurodollar Loan during such Interest Period;
the Lender shall give telecopy or telephonic notice thereof to the Borrower as
soon as practicable thereafter. If such notice is given (x) any Eurodollar Loan
requested to be made on the first day of such Interest Period shall be made as
an ABR Loan, (y) any ABR Loan that was to have been converted on the first day
of such Interest Period to a Eurodollar Loan shall be continued as an ABR Loan
and (z) any outstanding Eurodollar Loan shall be converted, on the first day of
such Interest Period, to an ABR Loan. Until such notice has been withdrawn by
the Lender, no further Eurodollar Loan shall be made or continued as such, nor
shall the Borrower have the right to convert the Loan to a Eurodollar Loan.
2.9 Illegality. Notwithstanding any other provision herein, if the
----------
adoption of or any change in any Requirement of Law or in the interpretation or
application thereof shall make it unlawful for the Lender to make or maintain a
Eurodollar Loan as contemplated by this Agreement, (a) the commitment of the
Lender hereunder to make a Eurodollar Loan, continue a Eurodollar Loan as such
and convert an ABR Loan to a Eurodollar Loan shall forthwith be suspended until
such time as it shall no longer be unlawful for the Lender to make or maintain a
Eurodollar Loan as contemplated by this Agreement and (b) the then outstanding
Eurodollar Loans shall be converted automatically to ABR Loans on the respective
last day of the then current Interest Period or within such earlier period as
required by law. If any such conversion of a Eurodollar Loan occurs on a day
which is not the last day of the then current Interest Period with respect
thereto, the Borrower shall pay to the Lender such amounts, if any, as may be
required pursuant to subsection 2.12.
2.10 Requirements of Law. (a) If the adoption of or any change in
-------------------
any Requirement of Law or in the interpretation or application thereof or
compliance by the Lender with any request or directive (whether or not having
the force of law) from any central bank or other Governmental Authority made
subsequent to the date hereof:
(i) shall subject the Lender to any tax of any kind whatsoever
with respect to this Agreement, any Note or any Eurodollar Loan made by it,
or change the basis of taxation of payments to the Lender in respect
thereof (except for Non-Excluded Taxes covered by subsection 2.11 and
changes in the rate of tax on the overall net income of the Lender);
<PAGE>
21
(ii) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets held
by, deposits or other liabilities in or for the account of, advances, loans
or other extensions of credit by, or any other acquisition of funds by, any
office of the Lender which is not otherwise included in the determination
of the Eurodollar Rate hereunder; or
(iii) shall impose on the Lender any other condition;
and the result of any of the foregoing is to increase the cost to the Lender, by
an amount which the Lender deems to be material, of making, converting into,
continuing or maintaining a Eurodollar Loan or to reduce any amount receivable
hereunder in respect thereof, then, in any such case, the Borrower shall
promptly pay the Lender such additional amount or amounts as will compensate the
Lender for such increased cost or reduced amount receivable.
(b) If the Lender shall have determined that the adoption of or any
change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by the Lender with any
request or directive regarding capital adequacy (whether or not having the force
of law) from any Governmental Authority made subsequent to the date hereof shall
have the effect of reducing the rate of return on the Lender's capital as a
consequence of its obligations hereunder to a level below that which the Lender
could have achieved but for such adoption, change or compliance (taking into
consideration the Lender's policies with respect to capital adequacy) by an
amount deemed by the Lender to be material, then from time to time, the Borrower
shall promptly pay to the Lender such additional amount or amounts as will
compensate the Lender for such reduction.
(c) If the Lender becomes entitled to claim any additional amounts
pursuant to this subsection (whether such additional amounts will be incurred
subsequent to the event or were accumulated prior to the event as a result of
the event occurring), it shall promptly notify the Borrower of the event by
reason of which it has become so entitled as promptly as practicable, but in any
event within 45 days after such Lender obtains actual knowledge thereof, and the
Borrower shall pay such additional amounts in full on demand by the Lender,
provided that if the Lender fails to give such notice within 45 days after it
obtains actual knowledge of such an event, the Lender shall, with respect to
compensation payable pursuant to this subsection in respect of any costs
resulting from such event, only be entitled to payment under this subsection for
costs incurred from and after the date that is 45 days prior to the date that
the Lender does give such notice. A certificate as to any additional amounts
payable pursuant to this subsection submitted by the Lender to the Borrower
shall be conclusive in the absence of manifest error. The agreements in this
subsection shall survive the termination of this Agreement and the payment of
the Loan and all other amounts payable hereunder.
2.11 Taxes. All payments made by the Borrower under this Agreement
-----
and the Note shall be made free and clear of, and without deduction or
withholding for or on account of, any present or future income, stamp or other
taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now
or hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority, excluding income taxes and franchise
<PAGE>
22
taxes (imposed in lieu of income taxes) imposed on the Lender as a result of a
present or former connection between the Lender and the jurisdiction of the
Governmental Authority imposing such tax or any political subdivision or taxing
authority thereof or therein (other than any such connection arising solely from
the Lender having executed, delivered or performed its obligations or received a
payment under, or enforced, this Agreement or any Note). If any such non-
excluded taxes, levies, imposts, duties, charges, fees deductions or
withholdings ("Non-Excluded Taxes") are required to be withheld from any amounts
payable to the Lender hereunder or under any Note, the amounts so payable to the
Lender shall be increased to the extent necessary to yield to the Lender (after
payment of all Non-Excluded Taxes) interest or any such other amounts payable
hereunder at the rates or in the amounts specified in this Agreement. Whenever
any Non-Excluded Taxes are payable by the Borrower, as promptly as possible
thereafter the Borrower shall send to the Lender a certified copy of an original
official receipt received by the Borrower showing payment thereof. If the
Borrower fails to pay any Non-Excluded Taxes when due to the appropriate taxing
authority or fails to remit to the Lender the required receipts or other
required documentary evidence, the Borrower shall indemnify the Lender for any
incremental taxes, interest or penalties that may become payable by the Lender
as a result of any such failure. The agreements in this subsection shall survive
the termination of this Agreement and the payment of the Loan and all other
amounts payable hereunder.
2.12 Indemnity. The Borrower agrees to indemnify the Lender and to
---------
hold the Lender harmless from any loss or expense which the Lender may sustain
or incur as a consequence of (a) default by the Borrower in making a borrowing
of, conversion into or continuation of a Eurodollar Loan after the Borrower has
given a notice requesting the same in accordance with the provisions of this
Agreement, (b) default by the Borrower in making any prepayment after the
Borrower has given a notice thereof in accordance with the provisions of this
Agreement or (c) the making of a prepayment of a Eurodollar Loan on a day which
is not the last day of an Interest Period with respect thereto. Such
indemnification may include an amount equal to the excess, if any, of (i) the
amount of interest which would have accrued on the amount so prepaid, or not so
borrowed, converted or continued, for the period from the date of such
prepayment or of such failure to borrow, convert or continue to the last day of
such Interest Period (or, in the case of a failure to borrow, convert or
continue, the Interest Period that would have commenced on the date of such
failure) in each case at the applicable rate of interest for such Loan provided
for herein (excluding, however, the Applicable Margin included therein, if any)
over (ii) the amount of interest (as reasonably determined by the Lender) which
would have accrued to the Lender on such amount by placing such amount on
deposit for a comparable period with leading banks in the interbank eurodollar
market. This covenant shall survive the termination of this Agreement and the
payment of the Loan and all other amounts payable hereunder.
SECTION 3. REPRESENTATIONS AND WARRANTIES
To induce the Lender to enter into this Agreement and to make the
Loan, the Borrower hereby represents and warrants to the Lender that:
<PAGE>
23
3.1 Financial Condition. The consolidated balance sheet of the
-------------------
Borrower and its consolidated Subsidiaries as at December 31, 1996 and the
related consolidated statements of operations and shareholders' equity and of
cash flows for the fiscal year ended on such date, reported on by KPMG Peat
Marwick, copies of which have heretofore been furnished to the Lender, are
complete and correct and present fairly in all material respects the
consolidated financial condition of the Borrower and its consolidated
Subsidiaries as at such date, and the consolidated results of their operations
and shareholders' equity and cash flows for the fiscal year then ended. The
unaudited consolidated balance sheet of the Borrower as at September 30, 1997
and the related unaudited consolidated statements of operations and
shareholders' equity and of cash flows for the nine-month period ended on such
date, certified by a Responsible Officer, copies of which have heretofore been
furnished to the Lender, are complete and correct and present fairly in all
material respects the consolidated financial condition of the Borrower and its
consolidated Subsidiaries at such date, and the consolidated results of their
operations and shareholders' equity and their consolidated cash flows for the
nine-month period then ended (subject to normal year-end audit adjustments).
All such financial statements, including the related schedules and notes
thereto, have been prepared in accordance with GAAP applied consistently
throughout the periods involved. Neither the Borrower nor any of its
consolidated Subsidiaries has, at the date hereof, any material Guarantee
Obligation, contingent liability or liability for taxes, or any long-term lease
or unusual forward or long-term commitment, including, without limitation, any
interest rate or foreign currency swap or exchange transaction, which is not
reflected in the foregoing statements or in the notes thereto. During the
period from December 31, 1996 to and including the date hereof there has been no
sale, transfer or other disposition by the Borrower or any of its consolidated
Subsidiaries of any material part of its business or property and no purchase or
other acquisition of any business or property (including any Capital Stock of
any other Person) material in relation to the consolidated financial condition
of the Borrower and its consolidated Subsidiaries at December 31, 1996.
3.2 No Change. Since December 31, 1996, there has been no
---------
development or event which has had or could reasonably be expected to have a
Material Adverse Effect (it being agreed that losses of the Borrower incurred
since December 31, 1996 but prior to the date hereof, as set forth in the
financial statements delivered to the Lender prior to the date hereof, shall not
be deemed to constitute a Material Adverse Effect for purposes of this
provision).
3.3 Corporate Existence; Compliance with Law. Each of the Borrower
----------------------------------------
and its Subsidiaries (a) is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, (b) has the
corporate power and authority, and the legal right, to own and operate its
property, to lease the property it operates as lessee and to conduct the
business in which it is currently engaged, (c) is duly qualified as a foreign
corporation and in good standing under the laws of each jurisdiction where its
ownership, lease or operation of property or the conduct of its business
requires such qualification and (d) is in compliance with all Requirements of
Law (including ERISA and all applicable Environmental Laws) except to the extent
that the failure to comply therewith could not, in the aggregate, reasonably be
expected to have a Material Adverse Effect.
<PAGE>
24
3.4 Corporate Power; Authorization; Enforceable Obligations. The
-------------------------------------------------------
Borrower has the corporate power and authority, and the legal right, to make,
deliver and perform the Loan Documents to which it is a party and to borrow
hereunder and has taken all necessary corporate action to authorize the
borrowings on the terms and conditions of this Agreement and the Note and to
authorize the execution, delivery and performance of the Loan Documents to which
it is a party. No consent or authorization of, filing with, notice to or other
act by or in respect of, any Governmental Authority or any other Person is
required in connection with the borrowings hereunder or with the execution,
delivery, performance, validity or enforceability of the Loan Documents to which
the Borrower is a party. This Agreement has been, and each other Loan Document
to which it is a party will be, duly executed and delivered on behalf of the
Borrower. This Agreement constitutes, and each other Loan Document to which it
is a party when executed and delivered will constitute, a legal, valid and
binding obligation of the Borrower enforceable against the Borrower in
accordance with its terms, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.
3.5 No Legal Bar. The execution, delivery and performance of the
------------
Loan Documents, the borrowings hereunder and the use of the proceeds thereof
will not violate any Requirement of Law or Contractual Obligation of the
Borrower or any of its Subsidiaries and will not result in, or require, the
creation or imposition of any Lien on any of its properties or revenues pursuant
to any such Requirement of Law or Contractual Obligation.
3.6 No Material Litigation. Except as set forth on Schedule 3.6, no
----------------------
litigation, investigation or proceeding of or before any arbitrator or
Governmental Authority is pending or, to the knowledge of the Borrower,
threatened by or against the Borrower or any of its Subsidiaries or against any
of its or their respective properties or revenues (a) with respect to any of the
Loan Documents or any of the transactions contemplated hereby or thereby or (b)
which could reasonably be expected to have a Material Adverse Effect.
3.7 No Default. Neither the Borrower nor any of its Subsidiaries is
----------
in default under or with respect to any of its Contractual Obligations in any
respect which could reasonably be expected to have a Material Adverse Effect.
No Default or Event of Default has occurred and is continuing.
3.8 Ownership of Property; Liens. Each of the Borrower and its
----------------------------
Subsidiaries has good record and marketable title in fee simple to, or a valid
leasehold interest in, all its real property, and good title to, or a valid
leasehold interest in, all its other property, and none of such property is
subject to any Lien except as permitted by subsection 6.3.
3.9 Intellectual Property. The Borrower and each of its Subsidiaries
---------------------
owns, or is licensed to use, all trademarks, tradenames, copyrights, technology,
know-how and processes necessary for the conduct of its business as currently
conducted except for those the failure to own or license which could not
reasonably be expected to have a Material Adverse Effect (the "Intellectual
------------
Property"). No claim has been asserted and is pending by any Person
- --------
<PAGE>
25
challenging or questioning the use of any such Intellectual Property or the
validity or effectiveness of any such Intellectual Property that could
reasonably be expected to have a Material Adverse Effect, nor does the Borrower
know of any valid basis for any such claim. The use of such Intellectual
Property by the Borrower and its Subsidiaries does not infringe on the rights of
any Person, except for such claims and infringements that, in the aggregate,
could not reasonably be expected to have a Material Adverse Effect.
3.10 No Burdensome Restrictions. No Requirement of Law or
--------------------------
Contractual Obligation of the Borrower or any of its Subsidiaries has a Material
Adverse Effect.
3.11 Taxes. Each of the Borrower and its Subsidiaries has filed or
-----
caused to be filed all tax returns which, to the knowledge of the Borrower, are
required to be filed and has paid all taxes shown to be due and payable on said
returns or on any assessments made against it or any of its property and all
other taxes, fees or other charges imposed on it or any of its property by any
Governmental Authority (other than any the amount or validity of which are
currently being contested in good faith by appropriate proceedings and with
respect to which reserves in conformity with GAAP have been provided on the
books of the Borrower or its Subsidiaries); except as set forth on Schedule
3.11, no tax Lien has been filed, and, to the knowledge of the Borrower, no
claim is being asserted, with respect to any such tax, fee or other charge.
3.12 Federal Regulations. No part of the proceeds of the Loan will
-------------------
be used for "purchasing" or "carrying" any "margin stock" within the respective
meanings of each of the quoted terms under Regulation G or Regulation U of the
Board of Governors of the Federal Reserve System as now and from time to time
hereafter in effect. If requested by the Lender, the Borrower will furnish to
the Lender a statement to the foregoing effect in conformity with the
requirements of FR Form G-1 or FR Form U-1 referred to in said Regulation G or
Regulation U, as the case may be.
3.13 ERISA. Neither a Reportable Event nor an "accumulated funding
-----
deficiency" (within the meaning of Section 412 of the Code or Section 302 of
ERISA) has occurred during the five-year period prior to the date on which this
representation is made or deemed made with respect to any Plan, and each Plan
has complied in all material respects with the applicable provisions of ERISA
and the Code. No termination of a Single Employer Plan has occurred, and no Lien
in favor of the PBGC or a Plan has arisen, during such five-year period. The
present value of all accrued benefits under each Single Employer Plan (based on
those assumptions used to fund such Plans) did not, as of the last annual
valuation date prior to the date on which this representation is made or deemed
made, exceed the value of the assets of such Plan allocable to such accrued
benefits. Neither the Borrower nor any Commonly Controlled Entity has had a
complete or partial withdrawal from any Multiemployer Plan, and neither the
Borrower nor any Commonly Controlled Entity would become subject to any
liability under ERISA if the Borrower or any such Commonly Controlled Entity
were to withdraw completely from all Multiemployer Plans as of the valuation
date most closely preceding the date on which this representation is made or
deemed made. No such Multiemployer Plan is in Reorganization or Insolvent.
<PAGE>
26
3.14 Investment Company Act; Other Regulations. The Borrower is not
-----------------------------------------
an "investment company", or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended. The
Borrower is not subject to regulation under any Federal or State statute or
regulation (other than Regulation X of the Board of Governors of the Federal
Reserve System) which limits its ability to incur Indebtedness.
3.15 Purpose of Loan. The proceeds of the Loan shall be used by the
---------------
Borrower to refinance the PNC Term Loan and the Existing Chase Term Loan and to
pay related fees and expenses.
3.16 Subsidiaries. The Borrower has no Subsidiaries as of the date
------------
hereof.
3.17 Environmental Matters. Except to the extent that the facts and
---------------------
circumstances giving rise to any such failure to be so true and correct would
not be reasonably likely to have a Material Adverse Effect, to the best
knowledge of the Borrower:
(a) the real property owned or leased by the Borrower or any of its
Subsidiaries does not contain any Hazardous Materials in concentrations
which violate any applicable Environmental Laws governing the use, storage,
treatment, transportation, manufacture, refinement, handling, production or
disposal of Hazardous Materials;
(b) such real property is in compliance with all Environmental Laws,
including, without limitation, all applicable Federal, State and local
standards and requirements regarding the generation, treatment, storage,
handling, use or disposal of Hazardous Materials at such real property, and
there is no Hazardous Materials contamination which could materially
interfere with the continued operation of any such real property or
materially impair the fair saleable value thereof;
(c) except as set forth on Schedule 3.17(c), neither the Borrower nor
any of its Subsidiaries has received any notice of violation or advisory
action by any Governmental Authority regarding environmental control
matters or permit compliance with regard to such real property, nor is the
Borrower aware that any Governmental Authority is contemplating delivering
to the Borrower or any of its Subsidiaries any such notice;
(d) Hazardous Materials have not been transferred from such real
property to any other location in violation of any applicable Environmental
Laws; and
(e) there are no governmental administrative actions or judicial
proceedings pending or threatened under any Environmental Laws to which the
Borrower or any of its Subsidiaries is or will be named as a party with
respect to such real property.
3.18 Information. No information (including without limitation the
-----------
information contained in the financial statements referred to in subsection
3.1), which has
<PAGE>
27
been made available to the Lender by or on behalf of the Borrower in connection
with the transactions contemplated hereby contains any untrue statement of a
material fact or omits to state a material fact necessary to make the statements
made therein not misleading.
3.19 Material Agreements. Each of the Bayer Documents is in full
-------------------
force and effect.
SECTION 4. CONDITIONS PRECEDENT
4.1 Conditions to the Loan. The agreement of the Lender to make the
----------------------
Loan requested to be made by it is subject to the satisfaction, immediately
prior to or concurrently with the making of such Loan on the Closing Date, of
the following conditions precedent:
(a) Loan Documents. The Lender shall have received (each of which
--------------
shall be satisfactory in form and substance to the Lender) (i) this
Agreement, executed and delivered by a duly authorized officer of the
Borrower, (ii) the Guarantee and Collateral Agreement, executed and
delivered by a duly authorized officer of each party thereto, (iii) the
Borrower Mortgage, executed and delivered by a duly authorized officer of
the Borrower and the SCIDA, (iv) the Intercreditor Agreement, executed and
delivered by a duly authorized officer of each of the Borrower and Bayer
and (v) a Note conforming to the requirements hereof, executed and
delivered by a duly authorized officer of the Borrower.
(b) PNC Term Loan and Existing Chase Term Loan. The Lender shall
------------------------------------------
have received (i) evidence satisfactory to it that all principal, interest
thereon and all commitment and other fees payable under, and in respect of,
the PNC Term Loan and the Existing Chase Term Loan, respectively, shall
have been repaid or paid, as the case may be, in full and (ii) true and
correct copies of each of the Issuing Bank Letter of Credit Termination and
the Confirming Bank Letter of Credit Termination.
(c) Related Agreements. The Lender shall have received true and
------------------
correct copies, certified as to authenticity by the Borrower (each of which
shall be satisfactory in form and substance to the Lender), of (i) the
Bayer Guaranty Termination Agreement, (ii) the PNC Termination Agreement,
(iii) the Ampersand Termination Agreement, (iv) the Facility Lease
Modification Agreement, (v) the Equipment Lease Modification Agreement,
(vi) the VITEX Intercreditor Termination Agreement, (vii) all material
lease, loan or credit agreements entered into by any Loan Party, (viii) any
amendments, waivers, supplements or other modifications to the Custom
Processing Agreement, the Bayer Modification Agreement and any other Bayer
Document, (ix) all leases affecting the Duryea Road Property (including,
without limitation, the Bayer Mortgage, the Bayer Mortgage Amendment, the
Bayer Lease Agreement, the Bayer Sublease Agreement and any and all
amendments, waivers, supplements or other modifications thereto), (x) the
Bayer/SCIDA Security Agreement, the Bayer Security Modification Agreement,
the Bayer Security Agreement and any and all amendments, waivers,
supplements or other modifications thereto and (xi) such other documents or
<PAGE>
28
instruments as may be reasonably requested by the Lender, including,
without limitation, a copy of any debt instrument, security agreement or
other material contract to which the Borrower or its Subsidiaries may be a
party.
(d) Notice of Borrowing. The Lender shall have received a
-------------------
certificate of the Borrower in accordance with subsection 2.2, satisfactory
in form and substance to the Lender, executed by the chief financial
officer of the Borrower.
(e) Closing Certificate. The Lender shall have received, a
-------------------
certificate of the Borrower, dated the Closing Date, substantially in the
form of Exhibit E with appropriate insertions and attachments (including a
section as to the incumbency and signature of the officers of the Borrower
executing any Loan Document), satisfactory in form and substance to the
Lender, executed by the President or any Vice President and the Secretary
or any Assistant Secretary of the Borrower.
(f) Corporate Proceedings of the Borrower. The Lender shall have
-------------------------------------
received a copy of the resolutions, in form and substance satisfactory to
the Lender, of the Board of Directors of the Borrower authorizing (i) the
execution, delivery and performance of this Agreement and the other Loan
Documents to which it is a party, (ii) the borrowings contemplated
hereunder and (iii) the granting by it of the Liens created pursuant to the
Borrower Mortgage and the Guarantee and Collateral Agreement, certified by
the Secretary or an Assistant Secretary of the Borrower as of the Closing
Date, which certificate shall be in form and substance satisfactory to the
Lender and shall state that the resolutions thereby certified have not been
amended, modified, revoked or rescinded.
(g) Corporate Documents. The Lender shall have received true and
-------------------
complete copies of the certificate of incorporation and by-laws of the
Borrower, certified as of the Closing Date as complete and correct copies
thereof by the Secretary or an Assistant Secretary of the Borrower.
(h) Fees. The Lender shall have received all fees and expenses
----
payable to the Lender on or prior to the Closing Date pursuant to the
letter agreement dated as of August 12, 1997 between the Borrower and the
Lender (including, without limitation, reasonable fees and disbursements of
counsel to the Lender and all fees, taxes, insurance premiums, costs and
expenses associated with the Borrower Mortgage).
(i) Legal Opinions. The Lender shall have received the executed
--------------
legal opinion of Crummy, Del Deo, Dolan, Griffinger & Vecchione, counsel to
the Borrower, substantially in the form of Exhibit F. Such legal opinion
shall cover such other matters incident to the transactions contemplated by
this Agreement as the Lender may reasonably require.
(j) Actions to Perfect Liens. The Lender shall have received
------------------------
evidence in form and substance satisfactory to it that all filings,
recordings, registrations and other actions, including, without limitation,
the filing of duly executed financing statements
<PAGE>
29
on form UCC-1, necessary or, in the opinion of the Lender, desirable to
perfect the Liens created by the Security Documents shall have been
completed.
(k) Lien Searches. The Lender shall have received the results of a
-------------
recent search by a Person satisfactory to the Lender, of the Uniform
Commercial Code, judgement and tax lien filings which may have been filed
with respect to personal property of the Borrower and its Subsidiaries, and
the results of such search shall be satisfactory to the Lender.
(l) Representations and Warranties. Each of the representations and
------------------------------
warranties made by the Borrower or any other Loan Party in or pursuant to
the Loan Documents shall be true and correct in all material respects on
and as of the Closing Date as if made on and as of the Closing Date.
(m) No Default. No Default or Event of Default shall have occurred
----------
and be continuing on the Closing Date or after giving effect to the Loan
requested to be made on the Closing Date.
(n) Regulatory Compliance. Except to the extent that non-compliance
---------------------
would not be reasonably likely to have a Material Adverse Effect, each of
the Borrower and its Subsidiaries shall be in compliance with all
Contractual Obligations and Requirements of Law, including all FDA
licensing rules and regulations.
(o) Copies of Documents. The Lender shall have received a copy of
-------------------
the financial statements referred to in subsection 3.1 (including, without
limitation, the financial statements for the nine-month period ended
September 30, 1997).
(p) Consents, Authorizations and Filings. The Lender shall have
------------------------------------
received copies of all consents, authorizations and filings, if any,
required in connection with the execution, delivery and performance by each
Loan Party, and the validity and enforceability against each Loan Party, of
the Loan Documents to which it is a party, and such consents,
authorizations and filings shall be in full force and effect and shall be
in form and substance satisfactory to the Lender.
(q) Insurance. The Lender shall have received evidence in form and
---------
substance satisfactory to it that all the requirements of subsections 5.3
and 5, respectively, of the Guarantee and Collateral Agreement and the
Borrower Mortgage shall have been satisfied (including, without limitation,
evidence of fire insurance, flood insurance (if applicable) and title
insurance for the Duryea Road Property and the naming of the Lender as
insured party or loss payee with regard to all insurance covering the
Collateral).
(r) Absence of Material Adverse Effect. There shall have been no
----------------------------------
development which, in any such case in the opinion of the Lender, has or
would have a Material Adverse Effect.
<PAGE>
30
(s) No Legal Constraints. There shall be no inquiry, injunction,
--------------------
restraining order, action, suit or proceeding pending or entered or any
statute or rule proposed, enacted or promulgated by any Governmental
Authority or any other Person, which, in the opinion of the Lender (i) has
or would have a Material Adverse Effect, (ii) would give rise to any
liability on the part of the Lender in connection with this Agreement, any
other Loan Document or the transactions contemplated hereby or thereby or
(iii) would bar the making of the Loan or the use of proceeds thereof in
accordance with the terms of this Agreement.
(t) Additional Matters. All corporate and other proceedings, and
------------------
all documents, instruments and other legal matters in connection with the
transactions contemplated by this Agreement and the other Loan Documents
shall be satisfactory in form and substance to the Lender, and the Lender
shall have received such other documents and legal opinions in respect of
any aspect or consequence of the transactions contemplated hereby or
thereby as it shall reasonably request.
SECTION 5. AFFIRMATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitment remains in
effect, the Note remains outstanding and unpaid or any amount is owing to the
Lender hereunder or under any other Loan Document, it shall, and (except in the
case of delivery of financial information, reports and notices) shall cause each
of its Subsidiaries to:
5.1 Financial Statements. Furnish to the Lender:
--------------------
(a) as soon as available, but in any event within 120 days after the
end of each fiscal year of the Borrower, a copy of the consolidated (and,
if applicable, consolidating) balance sheet of the Borrower and its
consolidated Subsidiaries as at the end of such year and the related
consolidated (and, if applicable, consolidating) statements of operations
and shareholders' equity and of cash flows for such year, setting forth in
each case in comparative form the figures for the previous year, reported
on without qualification or exception, or qualification arising out of the
scope of the audit, by KPMG Peat Marwick or other independent certified
public accountants of nationally recognized standing satisfactory to the
Lender; and
(b) as soon as available, but in any event not later than 60 days
after the end of each of the first three quarterly periods of each fiscal
year of the Borrower, the unaudited consolidated (and, if applicable,
consolidating) balance sheet of the Borrower and its consolidated
Subsidiaries as at the end of such quarter and the related unaudited
consolidated (and, if applicable, consolidating) statements of operations
and shareholders' equity and of cash flows of the Borrower and its
consolidated Subsidiaries for such quarter and the portion of the fiscal
year through the end of such quarter, setting forth in each case in
comparative form the figures for the previous year, certified by a
Responsible Officer as being fairly stated in all material respects
(subject to normal year-end audit adjustments);
<PAGE>
31
all such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods.
5.2 Certificates; Other Information. Furnish to the Lender:
-------------------------------
(a) concurrently with the delivery of the financial statements
referred to in subsection 5.1(a), a certificate of the independent
certified public accountants reporting on such financial statements stating
that in making the examination necessary therefor no knowledge was obtained
of any Default or Event of Default arising as a result of the Borrower's
failure to comply with subsection 6.1, except as specified in such
certificate;
(b) concurrently with the delivery of the financial statements
referred to in subsections 5.1(a) and (b), a certificate of a Responsible
Officer (i) stating that, to the best of such Responsible Officer's
knowledge, during such period the Borrower has observed or performed all of
its covenants and other agreements, and satisfied every condition,
contained in this Agreement and the other Loan Documents to be observed,
performed or satisfied by it, and that such Responsible Officer has
obtained no knowledge of any Default or Event of Default except as
specified in such certificate, (ii) setting forth the calculations required
to determine compliance with subsection 6.1 and (iii) setting forth the
calculations required to determine the ratio of Consolidated EBIT to
Consolidated Interest Expense for purposes of determining the Applicable
Margin;
(c) not later than sixty days after the end of each fiscal year of
the Borrower, a copy of the projections by the Borrower of the operating
budget and cash flow budget of the Borrower and its Subsidiaries for the
succeeding fiscal year, such projections to be accompanied by a certificate
of a Responsible Officer to the effect that such projections have been
prepared on the basis of sound financial planning practice and that such
Responsible Officer has no reason to believe they are incorrect or
misleading in any material respect;
(d) within five days after the same are sent, copies of all financial
statements and reports which the Borrower sends to its public stockholders,
and within five days after the same are filed, copies of all financial
statements and reports which the Borrower may make to, or file with, the
Securities and Exchange Commission or any successor or analogous
Governmental Authority;
(e) promptly, upon receipt thereof, a copy of any management letter
received by the Borrower from the accountants which perform the audit of
the financial statements of the Borrower pursuant to subsection 5.1(a);
(f) promptly, following execution thereof, a copy of each agreement
entered into in connection with a Collaboration or an Investment in a Joint
Venture by the Borrower or any of its Subsidiaries; and
<PAGE>
32
(g) promptly, such additional financial and other information as the
Lender may from time to time reasonably request.
5.3 Payment of Obligations. Pay, discharge or otherwise satisfy at
----------------------
or before maturity or before they become delinquent, as the case may be, all its
material obligations of whatever nature, except where the amount or validity
thereof is currently being contested in good faith by appropriate proceedings
and reserves in conformity with GAAP with respect thereto have been provided on
the books of the Borrower or its Subsidiaries, as the case may be.
5.4 Conduct of Business and Maintenance of Existence. Continue to
------------------------------------------------
engage in business of the same general type as now conducted by it and preserve,
renew and keep in full force and effect its corporate existence and take all
reasonable action to maintain all rights, privileges, licenses (including those
issued by the FDA) and franchises necessary or desirable in the normal conduct
of its business, except as otherwise permitted pursuant to subsection 6.5; and
comply with all Contractual Obligations and Requirements of Law, including any
FDA licensing rules and regulations, any applicable Environmental Laws and
ERISA, except to the extent that failure to comply therewith could not, in the
aggregate, be reasonably expected to have a Material Adverse Effect.
5.5 Maintenance of Property; Insurance. Keep all property useful and
----------------------------------
necessary in its business in good working order and condition; maintain with
financially sound and reputable insurance companies insurance on all its
property in at least such amounts and against at least such risks (but including
in any event public liability, product liability and business interruption) as
are usually insured against in the same general area by companies engaged in the
same or a similar business; furnish to the Lender, upon written request, full
information as to the insurance carried; and promptly notify the Lender of the
cancellation of any insurance policy.
5.6 Inspection of Property; Books and Records; Discussions. Keep
------------------------------------------------------
proper books of records and accounts in which full, true and correct entries in
conformity with GAAP and all Requirements of Law (including all FDA licensing
rules and regulations) shall be made of all dealings and transactions in
relation to its business and activities; and permit representatives of the
Lender to visit and inspect any of its properties and examine and make abstracts
from any of its books and records at any reasonable time and as often as may
reasonably be desired and to discuss the business, operations, properties and
financial and other condition of the Borrower and its Subsidiaries with
Responsible Officers of the Borrower and its Subsidiaries and with its
independent certified public accountants.
5.7 Notices. Promptly after acquiring knowledge thereof, give
-------
written notice to the Lender of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of the Borrower or any of its Subsidiaries or (ii) litigation,
investigation or proceeding which
<PAGE>
33
may exist at any time between the Borrower or any of its Subsidiaries and
any Governmental Authority, which in either case, if not cured or if
adversely determined, as the case may be, could reasonably be expected to
have a Material Adverse Effect;
(c) any litigation or proceeding affecting the Borrower or any of its
Subsidiaries in which the amount involved is $100,000 or more and not
covered by insurance or in which injunctive or similar relief is sought;
(d) the following events (to the extent any such event, individually
or in the aggregate, could reasonably be expected to have a Material
Adverse Effect), as soon as possible and in any event within 30 days after
the Borrower knows or has reason to know thereof: (i) the occurrence or
expected occurrence of any Reportable Event with respect to any Plan, a
failure to make any required contribution to a Plan, the creation of any
Lien in favor of the PBGC or a Plan or any withdrawal from, or the
termination, Reorganization or Insolvency of, any Multiemployer Plan or
(ii) the institution of proceedings or the taking of any other action by
the PBGC or the Borrower or any Commonly Controlled Entity or any
Multiemployer Plan with respect to the withdrawal from, or the terminating,
Reorganization or Insolvency of, any Plan;
(e) any material adverse change in the business, operations,
property, condition (financial or otherwise) or prospects of the Borrower
or the Borrower and its Subsidiaries, taken as a whole;
(f) the formation or acquisition of any Subsidiary at least five days
prior to such formation or acquisition; and
(g) the consummation of any transaction permitted under subsection
6.5.
Each notice pursuant to this subsection shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action the Borrower proposes to take with respect thereto.
5.8 Environmental Laws. (a) Comply in all material respects with,
------------------
and ensure compliance in all material respects by all tenants and subtenants, if
any, with all applicable Environmental Laws and obtain and comply in all
material respects with and maintain, and ensure that all tenants and subtenants
obtain and comply in all material respects with and maintain, any and all
licenses, approvals, notifications, registrations or permits required by
applicable Environmental Laws.
(b) Conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply with all lawful orders and directives of
all Governmental Authorities regarding Environmental Laws except to the extent
that the same are being contested in good faith by appropriate proceedings and
the pendency of such proceedings could not be reasonably expected to have a
Material Adverse Effect.
<PAGE>
34
5.9 Further Assurances. Upon the request of the Lender, promptly
------------------
perform or cause to be performed any and all acts and execute or cause to be
executed any and all documents (including, without limitation, financing
statements and continuation statements) for filing under the provisions of the
Uniform Commercial Code or any other Requirement of Law which are necessary or
advisable to maintain in favor of the Lender, Liens on the Collateral that are
duly perfected in accordance with all applicable Requirements of Law.
5.10 Additional Collateral. (a) With respect to any assets acquired
---------------------
after the Closing Date by the Borrower or any of its Domestic Subsidiaries that
are intended to be subject to the Lien created by any of the Security Documents
but which are not so subject (other than (x) any assets described in paragraph
(b) or (c) of this subsection and (y) immaterial assets a Lien on which cannot
be perfected by filing UCC-1 financing statements), promptly (and in any event
within 30 days after the acquisition thereof): (i) execute and deliver to the
Lender such amendments to the relevant Security Documents or such other
documents as the Lender shall deem necessary or advisable to grant to the
Lender, a Lien on such assets, (ii) take all actions necessary or advisable to
cause such Lien to be duly perfected in accordance with all applicable
Requirements of Law, including, without limitation, the filing of financing
statements in such jurisdictions as may be requested by the Lender, and (iii) if
requested by the Lender, deliver to the Lender legal opinions relating to the
matters described in clauses (i) and (ii) immediately preceding, which opinions
shall be in form and substance, and from counsel, reasonably satisfactory to the
Lender.
(b) With respect to any Person that, subsequent to the Closing Date,
becomes a Domestic Subsidiary, promptly upon the request of the Lender: (i)
execute and deliver to the Lender, a supplement to the Guarantee and Collateral
Agreement in form and substance reasonably satisfactory to the Lender to grant
to the Lender, a Lien on the Capital Stock of such Subsidiary which is owned by
the Borrower or any of its Subsidiaries, (ii) deliver to the Lender the
certificates representing such Capital Stock, together with undated stock powers
executed and delivered in blank by a duly authorized officer of the Borrower or
such Subsidiary, as the case may be, (iii) cause such new Subsidiary (A) to
become a party to the Guarantee and Collateral Agreement, in each case pursuant
to documentation which is in form and substance reasonably satisfactory to the
Lender and (B) to take all actions necessary or advisable to cause the Lien
created by such Guarantee and Collateral Agreement to be duly perfected in
accordance with all applicable Requirements of Law, including, without
limitation, the filing of financing statements in such jurisdictions as may be
requested by the Lender and (iv) if requested by the Lender, deliver to the
Lender legal opinions relating to the matters described in clauses (i), (ii) and
(iii) immediately preceding, which opinions shall be in form and substance, and
from counsel, reasonably satisfactory to the Lender.
(c) With respect to any Person that, subsequent to the Closing Date,
becomes a Foreign Subsidiary, promptly upon the request of the Lender: (i)
execute and deliver to the Lender a supplement to the Guarantee and Collateral
Agreement in form and substance reasonably satisfactory to the Lender, to grant
to the Lender, a Lien on the Capital Stock of such Subsidiary which is owned by
the Borrower or any of its Subsidiaries (provided that in no event shall more
than 65% of the Capital Stock of any such Subsidiary be required to be so
pledged), (ii) deliver to the Lender any certificates representing such Capital
Stock,
<PAGE>
35
together with undated stock powers executed and delivered in blank by a duly
authorized officer of the Borrower or such Subsidiary, as the case may be, and
take or cause to be taken all such other actions under the law of the
jurisdiction of organization of such Foreign Subsidiary as may be necessary or
advisable to perfect such Lien on such Capital Stock and (iii) if requested by
the Lender, deliver to the Lender legal opinions relating to the matters
described in clauses (i) and (ii) immediately preceding, which opinions shall be
in form and substance, and from counsel, reasonably satisfactory to the Lender.
(d) With respect to any Investment in a Joint Venture, promptly upon
the request of the Lender: (i) execute and deliver to the Lender, a supplement
to the Guarantee and Collateral Agreement in form and substance reasonably
satisfactory to the Lender to grant to the Lender, a Lien on the Capital Stock
of the Joint Venture relating to such Investment which is owned by the Borrower
or any of its Subsidiaries, (ii) deliver to the Lender the certificates
representing such Capital Stock (if any), together with undated stock powers
executed and delivered in blank by a duly authorized officer of the Borrower or
such Subsidiary, as the case may be, and take or cause to be taken all such
other actions under applicable law as may be necessary or advisable to perfect
such Lien on such Capital Stock and (iii) if requested by the Lender, deliver to
the Lender legal opinions relating to the matters described in clauses (i) and
(ii) immediately preceding, which opinions shall be in form and substance, and
from counsel, reasonably satisfactory to the Lender.
SECTION 6. NEGATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitment remains in
effect, the Note remains outstanding and unpaid or any amount is owing to the
Lender hereunder or under any other Loan Document, it shall not and shall not
permit any of its Subsidiaries to, directly or indirectly:
6.1 Financial Condition Covenants. Unless the Lender shall otherwise
-----------------------------
consent in writing:
(a) Maintenance of Consolidated Capital Funds. Permit Consolidated
-----------------------------------------
Capital Funds at any time during any period set forth below to be less than the
amount set forth opposite such period below:
Period Amount
------ -------
From and including the Closing Date $10,000,000
through December 31, 1997
From and including January 1, 1998 through $ 8,000,000
December 30, 1998
From and including December 31, 1998 $ 9,000,000
through June 29, 1999
<PAGE>
36
From and including June 30, 1999 through $12,000,000
December 30, 1999
From and including December 31, 1999 $14,000,000
through December 30, 2000
From and including December 31, 2000 and Consolidated
thereafter Capital Funds at
December 31, 1999
plus $4,000,000
(b) Maintenance of Consolidated Debt Service Coverage Ratio. Permit
-------------------------------------------------------
the Consolidated Debt Service Coverage Ratio at the end of any period set forth
below to be less than the amount set forth opposite such period below:
Consolidated Debt
Period Service Coverage Ratio
------ ----------------------
Three-month period ending March 31, 1999 1.50 to 1.00
Six-month period ending June 30, 1999 1.50 to 1.00
Nine-month period ending September 30, 1999 1.75 to 1.00
Period of four consecutive fiscal quarters
ending December 31, 1999 2.00 to 1.00
Each period of four consecutive fiscal
quarters ending on or after March 31, 2000 3.00 to 1.00
(c) Consolidated Net Loss. Permit the Consolidated Net Loss of the
---------------------
Borrower and its Subsidiaries for any period set forth below to be in excess of
the amount set forth below opposite such period below:
Period Amount
------ ------
Fiscal year ending December 31, 1997 $12,500,000
Fiscal year ending December 31, 1998 $2,000,000
Any fiscal year or fiscal quarter ending
after December 31, 1998 $0
(d) Cash Balances. Permit the consolidated cash balances of the
-------------
Borrower and its consolidated Subsidiaries to be less than $2,000,000 at any
time.
6.2 Limitation on Indebtedness. Create, incur, assume or suffer to
--------------------------
exist any Indebtedness, except:
<PAGE>
37
(a) Indebtedness of the Borrower to the Lender;
(b) Indebtedness outstanding on the date hereof and listed on Schedule
6.2(b);
(c) Indebtedness of the Borrower and any of its Subsidiaries incurred
to finance the acquisition of fixed or capital assets (whether pursuant to a
loan, a Financing Lease or otherwise); and
(d) Indebtedness of the Borrower and any of its Subsidiaries in respect
of Financing Leases entered into in connection with the Sale/Leaseback
Transaction permitted under subsection 6.12.
