<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 2, 1998
REGISTRATION STATEMENT NO. 333-59857
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------------------
AMENDMENT NO. 2
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
DEY, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 2834 94-2463696
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
------------------------
2751 NAPA VALLEY CORPORATE DRIVE, NAPA, CALIFORNIA 94558, (877) 666-1534
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
CHARLES A. RICE
PAMELA R. MARRS
DEY, INC.
2751 NAPA VALLEY CORPORATE DRIVE
NAPA, CALIFORNIA 94558
(877) 666-1534
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------
with copies to:
<TABLE>
<S> <C>
EDWIN S. MATTHEWS, JR., ESQ. ROBERT M. CHILSTROM, ESQ.
JEFFREY E. COHEN, ESQ. SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
COUDERT BROTHERS 919 THIRD AVENUE
1114 AVENUE OF THE AMERICAS NEW YORK, NY 10022
NEW YORK, NY 11036 (212) 735-3000
(212) 626-4400
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective
------------------------
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 this form is a post-effective amendment filed pursuant to
Rule 462(d) 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,
please 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 THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth all expenses, other than underwriting
discounts and commissions, payable by the registrant in connection with the sale
of the Common Stock being registered. All the amounts shown are estimates.
<TABLE>
<CAPTION>
<S> <C>
SEC registration fee...................................................................... $ 76,535
NASD filing fee........................................................................... 26,444
New York Stock Exchange listing fee....................................................... 383,000
Blue Sky fees and expenses................................................................ 15,000
Printing and engraving expenses........................................................... 300,000
Legal fees and expenses................................................................... 500,000
Accounting fees and expenses.............................................................. 300,000
Miscellaneous expenses.................................................................... 74,021
----------
TOTAL................................................................................ $1,675,000
----------
----------
</TABLE>
All of such expenses are to be borne by the Company.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the DGCL authorizes, inter alia, a corporation generally to
indemnify any person ("indemnitee") who was or is a party or is threatened to be
made a party to any threatened, pending or completed action, suit or proceeding
(other than an action by or in the right of the corporation) by reason of the
fact that such person is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation in a similar
position with another corporation or entity, against expenses (including
attorney's fees), judgements, fines and amounts paid in settlement, actually and
reasonably incurred by him in connection with such action, suit or proceeding if
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, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. With respect to actions or suits by or in the right of the
corporation, however, an indemnitee who acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation is generally limited to attorneys' fees and other expenses, and no
indemnification shall be made if such person is adjudged liable to the
corporation unless and only to the extent that a court of competent jurisdiction
determines that indemnification is appropriate. Section 145 further provides
that any indemnification shall be made by the corporation only as authorized in
each specific case upon a determination by the (i) stockholders, (ii) board of
directors by a majority voted of a quorum consisting of directors who were not
parties to such action, suit or proceeding or (iii) independent counsel if a
quorum of disinterested directors so directs, that indemnification of the
indemnitee is proper because he has met the applicable standard of conduct.
Section 145 provides that indemnification pursuant to its provisions is not
exclusive of other rights of indemnification to which a person may be entitled
under any by-law, agreement, vote of stockholders or disinterested directors or
otherwise.
The Certificate of Incorporation provides that the registrant will
indemnify, to the full extent authorized or permitted by law, any person made,
or threatened to be made, a party or witness to any action, suit or proceeding,
whether civil or criminal or otherwise, by reason of the fact that he or she is
or was a director or officer of the registrant or by reason of the fact that
such director or officer, at the request of the registrant, is or was serving
any other corporation, partnership, joint venture, trust, employee benefit plan
or other enterprise, in any capacity.
The Certificate of Incorporation also provides that no director of the
registrant will be personally liable to the registrant or its stockholders for
monetary damages for any breach of fiduciary duty by such a director as a
director other than for: (i) any breach of the director's duty of loyalty to the
registrant or its stockholders, (ii) acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii)
II-1
<PAGE>
authorization of illegal dividends or (iv) any transaction from which such
director derived an improper personal benefit.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
The registrant has not issued any securities within the past three years.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits.
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- --------- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
1.1 -- Underwriting Agreement*
3.1 -- Restated Certificate of Incorporation of the Company*
3.2 -- Amended and Restated By-laws of the Company*
4.1 -- Note dated July 31, 1997, issued by the Company to Lipha Americas, Inc.**
4.2 -- Facility Agreement dated as of August 13, 1998 between the Company and Merck KGaA as Lender***
5.1 -- Opinion of Coudert Brothers*
10.1 -- Master Agreement between EM Industries, Incorporated and Dey Laboratories, L.P., dated as of May 26,
1998****
10.2 -- License Agreement dated , 1998 between Dey Laboratories, L.P. and Lipha S.A.*
10.3 -- Tax Sharing Agreement dated , 1998 between the Company and Lipha Americas, Inc.*
10.4 -- Management Services Agreement dated September 1, 1998 between the Company and Lipha Americas, Inc.**
10.5 -- Management Services Agreement dated September 1, 1998 between the Company and Allergy Free L.P.**
10.6 -- Management Services Agreement dated September 1, 1998 between the Company and EM Pharma, Inc.**
10.7 -- Lease between Dey Laboratories, L.P. and EBP 2, Ltd.**
10.8 -- Assignment Agreement dated September 1, 1998 between Dey, L.P. and EM Pharma, Inc.**
10.9 -- Dey, Inc. 1998 Incentive Plan*
21.1 -- Subsidiaries of the Company***
23.1 -- Consent of Coudert Brothers (filed as Exhibit 5.1 hereto)*
23.2 -- Report on Schedule and Consent of KPMG Peat Marwick LLP, Independent Auditors***
24.1 -- Power of Attorney***
27.1 -- Financial Data Schedule***
</TABLE>
- ------------------
* To be filed by amendment.
** Filed herewith.
*** Previously filed.
**** Filed herewith. Confidential material omitted and filed separately with the
Commission pursuant to the Company's Application Requesting Confidential
Treatment under Rule 406 under the Securities Act.
(b) Financial Statements and Schedules.
Schedule II Valuation and Qualifying Accounts
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes to provide to the Underwriters
at the closing specified in the Underwriting Agreement, 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
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described in Item 14, or
II-2
<PAGE>
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 of 1933 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 of whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance of 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 of 1933 shall be deemed to be 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 of 1933, 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 the
time shall be deemed to be the initial bona fide offering thereof.
II-3
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS AMENDMENT TO THE REGISTRATION STATEMENT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF NAPA, STATE
OF CALIFORNIA, ON OCTOBER 2, 1998.
DEY, INC.
By: /s/ CHARLES A. RICE
----------------------------------
Charles A. Rice
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
/s/ CHARLES A. RICE President, Chief Executive Officer and Director Oct. 2, 1998
- ---------------------------------------- (Principal Executive Officer)
Charles A. Rice
* Executive Vice President, Chief Financial Oct. 2, 1998
- ---------------------------------------- (Principal Executive Officer)
Pamela R. Marrs Accounting Officer)
* Director Oct. 2, 1998
----------------------------------------
Bernhard Scheuble
* Director Oct. 2, 1998
- ----------------------------------------
Jean-Noel Treilles
* Director Oct. 2, 1998
Peter A. Wriede
</TABLE>
* By /S/ CHARLES A. RICE
----------------------------------
Charles A. Rice
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION PAGE NO.
------- ----------- ----------
<S> <C> <C> <C>
1.1 -- Underwriting Agreement*
3.1 -- Restated Certificate of Incorporation of the Company*
3.2 -- Amended and Restated By-laws of the Company*
4.1 -- Note dated July 31, 1997, issued by the Company to Lipha Americas, Inc.**
4.2 -- Facility Agreement dated as of August 13, 1998 between the Company and Merck KGaA as
Lender***
5.1 -- Opinion of Coudert Brothers*
10.1 -- Master Agreement between EM Industries, Incorporated and Dey Laboratories, L.P., dated
as of May 26, 1998****
10.2 -- License Agreement dated , 1998 between Dey Laboratories, L.P. and Lipha S.A.*
10.3 -- Tax Sharing Agreement dated , 1998 between the Company and Lipha Americas,
Inc.*
10.4 -- Management Services Agreement dated September 1, 1998 between the Company and Lipha
Americas, Inc.**
10.5 -- Management Services Agreement dated September 1, 1998 between the Company and Allergy
Free L.P.**
10.6 -- Management Services Agreement dated September 1, 1998 between the Company and
EM Pharma, Inc.**
10.7 -- Lease between Dey Laboratories, L.P. and EBP 2, Ltd.**
10.8 -- Assignment Agreement dated September 1, 1998 between Dey, L.P. and EM Pharma, Inc.**
10.9 -- Dey, Inc. 1998 Incentive Plan*
21.1 -- Subsidiaries of the Company***
23.1 -- Consent of Coudert Brothers (filed as Exhibit 5.1 hereto)*
23.2 -- Report on Schedule and Consent of KPMG Peat Marwick LLP, Independent Auditors***
24.1 -- Power of Attorney***
27.1 -- Financial Data Schedule***
</TABLE>
- ------------------
* To be filed by amendment.
** Filed herewith.
*** Previously filed.
**** Filed herewith. Confidential material omitted and filed separately with the
Commission pursuant to the Company's Application Requesting Confidential
Treatment under Rule 406 under the Securities Act.
<PAGE>
PROMISSORY NOTE
U.S. $22,000,000.00 New York, New York
As of July 31, 1997
FOR VALUE RECEIVED, DEY LABORATORIES, L.P. (the "Borrower"), a Delaware
limited partnership, with its principal place of business at 2751 Napa Valley
Corporate Drive, Napa, California, 94558, hereby promises to pay to LIPHA
AMERICAS, INC. (the "Lender"), a Delaware corporation, with its principal
office at 1209 Orange Street, Wilmington, Delaware 19891, in the lawful money
of the United States of America ("Dollars" or "US $"), on the Maturity Date
(as hereinafter defined), (i) the principal amount of Twenty Two Million
Dollars (US $22,000,000.00), and (ii) during each Interest Period (as
hereinafter defined) until the Maturity Date, interest on the outstanding
principal amount hereof at a rate per quarter equal to the Applicable Federal
Short-Term Rate (as hereinafter defined) for such Interest Period, payable
quarterly in arrears. The term "Applicable Federal Short-Term Rate" shall mean
the Federal short-term rate (within the meaning of Section 1274(d)(1)(C) of
the Internal Revenue Code of 1986, as amended, or any successor provision
thereto) which the Internal Revenue Service announces from time to time shall
apply during a calendar month, based on a quarterly period for compounding.
The term "Interest Period" shall mean, initially, the period from and
including the date hereof to but excluding the first day of the next calendar
month, and thereafter, the period from and including the next calendar day
following the expiration of the prior Interest Period to but excluding the
first day of the subsequent calendar month. The term "Maturity Date" shall
mean July 31, 1999.
The Borrower hereby waives presentment, demand for payment, notice of
dishonor and any and all other notices or demands in connection with the
delivery, acceptance, performance, default or enforcement of this Note and
hereby consents to any waivers or modifications that may be granted or
consented to by the holder of this Note.
In the event that any holder shall institute any action for the
enforcement or the collection of this Note, there shall be immediately due and
payable, in addition to the unpaid balance hereof, all late charges, and all
costs and expenses of such action, including attorneys' fees. Borrower waives
the right to interpose any setoff, counterclaim or defense of any nature or
description whatsoever.
Borrower agrees that its liability hereunder is absolute and
unconditional without regard to the liability of any party and that no delay
on the part of the holder hereof in exercising any power or right hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise of
any power or right hereunder preclude other or further exercise thereof or the
exercise of any other power or right.
<PAGE>
The Borrower may, at its option, prepay the principal under this Note in
whole at any time or in part from time to time, without premium or penalty,
but with interest accrued on the principal being prepaid to the date of
prepayment.
This Note shall be governed by, and construed and interpreted in
accordance with, the laws of the State of New York.
DEY LABORATORIES, L.P.
By Dey Laboratories, Inc., its general partner
By /s/ Charles A. Rice
-------------------------------
Name: Charles A. Rice
Title: President and Chief Executive Officer
2
<PAGE>
Pages or exhibits where confidential treatment has been requested pursuant to
the Company's application under Rule 406 of the Securities Act of 1933 are
stamped "Confidential material omitted and filed separately with the Securities
and Exchange Commission." The appropriate section has been marked at the
appropriate place with an "*".
MASTER AGREEMENT
Agreement dated as of May 26, 1998, between EM Industries, Incorporated
("EMI"), a corporation organized under the laws of New York and having offices
at 7 Skyline Drive, Hawthorne, New York, 10532, and Dey Laboratories L.P.
("Dey"), a limited partnership organized under the laws of Delaware and having
offices at 2751 Napa Valley Corporate Drive, Napa, California 94558.
WHEREAS, EMI has the right to license the Intellectual Property (as
hereinafter defined) used in connection with the development, production,
marketing and distribution of the Products (as hereinafter defined); and
WHEREAS, Dey desires to acquire a license (or sub-license, as the case
may be) to use the Intellectual Property in connection with the development,
production, marketing and distribution of the Products within the Territory (as
hereinafter defined); and
WHEREAS, EMI is the distributor of certain Products, including without
limitation EpiPen(R) and related products under agreements (as amended and
supplemented with any ancillary agreements thereto, and as listed in Schedule A
hereof, the "Schedule A Agreements") with certain third parties (the "Schedule A
Third Parties"); and
WHEREAS, Dey desires to become a sub-distributor for the exclusive
marketing of these Products in the Territory; and
WHEREAS, EMI is a party to certain distribution agreements (as amended
and supplemented with any ancillary agreements thereto, and as listed in
Schedule B hereof, the "Schedule B Agreements"; together with the Schedule A
Agreements, the "Third-Party Agreements") with certain third parties (the
"Schedule B Third Parties"; together with the Schedule A Third Parties, the
"Third Parties"), with respect to the distribution of EpiPen(R) and related
products in Canada and in Europe and EMI desires to transfer and assign to Dey
all of its right, title and interest, and delegate to Dey the performance of all
its duties and obligations, in and under the Schedule B Agreements, and Dey has
agreed to accept such assignment and delegation of such Schedule B Agreements;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereby agree as follows:
1. DEFINITIONS
For the purpose of this Agreement, the terms set forth below shall have
the following meanings:
<PAGE>
1.1 "ACAROSAN Products" means those Products specified in the
Allergopharma Agreement.
1.2 "Allergopharma Agreement" means that certain distribution agreement
dated April 1, 1994 between Allergopharma Joachim Ganzer KG ("Allergopharma", as
assignee of Werner & Mertz GmbH for the agreement dated June 22, 1988 between
Werner & Mertz GmbH and Chemical Services and Finances AG) and EMI, through its
Center Laboratories division, relating to ACAROSAN, as amended.
1.3 "ASTECH Products" means those Products referred to in the BIOTRINE
Agreement.
1.4 "BIOTRINE Agreement" means that certain technology purchase
agreement dated April 1, 1994 between Biotrine Corporation ("BIOTRINE") and EMI
relating to the Home Peak Flow Meter, as amended.
1.5 "Confidential Information" means any and all proprietary or
confidential information of either of the parties, including without limitation
any and all know-how, data, information, results, procedures, methodology, trade
secrets, technical and scientific expertise, marketing information and customer
lists which relate to the Products, business, financial, marketing,
manufacturing, sales, distribution and supply information, and information
related to the party's internal organization, personnel, methods and procedures,
finances, facilities, capabilities, research, development, planning or products,
and any other information including Know-How and Patent Rights (to the extent
applicable) that would reasonably be considered to be confidential for purposes
of this Agreement. Notwithstanding the foregoing, in the context of each
individual Schedule A Agreement, "Confidential Information" shall have the
meaning ascribed to it in such Schedule A Agreement.
1.6 "EpiPen(R) Agreement" means that certain agreement dated October
21, 1996, as amended, between Survival Technology, Inc. ("Meridian") and EMI
through its Center Laboratories division, relating to, without limitation,
EpiPen(R), EpiPen(R) Jr., Epi E= Z Pen(R) and Epi E= Z Pen(R), Jr.
1.7 "EpiPen(R) Products" means those Products specified in the
EpiPen(R) Agreement.
1.8 "FDA" means the United States Food and Drug Administration.
1.9 "Net Sales" means, with respect to each Product, gross sales of
each such Product less chargebacks, discounts, allowances (including without
limitation, returns and all other credit memos), and rebates for such Product.
1.10 "Gross Profit" means, with respect to each Product, the net sales
of such Product less the cost of goods sold for such Product.
2
<PAGE>
1.11 "Intellectual Property" means collectively, the Know-How, the
Trademarks and the Patent Rights. "Owned Intellectual Property" shall mean all
Patent Rights, Know-How and Trademarks except those licensed to EMI pursuant to
the Allergopharma Agreement.
1.12 "Know-How" means, with respect to each individual Product,
technical data, knowledge or information, trade secrets, or advice, written or
oral, relating to the design, development engineering, manufacture, assembly,
use, sale, marketing, distribution, installation, operation or servicing of such
Products, including without limitation all Technical Information (as defined in
the Allergopharma Agreement), any improvements in Products referred to in the
BIOTRINE Agreement (whether made by BIOTRINE or EMI), trade secrets, unpatented
inventions, protocols, know-how, product formulae, product formulations,
systems, manufacturing, processes, procedures, recipes, records of inventions,
test information, drawings, diagrams, designs and operating manuals, software
and other proprietary information related to such Products, whether acquired or
made prior to, on or after the date hereof.
1.13 "Patent Rights" means, with respect to each individual Product,
any and all rights owned or licensed by EMI under certificates of invention,
patents, certificates of protection and all decrees, grants, concessions,
licenses and contracts (and applications therefor) whereby any government or
governmental authority confers upon an individual, partnership, association,
corporation or other entity the exclusive right within any territory, for any
period of time to manufacture, sell or use a process, apparatus or article, to
license others to perform these activities and/or to restrain others from so
doing, and which relate to the design, engineering, development, assembly,
manufacture, installation or sale of the Products, including without limitation
those identified in Schedule C attached hereto and such other Patent Rights as
EMI shall from time to time designate in writing to Dey in its sole discretion.
1.14 "Products" means any and all of those pharmaceutical products,
allergy-reduction devices and other consumer products referred to in the
Schedule A Agreements for purposes of this Agreement. In the context of each
individual Schedule A Agreement,"Products" shall have the meaning ascribed to it
in such Schedule A Agreement.
1.15 "Term" means the period from the date hereof until termination of
this Agreement in accordance with Article 12 hereof.
1.16 "Territory" means all the countries of the world with respect to
this Agreement. Notwithstanding the foregoing, in the context of each individual
Schedule A Agreement, "Territory" shall have the meaning ascribed to it in such
Schedule A Agreement.
1.17 "Trademarks" means the trademarks and trade names set forth in
Schedule D attached hereto as they shall be modified from time to time by EMI,
and such other trademarks and trade names used in connection with the Products
as EMI shall from time to time designate in writing to Dey in its sole
discretion.
Article 2. GRANT OF RIGHTS
3
<PAGE>
2.1 License to the Patent Rights.
EMI hereby grants to Dey and Dey hereby accepts, during the term of
this Agreement and subject to the terms and conditions set forth below, an
exclusive right and license to use the Patents Rights in connection with the
production, marketing, sale and distribution (as applicable) of each respective
Product, in accordance with each respective Schedule A Agreement or Schedule B
Agreement.
2.2 Trademark License.
EMI hereby grants to Dey and Dey hereby accepts, during the term of
this Agreement and subject to the terms and conditions set forth below, an
exclusive right and license to use the Trademarks in connection with the
production, marketing, sale and distribution (as applicable) of each respective
Product, in accordance with each respective Third-Party Agreement.
2.3 License to Know-How.
EMI hereby grants to Dey and Dey hereby accepts, during the term of
this Agreement and subject to the terms and conditions set forth below, an
exclusive right and license to use the Know-How in connection with the
production, marketing, sale and distribution (as applicable) of each respective
Product, in accordance with each respective Third-Party Agreement.
2.4 Dey shall not, directly or indirectly, register, or attempt to
register, in any country, territory or jurisdiction any rights as to any of the
Intellectual Property, either during the Term of this Agreement or after its
expiration or termination.
2.5 Dey acknowledges and agrees that EMI is the sole owner of the Owned
Intellectual Property and all goodwill relating thereto, and that Dey shall not,
by reason of this Agreement or otherwise, acquire any right, title or other
interest therein, other than the limited rights of use granted hereunder. Dey
shall not sublicense its rights under this Article 2 without the prior written
consent of EMI. All goodwill arising from the use of the Owned Intellectual
Property by Dey shall inure solely to the benefit of EMI, and Dey hereby
irrevocably assigns to EMI all other rights and any goodwill created by or
arising out of such use.
Article 3. APPOINTMENT OF SUB-DISTRIBUTOR
3.1 Engagement.
EMI hereby appoints Dey to act during the Term as its exclusive
sub-distributor of Products, to the extent permitted by each Schedule A
Agreement, within the Territory, as the Territory shall be constituted from time
to time, and Dey hereby accepts such appointment.
3.2 Duties of Dey as Sub-Distributor.
4
<PAGE>
Dey shall at its own cost and expense distribute, sell, market,
promote, service, support and maintain the Products in the Territory, in
accordance with each Schedule A Agreement. Dey shall arrange the terms of sale,
including the price of the Products, between itself and its customers, in
accordance with each Schedule A Agreement.
3.3 Dey shall purchase each respective Product, as applicable, from the
Schedule A Third Parties in accordance with the terms of each respective
Schedule A Agreement. Dey agrees to produce, sell, market and distribute, as
applicable, each respective Product in accordance with each respective Schedule
A Agreement, and further agrees that all aspects of the production, sale,
marketing and distribution of each Product shall be subject to and governed by
each respective Schedule A Agreement.
3.4 Notwithstanding the foregoing, and provided such actions do not
contravene each respective Schedule A Agreement, Dey may appoint
sub-distributors for each respective Product upon written notification to EMI.
EMI acknowledges and agrees that upon assignment and assumption of the Schedule
B Agreements by Dey in accordance with the Assignment and Assumption Agreement
in form attached hereto as Schedule E, the Schedule B Third Parties shall become
sub-distributors of Dey with respect to the EpiPen(R) Product Line.
Article 4. ASSIGNMENT OF SCHEDULE B CONTRACTS.
EMI hereby agrees to transfer and assign to Dey all of its right, title
and interest, and delegate to Dey the performance of all its duties and
obligations, in and under the Schedule B Agreements and Dey hereby accepts such
assignment and delegation, all in accordance with the Assignment and Assumption
Agreement attached hereto as Schedule E.
Article 5. FEES
5.1 In consideration of the sub-license by EMI to Dey of the
Intellectual Property, the appointment by EMI of Dey as sub-distributor under
the Schedule A Agreements and the assignment from EMI to Dey of the Schedule B
Agreements, Dey shall pay to EMI:
5.1.1 on a quarterly basis, in U.S. dollars, within fifteen
(15) calendar days of the conclusion of each calendar quarter, a royalty payment
equal to 16.5% (the "EpiPen(R) Royalty Percentage") of the aggregate applicable
Net Sales for the EpiPen(R) Products during such calendar quarter; provided,
that if such Net Sales exceed $15.75 million in 1997 or $31.5 million for any
calendar year thereafter, such Net Sales shall be deemed to equal $15.75 million
for 1997 or $31.5 million for any such year thereafter, as applicable (such
amount, the "EpiPen(R) Royalty Amount"). Notwithstanding the foregoing, in the
event that the aggregate Net Sales for the EpiPen(R) Products fall below $14.25
million for 1997 or below $28.5 million for any calendar year thereafter, or in
the event that the aggregate Gross Profit for the EpiPen(R) Products falls below
$7.3 million for 1997 or below $14.6 million for any calendar year thereafter,
the Parties agree to negotiate in good faith to determine a new EpiPen(R)
Royalty Percentage which should be applicable to such year and subsequent years,
and, as appropriate, revised sales
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projections and cost estimates as well as the establishment of a new minimum
gross profit level, utilizing the same valuation principles used to calculate
the original EpiPen(R) Royalty Percentage. Any negotiated or renegotiated
EpiPen(R) Royalty Percentage shall be applied retroactively to the first day of
the calendar quarter in which gross profit falls below the specified amount.
5.1.2 within 30 days of the execution of this Agreement,
$71,000 for the ACAROSAN Products, provided that no further royalty amounts
shall be paid for the ACAROSAN Products.
5.1.3 on a quarterly basis, in U.S. dollars, within fifteen
(15) calendar days of the conclusion of each calendar quarter, a royalty payment
equal to 7% of the aggregate applicable Net Sales for the ASTECH Products (the
"ASTECH Royalty Payment").
5.2 Notwithstanding anything to the contrary herein, all calculations
in Section 5.1 shall be made pro rata for any partial years in which this
Agreement is in effect.
5.3 Verification of Net Sales and Gross Profit
5.3.1 Once after the conclusion of each calendar year, Dey
agrees to grant EMI access to all books, records and documentation maintained by
Dey with respect to the EpiPen(R) Products and the ASTECH Products for the
purpose of verification of Net Sales on the EpiPen(R) Products and the ASTECH
Products.
5.3.2 Once after the conclusion of each calendar year, Dey
agrees to grant EMI access to all books, records and documentation maintained by
Dey with respect to the EpiPen(R) Products for the purpose of verification of
Gross Profit on the EpiPen(R) Products; provided, however, that such access will
only be granted in the event that the aggregate Gross Profit for the EpiPen(R)
Products falls below $7.3 million for 1997 or below $14.6 million for any
calendar year thereafter.