6.3 Limitation on Liens. Create, incur, assume or suffer to exist any
-------------------
Lien upon any of its property, assets or revenues, whether now owned or
hereafter acquired, except for:
(a) Liens for taxes not yet due or which are being contested in good
faith by appropriate proceedings, provided that adequate reserves with respect
--------
thereto are maintained on the books of the Borrower or its Subsidiaries, as
the case may be, in conformity with GAAP;
(b) carriers', warehousemen's, mechanics', materialmen's, repairmen's
or other like Liens arising in the ordinary course of business which are not
overdue for a period of more than 60 days or which are being contested in good
faith by appropriate proceedings;
(c) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation;
(d) deposits to secure the performance of bids, trade contracts (other
than for borrowed money), leases, statutory obligations, surety and appeal
bonds, performance bonds and other obligations of a like nature incurred in
the ordinary course of business;
(e) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount and which do not in any case
materially detract from the value of the property subject thereto or
materially interfere with the ordinary conduct of the business of the Borrower
or such Subsidiary;
(f) Liens in existence on the date hereof listed on Schedule 6.3(f),
securing Indebtedness permitted by subsection 6.2(b), provided that no such
--------
Lien is spread to cover any additional property or Indebtedness after the
Closing Date and that the amount of Indebtedness secured thereby is not
increased;
(g) Liens under the Bayer Security Documents, provided that (i) no
--------
such Lien is spread to cover any additional property after the Closing Date
and (ii) such Liens shall only secure the obligations which are secured by
such Liens as of the date hereof;
<PAGE>
38
(h) Liens granted to the Lender; and
(i) Liens securing Indebtedness of the Borrower permitted by subsection
6.2(c) incurred to finance the acquisition of fixed or capital assets,
provided that (i) such Liens shall be created substantially simultaneously
--------
with the acquisition of such fixed or capital assets, (ii) such Liens do not
at any time encumber any property other than the property financed by such
Indebtedness, (iii) the amount of Indebtedness secured thereby is not
increased and (iv) the principal amount of Indebtedness secured by any such
Lien shall at no time exceed 100% of the original purchase price of such
property.
6.4 Limitation on Guarantee Obligations. Create, incur, assume or
-----------------------------------
suffer to exist any Guarantee Obligation except:
(a) Guarantee Obligations in existence on the date hereof and listed on
Schedule 6.4(a);
(b) Guarantee Obligations of the Borrower in respect of the Bayer
Security Agreement;
(c) guarantees in favor of the Lender; and
(d) Guarantee Obligations of the Borrower in respect of the obligations
of SCIDA under the Master Equipment Lease Agreement dated as of April 8, 1997,
between Financing for Science International, Inc. and the Borrower, as Agent
for and on behalf of SCIDA, together with all schedules and attachments
thereto and as the same may be amended, supplemented or otherwise modified
from time to time, or a similar or replacement agreement with respect to the
obligations of the SCIDA or any other analogous Governmental Authority.
6.5 Limitation on Fundamental Changes. Enter into any merger,
---------------------------------
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or convey, sell, lease, assign, transfer
or otherwise dispose of, all or substantially all of its property, business or
assets, or make any material change in its present method of conducting business
except:
(a) any Subsidiary of the Borrower may be merged or consolidated with
or into the Borrower (provided that the Borrower shall be the continuing or
--------
surviving corporation) or with or into any one or more wholly owned Subsidiary
Guarantors (provided that the wholly owned Subsidiary Guarantor or Guarantors
--------
shall be the continuing or surviving corporation and, provided further that a
-------- -------
Foreign Subsidiary of the Borrower may be merged or consolidated with a
Domestic Subsidiary of the Borrower only if the Domestic Subsidiary is the
continuing or surviving corporation); and
(b) any wholly owned Subsidiary may sell, lease, transfer or otherwise
dispose of any or all of its assets (upon voluntary liquidation or otherwise)
to the Borrower or any other wholly owned Subsidiary Guarantor of the
Borrower.
<PAGE>
39
6.6 Limitation on Sale of Assets. Convey, sell, lease, assign,
----------------------------
transfer or otherwise dispose of any of its property, business or assets
(including, without limitation, receivables and leasehold interests), whether
now owned or hereafter acquired, or, in the case of any Subsidiary, issue or
sell any shares of such Subsidiary's Capital Stock to any Person other than the
Borrower or any wholly owned Subsidiary, except:
(a) the sale or other disposition of obsolete or worn out property in
the ordinary course of business;
(b) the sale of inventory in the ordinary course of business;
(c) as permitted by subsection 6.5(b); and
(d) as permitted by subsection 6.9(c); and
(e) the sale or other disposition of any property or assets (in
addition to sales and other dispositions otherwise permitted hereunder),
provided that the aggregate book value of all assets so sold or disposed of in
--------
any period of twelve consecutive months shall not exceed $500,000;
(f) the license of intellectual property rights in the ordinary course
of business, including any such licenses entered into by the Borrower or any
of its Subsidiaries pursuant to any Collaboration or Investment in a Joint
Venture; and
(g) the sale of intellectual property rights (other than intellectual
property rights used in the operation of the S/D Plasma Business (which
consists of a manufacturing process involving the viral inactivation of
transfused plasma) or the Bayer Processing and Fractionation Operation (as
defined in the Bayer Security Agreement)), provided no Default or Event of
--------
Default shall have then occurred and be continuing or would result therefrom.
6.7 Limitation on Dividends. Declare or pay any dividend (other than
-----------------------
dividends payable solely in common stock of the Borrower) on, or make any
payment on account of, or set apart assets for a sinking or other analogous fund
for, the purchase, redemption, defeasance, retirement or other acquisition of,
any shares of any class of Capital Stock of the Borrower or any warrants or
options to purchase any such Capital Stock, whether now or hereafter
outstanding, or make any other distribution in respect thereof, either directly
or indirectly, whether in cash or property or in obligations of the Borrower or
any Subsidiary, except that the Borrower may repurchase or otherwise acquire any
of its Capital Stock issued pursuant to the Borrower's stock option plans so
long as the aggregate amount of all such repurchases and acquisitions subsequent
to the Closing Date does not exceed $500,000.
6.8 Limitation on Capital Expenditures. Unless the Lender shall
----------------------------------
otherwise consent in writing, make or commit to make (by way of the acquisition
of securities of a Person or otherwise) any Capital Expenditure (excluding any
such Capital Expenditures for assets acquired in connection with normal
replacement and maintenance programs properly charged to current operations),
except for Capital Expenditures in the ordinary course of
<PAGE>
40
business not exceeding, in the aggregate for the Borrower and its Subsidiaries
during any of the fiscal years of the Borrower set forth below, the amount set
forth opposite such fiscal year below:
Fiscal Year Amount
----------- ------
1997 $12,000,000
1998 $10,000,000
1999 $ 8,000,000
2000 $ 8,000,000
2001 $ 8,000,000
6.9 Limitation on Investments, Loans and Advances. Make any advance,
---------------------------------------------
loan, extension of credit (by way of guarantee of otherwise) or capital
contribution to, or purchase any stock, bonds, notes, debentures or other
securities of or any assets constituting all or a material part of a business
unit of, or make any other investment in, any Person (each, an "Investment"),
----------
except:
(a) extensions of trade credit in the ordinary course of business;
(b) Permitted Investments; and
(c) any Investments in any Joint Venture, including, without
limitation, the Investments contemplated by the Letter of Intent, dated
November 3, 1997, between Pall Corporation and the Borrower, provided that (i)
--------
for so long as this Agreement or any of the other Loan Documents are in
effect, the Borrower shall not sell, lease, assign, transfer or otherwise
dispose of (A) any property, assets or rights (including, without limitation,
intellectual property) that are used in the operation of the S/D Plasma
Business (which consists of a manufacturing process involving the viral
inactivation of transfused plasma), the Bayer Processing and Fractionation
Operation (as defined in the Bayer Security Agreement) or (B) the Duryea Road
Property and (ii) no Default or Event of Default shall have then occurred and
be continuing or would result therefrom.
6.10 Limitation on Optional Payments and Modifications of Certain
------------------------------------------------------------
Instruments. (a) Without the prior written consent of the Lender, (i) make any
- -----------
optional payment or prepayment on or redemption or purchase of any Indebtedness
(other than the Loan) or, (ii) amend, modify or change, or consent or agree to
any amendment, modification or change to any of the terms of any Indebtedness
(other than any such amendment, modification or change which would extend the
maturity or reduce the amount of any payment of principal thereof or which would
reduce the rate or extend the date for payment of interest thereon), (b) amend,
modify or change, or consent or agree to any amendment, modification or change
to, any Bayer Security Document or the Bayer Guaranty Termination Agreement or
(c) amend, modify or change, or consent or agree to any amendment, modification
or change to, the Custom Processing Agreement unless (i) the Borrower shall have
given the Lender, at least ten Business Days prior to the effectiveness thereof,
a copy of any such proposed amendment, modification or change, and (ii) the
Borrower shall have obtained the prior written consent to
<PAGE>
41
any such amendment, modification or change if such amendment, modification or
change could reasonably be expected to have a Material Adverse Effect.
6.11 Limitation on Transactions with Affiliates. Enter into any
------------------------------------------
transaction, including, without limitation, any purchase, sale, lease or
exchange of property or the rendering of any service, with any Affiliate unless
such transaction is (a) otherwise permitted under this Agreement, (b) in the
ordinary course of the Borrower's or such Subsidiary's business and (c) upon
fair and reasonable terms no less favorable to the Borrower or such Subsidiary,
as the case may be, than it would obtain in a comparable arm's length
transaction with a Person which is not an Affiliate.
6.12 Limitation on Sales and Leasebacks. Enter into any arrangement (a
----------------------------------
"Sale/Leaseback Transaction") with any Person providing for the leasing by the
--------------------------
Borrower or any Subsidiary of real or personal property which has been or is to
be sold or transferred by the Borrower or such Subsidiary to such Person or to
any other Person to whom funds have been or are to be advanced by such Person on
the security of such property or rental obligations of the Borrower or such
Subsidiary, provided, however, that the Borrower may enter into Sale/Leaseback
--------
Transactions with respect to fixed or capital assets to be acquired by the
Borrower after the Closing Date in an aggregate amount not to exceed $2,000,000.
6.13 Limitation on Changes in Fiscal Year, Tax Status and Accounting.
---------------------------------------------------------------
(a) Permit the fiscal year of the Borrower to end on a day other than December
31 and (b) permit any amendments, modifications or changes to the accounting
treatments and reporting practices applied to the financial statements of each
of the Borrower and its Subsidiaries, except as otherwise required by changes in
GAAP.
6.14 Limitation on Negative Pledge Clauses. Enter into with any Person
-------------------------------------
any agreement, other than (a) this Agreement and (b) any industrial revenue
bonds, purchase money mortgages or Financing Leases permitted by this Agreement
(in which cases, any prohibition or limitation shall only be effective against
the assets financed thereby), which prohibits or limits the ability of the
Borrower or any of its Subsidiaries to create, incur, assume or suffer to exist
any Lien upon any of its property, assets or revenues, whether now owned or
hereafter acquired.
6.15 Limitation on Lines of Business. Enter into any business, either
-------------------------------
directly or through any Subsidiary, except for those businesses reasonably
related to that in which the Borrower and its Subsidiaries are engaged on the
date of this Agreement.
SECTION 7. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) the Borrower shall fail to pay any principal of the Loan when due
in accordance with the terms hereof; or the Borrower shall fail to pay any
interest on the
<PAGE>
42
Loan, or any other amount payable hereunder, within five Business Days after
any such interest or other amount becomes due in accordance with the terms
hereof; or
(b) any representation or warranty made or deemed made by the Borrower
or any other Loan Party herein or in any other Loan Document or which is
contained in any certificate, document or financial or other statement
furnished by it at any time under or in connection with this Agreement or any
such other Loan Document shall prove to have been incorrect in any material
respect on or as of the date made or deemed made; or
(c) the Borrower or any other Loan Party shall default in the
observance or performance of any agreement contained in subsection 5.7(a) or
Section 6 hereof or Section 5 of the Guarantee and Collateral Agreement; or
(d) the Borrower or any other Loan Party shall default in the
observance or performance of any other agreement contained in this Agreement
or any other Loan Document (other than as provided in paragraphs (a) through
(c) of this Section) and such default shall continue unremedied for a period
of 30 days; or
(e) the Borrower or any of its Subsidiaries shall (i) default in any
payment of principal of or interest of any Indebtedness (other than the Loan)
or in the payment of any Guarantee Obligation, beyond the period of grace (not
to exceed 30 days), if any, provided in the instrument or agreement under
which such Indebtedness or Guarantee Obligation was created; or (ii) default
in the observance or performance of any other agreement or condition relating
to any such Indebtedness or Guarantee Obligation or contained in any
instrument or agreement evidencing, securing or relating thereto, or any other
event shall occur or condition exist, the effect of which default or other
event or condition is to cause, or to permit the holder or holders of such
Indebtedness or beneficiary or beneficiaries of such Guarantee Obligation (or
a trustee or agent on behalf of such holder or holders or beneficiary or
beneficiaries) to cause, with the giving of notice if required, such
Indebtedness to become due prior to its stated maturity or such Guarantee
Obligation to become payable; provided, however, that no Default or Event of
-------- -------
Default shall exist under this paragraph unless the aggregate amount of
Indebtedness and/or Guarantee Obligations in respect of which any default or
other event or condition referred to in this paragraph shall have occurred
shall be equal to at least $100,000; or
(f) the Borrower or any of its Subsidiaries shall commence any
case, proceeding or other action (A) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief
entered with respect to it, or them, or seeking to adjudicate it, or them, a
bankrupt or insolvent, or seeking reorganization, arrangement, adjustment,
winding-up, liquidation, dissolution, composition or other relief with respect
to it, or them, or its, or their, debts, or (B) seeking appointment of a
receiver, trustee, custodian, conservator or other similar official for it, or
them, or for all or any substantial part of its, or their, assets, or the
Borrower or any of its Subsidiaries shall make a general assignment for the
benefit of its, or their, creditors; or there shall be commenced against the
Borrower or any of its Subsidiaries any case, proceeding or other action of a
<PAGE>
43
nature referred to in clause (i) above which (A) results in the entry of an
order for relief or any such adjudication or appointment or (B) remains
undismissed, undischarged or unbonded for a period of 60 days; or (iii) there
shall be commenced against the Borrower or any of its Subsidiaries any case,
proceeding or other action seeking issuance of a warrant of attachment,
execution, distraint or similar process against all or any substantial part of
its, or their, assets which results in the entry of an order for any such
relief which shall not have been vacated, discharged, or stayed or bonded
pending appeal within 60 days from the entry thereof; or (iv) the Borrower or
any of its Subsidiaries shall take any action in furtherance of, or indicating
its, or their, consent to, approval of, or acquiescence in, any of the acts
set forth in clause (i), (ii), or (iii) above; or (v) the Borrower or any of
its Subsidiaries shall generally not, or shall be unable to, or shall admit in
writing its, or their, inability to, pay its, or their, debts as they become
due; or
(g) (i) any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any
Plan, (ii) any "accumulated funding deficiency" (as defined in Section 302 of
ERISA), whether or not waived, shall exist with respect to any Plan or any
Lien in favor of the PBGC or a Plan shall arise on the assets of the Borrower
or any Commonly Controlled Entity, (iii) a Reportable Event shall occur with
respect to, or proceedings shall commence to have a trustee appointed, or a
trustee shall be appointed, to administer or to terminate, any Single Employer
Plan, which Reportable Event or commencement of proceedings or appointment of
a trustee is, in the reasonable opinion of the Lender, likely to result in the
termination of such Plan for purposes of Title IV of ERISA, (iv) any Single
Employer Plan shall terminate for purposes of Title IV of ERISA, (v) the
Borrower or any Commonly Controlled Entity shall, or in the reasonable opinion
of the Lender is likely to, incur any liability in connection with a
withdrawal from, or the Insolvency or Reorganization of, a Multiemployer Plan
or (vi) any other event or condition shall occur or exist with respect to a
Plan; and in each case in clauses (i) through (vi) above, such event or
condition, together with all other such events or conditions, if any, could
reasonably be expected to have a Material Adverse Effect; or
(h) one or more judgments or decrees shall be entered against the
Borrower or any of its Subsidiaries involving in the aggregate a liability
(not paid or fully covered by insurance) of $100,000 or more, and all such
judgments or decrees shall not have been vacated, discharged, stayed or bonded
pending appeal within 60 days from the entry thereof; or
(i) (i) any of the Loan Documents or the Bayer Documents shall cease,
for any reason, to be in full force and effect, or the Borrower or any other
Loan Party which is a party to any of the Loan Documents or SCIDA shall so
assert or (ii) the Lien created by any of the Security Documents or the Bayer
Security Documents shall cease to be enforceable and of the same effect and
priority purported to be created thereby; or
(j) (i) the Custom Processing Agreement shall cease, for any reason, to
be in full force and effect or any party thereto shall so assert or the
Borrower shall cease to receive the principal economic benefits of the Custom
Processing Agreement expected to be
<PAGE>
44
received as of the Closing Date; provided, however, that no Default or Event
-------- -------
of Default shall be deemed to have occurred under this subsection if prior to
such cessation or assertion, the Borrower has entered into an agreement (the
"Replacement Agreement") that (A) constitutes, in the reasonable business
----------------------
judgment of the Borrower, as evidenced by a certificate of the Borrower to
such effect delivered to the Lender, a substantially economically equivalent
replacement of the Custom Processing Agreement and (B) is in form and
substance reasonably satisfactory to the Lender; or (ii) Bayer shall suspend
its payment obligations under the Custom Processing Agreement, in whole or in
part, for any reason or its successor shall suspend its payment obligations
under the Replacement Agreement, in whole or in part, for any reason; or
(k) on any Business Day, two of the Change of Control Individuals shall
(i) have been incapacitated for more than 180 consecutive days or (ii) have
died or (iii) have resigned or been removed from the same or similar positions
which they held with the Borrower on the Closing Date or (iv) have otherwise
departed from the Borrower or (v) any combination of (i) through (iv) above,
and more than 120 days shall have passed from the date of the happening of
(i), (ii), (iii) or (iv) to the second Change of Control Individual without
the Borrower finding replacements for both Change of Control Individuals; or
(l) a Change of Control shall have occurred;
then, (A) if such event is an Event of Default specified in clause (i) or (ii)
of paragraph (f) of this Section with respect to the Borrower, automatically the
Commitment shall immediately terminate and the Loan hereunder (with accrued
interest thereon) and all other amounts owing under this Agreement shall
immediately become due and payable, and (B) if such event is any other Event of
Default: the Lender may (i) by notice to the Borrower declare the Commitment to
be terminated forthwith, whereupon the Commitment shall immediately terminate;
and (ii) declare the Loan hereunder (with accrued interest thereon) and all
other amounts owing under this Agreement to be due and payable forthwith,
whereupon the same shall immediately become due and payable. Except as
expressly provided above in this Section, presentment, demand, protest and all
other notices of any kind are hereby expressly waived.
SECTION 8. MISCELLANEOUS
8.1 Amendments and Waivers. Neither this Agreement nor any other Loan
----------------------
Document, nor any terms hereof or thereof may be amended, supplemented or
modified except in accordance with the provisions of this subsection. This
Agreement may not be amended except pursuant to an instrument in writing
executed by the Borrower and the Lender. Any such waiver and any such
amendment, supplement or modification shall be binding upon the Borrower, the
Lender and all future holders of the Loan. In the case of any waiver, the
Borrower and the Lender shall be restored to their former positions and rights
hereunder and under the other Loan Documents, and any Default or Event of
Default waived
<PAGE>
45
shall be deemed to be cured and not continuing; no such waiver shall extend to
any subsequent or other Default or Event of Default or impair any right
consequent thereon.
8.2 Notices. All notices, requests and demands to or upon the
-------
respective parties hereto to be effective shall be in writing (including by
facsimile transmission) and, unless otherwise expressly provided herein, shall
be deemed to have been duly given or made (a) in the case of delivery by hand,
when delivered, (b) in the case of delivery by mail, three days after being
deposited in the mails, postage prepaid, or (c) in the case of delivery by
facsimile transmission, when sent and receipt has been confirmed, addressed as
follows or to such other address as may be hereafter notified by the respective
parties hereto:
The Borrower: V.I Technologies, Inc.
155 Duryea Road
Melville, New York 11747
Attention: Chief Financial Officer
Fax: 516-752-8754
The Lender: The Chase Manhattan Bank
7600 Jericho Turnpike,
Woodbury, NY 11797
Attention: V.I. Technologies, Inc. Account Officer
Fax: 516-364-3307
provided that any notice, request or demand to or upon the Lender pursuant to
- --------
subsection 2.2, 2.4 or 2.5 shall not be effective until received.
8.3 No Waiver; Cumulative Remedies. No failure to exercise and no
------------------------------
delay in exercising, on the part of the Lender, any right, remedy, power or
privilege hereunder or under the other Loan Documents shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges herein provided are cumulative and not exclusive of any
rights, remedies, powers and privileges provided by law.
8.4 Survival of Representations and Warranties. All representations
------------------------------------------
and warranties made hereunder, in the other Loan Documents and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Agreement and the making of the
Loan hereunder.
8.5 Payment of Expenses and Taxes. The Borrower agrees (a) to pay or
-----------------------------
reimburse the Lender for all its reasonable out-of-pocket costs and expenses
incurred in connection with the development, preparation and execution of, and
any amendment, supplement or modification to, this Agreement and the other Loan
Documents and any other documents prepared in connection herewith and therewith,
and the consummation and administration of the transactions contemplated hereby
and thereby, including, without limitation, the reasonable fees and
disbursements of counsel to the Lender, (b) to pay or
<PAGE>
46
reimburse the Lender for all its reasonable out-of-pocket costs and expenses
incurred in connection with the development, preparation and execution of, and
any amendment, supplement or modification to, this Agreement and the other Loan
Documents and any other documents prepared in connection herewith or therewith,
and the consummation and administration of the transactions contemplated hereby
and thereby, including, without limitation, the reasonable fees and
disbursements of counsel to the Lender, (b) to pay or reimburse the Lender for
all its costs and expenses incurred in connection with the enforcement or
preservation of any rights under this Agreement, the other Loan Documents and
any such other documents, including, without limitation, the reasonable fees and
disbursements of counsel to the Lender, (c) to pay, indemnify, and hold the
Lender harmless from, any and all recording and filing fees and any and all
liabilities with respect to, or resulting from any delay in paying, stamp,
excise and other taxes, if any, which may be payable or determined to be payable
in connection with the execution and delivery of, or consummation or
administration of any of the transactions contemplated by, or any amendment,
supplement or modification of, or any waiver or consent under or in respect of,
this Agreement, the other Loan Documents and any such other documents, and (d)
to pay, indemnify, and hold the Lender harmless from and against any and all
other liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever with
respect to the execution, delivery, enforcement, performance and administration
of this Agreement, the other Loan Documents and any such other documents (all
the foregoing in this clause (d), collectively, the "Indemnified Liabilities"),
----------- -----------
provided that the Borrower shall have no obligation hereunder to the Lender with
- --------
respect to Indemnified Liabilities arising from the gross negligence or willful
misconduct of the Lender. The agreements in this subsection shall survive
repayment of the Loan and all other amounts payable hereunder.
8.6 Successors and Assigns; Participations and Assignments. (a) This
------------------------------------------------------
Agreement shall be binding upon and inure to the benefit of the Borrower, the
Lender and their respective successors and assigns, except that the Borrower may
not assign or transfer any of its rights or obligations under this Agreement
without the prior written consent of the Lender.
(b) The Lender may, in the ordinary course of its commercial banking
business and in accordance with applicable law, at any time sell to one or more
banks or other entities ("Participants") participating interests in any Loan
------------
owing to the Lender, or any other interest of the Lender hereunder and under the
other Loan Documents. In the event of any such sale by the Lender of a
participating interest to a Participant, the Lender's obligations under this
Agreement to the Borrower shall remain unchanged, the Lender shall remain solely
responsible for the performance thereof, the Lender shall remain the holder of
the Loan for all purposes under this Agreement and the other Loan Documents, and
the Borrower shall continue to deal solely and directly with the Lender in
connection with the Lender's rights and obligations under this Agreement and the
other Loan Documents. The Lender shall not be entitled to create in favor of
any Participant, in the participation agreement pursuant to which such
Participant's participating interest shall be created or otherwise, any right to
vote on, consent to or approve any matter relating to this Agreement or any
other Loan Document except for those relating to the (i) amount of any Loan,
(ii) the scheduled date of maturity of any Loan or of any installment thereof or
(iii) reduction of the stated rate of any interest or fee payable hereunder or
the extension of the scheduled date of any payment thereof. The Borrower agrees
that if amounts outstanding under this Agreement are due or unpaid, or shall
have been declared or shall have become due and payable upon the occurrence of
an Event of Default, each Participant shall, to the maximum extent permitted by
applicable law, be deemed to have the right of setoff in respect of its
participating interest in amounts owing
<PAGE>
47
under this Agreement to the same extent as if the amount of its participating
interest were owing directly to it as a Lender under this Agreement. The
Borrower also agrees that each Participant shall be entitled to the benefits of
subsections 2.10, 2.11 and 2.12 with respect to its participation in the
Commitment and the Loan as if it was a Lender; provided that, in the case of
--------
subsection 2.11, such Participant shall have complied with the requirements of
said subsection and provided, further, that no Participant shall be entitled to
-------- -------
receive any greater amount pursuant to any such subsection than the Lender would
have been entitled to receive in respect of the amount of the participation
transferred by the Lender to such Participant had no such transfer occurred.
(c) The Lender may, in the ordinary course of its commercial banking
business and in accordance with applicable law, at any time and from time to
time assign with the consent of the Borrower (which consent may not be
unreasonably withheld), to an additional bank or financial institution (an
"Assignee") all of its rights and obligations under this Agreement and the other
- ---------
Loan Documents pursuant to an assignment and acceptance (an "Assignment and
--------------
Acceptance"), substantially in the form of Exhibit G, executed by such Assignee,
- ----------
the Lender and by the Borrower. Upon such execution and delivery, from and
after the effective date determined pursuant to such Assignment and Acceptance,
(x) the Assignee thereunder shall be a party hereto and, to the extent provided
in such Assignment and Acceptance, have the rights and obligations of the Lender
hereunder with a Commitment as set forth therein, and (y) the Lender shall, to
the extent provided in such Assignment and Acceptance, be released from its
obligations under this Agreement (and in the case of an Assignment and
Acceptance covering all or the remaining portion of a Lender's rights and
obligations under this Agreement, such Lender shall cease to be a party hereto).
Notwithstanding any provision of this paragraph (c) of this subsection, the
consent of the Borrower shall not be required (other than in connection with any
assignment to an Assignee to the extent that after giving effect thereto such
Assignee would be entitled to receive any greater payment under subsections
2.10, 2.11 or 2.12 at such time than the Lender is entitled to receive at such
time, in which case the consent of the Borrower to such assignment shall be
required), and, unless requested by the Assignee and/or the Lender, new Notes
shall not be required to be executed and delivered by the Borrower, for any
assignment which occurs at any time when any Event of Default shall have
occurred and be continuing.
(d) The Borrower authorizes the Lender to disclose to any Participant
or Assignee (each, a "Transferee") and any prospective Transferee, subject to
----------
the provisions of subsection 8.15, any and all financial information in the
Lender's possession concerning the Borrower and its Affiliates which has been
delivered to the Lender by or on behalf of the Borrower pursuant to this
Agreement or which has been delivered to the Lender by or on behalf of the
Borrower in connection with the Lender's credit evaluation of the Borrower and
its Affiliates prior to becoming a party to this Agreement.
(e) For avoidance of doubt, the parties to this Agreement acknowledge
that the provisions of this subsection concerning assignments of the Loan and
the Note relate only to absolute assignments and that such provisions do not
prohibit assignments creating security interests, including, without limitation,
any pledge or assignment by the Lender of any Loan or Note to any Federal
Reserve Bank in accordance with applicable law.
<PAGE>
48
8.7 Set-Off. In addition to any rights and remedies of the Lender
-------
provided by law, the Lender and its Affiliates shall have the right, without
prior notice to the Borrower, any such notice being expressly waived by the
Borrower to the extent permitted by applicable law, upon any amount becoming due
and payable by the Borrower hereunder (whether at the stated maturity, by
acceleration or otherwise) to set-off and appropriate and apply against such
amount any and all deposits (general or special, time or demand, provisional or
final), in any currency, and any other credits, indebtedness or claims, in any
currency, in each case whether direct or indirect, absolute or contingent,
matured or unmatured, at any time held or owing by the Lender or its Affiliates
or any branch or agency thereof to or for the credit or the account of the
Borrower. The Lender agrees promptly to notify the Borrower after any such set-
off and application made by the Lender or its Affiliates, provided that the
--------
failure to give such notice shall not affect the validity of such set-off and
application.
8.8 Counterparts. This Agreement may be executed by the parties to
------------
this Agreement on separate counterparts (including by facsimile transmission),
and both of said counterparts taken together shall be deemed to constitute one
and the same instrument. A set of the copies of this Agreement signed by the
parties shall be lodged with the Borrower and the Lender.
8.9 Severability. Any provision of this Agreement which is prohibited
------------
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
8.10 Integration. This Agreement and the other Loan Documents
-----------
represent the agreement of the Borrower and the Lender with respect to the
subject matter hereof, and there are no promises, undertakings, representations
or warranties by the Lender relative to the subject matter hereof not expressly
set forth or referred to herein or in the other Loan Documents.
8.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
-------------
THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
8.12 Submission To Jurisdiction; Waivers. The Borrower hereby
-----------------------------------
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which it
is a party, or for recognition and enforcement of any judgement in respect
thereof, to the non-exclusive general jurisdiction of the courts of the State
of New York, the courts of the United States of America for the Southern
District of New York, and appellate courts from any thereof;
<PAGE>
49
(b) consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the venue
of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or
claim the same;
(c) agrees that service of process in any such action or proceeding may
be effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to the Borrower at its
address set forth in subsection 8.2 or at such other address of which the
Lender shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect service
of process in any other manner permitted by law or shall limit the right to
sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any legal action or proceeding referred to in
this subsection any special, exemplary, punitive or consequential damages.
8.13 Acknowledgements. The Borrower hereby acknowledges that:
----------------
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents;
(b) the Lender does not have any fiduciary relationship with or duty to
the Borrower arising out of or in connection with this Agreement or any of the
other Loan Documents, and the relationship between the Lender, on the one
hand, and the Borrower, on the other hand, in connection herewith or therewith
is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan Documents
or otherwise exists by virtue of the transactions contemplated hereby between
the Lender and the Borrower.
8.14 WAIVERS OF JURY TRIAL. THE BORROWER AND THE LENDER HEREBY
---------------------
IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY
COUNTERCLAIM THEREIN.
8.15 Confidentiality. The Lender agrees to keep confidential any
---------------
written or oral information (a) provided to it by or on behalf of the Borrower
pursuant to or in connection with this Agreement or (b) obtained by the Lender
based on a review of the books and records of the Borrower; provided that
--------
nothing herein shall prevent the Lender from disclosing any such information as
appropriate or required (i) to any Transferee or potential Transferee which
agrees to comply with the provisions of this subsection, (ii) to its
<PAGE>
50
employees, directors, agents, attorneys, accountants and other professional
advisors, (iii) upon the request or demand of any Governmental Authority having
jurisdiction over the Lender, (iv) in response to any order of any court or
other Governmental Authority or as may otherwise be required pursuant to any
Requirement of Law, (v) which has been publicly disclosed other than in breach
of this Agreement, or (vi) in connection with the exercise of any remedy
hereunder.
8.16 Section Headings. The section headings used in this Agreement are
----------------
for convenience of reference only and are not to affect the construction hereof
or be taken into consideration in the interpretation hereof.
<PAGE>
51
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
V.I. TECHNOLOGIES, INC.
By: /s/ Joanne Leonard
---------------------------------
Title: VICE PRESIDENT, CFO
THE CHASE MANHATTAN BANK,
as Lender
By: /s/ Diane E. Vaccarelli
---------------------------------
Title: VICE PRESIDENT
<PAGE>
SCHEDULE 3.6
1. Melville Biologics. Inc. v. New York State Insurance Fund - V.I.
---------------------------------------------------------
Technologies, Inc. is appealing the assessment of a penalty in the amount of
$3,500 for alleging failure to secure payment of worker's compensation insurance
from January 29, 1996 through June 16, 1996.
2. Vigilant Insurance Company v. V.I. Technologies. Inc. - V.I. Technologies,
-----------------------------------------------------
Inc.'s insurance carrier has denied coverage of a potential property claim filed
by V.I. Technologies, Inc. and has commenced a legal proceeding seeking a
determination that the potential loss is not covered by the insurance policy.
(filed 11/26/96, NY). V.I. Technologies, Inc. filed an answer to said complaint
in May, 1997. Subsequent Motions have been filed by each party and a decision is
pending by the Supreme Court of New York.
3. Workers Compensation Review Board - WCB Case No. 29610137 (David K.
---------------------------------
Peterson). Worker's compensation claim filed by employee for injuries allegedly
suffered on April 24, 1996. Claimant's medical and other related expenses have
been paid by the Borrower. Status hearing is scheduled for April, 1998.
4. Demand Letter - V.I. Technologies, Inc. has received a Demand Letter from
-------------
Corporate Realty Capital ("CRC") alleging payment of a termination fee is due
CRC in the amount of $312,000 for wrongful termination of a Letter of Intent
between V.I. Technologies, Inc. and CRC.
5. Antitrust Matter - On December 15, 1997, V.I. Technologies, Inc. entered
----------------
into a Supply Manufacturing and Distribution Collaboration Agreement with the
American National Red Cross (the "ANRC"), pursuant to which V.I. Technologies,
Inc. granted the ANRC an exclusive right to distribute S/D Plasma manufactured
by V.I. Technologies, Inc. A competitor of the ANRC, America's Blood Centers
(the "ABC") had held negotiations with V.I. Technologies, Inc. regarding a
distribution arrangement. ABC has sent letters to V.I. Technologies, Inc.
threatening litigation against the ANRC and possibly V.I. Technologies, Inc.
over antitrust issues arising out of the exclusive distributorship arrangement
between the ANRC and V.I. Technologies, Inc. V.I. Technologies, Inc. and the
ANRC have arranged a meeting with the ABC to address the concerns expressed by
the ABC.
6. Technology Transfer Agreement, dated December 15. 1988, between OctaPharma
--------------------------------------------------------------------------
A.G. and New York Blood Center. Inc. ("NYBC"). - Since the Fall of 1993,
- ---------------------------------------------
OctaPharma has alleged that NYBC breached the Agreement (covering albumin know-
how) and that the Agreement was therefore terminated. NYBC has advised
OctaPharma that no breach has occurred and that the Agreement is in full force
and effect. OctaPharma has taken legal action against NYBC to claim the monies
OctaPharma believes are owed to it under the Agreement.
7. Letter Agreement, dated February 20, 1997, between University Hospitals. the
----------------------------------------------------------------------------
Borrower and NYBC. - University Hospitals has alleged that NYBC and the Borrower
- ------------------
breached the Agreement and NYBC has responded by advising University Hospitals
that no breach has occurred and that the Agreement is in full force and effect.
<PAGE>
SCHEDULE 3.11
The New York Commissioner of Taxation and Finance holds a judgment, filed on
August 22, 1997, against the Borrower in the amount of $2,165.40.
<PAGE>
Schedule 3.17(c) to Credit Agreement
------------------------------------
Environmental Matters
---------------------
The Borrower has an application pending to increase its permitted discharge to
its sanitary sewer, which application the Borrower expects will be approved in
due course prior to the time any applicable permit limits relating thereto would
be exceeded.
<PAGE>
SCHEDULE 6.2 (b)
1. Mortgage, Security Agreement and Fixture Filing among IDA, Borrower and
Bayer dated as of 2/15/95
2. Lease Agreement dated as of 2/7/95 between Borrower and Bayer and all
amendments thereto
3. Sublease Agreement dated as of 2/7/95 between Borrower and Bayer and all
amendments thereto
4. Facility Lease Agreement dated 2/15/95 between Suffolk County Industrial
Development Agency ("IDA") and Borrower and all amendments, schedules and
exhibits thereto
5. Equipment Lease Agreement between Borrower and IDA dated 5/1/96 and all
amendments thereto
6. Security Agreement dated 5/1/96 among IDA, Borrower and Bayer and all
amendments thereto
7. Equipment Lease Agreement dated as of April 8, 1996 between the IDA and the
Borrower (this Agreement is in the final stages of preparation and will be
executed shortly)
8. Settlement Agreement between Bayer and Borrower dated as of July 1, 1997
9. Supply, Manufacturing and Distribution Collaboration Agreement between
Borrower and American National Red Cross dated December 15, 1997
10. Amended and Restated Collaboration Agreement among American National Red
Cross, New York Blood Center, Inc. and Borrower dated December 15, 1997
11. Master Equipment Lease Agreement dated April 8, 1996 between FINOVA
(formerly known as Financing For Science, Inc.) and Borrower (as agent for
IDA) and all schedules, exhibits and amendments thereto (Rental Schedules
related to each funding: Promissory Notes in connection with Rental
Schedules; Letter Agreements related to conversion of Promissory Notes;
Guaranty of Lease; Non-recourse Agreement; Reserve Pledge and Security
Agreement; Purchase Agreement Assignments with vendors; Consent to
Assignment of Master Equipment Lease Agreement dated April 8, 1996 between
the Borrower, as agent for IDA, and FINOVA)
12. Other financing leases covering phones, copiers, computer equipment and
forklifts with yearly lease payments to be made thereunder in the aggregate
of approximately $ 100,000 through the year 2001
13. Agreement, dated May 10, 1993, among NYBC, Suffolk County Sewer District No.
3, Suffolk County Department of Public Works, Suffolk County Sewer Agency
and County of Suffolk and all amendments thereto
<PAGE>
14. Assignment and Assumption Agreement, dated February 7, 1995, by and
between NYBC and the Borrower
15. Payment in Lieu of Tax Agreement, dated February 15, 1995, between the
Borrower and IDA
16. Lease Agreement, dated June 21, 1996, by and between The Trustees of
Columbia University in the City of New York and the Borrower
17. Agreement, dated December 26, 1996, by and between Stericon, Inc. and
the Borrower
18. Purchase Agreement, dated April 9, 1997, between Medsep Corporation and
the Borrower
19. Letter Agreements vita certain Vice Presidents providing severance
benefits
20. Non-Exclusive License Agreement, dated October 26, 1995, For Solvent
Detergent Treated Blood Derived Therapeutic Products between NYBC and
the Borrower
21. Non-Exclusive License Agreement, dated October 26, 1995, For UV Treated
Blood Derived Therapeutic Products between NYBC and the Borrower
22. Exclusive License Agreement, dated October 26, 1995, For Virally
Inactivated Transfusion Plasma Products between NYBC and the Borrower,
and Amendment I thereto effective December 31, 1996
23. Exclusive License Agreement, dated October 26, 1995, For Virally
Inactivated Fibrin Sealant/Thrombin Products between NYBC and the
Borrower, and Amendment I thereto effective October 26, 1996
24. Exclusive License Agreement, dated October 26, 1995, For Virally
Inactivated Cellular Products between NYBC and the Borrower.
25. License Agreement, dated December 4, 1995, between the Borrower and Dill
Instruments, Inc.
27. Exclusive Distribution Agreement, dated September 11, 1996, between the
Borrower and United States Surgical Corporation, and Amendment I thereto
effective October 26, 1996
28. Guaranty and Indemnity Agreement, dated as of February 18, 1997, between
the Borrower and EFOS Corporation
29. Research Development License and Manufacturing Master Agreement, dated
March 15, 1997, between the Borrower and EFOS International, Inc.
<PAGE>
See also Schedule 6.3(f)
- --- ----
<PAGE>
SCHEDULE 6.3 (f)
1. Mortgage, Security Agreement and Fixture Filing among IDA, Borrower and
Bayer dated as of 2/15/95 and all amendments thereto.
2. Lease Agreement dated as of 2/7/95 between Borrower and Bayer and all
amendments thereto.
3. Sublease Agreement dated as of 2/7/95 between Borrower and Bayer and all
amendments thereto.
4. Security Agreement dated 5/1/96 among IDA, Borrower and Bayer and all
amendments thereto.
5. Reserve Pledge and Security Agreement dated 4/8/96 between FSI and
Borrower.
6. Bayer Corporation has a security interest set forth in the following
Financing Statements:
a) UCC-1 Financing Statement # 028615 filed with the State of New York
on 2-9-95, with Bayer as the Secured party and collateral of equipment,
inventory, intangibles, accounts and proceeds & products.
b) UCC-1 Financing Statement # 02086 filed with the Suffolk County Clerk
on 2-8-95, with Bayer as the Secured party and collateral of equipment,
inventory, intangibles, accounts and proceeds & products.
7. Finova Technology Finance, f/k/a Financing for Science International has
a security interest as set forth in the following Financing Statements:
a) UCC-1 Financing Statement # 116513 filed with the State of New York
on 6-10-96, with Fleet Bank / Finova Technology Finance ("Finova") as
the Secured party and collateral of equipment leased pursuant to Master
Lease-between Finova and Borrower dated 4-8-96.
b) UCC-1 Financing Statement # 116521 filed with the State of New York
on 6-10-96, with Fleet Bank / Finova Technology Finance as the Secured
party and collateral of equipment leased pursuant to Master Lease
between Finova and Borrower dated 4-8-96.
c) UCC-1 Financing Statement # 116528 filed with the State of New York
on 6-10-96, with Fleet Bank / Finova Technology Finance as the Secured
party and collateral of equipment leased pursuant to Master Lease
between Finova and Borrower dated 4-8-96.
d) UCC-1 Financing Statement # 116536 filed with the State of New York
on 6-10-96, with Fleet Bank / Finova Technology Finance as the Secured
party and collateral of equipment leased pursuant to Master Lease
between Finova and Borrower dated 4-8-96.
e) UCC-1 Financing Statement # 116546 filed with the State of New York
on 6-10-96, with Fleet Bank / Finova Technology Finance as the Secured
party and collateral of equipment leased pursuant to Master Lease
between Finova and Borrower dated 4-8-96.
f) UCC-1 Financing Statement # 116552 filed with the State of New York
on 6-10-96, with Fleet Bank / Finova Technology Finance as the Secured
party and collateral of equipment leased pursuant to Master Lease
between Finova and Borrower dated 4-8-96.