5.4 In the event that EMI shall dispute the calculation of Net Sales,
pursuant to 5.3.1, or the calculation of Gross Profit, pursuant to 5.3.2, and
the Presidents of EMI and Dey shall fail to resolve such dispute in accordance
with Article 14 hereof, then the parties agree to appoint the San Francisco
office of KPMG Peat Marwick, or such other nationally recognized accounting firm
as both parties shall agree (the "Independent Auditor"), to review such
calculations and its opinion shall be final and binding upon the parties. The
Independent Auditor's fees for such review shall be the sole cost and obligation
of, and shall be paid by, the party whose position is determined by the
Independent Auditor to be incorrect; provided, however, that if a compromise is
reached on any such dispute after the Independent Auditor has been engaged, the
Independent Auditor's fees shall be apportioned between the parties as part of
the determination of the relevant dispute or controversy, in such manner as the
Independent Auditors shall deem equitable in light of the issues raised and the
degree to which each party shall have prevailed.
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5.5 Without limitation of Section 5.1.1., promptly upon Dey's written
notification to EMI that marketplace conditions with respect to, or the
profitability of, any of the Products have materially deteriorated, both parties
agree to negotiate in good faith to determine whether any adjustment to the
provisions of this Article 5 is desirable.
Article 6. REGULATORY REQUIREMENTS
6.1 All licenses, registrations and approvals for the Products after
the date hereof shall be applied for in the name of Dey ("Dey Product
Registrations"). Unless otherwise specified in the Third-Party Agreements, Dey
shall be responsible for all costs related to such actions.
6.2 In order to assist Dey in fulfilling its obligations under this
Article 6, EMI agrees (i) to make available at no cost to Dey all documents
available and used for the registration and distribution of the Products in the
Territory and (ii) to make available at no cost to Dey the reasonable assistance
of EMI personnel, not involving any out-of-pocket expense to EMI and not unduly
interfering with such personnel's normal business activities, in the preparation
of such filings as may be required under laws and regulations throughout the
Territory to effectuate and maintain registration and other regulatory approvals
of Products in the Territory.
6.3 EMI agrees to transfer to Dey, as soon as practicable, all permits,
licenses, approvals, product registrations, product clearances and
authorizations issued by governmental or regulatory bodies to EMI or in the name
of EMI, with respect to the Products, to the extent the same are transferable.
6.4 EMI hereby grants to Dey and Dey hereby accepts, until such time as
Dey has exhausted all remaining supplies of labels, packaging and promotional
materials used exclusively in connection with the Products bearing the name,
mark, logo and/or design of Center Laboratories (collectively, the "Center
Marks"), a non-exclusive, royalty-free license (without the right to sublicense)
to use the Center Marks solely with respect to such supplies.
Article 7. MISCELLANEOUS COVENANTS
7.1 Dey shall be responsible for the maintenance of selling and
marketing staff for the sale of the Products in the United States and may
utilize this same group of personnel to sell other Dey products. Dey may offer
employment to former employees of EMI, provided, however, that Dey shall not
have or assume any liability with respect to any claims by or in respect of any
current, former or future employees of EMI, or their spouses, dependents,
beneficiaries, heirs or assigns, relating to EMI (the "Employee Liabilities").
7.2 Dey Performance Obligations.
7.2.1 Dey shall perform on behalf of EMI under any supply
arrangements, forward sales contracts, price commitments and sales commitments
with customers of EMI
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relating to the Products (the "Customer Arrangements"); provided, however, that
Dey shall not have any liability under the Customer Arrangements arising prior
to July 1, 1997 (the "Sales Liabilities").
7.2.2 From and after July 1, 1997, Dey shall process on behalf
of EMI, all EMI chargebacks, EMI Medicaid rebates, and EMI credit memos for
returned or expired products, all as attributable exclusively to sales made by
the Center Laboratories division of EMI prior to July 1, 1997 (the
"Miscellaneous Items"). Promptly, upon written notice from time to time by Dey
to EMI, and in a manner specified by Dey, EMI shall reimburse Dey for all
expenditures and liabilities incurred by Dey and attributable to the
Miscellaneous Items. Dey shall not incur any cost, have any obligation with
respect to, or have any liability of any kind or nature, whether fixed,
contingent or otherwise, attributable to any EMI chargebacks, EMI Medicaid
rebates, or EMI credit memos for returned or expired products, including those
processed for payment on or after July 1, 1997. All chargebacks processed by Dey
on or after July 1, 1997 through and including September 30, 1997 relating to
Products and all Medicaid rebates processed by Dey relating to the third and
fourth quarters of 1997 and in connection with Products shall be deemed to be
Miscellaneous Items for purposes of this Section 7.2.2. Without limitation of
the foregoing, Dey and EMI hereby agree to grant each other credit for cash
collections erroneously received by the other party.
7.3 EMI shall promptly deliver to Dey from time to time all
correspondence and purchase orders received after the date hereof and relating
to the Products.
7.4 EMI shall hold in trust for Dey, and shall remit to Dey as Dey may
specify from time to time, any funds received attributable to the Products
(including, without limitation, customer payments) and shall refer all inquiries
relating to the Products by any person to Dey.
7.5 On or after the date hereof, in the event that EMI shall have a
claim, as determined by either EMI or Dey individually, against any Schedule A
Third Party for breach or misrepresentation under any Schedule A Agreement, the
parties shall promptly consult and jointly agree upon a course of action.
7.6 Insurance.
Dey and EMI shall each maintain comprehensive general liability
insurance, including contractual and product liability insurance against claims
for bodily injury or property damage arising from its activities contemplated by
this Agreement, with such insurance companies and in such amounts as it
customarily maintains for similar activities; provided further that Dey shall
maintain or cause to be maintained at all times during the term of this
Agreement insurance policies of a kind and in an amount sufficient under the
terms of each Third-Party Agreement.
Article 8. REPRESENTATIONS AND WARRANTIES
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8.1 EMI Warranties.
EMI represents and warrants that:
8.1.1 (i) Ownership and title to the Intellectual Property is
either vested solely in EMI or licensed to EMI pursuant to valid licenses; (ii)
EMI has acquired, through assignment or through valid license, or developed the
Know-How; (iii) the Trademarks are duly and validly registered to the extent
specifically so noted in Schedule D; (iv) EMI has not entered into any agreement
or commitment with any person which would impair, interfere with or infringe
upon the rights granted hereunder; (v) to the best of EMI's knowledge, the
utilization of Patent Rights, Know-How and the Trademarks will not result in the
infringement of any person's patents, trademarks, trade names, or know-how; and
(vi) to the best of EMI's knowledge, there are no claims or actions pending or
threatened relating to the Patent Rights, Know-How or the Trademarks or the
rights granted hereunder.
8.1.2 Except as disclosed in Schedule F hereof, there are no
suits, actions, claims, proceedings (including, without limitation, arbitral and
administrative proceedings) or governmental investigations pending or, to the
best knowledge of EMI, threatened against or contemplated against EMI (or any of
its Affiliates or agents) relating to or affecting, directly or indirectly, the
Products. There is no judgment, order, injunction, decree or award issued by any
court, arbitrator, governmental body or agency thereof to which EMI is a party
and which would materially affect the Products, which is unsatisfied or which
requires continuing compliance therewith by EMI.
8.1.3 Each Third-Party Agreement is in full force and effect;
neither EMI nor (to the best knowledge of the EMI) any other party is in default
under any such agreement and no event has occurred which constitutes, or with
the lapse of time or the giving of notice or both would constitute, a default by
EMI or (to the best knowledge of EMI) a default by any other party under such
contract; and (iii) to the best knowledge of EMI, there are no disputes or
disagreements between the Seller and any other party with respect to any such
contract.
8.2 EMI WARRANTIES SET FORTH IN THIS ARTICLE 8 ARE ITS EXCLUSIVE
WARRANTIES TO DEY WITH RESPECT TO THE PRODUCTS, AND ARE GIVEN AND ACCEPTED IN
LIEU OF ANY AND ALL OTHER WARRANTIES, GUARANTEES, CONDITIONS, AND
REPRESENTATIONS, EXPRESS OR IMPLIED, CONCERNING THE PRODUCTS, AND INCLUDING,
WITHOUT LIMITATION, ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE, EXCEPT THAT EMI WARRANTS THAT DEY WILL HAVE GOOD TITLE TO
THE ASTECH PRODUCTS SUPPLIED BY EMI TO DEY HEREUNDER. EMI AGREES THAT DEY SHALL
BE ENTITLED TO ANY BENEFIT THAT EMI RECEIVES FROM ANY WARRANTIES WITH RESPECT TO
THE PRODUCTS UNDER LAW OR BY AGREEMENT WITH THIRD PARTIES.
8.3 Mutual Representations and Warranties.
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Each of the parties represents and warrants to the other that:
8.3.1 This Agreement, when executed and delivered, will be the
legal, valid, and binding obligation of such party, enforceable in accordance
with its terms; and
8.3.2 Except as provided herein, the execution, delivery, and
performance of this Agreement by such party does not conflict with, or
constitute a breach or default under (a) its charter documents, (b) any law,
order, judgment or governmental rule or regulation applicable to it, or (c) any
provision of any agreement, contract, commitment, or instrument to which it is a
party, and the execution and delivery of this Agreement does not require the
consent, approval or authorization of, or notice declaration, filing, or
registration with, any governmental or regulatory authority.
Article 9. INDEMNIFICATION
9.1 Product Liabilities. Dey shall not have any liability with respect
to, and EMI hereby agrees to indemnify and hold Dey harmless from any loss,
damage, claim, liability, obligation, suit, fee, cost or expense of any nature
whatsoever (including, without limitation, reasonable attorneys' fees) with
respect to claims (i) relating to any of the Products or (ii) based upon any
law, judgment, order, rule, standard or regulation promulgated by the FDA or
foreign governmental authority, relating to the Products (including, without
limitation, regulations requiring the testing of such Products or the withdrawal
of such Products from the marketplace) (the foregoing collectively, "Product
Liabilities"), except as expressly provided in Section 9.2 below.
9.2 Reduction of Royalties. The EpiPen(R) Royalty Amount or the ASTECH
Royalty Amount, as applicable, shall be reduced on a dollar-for-dollar basis (i)
for the full amount of any claim for indemnity by Dey which is not a claim
related to Product Liabilities; (ii) for the full amount of any indemnity claim
by Dey which is related to Product Liabilities arising prior to July 1, 1997;
and (iii) to the extent that the amount of any claim for indemnity by Dey
related to Product Liabilities arising on or after July 1, 1997, together with
the accumulated amount of all previous such indemnity claims (including, without
limitation, all costs of investigation and reasonable attorneys' fees), exceeds
$350,000 per year. Such reduction shall be effected first by reducing any
Royalty amounts currently due and payable, next by reducing any future Royalty
payments, and finally by refunding to Dey Royalty payments made since the
inception of this Agreement. Any such reduction in the EpiPen(R) Royalty Amount
or the ASTECH Royalty Amount, as applicable, shall be net of any amounts
recovered by Dey from Meridian, Allergopharma or Biotrine, as applicable, under
the terms of the respective Schedule A Agreements.
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9.3 Other Liabilities. EMI hereby agrees to indemnify and hold Dey
harmless from any loss, damage, claim, liability, obligation, suit, fee, cost or
expense of any nature whatsoever (including, without limitation, reasonable
attorneys' fees) with respect to:
(i) the breach of any representation or warranty of EMI in
this Agreement;
(ii) the failure to perform any of the covenants, agreements
or undertakings of EMI in this Agreement;
(iii) any Employee Liabilities, Sales Liabilities or any
claims by any person, against EMI relating to the Schedule A Agreements
or Schedule B Agreements relating to the Products; and
(iv) EMI Tax Liabilities (as defined below).
In the event of a third-party claim or suit for which Dey makes an
indemnity claim, Dey shall give prompt written notice thereof, and shall permit
EMI to undertake and control the defense and settlement thereof, at EMI's
expense. Dey shall cooperate in such defense, to the extent reasonably requested
by EMI, at EMI's expense. Dey shall have the right to participate in such
defense at its own expense.
9.4 Dey Indemnifications. Dey hereby agrees to indemnify and hold EMI
harmless from, and to reimburse EMI for, any loss, damage, claim, liability,
suit, fee, cost or expense of any nature whatsoever (including, without
limitation, reasonable attorneys' fees) with respect to:
(i) the breach of any representation or warranty of Dey in
this Agreement;
(ii) the failure to perform any of the covenants, agreements
or undertakings of Dey in this Agreement; and
(iii) Dey Tax Liabilities (as defined below).
In the event of a third-party claim or suit for which EMI makes an
indemnity claim, EMI shall give prompt written notice thereof and shall permit
Dey to undertake and control the defense and settlement thereof, at Dey's
expense. EMI shall cooperate in such defense, to the extent reasonably requested
by Dey, at Dey's expense. EMI shall have the right to participate in such
defense at its own expense.
9.5 For purposes hereof, a "Tax Claim" shall mean a determination by
any taxing authority that the amount of any royalty payment by Dey for any
Product is excessive or inadequate (e.g., under Internal Revenue Code Section
482 or applicable transfer pricing laws and regulations). An "EMI Tax Liability"
shall mean the amount equal to: (i) the extent that
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Dey's taxable income is increased (or loss decreased) for any taxable year as a
result of a Definitively Resolved (as hereinafter defined) Tax Claim, plus (ii)
any interest, penalties or other charges by a governmental authority assessed
with respect to the foregoing, plus (iii) all costs (including, without
limitation, reasonable attorney's and accountants' fees) incurred by Dey in
obtaining Definitive Resolution of such Tax Claim. A "Dey Tax Liability" shall
mean the amount equal to: (i) the extent that EMI's taxable income is increased
(or loss decreased) for any taxable year as a result of a Definitively Resolved
Tax Claim, plus (ii) any interest, penalties or other charges by a governmental
authority assessed with respect to the foregoing, plus (iii) all costs
(including, without limitation, reasonable attorney's and accountants' fees)
incurred by EMI in obtaining Definitive Resolution of such Tax Claim.
"Definitive Resolution" shall occur when: (i) a claim is settled by written
agreement of the indemnified party and the taxing authority; or (ii) a final
non-appealable judgment, order or award of a court of competent jurisdiction or
arbitrator deciding such Tax Claim has been rendered, as evidenced by a
certified copy of such judgment, order or award.
9.6 The provisions of this Article 9 shall survive termination of this
Agreement.
Article 10. CONFIDENTIAL INFORMATION AND RESTRICTIVE COVENANT
10.1 Except as specifically authorized by this Agreement, each party
will, for the Term and for three (3) years after the expiration or termination
of this Agreement for any reason, keep confidential, not disclose to others and
use only for the purposes provided for or permitted under this Agreement, all of
the Confidential Information; provided, however, that each party shall have the
right to disclose such Confidential Information to its officers and employees to
the extent necessary to discharge its duties and obligations under this
Agreement. Nothing in this Article 10.1 will prevent disclosure or use of
information which is or becomes public knowledge without the fault of either of
the parties hereto or information already known to the parties or received from
any third party having the right to convey it. Notwithstanding the foregoing,
such information may be (a) disclosed to government agencies and to others to
the extent such disclosure may be required by law; (b) provided to third parties
under appropriate terms and conditions, including without limitation,
confidentiality provisions substantially equivalent to those in this Agreement
for consulting, manufacturing, development, supply, external testing and
marketing trials with respect to the Products, consistent with industry
practice; (c) published, if and to the extent such publication has been approved
in writing by each of the parties; or (d) disclosed to the extent required by
applicable laws or regulations or as ordered by a court or other regulatory body
of competent jurisdiction.
10.2 During the Term, EMI agrees that it shall not enter into any
additional agreements with any Third Party, nor appoint additional sub-licensees
or sub-distributors, with respect to the Products, without the prior written
consent of Dey. During the Term, Dey may enter into additional agreements
directly with any Third Party with respect to the Products, upon prior written
notice to EMI.
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Article 11. RELATIONSHIP OF THE PARTIES
Nothing herein contained shall be construed to constitute a
partnership, employer-employee relationship, joint venture or agency
relationship between the parties hereto. Except as expressly provided for in
this Agreement, no party nor any of its employees or agents shall have any
authority to bind or commit the other party or to assume any obligation of any
kind, express or implied, for or on behalf of the other party.
Article 12. TERM AND TERMINATION
12.1 This Agreement shall be deemed effective as of July 1, 1997.
12.2 Term of this Master Agreement. This Agreement will continue in
effect until the earlier of one or more of the following:
12.2.1 The date by which all of the Third-Party Agreements
have either expired by their terms or been terminated;
12.2.2 The date by which all of the Products have been
withdrawn from the market for any reason;
12.2.3 The date on which the non-defaulting party hereunder
delivers a written notice of termination to the other party, provided that such
notice shall be given only in the event that the other party:
(i) Commits a material breach or default under this
Agreement (other than the payment of money when due, as provided in Article
12.2.4 below), which breach or default is not remedied within forty-five (45)
days after the receipt of written notice thereof by the party in breach or
default;
(ii) Has made a material misrepresentation herein; or
(iii) Makes an assignment for the benefit of creditors,
permits the appointment of a trustee or receiver of all or a substantial part of
its assets, admits in writing its inability to meet its obligations when due,
commits any other act indicating that a bankruptcy or insolvency proceeding has
been commenced against it, or permits, consents to, acquiesces in, admits the
material allegations of or defaults in answering a petition filed against it in
an involuntary bankruptcy or insolvency proceeding;
12.2.4 The date by which EMI delivers to Dey a written notice
of termination of this Agreement, which notice may be given only in the event
that Dey fails to make a payment of money to EMI when due and such failure is
not cured within thirty (30) days
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after Dey's receipt of written notice thereof from EMI, which notice shall
specify such failure and the right of EMI to terminate the Agreement; or
12.2.5 The termination or expiration of the EpiPen(R)
Agreement.
12.3 Limitation of the Scope of Master Agreement/ Termination with
Respect to Individual Agreements.
12.3.1 Subject to Section 12.2, this Agreement shall expire
with respect to any one of the Third-Party Agreements upon the earlier of the
following (the "Third-Party Agreement Expiration Events"):
(a) The date on which such Third-Party Agreement
has expired by its terms or been terminated for whatever reason;
(b) The date on which the Product(s) specified in
such Third-Party Agreement has been withdrawn from the market for
any reason, voluntary or involuntary.
12.3.2 This Agreement may be terminated by Dey with respect to
any one of the Third-Party Agreements upon ninety (90) days' written notice by
Dey to EMI, if in Dey's sole opinion the Products specified in such Third-Party
Agreement are not deemed marketable on a profitable basis in the Territory
(together with the Third-Party Agreement Expiration Events, the "Third-Party
Agreement Termination Events") provided, further that such written notice shall
contain the name of the Product, the Territory involved and Dey's rationale for
such termination.
12.3.3 Upon the occurrence of such Third-Party Agreement
Termination Event, this Agreement shall be construed to exclude such Third-Party
Agreement from the scope thereof as of the date of such termination, and such
Third-Party Agreement shall be deemed to be stricken from the definition of
"Schedule A Agreement" or "Schedule B Agreement", as the case may be; provided,
however, that to the extent that any indemnity claims by Dey or indemnity claims
by EMI have arisen in the time period from the date hereof until the Third-Party
Agreement Termination Event, Article 9 shall be deemed to apply with respect to
such aforementioned Third-Party Agreement.
12.4 Product-by-Product Termination.
12.4.1 Subject to Section 12.2, Dey may specify, with ninety
(90) days' written notice to EMI, that any individual Product specified in a
Third-Party Agreement is not deemed marketable on a profitable basis in any
portion or all of the Territory and may, in its discretion, terminate this
Agreement with respect to such portion or all of the Territory; provided,
further that such written notice shall contain the name of the Product, the
specific portion of the Territory involved and Dey's rationale for such
termination. Following such termination, EMI may, in its sole discretion but
upon approval of the Third Party and
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amendment of the Third-Party Agreement as necessary, offer a new sub-license or
sub-distributorship arrangement (the "New Arrangement") to any person, on such
terms and conditions as EMI may in its discretion determine, for the Product
that is the subject of Dey's notice. Dey and EMI shall cooperate to secure the
consent of such Third-Party and amendment of such Third-Party Agreement, as
necessary.
12.4.2 Upon the execution of such New Arrangement, this
Agreement shall be construed to exclude such Product from the scope thereof as
of the date of such execution, and such Product shall be deemed to be stricken
from the definition of "Products"; provided, however, that to the extent that
any indemnity claims by Dey or indemnity claims by EMI have arisen in the time
period from the date hereof until the execution of such New Arrangement, Article
9 shall be deemed to apply with respect to such aforementioned Product.
12.4.3 Subject to Section 12.2., this Agreement shall be
deemed terminated with respect to the ASTECH Products, and such ASTECH Products
shall be deemed stricken from the definition of "Products," upon the date of
expiration of the patent listed in Schedule C hereof.
12.5 Upon Termination of this Agreement.
12.5.1 Promptly upon termination of this Agreement and upon
notice by EMI of its intentions with respect to the Schedule B Agreements, Dey
shall transfer and assign to EMI all of its right, title and interest, and
delegate to EMI the performance of all its duties and obligations, in and under
the Schedule B Agreements.
12.5.2 Within thirty (30) days after termination of this
Agreement, each party will return to the other party all Confidential
Information of the other party, relating to the Products.
12.5.3 Promptly upon termination of this Agreement, all
sub-license rights of Dey and all sub-distribution rights of Dey granted by EMI
pursuant to this Agreement shall be terminated; provided, however, that EMI
acknowledges and agrees that Dey shall be permitted to exhaust its inventory of
Products and promotional materials (including, without limitation, labelling and
packaging materials) relating thereto in a commercially reasonable amount of
time.
Article 13. FORCE MAJEURE
13.1 EMI and Dey will each be relieved of its obligations under this
Agreement to the extent that fulfillment of such obligations is prevented by
strikes, embargoes, riots, fires, floods, war, hurricanes, windstorms,
earthquakes, acts or defaults of common carriers, governmental laws, acts or
regulations, shortages of material or any other occurrence, whether or not
similar to the foregoing, beyond the reasonable control of the party affected
thereby.
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13.2 If either party is prevented from fulfilling its obligations under
this Agreement by reason of a circumstance covered by this Article 13, the party
unable to fulfill its obligations will, upon the occurrence of any such
circumstance, promptly notify the other party of such circumstance and of the
likely duration thereof, and will promptly notify the other party upon cessation
of such circumstance.
Article 14. DISPUTE RESOLUTION
14.1 Any controversy or claim arising out of or relating to this
Agreement, or any failure to agree where agreement of the parties is necessary
pursuant hereto, shall be decided jointly by the respective Presidents of each
party.
Article 15. GENERAL PROVISIONS
15.1 A copy of each of the Third-Party Agreements is attached as
Annexes hereto and incorporated herein by this reference. Anything in this
Agreement to the contrary notwithstanding, the parties agree that they shall
take no action or omit to take any action which would be contrary to the
provisions of the above-referenced Third-Party Agreements or cause a breach of
any of such provisions, and Dey hereby acknowledges and agrees that this
Agreement shall be subject to all of the provisions of the Third-Party
Agreements and the rights of each respective Third Party, as applicable
thereunder.
15.2 Assignability.
This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their successors and assigns. Neither the rights nor
the obligations of EMI or Dey hereunder may be assigned or delegated without the
prior written consent of the other party.
15.3 Governing Law.
This Agreement will be governed by and construed in accordance
with the laws of the State of New York, without giving effect to the conflict of
law provisions thereunder.
15.4 Counterparts.
This Agreement may be executed simultaneously in two
counterparts, each of which will be deemed an original, but all of which
together with constitute one and the same instrument.
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15.5 Article Headings.
All Article headings herein are inserted for convenience only
and will not modify or affect the construction or interpretation of any
provision of this Agreement.
15.6 Amendment.
This Agreement may be modified, amended and supplemented only
by mutual written agreement of the parties. Each amendment, modification or
supplement shall be in writing signed by the party to be charged.
15.7 Entire Agreement.
This Agreement contains the entire agreement of the parties
regarding the subject matter contained herein. All prior agreements,
negotiations and discussions between the parties which are not reflected or set
forth in this Agreement are merged into this Agreement and have no force and
effect.
15.8 Waiver of Compliance.
Except as otherwise provided in this Agreement, any failure of
either of the parties to comply with any obligation, covenant or agreement
contained herein may be waived only by a written notice from the party entitled
to the benefits thereof. No failure by either party hereto to exercise, and no
delay in exercising, any right hereunder, shall operate as a waiver thereof, nor
shall any single or partial exercise of either right hereunder preclude any
other or future exercise of that right by that party.
15.9 Severability.
In case any one or more of the provisions of this Agreement should be
invalid, illegal, or unenforceable in any respect, the validity, legality, and
enforceability of the remaining provisions will not in any way be affected or
impaired thereby.
15.10 Notices.
All notices, requests, demands, and other communications hereunder will
be addressed to the addresses set forth at the head of this Agreement and deemed
to have been duly given upon receipt when delivered personally, mailed by
registered mail, return receipt requested, or telexed or telefaxed with
confirmed answer back to such address or to such other address designated by ten
(10) days prior written notice by the recipient in accordance with the
foregoing.
17
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
EM INDUSTRIES, INC. DEY LABORATORIES, L.P.
By: /s/ Peter A. Wriede By: /s/ Pamela R. Marrs
------------------------ -------------------------
Name: Peter A. Wriede Name: Pamela R. Marrs
Title: President & CEO Title: Executive Vice President
& CFO
18
<PAGE>
SCHEDULE A
1. Distribution Agreement dated April 1, 1994 between Allergopharma Joachim
Ganzer KG (as assignee of Werner & Mertz GmbH) and Center Laboratories, as a
division of EM Industries, Inc. (as assignee of Chemicals Services and Finances
AG), as amended --ACAROSAN.
2. Technology Purchase Agreement dated April 1, 1994 between Biotrine
Corporation and EM Industries, Inc., as amended -- Home Peak Flow Meter.
3. Agreement dated October 21, 1996 between Survival Technology, Inc. and Center
Laboratories, a division of and acting on behalf of EM Industries, Inc., as
amended.
<PAGE>
SCHEDULE B
1. Distribution agreement dated December 1, 1994 between ALK Laboratories and EM
Industries, Inc., as amended, relating to EpiPen(R) in Europe; and
2. Distribution agreement dated January 1, 1997 between Allerex Laboratory Ltd.
and Center Laboratories (as a division of EM Industries, Inc.), as amended,
relating to EpiPen(R) in Canada.