<PAGE>
g) UCC-1 Financing Statement # 116553 filed with the State of New York
on 6-10-96, with Fleet Bank / Finova Technology Finance as the Secured
party and collateral of equipment leased pursuant to Master Lease
between Finova and Borrower dated 4-8-96.
h) UCC-1 Financing Statement # 116578 filed with the State of New York
on 6-10-96, with Fleet Bank / Finova Technology Finance as the Secured
party and collateral of equipment leased pursuant to Master Lease
between Finova and Borrower dated 4-8-96.
i) UCC-1 Financing Statement # 118010 filed with the State of New York
on 6-12-96, with Fleet Bank / Finova Technology Finance as the Secured
party and collateral of equipment leased pursuant to Master Lease
between Finova and Borrower dated 4-8-96.
j) UCC- 1 Financing Statement # 222636 filed with the State of New York
on 11-8-96, with Fleet Bank / Finova Technology Finance as the Secured
party and collateral of equipment leased pursuant to Master Lease
between Finova and Borrower dated 4-8-96.
k) UCC-1 Financing Statement # 222675 filed with the State of New York
on 11-8-96, with Fleet Bank / Finova Technology Finance as the Secured
party and collateral of equipment leased pursuant to Master Lease
between Finova and Borrower dated 4-8-96.
l) UCC-1 Financing Statement # 09980 filed with the Suffolk County Clerk
on 6-18-96, with Fleet Bank / Finova as the Secured party and collateral
of equipment leased pursuant to Master Lease between Finova and
Borrower: dated 4-8-96.
m) UCC-1 Financing Statement # 09981 filed with the Suffolk County Clerk
on 6-18-96, with Fleet Bank / Finova as the Secured party and collateral
of equipment leased pursuant to Master Lease between Finova and Borrower
dated 4-8-96.
n) UCC-1 Financing Statement # 10059 filed with the Suffolk County Clerk
on 6-20-96, with Fleet Bank / Finova as the Secured party and collateral
of equipment leased pursuant to Master Lease between Finova and Borrower
dated 4-8-96.
o) UCC-1 Financing Statement # 10061 filed with the Suffolk County Clerk
on 6-20-96, with Fleet Bank / Finova as the Secured party and collateral
of equipment leased pursuant to Master Lease between Finova and Borrower
dated 4-8-96.
p) UCC-1 Financing Statement # 10063 filed with the Suffolk County Clerk
on 6-20-96, with Fleet Bank / Finova as the Secured party and collateral
of equipment leased pursuant to Master Lease between Finova and Borrower
dated 4-8-96.
q) UCC-1 Financing Statement # 10064 filed with the Suffolk County Clerk
on 6-20-96, with Fleet Bank / Finova as the Secured party and collateral
of equipment leased pursuant to Master Lease between Finova and Borrower
dated 4-8-96.
r) UCC-1 Financing Statement # 10066 filed with the Suffolk County Clerk
on 6-20-96, with Fleet Bank / Finova as the Secured party and collateral
of equipment leased pursuant to Master Lease between Finova and Borrower
dated 4-8-96.
s) UCC-1 Financing Statement # 10068 filed with the Suffolk County Clerk
on 6-20-96, with Fleet Bank / Finova as the Secured party and collateral
of equipment leased pursuant to Master Lease between Finova and Borrower
dated 4-8-96.
<PAGE>
t) UCC-1 Financing Statement # 10071 filed with the Suffolk County Clerk
on 6-20-96, with Fleet Bank / Finova as the Secured party and collateral
of equipment leased pursuant to Master Lease between Finova and Borrower
dated 4-8-96.
u) UCC- 1 Financing Statement # 10072 filed with the Suffolk County
Clerk on 6-20-96, with Fleet Bank / Finova as the Secured party and
collateral of equipment leased pursuant to Master Lease between Finova
and Borrower dated 4-8-96.
v) UCC-1 Financing Statement # 10076 filed with the Suffolk County Clerk
on 6-20-96, with Fleet Bank / Finova as the Secured party and collateral
of equipment leased pursuant to Master Lease between Finova and Borrower
dated 4-8-96.
w) UCC-1 Financing Statement # 10078 filed with the Suffolk County Clerk
on 6-20-96, with Fleet Bank / Finova as the Secured party and collateral
of equipment leased pursuant to Master Lease between Finova and Borrower
dated 4-8-96.
x) UCC-1 Financing Statement # 10080 filed with the Suffolk County Clerk
on 6-20-96, with Fleet Bank / Finova as the Secured party and collateral
of equipment leased pursuant to Master Lease between Finova and Borrower
dated 4-8-96.
y) UCC-l Financing Statement # 10082 filed with the Suffolk County Clerk
on 6-20-96, with Fleet Bank / Finova as the Secured party and collateral
of equipment leased pursuant to Master Lease between Finova and Borrower
dated 4-8-96.
z) UCC-1 Financing Statement # 10084 filed with the Suffolk County Clerk
on 6-20-96, with Fleet Bank / Finova as the Secured party and collateral
of equipment leased pursuant to Master Lease between Finova and Borrower
dated 4-8-96.
aa) UCC-1 Financing Statement # 10086 filed with the Suffolk County
Clerk on 6-20-96, with Fleet Bank / Finova as the Secured party and
collateral of equipment leased pursuant to Master Lease between Finova
and Borrower dated 4-8-96.
bb) UCC-1 Financing Statement # 10088 filed with the Suffolk County
Clerk on 6-20-96, with Fleet Bank / Finova as the Secured party and
collateral of equipment leased pursuant to Master Lease between Finova
and Borrower dated 4-8-96.
cc) UCC-1 Financing Statement # 10091 filed with the Suffolk County
Clerk on 6-20-96, with Fleet Bank / Finova as the Secured party and
collateral of equipment leased pursuant to Master Lease between Finova
and Borrower dated 4-8-96.
dd) UCC-1 Financing Statement # 09818 (fixture filing) filed with the
Real Estate Records of Suffolk County on 6-5-97, with Finova as the
Secured party and collateral of property (155 Duryea Rd., Melville, NY).
ee) UCC-1 Financing Statement # 09784 (fixture filing) filed with the
Real Estate Records of Suffolk County on 6-5-97, with Finova as the
Secured party and collateral of property (155 Duryea Rd., Mellville,
NY).
ff) UCC-1 Financing Statement # 09785 (fixture filing) filed with the
Real Estate Records of Suffolk County on 6-5-97, with Finova as the
Secured party and collateral of property (155 Duryea Rd., Melville, NY).
<PAGE>
8. Raymond Leasing Corporation has a security interest as set forth in the
following Financing Statements:
a) UCC-1 Financing Statement # 238922 filed with the State of New York
on 12-4-96, with Womack Material Handling / Raymond Leasing Corp. as the
Secured party and collateral of One Raymond Beach Truck, One Nationwide
Battery and One MAC Charger.
b) UCC-1 Financing Statement # 20188 filed with the Suffolk County Clerk
on 12-4-96, with Womack Material Handling / Raymond Leasing Corp. as the
Secured party and collateral of One Raymond Beach Truck, One Nationwide
Battery and One MAC Charger.
10. AT&T has a security interest as set forth in the following Financing
Statements:
UCC-1 Financing Statement # 112852 filed with the State of New York on
6-3-97, with AT&T as the Secured party and collateral of Merlin Legend
sold under Lease No. E113050 as described in Exhibit A to the Statement.
<PAGE>
SCHEDULE 6.4 (a)
1) Guarantee Obligations in respect to the obligations of IDA under the
Master Equipment Lease agreement dated as of April 8, 1997 between FSI
and Borrower, as Agent on behalf of IDA.
2) Guarantee Obligations in respect of the Security Agreement dated 5/1/96
among IDA, Borrower and Bayer and all amendments thereto.
3) Guaranty and Indemnity Agreement, dated as of February 18, 1997, between
the Borrower and EFOS Corporation.
<PAGE>
EXHIBIT 10.30
INTERCREDITOR AGREEMENT, dated as of December 22, 1997, among V.I.
TECHNOLOGIES, INC. (formerly known as Melville Biologics, Inc.), a Delaware
corporation (the "Company"), BAYER CORPORATION (formerly known as Miles, Inc.),
an Indiana corporation ("Bayer") and THE CHASE MANHATTAN BANK ("Chase").
WITNESSETH:
----------
WHEREAS, pursuant to the Credit Agreement, dated as of December 22, 1997
(the "Credit Agreement"), between the Company and Chase, Chase has agreed to
make a term loan (the "Chase Term Loan") in the principal amount of $10,750,000
to the Company subject to the terms and conditions set forth therein;
WHEREAS, pursuant to the Credit Agreement, the Company (and in the event
the Company forms or acquires any Subsidiaries (as hereinafter defined) after
the date hereof, each such Subsidiary) will grant Liens (as hereinafter defined)
on its assets to secure its obligations in respect of the Chase Term Loan;
WHEREAS, Bayer and the Company are parties to the First Amended and
Restated Agreement for Custom Processing, dated as of January 24, 1996
("Agreement for Custom Processing"), and to the Other Agreements, as defined in
Section 17 of the Agreement for Custom Processing, relative to processing and
fractionation of plasma and related matters;
WHEREAS, in conjunction with this Agreement, Bayer and the Company are
entering into the Modification Agreement, dated as of the date hereof (the
"Modification Agreement") between the Company and Bayer which, among other
things, amends said Agreement for Custom Processing so as, among other things,
to increase the intermediate product to be processed for Bayer and to extend the
term thereof;
WHEREAS, the proceeds of the Chase Term Loan will be used, in part, to
refinance a term loan made by PNC Bank to the Company (the "Existing PNC Loan"),
and the related Letter Agreement between the Company and PNC Bank is being
terminated;
WHEREAS, in connection with the refinancing of the Existing PNC Loan (i)
the Guaranty Agreement of Bayer in favor of PNC Bank, dated as of February 7,
1995 (the "Bayer Guaranty") in respect of the Existing PNC Loan, is being
terminated; (ii) the reimbursement obligations of the Company in respect of the
Bayer Guaranty under the Reimbursement and Security Agreement, dated February 7,
1995 (the "Reimbursement Agreement") are being terminated and (iii) the
Reimbursement Agreement and the Mortgage dated February 15, 1995 from the
Suffolk County Industrial Development Agency and the Company to Bayer (the "1995
Mortgage") are being amended to provide that the reimbursement obligations of
the Company in respect of the Bayer Guaranty will no longer be secured by the
Liens granted pursuant to the Reimbursement Agreement and the 1995 Mortgage;
<PAGE>
WHEREAS, to accomplish said amendments, the Company and Bayer are entering
into the Security Agreement (as defined below) and an amendment to the 1995
Mortgage (as so amended, the "Bayer Mortgage"), and, after giving effect to such
amendments, only the obligations of the Company under the Agreement for Custom
Processing will be secured by liens on certain assets of the Company pursuant to
the Security Agreement and the Bayer Mortgage;
WHEREAS, it is a condition precedent to the obligation of Chase to make the
Chase Term Loan pursuant to the Credit Agreement that the parties shall have
entered into this Intercreditor Agreement, whereby Chase and Bayer will agree on
their relative priorities and rights (and the relative rights and priorities of
any other holder of Senior Obligations (as hereinafter defined)) relative to the
assets of the Company and its Subsidiaries, in the manner provided for herein;
NOW, THEREFORE, in consideration of the mutual agreements contained herein
and for other good and valuable consideration, the receipt of and sufficiency of
which is hereby acknowledged, the parties hereto agree as follows:
SECTION 1. DEFINITIONS
1.1 Definitions. Unless otherwise defined herein, terms which are defined
-----------
in the Credit Agreement and used herein are so used as so defined and the
following terms shall have the following meanings:
"Agreement" means this Intercreditor Agreement, as the same may be
---------
amended, supplemented or otherwise modified from time to time.
"Agreement for Custom Processing" shall have the meaning given such
-------------------------------
term in the recitals to this Agreement.
"Bayer" shall have the meaning given such term in the recitals to this
-----
Agreement.
"Bayer Documents" shall mean the Custom Processing Agreement, the
---------------
Security Agreement, the Bayer Mortgage ,the Bayer Lease and the Bayer Sublease.
"Bayer Fractionation Collateral" shall have the meaning given to the
------------------------------
term "Collateral" in the Security Agreement.
"Bayer Guaranty" shall have the meaning given such term in the
--------------
recitals to this Agreement.
"Bayer Mortgage" shall have the meaning given such term in the
--------------
recitals to this Agreement.
"Chase" shall have the meaning given such term in the recitals to this
-----
Agreement.
2
<PAGE>
"Chase Term Loan" shall have the meaning given such term in the recitals to
---------------
this Agreement.
"Company" shall have the meaning given such term in the recitals to this
-------
Agreement.
"Credit Agreement" shall have the meaning given such term in the recitals
----------------
to this Agreement.
"Creditors" shall mean the collective reference to Bayer and the Senior
---------
Lenders.
"Custom Processing Agreement" means said Agreement for Custom Processing as
---------------------------
amended by the Modification Agreement, as the same may be amended, modified or
supplemented from time to time.
"Existing PNC Loan" shall have the meaning given such term in the recitals
-----------------
to this Agreement.
"Hedge Agreements": as to any Person, all interest rate swaps, caps or
----------------
collar agreements or similar arrangements entered into by such Person providing
for protection against fluctuations in interest rates or currency exchange rates
or the exchange of nominal interest obligations, either generally or under
specific contingencies.
"Lien" shall mean any mortgage, pledge, hypothecation, assignment, deposit
----
arrangement, encumbrance, lien (statutory or other), charge or other security
interest or any preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever.
"Modification Agreement" shall have the meaning given such term in the
----------------------
recitals to this Agreement.
"Mortgaged Property" shall have the meaning given such term in the Senior
------------------
Loan Mortgage.
"1995 Mortgage" shall have the meaning given such term in the recitals to
-------------
this Agreement.
"Person" an individual, partnership, corporation, limited liability
------
company, business trust, joint stock company, trust, unincorporated association,
joint venture, governmental authority or other entity of whatever nature.
"Proceeds" shall have the meaning given such term in the Uniform Commercial
--------
Code as in effect in the State of New York.
3
<PAGE>
"Reimbursement Agreement" shall have the meaning given such term in the
-----------------------
recitals to this Agreement.
"Security Agreement" means the Security Agreement dated as of the date
-------------------
hereof between the Company and Bayer, securing the Senior Bayer Obligations.
"Senior Bayer Obligations" means, at any time, the obligations of the
------------------------
Company to Bayer pursuant to the Custom Processing Agreement.
"Senior Lenders": the collective reference to Chase and all other holders
--------------
from time to time of Senior Obligations.
"Senior Loan Collateral" shall mean at any time all assets of the Company
----------------------
or any of its Subsidiaries, now owned or hereafter acquired, upon which a Lien
is purported to be created by any Senior Loan Document.
"Senior Loan Documents" means the collective reference to any and all
---------------------
documents or instruments that from time to time evidence the Senior Obligations
or secure or support payment or performance thereof, including, without
limitation, the Credit Agreement and all related documents and instruments.
"Senior Loan Mortgage" means the Mortgage and Security Agreement, dated as
--------------------
of December 22, 1997, made by the Suffolk County Industrial Development Agency
and the Company in favor of Chase.
"Senior Obligations" means, at any time, the collective reference to the
------------------
unpaid principal of and interest on all obligations and liabilities (including,
without limitation, any such obligations and liabilities in respect of the
replacement, refinancing or renewal of any other Senior Obligations) of the
Company to the Senior Lenders (including, without limitation, interest accruing
at the then applicable rate provided in any Senior Loan Document after the
maturity of the subject Senior Obligations and interest accruing at the then
applicable rate provided in any Senior Loan Document after the maturity of the
subject Senior Obligations and interest accruing at the then applicable rate
provided in any Senior Loan Document after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or like
proceeding, relating to the Company, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding), whether direct or
indirect, absolute or contingent, due or to become due, or now existing or
hereafter incurred, which may arise under, out of, or in connection with, this
Agreement, the Senior Loan Documents, any Hedge Agreement or any other document
made, delivered or given in connection therewith or otherwise, in each case
whether on account of principal, interest, reimbursement obligations, fees,
indemnities, costs, expenses or otherwise (including, without limitation, all
reasonable fees and disbursements of counsel to the Senior Lenders that are
required to be paid by the Company pursuant to the terms of any Senior Loan
Document or this Agreement).
4
<PAGE>
"Subsidiary" as to the Company, a corporation, partnership, or other
----------
entity of which shares of stock or other ownership interests having ordinary
voting power (other than stock or such other ownership interests having such
power only by reason of the happening of a contingency) to elect a majority of
the board of directors or other managers of such corporation, partnership or
entity are at the time owned, or the management of which is otherwise
controlled, directly or indirectly through one or more intermediaries, or both,
by the Company, but any Joint Venture (as defined in the Credit Agreement) of
the Company and its Subsidiaries shall not be a "Subsidiary" of the Company and
any other Person which enters into a Collaboration (as defined in the Credit
Agreement) with the Company or any of its Subsidiaries shall not, solely by
virtue of entering into such Collaboration, become a "Subsidiary" of the
Company.
"Transaction Documents" means the Senior Loan Documents and the Bayer
---------------------
Documents.
SECTION 2. INTERCREDITOR AGREEMENTS
2.1 Bayer Collateral. The parties agree that at all times Bayer shall
----------------
have the senior security interest and lien position in the Bayer Fractionation
Collateral to the extent of the Senior Bayer Obligations. Chase hereby agrees,
regardless of time and order of recordation or the rules for determining
priority under the Uniform Commercial Code or any other law governing the
relative priorities of secured creditors, to subordinate any security interests
and lien position it may have at any time in the Bayer Fractionation Collateral
to the security interests and liens of Bayer therein, up to the Senior Bayer
Obligations, and Chase agrees to refrain from taking or filing any action,
judicial or otherwise, to enforce any rights or to pursue or to exercise any
remedies under the Senior Loan Documents in the Bayer Fractionation Collateral
while the Custom Processing Agreement is in effect and prior to payment in full
of the Senior Bayer Obligations.
2.2 Senior Loan Collateral. The parties agree that at all times the
----------------------
Senior Lenders shall have the senior security interest and lien position in the
Senior Loan Collateral (other than the Bayer Fractionation Collateral) to the
extent of the Senior Obligations. Bayer hereby agrees, regardless of time and
order of recordation or the rules for determining priority under the Uniform
Commercial Code or any other law governing the relative priorities of secured
creditors, to subordinate any security interests and lien position it may have
at any time in the Senior Loan Collateral (other than the Bayer Fractionation
Collateral) to the security interests and liens of the Senior Lenders therein,
up to the Senior Obligations, and Bayer agrees to refrain from taking or filing
any action, judicial or otherwise, to enforce any rights or to pursue or to
exercise any remedies under the Bayer Documents in the Senior Loan Collateral
(other than the Bayer Fractionation Collateral) while any Senior Loan Document
is in effect and prior to payment in full of the Senior Obligations. Such
exercise and enforcement shall include, without limitation, the rights, subject
to Section 2.3, to sell or otherwise dispose of the Mortgaged Property, to incur
expenses in connection with such sale or disposition and to exercise all the
rights and remedies of a secured lender under the Uniform Commercial Code of any
applicable jurisdiction. Bayer and the Company hereby agree that no Liens shall
be granted in favor of Bayer, except for the Liens granted pursuant to the Bayer
Mortgage and the Security Agreement, in each case as in effect on
5
<PAGE>
the date hereof. It is understood that the foregoing shall not prevent a Bayer
Takeover, as defined in the Custom Processing Agreement as in effect on the date
hereof.
2.3 Leases. The parties recognize and agree that at all times the Senior
------
Lenders shall have the senior security interest and lien position in the
Mortgaged Property as contemplated by Section 2.2, and that the Bayer Mortgage
will be subordinate to the Senior Loan Mortgage. Chase agrees that, except as
otherwise provided hereunder and so long as Bayer is not in default in any
material respect of its obligations hereunder or under the Bayer Lease or the
Bayer Sublease, Chase will take no action to disturb Bayer's possession and
right of quiet enjoyment under the Lease or Sublease notwithstanding any taking
of possession or control by Chase of said premises, by foreclosure or otherwise,
pursuant to the Senior Loan Mortgage; and Chase will take no action to effect a
termination of the Lease or Sublease by any such foreclosure or by any judicial
sale, deed in lieu of foreclosure or any other such proceeding.
2.4 Agreements Regarding Collateral.
-------------------------------
(a) Each of the Creditors hereby agrees that the liens and security
interests granted to the Creditors under the Transaction Documents shall be
treated, as among the Creditors, as having the priorities set forth herein. Any
money, property or securities ("Proceeds") realized upon the sale, disposition
or other realization by either Creditor upon or in respect of all or any part of
the Bayer Fractionation Collateral or the Mortgaged Property, shall be applied
by such Creditor in the following order:
(1) First, to the payment in full of all costs and expenses
-----
(including, without limitation, attorneys' fees and disbursements) paid or
incurred by such Creditor in connection with the realization on the Bayer
Fractionation Collateral or the Mortgaged Property, as the case may be, or
the protection of its rights and interests therein;
(2) Second, in the case of any Proceeds realized upon the sale,
------
disposition or other realization by such Creditor upon all or any part of
the Bayer Fractionation Collateral, to the payment in full of all Senior
Bayer Obligations and, in the case of any Proceeds realized upon the sale,
disposition or other realization by such Creditor upon all or any part of
the Mortgaged Property, to the payment in full of all Senior Obligations;
(3) Third, in the case of any Proceeds realized upon the sale,
-----
disposition or other realization by such Creditor upon all or any part of
the Bayer Fractionation Collateral, to the payment in full of all Senior
Obligations and, in the case of any Proceeds realized upon the sale,
disposition or other realization by such Creditor upon all or any part of
the Mortgaged Property, to the payment in full of all Senior Bayer
Obligations; and
(4) Fourth, to pay to the Company, or its representative or as a
------
court of competent jurisdiction may direct, any surplus then remaining.
6
<PAGE>
(b) The Company shall notify Bayer of any acceleration or enforcement
action taken by any Senior Lender under any Senior Loan Document.
(c) The priorities provided for in this Agreement shall be enforceable
against the Company and the Creditors in any proceeding filed by or against the
Company under the bankruptcy code (11 USC (S)101 et. seq.) or any other
liquidation proceeding, whether or not under court supervision, filed by or
against the Company.
(d) Nothing contained in this Agreement is intended to or shall relieve the
obligations of the Company to the Creditors to pay any amount in respect of the
Senior Bayer Obligations or Senior Obligations, as the case may be, as and when
such amount shall become due and payable in accordance with the terms thereof.
(e) No failure on the part of the Creditors to act in accordance with the
terms of this Agreement shall relieve the Company of any of its obligations to
the Creditors or either of them under the Transaction Documents or any related
agreement.
(f) To the maximum extent permitted by law, each Creditor waives any claim
it might have against any other Creditor with respect to, or arising out of, any
action or failure to act or any error of judgment, negligence, or mistake or
oversight whatsoever on the part of such other Creditor or its directors,
officers, employees or agents with respect to any exercise of rights or remedies
under the Transaction Documents or any transaction relating to the Bayer
Fractionation Collateral or the Senior Loan Collateral, as the case may be. No
Senior Lender nor any of its directors, officers, employees or agents shall be
liable for failure to demand, collect or realize upon any of the Senior Loan
Collateral or for any delay in doing so or shall be under any obligation to sell
or otherwise dispose of any Senior Loan Collateral, or take any other action in
respect thereof, upon the request of the Company or Bayer.
SECTION 3. REPRESENTATIONS AND WARRANTIES
Each Creditor represents and warrants to the other Creditor that (a) the
execution, delivery and performance of this Agreement (i) have been duly
authorized by all requisite corporate or partnership action on its part and (ii)
will not contravene any provision of its charter or by-laws or partnership
agreement or any order of any court or other Governmental Authority having
applicability to it or any applicable law, and (b) this Agreement has been duly
executed and delivered by it and constitutes its legal, valid and binding
obligation.
SECTION 4. MISCELLANEOUS
4.1 Successors and Assigns; Continuing Effect. This Agreement is being
-----------------------------------------
entered into for the benefit of, and shall be binding upon, the Creditors and
their respective successors and assigns. Bayer may not assign or transfer any
of its rights or obligations under this Agreement or any Bayer Document without
the prior written consent of the Senior Lenders. This Agreement shall be a
continuing agreement and shall be irrevocable and shall remain in full force and
effect as long as there are any of the Senior Bayer Obligations or the Senior
Obligations outstanding.
7
<PAGE>
4.2 No Change in Obligations. Bayer may not waive, amend, supplement or
------------------------
otherwise modify the terms and conditions of the Bayer Mortgage and Bayer
Security Agreement without the prior written consent of the Senior Lenders.
4.3 Notices; Amendments, etc.
-------------------------
(a) All notices hereunder shall be in writing and shall be sufficiently
given if personally delivered, telecopied or mailed by first class, registered
or certified mail, return receipt requested, postage prepaid, and addressed to
the address of the relevant party at the address set forth under its signature
below, or to such other address or addresses as the party to whom such notice is
directed may have designated by like notice in writing to the other parties
hereto. A notice shall be deemed to have been given when personally delivered
or, if telecopied, upon receipt or, if mailed, on the earlier of (i) three (3)
days after the date on which it is deposited in the mail, or (ii) the date on
which it is received.
(b) This Agreement may be amended and the terms hereof may be waived only
with the written consent of Bayer, each Senior Lender and the Company.
4.4. Counterparts. This Agreement may be executed in any number of
------------
counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute one agreement.
4.5 Severability. Any provision to this Agreement which is prohibited or
------------
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
4.6 Agreement; Governing Law. This Agreement embodies the entire
------------------------
agreement and understanding of the parties hereto regarding the subject matter
hereof. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
4.7 Relative Rights. This Agreement is intended solely for the purpose of
---------------
defining the relative rights of the Senior Lenders on the one hand and Bayer on
the other hand, and no other Person shall have any right, benefit or other
interest under this Agreement.
4.8 Further Assurances. Each Creditor and the Company, at their own
------------------
expense and at any time from time to time, upon the written request of any
Creditor will promptly and duly execute and deliver such further instruments and
documents and take such further actions as such Creditor reasonably may request
for the purposes of obtaining or preserving the full benefits of this Agreement
and of the rights and powers herein granted.
8
<PAGE>
4.9 Expenses. The Company will pay or reimburse each Senior Lender, upon
--------
demand, for all its costs and expenses in connection with the enforcement or
preservation of any rights under this Agreement, including, without limitation,
reasonable fees and disbursements of counsel to the Senior Lenders. The Company
will pay, indemnify, and hold each Senior Lender harmless, from and against any
and all other liabilities, obligations, losses, damages, penalties, actions
(whether sounding in contract, tort of on any other ground), judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever with respect
to the execution, delivery, enforcement, performance and administration of, or
in any other way arising out of or relating to this Agreement or any action
taken or omitted to be taken by any Senior Lender with respect to any of the
foregoing.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly
executed and delivered by their authorized officers on the date and year first
above written.
V.I. TECHNOLOGIES, INC.
By: /s/ Joanne Leonard
------------------------
Name: Joanne Leonard
Title: Vice President, CFO
Address for Notices:
155 Duryea Road
Melville, New York 11747
Attn: Joanne Leonard
Chief Financial Officer
9
<PAGE>
BAYER CORPORATION
By: /s/ Jack Ryan
----------------------
Name: Jack Ryan
Title: Vice President
Address for Notices:
THE CHASE MANHATTAN BANK
By: /s/ Diane E. Vaccarelli
------------------------
Name: Diane E. Vaccarelli
Title: Vice President
Address for Notices:
7600 Jericho Turnpike
Woodbury, NY 11797
10
<PAGE>
EXHIBIT 10.31
MORTGAGE AND
SECURITY AGREEMENT
from
SUFFOLK COUNTY INDUSTRIAL DEVELOPMENT AGENCY, SCIDA
and
V.I. TECHNOLOGIES, INC. (formerly known as Melville Biologics, Inc.),
the Company
to
THE CHASE MANHATTAN BANK, Mortgagee
DATED AS OF December 22, 1997
After recording, please return to:
Simpson Thacher & Bartlett
a partnership which includes
professional corporations
425 Lexington Avenue
New York, New York 10017
ATTN: Arthur L. Gallagher
<PAGE>
MORTGAGE AND SECURITY AGREEMENT
-------------------------------
THIS MORTGAGE AND SECURITY AGREEMENT, dated as of December __, 1997 is
made by SUFFOLK COUNTY INDUSTRIAL DEVELOPMENT AGENCY, a public benefit
corporation organized and existing under the laws of the State of New York,
having an office at 220 Rabro Drive, Post Office Box 6100, Hauppauge, New York
11788-0099 ("SCIDA") and by V.I. TECHNOLOGIES, INC. (formerly known as Melville
Biologics, Inc.), a Delaware corporation (the "Company"; SCIDA and the Company,
collectively, the "Mortgagor"), having an address at 155 Duryea Road, Melville,
New York 11747, to THE CHASE MANHATTAN BANK, a New York banking corporation,
whose address is 7600 Jericho Turnpike, Woodbury, New York 11797 (in such
capacity, the "Mortgagee"). References to this "Mortgage" shall mean this
instrument and any and all renewals, modifications, amendments, supplements,
extensions, consolidations, substitutions, spreaders and replacements of this
instrument. Unless otherwise defined herein, capitalized terms shall have the
meanings ascribed to them in the Credit Agreement (as hereinafter defined).
Background
----------
WHEREAS, Title 1 of Article 18-A of the General Municipal Law of the
State of New York was duly enacted into law as Chapter 1030 of the Laws of 1969
of the State of New York (the "State"), as amended, together with Chapter 675 of
the Laws of 1975 of the State, as amended (the "Act");
WHEREAS, the Act authorizes the creation of industrial development
agencies for the benefit of several counties, cities, villages and towns in the
State and to empower such agencies, among other things, to acquire, construct,
reconstruct, lease, improve, maintain, equip and sell land and any building or
other improvement, and all real and personal properties, including, but not
limited to, machinery and equipment deemed necessary in connection therewith,
whether or not now in existence or under construction, which shall be suitable
for manufacturing, warehousing, research, commercial, recreation or industrial
facilities, including industrial pollution control facilities, in order to
advance job opportunities, health, general prosperity and the economic welfare
of the people of the State and to improve their standard of living;
WHEREAS, SCIDA is the owner in fee simple of a certain tract or parcel
of land situated in the Town of Huntington, Village of Melville, Suffolk County,
State of New York, as more fully described on Schedule A attached hereto (such
real property, together with all of the buildings, improvements, structures and
fixtures now or subsequently located thereon (the "Improvements"), being
collectively referred to as the "Real Estate");
WHEREAS, pursuant to a Credit Agreement dated as of the date hereof
between the Company and Mortgagee (as the same may be amended, modified,
supplemented or extended from time to time, the "Credit Agreement"), Mortgagee
has agreed to make a loan in the amount of $10,750,000 (the "Loan") to the
Company, which Loan shall be evidenced by the Note;
<PAGE>
2
WHEREAS, SCIDA leased the Real Estate to the Company pursuant to the
Facility Lease Agreement dated as of February 15, 1995 (the "Facility Lease"),
and SCIDA will benefit from the making of the Loan to the Company;
WHEREAS, pursuant to the terms of the Credit Agreement, the Mortgagee
has agreed, among other things, to make the Loan on the condition (among others)
that Mortgagor grant to Mortgagee a lien upon and perfected security interest
in, among other things, all estate, right, title and interest of Mortgagor in
and to the Real Estate pursuant to the terms hereof;
WHEREAS, pursuant to and in accordance with the provisions of the Act,
SCIDA was created and is empowered under the Act to grant this Mortgage to
Mortgagee;
NOW THEREFORE, in consideration of the premises and for the sum of Ten
Dollars ($10.00), the receipt and sufficiency of which is hereby acknowledged,
Mortgagor hereby agrees as follows:
Granting Clauses
----------------
For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Mortgagor agrees that to secure:
(a) the repayment of principal of and interest on (including, without
limitation, interest accruing at the then applicable rate provided in the
Credit Agreement after the maturity of the Loan and interest accruing at
the then applicable rate provided in the Credit Agreement after the filing
of any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to Mortgagor, whether or not a
claim for post-filing or post-petition interest is allowed in such
proceeding) the Loan and all other obligations and liabilities of Mortgagor
to Mortgagee, whether direct or indirect, absolute or contingent, due or to
become due, now existing or hereafter incurred, which may arise under, out
of, or in connection with, the Credit Agreement, the Note, this Mortgage,
the Loan, the other Loan Documents, or any other document made, delivered
or given in connection therewith, in each case whether on account of
principal, interest, reimbursement obligations, fees, indemnities, costs,
expenses or otherwise (including, without limitation, all reasonable fees,
charges and disbursements of counsel to Mortgagee that are required to be
paid by Mortgagor pursuant to the Credit Agreement or any other Loan
Document) (the items set forth above being referred to collectively as the
"Indebtedness"); and
(b) the performance of all covenants, agreements, obligations and
liabilities of Mortgagor (the "Obligations") under or pursuant to the
provisions of the Credit Agreement, the Note, this Mortgage, the Loan, any
other document securing payment of the Indebtedness (the "Security
Documents"), any other Loan Document and any amendments, supplements,
extensions, renewals, restatements, replacements or modifications of any of
the foregoing (the Credit Agreement, the Note, this Mortgage, the Loan, and
all other documents and instruments from time to time evidencing, securing
or
<PAGE>
3
guaranteeing the payment of the Indebtedness or the performance of the
Obligations, as any of the same may be amended, supplemented, extended,
renewed, restated, replaced or modified from time to time, are collectively
referred to as the "Loan Documents"); and
MORTGAGOR HEREBY GRANTS TO MORTGAGEE A LIEN UPON AND A SECURITY INTEREST IN, AND
HEREBY MORTGAGES, GRANTS, ASSIGNS, TRANSFERS AND SETS OVER TO MORTGAGEE:
(A) (i) the Real Estate, and (ii) the leasehold estate in the Real
Estate created by, and all right, title and interest of the Company in, to
and under, the Facility Lease, with all rights of use, occupancy and
enjoyment, and in and to all rents, income and profits arising from or
pursuant to the Facility Lease;
(B) all the estate, right, title, claim or demand whatsoever of
Mortgagor in possession or expectancy, in and to the Real Estate or any
part thereof;
(C) all right, title and interest of Mortgagor in, to and under all
easements, rights of way, gores of land, streets, ways, alleys, passages,
sewer rights, waters, water courses, water and riparian rights, development
rights, air rights, mineral rights, oil and gas rights and all estates,
rights, titles, interests, privileges, licenses, tenements, hereditaments
and appurtenances belonging, relating or appertaining to the Real Estate,
and any reversions, remainders, rents, issues, profits and revenue thereof
and all land lying in the bed of any street, road or avenue, in front of or
adjoining the Real Estate to the center line thereof;
(D) all of the fixtures, chattels, business machines, machinery,
apparatus, equipment, furnishings, fittings and articles of personal
property of every kind and nature whatsoever, and all appurtenances and
additions thereto and substitutions or replacements thereof (together with,
in each case, attachments, components, parts and accessories) currently (x)
owned or subsequently acquired by Mortgagor and (y) now or subsequently
attached to, or contained in or used in any way in connection with any
operation or letting of the Real Estate, including but without limiting the
generality of the foregoing, all equipment owned by SCIDA and leased to the
Company pursuant to the Equipment Lease Agreement dated as of May 1, 1996
by and between SCIDA and the Company (as the same may be amended, modified,
supplemented or extended from time to time, "Equipment Lease Agreement")
("SCIDA Equipment"), all screens, awnings, shades, blinds, curtains,
draperies, artwork, carpets, rugs, storm doors and windows, furniture and
furnishings, heating, electrical, and mechanical equipment, lighting,
switchboards, plumbing, ventilating, air conditioning and air-cooling
apparatus, refrigerating, and incinerating equipment, escalators,
elevators, loading and unloading equipment and systems, stoves, ranges,
laundry equipment, cleaning systems (including window cleaning apparatus),
telephones, communication systems (including satellite dishes and
antennae), televisions, computers, sprinkler systems and other fire
prevention and extinguishing apparatus and materials, security systems,
motors, engines, machinery, pipes, pumps, tanks, conduits, appliances,
fittings and fixtures of every kind and description (all of the foregoing
in this paragraph (D) being referred to as the "Equipment"), it being
understood and agreed that the term "Equipment" hereby
<PAGE>
4
expressly excludes equipment, other than the SCIDA Equipment, leased
pursuant to any sale/leaseback transaction and any other equipment leased
by the Company from Finova Capital Corp.;
(E) all right, title and interest of Mortgagor in and to all
substitutes and replacements of, and all additions and improvements to, the
Real Estate and the Equipment, subsequently acquired by or released to
Mortgagor or constructed, assembled or placed by Mortgagor on the Real
Estate, immediately upon such acquisition, release, construction,
assembling or placement, including, without limitation, any and all
building materials owned by Mortgagor and to be incorporated in or on the
Real Estate whether stored at the Real Estate or offsite, and, in each such
case, without any further mortgage, conveyance, assignment or other act by
Mortgagor;
(F) all right, title and interest of Mortgagor in, to and under all
leases, subleases, underlettings, concession agreements, management
agreements, licenses and other agreements relating to the use or occupancy
of the Real Estate or the Equipment or any part thereof, now existing or
subsequently entered into by Mortgagor and whether written or oral and all
guarantees of any of the foregoing (collectively, as any of the foregoing
may be amended, restated, extended, renewed or modified from time to time,
the "Leases"), including, without limitation, the Facility Lease, the
Equipment Lease Agreement, the Bayer Lease Agreement and the Bayer Sublease
Agreement, and all rights of Mortgagor in respect to cash and securities
deposited thereunder and the right to receive and collect the revenues,
income, rents, issues and profits thereof, together with all other rents,
royalties, issues, profits, revenue, income and other benefits arising from
the use and enjoyment of the Mortgaged Property (as defined below)
(collectively, the "Rents") (notwithstanding anything, to the contrary
herein, SCIDA has reserved unto itself and has not given, granted,
bargained, sold, warranted, alienated, remitted, released, conveyed,
assigned, transferred, mortgaged, hypothecated, deposited, pledged, set
over or confirmed unto Mortgagee nor granted a security interest to
Mortgagee in any right, title, interest in, to or under the Facility Lease
with respect to payments or reimbursements of whatever kind to be made to
SCIDA, liability insurance for the benefit of SCIDA, indemnifications of or
running to SCIDA, obligations by the Company running to SCIDA for
performance of SCIDA's obligations, or the rights of SCIDA to declare
Events of Default thereunder or to take any action to enforce any of its
rights or remedies under the Facility Lease, all of which shall be
considered personal to SCIDA (the "Retained Rights"), and such Retained
Rights shall continue to be the duties, obligations and liabilities of the
Company and shall not be construed as to impose any duties or obligations
on or be liabilities of Mortgagee or Mortgagee's interest in the Mortgaged
Property);
(G) all logos, copyrights, good will and books and records relating
to or used in connection with the ownership and operation of the Real
Estate or the Equipment or any part thereof; all general intangibles
related to the ownership and operation of the Improvements now existing or
hereafter arising;
<PAGE>
5
(H) all unearned premiums under insurance policies now or
subsequently obtained by Mortgagor relating to the Real Estate or Equipment
and Mortgagor's interest in and to all proceeds of any such insurance
policies (including title insurance policies) including the right to
collect and receive such proceeds, subject to the provisions relating to
insurance generally set forth below; and all awards and other compensation,
including the interest payable thereon and the right to collect and receive
the same, made to the present or any subsequent owner of the Real Estate or
Equipment for the taking by eminent domain, condemnation or otherwise, of
all or any part of the Real Estate or any easement or other right therein;
(I) to the extent assignable, all right, title and interest of
Mortgagor in and to the extent assignable, (i) all contracts from time to
time executed by Mortgagor or any manager or agent on their behalf relating
to the ownership, construction, maintenance, repair, operation, occupancy,
sale or financing of the Real Estate or Equipment or any part thereof and
all agreements relating to the purchase or lease of any portion of the Real
Estate or any property which is adjacent or peripheral to the Real Estate,
together with the right to exercise such options and all leases of
Equipment (collectively, the "Contracts"), including without limitation,
all right, title and interest of the Company's (but excluding SCIDA's)
interest in the Payment-In-Lieu-of-Tax ("PILOT") Agreement dated as of
February 15, 1995 between SCIDA and the Company, (ii) all consents,
licenses, building permits, certificates of occupancy and other
governmental approvals relating to construction, completion, occupancy, use
or operation of the Real Estate or any part thereof (collectively, the
"Permits") and (iii) all drawings, plans, specifications and similar or
related items relating to the Real Estate (collectively, the "Plans");
(J) any and all monies now or subsequently on deposit for the payment
of real estate taxes or special assessments against the Real Estate or for
the payment of premiums on insurance policies covering the foregoing
property or otherwise on deposit with or held by Mortgagee as provided in
this Mortgage; all capital, operating, reserve or similar accounts held by
or on behalf of Mortgagor and related to the ownership and operation of the
Mortgaged Property, whether now existing or hereafter arising and all
monies held in any of the foregoing accounts and any certificates or
instruments related to or evidencing such accounts; and
(K) all proceeds, both cash and noncash, of the foregoing;
(All of the foregoing property and rights and interests now owned or
held or subsequently acquired by Mortgagor and described in the foregoing
clauses (A) through (E) are collectively referred to as the "Premises", and
those described in the foregoing clauses (A) through (K) are collectively
referred to as the "Mortgaged Property").
TO HAVE AND TO HOLD the Mortgaged Property and the rights and
privileges hereby mortgaged unto Mortgagee, its successors and assigns for the
uses and purposes set forth, until the Indebtedness is fully paid and the
Obligations fully performed or otherwise discharged.
<PAGE>
6
NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE CONTRARY, the maximum
amount of principal indebtedness secured by this Mortgage at execution or which
under any contingency may become secured hereby at any time hereafter is
$10,750,000 plus (a) taxes, charges or assessments which may be imposed by law
upon the Mortgaged Property; (b) premiums on insurance policies covering the
Mortgaged Property; (c) expenses incurred in upholding the lien of this
Mortgage, including, but not limited to (i) the expenses of any litigation to
prosecute or defend the rights and lien created by this Mortgage; (ii) any
amount, cost or charge to which Mortgagee becomes subrogated, upon payment,
whether under recognized principles of law or equity, or under express statutory
authority and (iii) interest at the rate set forth in the Credit Agreement.
Terms and Conditions
--------------------
Mortgagor further represents, warrants, covenants and agrees with
Mortgagee as follows:
1 Warranty of Title and Authorization. (a) SCIDA represents and
-----------------------------------
warrants that (i) it is the owner of good and marketable title to an estate in
fee simple absolute in the Real Estate, free and clear of all liens and
encumbrances, except for the Permitted Liens (as hereinafter defined), (ii) it
is duly established and validly existing under the provisions of the Act, (iii)
it has full legal right, power and authority to execute this Mortgage and (iv)
this Mortgage has been duly authorized, executed and delivered by it.