<PAGE>
SCHEDULE C
1. Home Peak Flow Meter
United States Patent #5,246,010 - Method and Apparatus for Exhalation
Analysis
Issued September 21, 1993
<PAGE>
SCHEDULE D
1. Registered Trademarks
a. ASTECH (Registration Nos. 1,806,703; 1,837,802)
b. Epi Pen (Registration Nos. 1,124,454; 1,479,294)
c. Epi E-Z Pen (Registration No. 2,059,337)
<PAGE>
SCHEDULE E
ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT is entered into this 26th day
of May, 1998 between DEY LABORATORIES, L.P. ("Assignee") and EM INDUSTRIES,
INC., for itself and on behalf of its Center Laboratories division ("Assignor").
W I T N E S S E T H:
WHEREAS, pursuant to an Agreement of even date herewith between
Assignor and Assignee (the "Master Agreement"), Assignor has agreed to transfer
and assign to Assignee all of its right, title and interest, and delegate to
Assignee the performance of all its duties and obligations, under certain
contracts and leases of Assignor identified in Exhibit A hereto, as amended and
supplemented, and any agreements ancillary thereto (the "Contracts") and
Assignee has agreed to accept such assignment and delegation of such Contracts,
effective as of July 1, 1997;
NOW THEREFORE, in consideration of the mutual covenants contained
herein and in the Master Agreement, and other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, it is agreed as
follows:
1. Assignor hereby assigns to Assignee all of its rights, title and
interest, and delegates to Assignee the performance of all of its duties and
obligations, under the Contracts arising out of the period from and after July
1, 1997.
2. Assignee hereby accepts the assignment and delegation of the
Contracts.
3. The parties acknowledge that this Assignment and Assumption
Agreement is subject in all respects to the terms of the Master Agreement.
4. This Assignment and Assumption Agreement shall inure to the benefit
of and be binding upon the parties, their successors and assigns.
5. The parties have agreed that the validity, construction, operation
and effect of all of the terms and provisions of this Agreement, and the
respective rights, duties and obligations of the parties hereunder, shall be
determined and enforced in accordance with the laws of the State of New York
without giving effect to principles of conflicts of law thereunder.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
EM INDUSTRIES, INC.
By:
-------------------------------------
Name: Peter A. Wriede
Title: President & CEO
DEY LABORATORIES, L.P.
By:
-------------------------------------
Name: Charles Rice
Title: President & CEO
2
<PAGE>
EXHIBIT A
I. Agreements relating to EpiPen(R):
A. Distribution agreement dated December 1, 1994 between ALK
Laboratories and EM Industries, Inc., as amended, relating to
EpiPen(R) in Europe; and
B. Distribution agreement dated January 1, 1997 between Allerex
Laboratory Ltd. and Center Laboratories (as a division of EM
Industries, Inc.), as amended, relating to EpiPen(R) in
Canada.
3
<PAGE>
SCHEDULE F
EpiPen(R) Product Liability Claims / Litigation
Yevon Creel, et ux. v. EM Industries, Inc., et al.
Case No. 97-216-CIV-ORL-19
U.S. District Court, Middle District, Orlando Division
Debbye F. Kurty - Representation Letter - June 24, 1996
Maryland
Patricia Misson v. Donna Martin v. EM Industries, Inc.
Case # 1013-C of 1997
Court of Common Pleas, Luzerne County, Pennsylvania
Mary Ellen Saba - Representation Letter - April 17, 1995
New York
Stephen J. Verin, Jr., et ux v. EM Industries, Inc., et al
Civil Action - 5210 of 1996
Court of Common Pleas, Westmoreland County, Pennsylvania
<PAGE>
ANNEX 1
DISTRIBUTION AGREEMENT
THIS AGREEMENT made and entered into this 1st day of April, 1994, by and between
ALLERGOPHARMA JOACHIM GANZER KG
Hermann-Korner-Strasse 52
D-21465 Reinbek
Federal Republic of Germany
hereinafter called ALLERGOPHARMA
and CENTER LABORATORIES
35 Channel Drive
Port Washington, NY 11050
USA
hereinafter called CENTER.
WHEREAS, ALLERGOPHARMA acquired from Werner & Mertz ("W&M") the rights to
certain acaricidal products, plan to expand and further develop these acaricidal
products and desire to enter into a product distribution agreement for the
United States;
WHEREAS, CENTER manufactures and markets allergenic extracts and other products
to the allergy and asthma health care markets in the United States and desires
to expand its product line to include acaricidal products;
WHEREAS, CENTER is negotiating with Chemical Services and Finances AG ("CSF")
for the purchase of CSF's distribution rights to the ALLERGOPHARMA acaricidal
products in the United States and subject to the successful conclusion of that
negotiation, desires to enter into a new Distribution Agreement with
ALLERGOPHARMA.
NOW THEREFORE, in consideration of the mutual covenants contained herein and
other valuable consideration, the sufficiency of which is hereby acknowledged,
the parties agree as follows:
-1-
<PAGE>
REPLACEMENT OF PRIOR CONTRACTS
This Agreement will specifically terminate and supersede the Agreement dated
June 22, 1988 between W&M and CSF which agreement was assigned by W&M to
ALLERGOPHARMA and by CSF to CENTER, respectively.
Article 1 - Definitions
In this Agreement the following words shall have the meanings set forth below:
1.1 Products shall mean together
a) the complete ALLERGOPHARMA product-line of preparations for
the prevention of mite allergies which includes those products
for the determination, elimination and protection from
house-dust mite debris, their allergens and feces material as
defined in Appendix A and which are promoted to physicians and
allergy care specialists; and,
b) new products for the prevention of allergic diseases developed
and manufactured by ALLERGOPHARMA during the term of this
Agreement as may be expressly agreed in writing between the
parties.
1.2 Territory shall mean the United States of America, its territories and
possessions.
1.3 Government Approval shall mean all ongoing necessary health,
environmental, packaging and other approvals required from the relevant
authorities in the Territory, both Federal and State, for the
manufacture, use, distribution and sale of the Products.
1.4 Technical Information shall mean all necessary information, in the
English language, and all such data as may be required to obtain and
maintain Government Approval.
1.5 Patents shall mean those Patents and Patent Applications, together with
any Patents issuing thereon, or any substitute, continuation,
continuation-in-part, or divisional application thereof which claim an
invention developed by or for W&M and licensed to ALLERGOPHARMA and/or
which may be licensed to CENTER in the Territory and which claim in any
way the Products, the process and/or a use thereof, including but not
limited to those listed in Appendix C.
1.6 The Specifications shall mean the specifications of the Products as
established by ALLERGOPHARMA set out in Appendix B hereof or as amended
thereafter by mutual agreement of the parties or as shall be required
for Government Approval.
-2-
<PAGE>
1.7 The Trademarks shall mean those trademarks set out in Appendix D hereof
or such other trademarks licensed to ALLERGOPHARMA and licensed to
CENTER.
Article 2 - License Grant
2.1 ALLERGOPHARMA hereby grants to CENTER the sole and exclusive right and
license to distribute and sell the Products under the Patents and
Technical Information in the Territory.
Article 3 - Government Approval
3.1 The right of CENTER to distribute and sell the Products in the
Territory is expressly conditional upon ALLERGOPHARMA and/or CENTER
having first obtained the necessary individual and separate Government
Approval(s) for the Territory. CENTER and ALLERGOPHARMA shall become
individual registrants under the provisions of the Federal Insecticide,
Fungicide and Rodenticide Act (FIFRA) codified in 40 C.F.R.
162.6(a)(1), whereunder any person who distributes, sells, offers,
holds, ships or delivers a pesticide may apply for registration. The
part of this Agreement calling for pesticide registrations by both
parties shall be conditional upon the Government Authorities'
acceptance of registration applications from both parties as described
under FIFRA Section 3(c)(7)(A). CENTER shall be identified on all
labeling, advertising, promotional material, packaging, and use
instructions. ALLERGOPHARMA hereby agrees to the joint use of
identification thereon within the parameters of prescribed Trademark
law. The registration shall identify ALLERGOPHARMA as the manufacturer
and supplier of the Products. CENTER shall be the exclusive distributor
in the Territory and ALLERGOPHARMA shall not register supplemental
distributors as described in 40 C.F.R. 162.6(b)(4) other than CENTER
except as otherwise provided under terms of this Agreement. In no event
will the Product registrations be transferred to any other party except
a wholly-owned subsidiary of ALLERGOPHARMA or CENTER without prior
approval of the other party to this Agreement. ALLERGOPHARMA shall
appoint CENTER to be the official representative before all regulatory
authorities, as described in 40 C.F.R. 162.6(a)(3), for the purpose of
obtaining and maintaining registrations of the Products on behalf of
ALLERGOPHARMA.
3.2 ALLERGOPHARMA will reimburse CENTER for the costs of registration fees,
once having obtained Government Approval, excluding, however, out of
pocket costs incurred by CENTER in making submissions to Governmental
authorities. Such costs to be born by CENTER refer to transportation,
travel, consultant and legal data compensation.
3.3 In the event that CENTER is required to conduct other work to obtain or
sustain Government Approval ALLERGOPHARMA will supply sufficient
quantities of the Products at no charge to CENTER for the purpose of
conducting said clinical trials or other
-3-
<PAGE>
work. In the event any such clinical trials are required, ALLERGOPHARMA
shall be responsible for the conduct of such clinical trial or other
work and shall fund the entire cost of any such clinical trial or other
work.
3.4 CENTER shall regularly inform ALLERGOPHARMA in writing of the progress
of all applications for Government Approval every three (3) months
including reports on trial activity, if any. CENTER shall inform
ALLERGOPHARMA in writing within one (1) month of the receipt by CENTER
of Government Approval.
3.5 CENTER shall commence distribution and sale of the Products within
three (3) months of the grant of Government Approval.
3.6 At CENTER's request, ALLERGOPHARMA will assist CENTER in providing a
prompt response to inquiries relating to Governmental Approval.
3.7 ALLERGOPHARMA agrees to grant CENTER and representatives from those
bodies from whom Government Approval will be sought reasonable access
to the manufacturing area of the Products and to records and other data
relating to the Products. ALLERGOPHARMA agrees to provide CENTER
promptly with copies of any reports which result from any inspection of
ALLERGOPHARMA's manufacturing area of the Products including by the
bodies from whom Government Approval is sought.
3.8 Before making any changes to the method of manufacture, specification,
labeling, packaging, test methods or any other aspect of the Products
that might affect Government Approval of the Products, ALLERGOPHARMA
will notify CENTER in writing and obtain CENTER's agreement to the
changes, such agreement of CENTER not to be unreasonably withheld.
Article 4 - Prices
4.1 Prices for the Products shall be negotiated in accordance with and
subject to the following conditions:
Prices will be based on German Deutsche Mark and will be set for one
calendar year.
The initial price, which shall be effective through December 31, 1995,
charged by ALLERGOPHARMA to CENTER for the Products to be ordered,
beginning with the first delivery, shall be:
a) Moist Powder as defined in Appendix A
package of 3 bags of 750 g. DM 36,-
b) Moist Powder of 1 bag DM 14,30
-4-
<PAGE>
The above prices are understood "ex factory ALLERGOPHARMA."
Prices will be firm for current packaging adapted to English. If any
revision to existing packaging is required to meet Government Approval,
except labeling statements, or other packaging changes requested by
CENTER which are different in cost from the current packaging, then
ALLERGOPHARMA shall re-cost the Products and determine a change in
purchase prices. ALLERGOPHARMA shall fully document the basis for the
additional price changes to CENTER.
4.2 Beginning January 1, 1996 and at intervals of not less than twelve (12)
months during the term of this Agreement, ALLERGOPHARMA may revise the
Products' prices to reflect the increase in the production costs since
the date of this Agreement.
Each price revision requires two (2) months prior written notice to
CENTER prior to its implementation and will be applicable to all
shipments subsequent thereto.
4.3 Provided that a) Government Approval has been gained throughout the
Territory without material exception, b) ALLERGOPHARMA performs its
duties and obligations in accordance with this Agreement, including,
but not limited to those duties and obligations relating to the supply
of the Products to CENTER, then CENTER will purchase and take delivery
of the following total target quantities of the Products as per Article
4.1 a), b) to the German Deutsche mark value each calendar year:
1994 800.000, --
1995 900.000, ----
1996 1.200.000, --
1997 1.400.000, --
The above figures only refer to the purchases of the Moist Powder and
will be revised as soon as Acarosan Foam and Acarex-Test or other
products have been registered and available for sale.
4.4 In the event the aforesaid minimum values are not purchased by CENTER,
ALLERGOPHARMA may by written notice to CENTER convert CENTER's
exclusive right under this Agreement to non-exclusive rights and will
be free to seek additional licensees for Products in the Territory;
provided, however, that in no event will CENTER lose its exclusive
right to use the Trademarks. In no event will ALLERGOPHARMA sell
Products to other licensees in the Territory at prices lower than those
charged to CENTER. ALLERGOPHARMA may exercise this right only during
the first three months following the calendar year in which CENTER has
not purchased the aforesaid minimum values.
4.5 If CENTER should purchase and take delivery of Products as per Article
4.1 a), b) in 1997 and any consecutive year up to the end of this
Agreement as defined in Article 13 of less
-5-
<PAGE>
than DM 1.000.000,--, ALLERGOPHARMA shall be entitled to terminate this
Agreement within the first three months following the calendar year
during which CENTER fails to purchase and take delivery of such
quantities, such termination to be effective as of the end of the then
current calendar year. In compliance with Article 4.3, the amount of DM
1.000.000,-- only refers to the purchases of the Acarosan Moist Powder.
Article 5 - Payment and Delivery
All purchases of the Products by CENTER from ALLERGOPHARMA shall be subject to
the following conditions:
5.1 CENTER shall purchase the Products solely from ALLERGOPHARMA.
5.2 ALLERGOPHARMA warrants to CENTER that Products supplied under this
Agreement (i) will meet the Specifications set out in Appendix B and
(ii) will meet the requirements of the Government Approval.
ALLERGOPHARMA shall supply a Certificate of Analysis with each lot of
Product sold to CENTER.
5.3 CENTER shall be invoiced by ALLERGOPHARMA for all purchases made. Title
to the products sold by ALLERGOPHARMA to CENTER shall pass ex-factory
ALLERGOPHARMA. Payment terms shall be sixty (60) days from the date of
invoice. Payment shall be in DM to a bank determined by ALLERGOPHARMA.
Freight and insurance charges, if any, will be billed separately to
CENTER.
5.4 Notwithstanding ALLERGOPHARMA's obligations and liabilities stated
elsewhere in this Agreement, Products which do not meet the required
Specifications shall at ALLERGOPHARMA's expense either be returned to
ALLERGOPHARMA or destroyed by CENTER on ALLERGOPHARMA instructions, and
the purchase price thereof deducted from the invoiced price. In certain
circumstances, CENTER may be able to rework the Products not meeting
their Specifications and the parties agree to negotiate CENTER's
performing any such rework and a reasonable reimbursement to CENTER.
CENTER shall be entitled to rely on ALLERGOPHARMA's Certificate of
Analysis. Should CENTER perform any quality control tests and find any
inconsistencies against Specifications, CENTER shall report any such
inconsistencies against Specifications within thirty (30) days of its
inspection of Products.
5.5 Should any of the Products be found not to meet the Specifications upon
receipt thereof by CENTER in the Territory, whether through
ALLERGOPHARMA's fault or not, ALLERGOPHARMA shall use its best efforts
to provide CENTER with replacement Products as soon as possible with a
view to avoiding CENTER's running out of stocks of the Products in the
Territory.
-6-
<PAGE>
5.6 ALLERGOPHARMA shall incorporate CENTER's logo and trade name in the
packaging material in accordance with regulations in force in the
Territory. There will be no changes made to such agreed packaging
without the consent of both parties in writing. Any such change in
packaging will not be implemented before ALLERGOPHARMA has used and
balanced its inventory of existing packaging unless otherwise agreed
between the parties.
Article 6 - Forecasts and Orders
6.1 Each year on October 1st CENTER shall supply to ALLERGOPHARMA a
forecast of its requirements for the Products for the succeeding twelve
(12) month period on a quarterly basis. CENTER shall revise this
forecast forward at quarterly intervals thereafter. CENTER undertakes
that at all time it will use its reasonable efforts to achieve accuracy
in the preparation of the forecast. CENTER will place orders for a
minimum of eighty percent (80%) of each twelve (12) month forecast.
6.2 CENTER shall submit quarterly orders for the Products specifying
quantities, delivery dates and shipping location except that in the
case of the first forecast CENTER shall submit orders for delivery
within 3 months recognizing that ALLERGOPHARMA does require a certain
amount of time to complete the first order.
6.3 ALLERGOPHARMA shall deliver all subsequent orders within two (2) months
of CENTER placing the order. ALLERGOPHARMA shall not be obligated to
deliver in any one calendar quarter an amount which exceeds one hundred
and twenty-five (125) percent of the forecast supplied by CENTER under
Article 6.1 hereof. If the orders placed by CENTER exceed one hundred
and twenty-five (125) percent of the forecasts, ALLERGOPHARMA shall use
all reasonable efforts to supply CENTER with the excess quantities
required.
Article 7 - Promotion and Marketing
7.1 CENTER agrees to discuss with ALLERGOPHARMA the sales and marketing
activities for the Products in the Territory which may include
establishing such wholesale and other distribution channels to ensure
adequate market coverage and penetration. The parties agree to meet on
an annual basis to review the progress of the sales and marketing
activities.
7.2 ALLERGOPHARMA agrees to make available to CENTER, together with an
English translation thereof, samples of catalogues, brochures and other
advertising material regarding the Products at no charge, as well as
samples of other like promotional, packaging and informational material
developed by ALLERGOPHARMA and other licensees in other territories
and/or other parties which may be reasonably necessary or desirable for
successful marketing of the Products by CENTER.
-7-
<PAGE>
Article 8 - Confidentiality
8.1 Neither party shall divulge any information obtained from the other
party relating to trade secrets, business techniques, or other
confidential matters relating to the Products without the other parties
written consent.
8.2 CENTER shall not use confidential information referred to in Article
8.1 hereof otherwise than for the purpose of registration, promotion
and sale of the Products or for the purpose of medical emergency or as
required by a Court of Law or administrative agency or as agreed by the
parties in writing.
8.3 The obligation of confidentiality shall not apply to any information
which is or becomes known to the public through no fault of the party
receiving the information, was known to the receiving party prior to
its receipt from the other party as established by the receiving
party's written records, is disclosed to the receiving party by a third
party not in breach of an obligation of confidentiality to the other
party, or is independently developed by the receiving party as
established by the receiving party's written records.
8.4 The aforesaid obligations of confidentiality shall survive any
termination of this Agreement, irrespective of the legal basis thereof,
for a period of three (3) years following such termination.
Article 9 - Representations and Warranties
9.1 ALLERGOPHARMA represents and warrants that as of the date this
Agreement becomes effective, ALLERGOPHARMA has not granted any third
party a license to use, distribute or sell the Products in the
Territory.
9.2 ALLERGOPHARMA represents and warrants that as of the date of this
Agreement it has not been, nor is currently being, made aware of any
claims and liabilities whatsoever, which have arisen as a result of the
sale or use of the Products anywhere.
9.3 ALLERGOPHARMA represents and warrants that during the continuance of
this Agreement it shall not sell directly or indirectly, or license,
authorize or appoint any other party to distribute or sell the Products
in the Territory to any other party than CENTER, except as provided in
Article 4.4 hereof.
9.4 CENTER represents and warrants that to the extent legally permissible
in the Territory during the continuance of this Agreement it shall not
sell directly or indirectly the products outside of the Territory,
except as prior thereto agreed in writing by ALLERGOPHARMA.
-8-
<PAGE>
9.5 ALLERGOPHARMA represents and warrants that during the term of this
Agreement it shall not appoint any third party as a distributor in the
Territory of any improved, developed or modified versions of the
Products utilizing the Technical Information and Patents herein
licensed. Furthermore, should ALLERGOPHARMA develop product(s) related
to the Products in terms of marketplace or therapeutic use not covered
by license grants herein, then ALLERGOPHARMA shall first exclusively
offer to CENTER said new products(s) at terms and conditions no less
favorable than offered to a third party for its evaluation for a period
of ninety (90) days from when CENTER shall have received sufficient
information, in its opinion, to make a reasonable decision thereon.
9.6 CENTER will at her own expenses and for the duration of this Agreement
- and for 3 (three) years thereafter, beginning from the day this
Agreement will end - effect a liability insurance in order to cover all
costs, claims for damages or other financial obligations of which
CENTER could be made liable for satisfying the requirements of law in
the Territory with respect to claims which may result from the
distribution of the Products.
In case of customer's complaints ALLERGOPHARMA has to be informed at
once, justified complaints will be settled by replacing the
corresponding products free of charge. CENTER shall secure
ALLERGOPHARMA against all claims and demands which may be brought
against ALLERGOPHARMA arising from the distribution of the Product. On
the other hand ALLERGOPHARMA ensures to dispose of a manufacturer
liability insurance and secures CENTER against all claims and demands
which may be brought against CENTER due to the fact that all
ALLERGOPHARMA supplied CENTER with defective Products.
Should there be any side effects and complaints related to the Products
delivered by ALLERGOPHARMA, CENTER has to advise ALLERGOPHARMA at once,
providing ALLERGOPHARMA with the respective information in order to
enable ALLERGOPHARMA to investigate the matter, provided the
authorities do not object the transfer of these data.
9.7 If recall of any of the Products is deemed advisable by CENTER or
by ALLERGOPHARMA, such recall shall be promptly implemented and
administered by CENTER in a manner which is appropriate and reasonable
under the circumstances and in conformity with accepted regulations and
trade practices. CENTER shall promptly notify ALLERGOPHARMA, if
circumstances arise, which in CENTER's opinion may be advisable to
institute such recall of any of the Products and, if the circumstances
allow, shall give ALLERGOPHARMA an opportunity to participate in the
decision on such Product recall. In the event that a recall is required
for any reason, ALLERGOPHARMA shall reimburse CENTER for all properly
documented expenses incurred in connection with implementing the
recall, except for recalls due to reasons for which CENTER is
responsible.
-9-
<PAGE>
Article 10 - Intellectual Property
10.1 ALLERGOPHARMA represents and warrants that to the best of its present
knowledge the manufacture, distribution, use and sale of the Products
does not infringe any patent or other Intellectual Property rights of
any third party in the Territory.
10.2 In the event that infringement proceeding are commenced by a third
party against CENTER for alleged infringement by CENTER in the
Territory of patent or other Intellectual Property rights in relation
to the Products, CENTER shall notify ALLERGOPHARMA promptly of the
commencement thereof.
10.3 ALLERGOPHARMA agrees to defend and indemnify CENTER for costs,
including, but not limited to, attorney's fees, arbitration fees, data
compensation requirements and damages in any infringement proceedings
in relation to the Products, provided that ALLERGOPHARMA has been given
the opportunity to defend such proceedings and generate or acquire
technical data at its own expense.
10.4 CENTER shall immediately inform ALLERGOPHARMA of any infringement in
the Territory of any Patent or other Intellectual Property right owned
by ALLERGOPHARMA and relating to the Products of which it becomes aware
and will at ALLERGOPHARMA's cost cooperate fully with any action which
ALLERGOPHARMA may take to defend the validity of any such Patent or
other Intellectual Property right and to prosecute any infringement
thereof.
10.5 ALLERGOPHARMA will be responsible for, and pay within the time allotted
therefore, all fees or other payments which may be required to maintain
the Patents and other Intellectual Property rights, including
trademarks, relating to the Products in full force and effect, except
for such Patents and other Intellectual Property rights which have been
transferred to CENTER.
Article 11 - Trademarks
11.1 The Trademarks for the Products shall be determined by ALLERGOPHARMA
with the consent of CENTER, which consent shall not be unreasonably
withheld.
11.2 CENTER shall have the exclusive right to distribute, sell, promote and
advertise the Products in the Territory using the Trademarks.
11.3 ALLERGOPHARMA represents and warrants that to the best of its knowledge
the use of the Trademarks for the Products do not infringe any rights
of any third party within the Territory.
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<PAGE>
11.4 CENTER may, in addition to the Trademarks, use the CENTER name and logo
on and in association with the Products, within the parameters of
prescribed trademark law. ALLERGOPHARMA shall have no right, title or
interest in or to the CENTER name and logo.
Article 12 - Records
12.1 CENTER agrees to keep and maintain records of unit and currency sales
of each of the Products sold for a period of no less than five (5)
years from the date of sale of the Products. ALLERGOPHARMA agrees to
keep and maintain appropriate quality control records and batch samples
relating to the Products for a period of five (5) years from the date
of supply of the Products to CENTER.
12.2 ALLERGOPHARMA agrees to maintain all records required under U.S.
Environmental Protection Agency regulations 40 C.F.R. 169.2. Such
records as specified in 40 C.F.R. 169.3 shall be available for
inspection by the other party and by appropriate government agencies
upon reasonable prior notice to the other party.
Article 13 - Term and Termination
13.1 This Agreement shall come into effect on the date hereof, and unless
earlier terminated under the provisions hereunder, shall remain in
force for an initial period expiring ten (10) years from the date
hereof or on the expiration of any Patent(s) described in Appendix C as
granted at the date of this Agreement or any Patents relating to the
Products, their manufacturing process or use thereof which may become
effective during the Agreement, whichever is longer. Following this
period, this Agreement will be automatically renewed for two-year
periods at a time, unless terminated by either party by giving not less
than six (6) months notice prior to the end of the appropriate two (2)
year period.
13.2 If, due to salient changes of technology or the economic or legal
situation (e.g. fluctuation of exchange rates, competitive environment,
market potential, etc.), for which the party affected thereby shall
furnish valid proof, the Products can no longer be sold or produced
economically, then such party may demand and both parties shall
negotiate in good faith such changes or adjustments of this Agreement
as may be deemed reasonable and necessary, taking into account the
original balance of interests as provided herein. Provided, however,
that neither party shall be required to distribute or produce the
Products at a loss or at costs only. If such change or adjustment
cannot be agreed upon by the parties to correct said proven
inadequacies, the party materially affected may terminate this
Agreement by giving six (6) months notice of termination.
13.3 Either party may terminate this Agreement forthwith at any time by
giving written notice to the other party in the event that there is any
material breach of this Agreement by the other
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party which is not corrected within sixty (60) days after receipt of
written notification thereof from the first party. Any termination of
this Agreement pursuant to this section shall be in addition to and
shall be exclusive of or not prejudicial to any other rights or
remedies, at law or in equity, which one party may have on account of
the default or the other.
13.4 Upon termination as provided for under Article 13.3 ALLERGOPHARMA
immediately shall be free to confer upon others as of the effective
date of such termination all rights herein granted to CENTER.
Termination hereof shall not release either party from any liability
pertaining to this Agreement.
13.5 Upon termination of the Agreement as herein provided, each party shall
forthwith cease to use any information or licensed property except as
otherwise provided in this Agreement received by it from the other
party hereunder in connection with the manufacture, use or sale of the
Products. In addition, each party shall return promptly to the other
party any and all information previously furnished to it by the other
party under this Agreement which is still in its possession or under
its control.
13.6 Upon termination of the Agreement CENTER shall transfer at
ALLERGOPHARMA's expense all Government Approvals necessary to enable
the use, distribution or sale of the Products to ALLERGOPHARMA or a
third party.
13.7 If either party shall become bankrupt or insolvent and/or if the
business of that party shall be placed in the hands of a receiver,
assignee or trustee, whether by a voluntary act or otherwise, then this
Agreement may be immediately terminated by the other party.
Article 14 - Disposal of Products on Termination
14.1 In the event of this Agreement terminating early for any reason,
ALLERGOPHARMA shall at its option:
a) enable CENTER to dispose of any stock of the Products in its
possession, or which CENTER is obliged to purchase under
Article 6.1 within twelve (12) months after the date of such
termination,
or
b) take back all or any of the Products which may be in stock
with CENTER at the delivered cost of the Products to CENTER.
ALLERGOPHARMA shall repackage the same in packaging which
makes no reference to CENTER and shall destroy the original
packaging and provide evidence of destruction as CENTER shall
reasonably require.
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14.2 Upon termination of this Agreement for any reason, ALLERGOPHARMA shall
destroy all excess packaging materials in its possession which relate
to the Products and which contain any reference to CENTER and shall
provide such evidence of destruction as CENTER may reasonably request.
Article 15 - Force Majeure
Neither party shall be liable for failure to perform or delay in
performing any obligation under this Agreement or any individual
contract of sale hereunder if such failure or delay is due to act of
God, fire, flood, earthquake, war (declared or undeclared), embargo,
blockade, legal prohibition, governmental action, riot, insurrection,
damage, destruction, strike, lock-out, or any other cause beyond the
control of such defaulting party preventing or delaying performance.
However, the affected party shall promptly provide the other with
complete information concerning such force majeure and shall endeavor
to achieve performance by other available means.
Article 16 - Miscellaneous
16.1 This Agreement shall be binding upon and inure to the benefit of the
parties herein, their successors and assignees. Neither party shall
assign or transfer its rights or obligations under this Agreement
without the prior written consent of the other party, such consent not
to be unreasonably withheld. CENTER may so assign or transfer this
Agreement to another company within the CENTER group, provided, that
all liabilities shall be guaranteed by CENTER and further provided that
at all times the marketing of the Products shall be maintained under
the name "Center" and the respective logo. In the event of assignment
of this Agreement, the assignees shall agree to be bound by this
Agreement, but in no event shall the assignor be relieved from any
liability pertaining to this Agreement.
16.2 If any provision of this Agreement shall be determined to be invalid,
inoperative or unenforceable by a Court of competent jurisdiction, the
same shall not affect any of the remaining provisions of this
Agreement.
16.3 All notices and communications provided for herein shall be in writing
and shall be deemed to be sufficiently given for all purposes hereof
ten (10) days after being sent by registered airmail addressed to the
party to whom it is to be given as follows;
for ALLERGOPHARMA: ALLERGOPHARMA
JOACHIM GANZER KG
Hermann-Korner-Strasse 52
D-21465 Reinbek
Federal Republic of Germany
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for CENTER: CENTER LABORATORIES
35 Channel Drive
Port Washington, NY 11050
USA
Either party may change the address to which notices are to be sent by
notifying the other party in accordance with the provisions of this
Article.
16.4 In the event of a dispute between the parties, which cannot be amicably
resolved, the parties hereby agree that if a lawsuit or other judicial
process is initiated by CENTER or ALLERGOPHARMA, it shall be brought
before the courts of Lubeck under the law of the Federal Republic of
Germany.
16.5 These foregoing articles constitute the entire agreement between the
parties on the subject matter hereof and supersede any and all prior or
other agreements and understandings between ALLERGOPHARMA and CENTER
regarding the Products, whether oral or written, between the parties
with respect to the subject matter hereof and no variation, waiver or
modification of any of the terms of this Agreement shall be binding
unless made in writing and signed on behalf of CENTER by its duly
authorized officer and on behalf of ALLERGOPHARMA by its duly
authorized officer.
IN WITNESS WHEREOF the parties being entitled to enter into this Agreement have
caused this Agreement to be executed by their duly authorized officers and this
Agreement shall become effective as of the day and year first above written.
For and on behalf of For and on behalf of
ALLERGOPHARMA CENTER LABORATORIES
JOACHIM GANZER KG
/s/ Joachim Ganzer /s/ Alan Pernick
- -------------------- --------------------
Reinbek, 14.9.94
- ---------------------
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Appendix A
Products
1. Acarosan Moist Power
A cleansing composition for treating textile surfaces such as carpets
and carpet floors, including the ACARICIDAL component Benzyl Benzoate
for the elimination of house dust mites and their larvae and providing
for the physical removal of house dust mite debris, their allergens,
feces and other household dust or mold particles by normal vacuum
cleaning of said textile surfaces.
2. Allergocover
Encasings to cover mattresses, duvets and pillows, made of a tight
woven micro-fabric; impermeable for mites and their feces but permeable
for vapor and air for preventing the contact of the patient with
allergens caused by house dust mites.
3. Acarex Test
A diagnostic test to locate and determine the extent of house dust
mites and allergens in mattresses, upholstered furniture, carpets,
carpet floors and other textiles for use in conjunction with Acarosan
Foam and Acarosan Moist Powder.
4. Acarosan Foam
A cleansing composition for treating textile surfaces such as
mattresses, upholstered furniture and small textiles, including the
ACARICIDAL component Benzyl Benzoate for the elimination of house dust
mites and their larvae and providing for the physical removal of house
dust mite debris, their allergens, feces and other household dust or
mold particles by normal vacuum cleaning of said textile surfaces.
5. Acaril
A washing additive for treating textiles such as clothes, blankets,
linen and others, including the ACARICIDAL component Benzyl Benzoate
for the elimination of house dust mites and their larvae and washing
components for the removal of house dust mite debris, their allergens,
feces and other household dust or mold particles by washing the said
textiles at a temperature below 60(degree) C.
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APPENDIX B
PRODUCTS SPECIFICATIONS
SPECIFICATIONS FOR ACAROSAN MOIST POWDER
APPEARANCE: Soft, white, easily pourable, sweetish/aromatic
powder, without large lumps
DRY RESIDUE: 48 +/- 2%, dry residue determined with Inframatic
equipment after 10 minutes
ASSAY FOR BENZYL BENZOATE: 5.0+/-1.0% gas chromatographic method
IDENTIFICATION: IR spectrum compares to reference
WEIGHT OF POWDER IN BAG: The mean of the number of packages tested is not
less than 750 g, and not more than 2% of the
number of packages tested weigh less than 739 g,
and no package weighs less than 727 g
PACKAGE: One bag Of 750 g per package or
Three bags of 750 g per package
SHELF LIFE: 60 months from date of manufacture
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APPENDIX B
PRODUCTS SPECIFICATIONS
SPECIFICATIONS FOR ACAREX DIAGNOSTIC TEST
APPEARANCE: Test Kit containing:
- test solution, clear,
colorless liquid (10 bags)
- dip sticks (10x)
- small measuring spoon (1x)
- instruction leaflet
COMPOSITION OF TEST Potassium hydroxide: 4.3 % w/w
SOLUTION: (= 3.7+/-0.2%, w/v)
Methanol: 71.8 % w/w
Water: 23.9 % w/w
ASSAY FOR POTASSIUM titration method; after dilution of the contents
HYDROXIDE IN METHANOL of one bag with 20 mL purified water it is
WATER: titrated with 0.5 N HCL.
IDENTIFICATION: the content of one bag is diluted with purified
water, 1:10 mL and then checked with pH-paper
(strong alkaline solution)
or
refraction of liquid 1.3465-1.3475.
COMPOSITION OF DIP STICKS: specially solidified diazonium salt
FILL VOLUME: - one bag contains 1.2 mL+/-0.1 mL fluid
PACKAGE: 10 bags of solution and 10 dipsticks per test kit
SHELF LIFE: One year from date of manufacture
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APPENDIX B
PRODUCTS SPECIFICATIONS
SPECIFICATIONS FOR ACAROSAN FOAM (AEROSOL)
APPEARANCE: A White, aerosol foam propelled by a mixture of
butane and propane
ASSAY FOR BENZYL BENZOATE: 2.6+/-0.5% gas chromatographic method
PRESSURE: 4.3+/-0.3 kg/cm2
DENSITY: 9.919+/-0.002 gm/mL (liquid in the can)
IDENTIFICATION: IR spectrum compares to reference
RATE OF LEAKAGE Not more than 3.5% w/w per year
NET CONTENTS: The mean content of
the number of cans
tested is not less
than 300 mL (275.7 g),
and not more than 2% of
the number of cans tested
contain less than 291 mL
(267.4 g), and no can
contains less than 282 mL
(259.2 g).
PACKAGE: One can of 300 mL in one box or 6 cans of 300
mL in one box
SHELF LIFE: 60 months from date of manufacture
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APPENDIX C
PATENTS APPLIED FOR AND GRANTED
1. ACAREX-TEST
Application No.: 016623
Filing Date: July 19, 1987
Patent Number: 4 806 490
Date of Grant: February 21, 1989
2. ACAROSAN
Application No.: 767 476
Filing Date: August 20th, 1985
Patent Number: 4 666 940
Date of Grant: May 19th, 1987
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APPENDIX D
TRADEMARKS
1. ACAREX-TEST
Application No. 566341
Filing Date January 11th, 1985
Registration No. 1405 404
August 19th, 1986
2. ACAROSAN
Application No. 677 186
Filing Date: August 6th, 1987
Registration No. 1500 038
August 3, 1988
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ANNEX 2
TECHNOLOGY PURCHASE AGREEMENT
This Agreement effective this 1st day of April, 1994 by and between EM
INDUSTRIES, INCORPORATED, a New York corporation, having its principal place of
business at 5 Skyline Drive, Hawthorne, NY 10532 ("CENTER") and BIOTRINE
CORPORATION, a Massachusetts corporation, with its principal place of business
at 52 Dragon Court, Woburn, MA 01801 ("BIOTRINE").
RECITALS
I. BIOTRINE is the owner of patented and proprietary technology for a
Home Peak Flow Meter (the "Meter") and a Letter Patent of the United States, No.
5,246,010, was issued to BIOTRINE on September 21, 1993.
II. CENTER desires to purchase and acquire all rights and licenses to the
patents, know-how and technology covering the Meter.
III. BIOTRINE and CENTER have previously entered into an Exclusive Marketing and
Licensing Agreement on July 8, 1991 and desire to have this Technology Purchase
Agreement terminate and supersede the prior Exclusive Marketing and Licensing
Agreement.
NOW THEREFORE in consideration of the mutual undertakings contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree as follows:
1.0 REPLACEMENT OF PRIOR CONTRACTS
1.1 This Agreement will specifically terminate and supersede
the Exclusive Marketing and Licensing Agreement dated July 8, 1991 between
BIOTRINE and CENTER.
2.0 DEFINITIONS
For the purposes of this Agreement, the following terms will
have the following meanings:
2.1 "Affiliate" means each and every business entity
controlled by, controlling, or under common control with a party hereto. For
purposes of this definition, control will mean ownership, directly or
indirectly, of at least fifty percent (50%) of the voting shares of the business
entity.
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2.2 "Controlled By" means the right in BIOTRINE to grant
rights, licenses or immunities relative to the controlled material, either with
or without a corresponding obligation on the part of BIOTRINE to account to
others by reason of such grant.
2.3 "Improvement" means a change to the Meter structure or
design which improves performance, marketability, safety, etc. (for example and
not by way of limitation, increases the accuracy or ease of reading of the
Meter).
2.4 "Know-How" means all unpatented scientific, engineering,
economic or other know-how, technical data or information, all methods,
processes and procedures and any other intangible property now or at any time
owned or Controlled By BIOTRINE relating to or useful in connection with the
manufacture, sale or use of the Meter which is the subject of this Agreement.
2.5 "Meter" means the Home Peak Flow Meter and Improvements
thereto which conforms to the specifications described in the Patent Rights and
as from time to time amended by the mutual agreement of the parties. Any such
amendments will be reflected on Exhibit A.
2.6 "Net Quantity" shall mean the total invoiced quantity of
all sales, excluding the quantities of sales at no charge for samples, of Meters
made by CENTER, its Affiliates or its sublicensee to any independent third party
less amounts credited by reason of rejections or returns of goods.
2.7 "Patent Rights" means the patents and applications listed
in Exhibit A and any and all patents and applications now or hereafter owned or
Controlled By BIOTRINE which are necessary or useful in connection with the
manufacture or use of a Meter.
2.8 "Trademark Rights" means any and all trademarks, including
the ASTECH trademark, service marks, trade names, logotypes, commercial symbols,
and other designations identifying the Meters and any and all processes and
services associated therewith, including any and all applications for trademark
registrations, trade name registrations, if any, trademark and service mark
registrations, application for registrations of trademarks and service marks,
and the right to file for trademark registration and service mark registration.
3.0 SALE TO CENTER
3.1 BIOTRINE Representations - BIOTRINE represents and
warrants that:
a. It is the owner of the Know-How and the owner of each
of the patents and applications specified in the Patent Rights.
b. It has disclosed all information known to it regarding
any patent or pending applications, other than those in Exhibit A, having claims
which would be infringed by the manufacture, use or sale of the Meters.
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c. It is the unrestricted owner of the Meter and all the
related technology and has the unrestricted right to sell the Meter and all its
related technology to CENTER.
d. The patents and applications in Exhibit A and the
Know-How represent all of the technology necessary to make and use the Meter.
3.2 Technology Purchase - On the terms and subject to the
conditions hereinafter set forth, and in consideration for the payment to
BIOTRINE by CENTER of the purchase price as set forth more fully in Section 3.4
below, BIOTRINE hereby sells, transfers, and assigns to CENTER, and CENTER
hereby purchases all of BIOTRINE's right, title, and interest in the Meter and
its related technology, free and clear of any and all liens, encumbrances,
security interests, or rights of any other party whatsoever.
3.3 Assignment - BIOTRINE hereby assigns to CENTER all of
BIOTRINE's right, title, and interest in the Patent Rights, Copyright Rights,
and Trademark Rights in the Meter and its related technology and the
Improvements.
3.3.1 Concurrently with the execution of this Agreement
by the parties hereto, BIOTRINE shall execute a formal assignment of all of
BIOTRINE's right, title, and interest in the Meter technology, Improvements,
Patent Rights, and Trademark Rights, in the form attached hereto as Exhibit "B."
3.4 Improvement Assignment - If BIOTRINE makes any
Improvement, then, without payment or further consideration, all of BIOTRINE's
right, title, and interest in such Improvement shall be assigned to CENTER, and
BIOTRINE shall promptly communicate such Improvement to CENTER and give CENTER
full information regarding the Improvement and the mode of using it. Such
information may be transmitted orally, in writing, and/or through
demonstrations, as the occasion requires, and shall be sufficient in scope to
enable CENTER, its Affiliates, and their attorneys to understand, apply,
evaluate the subject matter, and file patent and/or copyright applications
thereon as appropriate to the subject matter.
3.5 Further Acts - BIOTRINE shall do all acts considered by
counsel for CENTER necessary or advisable to assist CENTER in obtaining,
recording, sustaining, reissuing, or extending (i) trademark and service mark
registrations, (ii) letters patent on patent applications and (iii) copyrights,
including, without limitation, the execution and delivery to CENTER, its
Affiliates, and their attorneys of such documents as may be deemed by counsel to
CENTER to be necessary or advisable for filing and recording in the appropriate
patent or copyright office, and shall give testimony in cases of interference as
well as provide evidence in conjunction therewith, and in conjunction with any
litigation or any such patent, copyright, or trademark.
3.6 Purchase Price Payment to BIOTRINE - In consideration for
the sale of the Meter and its related technology and Improvements to CENTER, and
subject to paragraphs 3.10 and 6.4 hereof, CENTER has paid the amounts stated in
paragraph 6.1 and will pay BIOTRINE an additional amount for each Meter sold by
CENTER, its Affiliates or its sub-licensees according to the following schedule:
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April 1, 1994 - September 30, 1998 $.50 / Meter sold,
October 1, 1998 - September 30, 2001 $.30 / Meter sold,
October 1, 2001 - Agreement Termination $.10 / Meter sold.
The parties agree that the amount payable per Meter sold shall be reduced by
one-half (1/2) on all Meters sold on promotional orders. A Promotional Order is
defined as being any order at a price per Meter which is less than the lowest
contract price per Meter at the time the Promotional Order is placed. Before
accepting a promotional order for more than five hundred (500) units, CENTER
shall request BIOTRINE's written approval, which approval shall not be
unreasonably withheld.
Notwithstanding all of the above, no amount will be due or payable from CENTER
for a Meter purchased from BIOTRINE or an Affiliate of BIOTRINE.
3.7 Purchase Price Payments - CENTER will, within thirty (30)
days following each calendar quarter commencing with the quarter wherein it made
its first sale of a Meter manufactured by a party other than BIOTRINE or an
Affiliate or agent of BIOTRINE, submit to BIOTRINE an accounting report of (a)
the Net Quantity of Meters sold by CENTER, its Affiliates or its sub-licensees
and (b) the amount earned by BIOTRINE as a result thereof. The amount due to
BIOTRINE, subject to the offset provided for in paragraph 6.4, will accompany
such report.
3.8 Book and Records - CENTER will keep or cause to be kept
books, records and accounts in accordance with good accounting practice and
principles consistently applied covering its activities hereunder and containing
all information necessary for the true and accurate determination of the amounts
earned and paid hereunder. CENTER will, not more than once per year and upon
prior reasonable written notice by BIOTRINE, permit a certified public
accountant appointed and paid for by BIOTRINE (the "Auditor") to inspect each
CENTER facility manufacturing Meters and to review the previous two (2) years
books, records and accounts to verify the amounts earned by BIOTRINE and paid by
CENTER hereunder. The Auditor will furnish to both parties reports stating only
his findings during such inspection as to the accuracy, or the nature and extent
of any inaccuracy of such books, records, accounts and payments. Accounting
reports supplied by CENTER which are more than two (2) years old will be
conclusively presumed to be correct. In the event the Auditor finds a
discrepancy of more than ten percent (10%), CENTER will pay the Auditor's
reasonable audit fees.
3.8.1 Any deficiency identified by the Auditor between the
amounts actually earned by BIOTRINE under Paragraph 3.7 hereof and the amounts
reported to be earned and paid on by CENTER in accordance with Paragraph 3.8
hereof will be paid to BIOTRINE, plus interest computed at two percent (2.0%)
over the prime bank lending rate as published in the Wall Street Journal on the
day of the Auditor's report, within thirty (30) days of receipt by CENTER of the
Auditor's report.
3.8.2 The termination of this Agreement for any reason
will not prejudice BIOTRINE's right, for at least one (1) year subsequent to
such termination, to examine CENTER's books, records and accounts. A final
accounting and the amount due and payable by CENTER to
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BIOTRINE, if any, will be provided to BIOTRINE within sixty (60) days of the
termination of this Agreement.
3.9 Transfer of Know-How - BIOTRINE will, within fifteen (15)
days of the signing of this Agreement, transfer the then present state of
BIOTRINE's Meter Know-How to CENTER. Such Meter Know-How transfer will be by way
of writings, drawings, specifications, flow diagrams, material data sheets and
other documents prepared by or on behalf of BIOTRINE and will be in sufficient
depth and detail to permit CENTER to fully understand the manufacture, quality
control and use of the Meters manufactured by BIOTRINE for CENTER under Article
4.0 hereof. BIOTRINE will thereafter provide to CENTER, within fifteen (15) days
of the creation by BIOTRINE, its agents or Affiliates any additional Know-How
relating to the Meters.
3.9.1 During the term of this Agreement, BIOTRINE shall
assist, at no additional charge, CENTER as is reasonably necessary in completing
development and production of METERS. Such assistance may include, but is not
limited to, the testing and qualification of aluminum tubes from new vendors,
the thorough investigation of adhesive backing for scale, the rework of Meters
produced by BIOTRINE, the resolution of any field problems with Meters, the
development of temperature ratings of zone indicators and vendor and part
sourcing and qualification for springs and other Meter components.
3.10 Conflicting Patents - If, at any time during the life of
this Agreement, CENTER discovers that any Meter manufactured, used or sold by
CENTER are covered by any patent which is owned or controlled by a person, firm
or corporation other than BIOTRINE, CENTER may negotiate with such person, firm
or corporation for a license on such terms as CENTER deems appropriate. Should
the license agreement with such person, firm or corporation require the payment
of earned royalties on such Meter made, used or sold or processes employed by
CENTER or any of its direct or indirect customers, the earned amounts otherwise
payable to BIOTRINE under Paragraph 3.6 will be reduced by the same amount that
earned royalties are paid to such other person, firm or corporation.
Notwithstanding the preceding sentence, the earned amounts otherwise payable to
BIOTRINE under Paragraph 3.6 will not be reduced to less than either five cents
($.05) per Meter sold or ten cents ($.10) per Meter sold, as the case may be.
4.0 MANUFACTURE AND SALE OF METERS
4.1 Meters for CENTER - Until such time as CENTER has built an
adequate inventory of Meters and is producing new Meters at a rate commensurate
with market demand, BIOTRINE agrees to and will manufacture, have manufactured,
sell and deliver to CENTER and CENTER will purchase and take from BIOTRINE all
of CENTER's additional requirements of Meters.
4.2 Purchase Price for Meters - CENTER will pay BIOTRINE
* for each Meter ordered by and delivered to Center. It is expressly
understood that CENTER is free to determine and set its own prices for Meters
sold to third parties.
* Confidential material omitted and filed separately with the Securities and
Exchange Commission.
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4.3 Trademarks and Trade Dress - CENTER will specify the
trademarks and tradename of each of the Meters sold to or by CENTER under this
Agreement.
4.4 Time of Delivery - BIOTRINE will deliver to CENTER the
quantities of Meters specified in CENTER's Purchase Orders not later than
twenty-one (21) days following the date mutually agreed upon by the parties
unless both parties agree to change such agreed upon shipping date.
4.5 Shipment Terms - BIOTRINE will deliver Meters to CENTER,
F.O.B. BIOTRINE.
4.6 Payment Terms - CENTER will pay each BIOTRINE invoice for
Meters ordered by CENTER for its account within thirty (30) days of the later
of: (a) receipt of the invoice, or (b) receipt of the Meters referenced on such
invoice.
4.7 Warranty - BIOTRINE warrants that all Meters will be free
from defects in materials and workmanship and will conform to the specifications
therefor in Exhibits A or C. Any Meter which fails to meet the foregoing
warranty will be replaced by BIOTRINE without cost or expense to CENTER.
EXCEPT AS TO THE FOREGOING AND THE WARRANTY OF TITLE THERE ARE NO OTHER
WARRANTIES, EXPRESS OR IMPLIED RELATIVE TO THE METERS AND NONE SHALL BE CREATED
INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE AND ALL WARRANTIES ARISING FROM CUSTOM OR USAGE
IN THE TRADE OR THE COURSE OF DEALINGS BETWEEN THE PARTIES.
4.8 Inspection and Test - BIOTRINE agrees to and will, prior
to shipment, inspect or have inspected each of the Meters sold to CENTER and
perform each of the quality tests specified in Exhibit C. CENTER has loaned to
BIOTRINE a "wave form generator" test instrument for BIOTRINE's use in testing
and inspecting Meters. During the period that the wave form generator instrument
is installed on BIOTRINE's or BIOTRINE's agent's premises, BIOTRINE shall assume
full responsibility for all risks of physical loss or damage to the wave form
generator instrument, ordinary wear and tear excepted. BIOTRINE shall return the
wave form generator to CENTER, at CENTER's expense, upon thirty (30) day's
written notice.
4.9 Purchase and Sale Forms - Any terms and conditions on
either a CENTER Purchase Order or a BIOTRINE Order Acknowledgment or any other
document relating to the purchase, sale or transfer of products or services
between the parties which are in conflict with, or impose obligations in
addition to, any of the terms and conditions of this Agreement will be null and
void and without any legal effect.
5.0 REGULATORY MATTERS
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5.1 Good Manufacturing Practices - BIOTRINE represents and
warrants on behalf of itself and its agents and Affiliates providing Products
hereunder to CENTER, that it will at all times comply with and conform to FDA
Good Manufacturing Practices, as amended and in effect at such time of
manufacture, and to all other applicable federal, state and local statutes,
laws, regulations and ordinances.
5.2 510k Maintenance - CENTER shall maintain and keep current
the FDA 510k filing covering the Meters. BIOTRINE will take all necessary and
reasonable measures with the FDA to ensure the orderly transfer of the 510k to
CENTER.