(b) The Company represents and warrants that (i) it is the owner of a
valid and subsisting leasehold estate in the Real Estate, free and clear of all
liens and encumbrances, except for the Permitted Liens (as hereinafter defined),
(ii) it is duly established, validly existing and in good standing under the
laws of the state of its incorporation, (iii) it has full legal right, power and
authority to execute this Mortgage and (iv) this Mortgage has been duly
authorized, executed and delivered by it.
(c) Mortgagor warrants that this Mortgage is a valid and enforceable
lien on the Mortgaged Property subject only to those matters set forth in
Schedule B of the title insurance policy being issued to Mortgagee to insure the
lien of this Mortgage and to the liens created by that certain Mortgage,
Security Agreement and Fixture Filing dated February 15, 1995 by SCIDA and the
Company to Miles Inc. (the "Permitted Liens"). Mortgagor also represents and
warrants that, notwithstanding anything herein to the contrary, this Mortgage
and the liens created hereby are subject to the terms and conditions of the
Intercreditor Agreement dated as of the date hereof among the Company, Bayer
Corporation and Mortgagee (as the same may be amended, supplemented or otherwise
modified from time to time, the "Intercreditor Agreement").
(d) Mortgagor shall preserve such title as it warrants herein and the
validity and priority of the lien hereof and shall forever warrant and defend
the same to Mortgagee against the claims of all persons and parties whomsoever.
<PAGE>
7
2. Payment of Indebtedness. The Company shall pay the Indebtedness
-----------------------
at the times and places and in the manner specified in the Credit Agreement and
Mortgagor shall perform all the Obligations as required under the Loan
Documents.
3. Requirements.
------------
(a) Mortgagor shall promptly comply with, or cause to be complied
with, and conform to all present and future laws, statutes, codes, ordinances,
orders, judgments, decrees, rules, regulations and requirements applicable to
the Mortgaged Property, and irrespective of the nature of the work to be done,
of each of the United States of America, any State and any municipality, local
government or other political subdivision thereof and any agency, department,
bureau, board, commission or other instrumentality of any of them, now existing
or subsequently created (collectively, "Governmental Authority") which has
jurisdiction over the Mortgaged Property and all covenants, restrictions and
conditions now or later of record which may be applicable to any of the
Mortgaged Property, or to the use, manner of use, occupancy, possession,
operation, maintenance, alteration, repair or reconstruction of any of the
Mortgaged Property unless the failure to so comply would not have a Material
Adverse Effect. All present and future laws, statutes, codes, ordinances,
orders, judgments, decrees, rules, regulations and requirements of every
Governmental Authority applicable to Mortgagor or to any of the Mortgaged
Property and all covenants, restrictions, and conditions which now or later may
be applicable to any of the Mortgaged Property are collectively referred to as
the "Legal Requirements".
(b) From and after the date of this Mortgage, Mortgagor shall not by
act or omission permit any building or other improvement on any premises not
subject to the lien of this Mortgage to rely on the Premises or any part thereof
or any interest therein to fulfill any Legal Requirement, and Mortgagor hereby
assigns to Mortgagee any and all rights to give consent for all or any portion
of the Premises or any interest therein to be so used. Mortgagor shall not by
act or omission impair the integrity of any of the Real Estate as a single
zoning lot separate and apart from all other premises. Mortgagor represents
that each parcel of the Real Estate constitutes a legally subdivided lot, in
compliance with all subdivision laws and similar Legal Requirements. Any act or
omission by Mortgagor which would result in a violation of any of the provisions
of this subsection shall be void.
4. Payment of Taxes and Other Impositions. (a) Before they become
--------------------------------------
delinquent, the Company shall pay and discharge all taxes of every kind and
nature (including, without limitation, all real and personal property, income,
franchise, withholding, transfer, gains, profits and gross receipts taxes and
PILOT payments), all charges for any easement or agreement maintained for the
benefit of any of the Mortgaged Property, all general and special assessments,
levies, permits, inspection and license fees, all water and sewer rents and
charges and all other public charges even if unforeseen or extraordinary,
imposed upon or assessed against or which may become a lien on any of the
Mortgaged Property, or arising in respect of the occupancy, use or possession
thereof, together with any penalties or interest on any of the foregoing (all of
the foregoing are collectively referred to as the "Impositions"). The Company
shall within 10 business days after request by Mortgagee deliver to Mortgagee
(i) original or copies of receipted bills and cancelled checks evidencing
payment of such Imposition if it is a real estate tax or other
<PAGE>
8
public charge and (ii) evidence reasonably acceptable to Mortgagee showing the
payment of any other such Imposition. If by law any Imposition, at the
Company's option, may be paid in installments (whether or not interest shall
accrue on the unpaid balance of such Imposition), the Company may elect to pay
such Imposition in such installments and shall be responsible for the payment of
such installments with interest, if any.
(b) Nothing herein shall affect any right or remedy of Mortgagee
under this Mortgage or otherwise, without notice or demand to the Company, to
pay any Imposition after the date such Imposition shall have become delinquent,
and to add to the Indebtedness the amount so paid, together with interest from
the time of payment at the rate of interest set forth in Section 2.6(c) of the
Credit Agreement (the "Default Rate"). Any sums paid by Mortgagee in discharge
of any Impositions shall be (i) a lien on the Premises secured hereby prior to
any right or title to, interest in, or claim upon the Premises subordinate to
the lien of this Mortgage, and (ii) payable on demand by the Company to
Mortgagee together with interest at the Default Rate as set forth above.
(c) The Company shall not claim, demand or be entitled to receive any
credit or credits toward the satisfaction of this Mortgage or on any interest
payable thereon for any taxes assessed against the Mortgaged Property or any
part thereof, and shall not claim any deduction from the taxable value of the
Mortgaged Property by reason of this Mortgage.
(d) The Company shall have the right before any delinquency occurs to
contest or object in good faith to the amount or validity of any Imposition by
appropriate legal proceedings, but such right shall not be deemed or construed
in any way as relieving, modifying, or extending the Company's covenant to pay
any such Imposition at the time and in the manner provided in this Section
unless (i) the Company has given prior written notice to Mortgagee of the
Company's intent so to contest or object to an Imposition, (ii) the Company
shall demonstrate to Mortgagee's reasonable satisfaction that the legal
proceedings shall operate conclusively to prevent the sale of the Mortgaged
Property, or any part thereof, to satisfy such Imposition prior to final
determination of such proceedings and (iii) the Company shall furnish a good and
sufficient bond or surety or other security as requested by and reasonably
satisfactory to Mortgagee in the amount of the Impositions which are being
contested plus any interest and penalty which may be imposed thereon and which
could become a lien against the Real Estate or any part of the Mortgaged
Property.
(e) Upon notice to the Company, Mortgagee after an Event of Default
(as defined below) shall be entitled to require the Company to pay monthly in
advance to Mortgagee the equivalent of 1/12th of the estimated annual
Impositions. Mortgagee shall keep such funds in a separate escrow account, and
the Company shall not be entitled to interest thereon. Mortgagee shall use such
funds to pay the Impositions as they become due and any funds remaining may be
applied by Mortgagee, in its sole discretion, to the Indebtedness in the reverse
order of the amortization payments required by the Credit Agreement.
5. Insurance. (a) The Company shall maintain or cause to be
---------
maintained on all of the Premises
<PAGE>
9
(i) property insurance against loss or damage by fire,
lightning, windstorm, tornado, water damage, flood, earthquake and by such
other further risks and hazards as now are or subsequently may be covered
by an "all risk" policy or a fire policy covering "special" causes of loss.
The policy shall include building ordinance law endorsements and the policy
limits shall be automatically reinstated after each loss;
(ii) comprehensive general liability insurance under a policy
including the "broad form CGL endorsement" (or which incorporates the
language of such endorsement), covering all claims for personal injury,
bodily injury or death, or property damage occurring on, in or about the
Premises in an amount not less than $10,750,000, combined single limit with
respect to injury and property damage relating to any one occurrence plus
such excess limits as Mortgagee shall reasonably request from time to time;
(iii) when and to the extent required by Mortgagee, insurance
against loss or damage by any other risk commonly insured against by
persons occupying or using like properties in the locality or localities in
which the Real Estate is situated;
(iv) insurance against rent loss, extra expense or business
interruption (and/or soft costs, in the case of new construction), to the
extent applicable, in amounts reasonably satisfactory to Mortgagee, but not
less than one year's gross rent or gross income;
(v) during the course of any construction or repair of
Improvements, comprehensive general liability insurance under a policy
including the "broad form CGL endorsement" (or which incorporates the
language of such endorsement) (including coverage for elevators and
escalators, if any). The policy shall include coverage for independent
contractors and completed operations. The completed operations coverage
shall stay in effect for two years after construction of any Improvements
has been completed. The policy shall provide coverage on an occurrence
basis against claims for personal injury, including, without limitation,
bodily injury, death or property damage occurring on, in or about the
Premises and the adjoining streets, sidewalks and passageways, such
insurance to afford immediate minimum protection to a limit of not less
than that reasonably required by Mortgagee with respect to personal injury,
bodily injury or death to any one or more persons or damage to property;
(vi) during the course of any construction or repair of the
Improvements, workers' compensation insurance (including employer's
liability insurance) for all employees of the Company (or the Company's
contractors) engaged on or with respect to the Premises in such amounts as
are required by law;
(vii) during the course of any construction, addition,
alteration or repair of the Improvements, builder's risk completed value
form insurance against "all risks of physical loss," including collapse,
water damage, flood and earthquake and transit coverage, with deductible
approved by Mortgagee (which approval shall not be unreasonably withheld or
delayed), in nonreporting form, covering the total value of work
<PAGE>
10
performed and equipment, supplies and materials furnished (with an
appropriate limit for soft costs in the case of construction);
(viii) boiler and machinery property insurance covering pressure
vessels, air tanks, boilers, machinery, pressure piping, heating, air
conditioning and elevator equipment and escalator equipment, provided the
Improvements contain equipment of such nature, and insurance against rent,
extra expense, business interruption and soft costs, if applicable, arising
from any such breakdown, in such amounts as are reasonably satisfactory to
Mortgagee but not less than the lesser of $1,000,000 or 10% of the value of
the Improvements;
(ix) if any portion of the Premises are located in an area
identified as a special flood hazard area by the Federal Emergency
Management Agency or other applicable agency, flood insurance in an amount
reasonably satisfactory to Mortgagee, but in no event less than the maximum
limit of coverage available under the National Flood Insurance Act of 1968,
as amended; and
(x) such other insurance in such amounts as Mortgagee may
reasonably request from time to time.
Each insurance policy (other than flood insurance written under the National
Flood Insurance Act of 1968, as amended, in which case to the extent available)
shall (i) provide that it shall not be cancelled, non-renewed or materially
amended without 30-days' prior written notice to Mortgagee, and (ii) with
respect to all property insurance, provide for deductibles not to exceed
$50,000, contain a "Replacement Cost Endorsement" without any deduction made for
depreciation and with no co-insurance penalty (or attaching an agreed amount
endorsement satisfactory to Mortgagee), with loss payable solely to Mortgagee
(modified, if necessary, to provide that proceeds in the amount of replacement
cost may, upon an Event of Default, be retained by Mortgagee without the
obligation to rebuild) as its interest may appear, without contribution, under a
"standard" or "New York" type mortgagee clause acceptable to Mortgagee and be
written by insurance companies having an A.M. Best Company, Inc. rating of A or
higher and a financial size category of not less than XII, or otherwise as
approved by Mortgagee. Liability insurance policies shall name Mortgagee as an
additional insured and contain a waiver of subrogation against Mortgagee; all
such policies shall indemnify and hold Mortgagee harmless from all liability
claims occurring on, in or about the Premises and the adjoining streets,
sidewalks and passageways. The amounts of each insurance policy and the form of
each such policy shall at all times be reasonably satisfactory to Mortgagee.
Each policy shall expressly provide that any proceeds which are payable to
Mortgagee shall be paid by check payable to the order of Mortgagee only and
requiring the endorsement of Mortgagee only. If any required insurance shall
expire, be withdrawn, become void by breach of any condition thereof by
Mortgagor or by any lessee of any part of the Mortgaged Property or become void
or unsafe by reason of the failure or impairment of the capital of any insurer,
or if for any other reason whatsoever such insurance shall become reasonably
unsatisfactory to Mortgagee (based on the standards set forth herein), the
Company shall immediately obtain new or additional insurance reasonably
satisfactory to Mortgagee (based on the standards set forth herein). The
Company
<PAGE>
11
shall not take out any separate or additional insurance which is contributing in
the event of loss unless it is properly endorsed and otherwise reasonably
satisfactory to Mortgagee in all respects.
(b) The Company shall deliver to Mortgagee an original of each
insurance policy required to be maintained, or a certificate of such insurance
reasonably acceptable to Mortgagee, together with a copy of the declaration page
for each such policy. The Company shall (i) pay as they become due all premiums
for such insurance, (ii) not later than 15 days prior to the expiration of each
policy to be furnished pursuant to the provisions of this Section, deliver a
renewed policy or policies, or duplicate original or originals thereof, marked
"premium paid," or accompanied by such other evidence of payment satisfactory to
Mortgagee with standard non-contributory mortgage clauses in favor of and
reasonably acceptable to Mortgagee. Upon request of Mortgagee, the Company
shall cause its insurance underwriter or broker to certify to Mortgagee in
writing that all the requirements of this Mortgage governing insurance have been
satisfied.
(c) If the Company is in default of its obligations to insure or
deliver any such prepaid policy or policies, then Mortgagee, at its option and
upon 5 days prior written notice (unless any portion of the insurance set forth
above has lapsed or will lapse during such 5 day period in which case no prior
notice shall be required by Mortgagee), may effect such insurance from year to
year, and pay the premium or premiums therefor, and the Company shall pay to
Mortgagee on demand such premium or premiums so paid by Mortgagee with interest
from the time of payment at the Default Rate and the same shall be deemed to be
secured by this Mortgage and shall be collectible in the same manner as the
Indebtedness secured by this Mortgage.
(d) The Company shall increase the amount of property insurance
required to equal 100% replacement cost pursuant to the provisions of this
Section at the time of each renewal of each policy (but not later than 12 months
from the date of this Mortgage and each successive 12 month period to occur
thereafter) by using the F.W. Dodge Building Index to determine whether there
shall have been an increase in the replacement value since the most recent
adjustment and, if there shall have been such an increase, the amount of
insurance required shall be adjusted accordingly.
(e) The Company promptly shall comply with and conform to (i) all
provisions of each such insurance policy, and (ii) all requirements of the
insurers applicable to the Company or to any of the Premises or to the use,
manner of use, occupancy, possession, operation, maintenance, alteration or
repair of any of the Premises. The Company shall not use or permit the use of
the Premises in any manner which would permit any insurer to cancel any
insurance policy or void coverage required to be maintained by this Mortgage.
(f) If the Premises, or any part thereof, shall be destroyed or
damaged by fire or any other casualty, whether insured or uninsured, or in the
event any claim is made against the Company for any personal injury, bodily
injury or property damage incurred on or about the Premises, the Company shall
give immediate notice thereof to Mortgagee. If the Mortgaged Property is
damaged by fire or other casualty, the insurance proceeds relating to such loss
shall be paid over to a collateral account maintained under the sole dominion
and control of
<PAGE>
12
Mortgagee (the "Collateral Account"). The insurance proceeds or any part
thereof delivered to the Collateral Account shall be applied by Mortgagee toward
reimbursement of all reasonable costs and expenses of Mortgagee in collecting
such proceeds, and the balance shall, (i) provided that no Event of Default
shall have occurred and be continuing, be disbursed by Mortgagee to the Company
for the restoration or repair of the property damaged, subject to the
satisfaction of the conditions set forth in Section 10 of this Mortgage; (ii)
upon an Event of Default, be applied by Mortgagee to the Indebtedness in such
manner as Mortgagee shall elect. If an Event of Default shall have occurred and
be continuing, then the Company authorizes and empowers Mortgagee, at
Mortgagee's option and in Mortgagee's sole discretion, as attorney-in-fact for
the Company, to make proof of loss, to adjust and compromise any claim under any
insurance policy, to appear in and prosecute any action arising from any policy,
to collect and receive insurance proceeds after consultation with the Company
and to deduct therefrom Mortgagee's reasonable expenses incurred in the
collection process. Each insurance company concerned is hereby authorized and
directed to make payment for such loss directly to the Collateral Account
maintained by Mortgagee. Mortgagee shall have the right to require the Company
to repair or restore the Premises, and the Company hereby designates Mortgagee
as its attorney-in-fact for the purpose of making any election required or
permitted under any insurance policy relating to repair or restoration.
(g) In the event of foreclosure of this Mortgage or other transfer of
title to the Mortgaged Property in extinguishment of the Indebtedness, all
right, title and interest of the Company in and to any insurance policies then
in force shall pass to the purchaser or grantee and the Company hereby appoints
Mortgagee its attorney-in-fact, in the Company's name, to assign and transfer
all such policies and proceeds to such purchaser or grantee.
(h) Upon notice to the Company, Mortgagee after an Event of Default
shall be entitled to require the Company to pay monthly in advance to Mortgagee
the equivalent of 1/12th of the estimated annual premiums due on such insurance.
Mortgagee shall keep such funds in a separate escrow account and the Company
shall not be entitled to interest thereon. Mortgagee shall use such funds to
pay the annual premiums as they become due and any funds remaining may be
applied by Mortgagee, in its sole discretion, to the Indebtedness in reverse
order of the amortization payments required by the Credit Agreement.
(i) The Company may maintain insurance required under this Mortgage
by means of one or more blanket insurance policies maintained by the Company;
provided, however, that (A) any such policy shall specify, or the Company shall
- -------- -------
furnish to Mortgagee a written statement from the insurer so specifying, the
maximum amount of the total insurance afforded by such blanket policy that is
allocated to the Premises and any sublimits in such blanket policy applicable to
the Premises, (B) each such blanket policy shall include an endorsement
providing that, in the event of a loss resulting from an insured peril,
insurance proceeds shall be allocated to the Mortgaged Property in an amount
equal to the coverages required to be maintained by the Company as provided
above and (C) the protection afforded under any such blanket policy shall be no
less than that which would have been afforded under a separate policy or
policies relating only to the Premises.
<PAGE>
13
6. Restrictions on Liens and Encumbrances. Except for the lien of
--------------------------------------
this Mortgage, the Liens permitted under the Credit Agreement and the Permitted
Liens, Mortgagor shall not further mortgage, nor otherwise encumber the
Mortgaged Property nor create or suffer to exist any lien, charge or encumbrance
on the Mortgaged Property, or any part thereof, whether superior or subordinate
to the lien of this Mortgage and whether recourse or non-recourse.
7. Due on Sale and Other Transfer Restrictions. Except as may be
-------------------------------------------
permitted in the Credit Agreement, Mortgagor shall not sell, transfer, convey or
assign all or any portion of, or any interest in, the Mortgaged Property.
8. Maintenance; No Alteration; Inspection; Utilities. (a) The
--------------------------------------- ---------
Company shall maintain or cause to be maintained all the Improvements in good
condition and repair and shall not commit or suffer any waste of the
Improvements. The Company shall repair, restore, replace or rebuild promptly
any part of the Premises which may be damaged or destroyed by any casualty
whatsoever. The Improvements shall not be demolished or materially altered, nor
any material additions built, without the prior written consent of Mortgagee,
which will not be unreasonably withheld.
(b) Mortgagee and any persons authorized by Mortgagee shall have the
right to enter and inspect the Premises during normal business hours after
telephonic or written notice to the Company of its intent to do so and the right
to inspect all work done, labor performed and materials furnished in and about
the Improvements, provided Mortgagee shall not unreasonably interfere with the
Company's use of the Premises and provided further that Mortgagee shall be
liable for any damage caused by Mortgagee or its agents.
9. Condemnation/Eminent Domain. Immediately upon obtaining knowledge
---------------------------
of the institution of any proceedings for the condemnation of the Mortgaged
Property, or any portion thereof, Mortgagor will notify Mortgagee of the
pendency of such proceedings. Mortgagor authorizes Mortgagee, at Mortgagee's
option and in Mortgagee's sole discretion, as attorney-in-fact for Mortgagor, to
commence, appear in and prosecute, in Mortgagee's or Mortgagor's name, any
action or proceeding relating to any condemnation of the Mortgaged Property, or
any portion thereof, and to settle or compromise any claim in connection with
such condemnation, provided the award resulting therefrom will, in Mortgagee's
discretion, exceed $500,000. If Mortgagee elects not to participate in such
condemnation proceeding, then Mortgagor shall, at its expense, diligently
prosecute any such proceeding and shall consult with Mortgagee, its attorneys
and experts and cooperate with them in any defense of any such proceedings. All
awards and proceeds of condemnation shall be assigned to Mortgagee to be applied
in the same manner as insurance proceeds, as provided above, and Mortgagor
agrees to execute any such assignments of all such awards as Mortgagee may
request.
10. Restoration. If Mortgagee releases funds from the Collateral
-----------
Account to the Company for restoration of any of the Mortgaged Property pursuant
to Section 5(f) or Section 9 of this Mortgage, then such restoration shall be
performed only in accordance with the following conditions:
<PAGE>
14
(i) prior to the disbursement by Mortgagee of restoration
funds from the Collateral Account and prior to the commencement of any
restoration, the plans and specifications for such restoration, and a
written statement detailing the budgeted costs, shall be submitted to and
approved by Mortgagee which approval shall not be unreasonably withheld or
delayed;
(ii) prior to making any advance of restoration funds, Mortgagee
shall be satisfied that the remaining restoration funds, together with the
Company's own funds from insurance or otherwise, are sufficient to complete
the restoration and to pay all related expenses, including interest on the
Indebtedness and real estate taxes on the Premises, during restoration;
(iii) at the time of any disbursement of the restoration funds,
(A) no Event of Default (as defined below) shall then have occurred, (B) no
mechanics' or materialmen's liens shall have been filed and remain
undischarged, except those to be discharged by the disbursement of the
requested restoration funds, provided that the Company may contest such
lien subject to the same conditions as set forth in Section 4(d) of this
Mortgage;
(iv) disbursements shall be made from time to time in an
amount not exceeding the cost of the work completed since the last
disbursement, upon Mortgagee's receipt of reasonably satisfactory evidence
from the Company (or its architect or contractor) of the stage of
completion and of performance of the work in a good and workmanlike manner
and in accordance with the plans and specifications previously approved by
Mortgagee;
(v) after approval of the plans and specifications, the Company
shall begin work promptly and thereafter diligently prosecute construction
in order to complete all work within such reasonable time frame as may be
prescribed by Mortgagee; provided, however, that if construction is
-------- -------
delayed by force majeure, the time for completion shall be extended
accordingly;
(vi) with respect to each advance of restoration funds,
Mortgagee may retain 10% of the amount of such advance as a holdback until
the restoration is fully completed;
(vii) the restoration funds shall earn interest and will be held
in the Collateral Account;
(viii) Mortgagee may impose such other reasonable conditions as
are customarily imposed by construction lenders; and
(ix) any restoration funds remaining shall be retained by
Mortgagee and may be applied by Mortgagee, in its sole discretion, to the
Indebtedness in the inverse order of the amortization payments set forth in
the Credit Agreement.
11. Leases. (a) Mortgagor shall not (i) execute an assignment or
------
pledge of any Lease relating to all or any portion of the Mortgaged Property
other than in favor of Mortgagee,
<PAGE>
15
or (ii) without the prior written consent of Mortgagee, execute or permit to
exist any Lease of any of the Mortgaged Property (except for the Facility Lease,
the Bayer Lease and the Bayer Sublease).
(b) As to any Lease consented to by Mortgagee, Mortgagor shall:
(i) promptly perform all of the provisions of the Lease on the
part of the lessor thereunder to be performed unless the failure to do so
shall not have a Material Adverse Effect;
(ii) promptly enforce all of the provisions of the Lease on the
part of the lessee thereunder to be performed unless the failure to do so
shall not have a Material Adverse Effect;
(iii) appear in and defend any action or proceeding arising
under or in any manner connected with the Lease or the obligations of
Mortgagor thereunder unless the failure to do so shall not have a Material
Adverse Effect;
(iv) exercise, within 10 business days after a request by
Mortgagee which request shall not be given more frequently than once every
6 months, any right contained in the Lease to request from the lessee a
certificate with respect to the status thereof;
(v) simultaneously deliver to Mortgagee copies of any notices
of default which Mortgagor may at any time forward to or receive from the
lessee;
(vi) promptly deliver to Mortgagee a fully executed
counterpart of the Lease; and
(vii) promptly deliver to Mortgagee, upon Mortgagee's request,
as further security, an assignment of Mortgagor's interest under such
Lease.
(c) If any Lease is executed subsequent to the date of this
Mortgage, Mortgagor agrees to deliver to Mortgagee, within 10 days after a
request by the Mortgagee, a written statement, certified by Mortgagor as being
true, correct and complete, containing the names of all lessees and other
occupants of the Mortgaged Property, the terms of all Leases and the spaces
occupied and rentals payable thereunder, and a list of all Leases which are then
in default, including the nature and magnitude of the default; such statement
shall be accompanied by credit information with respect to the lessees and such
other information as Mortgagee may request.
(d) All Leases entered into by Mortgagor after the date hereof, if
any, and all rights of any lessees thereunder shall be subject and subordinate
in all respects to the lien and provisions of this Mortgage unless Mortgagee
shall otherwise elect in writing.
(e) As to any Lease now in existence or subsequently consented to by
Mortgagee, except to the extent expressly provided for in such Lease, Mortgagor
shall not accept a surrender or terminate, cancel, rescind, supplement, alter,
revise, modify or amend such Lease or permit
<PAGE>
16
any such action to be taken unless Mortgagor decides in its reasonable business
judgment to do so; nor shall Mortgagor accept the payment of rent more than
thirty (30) days in advance of its due date.
(f) Each Lease entered into after the date hereof shall provide that
in the event of the enforcement by Mortgagee of any remedy under this Mortgage,
the lessee shall, if requested by Mortgagee or any other person succeeding to
the interest of Mortgagee as a result of such enforcement, attorn to Mortgagee
or to such person and shall recognize Mortgagee or such successor in interest as
lessor under the Lease without change in the provisions thereof; provided,
--------
however, that Mortgagee or such successor in interest shall not be: (i) bound
by any payment of an installment of rent or additional rent which may have been
made more than 30 days before the due date of such installment; (ii) bound by
any amendment or modification to the Lease made without the consent of Mortgagee
or such successor in interest; (iii) liable for any previous act or omission of
Mortgagor (or its predecessors in interest, as applicable); (iv) responsible for
any monies owing by Mortgagor to the credit of such lessee or subject to any
credits, offsets, claims, counterclaims, demands or defenses which the lessee
may have against Mortgagor (or its predecessors in interest) as applicable; (v)
bound by any covenant to undertake or complete any construction of the Premises
or any portion thereof; or (vi) obligated to make any payment to such lessee
other than any security deposit actually delivered to Mortgagee or such
successor in interest. Each lessee or other occupant, upon request by Mortgagee
or such successor in interest, shall execute and deliver an instrument or
instruments confirming such attornment. To the extent permitted by law,
subsections (d)-(f) of this Section shall be self-operative and any failure of
any Lease to include such language shall not impair the binding effect of such
provisions on any lessee under such Lease.
12. Further Assurances. To further assure Mortgagee's rights under
------------------
this Mortgage, the Company agrees upon demand of Mortgagee to do any act or
execute any additional documents (including, but not limited to, security
agreements on any personalty included or to be included in the Mortgaged
Property and a separate assignment of each Lease in recordable form) as may
reasonably be required by Mortgagee to confirm the lien of this Mortgage and all
other rights or benefits conferred on Mortgagee.
13. Mortgagee's Right to Perform. If the Company fails to perform
----------------------------
any of the covenants or agreements of the Company within the time period
provided herein for such performance, Mortgagee, without waiving or releasing
the Company from any obligation or default under this Mortgage, may, at any time
(but shall be under no obligation to) pay or perform the same, and the amount or
cost thereof, with interest at the Default Rate, shall immediately be due from
the Company to Mortgagee and the same shall be secured by this Mortgage and
shall be a lien on the Mortgaged Property prior to any right, title to, interest
in or claim upon the Mortgaged Property attaching subsequent to the lien of this
Mortgage. No payment or advance of money by Mortgagee under this Section shall
be deemed or construed to cure the Company's default or waive any right or
remedy of Mortgagee.
14. Events of Default. The occurrence of an Event of Default under
-----------------
Section 7 of the Credit Agreement shall constitute an Event of Default
hereunder.
<PAGE>
17
15. Remedies.
--------
(a) Upon the occurrence of any Event of Default, in addition to any
other rights and remedies Mortgagee may have pursuant to the Loan Documents, or
as provided by law, and without limitation, the Indebtedness and all other
amounts payable with respect to the Loans, the Credit Agreement, this Mortgage,
the other Security Documents and the other Loan Documents shall become due and
payable as provided in the Credit Agreement. Except as expressly provided above
in this Section, presentment, demand, protest and all other notices of any kind
are hereby expressly waived. In addition, upon the occurrence of any Event of
Default, Mortgagee may immediately take such action, without notice or demand
(to the extent permitted by law), as it deems advisable to protect and enforce
its rights against Mortgagor and in and to the Mortgaged Property, including,
but not limited to, the following actions, each of which may be pursued
concurrently or otherwise, at such time and in such manner as Mortgagee may
determine, in its sole discretion, without impairing or otherwise affecting the
other rights and remedies of Mortgagee:
(i) Mortgagee may, to the extent permitted by applicable law,
(A) institute and maintain an action of mortgage foreclosure against all or
any part of the Mortgaged Property, (B) institute and maintain an action on
the Note, the Credit Agreement or any other Loan Document, (C) sell all or
part of the Mortgaged Property (Mortgagor expressly granting to Mortgagee
the power of sale), or (D) take such other action at law or in equity for
the enforcement of this Mortgage or any of the Loan Documents as the law
may allow. Mortgagee may proceed in any such action to final judgment and
execution thereon for all sums due hereunder, together with interest
thereon at the Default Rate and all costs of suit, including, without
limitation, reasonable attorneys' fees and disbursements. Interest at the
Default Rate shall be due on any judgment obtained by Mortgagee from the
date of judgment until actual payment is made of the full amount of the
judgment.
(ii) Mortgagee may personally, or by its agents, attorneys and
employees and without regard to the adequacy or inadequacy of the Mortgaged
Property or any other collateral as security for the Indebtedness and
Obligations enter into and upon the Mortgaged Property and each and every
part thereof and exclude Mortgagor and its agents and employees therefrom
without liability for trespass, damage or otherwise (Mortgagor hereby
agreeing to surrender possession of the Mortgaged Property to Mortgagee
upon demand at any such time) and use, operate, manage, maintain and
control the Mortgaged Property and every part thereof. Following such entry
and taking of possession, Mortgagee shall be entitled, without limitation,
(x) to lease all or any part or parts of the Mortgaged Property for such
periods of time and upon such conditions as Mortgagee may, in its
discretion, deem proper, (y) to enforce, cancel or modify any Lease and (z)
generally to execute, do and perform any other act, deed, matter or thing
concerning the Mortgaged Property as Mortgagee shall deem appropriate as
fully as Mortgagor might do.
(b) The holder of this Mortgage, in any action to foreclose it,
shall be entitled to the appointment of a receiver. In case of a foreclosure
sale, the Real Estate may be sold, at
<PAGE>
18
Mortgagee's election, in one parcel or in more than one parcel and Mortgagee is
specifically empowered, (without being required to do so, and in its sole and
absolute discretion) to cause successive sales of portions of the Mortgaged
Property to be held.
(c) In the event of any breach of any of the covenants, agreements,
terms or conditions contained in this Mortgage, and notwithstanding to the
contrary any exculpatory or non-recourse language which may be contained herein,
Mortgagee shall be entitled to enjoin such breach and obtain specific
performance of any covenant, agreement, term or condition and Mortgagee shall
have the right to invoke any equitable right or remedy as though other remedies
were not provided for in this Mortgage.
16. Right of Mortgagee to Credit Sale. Upon the occurrence of any
---------------------------------
sale made under this Mortgage, whether made under the power of sale or by virtue
of judicial proceedings or of a judgment or decree of foreclosure and sale,
Mortgagee may bid for and acquire the Mortgaged Property or any part thereof.
In lieu of paying cash therefor, Mortgagee may make settlement for the purchase
price by crediting upon the Indebtedness or other sums secured by this Mortgage
the net sales price after deducting therefrom the expenses of sale and the cost
of the action and any other sums which Mortgagee is authorized to deduct under
this Mortgage. In such event, this Mortgage, the Note, the Credit Agreement,
the other Loan Documents and documents evidencing expenditures secured hereby
may be presented to the person or persons conducting the sale in order that the
amount so used or applied may be credited upon the Indebtedness as having been
paid.
17. Appointment of Receiver. If an Event of Default shall have
-----------------------
occurred and be continuing, Mortgagee as a matter of right and without notice to
the Company unless otherwise required by applicable law, and without regard to
the adequacy or inadequacy of the Mortgaged Property or any other collateral as
security for the Indebtedness and Obligations or the interest of the Company
therein, shall have the right to apply to any court having jurisdiction to
appoint a receiver or receivers or other manager of the Mortgaged Property. Any
such receiver or receivers shall have all the usual powers and duties of
receivers in like or similar cases and all the powers and duties of Mortgagee in
case of entry as provided in this Mortgage, including, without limitation and to
the extent permitted by law, the right to enter into leases of all or any part
of the Mortgaged Property, and shall continue as such and exercise all such
powers until the date of confirmation of sale of the Mortgaged Property unless
such receivership is terminated sooner.
18. Extension, Release, etc. (a) Without affecting the lien or
-----------------------
charge of this Mortgage upon any portion of the Mortgaged Property not then or
theretofore released as security for the full amount of the Indebtedness,
Mortgagee may, from time to time and without notice, agree to (i) release any
person liable for the Indebtedness, (ii) extend the maturity or alter any of the
terms of the Indebtedness or any guaranty thereof, (iii) grant other
indulgences, (iv) release, or cause to be released, at any time at Mortgagee's
option any parcel, portion or all of the Mortgaged Property from the lien of
this Mortgage, (v) take or release any other or additional security for any
obligation herein mentioned, or (vi) make compositions or other arrangements
principal with debtors in relation thereto. If at any time this Mortgage shall
secure less than all of the principal amount of the Indebtedness, it is
expressly agreed that any repayments of the principal
<PAGE>
19
amount of the Indebtedness shall not reduce the amount of the lien of this
Mortgage until the lien amount shall equal the principal amount of the
Indebtedness outstanding.
(b) No recovery of any judgment by Mortgagee and no levy of an
execution under any judgment upon the Mortgaged Property or upon any other
property of Mortgagor shall affect the lien of this Mortgage or any liens,
rights, powers or remedies of Mortgagee hereunder, and such liens, rights,
powers and remedies shall continue unimpaired.
(c) If Mortgagee shall have the right to foreclose this Mortgage,
Mortgagor authorizes Mortgagee at its option to foreclose the lien of this
Mortgage subject to the rights of any tenants of the Mortgaged Property. The
failure to make any such tenants parties defendant to any such foreclosure
proceeding and to foreclose their rights will not be asserted by Mortgagor as a
defense to any proceeding instituted by Mortgagee to collect the Indebtedness or
to foreclose the lien of this Mortgage.
(d) Unless expressly provided otherwise, in the event that ownership
of this Mortgage and title to the Mortgaged Property or any estate therein shall
become vested in the same person or entity, this Mortgage shall not merge in
such title but shall continue as a valid lien on the Mortgaged Property for the
amount secured hereby.
19. Security Agreement under Uniform Commercial Code. (a) It is the
------------------------------------------------
intention of the parties hereto that this Mortgage shall constitute a Security
Agreement within the meaning of the Uniform Commercial Code (the "Code") of the
State in which the Mortgaged Property is located. If an Event of Default shall
occur under this Mortgage, then in addition to having any other right or remedy
available at law or in equity, Mortgagee shall have the option of either (i)
proceeding under the Code and exercising such rights and remedies as may be
provided to a secured party by the Code with respect to all or any portion of
the Mortgaged Property which is personal property (including, without
limitation, taking possession of and selling such property) or (ii) treating
such property as real property and proceeding with respect to both the real and
personal property constituting the Mortgaged Property in accordance with
Mortgagee's rights, powers and remedies with respect to the real property (in
which event the default provisions of the Code shall not apply). If Mortgagee
shall elect to proceed under the Code, then ten business days' notice of sale of
the personal property shall be deemed reasonable notice and the reasonable
expenses of retaking, holding, preparing for sale, selling and the like incurred
by Mortgagee shall include, but not be limited to, reasonable attorneys' fees
and legal expenses. At Mortgagee's request, the Company shall assemble the
personal property and make it available to Mortgagee at a place designated by
Mortgagee which is reasonably convenient to both parties.
(b) Mortgagor and Mortgagee agree, to the extent permitted by law,
that: (i) all of the goods described within the definition of the word
"Equipment" are or are to become fixtures on the Real Estate; (ii) this Mortgage
upon recording or registration in the real estate records of the proper office
shall constitute a financing statement filed as a "fixture filing" within the
meaning of Sections 9-313 and 9-402 of the Code; (iii) Mortgagor is the record
owner of the Real Estate; and (iv) the addresses of Mortgagor and Mortgagee are
as set forth on the first page of this Mortgage.
<PAGE>
20
20. Assignment of Rents. Mortgagor hereby assigns to Mortgagee the
-------------------
Rents as further security for the payment of the Indebtedness and performance of
the Obligations, and Mortgagor grants to Mortgagee the right to enter the
Mortgaged Property for the purpose of collecting the same and to let the
Mortgaged Property or any part thereof, and to apply the Rents on account of the
Indebtedness. The foregoing assignment and grant is present and absolute and
shall continue in effect until the Indebtedness is paid in full, but Mortgagee
hereby waives the right to enter the Mortgaged Property for the purpose of
collecting the Rents and Mortgagor shall be entitled to collect, receive, use
and retain the Rents until the occurrence of an Event of Default under this
Mortgage; such right of Mortgagor to collect, receive, use and retain the Rents
may be revoked by Mortgagee upon the occurrence of any Event of Default under
this Mortgage by giving not less than five business days' written notice of such
revocation to Mortgagor; in the event such notice is given, Mortgagor shall pay
over to Mortgagee, or to any receiver appointed to collect the Rents, any lease
security deposits, and shall pay monthly in advance to Mortgagee, or to any such
receiver, the fair and reasonable rental value as determined by Mortgagee for
the use and occupancy of the Mortgaged Property or of such part thereof as may
be in the possession of Mortgagor or any affiliate of Mortgagor, and upon
default in any such payment Mortgagor and any such affiliate will vacate and
surrender the possession of the Mortgaged Property to Mortgagee or to such
receiver, and in default thereof may be evicted by summary proceedings or
otherwise. Mortgagor shall not accept prepayments of installments of Rent to
become due for a period of more than one month in advance (except for security
deposits and estimated payments of percentage rent, if any).
21. Trust Funds. This Mortgage is subject to the trust provisions of
-----------
Section 13 of the Lien Law of the State of New York.
22. Additional Rights. (a) The clauses and covenants contained in
-----------------
this Mortgage that are construed by Section 254 of the Real Property Law of the
State of New York shall be construed as provided in those sections, except that
the provisions of subsection 4 of such Section 254 shall not in any manner apply
to or construe the provisions of this Mortgage; the additional clauses and
covenants contained herein shall afford rights supplemental to and not exclusive
of the rights conferred by the clauses and covenants construed by such Section
254 and shall not impair, modify, alter or defeat such rights (except that the
provisions of this Mortgage governing insurance shall be exclusive of and shall
be in substitution for the rights which would be conferred by the clauses and
covenants construed by such subsection 4 of such Section 254), notwithstanding
that such additional clauses and covenants may relate to the same subject matter
or provide for different or additional rights in the same or similar
contingencies as the clauses and covenants construed by such Section 254; the
rights of Mortgagee arising under clauses and covenants contained in this
Mortgage shall be separate, distinct and cumulative and none of them shall be in
exclusion of the others; no act of Mortgagee shall be construed as an election
to proceed under any one provision herein to the exclusion of any other
provision, anything herein or otherwise to the contrary notwithstanding, and in
the event of any inconsistencies between the provisions of such Section 254 and
the provisions of this Mortgage, the provisions of this Mortgage shall prevail.
(b) The holder of any subordinate lien on the Mortgaged Property
shall have no right to terminate any Lease whether or not such Lease is
subordinate to this Mortgage nor shall
<PAGE>
21
any holder of any subordinate lien join any tenant under any Lease in any action
to foreclose the lien or modify, interfere with, disturb or terminate the rights
of any tenant under any Lease. By recordation of this Mortgage all subordinate
lienholders are subject to and notified of this provision, and any action taken
by any such lienholder contrary to this provision shall be null and void. Upon
the occurrence of any Event of Default, Mortgagee may, in its sole discretion
and without regard to the adequacy of its security under this Mortgage, apply
all or any part of any amounts on deposit with Mortgagee under this Mortgage
against all or any part of the Indebtedness. Any such application shall not be
construed to cure or waive any Default or Event of Default or invalidate any act
taken by Mortgagee on account of such Default or Event of Default.
23. Changes in Method of Taxation. In the event of the passage after
-----------------------------
the date hereof of any law of any Governmental Authority deducting from the
value of the Premises for the purposes of taxation any lien thereon, or changing
in any way the laws for the taxation of mortgages or debts secured thereby for
federal, state or local purposes, or the manner of collection of any such taxes,
and imposing a tax, either directly or indirectly, on mortgages or debts secured
thereby, the holder of this Mortgage shall have the right to declare the
Indebtedness due on a date to be specified by not less than 30 business days'
written notice to be given to the Company unless within such 30 business day
period the Company shall assume as an Obligation hereunder the payment of any
tax so imposed until full payment of the Indebtedness and such assumption shall
be permitted by law.
24. Notices. All notices, requests, demands and other communications
-------
hereunder shall be deemed to have been sufficiently given or served when served
in the manner set forth in Section 8.2 of the Credit Agreement, provided that
any notice to SCIDA shall be delivered in accordance with Section 8.2 of the
Credit Agreement to the address of SCIDA set forth in the preamble to this
Mortgage.
25. No Oral Modification. This Mortgage may not be changed or
--------------------
terminated orally. Any agreement made by Mortgagor and Mortgagee after the date
of this Mortgage relating to this Mortgage shall be superior to the rights of
the holder of any intervening or subordinate lien or encumbrance.