5.3 Product Problem - BIOTRINE will promptly communicate to
CENTER all information which comes to its attention pertaining to any adverse
reactions, product anomalies or other problems relative to or having a bearing
on the Meters sold under this Agreement. CENTER, will bring similar problems to
the attention of BIOTRINE. BIOTRINE will promptly investigate and report back to
CENTER on its resolution of all such problems.
6.0 PRIOR AGREEMENT ACCOUNTING RECONCILIATION
6.1 Prepaid Account - Under the Exclusive Marketing and
Licensing Agreement of July 8, 1991, certain advance payments were made to
BIOTRINE by CENTER totaling Two Hundred Eighty-Three Thousand Three Hundred
Seventy-Six Dollars and Fifty-Eight Cents ($283,376.58). Against this advance
payment, BIOTRINE manufactured and sold Meters to CENTER valued at One Hundred
Forty-Seven Thousand Five Hundred Ninety-Two Dollars and Fifty Cents
($147,592.50). BIOTRINE has or will transfer to CENTER Meter component parts
worth Sixty-Nine Thousand Three Hundred Sixty-Three Dollars and Seventy-Eight
Cents ($69,363.78) and packaging components and supplies worth Fourteen Thousand
Four Hundred Eighty-Eight Dollars and No Cents ($14,488.00) leaving a prepaid
balance in favor of CENTER amounting to Fifty-One Thousand Nine Hundred
Thirty-Two Dollars and Thirty Cents ($51,932.30).
6.2 Trademark Rights Consideration - The consideration for
assignment of the Trademark Rights is Three Thousand Two Hundred Thirty-Four
Dollars and No Cents ($3,234.00) and CENTER shall reduce BIOTRINE's obligation
against the prepaid account by this amount.
6.3 Additional Payments to BIOTRINE - CENTER may make
additional prepayments to BIOTRINE or on behalf of BIOTRINE during the term of
this Agreement, including, but not limited to, payments to Ms. Nancy Sander on
behalf of BIOTRINE. BIOTRINE agrees that any such payments shall be added to the
prepaid account and will remain an obligation of BIOTRINE until such time as
CENTER, in the exercise of its right of purchase price payment offset, fully
liquidates the BIOTRINE prepaid account.
6.4 Purchase Price Payment Offset - Until the balance in the
BIOTRINE prepaid account is reduced to zero, CENTER shall have the right to
reduce any amounts payable made to BIOTRINE under the provisions of Article 3 by
an amount equal to fifty percent (50%) of such
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<PAGE>
amounts payable or the remaining balance of the BIOTRINE prepaid account,
whichever is less. All purchase price payment offsets shall be clearly indicated
as such on any purchase price payment accounting provided to BIOTRINE.
7.0 CONFIDENTIALITY
Each party will maintain in confidence any information
received from the other party in writing and marked confidential during the term
of this Agreement, and will neither publish, disseminate nor disclose such
information to any third party nor use such information except for the
furtherance of the purposes of this Agreement without the express written
permission of such other party. Subject to the next sentence, the foregoing
obligations of confidentiality and non-use will continue for two (2) years after
the expiration of this Agreement. The obligation of the first sentence will not
apply to any information which is: (a) now or hereafter comes into the public
domain, or (b) which is already in the possession of the receiving party other
than as a result of having received it from the disclosing party and as shown by
written records, or (c) is brought to the receiving party by a third party who
does not require that it be maintained confidential by the receiving party, or
(d) is independently developed by the receiving party without use of or access
to the information of the disclosing party.
8.0 THIRD PARTY PATENTS AND COPYRIGHTS
If any Meter is in any suit or proceeding held to constitute
infringement of any Letters Patent or copyright and the further manufacture,
sale and/or use thereof is enjoined, BIOTRINE will use its best efforts, at
CENTER's expense, to modify it so it becomes noninfringing.
9.0 HOLD HARMLESS
9.1 Respective Responsibilities in Private Actions - BIOTRINE
will not be liable for, and CENTER assumes responsibility for, all personal
injury and property damage resulting from the handling, possession, use or sale
of the Meters following delivery thereof to CENTER. In no event will BIOTRINE be
liable for special, incidental or consequential damages, whether the claim is in
contract, negligence, strict liability or otherwise. CENTER will hold harmless,
defend and indemnify BIOTRINE, its officers, directors, agents and employees
from and against any and all damages, claims, liabilities, demands, losses or
expenses, including reasonable attorneys' fees, arising from or allegedly
arising from the Meters or any use thereof; provided that CENTER's agreement to
hold harmless, defend and indemnify BIOTRINE will not be applicable to, and
BIOTRINE will indemnify, hold harmless and defend CENTER from, any damage,
claim, liability, demand, loss or expense, including reasonable attorneys' fees,
which arises from the gross negligence or willful misconduct of BIOTRINE in
manufacturing, labeling, packaging or holding the Meters or in otherwise
performing its services hereunder.
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<PAGE>
9.2 BIOTRINE's Responsibilities in Governmental Actions -
BIOTRINE will defend, indemnify and hold harmless CENTER, its officers,
directors, agents and employees from any damages, expenses and costs (including
reasonable attorneys' fees) arising out of actions and proceedings brought by
any federal, state, local or foreign governmental authority or any agency or
instrumentality thereof against CENTER, its officers, directors, agents, and
employees or against the Products by reason of any claim or finding by any said
public authority that the Meters were defective at the time of shipment as a
result of BIOTRINE's gross negligence or willful misconduct.
9.3 CENTER's Responsibilities in Governmental Actions -
CENTER will defend, indemnify and hold harmless BIOTRINE, its officers,
directors, agents and employees, from any damages, expenses and costs arising
out of actions and proceedings brought by any federal, state, local or foreign
governmental authority or any agency or instrumentality thereof against
BIOTRINE, its officers, directors, agents and employees or against the Meters by
reason of any claims or findings by any said public authority relating to the
Meters, other than a claim or finding that there existed a defect in said Meters
at the time of shipment as a result of BIOTRINE's gross negligence or willful
misconduct.
9.4 Indemnification Procedures - In any case under this
Agreement where one party has indemnified the other against any claim or legal
action, indemnification will be conditioned on compliance with the procedure
outlined below. Provided that prompt notice is given of any claim or suit for
which indemnification might be claimed, the indemnifying party promptly will
defend, contest, or otherwise protect against any such claim or suit at its own
cost and expense. The indemnified party may, but will not be obligated to,
participate at its own expense in a defense thereof by counsel of its own
choosing, but the indemnifying party will be entitled to control the defense
unless the indemnified party has relieved the indemnifying party from liability
with respect to the particular matter. In the event the indemnifying party fails
to timely defend, contest, or otherwise protect against any such claim or suit,
the indemnified party may, but will not be obligated to, defend, contest, or
otherwise protect against the same, and make any compromise or settlement
thereof and recover the entire costs thereof from the indemnifying party,
including reasonable attorneys' fees, disbursements and all amounts paid as a
result of such claim or suit or the compromise or settlement thereof; provided,
however, that if the indemnifying party undertakes the defense of such matter,
the indemnified party will not be entitled to recover from the indemnifying
party costs incurred in the defense thereof other than the reasonable costs of
investigation undertaken by the indemnified party and reasonable costs of
providing assistance. The indemnified party will cooperate and provide such
assistance as the indemnifying party may reasonably request in connection with
the defense of the matter subject to indemnification.
9.5 Products Liability Insurance - CENTER will maintain
products liability insurance containing a broad form vendor's endorsement
covering all Meters sold pursuant to the terms of this Agreement with minimum
limits of ten million dollars ($10,000,000) for combined bodily injury and
property damage and said insurance will not be cancelled without at least thirty
(30) calendar days prior written notice to BIOTRINE. CENTER will provide
BIOTRINE, upon BIOTRINE's request therefore, with a certificate from the
insurance company providing such insurance evidencing compliance with the
provision of the preceding sentence. BIOTRINE will, for so long as it supplies
Meters under this Agreement, maintain products liability insurance on the
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<PAGE>
Meters for BIOTRINE's gross negligence or willful misconduct in the principal
amount of not less than one million dollars ($1,000,000) for combined bodily
injury and property damage and said insurance will not be cancelled without at
least thirty (30) calendar days prior written notice to CENTER. BIOTRINE will
provide CENTER, upon CENTER's request therefore, with a certificate from the
insurance company providing such insurance evidencing compliance with the
provision of the preceding sentence.
10.0 FORCE MAJEURE
BIOTRINE will not be liable for any delay or failure to
perform its obligations hereunder due to any contingency beyond its reasonable
control. BIOTRINE agrees to reasonably endeavor to resume its performance
hereunder if such performance is delayed or interrupted by reason of force
majeure.
11.0 TERM OF AGREEMENT
11.1 Term - Unless earlier terminated by either party in
accordance with Paragraph 11.2, the term of this Agreement will expire upon the
expiration of the Patent Rights. Upon expiration of this Agreement, all rights
and obligations of the parties will cease. Notwithstanding the foregoing,
obligations which accrued hereunder prior to expiration and obligations arising
under Paragraphs 3.6, 3.7, 4.6, 7.0 and 9.0 will survive expiration of this
Agreement.
11.2 Default - Should either party be in default as to any
material term of this Agreement and fail to remedy same within sixty (60) days
after receipt of written notice of such default by the nondefaulting party, then
the nondefaulting party will have, in addition to all other remedies available
at law or in equity, the right to terminate this Agreement upon delivery of
written notice of termination to the defaulting party. The failure of the
nondefaulting party to terminate this Agreement for any cause will not
constitute a waiver of such right in the future as to any subsequent default.
11.3 Effect of Termination - Upon termination of this
Agreement under Paragraphs 11.1 or 11.2, all rights and obligations of the
parties will cease. Notwithstanding the foregoing, obligations which accrued
prior to termination and obligations arising under Paragraphs 3.7, 4.7, 7.0 and
9.0 will survive termination of this Agreement.
12.0 NOTICES
All notices provided for in this Agreement will be in writing
and will be considered delivered when they are deposited in the United States
mail, certified first class or air mail postage prepaid, addressed to the
respective parties as follows:
If to CENTER: Center Laboratories
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<PAGE>
35 Channel Drive
P.O. Box 3947
Port Washington, NY 11050
Attention: President
with a copy to: EM Industries, Incorporated
5 Skyline Drive
Hawthorne, NY 10532
Attention: General Counsel
If to BIOTRINE: BIOTRINE Corporation
52 Dragon Court
Woburn, MA 01801
Attention: President
with a copy to: John M. Cornish
Choate, Hall and Stewart
Exchange Place
Boston, MA 02109
13.0 SEVERABILITY
In the event a court of competent jurisdiction holds any
provision of this Agreement to be invalid, such holding will have no effect on
the remaining provision, and they will continue in full force and effort.
14.0 ASSIGNMENT
Neither party will assign this Agreement to another without
the prior written consent of the other party; provided, however, that either
party may assign this Agreement to an Affiliate or a successor in ownership of
all or substantially all of the business assets to which this Agreement
pertains. Any other purported assignment will be void. This Agreement will be a
binding obligation of the heirs, successors and permitted assigns of all the
rights, title and interest of either party hereto.
15.0 DISPUTE RESOLUTION
Any controversy or claim arising out of or relating to this
Agreement shall be submitted to arbitration in accordance with the Commercial
Rules of the American Arbitration Association; provided, however, that this
clause shall not be construed to limit or to preclude either party from bringing
any action in any court of competent jurisdiction for injunctive or other
provisional relief as necessary or appropriate. The arbitration shall be
conducted in New York, NY. Any award or
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<PAGE>
determination of the arbitration tribunal shall be final, nonappealable, and
conclusive upon the parties, and judgment thereon may be entered by any court of
competent jurisdiction.
16.0 PUBLIC STATEMENTS
Except as may be required by law, neither party will make any
public announcement or authorize or author any statement to the press regarding
this Agreement or any of its terms or conditions or the relationships between
the parties created by this Agreement without the prior written permission of
the other party. The terms and conditions of this Agreement will be maintained
as confidential in accordance with Article 7.0 hereof.
17.0 ENTIRE AGREEMENT, MODIFICATION
17.1 Supremacy of this Agreement - This Agreement takes
precedence over and will control all terms of any purchase order, order
acknowledgment, invoice or any other document issued hereunder or pursuant
hereto.
17.2 Entire Agreement - This instrument contains the entire
and only agreement between the parties respecting the subject matter hereof and
supersedes all previous negotiations, representations, understandings, promises
or conditions, both written and oral, heretofore made between the parties with
respect to the subject matter hereof.
17.3 Modification - No waiver, alteration, modification,
renewal or extension of this Agreement will be valid unless made in writing and
signed by a duly authorized representative of CENTER and BIOTRINE.
IN WITNESS WHEREOF, the parties hereto have signed this Agreement by
their duly authorized representatives as of the day and year first written
above.
EM INDUSTRIES, INCORPORATED BIOTRINE CORPORATION
CENTER LABORATORIES
By /s/ Alan Pernick By /s/ Peter Gazzara
------------------------- ----------------------
Alan Pernick Peter Gazzara
Date 2/2/95 Date 2/1/95
----------------------- --------------------
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<PAGE>
c:\word\center\biotrm3.doc
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<PAGE>
EXHIBIT A
Patent Rights
United States Patent # 5,246,010 - Method and Apparatus for Exhalation Analysis
Issued September 21, 1993
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<PAGE>
TRADEMARK ASSIGNMENT
Trademark Assignment dated April 1, 1994, between BIOTRINE Corporation,
a Massachusetts corporation, having a principal place of business at 52 Dragon
Court, Woburn, MA 01801 ("Assignor"), and EM Industries, Incorporated, a New
York corporation, having a principal place of business at 5 Skyline Drive,
Hawthorne, NY 10532 ("Assignee").
W I T N E S S E T H :
WHEREAS, Assignor has developed the trademark ASTECH and its stylized
presentation (the "Trademark"); and
WHEREAS, pursuant to an Technology Purchase Agreement dated April 1,
1994, between Assignor and Assignee, Assignor has agreed to sell, transfer,
assign and deliver to Assignee, and Assignee has agreed to purchase all rights
and interest in the Trademark; and
WHEREAS, Assignee desires to acquire the Trademark and to pursue the
registration thereof.
NOW, THEREFORE, in consideration of Three Thousand Two Hundred
Thirty-Four Dollars and No Cents ($3,234.00) paid by Assignee to Assignor and
for other good and valuable consideration, the receipt and sufficiency of which
hereby are acknowledged, Assignor and Assignee agree as follows:
Assignor hereby assigns to Assignee all right, title and interest in
and to the Trademark, together with the good will of the business associated
with the Trademark and the rights to pursue the registration thereof.
IN WITNESS WHEREOF, the undersigned has caused this Trademark
Assignment to be executed by a duly authorized officer as of the 1st day of
April, 1994.
BIOTRINE CORPORATION
By: /s/ Peter Gazzara
-----------------
Peter Gazzara
President
STATE OF MASSACHUSETTS )
)SS.
COUNTY OF MIDDLESEX )
Then personally appeared Peter Gazzara, the person who signed this
instrument, who acknowledged that he signed it as the free act and deed on
behalf of the above identified corporation, before me.
/s/ Kristine P. Neary
---------------------
Notary Public
My Commission Expires 1/29/99
-------
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<PAGE>
EXHIBIT B
ASSIGNMENT OF TECHNOLOGY
Pursuant to that certain Technology Purchase Agreement, dated as of
April 1, 1994, among EM Industries, Incorporated, a New York corporation
("Assignee"), Biotrine Corporation, a Massachusetts corporation ("Assignor"),
Assignor hereby assigns to Assignee, effective as of the date hereof (this
"Assignment"): (i) all of Assignor's right, title, and interest in any and all
patent applications and patents, applied for or issued on the ASTECH home peak
flow meter (the "Meters"), and all know-how, information, apparatus, equipment,
devices, and technology, whether patented or unpatented, patentable or
unpatentable related thereto; (ii) any and all continuations,
continuations-in-part, divisions and reissues of any such patents and
applications, and all foreign patents or patent applications which correspond to
any such patents and applications or are based thereon or are related thereto;
(iii) any and all trademarks, service marks, trade names, logotypes, commercial
symbols and other designations identifying the Meters and any and all processes
and services associated therewith, including any and all applications for
trademark registrations, trade name registrations, if any, trademark and service
mark registrations, application for registration of trademarks and service
marks, and the right to file for trademark registration and trademark and
service mark registration; (iv) any and all common-law copyrights, applications
for copyright registrations, copyright registrations, if any, the right to file
for copyright registration and copyright renewals, in the United States and
elsewhere, owned or controlled directly or indirectly by Assignor which cover
any documentation used in connection with the Meters; and (v) all drawings,
writings, documents, data, papers, reports, test results, evaluations, plans,
studies, instructions, manuals, computer software, computer codes, formulas, and
formulations describing the Meters. This Assignment may be executed in
counterparts, each of which shall constitute an original and all of which
together shall constitute one (1) agreement.
BIOTRINE CORPORATION
By: /s/ Peter Gazzara
---------------------------
Peter Gazzara
President
STATE OF MASSACHUSETTS )
) SS.
COUNTY OF MIDDLESEX )
Then personally appeared Peter Gazzara, the person who signed this
instrument, who acknowledged that he signed it as the free act and deed on
behalf of the above identified corporation, before me.
/s/ Kristine P. Neary
---------------------
Notary Public
My Commission Expires 1/29/99
-------
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<PAGE>
EXHIBIT C
ASTECH(TM) Peak Flow Meter Acceptance Criteria
ASTECH(TM) Peak Flow Meters must be constructed entirely from components
approved by Center Laboratories and conform to the following criteria:
I. Tube color meets standard. There will no excessive scratches or
mottling.
II. Each meter is properly assembled:
A. One end piece and one mouthpiece.
B. One each red, yellow and green color zone indicator inserted
in proper location: red at the low end, yellow in the middle,
and green at the high end of the scale.
C. One peak flow indicator.
The meter is contained in a clear plastic tube with an end cap.
Each lot must conform to the following assembly Acceptable Quality Level
(A.Q.L.)
I. Critical Defects - A.Q.L. *
A. Meter missing part(s).
II. Major Defects - A.Q.L. *
A. Colored indicators in wrong order.
B. Scale plate not adhering to meter.
C. Cracked or broken mouthpiece, end-cap or bezel.
D. Peak Flow Indicator has a resistance of greater than 12 grams
as determined by testing with a resistance.
III. Minor Defects - A.Q.L. *
A. Aluminum tube heavily scratched or mottled.
Each lot must also conform to the following Accuracy and Precision A.Q.L.
I. Critical Defects - A.Q.L. *
A. Each individual unit must test within * of the waveform at
100L/min. and * at 700 L/min. If a unit passes one
specification but fails the other, the unit is considered
defective. The average accuracy must be greater than *
at 700 L/min. and * at 100 L/min. The precision, or
coefficient of variance, must be within *.
A completed device history record must be included for each lot of product. The
record must show that BIOTRINE testing and release criteria have been
successfully met.
* Confidential material omitted and filed separately with the Securities and
Exchange Commission.
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<PAGE>
ANNEX 3
AGREEMENT
By and Between
SURVIVAL TECHNOLOGY, INC.
and
EM INDUSTRIES, INC.
Dated as of October 21, 1996
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE 1........................................................ 2
ARTICLE 2........................................................ 5
ARTICLE 3........................................................ 7
ARTICLE 4........................................................ 10
ARTICLE 5........................................................ 13
ARTICLE 6........................................................ 15
ARTICLE 7........................................................ 16
ARTICLE 8........................................................ 17
ARTICLE 9........................................................ 21
ARTICLE 10....................................................... 22
ARTICLE 11....................................................... 23
ARTICLE 12....................................................... 24
ARTICLE 13....................................................... 24
ARTICLE 14....................................................... 25
ARTICLE 15....................................................... 25
ARTICLE 16....................................................... 26
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<PAGE>
AGREEMENT
THIS AGREEMENT, (this "Agreement") made as of the 21st day of
October, 1996 between SURVIVAL TECHNOLOGY, INC. ("STI"), a Delaware
corporation having its principal offices at 2275 Research Boulevard,
Rockville, Maryland 20850, and CENTER LABORATORIES ("Center"), a division and
acting on behalf of EM Industries, Inc. ("EM"), a New York corporation, said
division having its principal offices located at 35 Channel Drive, Port
Washington, New York 11050.
W I T N E S S E T H:
WHEREAS, STI has the capability to produce and fill the EpiPen, the
EpiPen Jr., the Epi E-Z Pen and the Epi E-Z Pen, Jr. (as herein defined); and
WHEREAS, Center is engaged in the business of manufacturing, selling
and distributing allergenic products worldwide; and
WHEREAS, STI previously has granted Center an exclusive right to
distribute and sell the Products (as herein defined), and in connection
therewith, STI and Center have previously entered into a certain Agreement
dated January 1, 1987, which was modified by several subsequent agreements and
understandings; and
<PAGE>
- 2 -
WHEREAS, STI and Center wish to modify and restate in their entirety
their previous agreements and understandings relating to the Products so as to
reflect the terms and conditions contained herein;
NOW, THEREFORE, upon the foregoing premises and in consideration of
the mutual covenants agreed upon herein, the parties agree as follows:
ARTICLE 1
For the purposes of this Agreement, the following terms shall have
the definitions set forth below:
1.1 "Component Factor" shall mean $ * plus the CPI Increment.
1.2 "CPI Increment" shall mean the amount determined by multiplying
the Component Factor or Trainer Component Factor, as applicable, for the prior
year by the percentage by which the Consumer Price Index for all Urban
Consumers (all items: U.S. City Average) compiled by the United States
Department of Labor for the month of December immediately preceding the
calendar year for which the calculation is made exceeds the Index for the
prior month of December.
1.3 "Epi E-Z Pen" shall mean automatic injectors filled with the drug
Epinephrine conforming to the specifications set forth in Exhibit A, as the
same may be updated from time to time by STI on not less than 90
* Confidential material omitted and filed separately with the Securities and
Exchange Commission.
<PAGE>
- 3 -
days' prior notice to Center to conform to improvements, redesigns,
modifications, replacement or substitutions.
1.4 "Epi E-Z Pen Jr." shall mean automatic injectors filled with the
drug Epinephrine conforming to the specifications set forth in Exhibit B, as
the same may be updated from time to time by STI on not less than 90 days'
prior notice to Center to conform to improvements, redesigns, modifications,
replacements or substitutions.
1.5 "Epi E-Z Pen Trainer" shall mean automatic injectors not filled
with any drug, not capable of injecting medicament and conforming to the
specifications set forth in Exhibit C, as the same may be updated from time to
time by STI on not less than 90 days' prior notice to Center to conform to
improvements, redesigns, modifications, replacements or substitutions.
1.6 "EpiPen" shall mean automatic injectors filled with the drug
Epinephrine conforming to the specifications set forth in Exhibit D, as the
same may be updated from time to time by STI on not less than 90 days' prior
notice to Center to conform to improvements, redesigns, modifications,
replacement or substitutions.
1.7 "EpiPen Jr." shall mean automatic injectors filled with the drug
Epinephrine conforming to the specifications set forth in Exhibit E, as the
same may be updated from time to time by STI on not less than 90
<PAGE>
- 4 -
days' prior notice to Center to conform to improvements, redesigns,
modifications, replacements or substitutions.
1.8 "EpiPen Trainer" shall mean automatic injectors not filled with
any drug, not capable of injecting medicament and conforming to the
specifications set forth in Exhibit F, as the same may be updated from time to
time by STI on not less than 90 days' prior notice to Center to conform to
improvements, redesigns, modifications, replacements or substitutions.
1.9 "Forecasts" shall mean the forecasts for Products required to be
provided pursuant to Section 3.1.
1.10 "Insurance Cost" shall mean the amount paid by STI during the
specified period as product liability insurance premiums relating to the
Products, expressed in dollars per unit of Regular Products to be delivered
during such period as forecast by Center pursuant to Section 3.2; provided,
however, that in the event the amount so calculated is less than $.24 per
unit, the Insurance Cost shall be the amount so calculated plus one-half the
amount by which $.24 exceeds such amount.
1.11 "New Auto Injector Technology" shall mean any type of new auto
injector products including DCA auto injectors for the drug Epinephrine, but
not including existing Products.
1.12 "Price" shall be that amount determined in accordance with
Sections 4.1 through 4.3.
<PAGE>
- 5 -
1.13 "Products" shall mean collectively the Epi E-Z Pen, the Epi E-Z
Pen Jr., the Epi E-Z Pen Trainer, the EpiPen, the EpiPen Jr. and the EpiPen
Trainer.
1.14 "Regular Products" shall mean collectively the Epi E-Z Pen, the
Epi E-Z Pen Jr., the EpiPen and the EpiPen Jr.
1.15 "Term" shall mean the term of this Agreement as provided in
Article 14.
1.16 "Trainer Component Factor" shall mean $ * in the case of the
Epi E-Z Pen Trainer and $ * in the case of the EpiPen Trainer plus, in both
cases, the CPI Increment.
1.17 "United States" shall mean the United States of America, its
territories, commonwealths and dependencies.
1.18 "Worldwide" shall mean all countries of the world other than the
United States and Canada.
ARTICLE 2
2.1 STI hereby confirms Center's exclusive right during the Term to
market and sell the Products for delivery and use in the United States, Canada
and Worldwide.
2.2 In the event that during the Term, Center wishes to sell or
distribute the Products in any country Worldwide in which the Products have
not been previously
* Confidential material omitted and filed separately with the Securities and
Exchange Commission.
<PAGE>
- 6 -
licensed for sale or distribution, Center may do so if it obtains at its sole
cost and expense all governmental licenses and approvals required to qualify
the Products for sale and distribution in such country.
2.3 In the event that during the Term, STI should develop New Auto
Injector Technology for the emergency treatment of severe allergic reactions
or asthma, STI shall first offer to Center the exclusive right to sell and
distribute such new products. If Center is not interested in selling and
distributing such new products or if, following good faith negotiations, STI
and Center are not able to agree on mutually satisfactory terms for such sale
and distribution, STI shall have the right to offer sale and distribution
rights to other entities or to sell or distribute such products itself and to
enter into appropriate agreements and arrangements with regard thereto,
provided that the terms of such agreements and arrangements shall be no less
favorable to STI than the final terms offered to STI by Center. The rights
granted to Center under this Section 2.3 shall not be applicable to products
developed by third parties and brought to STI including, without limitation,
projects involving contract filling and the manufacture of auto-injectors in
connection therewith.
<PAGE>
- 7 -
2.4 In the event that during the Term, Center wishes to acquire New
Auto Injector Technology and/or injectable drug compounds for the treatment of
severe allergic reactions or asthma, STI shall have the first right to
manufacture such products and to sell them to Center. If STI is not interested
in manufacturing and selling such new products or if, following good faith
negotiations, STI and Center are not able to agree on mutually satisfactory
terms for such manufacture and sale, Center shall have the right to purchase
such products from other entities or to manufacture such products itself and
to enter into appropriate agreements and arrangements with regard thereto,
provided that the terms of such agreements and arrangements are no less
favorable to Center than the final terms offered to Center by STI.
ARTICLE 3
3.1 Center agrees to purchase from STI and STI agrees to sell to
Center during the Term all of Center's requirements for the Products. Upon
execution of this Agreement and on each February 1, May 1, August 1 and
November 1 during the Term, Center shall provide a non-binding rolling
36-month forecast for each Product by country for each calendar quarter in
such period ("Forecasts").
<PAGE>
- 8 -
3.2 Center shall issue firm purchase orders on a country-by-country
basis specifying the desired quantities of the Products and requested delivery
dates at least (i) 90 days before each requested delivery date in the care of
Epi E-Z Pen Jr. and EpiPen Jr. and (ii) 120 days before each requested
delivery date for all other Products. Orders that exceed 120 percent of those
set forth in the Forecast for a particular month shall be shipped not later
than 120 days (in the case of Epi E-Z Pen Jr. and EpiPen Jr.) or 150 days (in
the case of all other Products) from the receipt of the applicable purchase
order.
3.3 STI shall issue credit for or refurbish, at no charge to Center,
all Products received by Center which do not meet the specifications contained
in Exhibits A through F, as the case may be, as from time to time updated by
STI on not less than 90 days' prior notice to Center to conform to
improvements, redesigns, modifications, replacements or substitutions. Within
30 days following the return by Center to STI of allegedly defective units of
Product, STI shall conduct an investigation of the alleged defect and shall
report to Center as to the results of such investigation.
3.4 STI shall maintain product liability insurance on the Products
for STI's gross negligence or willful misconduct in the principal amount of
not less
<PAGE>
- 9 -
than one million dollars ($1,000,000); provided, however, that on not less
than six months' prior written notice from Center, STI shall obtain a like
amount of product liability insurance on the Products that is not restricted
to STI's gross negligence or willful misconduct; and provided further, that in
the event that STI is unable to procure such coverage, then Center's sole
remedy shall be to terminate this Agreement and neither party shall have any
further liability to the other except as provided in Section 10.8.
3.5 STI represents and warrants to Center that all Products delivered
to Center hereunder shall meet the specifications contained in Exhibits A
through F hereof, as the case may be, as from time to time updated by STI on
not less than 90 days' prior notice to Center to conform to improvements,
redesigns, modifications or substitutions, and shall meet all requirements of
applicable United States state and federal law.
3.6 Center hereby represents and warrants that all applicable
regulatory filings have been and will continue to be made and all necessary
approvals obtained to permit Center to sell and distribute the Products in
those countries where the Products are sold or distributed. In the event that
regulatory agencies of any country where the Products are or are to be sold or
distributed require testing of Products prior to sale,
<PAGE>
- 10 -
the approval of STI shall be required before Center shall agree to any testing
protocols or procedures. Such protocols shall be established in accordance
with Exhibit I hereto. All costs of such filings and testing shall be borne by
Center.
3.7 STI covenants and agrees that it shall use reasonable efforts to
respond promptly to Product complaints received from Center.
ARTICLE 4
4.1 The Price for each of the Regular Products ordered for delivery
during 1996 shall be as set forth on Exhibit G hereto. The Price for each of
the Regular Products ordered for delivery during 1997 and each subsequent
calendar year during the Term shall be the sum of (1) the Component Factor for
such year, (2) the Insurance Cost and (3) such adjustments as are set forth on
Exhibit G. The Price shall be subject to further adjustment from time-to-time
as provided in this Article 4 and in Article 6.
4.2 At each renewal of the product liability insurance policy
referred to in Section 3.4, STI shall calculate the Insurance Cost for the
period covered by such payment. In the event that the Insurance Cost for such
period is greater than or less than the Insurance Cost for the immediately
preceding period, the Price
<PAGE>
- 11 -
shall be increased or decreased, respectively, by the amount of such
difference. It is agreed for purposes of this Agreement that the Insurance
Cost is $.16 per unit for 1996.
4.3 In the event that the form, content or manner of the packaging of
the Products is changed during the Term from that utilized at the date hereof,
STI shall determine the difference in unit costs that will result from such
change, taking into account items of material, labor and overhead, and the
Price shall be increased by the amount so determined if the Unit cost would be
greater or decreased by one-half the amount so determined if the unit cost
would be less. This Section 4.3 shall apply to successive changes in packaging
during the Term.
4.4 Except as STI may otherwise consent, orders for units of Epi E-Z
Pen, EpiPen and EpiPen Jr. shall be in integral multiples of * units and
orders for units of Epi E-Z Pen Jr. shall be in integral multiplies of *
units, except that all orders for less than * units of Epi E-Z Pen Jr.
shall be subject to a surcharge as outlined on Exhibit G. Shipment of Regular
Products for more than 110 percent of previously agreed-upon unit amounts per
order shall require the consent of Center.
* Confidential material omitted and filed separately with the Securities and
Exchange Commission.
<PAGE>
- 12 -
4.5 The price for each Epi E-Z Pen Trainer and EpiPen Trainer ordered
for delivery during 1996 shall be $ * in the case of the Epi E-Z Pen Trainer
and $ * in the case of the EpiPen Trainer. During 1997 and each subsequent
calendar year during the Term, the price for each Epi E-Z Pen Trainer and
EpiPen Trainer shall be the Trainer Component Factor determined for such year.
Each order for Epi E-Z Pen Trainers and EpiPen Trainers shall be for at least
* units. Shipment of Epi E-Z Pen Trainer and EpiPen Trainer Products for
more than 110 percent of previously agreed-upon unit amounts per order shall
require the consent of Center.
4.6 STI shall ship the Products at Center's expense in accordance
with Center's instructions, F.O.B. STI's plant. For purposes of this
Agreement, delivery of Products shall be deemed to have occurred upon delivery
to a common carrier at STI's plant. Payment to STI shall be net 30 days after
date of shipment. Center shall pay interest on all past due balances at a rate
of one percent per month.
4.7 All calculations required pursuant to this Article 4 shall be
performed by STI, shall be to the nearest penny and shall be subject to review
by Center. In the absence of manifest error, such calculations shall be
conclusive and binding for all purposes of this Agreement.
* Confidential material omitted and filed separately with the Securities and
Exchange Commission.
<PAGE>
- 13 -
4.8 The parties agree to examine the cost and feasibility of providing
insurance coverage for Center under STI's insurance policies.
ARTICLE 5
5.1 Center agrees to order not less than 929,652 units of Regular
Products for delivery during 1996. Thereafter during the Term, Center shall
order for delivery and receipt during each calendar year not less than the
number of units of Regular Products determined as follows: (i) in 1997, 55
percent of the total number of units of Regular Products ordered for delivery
and receipt during the two immediately preceding calendar years; (ii) in 1998,
54 percent of the total number of units of Regular Products ordered for
delivery and receipt during the two immediately preceding calendar years;
(iii) in 1999, 53 percent of the total number of units of Regular Products
ordered for delivery and receipt during the two immediately preceding calendar
years; and (iv) in 2000 and thereafter, 52.5 percent of the total number of
units of Regular Products ordered for delivery and receipt during the two
immediately preceding calendar years.
5.2 In the event that Center does not order for delivery during any
calendar year the minimum quantities determined pursuant to Section 5.1, STI
may
<PAGE>
- 14 -
terminate Center's exclusive right to distribute and sell the Products as
provided in Section 2.1, provided that STI notifies Center in writing of its
intention to do so within 30 days following the close of the applicable
period. STI may terminate this Agreement in the event that Center does not
order for delivery during any calendar year 50 percent of the minimum
quantities determined pursuant to Section 5.1, provided that STI notifies
Center in writing of its intention to do so within 30 days following the close
of the applicable period. STI's failure to so notify Center within such
periods shall be deemed a waiver of its right to do so for such years, but
shall not be deemed a waiver of its right to terminate this Agreement or
exclusive territories, as applicable, for Center's failure to order the
minimum quantities during any subsequent years.
5.3 In the event that the exclusive right to distribute and sell the
Products is terminated pursuant to Section 5.2 (and this Agreement has not
otherwise been terminated), STI shall permit Center to distribute and sell the
Products to Center on a non-exclusive basis at such prices as STI shall
determine consistent with prices charged by STI for comparable quantities of
products in comparable markets.
5.4 In the event of any termination of this Agreement (whether
pursuant to Section 5.2 or otherwise), (a) Center shall take delivery of and
pay
<PAGE>
- 15 -
for all undelivered finished goods manufactured pursuant to firm purchase
orders previously provided from Center; and (b) to the extent not duplicative
with the preceding clause (a), Center shall pay to STI an amount equal to the
sum of (i) STI's cost, taking into account items of material, labor and
overhead theretofore incurred, purchased or ordered by STI pursuant to any
firm purchase orders provided prior to such date, and (ii) the Insurance Cost
then in effect multiplied by the excess of the number of units forecast for
delivery during the period based on firm purchase orders with respect to which
such Insurance Cost was calculated over the number of units delivered by STI
during such period, such product to be reduced by the amount of any rebate of
insurance premiums included in the Insurance Cost received by STI as a result
of termination of this Agreement.
ARTICLE 6
All Products ordered by or for Center shall be identified on the
label, package container and all product literature as the product of STI.
These materials shall also bear the Center mark or logo. Any label to be
affixed to the Products or to any package containing the Products which
differs from the label in use on the date hereof is subject to STI's prior
<PAGE>
- 16 -
approval, which approval shall not be unreasonably withheld. The printing and
affixing of such labels to the Products shall be done at STI's expense;
provided, however, that Center shall bear the incremental expense of preparing
and printing any labelling and secondary packaging required for sales of
Product in any country other than the United States.
ARTICLE 7
7.1 In the event of infringement by any third party of any patents
relating to the Products, STI may, in its discretion and at it own expense,
take steps to prevent such infringement, including the bringing of an
appropriate legal action, and shall retain for itself all recoveries
therefrom. If STI refuses to bring a legal action within 90 days after notice
from Center of an infringement, Center may bring a legal action at its cost
and expense and retain for itself all recoveries therefrom.
7.2 STI shall, at its expense, defend any suit instituted against
Center and indemnify Center against any award of damages made against Center
by a final judgment of a court of last resort based on a claim that the
Products, or any of them, constitute an infringement or any patent or
trademark other than the Center mark or logo (as to which Center shall defend
any suit
<PAGE>
- 17 -
instituted against STI and indemnify STI against any such award).
ARTICLE 8
8.1 STI shall not be liable for, and Center assumes responsibility
for, all personal injury and property damage resulting from the handling,
possession, or use of the Products or the Epinephrine contained therein
following delivery thereof to Center. In no event shall STI be liable for
special, incidental or consequential damages, whether Center's claim is in
contract, negligence, strict liability or otherwise. Center shall hold
harmless, defend and indemnify STI, its officers, directors, agents and
employees from and against any and all damages, claims, liabilities, demands,
losses or expenses, including reasonable attorneys' fees, arising from or
allegedly arising from the Products or the Epinephrine contained therein or
any use thereof; provided that Center's agreement to hold harmless, defend and
indemnify STI shall not be applicable to, and STI shall indemnify, hold
harmless and defend Center from, any damage, claim, liability, demand, loss or
expense, including reasonable attorneys' fees, which arises from or allegedly
arises from the gross negligence or willful misconduct of STI in formulating,
labeling, packaging or holding the Products
<PAGE>
- 18 -
or the Epinephrine contained therein or in otherwise performing its services
hereunder.
8.2 (a) STI shall defend, indemnify and hold harmless Center, its
officers, directors, agents and employees from any damages (other than damages
for lost profits), expenses and costs (including reasonable attorneys' fees)
arising out of actions and proceedings brought by any United States federal,
state or local governmental authority or any agency or instrumentality thereof
against Center, its officers, directors, agents, and employees or against the
Products by reason of any claim or finding by an said public authority that
the Products were defective at the time of shipment.
(b) STI shall defend, indemnify and hold harmless Center,
its officers, directors, agents and employees from any damages (other than
damages for lost profits), expenses and costs (including reasonable attorneys'
fees) arising out of actions and proceedings brought by any foreign
governmental authority or any agency or instrumentality thereof against
Center, its officers, directors, agents, and employees or against the Products
by reason of any claim or finding by an said public authority that the
Products were defective at the time of shipment as a result of STI's gross
negligence or willful misconduct.
<PAGE>
- 19 -
8.3 (a) Center shall defend, indemnify and hold harmless STI, its
officers, directors, agents and employees, from any damages (other than
damages for lost profits), expenses and costs arising out of actions and
proceedings brought by any United States federal, state or local governmental
authority or any agency or instrumentality thereof against STI, its officers,
directors, agents and employees or against the Products by reason of any
claims or findings by any said public authority relating to the Products,
other than a claim or finding that there existed a defect in said Products at
the time of shipment.
(b) Center shall defend, indemnify and hold harmless STI,
its officers, directors, agents and employees, from any damages (other than
damages for lost profits), expenses and costs arising out of actions and
proceedings brought by any foreign governmental authority or any agency or
instrumentality thereof against STI, its officers, directors, agents and
employees or against the Products by reason of any claims or findings by any
said public authority relating to the Products, other than a claim or finding
that there existed a defect in said Products at the time of shipment as a
result of STI's gross negligence or willful misconduct.
<PAGE>
- 20 -
8.4 In any case under this Agreement where one party has indemnified
the other against any claim or legal action, indemnification shall be
conditioned on compliance with the procedure outlined below. Provided that
prompt notice is given of any claim or suit for which indemnification might be
claimed, the indemnifying party promptly will defend, contest, or otherwise
protect against any such claim or suit at its own cost and expense. The
indemnified party may, but will not be obligated to, participate at its own
expense in a defense thereof by counsel of its own choosing, but the
indemnifying party shall be entitled to control the defense unless the
indemnified party has relieved the indemnifying party from liability with
respect to the particular matter. In the event the indemnifying party fails to
defend, contest, or otherwise protect against any such claim or suit in a
timely manner, the indemnified party may, but will not be obligated to,
defend, contest, or otherwise protect against the same, and make any
compromise or settlement thereof and recover the entire costs thereof from the
indemnifying party, including reasonable attorneys' fees, disbursements and
all amounts paid as a result of such claim or suit or the compromise or
settlement thereof; provided, however, that if the indemnifying party
undertakes the defense of such matter, the indemnified
<PAGE>
- 21 -
party shall not be entitled to recover from the indemnifying party for its
costs incurred in the defense thereof other than the reasonable costs of
investigation undertaken by the indemnified party and reasonable costs of
providing assistance. The indemnified party shall cooperate and provide such
assistance as the indemnifying party may reasonably request in connection with
the defense of the matter subject to indemnification.
ARTICLE 9
Neither party to this Agreement shall disclose to any third party or
commercially use any confidential concepts, information and knowledge
concerning the business and products of the other party which it may come to
know in dealing with the other party pursuant to the terms of this Agreement,
provided that such obligation shall not apply to concepts, information and
knowledge:
1) which were already known at the time of receipt from the other
party;
2) which are subsequently acquired from sources under no obligation
of secrecy to the other party; and
3) which are at the time of receipt from the other party or
thereafter become part of the public
<PAGE>
- 22 -
domain through no fault of the party receiving such information.
ARTICLE 10
10.1 In the event Center shall be in arrears in payments pursuant to
this Agreement for a period of 60 days after the due date thereof, STI shall
have the right to terminate this Agreement upon giving Center 60 days' written
notice, such termination to be effective at the end of such 60-day period
unless Center shall have paid the arrearages due within such time.
10.2 In the event STI is unable to supply all or any part of Center's
orders within six months from the date such orders would otherwise be due to
be delivered to Center by virtue of any governmental action or final
injunctive decree brought or issued for any reason, Center may terminate this
Agreement.
10.3 In the event STI permanently discontinues its business of
producing the Products for any reason, voluntary or involuntary, STI may
terminate this Agreement without liability to Center by giving not less than
six months prior written notice to Center. STI agrees that in the event it
delivers such notice, it will, upon Center's request delivered within 30 days
thereafter, use its best efforts to assist Center in
<PAGE>
- 23 -
establishing an alternative source for the Product on terms mutually agreeable
to STI and Center.
10.4 Either party shall have the right to terminate this Agreement if
the other materially breaches any of the material provisions of this
Agreement, provided that the terminating party gives the other party written
notice of such termination and a 30-day period from the receipt of said notice
to cure said breach. For purposes of this Section 10.4, Section 3.7 shall not
be considered a material provision.
10.5 Any election to terminate the Agreement pursuant to the
provisions of this Article shall affect neither party's available remedies at
law or in equity or as otherwise provided herein.
10.6 Under no circumstances shall termination of this Agreement under
this Article 10 or otherwise relieve the parties of their respective
obligations to make any payments due under this Agreement. The provisions of
Section 5.4 and Articles 7, 8, 9, 11 and 16 shall survive any such termination
of this Agreement.
ARTICLE 11
The rights and obligations of the parties under this Agreement shall
be construed under, and governed by the substantive laws, but not the rules
relating to the
<PAGE>
- 24 -
choice of law, of the State of New York. Any controversy or claim arising out
of or relating to this Agreement, or the breach thereof, shall be settled by
arbitration, in accordance with the Rules of the American Arbitration
Association, and judgment upon the award rendered may be entered in any court
having jurisdiction thereof.
ARTICLE 12
This Agreement shall not be assignable by EM or Center without the
prior written consent of STI, except (a) by Center to the parent of EM or to a
wholly owned subsidiary of EM or of such parent; or (b) by Center to another
corporation in connection with the sale to such corporation of substantially
all of the assets of EM as a going concern or in connection with a merger or
consolidation of Center into or with such corporation, provided that upon any
such sale of assets, merger or consolidation, the assignee or successor
corporation shall, as a condition to such transaction, expressly assume in
writing the obligations of Center hereunder.
ARTICLE 13
This Agreement is subject to force majeure and failure to perform any
part hereof shall not subject any party to any liability to the other or be a
cause for
<PAGE>
- 25 -
termination of this Agreement if such failure is caused by a strike (whether
or not the demands of employees involved are reasonable and within the party's
power to concede), accident, act of God or the public enemy, weather
conditions, default by supplier either in late delivery or delivery of
defective goods, or other circumstances of like or different character which
are reasonably beyond the control of the party failing to perform.
ARTICLE 14
Unless previously terminated pursuant to Section 3.4, Section 5.2 or
Article 10, this Agreement shall be for an initial term ending December 31,
2010. Thereafter, this Agreement shall renew automatically for successive
two-year terms unless either party shall have provided a notice of termination
not less than one year in advance of the original expiration date or of the
expiration date of any renewal term.
ARTICLE 15
STI and Center hereby undertake to exchange and to keep the other
currently informed of all market information pertaining to the Products which
may be developed or available to the other.
<PAGE>
- 26 -
ARTICLE 16
16.1 This Agreement may be executed in any two counterparts, which
are in all respects similar and each of which shall be deemed to be complete
in itself so that any one may be introduced in evidence or used for any other
purpose without the production of the other counterpart.
16.2 Any and all notices hereunder shall be in writing and sufficient
if delivered personally or sent by registered or certified mail, postage
prepaid, or by overnight express service, addressed to the parties hereto as
follows:
If to STI:
Survival Technology, Inc.
2275 Research Boulevard
Rockville, Maryland 20850
Attention: President
If to Center:
Center Laboratories
35 Channel Drive
Port Washington, New York 11050
Attention: President
16.3 This Agreement contains the entire agreement between the parties
with respect to the subject matter hereof and supersedes all prior
arrangements or understandings with respect thereto, written or oral, other
than the agreements between the parties relating to the EpiPen trademark and
those agreements attached hereto as Exhibit H. The terms and
<PAGE>
- 27 -
conditions of this Agreement shall inure to the benefit of and be binding upon
the parties hereto and thereto and their respective successors and assigns.
Nothing in this Agreement, expressed or implied, is intended to confer upon
any party, other than the parties hereto and their respective successors and
assigns, any rights, remedies, obligations or liabilities.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first above written.
ATTEST: SURVIVAL TECHNOLOGY, INC.
/s/ Illegible By /s/ Mark D. Ruby
- ------------------------------- -----------------------------
ATTEST: CENTER LABORATORIES, A
DIVISION AND ON BEHALF OF EM
INDUSTRIES, INC.
/s/ Arlene S. Mellina By /s/ Alan Pernick
- ------------------------------- -----------------------------
<PAGE>
LIST OF EXHIBITS
Exhibit A EPI E-Z Pen Product Specifications
Exhibit B EPI E-Z Pen Jr. Product Specifications
Exhibit C EPI E-Z Pen Trainer Product Specifications
Exhibit D EPI Pen Product Specifications
Exhibit E EPI Pen Jr. Product Specifications
Exhibit F EPI Pen Trainer Product Specifications
Exhibit G Pricing Schedule
Exhibit H Letters of Agreement
Exhibit I Testing Protocol
<PAGE>
EXHIBIT A
EPI E - Z PEN PRODUCT SPECIFICATIONS
<PAGE>
Exhibit A
June, 1996
STI(R) PRODUCT SPECIFICATIONS
EPI EZPEN(R) AUTO-INJECTOR
- ------------------------------------------------------------------------------
Epi EZPen Epinephrine Injection
1:1,000; 0.3 mL/dose
- ------------------------------------------------------------------------------
POST 100% INSPECTION: Sampled per MIL-STD-105D Level II, Single
Sampling, Normal Inspection
TEST: VISUAL AUDIT (BASIC UNIT)
TEST - CRITICAL DEFECTS LIMITS - AQL *
Definition - Could, through use, present clear hazard to the user/patient. The
product will not function as intended by delivering the specified dose, and
therefore, causes misdiagnosis or subjects the user to significant risk. The
fact that the product will not function is not clearly obvious prior to use.
1. Crack in glass (jeopardizes functionality or sterility).
2. Any visual indication of contamination/degradation of solution.
3. Hole or split in sheath, sheath missing or sheath penetrated by needle.
4. Wrong or missing component - renders the unit non-functional.
5. Other (must meet definition of "Critical").
TEST - MAJOR DEFECTS LIMITS - AQL *
DEFINITION Could, through use, cause extreme discomfort to the user/patient.
The product will function as intended, but may result in customer
dissatisfaction. The defect may or may not be obvious to the user/patient
prior to use.
1. Leakage (obvious prior to use).
2. Loose hub (jeopardizes functionally; precludes use).
3. Chip in glass (does not jeopardize functionally or sterility).
4. Other (must meed definition of "Major").
* Confidential material omitted and filed separately with the Securities and
Exchange Commission.
Page 1 of 5
<PAGE>
Exhibit A
June, 1996
STI(R) PRODUCT SPECIFICATIONS
EPI EZPEN(R) AUTO-INJECTOR
TEST - MAJOR DEFECTS LIMITS - AQL *
1. Visual (unmagnified) particulate contamination in solution (using
white/black background).
2. Other (must meet definition of "Major").
TEST: FUNCTIONALITY TESTING (ASSEMBLED AUTOINJECTOR)
TEST - CRITICAL DEFECTS LIMITS - AQL *
1. Extended needle length less than * or greater than * .
2. Gross injection of foreign material.
3. Slow dispensing time (greater than * seconds).
4. Delivered volume is less than * or greater than * .**
5. Leakage.
6. Injector self-activates during arming.
7. Missing component renders the unit non-functional.
8. Fails functionality test (unable to remove safety cap or expel contents).
9. Other (must meet definition of "Critical").
** Regardless of ML-STD
TEST - MAJOR DEFECTS LIMITS - AQL *
1. Delivered volume not within specification ( * ).
2. Extended needle length not within limits ( * ).
3. Nose cone loose or not properly seated.
4. Slow dispensing time; greater than * but less than * seconds.
5. Other (must meet definition of "Major").
6. Activation force less than * lbs. or greater than * lbs.
7. Gross hook or burr. Reversed needles or missing needle point.
* Confidential material omitted and filed separately with the Securities and
Exchange Commission.
Page 2 of 5
<PAGE>
Exhibit A
June, 1996
STI(R) PRODUCT SPECIFICATIONS
EPI EZPEN(R) AUTO-INJECTOR
TEST - MINOR DEFECTS LIMITS - AQL *
1. Difficult to arm.
2. Other (must meet definition of "Minor").
TEST: FINAL PRODUCT INSPECTION I (LABELED AUTOINJECTOR)
TEST - CRITICAL DEFECTS LIMITS - AQL *
1. Incorrect, missing, or illegible product name, potency/strength,
volume/contents, lot number or expiration date on injector label.
2. Incorrect product component/label (product mix-up).
3. Wrong color of safe pincap or nose cone.
4. Injector label oriented in opposite direction.
5. Non-coapted plunger/barb.
6. Missing component, renders the unit non-functional.
7. Other (must meet definition of "Critical").
TEST - MAJOR DEFECTS LIMITS - AQL *
1. Nose cone loose or not properly seated.
2. Smearable, removable label markings (including imprinting).
3. Poor label adhesion.
4. Cap is not secure on tube.
5. Other (must meet definition of "Major").
TEST - MINOR DEFECTS LIMITS - AQL *
1. Label not on straight.
2. Poor workmanship.
3. Particle or fiber greater than * .
4. Incorrect orientation of injectors inside product tube.
5. Other (must meet definition of "Minor").
* Confidential material omitted and filed separately with the Securities and
Exchange Commission.