26. Partial Invalidity. In the event any one or more of the
------------------
provisions contained in this Mortgage shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision hereof, but each shall be
construed as if such invalid, illegal or unenforceable provision had never been
included. Notwithstanding anything to the contrary contained in this Mortgage
or in any provisions of the Indebtedness or Loan Documents, the obligations of
the Company and of any other obligor under the Indebtedness or Loan Documents
shall be subject to the limitation that Mortgagee shall not charge, take or
receive, nor shall the Company or any other obligor be obligated to pay to
Mortgagee, any amounts constituting interest in excess of the maximum rate
permitted by law to be charged by Mortgagee.
27. Mortgagor's Waiver of Rights. To the fullest extent permitted by
----------------------------
law, Mortgagor waives the benefit of all laws now existing or that may
subsequently be enacted
<PAGE>
22
providing for (i) any appraisement before sale of any portion of the Mortgaged
Property, (ii) any extension of the time for the enforcement of the collection
of the Indebtedness or the creation or extension of a period of redemption from
any sale made in collecting such debt and (iii) exemption of the Mortgaged
Property from attachment, levy or sale under execution or exemption from civil
process. To the full extent Mortgagor may do so, Mortgagor agrees that it will
not at any time insist upon, plead, claim or take the benefit or advantage of
any law now or hereafter in force providing for any appraisement, valuation,
stay, exemption, extension or redemption, or requiring foreclosure of this
Mortgage before exercising any other remedy granted hereunder and Mortgagor, for
itself and its successors and assigns, and for any and all persons ever claiming
any interest in the Mortgaged Property, to the extent permitted by law, hereby
waive and release all rights of redemption, valuation, appraisement, stay of
execution, notice of election to mature or declare due the whole of the secured
indebtedness and marshalling in the event of foreclosure of the liens hereby
created.
28. Remedies Not Exclusive. Mortgagee shall be entitled to enforce
----------------------
payment of the Indebtedness and performance of the Obligations and to exercise
all rights and powers under this Mortgage or under any of the other Loan
Documents or other agreement or any laws now or hereafter in force,
notwithstanding some or all of the Indebtedness and Obligations may now or
hereafter be otherwise secured, whether by mortgage, security agreement, pledge,
lien, assignment or otherwise. Neither the acceptance of this Mortgage nor its
enforcement, shall prejudice or in any manner affect Mortgagee's right to
realize upon or enforce any other security now or hereafter held by Mortgagee,
it being agreed that Mortgagee shall be entitled to enforce this Mortgage and
any other security now or hereafter held by Mortgagee in such order and manner
as Mortgagee may determine in its absolute discretion. No remedy herein
conferred upon or reserved to Mortgagee is intended to be exclusive of any other
remedy herein or by law provided or permitted, but each shall be cumulative and
shall be in addition to every other remedy given hereunder or now or hereafter
existing at law or in equity or by statute. Every power or remedy given by any
of the Loan Documents to Mortgagee or to which it may otherwise be entitled, may
be exercised, concurrently or independently, from time to time and as often as
may be deemed expedient by Mortgagee. In no event shall Mortgagee, in the
exercise of the remedies provided in this Mortgage (including, without
limitation, in connection with the assignment of Rents to Mortgagee, or the
appointment of a receiver and the entry of such receiver on to all or any part
of the Mortgaged Property), be deemed a "mortgagee in possession," and Mortgagee
shall not in any way be made liable for any act, either of commission or
omission, in connection with the exercise of such remedies.
29. Multiple Security. If (a) the Premises shall consist of one or
-----------------
more parcels, whether or not contiguous and whether or not located in the same
county, or (b) in addition to this Mortgage, Mortgagee shall now or hereafter
hold one or more additional mortgages, liens, deeds of trust or other security
(directly or indirectly) for the Indebtedness upon other property in the State
in which the Premises are located (whether or not such property is owned by
Mortgagor or by others) or (c) both the circumstances described in clauses (a)
and (b) shall be true, then to the fullest extent permitted by law, Mortgagee
may, at its election, commence or consolidate in a single foreclosure action all
foreclosure proceedings against all such collateral securing the Indebtedness
(including the Mortgaged Property), which action may be brought or consolidated
in the courts of any county in which any of such collateral is located.
Mortgagor acknowledges
<PAGE>
23
that the right to maintain a consolidated foreclosure action is a specific
inducement to Mortgagee to extend the Indebtedness, and Mortgagor expressly and
irrevocably waives any objections to the commencement or consolidation of the
foreclosure proceedings in a single action and any objections to the laying
of venue or based on the grounds of forum non conveniens which it may now or
----- --- ----------
hereafter have. Mortgagor further agrees that if Mortgagee shall be
prosecuting one or more foreclosure or other proceedings against a portion of
the Mortgaged Property or against any collateral other than the Mortgaged
Property, which collateral directly or indirectly secures the Indebtedness, or
if Mortgagee shall have obtained a judgment of foreclosure and sale or similar
judgment against such collateral, then, whether or not such proceedings are
being maintained or judgments were obtained in or outside the State in which the
Premises are located, Mortgagee may commence or continue foreclosure proceedings
and exercise its other remedies granted in this Mortgage against all or any part
of the Mortgaged Property, and Mortgagor waives any objections to the
commencement or continuation of a foreclosure of this Mortgage or exercise of
any other remedies hereunder based on such other proceedings or judgments, and
waives any right to seek to dismiss, stay, remove, transfer or consolidate
either any action under this Mortgage or such other proceedings on such basis.
Neither the commencement nor continuation of proceedings to foreclose this
Mortgage nor the exercise of any other rights hereunder nor the recovery of any
judgment by Mortgagee in any such proceedings shall prejudice, limit or preclude
Mortgagee's right to commence or continue one or more foreclosure or other
proceedings or obtain a judgment against any other collateral (either in or
outside the State in which the Premises are located) which directly or
indirectly secures the Indebtedness, and Mortgagor expressly waives any
objections to the commencement of, continuation of, or entry of a judgment in
such other proceedings or exercise of any remedies in such proceedings based
upon any action or judgment connected to this Mortgage, and Mortgagor also
waives any right to seek to dismiss, stay, remove, transfer or consolidate
either such other proceedings or any action under this Mortgage on such basis.
It is expressly understood and agreed that to the fullest extent permitted by
law, Mortgagee may, at its election, cause the sale of all collateral which is
the subject of a single foreclosure action at either a single sale or at
multiple sales conducted simultaneously and take such other measures as are
appropriate in order to effect the agreement of the parties to dispose of and
administer all collateral securing the Indebtedness (directly or indirectly) in
the most economical and least time-consuming manner.
30. Successors and Assigns. All covenants of Mortgagor contained in
----------------------
this Mortgage are imposed solely and exclusively for the benefit of Mortgagee
and its successors and assigns, and no other person or entity shall have
standing to require compliance with such covenants or be deemed, under any
circumstances, to be a beneficiary of such covenants, any or all of which may be
freely waived in whole or in part by Mortgagee at any time if in its sole
discretion it deems such waiver advisable. All such covenants of Mortgagor
shall run with the land and bind Mortgagor, its successors and assigns (and each
of them) and all subsequent owners, encumbrancers and tenants of the Mortgaged
Property, and shall inure to the benefit of Mortgagee, its successors and
assigns. The word "Mortgagor" shall be construed as if it read "Mortgagors"
whenever the sense of this Mortgage so requires and if there shall be more than
one Mortgagor, the obligations of the Mortgagors shall be joint and several.
31. No Waivers, etc. Any failure by Mortgagee to insist upon the
---------------
strict performance by the Company of any of the terms and provisions of this
Mortgage shall not be
<PAGE>
24
deemed to be a waiver of any of the terms and provisions hereof, and Mortgagee,
notwithstanding any such failure, shall have the right thereafter to insist upon
the strict performance by the Company of any and all of the terms and provisions
of this Mortgage to be performed by the Company. Mortgagee may release,
regardless of consideration and without the necessity for any notice to or
consent by the holder of any subordinate lien on the Mortgaged Property, any
part of the security held for the obligations secured by this Mortgage without,
as to the remainder of the security, in anyway impairing or affecting the lien
of this Mortgage or the priority of such lien over any subordinate lien.
32. Governing Law, etc. This Mortgage shall be governed by and
------------------
construed in accordance with the laws of the State of New York.
33. Waiver of Trial by Jury. Mortgagor and Mortgagee each hereby
-----------------------
irrevocably and unconditionally waives trial by jury in any action, claim, suit
or proceeding relating to this Mortgage and for any counterclaim brought
therein. Mortgagor hereby waives all rights to interpose any counterclaim in
any suit brought by Mortgagee hereunder and all rights to have any such suit
consolidated with any separate suit, action or proceeding.
34. Certain Definitions. Unless the context clearly indicates a
-------------------
contrary intent or unless otherwise specifically provided herein, words used in
this Mortgage shall be used interchangeably in singular or plural form and the
word "Mortgagor" shall mean "each Mortgagor or any subsequent owner or owners of
the Mortgaged Property or any part thereof or interest therein," the word
Company shall mean "the Company or any successor or assign of the Company", the
word "Mortgagee" shall mean "Mortgagee or any successor Agent," the word "Note"
shall mean "the Note or any other evidence of indebtedness secured by this
Mortgage," the word "person" shall include any individual, corporation,
partnership, trust, unincorporated association, government, governmental
authority, or other entity, and the words "Mortgaged Property" shall include any
portion of the Mortgaged Property or interest therein. Whenever the context may
require, any pronouns used herein shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns and pronouns shall
include the plural and vice versa. The captions in this Mortgage are for
convenience or reference only and in no way limit or amplify the provisions
hereof.
35. Nonresidential. THIS MORTGAGE DOES NOT COVER REAL PROPERTY
--------------
PRINCIPALLY IMPROVED BY ONE OR MORE STRUCTURES CONTAINING IN THE AGGREGATE NOT
MORE THAN SIX RESIDENTIAL DWELLING UNITS, EACH HAVING ITS OWN SEPARATE COOKING
FACILITIES.
36. Receipt of Copy. Mortgagor acknowledges that it has received a
---------------
true copy of this Mortgage.
37. Release. If the Company shall and does pay to Mortgagee the full
-------
principal amount of the Indebtedness secured hereby, together with all interest
accrued thereon, and keeps all the other covenants and agreements contained
herein and in the Note, the Credit Agreement and in the other Loan Documents,
all in the manner and at the times set forth herein or in the Note, the Credit
Agreement and in the other Loan Documents, and if the Company shall also pay
<PAGE>
25
all reasonable satisfaction costs, including, but not limited to, reasonable
attorneys' fees and the cost of recording a satisfaction piece and, if
appropriate, a power-of-attorney to satisfy this Mortgage, then and from
thenceforth this Mortgage and the estate hereby created, granted, transferred
and assigned shall cease and become void. Further, if any of the Collateral
shall be sold, transferred or otherwise disposed of by the Company in a
transaction permitted by the Credit Agreement, then such Collateral shall be
automatically released from the Liens created hereby on such Collateral and no
affirmative action on the part of Mortgagee shall be required. Nevertheless,
Mortgagor may request, at the sole expense of Mortgagor, that Mortgagee execute
and deliver to Mortgagor any and all releases or other documents reasonably
necessary or desirable to evidence the release of the Liens created hereby on
such Collateral.
38. Condominium. Provided there exists no Event of Default,
------------
Mortgagee shall, on the Company's written request, subordinate the lien of this
Mortgage to a declaration of condominium for the Premises and shall execute the
appropriate instruments (reasonably satisfactory in all respects to Mortgagee)
in recordable form to effect such subordination, upon the satisfaction of the
following conditions:
(a) Mortgagee shall have received and approved in all respects the
documents required for the creation of a condominium, which documents shall be
in proper form for recording or filing, as necessary, in the appropriate
offices;
(b) the title policy insuring this Mortgage shall have been endorsed
to provide affirmative insurance to the effect that the Premises constitute a
condominium validly created under the condominium laws of New York, and that the
release of any condominium unit will not affect the lien of this Mortgage except
as to the unit so released and further insuring against any loss or damage by
reason of the failure of any of the condominium units to be included in the
condominium created pursuant to the condominium laws of New York;
(c) The Company shall have duly executed and delivered, or caused to
be duly executed and delivered, to Mortgagee a conditional assignment of the
Company's rights under the condominium documents in form satisfactory to
Mortgagee, conditional resignations of the officers and members of the board of
directors of the applicable condominium association in form satisfactory to
Mortgagee and a conditional termination of the management agreement, if any,
covering all or any portion of the condominium in form satisfactory to
Mortgagee;
(d) Mortgagee shall have received an opinion from the counsel for the
Company to the effect that the condominium documents satisfy all applicable
requirements of Governmental Authorities and have been duly executed and, where
necessary, duly recorded or filed pursuant to the condominium laws of New York,
all requirements of any applicable statute, rule or ordinance have been duly
satisfied and the condominium has been duly created and no filing, registration
or other compliance with any federal or state securities law or other law or
regulation will be required in connection with the sale of condominium units, or
if such filing is necessary, that the applicable law or regulation governing the
same has been fully complied with and the assignment, resignations and
agreements referred to in paragraph (c) of this Section have each been duly
authorized, executed and delivered by the respective parties thereto and are
enforceable against said parties in accordance with their respective terms;
<PAGE>
26
(e) Mortgagee shall have received such other documents, certificates,
opinions or assurances as it may reasonably request.
39. SCIDA Non Recourse. Notwithstanding anything to the contrary in
------------------
this Mortgage, with respect to SCIDA, it is agreed that SCIDA, its officers,
members, employees, agents and directors shall have no personal liability
hereunder, nor in their capacity as officers, members, employees, agents and
directors. SCIDA has executed this Mortgage to subject its interest in the
Mortgaged Property to the lien of this Mortgage; however, Mortgagee shall have
no recourse against SCIDA other than its interest in the Mortgaged Property. No
provision, covenant or agreement contained in this Mortgage or any obligations
herein imposed upon SCIDA or the branch thereof, shall constitute or give rise
to or impose upon SCIDA a pecuniary liability or a charge upon its general
credit. In making the agreements, provisions and covenants set forth in this
Mortgage, SCIDA has not obligated itself except with respect to the Mortgaged
Property. All covenants, stipulations, promises, agreements and obligations of
SCIDA contained herein shall be deemed to be covenants, stipulations, promises,
agreements and obligations of SCIDA and not of any member, director, officer,
employee or agent of SCIDA in his or her individual capacity, and no recourse
shall be had for the payment of the principal of any debt or interest therein or
hereunder against any member, director, officer, employee or agent of SCIDA or
any natural person executing this Mortgage. No covenant herein contained shall
be deemed to constitute a debt of the State of New York nor the County of
Suffolk and neither the State of New York nor the County of Suffolk shall be
liable on any covenant contained herein, nor shall the Obligations secured by
this Mortgage be payable out of any funds of SCIDA.
40. Without regard to the provisions of Section 39 herein, the
Company unconditionally and irrevocably guarantees to Mortgagee SCIDA's
performance of its Obligations under this Mortgage. All Obligations of, and all
representations, warranties, covenants and other agreements made or performed
by, Mortgagor under this Mortgage shall be deemed to be, and shall be,
Obligations of, and representations, warranties, covenants and other agreements
made or performed by, the Company. The Company shall defend, indemnify and hold
SCIDA harmless from and against any and all past, present and future liability,
loss, damage, costs and expenses suffered, incurred or threatened as a result of
an Obligation arising hereunder.
41. Notwithstanding anything herein to the contrary, this Mortgage is
subject to the terms and conditions of the Intercreditor Agreement.
42. The Company directs SCIDA to execute and deliver this Mortgage to
Mortgagee.
43. Facility Lease. (a) The Company shall pay or cause to be paid
--------------
all rent and other charges required under the Facility Lease as and when the
same are due and shall promptly and faithfully perform or cause to be performed
all other material terms, obligations, covenants, conditions, agreements,
indemnities, representations, warranties or liabilities of the lessee under the
Facility Lease. The Company shall not (i) in any manner, cancel, terminate or
surrender, or permit the cancellation, termination or surrender of the Facility
Lease, in whole or in part, (ii) either orally or in writing, modify, amend or
permit any modification or amendment of any of the
<PAGE>
27
terms of the Facility Lease in any manner that could materially adversely affect
the value, use and/or operation of the Premises or (iii) permit the
subordination of the Facility Lease to any deed of trust or mortgage other than
this Mortgage and any attempt to do any of the foregoing shall be null and void
and of no effect and shall constitute an Event of Default hereunder.
(b) The Company shall do, or cause to be done, all things necessary
to preserve and keep unimpaired all material rights of the Company as lessee
under the Facility Lease, and to prevent any default under the Facility Lease,
or any termination, surrender, cancellation, forfeiture, subordination or
impairment thereof. The Company does hereby authorize and irrevocably appoint
and constitute Mortgagee as its true and lawful attorney-in-fact, which
appointment is coupled with an interest, in its name, place and stead, to take
any and all actions deemed necessary or desirable by Mortgagee to perform and
comply with all the obligations of the Company under the Facility Lease, and to
do and take, but without any obligation so to do, any action which Mortgagee
deems necessary or desirable to prevent or cure any default by the Company under
the Facility Lease, to enter into and upon the Premises or any part thereof to
such extent and as often as Mortgagee, in its sole discretion, deems necessary
or desirable in order to prevent or cure any default of the Company pursuant
thereto, to the end that the rights of the Company in and to the leasehold
estate created by the Facility Lease shall be kept unimpaired and free from
default. All sums so expended by Mortgagee, with interest thereon at the
Default Rate from the date of each such expenditure, shall be paid by the
Company to Mortgagee promptly upon demand by Mortgagee. The Company shall,
within five (5) business days after written request by Mortgagee, execute and
deliver to Mortgagee, or to any person designated by Mortgagee, such further
instruments, agreements, powers, assignments, conveyances or the like as may be
necessary to complete or perfect the interest, rights or powers of Mortgagee
pursuant to this paragraph.
(c) The Company shall enforce the obligations of the lessor under the
Facility Lease and shall promptly notify Mortgagee in writing of any material
default by either the lessor or the Company in the performance or observance of
any of the terms, covenants and conditions contained in the Facility Lease. The
Company shall deliver to Mortgagee, within ten (10) business days after receipt,
a copy of any notice of any pending or actual default under the Facility Lease.
If the lessor shall deliver to Mortgagee a copy of any notice of default given
to the Company, such notice shall constitute full authority and protection to
Mortgagee for any actions taken or omitted to be taken in good faith by
Mortgagee on such notice.
(d) If any action or proceeding shall be instituted to evict the
Company or to recover possession of the Mortgaged Property from the Company or
any part thereof or interest therein or any action or proceeding otherwise
affecting the Facility Lease or this Mortgage shall be instituted, then the
Company shall, immediately after receipt deliver to Mortgagee a true and
complete copy of each petition, summons, complaint, notice of motion, order to
show cause and all other pleadings and papers, however designated, served in any
such action or preceding.
(e) The Company covenants and agrees that the fee title to the Real
Estate and the leasehold estate created under the Facility Lease shall not merge
but shall always remain separate and distinct, notwithstanding the union of said
estates either in the Company or a third party by purchase or otherwise.
<PAGE>
28
(f) No release or forbearance of any of the Company's obligations
under the Facility Lease, pursuant to the Facility Lease or otherwise, shall
release the Company from any of its obligations under this Mortgage, including
its obligations to pay rent and to perform all of the terms, provisions,
covenants, conditions and agreements of the lessee under the Facility Lease.
(g) Except as required below with respect to renewals and extensions
of the Facility Lease, the Company shall not make any election or give any
consent or approval under the Facility Lease as to any matter that could have a
material adverse affect upon the value, use and/or operation of the Premises.
Upon the occurrence of any Event of Default hereunder, all such rights, together
with the right to terminate or to modify the Facility Lease, which have been
assigned for collateral purposes to Mortgagee, shall automatically vest
exclusively in and be exercisable solely by Mortgagee.
(h) The Company will give Mortgagee prompt written notice of the
commencement of any arbitration or appraisal proceeding under and pursuant to
the provisions of the Facility Lease involving amounts in excess of $500,000 on
a present value basis. So long as no Event of Default shall have occurred and
be continuing hereunder, the Company may conduct such proceeding provided that
(i) Mortgagee shall have the right to intervene and participate in any such
proceeding, (ii) the Company shall confer with Mortgagee, (iii) the Company
shall exercise all rights of arbitration conferred upon it by the Facility Lease
and (iv) the Company's selection of an arbitrator or appraiser shall be subject
to prior written approval by Mortgagee; provided, however, that automatically
-------- -------
upon the occurrence of an Event of Default and for so long as it shall be
continuing Mortgagee shall have the sole authority to conduct the proceeding and
the Company hereby irrevocably appoints and constitutes Mortgagee as its true
and lawful attorney-in-fact, which appointment is coupled with an interest, in
its name, place and stead, to exercise, at the expense of the Company, all
right, title and interest of the Company in connection with such proceeding,
including the right to appoint arbitrators and to conduct arbitration
proceedings on behalf of the Company, following an Event of Default. Nothing
contained herein shall obligate Mortgagee to participate in such proceeding.
(i) Unless Mortgagee shall otherwise direct in writing, the Company
shall exercise any option or right to renew or extend the term of the Facility
Lease not less than 120 days before the expiration of the exercise right. The
Company shall give Mortgagee simultaneous written notice of any such exercise
together with a copy of the notice or other document given to the lessor and
shall promptly deliver to Mortgagee a copy of any acknowledgment by such the
lessor of the exercise of such option or right. If any such option or right has
not been exercised as aforesaid, then, not less than 180 days before the right
of the Company to exercise any such option or right expires, the Company shall
give written notice of such fact to Mortgagee, which notice shall specify the
final date for exercise; provided, however that any failure by the Company to
deliver such notice shall not limit Mortgagee's rights hereunder. In the event
that the Company fails to exercise any such option or right by the date 120 days
prior to the date of expiration of the exercise right or upon the occurrence of
any Event of Default hereunder, Mortgagee may act in its stead and the Company
hereby irrevocably authorizes and appoints Mortgagee as its true and lawful
attorney-in-fact, which appointment is coupled with an interest, in its name,
place and stead, to execute and deliver, for and in the name
<PAGE>
29
of the Company, all of the instruments and agreements necessary under the
Facility Lease or otherwise to cause any extension of the term thereof. Nothing
contained herein shall affect or limit any rights of the Company or Mortgagee
granted under the Facility Lease.
(j) The Company shall, within ten (10) days after written demand from
Mortgagee, deliver to Mortgagee proof of payment of all items that are required
to be paid by the Company under the Facility Lease, including, without
limitation, rent, taxes, operating expenses and other charges.
(k)(i) the lien of this Mortgage shall attach to all of the Company's
rights and remedies at any time arising under or pursuant to Subsection 365(h)
of the Bankruptcy Code, 11 U.S.C. ' 365(h), as the same may hereafter be amended
(the "Bankruptcy Code"), including, without limitation, all of the Company's
rights to remain in possession of the Real Estate. The Company shall not,
without Mortgagee's prior written consent, elect to treat the Facility Lease as
terminated under Subsection 365(h)(1) of the Bankruptcy Code. Any such election
made without Mortgagee's consent shall be void.
(ii) Mortgagee shall have the right to proceed in its own name or
in the name of the Company in respect of any claim, suit, action or proceeding
relating to the rejection of the Facility Lease by the lessor or any other
party, including, without limitation, the right to file and prosecute under the
Bankruptcy Code, without joining or the joinder of the Company, any proofs of
claim, complaints, motions, applications, notices and other documents. Any
amounts received by Mortgagee as damages arising out of the rejection of the
Facility Lease as aforesaid shall be applied first to all costs and expenses of
Mortgagee (including, without limitation, attorneys' fees) incurred in
connection with the exercise of any of its rights or remedies under this
paragraph. The Company acknowledges that the assignment of all claims and rights
to the payment of damages from the rejection of the Facility Lease made under
the granting clauses of this Mortgage constitutes a present irreversible and
unconditional assignment and the Company shall, at the request of Mortgagee,
promptly make, execute, acknowledge and deliver, in form and substance
satisfactory to Mortgagee, a UCC Financing Statement (Form UCC-1) and all such
additional instruments, agreements and other documents, as may at any time
hereafter be required by Mortgagee to carry out such assignment.
(iii) If any action, proceeding, motion or notice shall be
commenced or filed in respect of the lessor under the Facility Lease or any
other party or in respect of the Facility Lease in connection with any case
under the Bankruptcy Code, then Mortgagee shall have the option, exercisable
upon notice from Mortgagee to the Company, to conduct and control any such
litigation with counsel of Mortgagee's choice. Mortgagee may proceed in its own
name or in the name of the Company in connection with any such litigation, and
the Company agrees to execute any and all powers, authorizations, consents or
other documents required by Mortgagee in connection therewith. The Company
shall, upon demand, pay to Mortgagee all costs and expenses (including
attorneys' fees) paid or incurred by Mortgagee in connection with the
prosecution or conduct of any such proceedings. The Company shall not commence
any action, suit, proceeding or case, or file any application or make any
motion, in respect of the Facility Lease in any such case under the Bankruptcy
Code without the prior written consent of Mortgagee.
<PAGE>
30
(iv) The Company shall, after obtaining knowledge thereof, promptly
notify Mortgagee of any filing by or against the lessor or other party with an
interest in the Real Estate of a petition under the Bankruptcy Code. The
Company shall promptly deliver to Mortgagee, following receipt, copies of any
and all notices, summonses, pleadings, applications and other documents received
by the Company in connection with any such petition and any proceedings relating
thereto.
(v) If there shall be filed by or against the Company a petition
under the Bankruptcy Code and the Company, as lessee under the Facility Lease,
shall determine to reject the Facility Lease pursuant to Section 365(a) of the
Bankruptcy Code, then the Company shall give Mortgagee not less than twenty (20)
days' prior notice of the date on which the Company shall apply to the
Bankruptcy Court for authority to reject the Facility Lease. Mortgagee shall
have the right, but not the obligation, to serve upon the Company within such
twenty (20) day period a notice stating that Mortgagee demands that the Company
assume and assign the Facility Lease to Mortgagee pursuant to Section 365 of the
Bankruptcy Code. If Mortgagee shall serve upon the Company the notice described
in the preceding sentence, the Company shall not seek to reject such Facility
Lease and shall comply with the demand provided for in the preceding sentence.
In addition, effective upon the entry of an order for relief with respect to the
Company under the Bankruptcy Code, the Company hereby assigns and transfers to
Mortgagee a non-exclusive right to apply to the Bankruptcy Court under
subsection 365(d)(4) of the Bankruptcy Code for an order extending the period
during which the Facility Lease may be rejected or assumed.
(l) The Company shall request and use reasonable efforts to furnish
to Mortgagee, from time to time upon receipt of reasonable notice from
Mortgagee, in form and substance reasonably satisfactory to Mortgagee, (i) a
non-disturbance agreement from the holder of each mortgage encumbering the fee
estate in the Real Estate and (ii) an estoppel certificate from the lessor under
the Facility Lease with respect to such Facility Lease; provided, that the
--------
Company shall be required to use its best efforts to obtain each of the
foregoing if the Facility Lease provides that the Company with the right to
receive or otherwise obligates the lessor under the Facility Lease to provide
the Company with the same. Notwithstanding anything herein to the contrary, the
foregoing provision is subject to the terms and conditions of the Intercreditor
Agreement.
(m) If the Facility Lease shall be terminated prior to the natural
expiration of its term, and if, pursuant to any provision of the Facility Lease
or otherwise, Mortgagee or its designee shall acquire from the lessor under such
Facility Lease a new lease of the Real Estate or any part thereof, the Company
shall have no right, title or interest in or to such new lease or the leasehold
estate created thereby, or renewal privileges therein contained.
<PAGE>
This Mortgage has been duly executed by Mortgagor on the date first
above written.
V.I. TECHNOLOGIES, INC.
By: /s/ Joanne Leonard
---------------------
Name: Joanne Leonard
Title: Vice President, CFO
SUFFOLK COUNTY INDUSTRIAL
DEVELOPMENT AGENCY
By: /s/ Bruce Ferguson
---------------------
Name: Bruce Ferguson
Title: Administrative Director
<PAGE>
ACKNOWLEDGEMENT
STATE OF NEW YORK )
ss.:
COUNTY OF NEW YORK )
On the 22 day of December, 1997, before me, a Notary Public,
personally appeared Joanne Leonard, to me known, who, being by me personally
sworn, did depose and say that (s)he resides at Melville, New York, that (s)he
is the Vice President, CFO of V.I. Technologies, Inc., a Delaware corporation,
the corporation described in and which executed the foregoing instrument by
authority of the Board of Directors of said corporation, and that (s)he signed
(her)his name thereto by like authority.
IN WITNESS WHEREOF, I hereunto set my hand and official seal the day
and year first above written.
/s/ Cynthia Parker
-------------------------
Notary Public
My Commission expires: January 31, 1998
<PAGE>
ACKNOWLEDGEMENT
STATE OF NEW YORK )
ss.:
COUNTY OF NEW YORK )
On the 18 day of Dec., 1997, before me, a Notary Public, personally
appeared Bruce Ferguson, to me known, who, being by me personally sworn, did
depose and say that s(he) resides at Jamesport, N.Y., that s(he) is the Admin.
Dir. of Suffolk County Industrial Development Agency, a public benefit
corporation, organized and existing under the laws of the State of New York, the
corporation described in and which executed the foregoing instrument by
authority of the Board of Directors of said corporation, and that (s)he signed
(his)(her) name thereto by like authority.
IN WITNESS WHEREOF, I hereunto set my hand and official seal the day
and year first above written.
/s/ Anthony J. Catapano
-----------------------------------
Notary public
My Commission expires: February 17, 1998
<PAGE>
SCHEDULE "A"
ALL that certain plot, piece or parcel of land, situate, lying and being at
Melville, in the Town of Huntington, County of Suffolk and State of New York,
bounded and described as follows:
BEGINNING at a point on the new Northerly side of Duryea Road, distant
783.40 feet, Easterly as measured along said Northerly side of Duryea Road, from
the Southeasterly end of a connecting line, having a length of 52.23 feet,
connecting the said Northerly side of Duryea Road and the Easterly side of New
York State Route 110; said point of beginning also being where the Southeast
corner of the land now or formerly of Duryea intersects the said Northerly side
of Duryea Road;
RUNNING THENCE North 4 degrees 54 minutes 38 seconds East, 1047.70 feet, to
the land now or formerly of Abramoske;
THENCE along said last mentioned land the following two courses and
distances:
1. South 85 degrees 14 minutes 32 seconds East, 132.22 feet;
2. South 84 degrees 32 minutes 47 seconds East, 321.30 feet, to land now
or formerly of Brand;
THENCE along said last mentioned land, the following two courses and
distances:
1. South 5 degrees 38 minutes 21 seconds West, 280.65 feet;
2. South 4 degrees 54 minutes 38 seconds West, 772.18 feet, to the new
Northerly side of Duryea Road;
THENCE along said Duryea Road, North 84 degrees 05 minutes 47 seconds West,
450.00 feet, to the point or place of BEGINNING.
The policy is to be issued under this report will insure the
title to such buildings and improvements erected on the
premises which by law constitute real property.
FOR Together with all the right, title and interest of the party of
CONVEYANCES the first party, of, in and to the land lying in the street in
ONLY front of and adjoining said premises.
<PAGE>
EXHIBIT 10.32
EXECUTION COPY
GUARANTEE AND COLLATERAL AGREEMENT
made by
V.I. TECHNOLOGIES, INC.
and certain of its Subsidiaries
in favor of
THE CHASE MANHATTAN BANK,
as Lender
Dated as of December 22, 1997
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1. DEFINED TERMS................................................. 1
1.1 Definitions..................................................... 1
1.2 Other Definitional Provisions................................... 4
SECTION 2. GUARANTEE..................................................... 4
2.1 Guarantee....................................................... 4
2.2 Right of Contribution........................................... 5
2.3 No Subrogation.................................................. 5
2.4 Amendments, etc. with respect to the Borrower Obligations....... 5
2.5 Guarantee Absolute and Unconditional............................ 6
2.6 Reinstatement................................................... 7
2.7 Payments........................................................ 7
SECTION 3. GRANT OF SECURITY INTEREST.................................... 7
SECTION 4. REPRESENTATIONS AND WARRANTIES................................ 8
4.1 Representations in Credit Agreement............................. 8
4.2 Title; No Other Liens........................................... 9
4.3 Perfected Liens................................................. 9
4.4 Chief Executive Office.......................................... 10
4.5 Inventory and Equipment......................................... 10
4.6 Farm Products................................................... 10
4.7 Pledged Securities.............................................. 10
4.8 Receivables..................................................... 10
4.9 Contracts....................................................... 11
SECTION 5. COVENANTS..................................................... 11
5.1 Covenants in Credit Agreement................................... 11
5.2 Delivery of Instruments and Chattel Paper....................... 12
5.3 Maintenance of Insurance........................................ 12
5.4 Payment of Obligations.......................................... 12
5.5 Maintenance of Perfected Security Interest; Further
Documentation................................................. 12
5.6 Changes in Locations, Name, etc................................. 13
5.7 Notices......................................................... 13
5.8 Investment Property............................................. 13
5.9 Receivables..................................................... 15
5.10 Contracts...................................................... 15
SECTION 6. REMEDIAL PROVISIONS........................................... 15
6.1 Certain Matters Relating to Receivables......................... 15
6.2 Communications with Obligors; Grantors Remain
Liable........................................................ 16
6.3 Pledged Stock................................................... 17
6.4 Proceeds to be Turned Over To Lender............................ 17
6.5 Application of Proceeds......................................... 18
i
<PAGE>
6.6 Code and Other Remedies......................................... 18
6.7 Registration Rights............................................. 19
6.8 Waiver; Deficiency.............................................. 20
SECTION 7. THE LENDER.................................................... 20
7.1 Lender's Appointment as Attorney-in-Fact, etc................... 20
7.2 Duty of Lender.................................................. 21
7.3 Execution of Financing Statements............................... 22
7.4 Authority of Lender............................................. 22
SECTION 8. MISCELLANEOUS................................................. 22
8.1 Amendments in Writing........................................... 22
8.2 Notices......................................................... 22
8.3 No Waiver by Course of Conduct; Cumulative Remedies............. 22
8.4 Enforcement Expenses; Indemnification........................... 23
8.5 Successors and Assigns.......................................... 23
8.6 Set-Off......................................................... 23
8.7 Counterparts.................................................... 24
8.8 Severability.................................................... 24
8.9 Section Headings................................................ 24
8.10 Integration.................................................... 24
8.11 GOVERNING LAW.................................................. 24
8.12 Submission To Jurisdiction; Waivers............................ 24
8.13 Acknowledgements............................................... 25
8.14 WAIVER OF JURY TRIAL........................................... 25
8.15 Additional Grantors............................................ 25
8.16 Releases....................................................... 25
8.17 Intercreditor Agreement........................................ 26
ii
<PAGE>
GUARANTEE AND COLLATERAL AGREEMENT, dated as of December 22, 1997,
made by the Borrower (together with any other entity that may become a party
hereto as provided herein, the "Grantors"), in favor of The Chase Manhattan
--------
Bank, as Lender (the "Lender") under the Credit Agreement, dated as of December
------
22, 1997 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), between V.I. Technologies, Inc. (the "Borrower") and the
---------------- --------
Lender.
W I T N E S S E T H:
-------------------
WHEREAS, pursuant to the Credit Agreement, the Lender has agreed to
make extensions of credit to the Borrower upon the terms and subject to the
conditions set forth therein; and
WHEREAS, it is a condition precedent to the obligation of the Lender
to make its extensions of credit to the Borrower under the Credit Agreement that
the Borrower shall have executed and delivered this Agreement to the Lender for
the benefit of the Lender;
NOW, THEREFORE, in consideration of the premises and to induce the
Lender to enter into the Credit Agreement and to induce the Lender to make its
extensions of credit to the Borrower thereunder, each Grantor hereby agrees with
the Lender, for the benefit of the Lender, as follows:
SECTION 1. DEFINED TERMS
1.1 Definitions. (a) Unless otherwise defined herein, terms defined
-----------
in the Credit Agreement and used herein shall have the meanings given to them in
the Credit Agreement, and the following terms which are defined in the Uniform
Commercial Code in effect in the State of New York on the date hereof are used
herein as so defined: Accounts, Chattel Paper, Documents, Equipment, Farm
Products, Instruments, Inventory, Security, Securities Intermediary and Security
Entitlement.
(b) The following terms shall have the following meanings:
"Agreement": this Guarantee and Collateral Agreement, as the same may
---------
be amended, supplemented or otherwise modified from time to time.
"Borrower Obligations": the collective reference to the unpaid
--------------------
principal of and interest on the Loan and all other obligations and
liabilities of the Borrower (including, without limitation, interest
accruing at the then applicable rate provided in the Credit Agreement after
the maturity of the Loan and interest accruing at the then applicable rate
provided in the Credit Agreement after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or like
proceeding, relating to the Borrower, whether or not a claim for post-
filing or post-petition interest is allowed in such proceeding) to the
Lender (or, in the case of any
<PAGE>
2
Hedge Agreement referred to below, any Affiliate of the Lender), whether
direct or indirect, absolute or contingent, due or to become due, or now
existing or hereafter incurred, which may arise under, out of, or in
connection with, the Credit Agreement, this Agreement, the other Loan
Documents or any Hedge Agreement entered into by the Borrower with the
Lender (or any Affiliate of the Lender) or any other document made,
delivered or given to the Lender by the Borrower, in each case whether on
account of principal, interest, reimbursement obligations, fees,
indemnities, costs, expenses or otherwise (including, without limitation,
all fees and disbursements of counsel to the Lender that are required to be
paid by the Borrower pursuant to the terms of any of the foregoing
agreements).
"Collateral": as defined in Section 3.
----------
"Collateral Account": any collateral account established by the
------------------
Lender as provided in Section 6.1 or 6.4.
"Contracts": the contracts and agreements listed in Schedule 6, as
--------- ----------
the same may be amended, supplemented or otherwise modified from time to
time, including, without limitation, (i) all rights of any Grantor to
receive moneys due and to become due to it thereunder or in connection
therewith, (ii) all rights of any Grantor to damages arising thereunder and
(iii) all rights of any Grantor to perform and to exercise all remedies
thereunder.
"General Intangibles": all "general intangibles" as such term is
-------------------
defined in Section 9-106 of the Uniform Commercial Code in effect in the
State of New York on the date hereof and, in any event, including, without
limitation, with respect to any Grantor, all contracts, agreements,
instruments and indentures in any form, and portions thereof, to which such
Grantor is a party or under which such Grantor has any right, title or
interest or to which such Grantor or any property of such Grantor is
subject, as the same may from time to time be amended, supplemented or
otherwise modified, including, without limitation, (i) all rights of such
Grantor to receive moneys due and to become due to it thereunder or in
connection therewith, (ii) all rights of such Grantor to damages arising
thereunder and (iii) all rights of such Grantor to perform and to exercise
all remedies thereunder, in each case to the extent the grant by such
Grantor of a security interest pursuant to this Agreement in its right,
title and interest in such contract, agreement, instrument or indenture is
not prohibited by such contract, agreement, instrument or indenture without
the consent of any other party thereto, would not give any other party to
such contract, agreement, instrument or indenture the right to terminate
its obligations thereunder, or is permitted with consent if all necessary
consents to such grant of a security interest have been obtained from the
other parties thereto (it being understood that the foregoing shall not be
deemed to obligate such Grantor to obtain such consents), provided, that
--------
the foregoing limitation shall not affect, limit, restrict or impair the
grant by such Grantor of a security interest pursuant to this Agreement in
any Receivable or any money or other amounts due or to become due under any
such contract, agreement, instrument or indenture.
<PAGE>
3
"Guarantor Obligations": with respect to any Guarantor, the
---------------------
collective reference to (i) the Borrower Obligations and (ii) all
obligations and liabilities of such Guarantor which may arise under or in
connection with this Agreement or any other Loan Document to which such
Guarantor is a party, in each case whether on account of guarantee
obligations, reimbursement obligations, fees, indemnities, costs, expenses
or otherwise (including, without limitation, all reasonable fees and
disbursements of counsel to the Lender that are required to be paid by such
Guarantor pursuant to the terms of this Agreement or any other Loan
Document).
"Guarantors": the collective reference to each Grantor other than the
----------
Borrower.
"Hedge Agreements": as to any Person, all interest rate swaps, caps
----------------
or collar agreements or similar arrangements entered into by such Person
providing for protection against fluctuations in interest rates or currency
exchange rates or the exchange of nominal interest obligations, either
generally or under specific contingencies.
"Intercompany Note": any promissory note evidencing loans made by the
-----------------
Borrower or any Grantor to the Borrower or any Grantor.
"Investment Property": all "investment property" as such term is
-------------------
defined in Section 9-115 of the Uniform Commercial Code in effect in the
State of New York on the date hereof, and, in any event, including, without
limitation, all Pledged Securities.
"Issuers": the collective reference to each issuer of a Pledged
-------
Security.
"New York UCC": the Uniform Commercial Code as from time to time in
------------
effect in the State of New York.
"Obligations": (i) in the case of the Borrower, the Borrower
-----------
Obligations, and (ii) in the case of each Guarantor, its Guarantor
Obligations.
"Pledged Notes": all promissory notes listed on Schedule 2, all
------------- ----------
Intercompany Notes at any time issued to any Grantor and all other
promissory notes issued to or held by any Grantor (other than promissory
notes issued in connection with extensions of trade credit by any Grantor
in the ordinary course of business).
"Pledged Securities": the collective reference to the Pledged Notes
------------------
and the Pledged Stock.
"Pledged Stock": the shares of Capital Stock listed on Schedule 2,
------------- ----------
together with any other shares, stock certificates, options or rights of
any nature whatsoever in respect of the Capital Stock of any Person that
may be issued or granted to, or held by, any Grantor while this Agreement
is in effect.
<PAGE>
4
"Proceeds": all "proceeds" as such term is defined in Section 9-
--------
306(1) of the Uniform Commercial Code in effect in the State of New York on
the date hereof and, in any event, including, without limitation, all
dividends or other income from the Pledged Securities, collections thereon
or distributions or payments with respect thereto.
"Receivable": any right to payment for goods sold or leased or for
----------
services rendered, whether or not such right is evidenced by an Instrument
or Chattel Paper and whether or not it has been earned by performance
(including, without limitation, any Account).
"Securities Act": the Securities Act of 1933, as amended.
--------------
1.2 Other Definitional Provisions. (a) The words "hereof,"
-----------------------------
"herein," "hereto" and "hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement, and Section and Schedule references are to this
Agreement unless otherwise specified.
(b) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
(c) Where the context requires, terms relating to the Collateral or
any part thereof, when used in relation to a Grantor, shall refer to such
Grantor's Collateral or the relevant part thereof.
SECTION 2. GUARANTEE
2.1 Guarantee. (a) Each of the Guarantors hereby, jointly and
---------
severally, unconditionally and irrevocably, guarantees to the Lender, for the
benefit of the Lender and its successors, indorsees, transferees and assigns,
the prompt and complete payment and performance by the Borrower when due
(whether at the stated maturity, by acceleration or otherwise) of the Borrower
Obligations.
(b) Anything herein or in any other Loan Document to the contrary
notwithstanding, the maximum liability of each Guarantor hereunder and under the
other Loan Documents shall in no event exceed the amount which can be guaranteed
by such Guarantor under applicable federal and state laws relating to the
insolvency of debtors (after giving effect to the right of contribution
established in Section 2.2).
(c) Each Guarantor agrees that the Borrower Obligations may at any
time and from time to time exceed the amount of the liability of such Guarantor
hereunder without impairing the guarantee contained in this Section 2 or
affecting the rights and remedies of the Lender hereunder.
<PAGE>
5
(d) The guarantee contained in this Section 2 shall remain in full
force and effect until all the Borrower Obligations and the obligations of each
Guarantor under the guarantee contained in this Section 2 shall have been
satisfied by payment in full, notwithstanding that from time to time during the
term of the Credit Agreement the Borrower may be free from any Borrower
Obligations.
(e) No payment made by the Borrower, any of the Guarantors, any other
guarantor or any other Person or received or collected by the Lender from the
Borrower, any of the Guarantors, any other guarantor or any other Person by
virtue of any action or proceeding or any set-off or appropriation or
application at any time or from time to time in reduction of or in payment of
the Borrower Obligations shall be deemed to modify, reduce, release or otherwise
affect the liability of any Guarantor hereunder which shall, notwithstanding any
such payment (other than any payment made by such Guarantor in respect of the
Borrower Obligations or any payment received or collected from such Guarantor in
respect of the Borrower Obligations), remain liable for the Borrower Obligations
up to the maximum liability of such Guarantor hereunder until the Borrower
Obligations are paid in full and the Commitment is terminated.
2.2 Right of Contribution. Each Guarantor hereby agrees that to the
---------------------
extent that a Guarantor shall have paid more than its proportionate share of any
payment made hereunder, such Guarantor shall be entitled to seek and receive
contribution from and against any other Guarantor hereunder which has not paid
its proportionate share of such payment. Each Guarantor's right of contribution
shall be subject to the terms and conditions of Section 2.3. The provisions of
this Section 2.2 shall in no respect limit the obligations and liabilities of
any Guarantor to the Lender, and each Guarantor shall remain liable to the
Lender for the full amount guaranteed by such Guarantor hereunder.
2.3 No Subrogation. Notwithstanding any payment made by any
--------------
Guarantor hereunder or any set-off or application of funds of any Guarantor by
the Lender, no Guarantor shall be entitled to be subrogated to any of the rights
of the Lender against the Borrower or any other Guarantor or any collateral
security or guarantee or right of offset held by the Lender for the payment of
the Borrower Obligations, nor shall any Guarantor seek or be entitled to seek
any contribution or reimbursement from the Borrower or any other Guarantor in
respect of payments made by such Guarantor hereunder, until all amounts owing to
the Lender by the Borrower on account of the Borrower Obligations are paid in
full. If any amount shall be paid to any Guarantor on account of such
subrogation rights at any time when all of the Borrower Obligations shall not
have been paid in full, such amount shall be held by such Guarantor in trust for
the Lender, segregated from other funds of such Guarantor, and shall, forthwith
upon receipt by such Guarantor, be turned over to the Lender in the exact form
received by such Guarantor (duly indorsed by such Guarantor to the Lender, if
required), to be applied against the Borrower Obligations, whether matured or
unmatured, in such order as the Lender may determine.
2.4 Amendments, etc. with respect to the Borrower Obligations. Each
---------------------------------------------------------
Guarantor shall remain obligated hereunder notwithstanding that, without any
reservation of rights against any Guarantor and without notice to or further
assent by any Guarantor, any
<PAGE>
6
demand for payment of any of the Borrower Obligations made by the Lender may be
rescinded by the Lender and any of the Borrower Obligations continued, and the
Borrower Obligations, or the liability of any other Person upon or for any part
thereof, or any collateral security or guarantee therefor or right of offset
with respect thereto, may, from time to time, in whole or in part, be renewed,
extended, amended, modified, accelerated, compromised, waived, surrendered or
released by the Lender, and the Credit Agreement and the other Loan Documents
and any other documents executed and delivered in connection therewith may be
amended, modified, supplemented or terminated, in whole or in part, as the
Lender may deem advisable from time to time, and any collateral security,
guarantee or right of offset at any time held by the Lender for the payment of
the Borrower Obligations may be sold, exchanged, waived, surrendered or
released. The Lender shall have no obligation to protect, secure, perfect or
insure any Lien at any time held by it as security for the Borrower Obligations
or for the guarantee contained in this Section 2 or any property subject
thereto.
2.5 Guarantee Absolute and Unconditional. Each Guarantor waives any
------------------------------------
and all notice of the creation, renewal, extension or accrual of any of the
Borrower Obligations and notice of or proof of reliance by the Lender upon the
guarantee contained in this Section 2 or acceptance of the guarantee contained
in this Section 2; the Borrower Obligations, and any of them, shall conclusively
be deemed to have been created, contracted or incurred, or renewed, extended,
amended or waived, in reliance upon the guarantee contained in this Section 2;
and all dealings between the Borrower and any of the Guarantors, on the one
hand, and the Lender, on the other hand, likewise shall be conclusively presumed
to have been had or consummated in reliance upon the guarantee contained in this
Section 2. Each Guarantor waives diligence, presentment, protest, demand for
payment and notice of default or nonpayment to or upon the Borrower or any of
the Guarantors with respect to the Borrower Obligations. Each Guarantor
understands and agrees that the guarantee contained in this Section 2 shall be
construed as a continuing, absolute and unconditional guarantee of payment
without regard to (a) the validity or enforceability of the Credit Agreement or
any other Loan Document, any of the Borrower Obligations or any other collateral
security therefor or guarantee or right of offset with respect thereto at any
time or from time to time held by the Lender, (b) any defense, set-off or
counterclaim (other than a defense of payment or performance) which may at any
time be available to or be asserted by the Borrower or any other Person against
the Lender, or (c) any other circumstance whatsoever (with or without notice to
or knowledge of the Borrower or such Guarantor) which constitutes, or might be
construed to constitute, an equitable or legal discharge of the Borrower for the
Borrower Obligations, or of such Guarantor under the guarantee contained in this
Section 2, in bankruptcy or in any other instance. When making any demand
hereunder or otherwise pursuing its rights and remedies hereunder against any
Guarantor, the Lender may, but shall be under no obligation to, make a similar
demand on or otherwise pursue such rights and remedies as it may have against
the Borrower, any other Guarantor or any other Person or against any collateral
security or guarantee for the Borrower Obligations or any right of offset with
respect thereto, and any failure by the Lender to make any such demand, to
pursue such other rights or remedies or to collect any payments from the
Borrower, any other Guarantor or any other Person or to realize upon any such
collateral security or guarantee or to exercise any such right of offset, or any
release of the Borrower, any other Guarantor or any other Person or any such
collateral security, guarantee or right of offset, shall not relieve any
<PAGE>
7
Guarantor of any obligation or liability hereunder, and shall not impair or
affect the rights and remedies, whether express, implied or available as a
matter of law, of the Lender against any Guarantor. For the purposes hereof
"demand" shall include the commencement and continuance of any legal
proceedings.
2.6 Reinstatement. The guarantee contained in this Section 2 shall
-------------
continue to be effective, or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any of the Borrower Obligations is rescinded or
must otherwise be restored or returned by the Lender upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of the Borrower or any
Guarantor, or upon or as a result of the appointment of a receiver, intervenor
or conservator of, or trustee or similar officer for, the Borrower or any
Guarantor or any substantial part of its property, or otherwise, all as though
such payments had not been made.
2.7 Payments. Each Guarantor hereby guarantees that payments
--------
hereunder will be paid to the Lender without set-off or counterclaim in Dollars
at the office of the Lender located at 7600 Jericho Turnpike, Woodbury, New York
11797 (or such other address as shall be notified to such Guarantor by the
Lender pursuant to Section 8.2).
SECTION 3. GRANT OF SECURITY INTEREST
Each Grantor hereby assigns and transfers to the Lender, and hereby
grants to the Lender, a security interest in, all of the following property now
owned or at any time hereafter acquired by such Grantor or in which such Grantor
now has or at any time in the future may acquire any right, title or interest
(collectively, the "Collateral"), as collateral security for the prompt and
----------
complete payment and performance when due (whether at the stated maturity, by
acceleration or otherwise) of such Grantor's Obligations:
(a) all Accounts;
(b) all Chattel Paper;
(c) all Contracts;
(d) all Documents;
(e) all Equipment;
(f) all General Intangibles;
(g) all Instruments;
(h) all Inventory;
(i) all Investment Property;
<PAGE>
8
(j) all books and records pertaining to the Collateral; and
(k) to the extent not otherwise included, all Proceeds and products
of any and all of the foregoing and all collateral security and guarantees
given by any Person with respect to any of the foregoing.
Notwithstanding the foregoing, if any contract entered into on or
prior to the date hereof expressly prohibits the granting of a security
interest in such contract or the assignment thereof without consent or any
contract would be voided or any Grantor would be in breach or default under
any contract by virtue of the granting of a security interest therein or
the assignment thereof, then unless such consent has been obtained, such
contract shall not be subject to assignment hereunder or to a security
interest under the Security Documents and shall not constitute Collateral.
It is understood that the Borrower is not granting a Lien on any Equipment
which is leased, now or in the future, by the Borrower from Finova Capital
Corp.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Lender to enter into the Credit Agreement and make its
extensions of credit to the Borrower thereunder, each Grantor hereby represents
and warrants to the Lender that:
4.1 Representations in Credit Agreement. In the case of each
-----------------------------------
Guarantor, the representations and warranties set forth in Section 3 of the
Credit Agreement as they relate to such Guarantor or to the Loan Documents to
which such Guarantor is a party, each of which is hereby incorporated herein by
reference, are true and correct, and the Lender shall be entitled to rely on
each of them as if they were fully set forth herein, provided that each
--------
reference in each such representation and warranty to the Borrower's knowledge
shall, for the purposes of this Section 4.1, be deemed to be a reference to such
Guarantor's knowledge.
(b) Each Guarantor hereby also represents to the Lender that:
(i) Such Guarantor (w) is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization, (x)
has the corporate power and authority, and the legal right, to own and
operate its property, to lease the property it operates as lessee and to
conduct the business in which it is currently engaged, (y) is duly
qualified as a foreign corporation and in good standing under the laws of
each jurisdiction where its ownership, lease or operation of property or
the conduct of its business requires such qualification except to the
extent its failure to be so qualified and/or in good standing could not
reasonably be expected to have a Material Adverse Effect and (z) is in
compliance with all Requirements of Law (including ERISA and all applicable
Environmental Laws) except to the extent that the failure to comply
therewith could not, in the aggregate, reasonably be expected to have a
Material Adverse Effect.
<PAGE>
9
(ii) Such Guarantor has the corporate power and authority, and the
legal right, to make, deliver and perform the Loan Documents to which it is
a party and has taken all necessary corporate action to authorize the
execution, delivery and performance of the Loan Documents to which it is a
party other than filings and recordings to perfect the Liens created by the
Security Documents. No consent or authorization of, filing with, notice to
or other act by or in respect of, any Governmental Authority or any other
Person is required in connection with the execution, delivery, performance,
validity or enforceability of the Loan Documents to which such Guarantor is
a party. This Agreement has been, and each other Loan Document to which it
is a party will be, duly executed and delivered on behalf of such
Guarantor. This Agreement constitutes, and each other Loan Document to
which it is a party when executed and delivered will constitute, a legal,
valid and binding obligation of such Guarantor enforceable against such
Guarantor in accordance with its terms, subject to the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a proceeding
in equity or at law) and an implied covenant of good faith and fair
dealing.
(iii) The execution, delivery and performance of the Loan Documents
to which such Guarantor is a party will not violate any Requirement of Law
or Contractual Obligation of such Guarantor or of any of its Subsidiaries
and will not result in, or require, the creation or imposition of any Lien
on any of its or their respective properties or revenues pursuant to any
such Requirement of Law or Contractual Obligation (other than pursuant to
this Agreement).
(iii) No litigation, investigation or proceeding of or before any
arbitrator or Governmental Authority is pending or, to the knowledge of
such Guarantor, threatened by or against such Guarantor or any of its
Subsidiaries or against any of its or their respective properties or
revenues (x) with respect to any of the Loan Documents or any of the
transactions contemplated hereby or thereby or (y) which could reasonably
be expected to have a Material Adverse Effect.
4.2 Title; No Other Liens. Except for (x) the security interest
---------------------
granted to the Lender for its benefit pursuant to this Agreement and (y) the
other Liens permitted to exist on the Collateral by the Credit Agreement
(including, without limitation, the Liens and security interests granted in
favor of Bayer pursuant to the Bayer Security Agreement), such Grantor owns each
item of the Collateral free and clear of any and all Liens or claims of others.
No financing statement or other public notice with respect to all or any part of
the Collateral is on file or of record in any public office, except such as have
been filed in favor of the Lender, for its benefit, pursuant to this Agreement
or as are permitted by the Credit Agreement.
4.3 Perfected Liens. The security interests granted pursuant to
---------------
this Agreement (a) upon completion of the filings and other actions specified on
Schedule 3 (which, in the case of all filings and other documents referred to on
- ----------
said Schedule, have been delivered to the Lender in completed and duly executed
form) will constitute valid perfected security
<PAGE>
10
interests in all of the Collateral in favor of the Lender, for its benefit, as
collateral security for such Grantor's Obligations, enforceable in accordance
with the terms hereof against all creditors of such Grantor and any Persons
purporting to purchase any Collateral from such Grantor and (b) except as set
forth in the Intercreditor Agreement, are prior to all other Liens on the
Collateral in existence on the date hereof except for unrecorded Liens permitted
by the Credit Agreement which have priority over the Liens on the Collateral by
operation of law.
4.4 Chief Executive Office. On the date hereof, such Grantor's
----------------------
jurisdiction of organization and the location of such Grantor's chief executive
office or sole place of business are specified on Schedule 4.
----------
4.5 Inventory and Equipment. On the date hereof, the Inventory and
-----------------------
the Equipment (other than mobile goods) are kept at the locations listed on
Schedule 5.
- ----------
4.6 Farm Products. None of the Collateral constitutes, or is the
-------------
Proceeds of, Farm Products.
4.7 Pledged Securities. (a) The shares of Pledged Stock pledged by
------------------
such Grantor hereunder constitute all the issued and outstanding shares of all
classes of the Capital Stock of each Issuer owned by such Grantor.
(b) All the shares of the Pledged Stock have been duly and validly
issued and are fully paid and nonassessable.
(c) Each of the Pledged Notes constitutes the legal, valid and
binding obligation of the obligor with respect thereto, enforceable in
accordance with its terms, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.
(d) Such Grantor is the record and beneficial owner of, and has good
and marketable title to, the Pledged Securities pledged by it hereunder, free of
any and all Liens or options in favor of, or claims of, any other Person, except
the security interest created by this Agreement. It is understood, and the
Borrower represents and warrants to the Lender, that there are no Pledged
Securities on the Closing Date.
4.8 Receivables. (a) No amount payable to such Grantor under or in
-----------
connection with any Receivable is evidenced by any Instrument or Chattel Paper
which has not been delivered to the Lender.
(b) None of the obligors on any Receivables is a Governmental
Authority.
(c) The amounts represented by such Grantor to the Lender from time
to time as owing to such Grantor in respect of the Receivables will at such
times be accurate.
<PAGE>
11
4.9 Contracts. (a) No consent of any party (other than such
---------
Grantor) to any Contract is required, or purports to be required, in connection
with the execution, delivery and performance of this Agreement.
(b) Each Contract is in full force and effect and constitutes a valid
and legally enforceable obligation of the parties thereto, subject to the
effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair dealing.
(c) No consent or authorization of, filing with or other act by or in
respect of any Governmental Authority is required in connection with the
execution, delivery, performance, validity or enforceability of any of the
Contracts by any party thereto other than those which have been duly obtained,
made or performed, are in full force and effect and do not subject the scope of
any such Contract to any material adverse limitation, either specific or general
in nature.
(d) Neither such Grantor nor (to the best of such Grantor's
knowledge) any of the other parties to the Contracts is in default in the
performance or observance of any of the terms thereof.
(e) The right, title and interest of such Grantor in, to and under
the Contracts are not subject to any defenses, offsets, counterclaims or claims.
(f) Such Grantor has delivered to the Lender a complete and correct
copy of each Contract, including all amendments, supplements and other
modifications thereto.
(g) No amount payable to such Grantor under or in connection with any
Contract is evidenced by any Instrument or Chattel Paper which has not been
delivered to the Lender.
(h) None of the parties to any Contract is a Governmental Authority.
SECTION 5. COVENANTS
Each Grantor covenants and agrees with the Lender that, from and after
the date of this Agreement until the Obligations shall have been paid in full
and the Commitment shall have terminated:
5.1 Covenants in Credit Agreement. In the case of each Guarantor,
-----------------------------
such Guarantor shall take, or shall refrain from taking, as the case may be,
each action that is necessary to be taken or not taken, as the case may be, so
that no Default or Event of Default is caused by the failure to take such action
or to refrain from taking such action by such Guarantor or any of its
Subsidiaries.
<PAGE>
12
5.2 Delivery of Instruments and Chattel Paper. If any amount payable
-----------------------------------------
under or in connection with any of the Collateral shall be or become evidenced
by any Instrument or Chattel Paper, such Instrument or Chattel Paper shall be
immediately delivered to the Lender, duly indorsed in a manner satisfactory to
the Lender, to be held as Collateral pursuant to this Agreement.
5.3 Maintenance of Insurance. (a) Such Grantor will maintain, with
------------------------
financially sound and reputable companies, insurance policies (i) insuring the
Inventory and Equipment against loss by fire, explosion, theft and such other
casualties as may be reasonably satisfactory to the Lender and (ii) insuring
such Grantor and the Lender against liability for personal injury and property
damage relating to such Inventory and Equipment, such policies to be in such
form and amounts and having such coverage as may be reasonably satisfactory to
the Lender.
(b) All such insurance shall (i) provide that no cancellation,
material reduction in amount or material change in coverage thereof shall be
effective until at least 30 days after receipt by the Lender of written notice
thereof, (ii) name the Lender as insured party or loss payee, (iii) if
reasonably requested by the Lender, include a breach of warranty clause and (iv)
be reasonably satisfactory in all other respects to the Lender.
(c) The Borrower shall deliver to the Lender a report of a reputable
insurance broker with respect to such insurance during a month in each calendar
year to be agreed by the Borrower and the Lender and such supplemental reports
with respect thereto as the Lender may from time to time reasonably request.
5.4 Payment of Obligations. Such Grantor will pay and discharge or
----------------------
otherwise satisfy at or before maturity or before they become delinquent, as the
case may be, all taxes, assessments and governmental charges or levies imposed
upon the Collateral or in respect of income or profits therefrom, as well as all
claims of any kind (including, without limitation, claims for labor, materials
and supplies) against or with respect to the Collateral, except that no such
charge need be paid if the amount or validity thereof is currently being
contested in good faith by appropriate proceedings, reserves in conformity with
GAAP with respect thereto have been provided on the books of such Grantor and
such proceedings could not reasonably be expected to result in the sale,
forfeiture or loss of any material portion of the Collateral or any interest
therein.
5.5 Maintenance of Perfected Security Interest; Further
---------------------------------------------------
Documentation. (a) Such Grantor shall maintain the security interest created
by this Agreement as a perfected security interest having at least the priority
described in Section 4.3 and shall defend such security interest against the
claims and demands of all Persons whomsoever.
(b) Such Grantor will furnish to the Lender from time to time
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as the Lender may
reasonably request, all in reasonable detail.
<PAGE>
13
(c) At any time and from time to time, upon the written request of
the Lender, and at the sole expense of such Grantor, such Grantor will promptly
and duly execute and deliver, and have recorded, such further instruments and
documents and take such further actions as the Lender may reasonably request for
the purpose of obtaining or preserving the full benefits of this Agreement and
of the rights and powers herein granted, including, without limitation, the
filing of any financing or continuation statements under the Uniform Commercial
Code (or other similar laws) in effect in any jurisdiction with respect to the
security interests created hereby.
5.6 Changes in Locations, Name, etc. Such Grantor will not, except
--------------------------------
upon 30 days' prior written notice to the Lender and delivery to the Lender of
(a) all additional executed financing statements and other documents reasonably
requested by the Lender to maintain the validity, perfection and priority of the
security interests provided for herein and (b) if applicable, a written
supplement to Schedule 5 showing any additional location at which Inventory or
----------
Equipment shall be kept:
(i) permit any of the Inventory or Equipment to be kept at a
location other than those listed on Schedule 5;
----------
(ii) change the location of its chief executive office or sole place
of business from that referred to in Section 4.4; or
(iii) change its name, identity or corporate structure to such an
extent that any financing statement filed by the Lender in connection with
this Agreement would become misleading.
5.7 Notices. Such Grantor will advise the Lender promptly, in
-------
reasonable detail, of:
(a) any Lien (other than security interests created hereby or Liens
permitted under the Credit Agreement) on any of the Collateral which would
adversely affect the ability of the Lender to exercise any of its remedies
hereunder; and
(b) of the occurrence of any other event which could reasonably be
expected to have a material adverse effect on the aggregate value of the
Collateral or on the security interests created hereby.
5.8 Investment Property. (a) If such Grantor shall become entitled
-------------------
to receive or shall receive any stock certificate (including, without
limitation, any certificate representing a stock dividend or a distribution in
connection with any reclassification, increase or reduction of capital or any
certificate issued in connection with any reorganization), option or rights in
respect of the Capital Stock of any Issuer, whether in addition to, in
substitution of, as a conversion of, or in exchange for, any shares of the
Pledged Stock, or otherwise in respect thereof, such Grantor shall accept the
same as the agent of the Lender, hold the same in trust for the Lender and
deliver the same forthwith to the Lender in the exact form received, duly
indorsed by such Grantor to the Lender, if required, together with an undated
stock power
<PAGE>
14
covering such certificate duly executed in blank by such Grantor and with, if
the Lender so requests, signature guaranteed, to be held by the Lender, subject
to the terms hereof, as additional collateral security for the Obligations. Any
sums paid upon or in respect of the Pledged Securities upon the liquidation or
dissolution of any Issuer shall be paid over to the Lender to be held by it
hereunder as additional collateral security for the Obligations, and in case any
distribution of capital shall be made on or in respect of the Pledged Securities
or any property shall be distributed upon or with respect to the Pledged
Securities pursuant to the recapitalization or reclassification of the capital
of any Issuer or pursuant to the reorganization thereof, the property so
distributed shall, unless otherwise subject to a perfected security interest in
favor of the Lender, be delivered to the Lender to be held by it hereunder as
additional collateral security for the Obligations. If any sums of money or
property so paid or distributed in respect of the Pledged Securities shall be
received by such Grantor, such Grantor shall, until such money or property is
paid or delivered to the Lender, hold such money or property in trust for the
Lender, segregated from other funds of such Grantor, as additional collateral
security for the Obligations.
(b) Without the prior written consent of the Lender, such Grantor
will not (i) vote to enable, or take any other action to permit, any Issuer to
issue any stock or other equity securities of any nature or to issue any other
securities convertible into or granting the right to purchase or exchange for
any stock or other equity securities of any nature of any Issuer, (ii) sell,
assign, transfer, exchange, or otherwise dispose of, or grant any option with
respect to, the Pledged Securities or Proceeds thereof (except pursuant to a
transaction expressly permitted by the Credit Agreement), (iii) create, incur or
permit to exist any Lien or option in favor of, or any claim of any Person with
respect to, any of the Pledged Securities or Proceeds thereof, or any interest
therein, except for the security interests created by this Agreement or (iv)
enter into any agreement or undertaking restricting the right or ability of such
Grantor or the Lender to sell, assign or transfer any of the Pledged Securities
or Proceeds thereof.
(c) In the case of each Grantor which is an Issuer, such Issuer
agrees that (i) it will be bound by the terms of this Agreement relating to the
Pledged Securities issued by it and will comply with such terms insofar as such
terms are applicable to it, (ii) it will notify the Lender promptly in writing
of the occurrence of any of the events described in Section 5.8(a) with respect
to the Pledged Securities issued by it and (iii) the terms of Sections 6.3(c)
and 6.7 shall apply to it, mutatis mutandis, with respect to all actions that
------- --------
may be required of it pursuant to Section 6.3(c) or 6.7 with respect to the
Pledged Securities issued by it.
(d) Each Grantor (i) shall at all times maintain its Investment
Property (other than, subject to Section 6.4, Permitted Investments) under the
"control" (within the meaning of Section 8-106 of the Uniform Commercial Code in
effect in the State of New York on the date hereof) of the Lender and (ii) shall
not permit any other Person (other than the Lender) to exercise or obtain
"control" (within the meaning of Section 8-106 of the Uniform Commercial Code in
effect in the State of New York on the date hereof) of any of its Investment
Property (including Permitted Investments) in connection with the grant of a
Lien by such Grantor to or for the benefit of such Person or any other Person
(other than the Lender). Without limiting the foregoing, if requested by the
Lender with respect to any
<PAGE>
15
Security Entitlement of such Grantor, such Grantor shall, and shall cause the
relevant Securities Intermediary to, enter into a control agreement in form and
substance satisfactory to the Lender for the purpose of perfecting the security
interest in such Security Entitlement granted pursuant to this Agreement. Each
Grantor agrees not to permit the issuer of any interest in a partnership or
limited liability company owned by it to be designated as a "Security" under the
Uniform Commercial Code in effect in any jurisdiction or to be held in a
"Securities Account" unless such Grantor shall have taken all of the actions
required, including any required filings, to maintain the perfection of the
security interests granted in such interests hereunder.
5.9 Receivables. (a) Other than in the ordinary course of business
-----------
consistent with its past practice, such Grantor will not (i) grant any extension
of the time of payment of any Receivable, (ii) compromise or settle any
Receivable for less than the full amount thereof, (iii) release, wholly or
partially, any Person liable for the payment of any Receivable, (iv) allow any
credit or discount whatsoever on any Receivable or (v) amend, supplement or
modify any Receivable in any manner that could adversely affect the value
thereof.
(b) Such Grantor will deliver to the Lender a copy of each material
demand, notice or document received by it that questions or calls into doubt the
validity or enforceability of more than 5% of the aggregate amount of the then
outstanding Receivables.
5.10 Contracts. (a) Such Grantor will perform and comply in all
---------
material respects with all its obligations under the Contracts unless the
failure to do so could not reasonably be expected to have a Material Adverse
Effect.
(b) Such Grantor will not amend, modify, terminate or waive any
provision of any Contract in any manner which could reasonably be expected to
materially adversely affect the value of such Contract as Collateral.
(c) Such Grantor will exercise promptly and diligently each and every
material right which it may have under each Contract (other than any right of
termination) unless the failure to do so could not reasonably be expected to
have a Material Adverse Effect.
(d) Such Grantor will deliver to the Lender a copy of each material
demand, notice or document received by it relating in any way to any Contract
that questions the validity or enforceability of such Contract.
SECTION 6. REMEDIAL PROVISIONS
6.1 Certain Matters Relating to Receivables. (a) The Lender shall
---------------------------------------
have the right to make test verifications of the Receivables in any manner and
through any medium that it reasonably considers advisable, and each Grantor
shall furnish all such assistance and information as the Lender may require in
connection with such test verifications. At any time and from time to time,
upon the Lender's request and at the expense of the relevant Grantor, such
Grantor shall cause independent public accountants or others satisfactory to the
Lender
<PAGE>
16
to furnish to the Lender reports showing reconciliations, aging and test
verifications of, and trial balances for, the Receivables.
(b) The Lender hereby authorizes each Grantor to collect such
Grantor's Receivables, subject to the Lender's direction and control, and the
Lender may curtail or terminate said authority at any time after the occurrence
and during the continuance of an Event of Default. If required by the Lender at
any time after the occurrence and during the continuance of an Event of Default,
any payments of Receivables, when collected by any Grantor, (i) shall be
forthwith (and, in any event, within two Business Days) deposited by such
Grantor in the exact form received, duly indorsed by such Grantor to the Lender
if required, in a Collateral Account maintained under the sole dominion and
control of the Lender, subject to withdrawal by the Lender for the account of
the Lender only as provided in Section 65, and (ii) until so turned over, shall
be held by such Grantor in trust for the Lender, segregated from other funds of
such Grantor. Each such deposit of Proceeds of Receivables shall be accompanied
by a report identifying in reasonable detail the nature and source of the
payments included in the deposit.
(c) At the Lender's request, each Grantor shall deliver to the Lender
all original and other documents evidencing, and relating to, the agreements and
transactions which gave rise to the Receivables, including, without limitation,
all original orders, invoices and shipping receipts.
6.2 Communications with Obligors; Grantors Remain Liable. (a) The
----------------------------------------------------
Lender in its own name or in the name of others may at any time after the
occurrence and during the continuance of an Event of Default communicate with
obligors under the Receivables and parties to the Contracts to verify with them
to the Lender's satisfaction the existence, amount and terms of any Receivables
or Contracts.
(b) Upon the request of the Lender at any time after the occurrence
and during the continuance of an Event of Default, each Grantor shall notify
obligors on the Receivables and parties to the Contracts that the Receivables
and the Contracts have been assigned to the Lender for its benefit and that
payments in respect thereof shall be made directly to the Lender.
(c) Anything herein to the contrary notwithstanding, each Grantor
shall remain liable under each of the Receivables and Contracts to observe and
perform all the conditions and obligations to be observed and performed by it
thereunder, all in accordance with the terms of any agreement giving rise
thereto. The Lender shall not have any obligation or liability under any
Receivable (or any agreement giving rise thereto) or Contract by reason of or
arising out of this Agreement or the receipt by the Lender of any payment
relating thereto, nor shall the Lender be obligated in any manner to perform any
of the obligations of any Grantor under or pursuant to any Receivable (or any
agreement giving rise thereto) or Contract, to make any payment, to make any
inquiry as to the nature or the sufficiency of any payment received by it or as
to the sufficiency of any performance by any party thereunder, to present or
file any claim, to take any action to enforce any performance or to collect the
<PAGE>
17
payment of any amounts which may have been assigned to it or to which it may be
entitled at any time or times.
6.3 Pledged Stock. (a) Unless an Event of Default shall have
-------------
occurred and be continuing and the Lender shall have given notice to the
relevant Grantor of the Lender's intent to exercise its corresponding rights
pursuant to Section 6.3(b), each Grantor shall be permitted to receive all cash
dividends paid in respect of the Pledged Stock and all payments made in respect
of the Pledged Notes, in each case paid in the normal course of business of the
relevant Issuer and consistent with past practice, to the extent permitted in
the Credit Agreement, and to exercise all voting and corporate rights with
respect to the Pledged Securities; provided, however, that no vote shall be cast
-------- -------
or corporate right exercised or other action taken which, in the Lender's
reasonable judgment, would impair the Collateral or which would be inconsistent
with or result in any violation of any provision of the Credit Agreement, this
Agreement or any other Loan Document.
(b) If an Event of Default shall occur and be continuing and the
Lender shall give notice of its intent to exercise such rights to the relevant
Grantor or Grantors, (i) the Lender shall have the right to receive any and all
cash dividends, payments or other Proceeds paid in respect of the Pledged
Securities and make application thereof to the Obligations in such order as the
Lender may determine, and (ii) any or all of the Pledged Securities shall be
registered in the name of the Lender or its nominee, and the Lender or its
nominee may thereafter exercise (x) all voting, corporate and other rights
pertaining to such Pledged Securities at any meeting of shareholders of the
relevant Issuer or Issuers or otherwise and (y) any and all rights of
conversion, exchange and subscription and any other rights, privileges or
options pertaining to such Pledged Securities as if it were the absolute owner
thereof (including, without limitation, the right to exchange at its discretion
any and all of the Pledged Securities upon the merger, consolidation,
reorganization, recapitalization or other fundamental change in the corporate
structure of any Issuer, or upon the exercise by any Grantor or the Lender of
any right, privilege or option pertaining to such Pledged Securities, and in
connection therewith, the right to deposit and deliver any and all of the
Pledged Securities with any committee, depositary, transfer agent, registrar or
other designated agency upon such terms and conditions as the Lender may
determine), all without liability except to account for property actually
received by it, but the Lender shall have no duty to any Grantor to exercise any
such right, privilege or option and shall not be responsible for any failure to
do so or delay in so doing.
(c) Each Grantor hereby authorizes and instructs each Issuer of any
Pledged Securities pledged by such Grantor hereunder to (i) comply with any
instruction received by it from the Lender in writing that (x) states that an
Event of Default has occurred and is continuing and (y) is otherwise in
accordance with the terms of this Agreement, without any other or further
instructions from such Grantor, and each Grantor agrees that each Issuer shall
be fully protected in so complying, and (ii) unless otherwise expressly
permitted hereby, pay any dividends or other payments with respect to the
Pledged Securities directly to the Lender.
6.4 Proceeds to be Turned Over To Lender. In addition to the rights
------------------------------------
of the Lender specified in Section 6.1 with respect to payments of Receivables,
if an Event of
<PAGE>
18
Default shall occur and be continuing, all Proceeds received by any Grantor
consisting of cash, checks and other near-cash items shall be held by such
Grantor in trust for the Lender, segregated from other funds of such Grantor,
and shall, forthwith upon receipt by such Grantor, be turned over to the Lender
in the exact form received by such Grantor (duly indorsed by such Grantor to the
Lender, if required). All Proceeds received by the Lender hereunder shall be
held by the Lender in a Collateral Account maintained under its sole dominion
and control. All Proceeds while held by the Lender in a Collateral Account (or
by such Grantor in trust for the Lender) shall continue to be held as collateral
security for all the Obligations and shall not constitute payment thereof until
applied as provided in Section 65.
6.5 Application of Proceeds. At such intervals as may be agreed upon
-----------------------
by the Borrower and the Lender, or, if an Event of Default shall have occurred
and be continuing, at any time at the Lender's election, the Lender may apply
all or any part of Proceeds held in any Collateral Account in payment of the
Obligations in such order as the Lender may elect, and any part of such funds
which the Lender elects not so to apply and deems not required as collateral
security for the Obligations shall be paid over from time to time by the Lender
to the Borrower or to whomsoever may be lawfully entitled to receive the same.
Any balance of such Proceeds remaining after the Obligations shall have been
paid in full and the Commitment shall have terminated shall be paid over to the
Borrower or to whomsoever may be lawfully entitled to receive the same.
6.6 Code and Other Remedies. If an Event of Default shall occur and
-----------------------
be continuing, the Lender may exercise, in addition to all other rights and
remedies granted to it in this Agreement and in any other instrument or
agreement securing, evidencing or relating to the Obligations, all rights and
remedies of a secured party under the New York UCC or any other applicable law.
Without limiting the generality of the foregoing, the Lender, without demand of
performance or other demand, presentment, protest, advertisement or notice of
any kind (except any notice required by law referred to below) to or upon any
Grantor or any other Person (all and each of which demands, defenses,
advertisements and notices are hereby waived), may in such circumstances
forthwith collect, receive, appropriate and realize upon the Collateral, or any
part thereof, and/or may forthwith sell, lease, assign, give option or options
to purchase, or otherwise dispose of and deliver the Collateral or any part
thereof (or contract to do any of the foregoing), in one or more parcels at
public or private sale or sales, at any exchange, broker's board or office of
the Lender or elsewhere upon such terms and conditions as it may deem advisable
and at such prices as it may deem best, for cash or on credit or for future
delivery without assumption of any credit risk. The Lender shall have the right
upon any such public sale or sales, and, to the extent permitted by law, upon
any such private sale or sales, to purchase the whole or any part of the
Collateral so sold, free of any right or equity of redemption in any Grantor,
which right or equity is hereby waived and released. Each Grantor further
agrees, at the Lender's request, to assemble the Collateral and make it
available to the Lender at places which the Lender shall reasonably select,
whether at such Grantor's premises or elsewhere. The Lender shall apply the net
proceeds of any action taken by it pursuant to this Section 6.6, after deducting
all reasonable costs and expenses of every kind incurred in connection therewith
or incidental to the care or safekeeping of any of the Collateral or in any way
relating to the Collateral or the rights of the Lender hereunder, including,
without limitation, reasonable attorneys' fees and
<PAGE>
19
disbursements, to the payment in whole or in part of the Obligations, in such
order as the Lender may elect, and only after such application and after the
payment by the Lender of any other amount required by any provision of law,
including, without limitation, Section 9-504(1)(c) of the New York UCC, need the
Lender account for the surplus, if any, to any Grantor. To the extent permitted
by applicable law, each Grantor waives all claims, damages and demands it may
acquire against the Lender arising out of the exercise by it of any rights
hereunder. If any notice of a proposed sale or other disposition of Collateral
shall be required by law, such notice shall be deemed reasonable and proper if
given at least 10 days before such sale or other disposition.
6.7 Registration Rights. (a) If the Lender shall determine to
-------------------
exercise its right to sell any or all of the Pledged Stock pursuant to Section
6.6, and if in the opinion of the Lender it is necessary or advisable to have
the Pledged Stock, or that portion thereof to be sold, registered under the
provisions of the Securities Act, the relevant Grantor will cause the Issuer
thereof to (i) execute and deliver, and cause the directors and officers of such
Issuer to execute and deliver, all such instruments and documents, and do or
cause to be done all such other acts as may be, in the opinion of the Lender,
necessary or advisable to register the Pledged Stock, or that portion thereof to
be sold, under the provisions of the Securities Act, (ii) use its best efforts
to cause the registration statement relating thereto to become effective and to
remain effective for a period of one year from the date of the first public
offering of the Pledged Stock, or that portion thereof to be sold, and (iii)
make all amendments thereto and/or to the related prospectus which, in the
opinion of the Lender, are necessary or advisable, all in conformity with the
requirements of the Securities Act and the rules and regulations of the
Securities and Exchange Commission applicable thereto. Each Grantor agrees to
cause such Issuer to comply with the provisions of the securities or "Blue Sky"
laws of any and all jurisdictions which the Lender shall designate and to make
available to its security holders, as soon as practicable, an earnings statement
(which need not be audited) which will satisfy the provisions of Section 11(a)
of the Securities Act.
(b) Each Grantor recognizes that the Lender may be unable to effect a
public sale of any or all the Pledged Stock, by reason of certain prohibitions
contained in the Securities Act and applicable state securities laws or
otherwise, and may be compelled to resort to one or more private sales thereof
to a restricted group of purchasers which will be obliged to agree, among other
things, to acquire such securities for their own account for investment and not
with a view to the distribution or resale thereof. Each Grantor acknowledges
and agrees that any such private sale may result in prices and other terms less
favorable than if such sale were a public sale and, notwithstanding such
circumstances, agrees that any such private sale shall be deemed to have been
made in a commercially reasonable manner. The Lender shall be under no
obligation to delay a sale of any of the Pledged Stock for the period of time
necessary to permit the Issuer thereof to register such securities for public
sale under the Securities Act, or under applicable state securities laws, even
if such Issuer would agree to do so.
(c) Each Grantor agrees to use its best efforts to do or cause to be
done all such other acts as may be necessary to make such sale or sales of all
or any portion of the Pledged Stock pursuant to this Section 6.7 valid and
binding and in compliance with any and
<PAGE>
20
all other applicable Requirements of Law. Each Grantor further agrees that a
breach of any of the covenants contained in this Section 6.7 will cause
irreparable injury to the Lender, that the Lender has no adequate remedy at law
in respect of such breach and, as a consequence, that each and every covenant
contained in this Section 6.7 shall be specifically enforceable against such
Grantor, and such Grantor hereby waives and agrees not to assert any defenses
against an action for specific performance of such covenants except for a
defense that no Event of Default has occurred under the Credit Agreement.
6.8 Waiver; Deficiency. Each Grantor waives and agrees not to assert
------------------
any rights or privileges which it may acquire under Section 9-112 of the New
York UCC. Each Grantor shall remain liable for any deficiency if the proceeds
of any sale or other disposition of the Collateral are insufficient to pay its
Obligations and the fees and disbursements of any attorneys employed by the
Lender to collect such deficiency.
SECTION 7. THE LENDER
7.1 Lender's Appointment as Attorney-in-Fact, etc. (a) Each Grantor
---------------------------------------------
hereby irrevocably constitutes and appoints the Lender and any officer or agent
thereof, with full power of substitution, as its true and lawful attorney-in-
fact with full irrevocable power and authority in the place and stead of such
Grantor and in the name of such Grantor or in its own name, for the purpose of
carrying out the terms of this Agreement, to take any and all appropriate action
and to execute any and all documents and instruments which may be necessary or
desirable to accomplish the purposes of this Agreement, and, without limiting
the generality of the foregoing, each Grantor hereby gives the Lender the power
and right, on behalf of such Grantor, without notice to or assent by such
Grantor, to do any or all of the following:
(i) in the name of such Grantor or its own name, or otherwise, take
possession of and indorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of moneys due under any
Receivable or Contract or with respect to any other Collateral and file any
claim or take any other action or proceeding in any court of law or equity
or otherwise deemed appropriate by the Lender for the purpose of collecting
any and all such moneys due under any Receivable or Contract or with
respect to any other Collateral whenever payable;
(ii) pay or discharge taxes and Liens levied or placed on or
threatened against the Collateral, effect any repairs or any insurance
called for by the terms of this Agreement and pay all or any part of the
premiums therefor and the costs thereof;
(iii) execute, in connection with any sale provided for in Section
6.6 or 6.7, any indorsements, assignments or other instruments of
conveyance or transfer with respect to the Collateral; and
(iv) (1) direct any party liable for any payment under any of the
Collateral to make payment of any and all moneys due or to become due
thereunder directly to the
<PAGE>
21
Lender or as the Lender shall direct; (2) ask or demand for, collect, and
receive payment of and receipt for, any and all moneys, claims and other
amounts due or to become due at any time in respect of or arising out of
any Collateral; (3) sign and indorse any invoices, freight or express
bills, bills of lading, storage or warehouse receipts, drafts against
debtors, assignments, verifications, notices and other documents in
connection with any of the Collateral; (4) commence and prosecute any
suits, actions or proceedings at law or in equity in any court of competent
jurisdiction to collect the Collateral or any portion thereof and to
enforce any other right in respect of any Collateral; (5) defend any suit,
action or proceeding brought against such Grantor with respect to any
Collateral; (6) settle, compromise or adjust any such suit, action or
proceeding and, in connection therewith, give such discharges or releases
as the Lender may deem appropriate; and (7) generally, sell, transfer,
pledge and make any agreement with respect to or otherwise deal with any of
the Collateral as fully and completely as though the Lender were the
absolute owner thereof for all purposes, and do, at the Lender's option and
such Grantor's expense, at any time, or from time to time, all acts and
things which the Lender deems necessary to protect, preserve or realize
upon the Collateral and the Lender's security interests therein and to
effect the intent of this Agreement, all as fully and effectively as such
Grantor might do.