Page 3 of 5
<PAGE>
Exhibit A
June, 1996
STI(R) PRODUCT SPECIFICATIONS
EPI EZPEN(R) AUTO-INJECTOR
TEST: FINAL PRODUCT INSPECTION II (FINAL PACKAGE)
TEST - CRITICAL DEFECTS (Blister Pack) LIMITS - AQL *
1. Incorrect, missing, or illegible product name, potency/strength,
volume/contents, lot number or expiration date on reply card.
2. Incorrect product component (product mix-up).
3. Patient insert, physician outsert, or business reply card missing.
4. Missing component, renders the unit non-functional.
5. Other (must meet definition of "Critical").
TEST - CRITICAL DEFECTS (12 Pack Tray) LIMITS - AQL *
1. Incorrect, missing, or illegible product name, potency/strength,
volume/contents, lot number or expiration date on 12 pack tray.
2. Incorrect 12 pack tray.
3. Other (must meet definition of "Critical").
TEST - CRITICAL DEFECTS (Shipper) LIMITS - AQL *
1. Incorrect, missing or illegible product name, potency/strength,
volume/contents, lot number or expiration date on injector shipper.
2. Incorrect shipper.
3. Other (must meet definition of "Critical").
TEST - MAJOR DEFECTS (Blister Tray) LIMITS - AQL *
1. Smearable, removable lid stock marking.
2. Lidstock print reversed.
3. Defective tray.
4. Incomplete seal of blister tray.
5. Other (must meet definition of "Major").
* Confidential material omitted and filed separately with the Securities and
Exchange Commission.
Page 4 of 5
<PAGE>
Exhibit A
June, 1996
STI(R) PRODUCT SPECIFICATIONS
EPI EZPEN(R) AUTO-INJECTOR
TEST - MINOR DEFECTS (Blister Tray) LIMITS - AQL *
1. Incorrect orientation of injector/product tube in blister tray.
2. Poor workmanship.
3. Other (must meet definition of "Minor").
TEST - MINOR DEFECTS (12 Pack Tray) LIMITS - AQL *
1. Incorrect orientation of blister tray in 12 pack tray.
2. Other (must meet definition of "Minor").
TEST - MINOR DEFECTS (Shipper) LIMITS - AQL *
1. Incorrect orientation of 12 pack tray in shipper (Product name visible,
facing same direction).
2. Other (must meet definition of "Minor").
* Confidential material omitted and filed separately with the Securities and
Exchange Commission.
Page 5 of 5
<PAGE>
FP-S-A FINISHED PRODUCT SPECIFICATION
- ------------------------------------------------------------------------------
Title: EpiE-ZPen(R)
Epinephrine Injection, 1:1000
0.3 mL / Dose
- ------------------------------------------------------------------------------
TEST METHOD SPECIFICATION
- ---- ------ -------------
Epinephrine Assay RDL - 173 *
pH current USP *
Identification current USP *
Total Acidity current USP *
Sodium Metabisulfite RDL - 156 *
Particulate Matter RDL - 169 *
Color and Clarity current USP *
Sterility DP-MS 406.0 *
Bacterial Endotoxin Content DP-MS 503.0 *
Activation Force DP-QC 394.1 *
Volume Dispensed DP-QC 394.1 *
Dispensing Time DP-QC 394.1 *
Exposed Needle Length DP-QC 331.0 *
* Confidential material omitted and filed separately with the Securities and
Exchange Commission.
<PAGE>
EXHIBIT B
EPI E-Z PEN JR. PRODUCT SPECIFICATIONS
<PAGE>
Exhibit B
June, 1996
STI(R) PRODUCT SPECIFICATIONS
EPI EZPEN JR.(R)AUTO-INJECTOR
- ------------------------------------------------------------------------------
Epi EZPen Jr. Epinephrine Injection
1:2,000; 0.3 mL/dose
- ------------------------------------------------------------------------------
POST 100% INSPECTION: Sampled per MIL-STD-105D Level II, Single
Sampling, Normal Inspection
TEST: VISUAL AUDIT (BASIC UNIT)
TEST - CRITICAL DEFECTS LIMITS - AQL *
Definition - Could, through use, present clear hazard to the user/patient. The
product will not function as intended by delivering the specified dose, and
therefore, causes misdiagnosis or subjects the user to significant risk. The
fact that the product will not function is not clearly obvious prior to use.
1. Crack in glass (jeopardizes functionality or sterility).
2. Any visual indication of contamination/degradation of solution.
3. Hole or split in sheath, sheath missing or sheath penetrated by needle.
4. Wrong or missing component - renders the unit non-functional.
5. Other (must meet definition of "Critical").
TEST - MAJOR DEFECTS LIMITS - AQL *
DEFINITION Could, through use, cause extreme discomfort to the user/patient.
The product will function as intended, but may result in customer
dissatisfaction. The defect may or may not be obvious to the user/patient
prior to use.
1. Leakage (obvious prior to use).
2. Loose hub (jeopardizes functionality; precludes use).
3. Chip in glass (does not jeopardize functionality or sterility).
4. Other (must meed definition of "Major").
* Confidential material omitted and filed separately with the Securities and
Exchange Commission.
Page 1 of 5
<PAGE>
Exhibit B
June, 1996
STI(R) PRODUCT SPECIFICATIONS
EPI EZPEN JR(R) AUTO-INJECTOR
TEST - MAJOR DEFECTS LIMITS - AQL *
1. Visual (unmagnified) particulate contamination in solution (using
white/black background).
2. Other (must meet definition of "Major").
TEST: FUNCTIONALITY TESTING (ASSEMBLED AUTOINJECTOR)
TEST - CRITICAL DEFECTS LIMITS - AQL *
1. Extended needle length less than * or greater than * .
2. Gross injection of foreign material.
3. Slow dispensing time (greater than * seconds).
4. Delivered volume is less than * or greater than * .**
5. Leakage.
6. Injector self-activates during arming.
7. Missing component renders the unit non-functional.
8. Fails functionality test (unable to remove safety cap or expel contents).
9. Other (must meet definition of "Critical").
** Regardless of ML-STD
TEST - MAJOR DEFECTS LIMITS - AQL *
1. Delivered volume not within specification ( * ).
2. Extended needle length not within limits ( * ).
3. Nose cone loose or not properly seated.
4. Slow dispensing time; greater than * but less than * seconds.
5. Other (must meet definition of "Major").
6. Activation force less than * lbs. or greater than * lbs.
7. Gross hook or burr. Reversed needles or missing needle point.
* Confidential material omitted and filed separately with the Securities and
Exchange Commission.
Page 2 of 5
<PAGE>
Exhibit B
June, 1996
STI(R) PRODUCT SPECIFICATIONS
EPI EZPEN JR(R) AUTO-INJECTOR
TEST - MINOR DEFECTS LIMITS - AQL *
1. Difficult to arm.
2. Other (must meet definition of "Minor").
TEST: FINAL PRODUCT INSPECTION I (LABELED AUTOINJECTOR)
TEST - CRITICAL DEFECTS LIMITS - AQL *
1. Incorrect, missing, or illegible product name, potency/strength,
volume/contents, lot number or expiration date on injector carton.
2. Incorrect product component/label (product mix-up).
3. Wrong nose cone.
4. Injector label oriented in opposite direction.
5. Non-coapted plunger/barb.
6. Missing component, renders the unit non-functional.
7. Other (must meet definition of "Critical").
TEST - MAJOR DEFECTS LIMITS - AQL *
1. Nose cone loose or not properly seated.
2. Smearable, removable label markings (including imprinting).
3. Poor label adhesion.
4. Cap is not secure on tube.
5. Other (must meet definition of "Major").
TEST - MINOR DEFECTS LIMITS - AQL *
1. Label not on straight.
2. Poor workmanship.
3. Particle or fiber (greater than) * .
4. Incorrect orientation of injectors inside product tube.
5. Other (must meet definition of "Minor").
* Confidential material omitted and filed separately with the Securities and
Exchange Commission.
Page 3 of 5
<PAGE>
Exhibit B
June, 1996
STI(R) PRODUCT SPECIFICATIONS
EPI EZPEN JR(R) AUTO-INJECTOR
TEST: FINAL PRODUCT INSPECTION II (FINAL PACKAGE)
TEST - CRITICAL DEFECTS (Blister Pack) LIMITS - AQL *
1. Incorrect, missing, or illegible product name, potency/strength,
volume/contents, lot number or expiration date on reply card.
2. Incorrect product component (product mix-up).
3. Patent insert, physician outsert, or business reply card missing.
4. Missing component, renders the unit non-functional.
5. Other (must meet definition of "Critical").
TEST - CRITICAL DEFECTS (12 Pack Tray) LIMITS - AQL *
1. Incorrect, missing, or illegible product name, potency/strength,
volume/contents, lot number or expiration date on 12 pack tray.
2. Incorrect 12 pack tray.
3. Other (must meet definition of "Critical").
TEST - CRITICAL DEFECTS (Shipper) LIMITS - AQL *
1. Incorrect, missing or illegible product name, potency/strength,
volume/contents, lot number or expiration date on injector shipper.
2. Incorrect shipper.
3. Other (must meet definition of "Critical").
TEST - MAJOR DEFECTS (Blister Tray) LIMITS - AQL *
1. Smearable, removable lid stock marking.
2. Lidstock print reversed.
3. Defective tray.
4. Incomplete seal of blister tray.
5. Other (must meet definition of "Major").
TEST - MINOR DEFECTS (Blister Tray) LIMITS - AQL *
1. Incorrect orientation of injector/product tube in blister tray.
2. Poor workmanship.
3. Other (must meet definition of "Minor").
* Confidential material omitted and filed separately with the Securities and
Exchange Commission.
Page 4 of 5
<PAGE>
Exhibit B
June, 1996
STI(R) PRODUCT SPECIFICATIONS
EPI EZPEN JR(R) AUTO-INJECTOR
TEST - MINOR DEFECTS (12 Pack Tray) LIMITS - AQL *
1. Incorrect orientation of blister tray in 12 pack tray.
2. Other (must meet definition of "Minor")
TEST - MINOR DEFECTS (Shipper) LIMITS - AQL *
1. Incorrect orientation of 12 pack tray in shipper (Product name visible,
facing same direction).
2. Other (must meet definition of "Minor").
* Confidential material omitted and filed separately with the Securities and
Exchange Commission.
Page 5 of 5
<PAGE>
FP-R-A FINISHED PRODUCT SPECIFICATION
- ------------------------------------------------------------------------------
Title: EpiE-ZPen(R) Jr.
Epinephrine Injection, 1:2000
0.3 mL / Dose
- ------------------------------------------------------------------------------
TEST METHOD SPECIFICATION
- ---- ------ -------------
Epinephrine Assay RDL - 173 *
pH current USP *
Identification current USP *
Total Acidity current USP *
Sodium Metabisulfite RDL - 156 *
Particulate Matter RDL - 169 *
Color and Clarity current USP *
Sterility DP-MS 406.0 *
Bacterial Endotoxin Content DP-MS 503.0 *
Activation Force DP-QC 394.1 *
Volume Dispensed DP-QC 394.1 *
Dispensing Time DP-QC 394.1 *
Exposed Needle Length DP-QC 331.0 *
* Confidential material omitted and filed separately with the Securities and
Exchange Commission.
<PAGE>
EXHIBIT C
EPI E-Z PEN TRAINER PRODUCT SPECIFICATIONS
<PAGE>
Exhibit C
June,1996
STI(R) PRODUCT SPECIFICATIONS
EPI EZPEN(R) TRAINER
LIMITS
1. Cap cannot be removed unless the clip is aligned with one of the black
dots.
2. Unit is capable of being activated with prod extension.
3. Push button does not fall out when inverted.
4. Durability: Rub label with finger using moderate pressure. Text should
not become smeared or illegible.
5. Label has sufficient overlap, but does not hide text.
Page 1 of 1
<PAGE>
EXHIBIT D
EPI PEN PRODUCT SPECIFICATIONS
<PAGE>
Exhibit D
June, 1996
STI(R) PRODUCT SPECIFICATIONS
EPIPEN(R) AUTO-INJECTOR
- ------------------------------------------------------------------------------
Epipen Epinephrine Injection
1:1,000; 0.3 mL/dose
- ------------------------------------------------------------------------------
POST 100% INSPECTION: Sampled per MIL-STD-105D Level II, Single
Sampling, Normal Inspection
TEST: VISUAL AUDIT (BASIC UNIT)
TEST - CRITICAL DEFECTS LIMITS - AQL *
Definition - Could, through use, present clear hazard to the user/patient. The
product will not function as intended by delivering the specified dose, and
therefore, causes misdiagnosis or subjects the user to significant risk. The
fact that the product will not function is not clearly obvious prior to use.
1. Crack in glass (jeopardizes functionality or sterility).
2. Any visual indication of contamination/degradation of solution.
3. Hole or split in sheath, sheath missing or sheath penetrated by needle.
4. Wrong or missing component - renders the unit non-functional.
5. Other (must meet definition of "Critical").
TEST - MAJOR DEFECTS LIMITS - AQL *
DEFINITION Could, through use, cause extreme discomfort to the user/patient.
The product will function as intended, but may result in customer
dissatisfaction. The defect may or may not be obvious to the user/patient
prior to use.
1. Leakage (obvious prior to use).
2. Loose hub (jeopardizes functionality; precludes use).
3. Chip in glass (does not jeopardize functionality or sterility).
4. Other (must meet definition of "Major").
TEST - MAJOR DEFECTS LIMITS - AQL *
1. Visual (unmagnified) particulate matter in solution (using white/black
background).
2. Other (must meet the definition of "major").
* Confidential material omitted and filed separately with the Securities and
Exchange Commission.
Page 1 of 4
<PAGE>
Exhibit D
June, 1996
STI(R) PRODUCT SPECIFICATIONS
EPIPEN(R) AUTO-INJECTOR
TEST - CRITICAL DEFECTS LIMITS - AQL *
1. Extended needle length less than * or greater than *.
2. Gross injection of foreign material.
3. Short outer tube separates from long outer tube on activation.
4. Slow dispensing time (greater than * seconds).
5. Delivered volume is less than * or greater than *.**
6. Leakage (not obvious prior to use).
7. Injector self-activates during arming.
8. Missing component renders the unit non-functional.
9. Fails functionality test (unable to arm injector or expel contents).
10. Other (must meet definition of "Critical").
** Regardless of MIL-STD
TEST - MAJOR DEFECTS LIMITS - AQL *
1. Delivered volume not within specification ( * ).
2. Activation force less than * lbs. or greater than * lbs.
3. Extended needle length not within limits ( * ).
4. Gross hook, burr or no point on needle.
5. Nose cone loose or not properly seated.
6. Slow dispensing time; greater than * but less than * seconds.
7. Other (must meet definition of "Major").
* Confidential material omitted and filed separately with the Securities and
Exchange Commission.
Page 2 of 4
<PAGE>
Exhibit D
June, 1996
STI(R) PRODUCT SPECIFICATIONS
EPIPEN(R) AUTO-INJECTOR
TEST - MINOR DEFECTS LIMITS - AQL *
Definition - Defect will not present hazard or be injurious to user/patient.
Aesthetic defect is viewed by the customer as less than desired quality and is
clearly evident to the user/patient prior to use. Significantly impairs
further processing or assembly of the batch and results in significant cost
increase.
1. Difficult to arm.
2. Other (must meet definition of "minor").
TEST: FINAL PRODUCT INSPECTION (FINISHED PRODUCT)
TEST - CRITICAL DEFECTS LIMITS - AQL *
1. Incorrect, missing, or illegible product name, potency/strength,
volume/contents, lot number or expiration date on injector carton.
2. Incorrect product component/label (product mix-up).
3. Wrong nose cone.
4. Injector label oriented in opposite direction.
5. Patient and/or physician insert missing in carton.
6. Non-coapted spacer/plunger. (Spacer to be fully threaded to plunger.)
7. Missing component, renders the unit non-functional.
8. Other (must meet definition of "Critical").
TEST - CRITICAL DEFECTS LIMITS - AQL *(tray)
1. Incorrect product name, potency/strength, volume/contents, lot number or
expiration date on injector tray, missing or illegible lot number.
2. Incorrect tray.
TEST - CRITICAL DEFECTS LIMITS - AQL *(shipper)
1. Incorrect product name, potency/strength, volume/contents, lot number or
expiration date on injector shipper, missing or illegible lot number.
2. Incorrect shipper.
* Confidential material omitted and filed separately with the Securities and
Exchange Commission.
Page 3 of 4
<PAGE>
Exhibit D
June, 1996
STI(R) PRODUCT SPECIFICATIONS
EPIPEN(R) AUTO-INJECTOR
TEST - MAJOR DEFECTS LIMITS - AQL *
1. Incorrect text other than product label.
2. Nose cone loose or not properly seated.
3. Smearable, removable label markings (including imprinting).
4. Poor label adhesion.
5. Plug cap is not secure on tube. (Cap is able to be removed when tube is
placed upside down and shaken.)
6. Other (must meet definition of "Major").
TEST - MINOR DEFECTS LIMITS - AQL *
1. Label not on straight
2. Poor workmanship.
3. Particle or fiber greater than * .
4. Incorrect orientation of injectors inside tubes, (should be tip down).
5. Other (must meet definition of "minor").
TEST - MINOR DEFECTS LIMITS - AQL * (innertray)
1. Incorrect packaging of inner tray (cartons facing same direction).
2. Shrinkwrap allows cartons to be removed (aesthetically incorrect or does
not provide a proper seal).
TEST - MINOR DEFECTS LIMITS - AQL * (shipper)
1. Incorrect orientation of inner trays in shipper. (Print will be visible
from the front of shipper.)
2. Other (must meet definition of "Minor").
* Confidential material omitted and filed separately with the Securities and
Exchange Commission.
Page 4 of 4
<PAGE>
Title: EpiPen(R)
Epinephrine Injection, 1:1000
0.3 mL / Dose
TEST METHOD SPECIFICATION
- ---- ------ -------------
Epinephrine Assay RDL - 173 *
pH current USP *
Identification current USP *
Total Acidity current USP *
Sodium Metabisulfite RDL - 156 *
Particulate Matter RDL - 169 *
Color and Clarity current USP *
Sterility DP-MS 406.0 *
Bacterial Endotoxin Content DP-MS 503.0 *
Activation Force DP-QC 394.1 *
Volume Dispensed DP-QC 394.1 *
Dispensing Time DP-QC 394.1 *
Exposed Needle Length DP-QC 331.0 *
* Confidential material omitted and filed separately with the Securities and
Exchange Commission.
<PAGE>
EXHIBIT E
EPI PEN JR. PRODUCT SPECIFICATIONS
<PAGE>
Exhibit E
June, 1996
STI(R) PRODUCT SPECIFICATIONS
EPIPEN JR(R) AUTO-INJECTOR
- ------------------------------------------------------------------------------
Epipen Jr. Epinephrine Injection
1:2,000; 0.3 mL/dose
- ------------------------------------------------------------------------------
POST 100% INSPECTION: Sampled per MIL-STD-105D Level II, Single
Sampling, Normal Inspection
TEST: VISUAL AUDIT (BASIC UNIT)
TEST - CRITICAL DEFECTS LIMITS - AQL *
Definition - Could, through use, present clear hazard to the user/patient. The
product will not function as intended by delivering the specified dose, and
therefore, causes misdiagnosis or subjects the user to significant risk. The
fact that the product will not function is not clearly obvious prior to use.
1. Crack in glass (jeopardizes functionality or sterility).
2. Any visual indication of contamination/degradation of solution.
3. Hole or split in sheath, sheath missing or sheath penetrated by needle.
4. Wrong or missing component - renders the unit non-functional.
5. Other (must meet definition of "Critical").
TEST - MAJOR DEFECTS LIMITS - AQL *
DEFINITION Could, through use, cause extreme discomfort to the user/patient.
The product will function as intended, but may result in customer
dissatisfaction. The defect may or may not be obvious to the user/patient
prior to use.
1. Leakage (obvious prior to use).
2. Loose hub (jeopardizes functionality; precludes use).
3. Chip in glass (does not jeopardize functionality or sterility).
4. Other (must meet definition of "Major").
TEST - MAJOR DEFECTS LIMITS - AQL *
1. Visual (unmagnified) particulate matter in solution (using white/black
background).
2. Other (must meet the definition of "major").
* Confidential material omitted and filed separately with the Securities and
Exchange Commission.
Page 1 of 4
<PAGE>
Exhibit E
June, 1996
STI(R) PRODUCT SPECIFICATIONS
EPIPEN JR(R) AUTO-INJECTOR
TEST: FUNCTIONALITY TESTING (ASSEMBLED AUTOINJECTOR)
TEST - CRITICAL DEFECTS LIMITS - AQL *
1. Extended needle length less than * or greater than * .
2. Gross injection of foreign material.
3. Short outer tube separates from long outer tube on activation.
4. Slow dispensing time (greater than * seconds).
5. Delivered volume is less than * or greater than * .**
6. Leakage (not obvious prior to use).
7. Injector self-activates during arming.
8. Missing component renders the unit non-functional.
9. Fails functionality test (unable to arm injector or expel contents).
10. Other (must meet definition of "Critical").
** Regardless of MIL-STD
TEST - MAJOR DEFECTS LIMITS - AQL *
1. Delivered volume not within specification ( * ).
2. Activation force less than * lbs. or greater than * lbs.
3. Extended needle length not within limits ( * ).
4. Gross hook, burr or no point on needle.
5. Nose cone loose or not properly seated.
6. Slow dispensing time; greater than * but less than * seconds.
7. Other (must meet definition of "Major").
* Confidential material omitted and filed separately with the Securities and
Exchange Commission.
Page 2 of 4
<PAGE>
Exhibit E
June, 1996
STI(R) PRODUCT SPECIFICATIONS
EPIPEN JR(R) AUTO-INJECTOR
TEST - MINOR DEFECTS LIMITS - AQL *
Definition - Defect will not present hazard or be injurious to user/patient.
Aesthetic defect is viewed by the customer as less than desired quality and is
clearly evident to the user/patient prior to use. Significantly impairs
further processing or assembly of the batch and results in significant cost
increase.
1. Difficult to arm.
2. Other (must meet the definition of "Minor").
TEST: FINAL PRODUCT INSPECTION (FINISHED PRODUCT)
TEST - CRITICAL DEFECTS LIMITS - AQL *
1. Incorrect, missing, or illegible product name, potency/strength,
volume/contents, lot number or expiration date on injector carton.
2. Incorrect product component/label (product mix-up).
3. Wrong or nose cone.
4. Injector label oriented in opposite direction.
5. Patient and/or physician insert missing in carton.
6. Non-coapted spacer/plunger. (Spacer to be fully threaded to plunger.)
7. Missing component, renders the unit non-functional.
8. Missing hub adapter.
9. Other (must meet definition of "Critical").
TEST - CRITICAL DEFECTS LIMITS - AQL * (tray)
1. Incorrect, missing, or illegible product name, potency/strength,
volume/contents, lot number or expiration date on injector tray.
2. Incorrect tray.
TEST - CRITICAL DEFECTS LIMITS - AQL * (shipper)
1. Incorrect, missing, or illegible product name, potency/strength,
volume/contents, lot number or expiration date on injector shipper.
2. Incorrect shipper.
* Confidential material omitted and filed separately with the Securities and
Exchange Commission.
Page 3 of 4
<PAGE>
Exhibit E
June, 1996
STI(R) PRODUCT SPECIFICATIONS
EPIPEN JR(R) AUTO-INJECTOR
TEST: FINAL PRODUCT INSPECTION
TEST - MAJOR DEFECTS LIMITS - AQL *
1. Incorrect text other than product label.
2. Nose cone loose or not properly seated.
3. Smearable, removable label markings (including imprinting).
4. Poor label adhesion.
5. Plug cap is not secure on tube. (Cap is able to be removed when tube is
placed upside down and shaken.)
6. Cracked or not fully seated hub adapter.
7. Other (must meet definition of "Major").
TEST - MINOR DEFECTS LIMITS - AQL *
1. Label not on straight.
2. Poor workmanship.
3. Particle or fiber less than * .
4. Incorrect orientation of injectors inside tubes, (should be tip down).
5. Other (must meet the definition of "minor").
TEST - MINOR DEFECTS LIMITS - AQL * (innertray)
1. Incorrect packaging of inner tray (cartons facing same direction).
2. Shrinkwrap allows cartons to be removed (aesthetically incorrect or does
not provide a proper seal).
TEST - MINOR DEFECTS LIMITS - AQL * (shipper)
1. Incorrect orientation of inner trays in shipper. (Print will be visible
from the front of shipper.)
2. Other (must meet definition of "Minor").
* Confidential material omitted and filed separately with the Securities and
Exchange Commission.
Page 4 of 4
<PAGE>
FP-R-X FINISHED PRODUCT SPECIFICATION
- ------------------------------------------------------------------------------
Title: EpiPen(R) Jr.
Epinephrine Injection, 1:2000
0.3 mL / Dose
- ------------------------------------------------------------------------------
TEST METHOD SPECIFICATION
- ---- ------ -------------
Epinephrine Assay RDL - 173 *
pH current USP *
Identification current USP *
Total Acidity current USP *
Sodium Metabisulfite RDL - 156 *
Particulate Matter RDL - 169 *
Color and Clarity current USP *
Sterility DP-MS 406.0 *
Bacterial Endotoxin Content DP-MS 503.0 *
Activation Force DP-QC 394.1 *
Volume Dispensed DP-QC 394.1 *
Dispensing Time DP-QC 394.1 *
Exposed Needle Length DP-QC 331.0 *
* Confidential material omitted and filed separately with the Securities and
Exchange Commission.