Anything in this Section 7.1(a) to the contrary notwithstanding, the
Lender agrees that it will not exercise any rights under the power of attorney
provided for in this Section 7.1(a) unless an Event of Default shall have
occurred and be continuing.
(b) If any Grantor fails to perform or comply with any of its
agreements contained herein, the Lender, at its option, but without any
obligation so to do, may perform or comply, or otherwise cause performance or
compliance, with such agreement.
(c) The expenses of the Lender incurred in connection with actions
undertaken as provided in this Section 7.1, together with interest thereon at a
rate per annum equal to the rate per annum at which interest would then be
payable on past due ABR Loans under the Credit Agreement, from the date of
payment by the Lender to the date reimbursed by the relevant Grantor, shall be
payable by such Grantor to the Lender on demand.
(d) Each Grantor hereby ratifies all that said attorneys shall
lawfully do or cause to be done by virtue hereof. All powers, authorizations
and agencies contained in this Agreement are coupled with an interest and are
irrevocable until this Agreement is terminated and the security interests
created hereby are released.
7.2 Duty of Lender. The Lender's sole duty with respect to the
--------------
custody, safekeeping and physical preservation of the Collateral in its
possession, under Section 9-207 of the New York UCC or otherwise, shall be to
deal with it in the same manner as the Lender deals with similar property for
its own account. Neither the Lender nor any of its respective officers,
directors, employees or agents shall be liable for failure to demand, collect or
realize upon any of the Collateral or for any delay in doing so or shall be
under any obligation to sell or otherwise dispose of any Collateral upon the
request of any Grantor or any other Person or to take any other action
whatsoever with regard to the Collateral or any part
<PAGE>
22
thereof. The powers conferred on the Lender hereunder are solely to protect the
Lender's interests in the Collateral and shall not impose any duty upon the
Lender to exercise any such powers. The Lender shall be accountable only for
amounts that they actually receive as a result of the exercise of such powers,
and neither they nor any of their officers, directors, employees or agents shall
be responsible to any Grantor for any act or failure to act hereunder, except
for their own gross negligence or willful misconduct.
7.3 Execution of Financing Statements. Pursuant to Section 9-402 of
---------------------------------
the New York UCC and any other applicable law, each Grantor authorizes the
Lender to file or record financing statements and other filing or recording
documents or instruments with respect to the Collateral without the signature of
such Grantor in such form and in such offices as the Lender reasonably
determines appropriate to perfect the security interests of the Lender under
this Agreement. A photographic or other reproduction of this Agreement shall be
sufficient as a financing statement or other filing or recording document or
instrument for filing or recording in any jurisdiction.
7.4 Authority of Lender. Each Grantor acknowledges that the rights
-------------------
and responsibilities of the Lender under this Agreement with respect to any
action taken by the Lender or the exercise or non-exercise by the Lender of any
option, voting right, request, judgment or other right or remedy provided for
herein or resulting or arising out of this Agreement shall be governed by the
Credit Agreement and by such other agreements with respect thereto as may exist
from time to time.
SECTION 8. MISCELLANEOUS
8.1 Amendments in Writing. None of the terms or provisions of this
---------------------
Agreement may be waived, amended, supplemented or otherwise modified except in
accordance with subsection 8.1 of the Credit Agreement.
8.2 Notices. All notices, requests and demands to or upon the Lender
-------
or any Grantor hereunder shall be effected in the manner provided for in
subsection 8.2 of the Credit Agreement; provided that any such notice, request
--------
or demand to or upon any Guarantor shall be addressed to such Guarantor at its
notice address set forth on Schedule 1.
----------
8.3 No Waiver by Course of Conduct; Cumulative Remedies. The Lender
---------------------------------------------------
shall not by any act (except by a written instrument pursuant to Section 8.1),
delay, indulgence, omission or otherwise be deemed to have waived any right or
remedy hereunder or to have acquiesced in any Default or Event of Default. No
failure to exercise, nor any delay in exercising, on the part of the Lender, any
right, power or privilege hereunder shall operate as a waiver thereof. No
single or partial exercise of any right, power or privilege hereunder shall
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. A waiver by the Lender of any right or remedy
hereunder on any one occasion shall not be construed as a bar to any right or
remedy which the Lender would otherwise have on any future occasion. The rights
and remedies herein provided are
<PAGE>
23
cumulative, may be exercised singly or concurrently and are not exclusive of any
other rights or remedies provided by law.
8.4 Enforcement Expenses; Indemnification. (a) Each Guarantor
-------------------------------------
agrees to pay or reimburse the Lender for all its costs and expenses incurred in
collecting against such Guarantor under the guarantee contained in Section 2 or
otherwise enforcing or preserving any rights under this Agreement and the other
Loan Documents to which such Guarantor is a party, including, without
limitation, the reasonable fees and disbursements of counsel to the Lender.
(b) Each Guarantor agrees to pay, and to save the Lender harmless
from, any and all liabilities with respect to, or resulting from any delay in
paying, any and all stamp, excise, sales or other taxes which may be payable or
determined to be payable with respect to any of the Collateral or in connection
with any of the transactions contemplated by this Agreement.
(c) Each Guarantor agrees to pay, and to save the Lender harmless
from, any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever with respect to the execution, delivery, enforcement, performance and
administration of this Agreement to the extent the Borrower would be required to
do so pursuant to subsection 8.5 of the Credit Agreement.
(d) The agreements in this Section 8.4 shall survive repayment of the
Obligations and all other amounts payable under the Credit Agreement and the
other Loan Documents.
8.5 Successors and Assigns. This Agreement shall be binding upon the
----------------------
successors and assigns of each Grantor and shall inure to the benefit of the
Lender and its successors and assigns; provided that no Grantor may assign,
--------
transfer or delegate any of its rights or obligations under this Agreement
without the prior written consent of the Lender.
8.6 Set-Off. Each Grantor hereby irrevocably authorizes the Lender
-------
at any time and from time to time while an Event of Default pursuant to Section
7(a) of the Credit Agreement shall have occurred and be continuing, without
notice to such Grantor or any other Grantor, any such notice being expressly
waived by each Grantor, to set-off and appropriate and apply any and all
deposits (general or special, time or demand, provisional or final), in any
currency, and any other credits, indebtedness or claims, in any currency, in
each case whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by the Lender to or for the credit or the
account of such Grantor, or any part thereof in such amounts as the Lender may
elect, against and on account of the obligations and liabilities of such Grantor
to the Lender hereunder and claims of every nature and description of the Lender
against such Grantor, in any currency, whether arising hereunder, under the
Credit Agreement, any other Loan Document or otherwise, as the Lender may elect,
whether or not the Lender has made any demand for payment and although such
obligations, liabilities and claims may be contingent or unmatured. The Lender
shall notify such Grantor promptly of any such set-off and the application made
by the Lender of the proceeds thereof, provided
--------
<PAGE>
24
that the failure to give such notice shall not affect the validity of such set-
off and application. The rights of the Lender under this Section 8.6 are in
addition to other rights and remedies (including, without limitation, other
rights of set-off) which the Lender may have.
8.7 Counterparts. This Agreement may be executed by one or more of
------------
the parties to this Agreement on any number of separate counterparts (including
by telecopy), and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
8.8 Severability. Any provision of this Agreement which is
------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
8.9 Section Headings. The Section headings used in this Agreement
----------------
are for convenience of reference only and are not to affect the construction
hereof or be taken into consideration in the interpretation hereof.
8.10 Integration. This Agreement and the other Loan Documents
-----------
represent the agreement of the Grantors and the Lender with respect to the
subject matter hereof and thereof, and there are no promises, undertakings,
representations or warranties by the Lender relative to subject matter hereof
and thereof not expressly set forth or referred to herein or in the other Loan
Documents.
8.11 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
-------------
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
8.12 Submission To Jurisdiction; Waivers. Each Grantor hereby
-----------------------------------
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which
it is a party, or for recognition and enforcement of any judgment in
respect thereof, to the non-exclusive general jurisdiction of the courts of
the State of New York, the courts of the United States of America for the
Southern District of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to
the venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially
<PAGE>
25
similar form of mail), postage prepaid, to such Grantor at its address
referred to in Section 8.2 or at such other address of which the Lender
shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any legal action or proceeding referred to
in this Section any special, exemplary, punitive or consequential damages.
8.13 Acknowledgements. Each Grantor hereby acknowledges that:
----------------
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents to which it is a
party;
(b) the Lender does not have any fiduciary relationship with or duty
to any Grantor arising out of or in connection with this Agreement or any
of the other Loan Documents, and the relationship between the Grantors, on
the one hand, and the Lender, on the other hand, in connection herewith or
therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan Documents
or otherwise exists by virtue of the transactions contemplated hereby among
the Grantors and the Lender.
8.14 WAIVER OF JURY TRIAL. EACH GRANTOR HEREBY IRREVOCABLY AND
--------------------
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
8.15 Additional Grantors. Each Subsidiary of the Borrower that is
-------------------
required to become a party to this Agreement pursuant to subsection 5.10 of the
Credit Agreement shall become a Grantor for all purposes of this Agreement upon
execution and delivery by such Subsidiary of an Assumption Agreement in the form
of Annex 1 hereto. It is understood that the Borrower has no Subsidiaries as of
the date hereof and that the Borrower is the sole Grantor as of the date hereof.
8.16 Releases. (a) At such time as the Loan and the other
--------
Obligations shall have been paid in full and the Commitment has been terminated,
the Collateral shall be released from the Liens created hereby, and this
Agreement and all obligations (other than those expressly stated to survive such
termination) of the Lender and each Grantor hereunder shall terminate, all
without delivery of any instrument or performance of any act by any party, and
all rights to the Collateral shall revert to the Grantors. At the request and
sole expense of any Grantor following any such termination, the Lender shall
deliver to such Grantor any
<PAGE>
26
Collateral held by the Lender hereunder, and execute and deliver to such Grantor
such documents as such Grantor shall reasonably request to evidence such
termination.
(b) If any of the Collateral shall be sold, transferred or otherwise
disposed of by any Grantor in a transaction permitted by the Credit Agreement,
then such Collateral shall be automatically released from the Liens created
hereby on such Collateral and no affirmative action on the part of the Lender
shall be required. Nevertheless, any Grantor may request, at the sole expense
of such Grantor, that the Lender execute and deliver to such Grantor any and all
releases or other documents reasonably necessary or desirable to evidence the
release of the Liens created hereby on such Collateral. At the request and sole
expense of the Borrower, a Subsidiary Guarantor shall be released from its
obligations hereunder in the event that all the Capital Stock of such Subsidiary
Guarantor shall be sold, transferred or otherwise disposed of in a transaction
permitted by the Credit Agreement; provided that the Borrower shall have
--------
delivered to the Lender, at least ten Business Days prior to the date of the
proposed release, a written request for release identifying the relevant
Subsidiary Guarantor and the terms of the sale or other disposition in
reasonable detail, including the price thereof and any expenses in connection
therewith, together with a certification by the Borrower stating that such
transaction is in compliance with the Credit Agreement and the other Loan
Documents.
8.17 Intercreditor Agreement. It is understood and agreed that this
-----------------------
Agreement and the liens and security interests created hereby are subject to the
terms and conditions of the Intercreditor Agreement and, in the event of any
conflict between this Agreement and the Intercreditor Agreement, the
Intercreditor Agreement shall control.
<PAGE>
27
IN WITNESS WHEREOF, each of the undersigned has caused this Guarantee
and Collateral Agreement to be duly executed and delivered as of the date first
above written.
V.I. TECHNOLOGIES, INC.
By: /s/ Joanne Leonard
-----------------------
Title: VICE PESIDENT,CFO
<PAGE>
Schedule 1
----------
NOTICE ADDRESSES OF GUARANTORS
None.
<PAGE>
Schedule 2
----------
DESCRIPTION OF PLEDGED SECURITIES
PLEDGED STOCK:
<TABLE>
<CAPTION>
Issuer Class of Stock Stock Certificate No. No. of
- ---------- -------------- --------------------- Shares
------
<S> <C> <C> <C>
None.
</TABLE>
PLEDGED NOTES:
<TABLE>
<CAPTION>
Issuer Payee Principal Amount
- ----------- ------------ -----------------------
<S> <C> <C>
None.
</TABLE>
<PAGE>
Schedule 3
----------
FILINGS AND OTHER ACTIONS
REQUIRED TO PERFECT SECURITY INTERESTS
Uniform Commercial Code Filings
-------------------------------
Filing of UCC-1 financing statements with New York State and with Suffolk
County.
Actions with Respect to Pledged Stock/**/
-----------------------------------------
None.
Other Actions
-------------
None.
<PAGE>
Schedule 4
----------
LOCATION OF JURISDICTION OF ORGANIZATION AND CHIEF EXECUTIVE OFFICE
<TABLE>
<CAPTION>
Grantor Jurisdiction of Organization Location of Chief Executive Office
- ------- ---------------------------- ----------------------------------
<S> <C> <C>
V.I. Technologies, Inc. Delaware 155 Duryea Road
Melville, New York 11747
</TABLE>
<PAGE>
Schedule 5
----------
LOCATION OF INVENTORY AND EQUIPMENT
<TABLE>
<CAPTION>
Grantor Locations
- ------- ---------
<S> <C>
V.I. Technologies, Inc. 155 Duryea Road
Melville, New York 11747
3960 Broadway
New York, New York 10032
</TABLE>
<PAGE>
Schedule 6
----------
CONTRACTS
Supply, Manufacturing and Distribution Collaboration Agreement between V.I.
Technologies, Inc. and American National Red Cross dated December 15, 1997
<PAGE>
ACKNOWLEDGEMENT AND CONSENT/**/
The undersigned hereby acknowledges receipt of a copy of the Guarantee and
Collateral Agreement dated as of December 22, 1997 (the "Agreement"), made by
---------
the Grantors parties thereto for the benefit of The Chase Manhattan Bank, as
Lender. The undersigned agrees for the benefit of the Lender as follows:
9.. The undersigned will be bound by the terms of the Agreement and will
comply with such terms insofar as such terms are applicable to the undersigned.
10.. The undersigned will notify the Lender promptly in writing of the
occurrence of any of the events described in Section 5.8(a) of the Agreement.
11.. The terms of Sections 6.3(a) and 6.7 of the Agreement shall apply to
it, mutatis mutandis, with respect to all actions that may be required of it
------- --------
pursuant to Section 6.3(a) or 6.7 of the Agreement.
[NAME OF ISSUER]
By ________________________
Title _____________________
Address for Notices:
___________________________
___________________________
Fax:_______________________
________________________
/**/ This consent is necessary only with respect to any Issuer which is not
also a Grantor. This consent may be modified or eliminated with respect to any
Issuer that is not controlled by a Grantor. If a consent is required, its
execution and delivery should be included among the conditions to the initial
borrowing specified in the Credit Agreement.
<PAGE>
Annex 1 to
Guarantee and Collateral Agreement
----------------------------------
ASSUMPTION AGREEMENT, dated as of ________________, 199_, made by
______________________________, a ______________ corporation (the "Additional
----------
Grantor"), in favor of The Chase Manhattan Bank, as lender (the "Lender") under
- ------- ------
the Credit Agreement referred to below. All capitalized terms not defined
herein shall have the meaning ascribed to them in such Credit Agreement.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, V.I. Technologies, Inc. (the "Borrower") and the Lender have
--------
entered into a Credit Agreement, dated as of December 22, 1997 (as amended,
supplemented or otherwise modified from time to time, the "Credit Agreement");
----------------
WHEREAS, in connection with the Credit Agreement, the Borrower and certain
of its Affiliates (other than the Additional Grantor) have entered into the
Guarantee and Collateral Agreement, dated as of December 22, 1997 (as amended,
supplemented or otherwise modified from time to time, the "Guarantee and
-------------
Collateral Agreement") in favor of the Lender;
- --------------------
WHEREAS, the Credit Agreement requires the Additional Grantor to become a
party to the Guarantee and Collateral Agreement; and
WHEREAS, the Additional Grantor has agreed to execute and deliver this
Assumption Agreement in order to become a party to the Guarantee and Collateral
Agreement;
NOW, THEREFORE, IT IS AGREED:
1. Guarantee and Collateral Agreement. By executing and delivering this
----------------------------------
Assumption Agreement, the Additional Grantor, as provided in Section 8.15 of the
Guarantee and Collateral Agreement, hereby becomes a party to the Guarantee and
Collateral Agreement as a Grantor thereunder with the same force and effect as
if originally named therein as a Grantor and, without limiting the generality of
the foregoing, hereby expressly assumes all obligations and liabilities of a
Grantor thereunder. The information set forth in Annex 1-A hereto is hereby
added to the information set forth in Schedules ____________/***/ to the
Guarantee and Collateral Agreement. The Additional Grantor hereby represents and
warrants that each of the representations and warranties contained in Section 4
of the Guarantee and
________________________
/***/ Refer to each Schedule which needs to be supplemented.
<PAGE>
2
Collateral Agreement is true and correct on and as the date hereof (after giving
effect to this Assumption Agreement) as if made on and as of such date.
2. GOVERNING LAW. THIS ASSUMPTION AGREEMENT SHALL BE GOVERNED BY, AND
-------------
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the undersigned has caused this Assumption Agreement to
be duly executed and delivered as of the date first above written.
[ADDITIONAL GRANTOR]
By:_______________________________________________________
Name:
Title:
<PAGE>
Exhibit 10.33
Lot: 022.00
Block: 01.00
Section: 0400-268.00
County: Suffolk
- --------------------------------------------------------------------------------
SUFFOLK COUNTY INDUSTRIAL DEVELOPMENT AGENCY
(Mortgagor)
and
MELVILLE BIOLOGICS, INC.
(Company)
to
MILES INC.
(Mortgagee)
---------------------------------------------
MORTGAGE, SECURITY AGREEMENT
AND FIXTURE FILING
---------------------------------------------
Dated: As of February 15, 1995
Property Location: 155 Duryea Road
Melville, New York 11747
RECORD AND RETURN TO:
Eckert Seamans Cherin & Mellott
600 Grant Street, 42nd Floor
Pittsburgh, PA 15219
Attention: Marcia L. Grimes, Esq.
<PAGE>
MORTGAGE, SECURITY AGREEMENT AND FIXTURE FILING
MADE as of the 15th day of February, 1995, by SUFFOLK COUNTY INDUSTRIAL
DEVELOPMENT AGENCY, a public benefit corporation organized and existing under
the laws of the State of New York, having an office at 220 Rabro Drive, Post
Office Box 6100, Hauppauge, New York 11788-0099 ("Mortgagor") and by MELVILLE
BIOLOGICS, INC., a Delaware corporation (the "Company"), having an address of
155 Duryea Road, Melville, New York 11747, in favor of MILES INC., an Indiana
corporation (along with its successors and assigns, the "Mortgagee"), having an
address of One Mellon Center, 53rd Floor, 500 Grant Street, Pittsburgh,
Pennsylvania 15219-2507.
WITNESSETH
----------
WHEREAS, Title 1 of Article 18-A of the General Municipal Law of the State
of New York was duly enacted into law as Chapter 1030 of the Laws of 1969 of the
State of New York (the "State"), as amended, together with Chapter 675 of the
Laws of 1975 of the State, as amended (the "Act"); and
WHEREAS, the Act authorizes the creation of industrial development agencies
for the benefit of the several counties, cities, villages and towns in the State
and to empower such agencies, among other things, to acquire, construct,
reconstruct, lease, improve, maintain, equip and sell land and any building or
other improvement, and all real and personal properties, including, but not
limited to, machinery and equipment deemed necessary in connection therewith,
whether or not now in existence or under construction, which shall be suitable
for manufacturing, warehousing, research, commercial, recreation or industrial
facilities, including industrial pollution control facilities, in order to
advance job opportunities, health, general prosperity and the economic welfare
of the people of the State and to improve their standard of living; and
WHEREAS, Mortgagor is the owner in fee simple of a certain tract or parcel
of land situate in the Town of Huntington, Village of Melville, Suffolk County,
State of New York, as more fully described in Exhibit A attached hereto and made
a part hereof, together with the improvements now or hereafter erected thereon,
which land and improvements Mortgagor acquired from the Company simultaneously
herewith; and
WHEREAS, PNC Bank, National Association ("PNC") has made a loan in the
original principal amount of Ten Million Dollars ($10,000,000) to the Company
(the "PNC Loan") pursuant to a Letter Agreement and a Term Note (collectively,
the "PNC Loan Documents"); and
WHEREAS, Mortgagee, as security for the PNC Loan, has granted in favor of
PNC a Guaranty of even date herewith (the "Guaranty"); and
<PAGE>
WHEREAS, in consideration of Mortgagee's granting the Guaranty to PNC for
the benefit of the Company, the Company has executed and delivered to Mortgagee
a Reimbursement and Security Agreement of even date herewith as the same may be
amended, modified or replaced from time to time (the "Reimbursement Agreement");
and
WHEREAS, Company is granting this Mortgage to Mortgagee to secure its
obligations under the Reimbursement Agreement; and
WHEREAS, pursuant to and in accordance with the provisions of the Act,
Mortgagor was created and is empowered under the Act to grant this Mortgage to
Mortgagee; and
WHEREAS, the Company and Mortgagee have entered into an Agreement for
Custom Processing ("Processing Agreement") dated as of February 7, 1995,
pursuant to which Mortgagor has agreed to process and fractionate certain
quantities of Miles Input as defined in the Processing Agreement (hereinafter
"Processing and Fractionation Operation"); and
WHEREAS, the Company and Mortgagee have entered into a Lease Agreement (the
"Lease") and a Sublease Agreement (the "Sublease"), each dated as of February 7,
1995 with respect to the Property hereinafter described; and
WHEREAS, Mortgagor and the Company have entered into that certain (i) Lease
Agreement (the "IDA Lease") pursuant to which Mortgagor leases the Property (as
defined below) to the Company and (ii) Payment-In-Lieu-of-Tax Agreement, each
dated as of February 15, 1995.
NOW, THEREFORE, in consideration of Mortgagee's granting the Guaranty and
for the purpose of securing the payment and performance by the Company of the
Obligations as defined in the Reimbursement Agreement, and in furtherance of
Mortgagor's purposes under the Act, Mortgagor and the Company, intending to be
legally bound hereby, do hereby give, grant, bargain, sell, warrant, alienate,
remise, release, convey, assign, transfer, mortgage, hypothecate, deposit,
pledge, set over and confirm unto Mortgagee and do agree that Mortgagee shall
have a security interest in the following described property, all accessions and
additions thereto, all substitutions therefor and replacements and proceeds
thereof, and all revisions and remainders of such property (collectively, the
"Mortgaged Property") now owned or held or hereafter acquired, to wit:
(i) Mortgagor's fee simple estate and the Company's ownership
interest and leasehold estate in the premises described in Exhibit A, together
with all of the easements, rights of way, privileges, liberties, hereditaments,
gores, streets, alleys, passages, ways, waters, watercourses, rights and
appurtenances thereunto belonging or appertaining and all of the estate, right,
title, interest, claim and demand whatsoever of Mortgagor and the Company
therein and in the public streets and ways adjacent thereto, either in law or in
equity, in possession or expectancy (collectively, the "Realty");
-2-
<PAGE>
(ii) the structures and buildings, and all additions and
improvements thereto, now or hereafter erected upon the Realty (collectively,
the "Improvements");
(iii) all machinery, apparatus, equipment, fittings, appliances,
building materials (to the extent they are fixtures) and all other fixtures of
every kind and nature whatsoever, and regardless of whether the same may now or
hereafter be attached or affixed to the Realty or Improvements, including,
without limitation, all electrical, antipollution, heating, lighting,
incinerating, power, air conditioning, plumbing, lifting, cleaning, fire
prevention, fire extinguishing, refrigerating, ventilating and communication
machinery, apparatus, equipment, fittings, appliances and fixtures, and all
engines, pipes, pumps, tanks, motors, conduits, ducts, compressors, elevators
and escalators, and all articles of personal property and goods of every kind
and nature whatsoever, now or hereafter affixed to, attached to, placed upon, or
used or usable in any way in connection with the use, enjoyment, occupancy or
operation of the Realty or Improvements to the extent that an interest in any of
the foregoing property arises under applicable real property law (collectively,
the "Equipment") (the Realty, the Improvements and the Equipment are hereinafter
sometimes referred to collectively as the "Property");
(iv) all leases (including but not limited to the Mortgagor's
and the Company's interests as Lessor and Lessee, respectively, under the IDA
Lease) and other agreements now or hereafter in existence relating to the use,
occupancy or possession of the Property, or any part thereof, and all right,
title and interest of Mortgagor and/or the Company thereunder, including cash
and securities deposited thereunder to secure performance by the tenants of
their obligations thereunder, and including further, the right to receive and
collect the rents thereunder and all guaranties thereof (collectively, the
"Leases"). Notwithstanding anything to the contrary herein, Mortgagor has
reserved unto itself and has not given, granted, bargained, sold, warranted,
alienated, remitted, released, conveyed, assigned, transferred, mortgaged,
hypothecated, deposited, pledged, set over or confirmed unto Mortgagee nor
granted a security interest to Mortgagee in any right, title, interest in, to or
under the IDA Lease with respect to payments or reimbursements of whatever kind
to be made to Mortgagor, liability insurance for the benefit of Mortgagor,
indemnifications of or running to Mortgagor, obligations by the Company running
to Mortgagor for performance of Mortgagor's obligations, or the rights of
Mortgagor to declare Events of Default thereunder or to take any action to
enforce any of its rights or remedies under the IDA Lease, all of which shall be
considered personal to Mortgagor (the "Retained Rights"), and such Retained
Rights shall continue to be the duties, obligations and liabilities of the
Company and shall not be construed as to impose any duties or obligations on or
be liabilities of Mortgagee or Mortgagee's interest in the Mortgaged Property;
(v) all revenues, income, rents, issues and profits of the
Property (collectively, the "Rents") including all proceeds of the conversion,
voluntary or involuntary, of the Property, or any part thereof, into cash or
liquidated claims, including proceeds of insurance and condemnation awards;
-3-
<PAGE>
(vi) all Mortgagor's and/or the Company's rights and interests
in all agreements now or hereafter in existence providing for or relating to the
maintenance, operation or management of the Property or any part thereof, and
any amendments, renewals and replacements thereof; to the extent permitted by
the relevant authorities, all licenses, permits and approvals for the ownership,
maintenance, operation, use and occupancy of the Property, or any part thereof
and any amendments, renewals and replacements thereof; all Mortgagor's and/or
the Company's rights and interests in all warranties and guaranties from
contractors, subcontractors, suppliers and manufacturers to the maximum extent
permissible relating to the Property or any part thereof; all insurance policies
covering or affecting the Property or any part thereof (collectively, the "Other
Property").
TO HAVE AND TO HOLD the Mortgaged Property unto Mortgagee, its successors
and assigns, to its own use forever in accordance with the provisions hereof.
PROVIDED ALWAYS, that if all the obligations secured hereby shall be paid
in full, and the Company shall abide by and comply with each and every covenant
contained herein and in the Reimbursement Agreement, then this Mortgage and the
estate hereby granted shall cease, terminate and become void.
Notwithstanding anything contained in this Mortgage or the Reimbursement
Agreement to the contrary, the maximum amount of principal indebtedness secured
by this Mortgage at the time of execution hereof or which under any contingency
may become secured by this Mortgage at any time hereafter is Ten Million Dollars
($10,000,000) plus (a) taxes, charges or assessments which may be imposed by law
upon the Mortgaged Property (as hereinafter defined); (b) premiums on insurance
policies covering the Mortgaged Property; (c) expenses incurred in upholding the
lien of this Mortgage, including, but not limited to (i) the expenses of any
litigation to prosecute or defend the rights and lien created by this Mortgage;
(ii) any amount, cost or charges to which the Mortgagee becomes subrogated, upon
payment, whether under recognized principles of law or equity, or under express
statutory authority and (iii) interest at the rate set forth in the PNC Loan
Documents, provided that (b), (c)(i) and (c)(ii) are advanced by Mortgagee as a
result of an Event of Default by the Company.
AND MORTGAGOR AND THE COMPANY hereby warrant, covenant and agree as follows
(provided that each of Mortgagor and the Company warrants, covenants and agrees
only with respect to the warranties, covenants and agreements of each and not of
the other):
1. Warranty of Title and Authorization.
-----------------------------------
(a) The Company warrants that Mortgagor has good and marketable title
to an estate in fee simple absolute in the Realty and Improvements, free and
clear of all liens and encumbrances, except for the Permitted Liens (as
hereinafter defined) and that this Mortgage is a valid and enforceable lien on
the Mortgaged Property subject only
-4-
<PAGE>
to those matters set forth in the First American Title Insurance Company of New
York Title Insurance Policy issued under Commitment No. 141-S-6382-AMD dated
November 1, 1994 and redated February 28, 1995, and to such other items to which
Mortgagee may have consented in writing (the "Permitted Liens"). The Company
shall preserve such title as it warrants herein and the validity and priority of
the lien hereof and shall forever warrant and defend the same to Mortgagee
against the claims of all persons and parties whomsoever.
The Company warrants that it has a valid leasehold estate in the Realty
and the Improvements, free and clear of all liens and encumbrances, except for
Permitted Liens.
(b) Mortgagor represents and warrants that (i) it is duly established
and validly existing under the provisions of the Act, (ii) it has full legal
right, power and authority to execute this Mortgage and (iii) this Mortgage has
been duly authorized, executed and delivered by Mortgagor.
(c) The Company represents and warrants that (i) it is duly organized
and validly existing; (ii) it has full power and lawful authority to execute
this Mortgage and that such execution is in accordance and compliance with all
requirements of law and any agreement to which it is a party or by which it or
its property is bound, and is in furtherance of its purposes; (iii) the PNC Loan
will be used for business purposes; (iv) the Mortgaged Property is not located
in an area identified by the Secretary of Housing and Urban Development having
special flood hazards; and (v) to the best of its knowledge, the Mortgaged
Property is not in an area in which an Indian Nation is making a claim in Court
based on the title of such area being owned by such Nation.
2. Legal Requirements. The Company shall promptly comply with and conform
------------------
to or cause to be complied with and conformed to all present and future laws,
statutes, codes, ordinances, orders, judgments, decrees, injunctions, rules,
regulations and requirements, even if unforeseen or extraordinary, of every duly
constituted governmental authority or agency having jurisdiction over the
Mortgaged Property and all covenants, restrictions and conditions which may be
applicable to Mortgagor and/or the Company or to any of the Mortgaged Property,
or to the use, manner of use, occupancy, possession, operation, maintenance,
alteration, repair or reconstruction of any of the Mortgaged Property
(collectively, the "Legal Requirements"), even if such compliance necessitates
structural changes or improvements or results in interference with the use or
enjoyment of any of the Mortgaged Property; provided, however, that the
Company's failure to so comply shall not constitute an Event of Default
hereunder if such failure would not have a material adverse effect on Mortgagor
and/or the Company or the Mortgaged Property.
3. Impositions. Before interest or penalties are due thereon and otherwise
-----------
before the same shall become delinquent, the Company shall pay and discharge, or
cause to be paid or discharged, all taxes of every kind and nature (including
real and personal property taxes on the Mortgaged Property, income, franchise,
withholding, profits and gross receipts taxes, any tax imposed directly or
indirectly on Mortgagee (but not
-5-
<PAGE>
including income taxes) with respect to the Mortgaged Property or this Mortgage,
the value of the equity of Mortgagor and/or the Company therein, or the
indebtedness evidenced by the Reimbursement Agreement), all charges for any
easement or agreement maintained for the benefit of any of the Mortgaged
Property, all general and special assessments, levies, permits, inspection and
license fees, all mortgages and other liens which may be permitted by Mortgagee,
all water and sewer rents and charges, or payments in lieu of such taxes,
assessments or water and sewer rents and charges, and all other charges and
liens whether of a like or different nature, even if unforeseen or
extraordinary, imposed upon or assessed against Mortgagor and/or the Company or
any of the Mortgaged Property or arising in respect of the occupancy, use or
possession thereof; provided, however, that if by law any of the foregoing may
be paid in installments (whether or not interest shall accrue on the unpaid
balance thereof the Company may pay the same in installments (together with
interest accrued on the unpaid balance thereof as the same respectively become
due, before any fine, penalty or cost attaches thereto. The Company shall comply
in all respects with all agreements, mortgages, covenants, and restrictions now
or hereafter affecting the Realty or Improvements; provided, however, that the
Company's failure to so comply shall not constitute an Event of Default
hereunder if such failure would not have a material adverse effect on Mortgagor,
the Company or the Mortgaged Property. The obligations referred to in this
Section are hereinafter collectively referred to as the "Impositions".
If the Company shall fail to timely pay or perform any of the Impositions,
Mortgagee may, after having given twenty (20) days' prior notice to the Company,
pay or perform the same, and add the amount so paid or the cost incurred to the
indebtedness evidenced by the Reimbursement Agreement, and all such amounts
shall on demand be due and payable, together with interest thereon from the date
of such demand at the rate set forth in the PNC Loan Documents.
Nothing in this Section 3 shall require the payment or discharge of any
Imposition so long as the Company shall, after complying with each of the
following conditions, in good faith and at its own expense, contest the same or
the validity thereof by appropriate legal proceedings diligently pursued. Before
commencing any such proceedings, the Company shall: (i) notify Mortgagee in
writing of its intent to do so; (ii) ascertain that such proceedings will
operate to prevent the collection thereof or other realization thereon and the
sale or forfeiture of the Mortgaged Property or any part thereof to satisfy the
same; and (iii) provide security reasonably satisfactory to Mortgagee assuring
the discharge of the Company's obligation under this Section 3 and of any
additional interest, charge, penalty, or expense arising from or incurred as a
result of such contest. Notwithstanding the foregoing, if at any time payment of
any Imposition shall become necessary to prevent a lien foreclosure sale of the
Mortgaged Property or any portion thereof because of nonpayment of such
Imposition, then the Company shall pay the same in sufficient time to prevent
the foreclosure sale.
4. Insurance. The Company shall maintain insurance on the Improvements and
---------
Equipment in amounts and coverages as required under the Reimbursement
Agreement, and all policies and renewals thereof shall name Mortgagee as
-6-
<PAGE>
additional insured or loss payee, as appropriate, and shall provide for no
amendment or termination without fifteen (15) days' prior written notice to
Mortgagee and shall contain a standard New York Lender endorsement. Mortgagee
shall, at its option, apply insurance proceeds to (i) the restoration of the
Improvements and Equipment, or (ii) the reduction of the indebtedness evidenced
by the Reimbursement Agreement.
Notwithstanding the foregoing, in the event an insured loss or damage
occurs, the replacement cost of which is determined by the insurer to be less
than One Hundred Thousand Dollars ($100,000) and there exists no Event of
Default hereunder, then Mortgagee, after deducting its reasonable costs and
expenses (including, without limitation, all adjusters' fees and expenses and
reasonable attorneys' fees and expenses), shall disburse the net insurance
proceeds to the Company, and the Company shall promptly use the same to repair
or replace the Improvements and Equipment, and shall upon completion thereof
deliver to Mortgagee a release of liens as described in Section 4(f) hereof. In
the event an insured loss or damage occurs, the replacement cost of which is
determined by the insurer to exceed One Hundred Thousand Dollars ($100,000), and
there exists no Event of Default hereunder, then Mortgagee, after deducting its
reasonable costs and expenses, as aforesaid, agrees with respect to such insured
loss or damage that the Company will be permitted to apply the net insurance
proceeds to the repair or rebuilding of the Improvements and Equipment in
accordance with the following terms:
(a) the net insurance proceeds shall be deposited in an account at a
bank reasonably acceptable to Mortgagee which shall require the signature of
Mortgagee alone for any disbursement;
(b) the plans, specifications, engineering reports, construction
contracts, subcontracts, and related documents for the repair, restoration, and
replacement work shall have been approved by Mortgagee, which approval shall not
be unreasonably withheld or delayed and which approval may be based on factors
such as whether the work described therein, when completed, would cause the
Improvements and Equipment to be fully repaired, replaced, or restored so that
it will be returned as nearly as possible to the value, character, and condition
that existed immediately prior to the loss or damage so that the Improvements
and Equipment continue to be an architecturally cohesive, integrated,
economically viable commercial real estate project in full compliance with all
Legal Requirements and with the same use as existed immediately prior to such
loss or damage;
(c) the Company shall deliver to Mortgagee its budget of the cost for
such repair, restoration, and replacement, and, prior to the commencement of any
work and from time to time thereafter as the estimated remaining cost may be
revised, the Company must deposit in the account into which the net insurance
proceeds were deposited pursuant to Section 4(a) above a sum equal to the amount
by which the estimated remaining cost of such repair, restoration, and
replacement work exceeds the balance of that account, if at all;
-7-
<PAGE>
(d) the Company and Mortgagee shall cooperate to jointly determine the
amount necessary to complete such repair, restoration, and replacement work;
provided, however, if the parties are unable to agree, Mortgagee's reasonable
determination shall prevail. Any funds disbursed by Mortgagee through the
account shall be in accordance with normal and usual construction loan draw
procedures;
(e) after approval of the plans and specifications, the Company must
begin work promptly and thereafter diligently prosecute construction in order to
complete all work within such reasonable time frame as may be prescribed by
Mortgagee; provided, however, if such construction is delayed by acts of God or
other forces beyond the control of the Company, the time for completion shall be
extended accordingly;
(f) a full and final release of liens with respect to all repair,
restoration, or replacement work is delivered to Mortgagee from all contractors,
materialmen, and subcontractors and/or partial releases of liens with respect to
all sums advanced from such account;
(g) upon the satisfaction of all of the foregoing conditions, any
excess funds and/or accrued interest in such savings account shall be disbursed
to the Company; and
(h) during any construction, repair, restoration, or replacement of any
Improvements, the Company shall obtain and keep in effect a standard builder's
risk insurance policy with extended coverage for the replacement cost of the
Improvements, with a noncontributing mortgagee clause and nonsurrender,
noncancellation, nonmodification clause, and such insurance shall be written in
such manner and by such companies as are approved by Mortgagee, which approval
shall not be unreasonably withheld or delayed. During any construction, repair,
restoration, or replacement of any Improvements, the Company shall cause all
contractors and subcontractors (including Mortgagor or the company if either
acts as a contractor) to obtain and keep in effect workers' compensation
insurance to the full extent required by applicable laws. Such workers'
compensation insurance shall also cover all employees of each contractor and
subcontractor. Upon demand, the Company shall provide evidence satisfactory to
Mortgagee that the Company is complying with the requirements of this Section
4(h).
5. Maintenance and Impairment of Security. The Company shall keep or
--------------------------------------
cause to be kept the Property in good condition and order and in a tenantable
state of repair and will make or cause to be made, as and when necessary, all
repairs, renewals, and replacements, structural and nonstructural, exterior and
interior, foreseen and unforeseen, ordinary and extraordinary. Mortgagor and the
Company shall not, except in the ordinary course of business, and except for the
Project (as defined in the Processing Agreement) remove, demolish or materially
alter the Property or any buildings or Improvements constituting a part thereof,
without Mortgagee's prior written consent, which consent shall not be
unreasonably withheld or delayed, nor commit or suffer waste with respect
thereto, nor permit the Property to become abandoned. Mortgagor and the Company
shall permit
-8-
<PAGE>
Mortgagee and its agents at any reasonable time, and from time to time, after
Mortgagee's having given telephonic or written notice to the Company of its
intent to do so, to enter upon and visit the Property for the purpose of
inspecting and appraising the same; provided, however, Mortgagee shall not
unreasonably interfere with the Company's use of the Property and Mortgagee
shall be liable for any damage to the Property or injury to any person caused by
Mortgagee or its agents. The Company covenants and agrees not to take or permit
any action with respect to the Property which will in any manner impair the
security of this Mortgage.
6. Condemnation. If all or any part of the Mortgaged Property shall be
------------
damaged or taken through condemnation (which term when used in this Mortgage
shall include any damage or taking by any governmental agency and any transfer
by private sale in lieu thereof), either temporarily or permanently, the
proceeds of any award or claim for damages, direct or indirect, in connection
therewith, are hereby assigned and shall be paid to Mortgagee, and Mortgagee, at
its option shall apply such proceeds (i) to restoration of the Mortgaged
Property, or (ii) to the reduction of the Obligations.
Notwithstanding the foregoing, if no Event of Default exists hereunder,
the Company will be permitted to apply the net condemnation proceeds to the
repair or rebuilding of the Mortgaged Property in accordance with the provisions
of Section 4 hereof.
7. Limitation on Transfers or Encumbrances.
---------------------------------------
(a) Neither Mortgagor nor the Company shall not transfer, pledge,
lease or otherwise encumber the Mortgaged Property nor permit the creation of
any lien, claim or restriction upon the Mortgaged Property, without Mortgagee's
prior, written consent.
(b) Notwithstanding the foregoing, solely in the event the Company
obtains Qualified Financing from any independent lender, lenders, financial
institution or institutions at any time or from time to time, Mortgagee agrees
to, and does hereby, subordinate the priority of its lien in the Mortgaged
Property (but not the right of payment) to the extent set forth below and to the
extent necessary to permit the Company to obtain such additional Qualified
Financing. As used in this Section 7, "Qualified Financing" means debt
financing, or with respect to the Mortgaged Property that is or will be used
exclusively in the MBI General Operations (as defined in the Reimbursement
Agreement) and not in the Processing and Fractionation Operation, purchase
money, lease, sale/leaseback or lease/leaseback financing, provided by a party
not directly or indirectly affiliated with New York Blood Center, Inc. or the
Company (a "Qualified Financing Lender") to be used by the Company in the
Processing and Fractionation Operation or in the MBI General Operations, and not
for any other use or purpose, in an amount up to Ten Million Dollars
($10,000,000) plus (i) an amount equal to the amount (if any) by which Five
Million Dollars ($5,000,000) exceeds the aggregate principal amount then
outstanding or available under the PNC Loan Documents and (ii) an unlimited
amount from and after the date of payment or prepayment in
-9-
<PAGE>
full of all amounts outstanding or available under the PNC Loan Documents,
including principal, interest, penalties and all other charges, in accordance
with the terms and conditions of the PNC Loan Documents (either such amount
being referred to herein as the "Excess Amount"); provided, however, that in no
event shall the amount of the Qualified Financing to which any portion of
Mortgagee's lien priority in the Mortgaged Property may be subordinated exceed
Fifteen Million Dollars ($15,000,000) so long as Mortgagee has or may have any
liability under the Guaranty. Notwithstanding the foregoing, (i) the provisions
of this Section 7(b) shall not apply to the Fractionation Business Collateral,
(ii) at all times the Collateral (as that term is defined in the Reimbursement
Agreement) together with the Mortgaged Property in which Mortgagee shall have a
first lien priority must have a fair market value (as of the date of the
Reimbursement Agreement and as of the effective date of any subordination under
this Section 7) of not less than Five Million Dollars ($5,000,000) ("Minimum
Collateral Value"), and (iii) with respect to the Mortgaged Property, Mortgagee
shall retain a first mortgage lien securing an amount equal to a portion of the
Minimum Collateral Value, to be mutually determined by the parties ("Minimum
First Mortgage Amount"), and an additional mortgage lien in the maximum amount
of Ten Million Dollars ($10,000,000) less the Minimum First Mortgage Amount,
that is second in lien priority only to a mortgage in favor of the Qualified
Financing Lender. As used in this Section 7, "Fractionation Business Collateral"
means all Collateral, including, without limitation, the Licenses and Permits,
Fractionation Contracts, Equipment and Inventory, (as these terms are defined in
the Reimbursement Agreement) used solely or to be used solely in the Processing
and Fractionation Operation such that Mortgagee shall always retain a first lien
priority on all property or rights of Mortgagor and the Company necessary or
appropriate in effectuating a Miles' Takeover under the Processing Agreement (as
defined therein); provided, however, that with respect to the Mortgaged
Property, (i) if the Company is able and desires in its sole and absolute
discretion to separate, the Company may separate, as a condominium or otherwise,
the premises on which the Processing and Fractionation Operation is conducted
from the real estate on which the Company conducts all other operations, (ii)
Mortgagee shall at all times retain a first mortgage lien on that portion of the
Mortgaged Property which separated out and devoted to the Processing and
Fractionation Operation, and (iii) Mortgagee shall release the lien of this
Mortgage from the remainder of the Mortgaged Property. In order for this
subordination to become effective, (a) Mortgagor and the Company must not be in
default under this Mortgage, and the Company must not be in default under the
Processing Agreement, the Reimbursement Agreement, the Lease or the Sublease,
(b) the Company must have obtained the Qualified Financing and (c) the Company
and Mortgagee must agree in writing to (i) the specific property and fair market
value of such property constituting the Fractionation Business Collateral, and
(ii) the Minimum First Mortgage Amount. The Company agrees to bear the cost and
expense of any appraisal or other independent services deemed necessary or
appropriate by Mortgagee to make such determinations. Notwithstanding any of the
foregoing, in the event any of Mortgagee's liens are subordinated to liens in
favor of any Qualified Financing Lender, nothing contained in this Section 7 or
elsewhere shall preclude, prevent, impair or impede Mortgagee's rights and
remedies to receive any payments from the Company or to enforce the Company's
obligations under this Mortgage or any obligations under the Processing
Agreement, the Reimbursement Agreement, the Lease or the Sublease. Mortgagee
agrees to execute and
-10-
<PAGE>
deliver any additional document or documents reasonably requested by any
Qualified Financing Lender upon such terms and conditions as are consistent with
this Section 7 and otherwise reasonably satisfactory to Mortgagee.
8. Compliance With Environmental Requirements.
------------------------------------------
(a) Except as specifically set forth in the materials listed on
Exhibit "E" to the Reimbursement Agreement, the Company hereby represents and
warrants to the Mortgagee that there are no hazardous materials presently
located on the Mortgaged Property which, under federal, state, or local law,
statute, ordinance or regulation; or court or administrative order or decree; or
private agreement (collectively, "Environmental Requirements"), require special
handling in collection, storage, treatment, or disposal and that the Company and
Mortgagor will not place and the Company will not permit to be placed any such
materials on the Mortgaged Property in violation of any applicable Environmental
Requirement.
(b) The Company hereby covenants and agrees that, if at any time it is
determined that there are materials located on the Property which, under any
Environmental Requirement require special handling in collection, storage,
treatment, or disposal, the Company shall, within thirty (30) days after written
notice thereof, take or cause to be taken, at its sole expense, such actions as
may be necessary to comply with all Environmental Requirements.
(c) Mortgagor and the Company agree that Mortgagee and its authorized
representatives may, after providing to the Company notice and the opportunity
to provide additional information, enter and inspect and assess the Property and
conduct tests (including soil test borings or other invasive tests) at
reasonable times as Mortgagee reasonably deems necessary to determine
Mortgagor's and the Company's compliance with the above conditions; provided,
however, that Mortgagee shall schedule the same so as not to unreasonably
interfere with the Company's operations on the Property. The cost of performing
such inspections and assessments shall be paid by the Company upon demand by
Mortgagee and any such cost shall constitute an Obligation secured by this
Mortgage.
(d) The Company shall defend, indemnify and hold Mortgagee harmless
from and against any and all past, present and future liability, loss, damage,
costs and expenses suffered, incurred or threatened as a result of any Event of
Default hereunder or as a result of notice, complaint, claim, demand, suit,
order, judgment, or any legal requirement, including without limitation of the
generality of the foregoing, court costs, attorneys' and consultants' fees,
environmental cleanup costs, natural resources damages, fines, penalties and
damages to persons, personal property, real property and business enterprises,
arising out of or relating to the environmental condition of the Property, the
existence of any environmental hazard on the Property or any release or threat
of release of any hazardous substance of any kind in, on, under or from the
Property at any time, except to the extent caused by the gross negligence or
willful misconduct of Mortgagee.
-11-
<PAGE>
Notwithstanding anything to the contrary in this Mortgage, the provisions of
this indemnity shall survive the payment and satisfaction or termination of this
Mortgage.
9. Recordation.
-----------
(a) Mortgagor forthwith upon the execution and delivery of this
Mortgage shall cause this Mortgage to be recorded in such manner and in such
place as may be required by law in order to publish notice of and fully to
protect the lien hereof upon and the interest of Mortgagee in the Mortgaged
Property. Mortgagor and the Company forthwith upon the execution and delivery of
this Mortgage and thereafter from time to time, shall cause any security
instrument creating the lien or evidencing the lien hereof upon Mortgaged
Property and each instrument of further assurance to be filed, registered or
recorded in such manner and in such places as may be required by any present or
future law in order to publish notice of and fully to protect the lien hereof
upon, and the interest of Mortgagee in, the Mortgaged Property.
(b) The Company shall pay all filing, registration and recording fees
and taxes, and all expenses incident to the preparation, execution and
acknowledgment of this Mortgage, any security instrument with respect to the
Improvements and Equipment and any instrument of further assurance and all
federal, state, county and municipal stamp taxes and other taxes, duties,
imposts, assessments and charges arising out of or in connection with the
execution and delivery of and all instruments or documents executed in
connection therewith or any security instrument with respect to the Improvements
and Equipment or any instrument of further assurance.
10. Further Assurances and Covenants. The Company, at its cost, and without
--------------------------------
expense to Mortgagee shall:
(a) within fifteen (15) days after receipt of a request therefor from
Mortgagee, deliver to Mortgagee a written statement, duly acknowledged, setting
forth the outstanding amount due under the PNC Loan, and offsets or defenses, if
any, which the Company has under the PNC Loan Documents;
(b) execute such further documents and provide such further
assurances as may be reasonably desirable by Mortgagee for the purposes of
further evidencing, carrying out and/or confirming this Mortgage and for all
other purposes intended by this Mortgage;
(c) with respect to any mortgage(s) held by a Qualified Financing
Lender (the "Additional Mortgages"):
-12-
<PAGE>
(i) fully, completely and strictly comply with the material
terms, conditions, covenants and agreements contained in the Additional
Mortgages or contained in any other document or agreement secured by or in any
way relating thereto;
(ii) promptly pay on a current basis, without extra interest,
late charge or penalty, each and every installment or other payment which the
Company is obligated to make under any note or debt instrument secured by the
Additional Mortgages;
(iii) not commit any act, nor refrain from doing any required
act, nor suffer any act or omission to occur, which would or could, whether
immediately or by passage of time, result in a default occurring under the
Additional Mortgages or under any other document or agreement secured or in any
way relating thereto, and, if the same shall occur, the Company shall
immediately act to fully and completely cure and remedy same;
(iv) not request or accept any future advance or loans from a
holder of any of the Additional Mortgages if the same is, or could arguably be
construed as being, secured by such Additional Mortgage, unless the amount
thereof is within the limitations set forth in Section 7 hereof;
(v) unless copies are provided to Mortgagee by a Qualified
Financing Lender, immediately provide Mortgagee written notice of any notices
received by the Company (whether such notices be given orally or in writing, but
if the same shall be in writing, such notice from the Company to Mortgagee shall
include a copy thereof) from the holder of any Additional Mortgage in which such
holder (a) alleges that the Company is in default under such Additional
Mortgage, or (b) alleges that circumstances exist that, with the passage of
time, will result in a default under such Additional Mortgage, or (c) notifies
the Company of rights and/or remedies which holder alleges that it intends to
invoke or is invoking under such Additional Mortgage or under any other
documents or agreements secured by or in any way relating thereto;
(vi) agree that Mortgagee shall have the right, if it so elects,
(but shall have no obligation) to make payments on the Company's behalf to any
holder of an Additional Mortgage and/or to perform any and all other obligations
of the Company under such Additional Mortgage, and, if Mortgagee does so, the
amount of any such payment and/or the cost to Mortgagee of performing any such
other obligation shall become a part of the Obligations, provided no such
payment made or cost incurred by shall be considered a waiver or release of any
remedy Mortgagee may have against the Company; and
-13-
<PAGE>
(vii) At Mortgagee's option, the entire principal sum secured by
this Mortgage and all interest thereon shall become due and payable upon the
occurrence of a default under any Additional Mortgage continuing uncured after
the expiration of any applicable cure period.
11. Events of Default. The occurrence of any one or more of the following
-----------------
events shall constitute an "Event of Default" hereunder:
(a) an Event of Default under the Processing Agreement has occurred
and is continuing;
(b) any representation or warranty of the Company contained in this
Mortgage shall be materially false;
(c) a failure by the Company to duly perform and observe any
provision in this Mortgage and the same shall remain uncured thirty (30) days
after receipt by the Company of notice thereof; provided, however, if such
matter cannot reasonably be cured within thirty (30) days, the Company shall not
be in default hereunder so long as the Company has commenced the cure within
such thirty (30) day period and is diligently pursuing the same to completion;
or
(d) the expiration of thirty (30) days from the passage of any law
deducting from the value of the Mortgaged Property for the purpose of taxation,
any lien thereon or changing in any way the taxation of mortgages or debts
secured thereby so as to impose a tax on this Mortgage or the Reimbursement
Agreement, unless such tax can be and is timely paid by the Company.
12. Remedies. In the event of an Event of Default, Mortgagee may, to the
--------
extent permitted by law, at its option, without demand, notice or delay, do one
or more of the following:
(a) exercise any right or remedy provided in the Reimbursement
Agreement, the Processing Agreement, the Lease or the Sublease. In the event
that the Sublease terminates as the result of a Miles Takeover under the
Processing Agreement, the Company, Mortgagor and Mortgagee specifically agree
that, as part of the rights granted to Mortgagee under this Mortgage, Mortgagee
has the rights with respect to a Miles Takeover set forth in the Lease, the
Reimbursement Agreement and the Processing Agreement; and
(b) institute and maintain an action of mortgage foreclosure against
the Mortgaged Property and the interest of Mortgagor and the Company therein;
and take such other action at law or in equity as the law may allow, and in each
such action Mortgagee shall be entitled to all costs of suit and reasonable
attorneys' fees. Mortgagee, in any such foreclosure action, shall be entitled to
appointment of a receiver; and
-14-
<PAGE>
(c) without releasing the Company from any obligation and without waiving
any Event of Default: (i) collect any or all of the Rents, including any Rents
past due and unpaid, (ii) perform any obligation or exercise any right or remedy
of Mortgagor or the Company under any Lease, or (iii) enforce any obligation of
any tenant of any of the Property. Mortgagee shall not be obligated to do any of
the foregoing, even if Mortgagee may have theretofore performed obligations or
exercised remedies of Mortgagor or the Company or enforced obligations of
tenants. Mortgagee may exercise any right under this subsection whether or not
Mortgagee shall have entered into possession of any of the Property, and nothing
herein contained shall be construed as constituting Mortgagee a "Mortgagee in
possession", unless Mortgagee shall have entered into and shall continue to be
in actual possession of the Property. Mortgagor and the Company hereby authorize
and direct each and every present and future tenant of any of the Property to
pay all Rents directly to Mortgagee and to perform all other obligations of that
tenant for the direct benefit of Mortgagee, as if Mortgagee were the landlord
under the Lease with that tenant, immediately upon receipt of a demand by
Mortgagee to make such payment or perform such obligations. No tenant shall have
any responsibility to ascertain whether such demand is permitted hereunder or
whether an Event of Default shall have occurred; Mortgagor and the Company
hereby waive any right, claim or demand each may now or hereafter have against
any such tenant by reason of such payment of Rents or performance of obligations
to Mortgagee; and any such payment or performance to Mortgagee shall discharge
the obligations of the tenant to make such payment or performance to Mortgagor
and the Company. The Company shall indemnify Mortgagee and hold Mortgagee
harmless from and against any and all, claims, liability, damage, cost and
expense (including reasonable attorneys' fees) which may be asserted against or
incurred by Mortgagee by reason of any alleged failure by Mortgagor or the
Company of its obligations to perform any provision of any Lease prior to
Mortgagee's foreclosure. After deduction of all costs and expenses incurred in
the operation and management of the Property and in the collection of the Rents
(including attorneys' fees, administration expenses, management fees and
brokers' commissions), Mortgagee may apply the Rents received by Mortgagee to
the payment of any or all of the following, in such order and amounts as
Mortgagee, in its sole discretion, may elect, whether or not the same be then
due: liens on any of the Property, Impositions, claims, insurance premiums,
other carrying charges, invoices of persons who have supplied goods or services
to or for the benefit of any of the Property, costs and expenses of maintenance,
repair, restoration, alteration or improvement of any of the Property. Mortgagee
may, in its sole discretion, determine the method by which, and extent to which,
the Rents will be collected and obligations of tenants enforced; and Mortgagee
may waive or fail to perform or enforce any provision of any Lease. Mortgagee
shall not be accountable for any Rents or other sums it does not actually
receive. Each of Mortgagor and the Company hereby appoints Mortgagee as its
attorney-in-fact effective upon an Event of Default to perform all acts which
Mortgagor and the Company are required or permitted to perform under any and all
Leases. Notwithstanding the foregoing provisions pertaining to Rents and Leases
or any other such provision contained in this Mortgage, it is understood and
agreed that the Company will, during the term of this Mortgage, occupy and
operate the Property directly and will not enter into any Lease (except for the
Lease, the Sublease, and the IDA Lease) or other agreement giving any right to
the Property or any interest therein to
-15-
<PAGE>
any third party whatsoever, without the prior written consent of Mortgagee,
which consent shall not be unreasonably withheld; and
(d) Mortgagee may, without releasing the Company from any obligation
under the Reimbursement Agreement and without waiving any Event of Default,
enter upon and take possession of the Property or any portion thereof, with or
without legal action and by force if necessary, or have a receiver appointed
without proof of depreciation or inadequacy of the value of the Property or
other security or proof of the insolvency of the Company. Mortgagee or said
receiver may manage and operate the Property; make, cancel, enforce or modify
the Leases or any of them; obtain and evict tenants; establish or change the
amount of any Rents; and perform any acts and advance any sums which Mortgagee
deems proper to protect the security of this Mortgage, all such sums to be
payable on demand, together with interest thereon, from the date of such demand,
and such sums and interest to be secured by this Mortgage; and
(e) Mortgagee may take possession of the Equipment and the Other
Property, or any portion thereof, and may use and deal with the same to the same
extent as Mortgagor or the Company is entitled to do so and may sell the same
pursuant to law and exercise such other rights and remedies with respect to the
same as may be provided by law, and file such continuation statements which it
deems desirable.
All remedies contained in this Mortgage are cumulative and Mortgagee also
has all other remedies provided by law or in equity. No delay or failure by
Mortgagee to exercise any right or remedy under this Mortgage will be construed
to be a waiver of that right or remedy or a waiver of any Event of Default.
Mortgagee may exercise any one or more of its rights and remedies without regard
to the adequacy of its security.
If any action or proceeding be commenced (except an action to foreclose
this Mortgage or to collect the debt secured hereby), to which action or
proceeding Mortgagee is made a party, or in which it becomes necessary to defend
or uphold the lien of this Mortgage, all reasonable sums paid by Mortgagee for
the expense of any litigation to prosecute or defend the rights and lien created
by this Mortgage (including reasonable attorneys' fees), shall be paid by the
Company, together with interest thereon at the rate set forth in the PNC Loan
Documents and any such sum and the interest thereon shall be a lien on the
Mortgaged Property, prior to any right, or title to, interest in or claim upon
the Mortgaged Property attaching or accruing subsequent to the lien of this
Mortgage, and shall be deemed to be secured by this Mortgage. In any action or
proceeding to foreclose this Mortgage, or to recover or collect the debt secured
thereby, the provisions of law respecting the recovering of costs, disbursements
and allowances shall prevail unaffected by this covenant.
-16-
<PAGE>
13. Mortgagee's Right to Protect Security. Mortgagee is hereby authorized
-------------------------------------
to do any one or more of the following irrespective of whether an Event of
Default has occurred: (a) appear in and defend any action or proceeding
purporting to affect the security hereof or the rights or powers of Mortgagee
hereunder; (b) after having given twenty (20) days' notice to the Company,
except in case of emergency, in which case no notice shall be required, take
such action as Mortgagee may determine to pay, perform or comply with any
Impositions or Legal Requirements, to cure any Events of Default and to protect
its security in the Mortgaged Property, advance sums on behalf of the Company to
pay, perform or comply with any Imposition, Legal Requirement, prohibited lien,
claims, costs and expenses in connection with the Mortgaged Property, including
payment for utilities, fuel or any other necessary maintenance expenses, fees,
insurance and repairs; and for the purpose of exercising any such powers
Mortgagee is hereby appointed attorney-in-fact for Mortgagor and is authorized
to pay or advance sums to meet necessary expenses and costs of repair, employ
counsel and pay reasonable attorneys' fees. All sums paid by or otherwise owing
to Mortgagee under this Mortgage shall be paid by the Company to Mortgagee on
demand, and until paid such sums shall be added to the principal secured hereby,
shall be included as part of the amounts due pursuant to the Reimbursement
Agreement and shall bear interest from the date of demand at the rate set forth
in the PNC Loan Documents.
14. Security Agreement Under Uniform Commercial Code. This Mortgage is a
------------------------------------------------
Security Agreement and a Fixture Filing as defined in the Uniform Commercial
Code of the State of New York. Notwithstanding any filing of a financing
statement covering any of the Mortgaged Property in the records normally
pertaining to personal property, at Mortgagee's option all of the Mortgaged
Property, for all purposes and in all proceedings, legal or equitable, shall be
regarded (to the extent permitted by law), as part of the Realty, whether or not
any such item is physically attached to the Realty or Improvements. The mention
in any such financing statement of any of the Mortgaged Property shall not be
construed as in any way altering any of the rights of Mortgagee or adversely
affecting the priority of the Glen granted hereby, but such mention in the
financing statement is hereby declared to be for the protection of Mortgagee in
the event any court shall at any time hold that notice of Mortgagee's priority
of interest, to be effective against any third party, must be filed in the
Uniform Commercial Code records. Information relating to the security interest
created hereby may be obtained by application to Mortgagee (secured party) at
the address set forth on page 1 hereof. The mailing addresses of the Mortgagor
and the Company are set forth on page 1 hereof.
15. Waivers by Mortgagor and the Company. Mortgagor and the Company, to the
------------------------------------
extent permitted by law, hereby waive all errors and imperfections in any
proceedings instituted by Mortgagee and all benefit of any present or future
statute of limitations or moratorium law or any other present or future law,
regulation or judicial decision which (a) exempts any of the Mortgaged Property
or any other property, real or personal, or any part of the proceeds arising
from any sale thereof from attachment, levy or sale under execution,
-17-
<PAGE>
(b) provides for any stay of execution, marshalling of assets, exemption from
civil process, redemption, extension of time for payment or valuation or
appraisement of any of the Mortgaged Property, or (c) conflicts with any
provision of the Reimbursement Agreement.
16. Notices. All notices, requests, consents and demands
-------
under and with respect to this Mortgage shall be in writing, and shall be served
by registered or certified mail, return receipt requested; by hand delivery; by
overnight mail; or by a nationally recognized overnight delivery service,
addressed to the respective parties at the following addresses (or to such other
addresses as either party shall provide to the other by written notice):
If to Mortgagee: Miles Inc.
One Mellon Center
53rd Floor, 500 Grant Street
Pittsburgh, Pennsylvania 15219-2507
Attention: Mr. Jon R. Wyne, Senior Vice President &
Treasurer and Mr. Roger W. Heins, Director -
Treasury Services
Telephone: (412) 394-5522
Telecopier: (412) 394-5578
with a copy to: Pharmaceutical Division
Miles Inc.
400 Morgan Lane
West Haven, Connecticut 06516
Attention: Law Department
Telephone: (203) 939-2401
Telecopier: (203) 937-2795
If to the Company: Melville Biologics, Inc.
155 Duryea Road
Melville, New York 11747
Attention: Mr. Thomas R. Ostermueller, President & CEO
Telephone: (516) 752-7339
Telecopier: (516) 752-8754
If to Mortgagor: Suffolk County Industrial Development Agency
220 Rabro Drive
Post Office Box 6100
Hauppauge, New York 11788-0099
Attention: Administrative Director
Telephone: (516) 853-4800
Telecopy: (516) 853-4888
-18-
<PAGE>
All such notices shall be deemed given three (3) business days after deposit
with the U.S. Postal Service if given by certified or registered mail; upon
actual delivery if hand delivered; and one (1) business day after deposit after
deposit with U.S. Postal Service for overnight mail or nationally recognized
overnight delivery service.
17. Status of Parties. It is understood and agreed that the
-----------------
relationship of the parties is that of Mortgagor and Mortgagee and that nothing
herein or in the Reimbursement Agreement or the Guaranty shall be construed to
constitute a partnership, joint venture or cotenancy among Mortgagor, the
Company and Mortgagee.
18. Severability. In the event any one or more of the provisions
------------
contained in this Mortgage or in the Reimbursement Agreement shall, for any
reason, be held to be inapplicable, invalid, illegal, or unenforceable in any
respect, such inapplicability, invalidity, illegality or unenforceability shall
not affect any other provision of this Mortgage, but this Mortgage shall be
construed as if such inapplicable, invalid, illegal or unenforceable provision
had never been contained herein or therein.
19. Successors. All of the grants, covenants, terms, provisions and
----------
conditions herein shall run with the land and shall apply to, bind and inure to
the benefit of, the respective successors and assigns of, Mortgagor, Mortgagee
and the Company.
20. Acceleration. In order to accelerate the maturity of the
------------
indebtedness hereby secured because of the failure of the Company to pay any
tax, assessment, liability, obligation, encumbrance or other Imposition upon the
Mortgaged Property as herein provided, it shall not be necessary nor requisite
that Mortgagee shall first pay the same.
21. Foreclosure Sale. In case any sale under this Mortgage occurs by
----------------
virtue of judicial proceedings, the Mortgaged Property may be sold in one parcel
and as an entity, or in such parcels, manner or order as Mortgagee in its sole
discretion may elect.
22. Lien Law. This Mortgage is subject to the trust provisions of
--------
Section 13 of the Lien Law of the State of New York.
23. Miscellaneous. (a) The section headings in this Mortgage are used
-------------
only for convenience in finding the subject matters and are not part of this
Mortgage or to be used in determining the intent of the parties or otherwise
interpreting this Mortgage; (b) as used in this Mortgage, the singular shall
include the plural as the context requires and the following words and phrases
shall have the following meanings: (i) "including" shall mean "including but not
limited to", (ii) "provisions" shall mean "provisions, terms, covenants and/or
conditions", (iii) "lien" shall mean "lien, charge, encumbrance, security
interest, mortgage and/or deed of trust", (iv) "obligation" shall mean
"obligation, duty, covenant and/or condition", (v) "any of the Mortgaged
Property " shall mean "the Mortgaged Property or any part thereof or interest
therein", (vi) "tenant" shall mean "tenant and/or subtenant and/or occupant
and/or user of any of the Property", and (vii) "any of the Property" shall mean
"the Property or any part thereof or interest therein"; (c) any act which
Mortgagee is
-19-
<PAGE>
permitted to perform under the Reimbursement Agreement or this Mortgage may be
performed at any time and from time to time by Mortgagee or any person or entity
designated by Mortgagee; (d) each appointment of Mortgagee as attorney-in-fact
for Mortgagor or the Company hereunder is irrevocable and coupled with an
interest; (e) this Mortgage may be modified, amended, discharged or waived only
by an agreement in writing signed by Mortgagor, Mortgagee and the Company; (f)
the covenants of this Mortgage shall run with the land and bind Mortgagor and
the Company, and the successors and assigns of Mortgagor and the Company, and
all present and subsequent encumbrances, tenants and subtenants of any of the
Mortgaged Property, and shall inure to the benefit of Mortgagee, its successors
and assigns; and (g) this Mortgage shall be governed and construed in accordance
with the laws of the State of New York.
24. The Property is not improved or to be improved by one or more
structures containing in the aggregate not more than six residential dwelling
units, each dwelling unit having its own separate cooking facilities.
25. Notwithstanding anything to the contrary in this Mortgage, with
respect to Mortgagor, it is agreed that Mortgagor, its officers, members,
employees, agents and directors shall have no personal liability hereunder, nor
in their capacity as officers, members, employees, agents and directors.
Mortgagor has executed this Mortgage to subject its interest in the Mortgaged
Property to the lien of this Mortgage; however, Mortgagee shall have no recourse
against Mortgagor other than its interest in the Mortgaged Property. No
provision, covenant or agreement contained in this Mortgage or any obligations
herein imposed upon Mortgagor or the breach thereof, shall constitute or give
rise to or impose upon Mortgagor a pecuniary liability or a charge upon its
general credit. In making the agreements, provisions and covenants set forth in
this Mortgage, Mortgagor has not obligated itself except with respect to the
Mortgaged Property. All covenants, stipulations, promises, agreements and
obligations of Mortgagor contained herein shall be deemed to be covenants,
stipulations, promises, agreements and obligations of Mortgagor and not of any
member, director, officer, employee or agent of Mortgagor in his or her
individual capacity, and no recourse shall be had for the payment of the
principal of any debt or interest thereon or for any claim based thereon or
hereunder against any member, director, officer, employee or agent of Mortgagor
or any natural person executing this Mortgage. No covenant herein contained
shall be deemed to constitute a debt of the State of New York nor the County of
Suffolk and neither the State of New York nor the County of Suffolk shall be
liable on any covenant contained herein, nor shall the Obligations secured by
this Mortgage be payable out of any funds of Mortgagor.
26. The Company directs Mortgagor to execute and deliver this Mortgage
to Mortgagee.
-20-
<PAGE>
IN WITNESS WHEREOF, intending to be legally bound hereby, Mortgagor
and the Company have caused this Mortgage to be duly executed on the day and
year first above written.
MORTGAGOR:
SUFFOLK COUNTY INDUSTRIAL
DEVELOPMENT AGENCY
By: /s/ Bruce E. Ferguson
-------------------------------
Title: Administrative Director
-----------------------------
THE COMPANY:
MELVILLE BIOLOGICS, INC.
By: /s/ Thomas R. Ostermueller
-------------------------------
Title: PRESIDENT & CEO
-----------------------------
-21-
<PAGE>
ACKNOWLEDGMENT
STATE OF NEW YORK )
) SS:
COUNTY OF NEW YORK )
On this, the 28 day of February, 1995, before me, a Notary Public,
personally appeared Thomas R. Ostermueller, to me known, who, being by me
personally sworn, did depose and say that he resides at 35 Fallowfield Road,
Fairfield, Connecticut 06430, that he is the President and Chief Executive
Officer of Melville Biologics, Inc. a Delaware corporation, the corporation
described in and which executed the foregoing instrument by authority of the
Board of Directors of said corporation, and that he signed his name thereto by
like authority.
IN WITNESS WHEREOF, I hereunto set my hand and official seal the day and
year first above written.
/s/ Margaret A. Williams
-----------------------------
Notary Public
My Commission expires:
MARGARET A. WILLIAMS
Notary Public, State of New York
No. 02WI5012233
Qualified in Monroe County
Certificate Filed in Monroe County
Commission Expires June 15, 1995
-22-
<PAGE>
ACKNOWLEDGMENT
STATE OF NEW YORK )
) SS:
COUNTY OF NEW YORK )
On this, the 27 day of February, 1995, before me, a Notary Public,
personally appeared Bruce E. Ferguson, to me known, who, being by me personally
sworn, did depose and say that s(he) resides at Ziemack Lane, Jamesport, NY,
that s(he) is the Admin. Director of Suffolk County Industrial Development
Agency, a public benefit corporation, organized and existing under the laws of
the State of New York, the corporation described in and which executed the
foregoing instrument by authority of the Board of Directors of said corporation,
and that (s)he signed (his)(her) name thereto by like authority.
IN WITNESS WHEREOF, I hereunto set my hand and official seal the day and
year first above written.
/s/ Anthony J. Catapano
-----------------------------
Notary Public
My Commission expires:
ANTHONY J. CATAPANO
Notary Public, State of New York
No. 4853562
Qualified in Suffolk County
Commission Expires Feb. 17, 1996
-23-
<PAGE>
EXHIBIT A
ALL that certain plot, piece or parcel of land, situate, lying and
being at Melville, in the Town of Huntington, County of Suffolk and State of New
York, bounded and described as follows:
BEGINNING at a point on the new Northerly side of Duryea Road, distant
783.40 feet, Easterly as measured along said Northerly side of Duryea Road, from
the Southeasterly end of a connecting line, having a length of 52.23 feet,
connecting the said Northerly side of Duryea Road and the Easterly side of New
York State Route 110; said point of beginning also being where the Southeast
corner of the land now or formerly of Duryea intersects the said Northerly side
of Duryea Road;
RUNNING THENCE North 4 degrees 54 minutes 38 seconds East, 1047.70
feet, to the land now or formerly of Abramoske;
THENCE along said last mentioned land the following two courses and
distances:
1. South 85 degrees 14 minutes 32 seconds East, 132.22 feet;
2. South 84 degrees 32 minutes 47 seconds East, 321.30 feet, to land
now or formerly of Brand;
THENCE along said last mentioned land, the following two courses and
distances:
1. South 5 degrees 38 minutes 21 seconds West, 280.65 feet;
2. South 4 degrees 54 minutes 38 seconds West, 772.18 feet, to the
new Northerly side of Duryea Road;
THENCE along said Duryea Road, North 84 degrees 05 minutes 47 seconds
West, 450.00 feet, to the point or place of BEGINNING.
-24-
<PAGE>
AMENDMENT
TO
MORTGAGE,
SECURITY AGREEMENT AND FIXTURE FILING
from
SUFFOLK COUNTY INDUSTRIAL DEVELOPMENT AGENCY, Mortgagor
and
V.I. TECHNOLOGIES. INC. (formerly known as Melville Biologics, Inc.), Company
to
BAYER CORPORATION (formerly known as Miles, Inc.), Mortgagee
DATED AS OF December 22, 1997
After recording, please return to:
Eckert Seamans Cherin & Mellott LLC
600 Grant Street - 42nd Fl.
Pittsburgh, Pennsylvania 15219-2788
ATTN: William Kelleher, Esq.
<PAGE>
AMENDMENT TO
MORTGAGE, SECURITY AGREEMENT AND FIXTURE FILING
-----------------------------------------------
THIS AMENDMENT TO MORTGAGE, SECURITY AGREEMENT AND FIXTURE FILING, dated as
of December 22, 1997 (the "Amendment") is made among SUFFOLK COUNTY INDUSTRIAL
DEVELOPMENT AGENCY, a public benefit corporation organized and existing under
the laws of the State of New York, having an office at 220 Rabro Drive, Post
Office Box 6100, Hauppauge, New York 11788-0099 ("Mortgagor"), V.I.
TECHNOLOGIES, INC. (formerly known as Melville Biologics. Inc.), a Delaware
corporation (the "Company"); having an address at 155 Duryea Road, Melville, New
York 11747, and BAYER CORPORATION (formerly known as Miles, Inc.), an Indiana
corporation, having an address at 400 Morgan Lane, West Haven, Connecticut 06516
(the "Mortgagee"). References herein to this Amendment shall mean this
instrument and any and all renewals, modifications, amendments, supplements,
extensions, consolidations, substitutions, spreaders and replacements of this
instrument.
Background
----------
WHEREAS, Mortgagor granted to Mortgagee that certain Mortgage, Security
Agreement and Fixture Filing dated as of February 15, 1995 and recorded in Book
18919 Page 642 of the records of Suffolk County, New York on March 3, 1995 (the
"1995 Mortgage"; terms used below and not defined herein are used as defined in
the 1995 Mortgage) covering the Property;
WHEREAS, the 1995 Mortgage secured reimbursement and other obligations of
the Company under the Reimbursement Agreement, relative to the Guaranty by
Mortgagee of the PNC Loan, and other obligations of the Company, to the
Mortgagee;
WHEREAS, pursuant to a Credit Agreement dated as of the date hereof between
the Company and The Chase Manhattan Bank ("Chase") (as the same may be amended,
modified, supplemented or extended from time to time, the "Credit Agreement"),
Chase has agreed to make a loan in the amount of $10,750,000 (the "Loan") to the
Company;
WHEREAS, the Loan will be made in part to pay off the PNC Loan, whereby,
among other things, the Guaranty and said reimbursement obligations will be
terminated, and in conjunction therewith the Reimbursement Agreement is being
amended and restated;
WHEREAS, Mortgagee, the Company, and Chase have entered into that certain
Intercreditor Agreement dated as of the date hereof (as the same may be amended,
modified or supplemented at any time, the "Intercreditor Agreement");
WHEREAS, Mortgagee, Ampersand Specialty Materials and Chemicals II Limited
Partnership, Ampersand Specialty Materials and Chemicals III Limited
Partnership, Laboratory Partners I Limited Partnership, Ampersand Specialty
Materials and Chemicals III Companion Fund Limited Partnership and Laboratory
Partners Companion Fund Limited Partnership
<PAGE>
(collectively, "Ampersand") entered into, with the Company, that certain
Intercreditor Agreement dated as of June 21, 1996 (the "Bayer/Ampersand
Intercreditor Agreement") in order to define each of Bayer's and Ampersand's
respective rights and obligations to receive and share any amounts received
pursuant to the Bayer Security Documents (as such term is defined in the
Bayer/Ampersand Intercreditor Agreement) and the Ampersand Security Documents
(as such term is defined in the Bayer/Ampersand Intercreditor Agreement); and
WHEREAS, the Bayer/Ampersand Intercreditor Agreement is being terminated
pursuant to this Amendment to, the Ampersand Termination, Discharge and Release
from Ampersand to the Company (the "Ampersand Termination"), and the VITEX
Intercreditor Termination, Discharge and Release from the Company to each of
Ampersand and Mortgagee (the "VITEX Intercreditor Termination"), each of which
is dated as of the date hereof;
NOW THEREFORE, in consideration of the premises and for the sum of Ten
Dollars ($10.00), the receipt and sufficiency of which is hereby acknowledged,
Mortgagor and Mortgagee hereby agree as follows:
1. References in the 1995 Mortgage are amended or deleted as follows:
a. references to Melville Biologics, Inc. are changed to V.I.
Technologies, Inc.;
b. references to Miles, Inc. or Miles are changed to Bayer
Corporation and Bayer, respectively;
c. references to the "Reimbursement Agreement" are replaced with
references to the Security Agreement between the Company and
Mortgagee dated the date hereof, and said reimbursement
obligations are terminated, discharged and released and no longer
secured by the 1995 Mortgage, as amended hereby;
d. references to PNC, the PNC Loan, the PNC Loan Documents, and
similar words, are deleted;
e. references to the Guaranty are deleted;
f. Sections 7(b) and 10(c) are deleted in their respective
entireties; and
g. references to "this Mortgage" or similar references shall be
deemed amended to refer to the 1995 Mortgage as amended by this
Amendment.
2. The Borrower Mortgage, as defined in the Credit Agreement, is
permitted and excluded from the limitations of Section 7(a) of the 1995
Mortgage, as amended hereby. Pursuant and subject to the Intercreditor
Agreement, any failure by the Mortgagor or the Company to comply with the
covenants and other provisions of the 1995 Mortgage shall not
<PAGE>
permit the Mortgagee to exercise any rights or remedies under any document to
which the Mortgagee is a party with the Mortgagor or the Company.
3. Section 16 in the 1995 Mortgage is amended by deleting the phrase "If
to Mortgagee:" and the address that appears to the right of such phrase and
substituting instead the following:
If to Mortgagee: Bayer Corporation
100 Bayer Road - Building 4
Pittsburgh, PA 15205-9741
Attention: Mr. Jon R. Wyne, Senior
Vice President and Treasurer
and
Mr. Roger W. Heins, Director - Treasury Services
Telephone: (412) 777-5717
Telecopier: (412) 778-4412
4. So long as in effect, in the event of any conflict between the
Intercreditor Agreement and the 1995 Mortgage, the Intercreditor
Agreement shall control over any contrary provision in the 1995
Mortgage, as amended hereby.
5. So long as the Intercreditor Agreement is in effect, the covenants and
other provisions of the Borrower Mortgage shall be incorporated by
reference into and supercede any contrary or other provisions of the
1995 Mortgage, as amended hereby, so the Mortgagor and the Company, as
applicable, need comply only with such covenants and other provisions
of the Borrower Mortgage and not with the covenants or other
provisions of the 1995 Mortgage, as amended hereby.
6. Other than as so amended or affected, the 1995 Mortgage shall remain
in full force and effect.
7. The Mortgagee, for itself and its successors and assigns, hereby
terminates all right, title and interest in and to the Bayer/Ampersand
Intercreditor Agreement, and hereby discharges and releases each of
Ampersand and the Company from any and all liabilities, obligations,
claims and causes of action relating to, arising out of, in connection
with, or in respect of the Bayer/Ampersand Intercreditor Agreement;
provided, however, that such termination shall not become effective
-------- -------
until each of the Company and Ampersand shall have executed and
delivered the VITEX Intercreditor Terrnination and the Ampersand
Termination, respectively.
8. The Company and the Mortgagee hereby acknowledge that, pursuant to
that certain Escrow Agreement among them and First American Title
Insurance Company of New York, dated February 7, 1995, that certain
Mortgage dated as of February 7, 1995 made by the Company in favor of
Mortgagee never became effective, was never recorded and was
superseded in its entirety by the 1995 Mortgage.
<PAGE>
This Amendment has been duly executed by Mortgagor, the Company and
Mortgagee on the date first above written.
V.I. TECHNOLOGIES, INC.
By: /s/ Joanne Leonard
---------------------------------
Name: Joanne Leonard
Title: Vice President, CFO
SUFFOLK COUNTY INDUSTRIAL
DEVELOPMENT AGENCY
By: /s/ Bruce E. Ferguson
---------------------------------
Name: Bruce E. Ferguson
Title: Administrative Director
BAYER CORPORATION
By: /s/ Jack Ryan
--------------------------
Name: Jack Ryan
Title: Vice Pres.
<PAGE>
ACKNOWLEDGMENT
STATE OF NEW YORK )
) ss:
COUNTY OF NEW YORK )
On the 22nd day of December 1997, before me, a Notary Public, personally
appeared Joanne Leonard, to me known, who, being by me personally sworn, did
depost and say that (s)he resides at Melville, New York, that (s)he is the Vice
President, CFO of V.I. Technologies, Inc., a Delaware corporation, the
corporation described in and which executed the foregoing instrument by
authority of the Board of Directors of said corporation, and that (s)he signed
his(her) name thereto by like authority.
IN WITNESS WHEREOF, I hereunto set my hand and official seal the day and
year first above written.
/s/ Cynthia Parker
---------------------------------------
Notary Public
[STAMP OF CYNTHIA PARKER APPEARS HERE]
My Commission expires: January 31, 1998
<PAGE>
ACKNOWLEDGMENT
STATE OF NEW YORK )
) ss:
COUNTY OF NASSAU )
On the 22nd day of December 1997, before me, a Notary Public, personally
appeared Bruce E. Ferguson, to me known, who, being by me personally sworn, did
depost and say that (s)he resides at Riverhead, New York, that (s)he is the
Administrative Director of Suffolk County Industrial Development Agency, a
public benefit corporation, organized and existing under the laws of the State
of New York, the corporation described in and which executed the foregoing
instrument by authority of the Board of Directors of said corporation, and that
(s)he signed his(her) name thereto by like authority.
IN WITNESS WHEREOF, I hereunto set my hand and official seal the day and
year first above written.
/s/ Anthony J. Catapano
----------------------------------------
Notary Public
My Commission expires: February 17, 1998
[STAMP OF ANTHONY J. CATAPANO APPEARS HERE]
<PAGE>
ACKNOWLEDGMENT
STATE OF CALIFORNIA )
) ss:
COUNTY OF ALAMEDA )
On the l9th day of December, 1997, before me, a Notary Public, personally
appeared Jack Ryan, to me known, who, being by me personally sworn, did depose
and say that he resides at 78 McNear Drive, San Rafael, California 94901, that
he is the Vice President -Commercial Development of Bayer Corporation, an
Indiana corporation, the corporation described in and which executed the
foregoing instrument for the purposes therein contained, and that he, being
authorized to do so, signed his name thereto on behalf of said corporation.
IN WITNESS WHEREOF, I hereunto set my hand and official seal the day and
year first above written.
/s/ B.C. Andersen
-----------------------------------------
Notary Public
[STAMP OF B.C. ANDERSON APPEARS HERE]
My Commission expires: April 11, 1998