<PAGE>
EXHIBIT F
EPI PEN TRAINER PRODUCT SPECIFICATIONS
<PAGE>
Exhibit F
June, 1996
STI(R) PRODUCT SPECIFICATIONS
EPIPEN(R) CLICK TRAINER
LIMITS
1. Assembly will successfully activate and recock.
2. Assembly simulates activation, with audible click.
3. The front end or tip of the assembly will be black, the safe pin will be
gray. The safe pin will be intact.
4. The assembly will include the proper label, with correct and legible
printing.
5. Units will be completely and properly manufactured, without damage to the
assembly.
6. The label will be unaffected and shall remain entirely adherent when
rubbed with moderate pressure.
<PAGE>
EXHIBIT G
PRICING SCHEDULE
<PAGE>
EXHIBIT G
PRICING SCHEDULE
CALENDAR YEAR 1996 PRICING
<TABLE>
<CAPTION>
U.S. LABELLING (per unit) NON-U.S. LABELLING (per unit)(2)
- ------------------------------------------------ ----------------------------------------
<S> <C> <C> <C> <C> <C>
BATCH SIZES * * * * *
EpiPen $ * N/A $ * $ * N/A
EpiPen Jr. $ * N/A $ * $ * $ *
Epi E-Z Pen $ * (*) N/A TBD TBD TBD
Epi E-Z Pen Jr. $ * (*) $ * (*) TBD TBD TBD
</TABLE>
(1) Reflects $ * per unit premium over the current EpiPen/EpiPen Jr. price
which will be applied to the first * Epi E-Z Pen and Epi E-Z Pen
Jr. auto-injectors delivered to Center,subject to paragraph 2 below.
(2) As provided in Article 6 of the Agreement.
ADDITIONAL PRICING PRINCIPLES
1. The price per unit for Products sold for * shall be $ * per unit for
the one year period after the commitment to launch in the United States
(provided this occurs in 1996). The price of * in years thereafter
shall be * percent of the applicable price for sales to Center.
* shall not be considered sales for purposes of the calculation of
minimum sales of Regular Products provided in Section 5.1 of the
Agreement.
2. In the event that Center shall have entered into an agreement providing
for the services of a co-marketer, at the end of each year in which sales
to Center shall have exceeded the applicable minimums set forth in
Section 5.1 (excluding * in each case), Center shall be entitled to
rebate of * percent of the amount of all sales (excluding *) in excess
of such applicable minimums. In the event that through the date of
such payment, STI shall have not received and aggregate of $ *
from the $ * per unit premium on Epi E-Z Pen Jr. Products noted in
footnote 1 above, STI may reduce such payment up to the difference
between $ * and the aggregate amount of premiums received and the
number of additional delivered Products on which such premium may be
charged may be reduced accordingly.
3. As provided in that January 11, 1996 letter agreement between STI and
Center appearing in Exhibit H to the Agreement, Center shall receive a
credit of $ * per unit on shipments of Epi E-Z Pen and Epi E-Z Pen Jr.,
after September 1, 1996, up to an aggregate of $ * .
* Confidential material omitted and filed separately with the Securities and
Exchange Commission.
<PAGE>
EXHIBIT H
LETTERS OF AGREEMENT
<PAGE>
[LOGO]
October 25, 1994
Mr. Alan Pernick, President
Center Laboratories, Inc.
35 Channel Drive
Port Washington, New York 11050
Dear Alan:
Thank you for the help in moving the packaging and labeling along for the EPI
EZ Pen. I anxiously await the launch of the new generation EpiPen(R) product.
With an eye to the future, I am proposing the following development program
for Epinephrine in the * Auto-Injector with * .
Phase I will be scheduled to begin immediately after the execution of this
letter agreement.
PHASE 1: FEASIBILITY $89,842
The objective of this phase is to evaluate the feasibility to improve the
stability of Epinephrine solution in dental cartridges via changes in
formulation, filling process, and/or drug container closure system. The
following activities are planned:
1. Formulation Evaluation: The studies include evaluation of Epinephrine
coverage and * on solution stability.
2. Processing Parameter Evaluation: The objective of this evaluation is to
protect the product from *
utilizing barrier technology. In addition, *
will be explored.
3. Container Closure Evaluation: Since we are focused on *
for the new generation EpiPen(R) lines, we will evaluate a
potentially better * than the current * . We will
evaluate both * formulations.
All these screening formulations will be placed on short-term (three month)
accelerated stability trials. The results will be compared with the current
EpiPen(R) product stability before a final formulation and process is
selected.
* will be required to
complete these studies and will be acquired at STI's expense.
* Confidential material omitted and filed separately with the Securities and
Exchange Commission.
<PAGE>
[LOGO]
Alan Pernick
Page Two
PHASE II: SCALE-UP FOR SUBMISSION PHASE $178,937 for each product
(EpiPen(R) Senior and
EpiPen(R) Junior)
After a feasible Epinephrine formulation and filling process is identified, we
will move forward to the scale-up phase. During this phase, three formal
stability batches will be required for each strength (total of six batches).
These batches will be filled at STI's St. Louis manufacturing facility using
production equipment. The batch size for these stability batches must be at
least 10% of the projected commercial batch size.
We will manufacture these stability batches *
filling equipment that is * . The assumption
underlying the above cost proposal is that STI will assure that all validation
required to support this production scale-up be performed at STI's expense.
Center will be responsible for the actual cost of the six stability/submission
batches (three for EpiPen(R) Junior and three for EpiPen(R) Senior) and
related stability testing. The recommended batch size is 8,000 units.
The total cost of both products (EpiPen(R) Senior and Junior) for Phases I and
II amounts to $447,716. There are no costs associated with the development of
the new * . The terms of this proposal require Center to pay STI a
non-refundable down payment equal to 50% of the proposal cost upon initiation
of each phase with the remaining balance to be paid upon completion of said
phase. Please be advised that an additional phase, Process Validation, will be
required before introducing the products to market.
The timeline for Phase I will be 3-5 months including time required for
accelerated stability; Phase II would begin within two months after a suitable
formulation and filling process is identified. Submission of an application to
the FDA will occur 15 months after completion of stability batch manufacture
assuming that we file with 12 months real time stability data.
* Confidential material omitted and filed separately with the Securities and
Exchange Commission.
<PAGE>
[LOGO]
Alan Pernick
Page Three
Please be assured that this project will receive preferred customer status due
to the importance that it represents to both Center and STI. EpiPen(R) is
viewed by STI as its "franchise" product. Upon agreement to the terms and
conditions outlined in this proposal, please sign below and return to my
attention. Again, many thanks for your courteous help.
Sincerely,
/s/ Frank J. Massino
- ----------------------------
Frank J. Massino
Executive Director
Commercial Development
APPROVED November 18, 1994
------------------
By: /s/ Alan Pernick
-------------------------
Alan Pernick, President
bcc: J. Church K. Austin
C. D'Erasmo T. Handel
P. Gallagher T. Lee
J. Miller
<PAGE>
[LOGO]
Mr. Chris Lo Sardo Ref. No.: FJM95017
March 31, 1995
It is important that we begin this project immediately as real time is the
note limiting factor. Please sign below and return one copy to my attention.
Thank you for your cooperation.
Respectfully,
/s/ Frank J. Massino
- -----------------------
Frank J. Massino
Executive Director
Commercial Development
- ----------------------- ------------------------
Chris Lo Sardo Dated
cc:
K. Austin A. Pernick, Center Laboratories
J. Church
T. Lee
J. Miller
G. Wickes
J. Wilmot
<PAGE>
[LOGO]
January 11, 1996
Mr. Alan Pernick
Center Laboratories
35 Channel Drive
Port Washington, New York 11050
Dear Alan:
This letter will serve to document our discussions regarding the EpiE-ZPen
cost reduction program:
o Center Laboratories ("Center") has agreed to advance $ * in the form
of a non-interest bearing loan to Survival Technology, Inc. (STI) to
reduce the cost of manufacturing the EpiE-ZPen auto-injector.
o The proceeds will be used for the following purposes:
- High Speed Filling Equipment (Change parts for new *
filling machine)
- Automation of the final packaging operations
- New mold for EPiE-ZPen training device.
These additions will require six (6) months for installation and
validation from the date monies are advanced to STI.
o The loan of $ * will be repaid to Center through a $ * credit
on all deliveries of EpiE-ZPen after the capital improvements are in
service and validated. Repayment of this loan will commence with
EpiE-ZPen shipments delivered after September 1, 1996.
* Confidential material omitted and filed separately with the Securities and
Exchange Commission.
<PAGE>
[LOGO]
Alan Pernick January 11, 1996
Center Laboratories Page Two of Two
o If STI is unable to deliver the new EpiE-ZPen for any reason or the
EpiE-ZPen proves unmarketable despite Center Laboratories' best efforts,
the $ * credit to repay the $ * loan will be made against
deliveries of EpiPen on a monthly basis not to exceed $ * per month.
If this accurately reflects our discussions, please acknowledge your agreement
by signing below.
Very truly yours,
/s/ James H. Miller
- ------------------------
James H. Miller
President and CEO
ACKNOWLEDGED AND AGREED
By: /s/ Alan Pernick Title: President
------------------------- --------------------------
Date: 1/21/96
-----------------------
* Confidential material omitted and filed separately with the Securities and
Exchange Commission.
<PAGE>
EXHIBIT I
TESTING PROTOCOL
<PAGE>
[LOGO]
Exhibit I
TESTING OF EPIPEN(R) PRODUCTS BY INTERNATIONAL DISTRIBUTORS
To maintain consistency in the testing of Epipen(R) and EpiEZ Pen
products by our international distributors, the following guidelines must be
applied regarding sample preparation, test methodology and appropriate test
limits. Inclusion of these requirements in a contract format is the
appropriate vehicle for clarification.
o ANALYTICAL TESTING. A list of tests required by the international
distributor/regulatory agency must be supplied to STI(R) for official
notification. STI will then supply the distributor with STI approved
departmental procedures for conducting the tests. Revisions to the
methods, when applicable, will be forwarded to the distributor to
maintain testing consistency with STI. Only STI approved analytical
methods may be used to test the final product.
FDA approved shelf life specifications will be provided to the
distributor for verification of product potency. Product release
specifications are only applicable when the final product is released for
sale by STI. After that date, shelf life specifications are to be used by
the distributor to verify product potency.
o MICROBIOLOGICAL TESTING. USP sterility testing is performed by STI for
product release and is therefore deemed the official result. Due to
aseptic technique sensitivity in performing the sterility test and issues
associated with product handling in an autoinjector configuration,
further sterility testing by the distributor is not recommended.
In the event of an international regulatory requirement for additional
sterility testing, basic unit samples representing the beginning, middle
and end of the batch production run will be sent to the distributor for
sterility testing. STI approved methods for conducting the USP sterility
test will be provided to the distributor and must be followed. USP
sterility testing of STI products may only be performed utilizing barrier
technology or the Millipore Steritest System.
<PAGE>
Epipen(R) Test Specifications
Page 2
(Microbiological Testing continued)
Should the international regulatory requirement specify sampling from the
distributed batch to perform additional sterility testing, autoinjector
samples will be sent to STI for disassembly. Basic unit samples will then
be sent to a STI approved testing laboratory for USP sterility testing as
outlined above.
Testing for bacterial endotoxin by the distributor must be conducted per
USP requirements, utilizing the gel-clot or turbidimetric LAL test. STI
will provide the distributor with test requirements for proper sample
dilution and minimum lysate sensitivity.
o PHYSICAL TESTING. Autoinjector functionality testing may only be
performed utilizing STI approved testing procedures and test equipment.
Sampling and testing of assembled autoinjectors is performed by STI on
every batch of distributed product. Should the distributors/regulatory
agency require additional functional testing, equipment must be purchased
from STI to conduct these tests. Operating procedures for proper
performance of these tests will be provided by STI.
<PAGE>
ANNEX 4
DISTRIBUTOR AGREEMENT
This AGREEMENT made as of the 1st day of December, 1994, by and between ALK
Laboratories, a Danish corporation, with its Principal office located at Boge
Alle 10-12, Postbox 408, DK-2970 Horsholm, Denmark (hereafter called ALK) and
the Center Laboratories division of EM Industries, Incorporated, a New York
corporation, with its principal office located at 35 Channel Drive, Port
Washington, NY 11050 (hereafter called CENTER).
WHEREAS, CENTER is engaged in the business of manufacturing and
distributing allergenic extracts and other prescription and non-prescription
products for the treatment of allergy and asthma, including the exclusive
distribution of certain epinephrine autoinjector products manufactured by
Survival Technology, Inc. under the EpiPen(R) trademark ("EpiPen products")
and;
WHEREAS, ALK is engaged in the business of selling allergenic
extracts and other prescription and non-prescription products to the allergy
and asthma care market in Europe; and
WHEREAS, CENTER desires to strengthen and expand its distribution of
EpiPen products in the European market and ALK desires to market and
distribute EpiPen products in the European market.
NOW THEREFORE, in consideration of the foregoing promises and the
mutual covenants hereinafter expressed, the parties agree as follows:
Article 1
CENTER hereby appoints ALK a distributor of its product(s) referred to in
Article 2 hereof on an exclusive basis pursuant to the terms of this Agreement
for sale and distribution in the European countries listed in Schedule A,
attached hereto and made a part hereof, and on a non-exclusive basis pursuant
to the terms of this Agreement for sale and distribution in the European
countries of Switzerland and Spain (collectively the "Territory").
During the term of this Agreement, and any extensions or renewals thereof, ALK
shall not, directly or indirectly, distribute any autoinjector product that
competes with the EpiPen product of CENTER which is the subject of this
Agreement.
It is understood and agreed that ALK will bring to the attention of CENTER
opportunities to expand the Territory and CENTER agrees to negotiate in good
faith any such extension of the Territory.
- 1 -
<PAGE>
Article 2
The EpiPen products referred to herein are those listed on Schedule B attached
hereto and made a part hereof. CENTER grants to ALK the first right to
distribute any complementary new or improved EpiPen product(s) or any
product(s) which will compete with any EpiPen current product(s). The parties
agree to negotiate in good faith the specific terms and conditions for
distributing any such new or improved complementary EpiPen product(s).
For purposes of this Agreement a "Right of First Refusal" means that CENTER
shall present ALK with a written proposal of the financial terms it will
require from ALK to be the sole and exclusive distributor or non-exclusive
distributor, as the case may be, of any complementary new or improved EpiPen
product. ALK will have ninety (90) days to either accept or reject such
proposal. If ALK rejects or fails to accept such proposal CENTER may
thereafter contract with any third party having the ability to market
throughout the proposed territory but only on terms no more favorable than
those offered to ALK. CENTER shall not offer a third party any terms which,
individually or in the aggregate, are more favorable than those offered to ALK
without first offering those terms to ALK in accordance with this procedure.
ALK grants to CENTER the first right to distribute in the United States any
complementary new or improved product(s) or any product(s) which will compete
with any EpiPen product(s) which ALK might develop or acquire for sale. The
parties agree to negotiate in good faith the specific terms and conditions for
distributing any such new or improved complementary product(s).
For purposes of this Agreement a "Right of First Refusal" means that ALK shall
present CENTER with a written proposal of the financial terms it will require
from CENTER to be the sole and exclusive distributor or non-exclusive
distributor, as the case may be, of any complementary new or improved product.
CENTER will have ninety (90) days to either accept or reject such proposal.
If CENTER rejects or fails to accept such proposal ALK may thereafter contract
with any third party in the United States having the ability to market
throughout the Territory but only on terms no more favorable than those
offered to CENTER. ALK shall not offer a third party any terms which,
individually or in the aggregate, are more favorable than those offered to
CENTER without first offering those terms to CENTER in accordance with this
procedure.
Article 3
Each EpiPen product so offered for sale will be provided with a "generic"
label. ALK shall label, at it's cost, each EpiPen product with the appropriate
label required by the regulatory authorities of each country into which the
EpiPen products are sold. ALK shall submit to CENTER, for both CENTER's and
Survival Technology's approval, which shall not be unreasonably withheld, the
proposed label, package and package insert text for each country prior to such
relabeling.
- 2 -
<PAGE>
ALK shall relabel EpiPen products in accordance with (i) Good Manufacturing
Practices as required by the United States Food, Drug and Cosmetic Act (the
"Act"), and (ii) all pertinent rules and regulations of the United States Food
and Drug Administration or such applicable rules and regulations of similar
state or national regulatory authority of any country into which EpiPen
products are resold by ALK.
Article 4
The price for each EpiPen product offered for sale to ALK hereunder, including
any annual volume discount, is set forth on Schedule B and such price(s) shall
remain in effect until December 31, 1995.
Commencing January 1, 1996 and on January 1 thereafter, CENTER reserves the
right to change the price of any said EpiPen product upon written notice to
ALK. Any such price revision shall be limited to the amount equal to the
percentage change in the Urban Consumer Price Index published by the Bureau of
Labor Statistics, United States Department of Labor ("Index") using the Index
published for calendar 1994 as the base year in accordance with the following
formula:
new year - base year x 100 = percentage adjustment
--------------------
base year
Notwithstanding the foregoing, in no event shall CENTER increase CENTER's
established price for any EpiPen product in any year relative to the prior
year by more than six percent (6.0%).
Any price revision shall be effective with any orders received or shipments
made, excluding backorder shipments, after the effective date of such price
revision.
Article 5
All orders for said EpiPen products shall be subject to acceptance by CENTER
at its office in Port Washington, NY. No order specifying less than a full lot
quantity (approx. 13,000 units) or less than a ninety (90) day delivery lead
time shall be entitled to acceptance. Payment of all orders shipped shall be
due net thirty (30) days after date of invoice.
ALK shall purchase the minimum quantities of EpiPen products as listed in
Schedule C, attached hereto and made a part hereof. If for any reason
registration in an individual country is not obtained, the minimum sales
obligations shall be reduced accordingly.
The parties shall negotiate, in good faith, minimum purchases for years four
and five of this Agreement. The parties further agree that said negotiations
shall commence not later than ninety (90) days from the end of the third year
of this Agreement.
- 3 -
<PAGE>
In the event ALK fails to purchase, in any year, at least eighty percent (80%)
of said year's minimum quantity, CENTER shall have the right to immediately
terminate this Agreement within ninety (90) days of the end of any such year.
ALK shall provide CENTER with a written, 12 month forecast of the quantity of
products it reasonably anticipates purchasing from CENTER and shall update the
12 month forecast within 10 days of the end of each calendar quarter. Other
than the obligation to provide such forecast, ALK is not bound by any such
forecast quantity.
Article 6
Requests for the return of any defective EpiPen product purchased from CENTER
must first be made in writing setting forth the date of purchase and invoice
number, product identification, quantity and reason for return.
Article 7
CENTER shall aid and assist ALK in the sale of EpiPen products by providing
ALK with such artwork (mechanicals) concerning the EpiPen products as the same
may be available, provide responses to technical questions and to attend sales
meetings, if requested.
Subject to the price revision methodology described in Article 4, CENTER shall
supply ALK with reasonable quantities of EpiPen Trainer products at a price of
$ * per unit, said price effective through December 31, 1995.
Article 8
ALK will maintain an adequate sales force commensurate with the need for
effective and competent market coverage and will provide CENTER with current
market information. ALK also agrees to maintain appropriate inventory levels
of all EpiPen products specified in Schedule A in all warehouse locations, so
that adequate customer service can be provided.
ALK shall be responsible for customer service and technical support.
ALK shall adequately fund marketing and promotional efforts designed to
maximize sales of EpiPen products throughout ALK's Territory.
Within sixty (60) days of the end of each year, ALK shall provide to CENTER
(i) an annual report of its EpiPen marketing activities for the recently
concluded year as well as the upcoming year and (ii) a report showing annual
EpiPen product unit sales on a country by country basis.
* Confidential material omitted and filed separately with the Securities and
Exchange Commission.
- 4 -
<PAGE>
Article 9
ALK shall indemnify and hold harmless CENTER and its shareholders, officers,
directors, employees and representatives against, and in respect of, any and
all claims, losses, expenses, costs, obligations and liabilities and damages
of every kind, including reasonable attorney's fees for the defense of same,
arising out of the sale and distribution of any EpiPen product, except those
caused by CENTER or otherwise arising out of or attributed, directly or
indirectly, to the negligence of CENTER.
CENTER shall indemnify and hold harmless ALK and its shareholders, officers,
directors, employees and representatives against, and in respect of, any and
all claims, losses, expenses, costs, obligations and liabilities and damages
of every kind, including reasonable attorney's fees for the defense of same,
arising out of the sale and distribution of any EpiPen product, except those
caused by ALK or otherwise arising out of or attributed, directly or
indirectly, to the negligence of ALK.
Article 10
ALK shall be deemed to be an independent contractor with respect to all
matters relating to this Agreement and shall bear all of its own expenses in
connection with this Agreement. ALK shall have no authority, whether express
or implied, to assume or create any obligation on behalf of CENTER nor shall
ALK issue or cause to be issued any price quotations or draft any letters or
documents under the name of CENTER, but rather shall use its own name for such
purposes.
Article 11
The initial term of this Agreement shall be from the date hereof until
December 31, 1999 and renewals shall be subject to (i) continuance of CENTER's
exclusive distribution rights of EpiPen products from Survival Technology,
Inc. on terms and conditions acceptable to CENTER and (ii) renegotiation, in
good faith, of all material issues, including, but not limited to, annual
minimum quantities, minimum order quantities, and EpiPen product pricing.
In the event that this Agreement is terminated (i) ALK shall take all
reasonable and necessary steps to effectively transfer the country by country
registration of the EpiPen products from ALK's name to CENTER's, (ii) ALK
shall provide CENTER, subject to the confidentiality provisions of Article 15,
with a list of customers for its products and (iii) CENTER shall pay, within
thirty (30) days of the end of each calendar quarter and for a period of two
(2) years following said termination, a commission of ten percent (10.0%) of
the net sales of products sold to such customers. "Net sales" shall mean the
total invoiced amount of all sales of products made by CENTER to these
specific customers less (i) regular trade and cash
- 5 -
<PAGE>
discounts actually allowed and taken; (ii) sales, excise or similar taxes; and
(iii) amounts repaid or credited by reason of rejections or returns of goods.
Furthermore, CENTER shall pay all costs directly or indirectly connected with
the taking over of the registration of the EpiPen products in the Territory.
ALK shall offer to resell to CENTER, at landed cost prices, all existing
EpiPen product inventory and labeling materials. Should CENTER reject such
offer, ALK shall be permitted to sell its remaining inventory of EpiPen
products.
During the two year period that CENTER is paying commissions to ALK, ALK shall
not offer for sale to these specific customers any autoinjector product which
competes with the EpiPen product distributed and sold by CENTER.
For the limited purpose of auditing any commission payments, CENTER shall
provide reasonable access by ALK or ALK's designated accounting representative
to its sales records to verify the accuracy of such commission payments. ALK
or ALK's accounting representative shall, if requested by CENTER, execute a
confidentiality agreement prior to obtaining access to CENTER's records.
Article 12
CENTER warrants that EpiPen products have been manufactured in accordance with
(i) Good Manufacturing Practices as required by the United States Food, Drug
and Cosmetic Act (the "Act"), and (ii) all pertinent rules and regulations of
the United States Food and Drug Administration. CENTER guarantees that no
EpiPen product delivered by it under this Agreement will be adulterated or
misbranded within the meaning of the Act, or within the meaning of any other
applicable law in which the definition of adulteration or misbranding are
substantially the same as those contained in the Act, as such laws are
constituted and effective at the time of such shipment or delivery, or as an
article which may not, under the provisions of Section 404 or 505 of such Act
be introduced into interstate commerce.
CENTER warrants the specified quality and quantity of the EpiPen products but
makes no representations or warranties as to fitness or merchantability; its
guarantee runs solely to the replacement of defective EpiPen products. CENTER
agrees to maintain products liability insurance containing a vendor's
endorsement and naming ALK as an additional insured covering all products sold
pursuant to the terms of this Agreement with minimum limits of $10,000,000 for
combined bodily injury and property damage providing that such insurance shall
not be canceled without at least thirty (30) days prior written notice to ALK.
ALK is required to carry insurance with minimum limits of $10,000,000 for
combined bodily injury and property damage with an acceptable insurance
carrier providing that such insurance shall not be canceled without at least
thirty (30) days prior written notice to CENTER. Each party shall be entitled
to request written evidence of such insurance and any such request shall be
honored.
- 6 -
<PAGE>
Article 13
ALK shall develop and maintain an adequate data base to file and obtain
appropriate regulatory approval for the EpiPen products in the various
countries of the Territory, and CENTER shall make such data available to ALK
and to such governmental and regulatory agencies as ALK may reasonably
designate. ALK shall inform CENTER of the priorities of countries and CENTER
shall follow this priority in specific regulatory matters.
ALK shall, unless prohibited by law, file such regulatory registration
documents in the name of CENTER in each of the countries of the Territory and
shall ensure that such registrations are issued in the name of CENTER. ALK
shall maintain any such registrations in full force and effect during the
initial and any subsequent renewal term of this Agreement. The costs of all
necessary registration fees, both initial filing fees and ongoing registration
renewal fees, if any, shall be shared equally by the parties; other out of
pocket expenses shall be borne by the party incurring them.
ALK shall create and maintain accurate product/lot traceability records on all
products shipped to its customers and ALK shall make such data available to
CENTER and to such governmental and regulatory agencies as is necessary.
Each party shall keep the other informed of any formal or informal inquiry
relating to any EpiPen products sold hereunder by any regulatory agency of any
state or national government or supranational authority.
Should any EpiPen product defect or any governmental action require (i) the
recall, destruction or withholding from market of any EpiPen product sold
hereunder (hereinafter "Recall"); (ii) issuance of a Medical Device Report
within the meaning of the Act on any EpiPen product sold hereunder
(hereinafter a "MDR"); or (iii) institution of a field correction of any
EpiPen product sold hereunder (hereinafter "Field Correction"), CENTER shall
bear the costs and expenses of such Recall, MDR or Field Correction if such
Recall, MDR or Field Correction is the direct result of any fault or omission
attributable to CENTER, and ALK shall bear the costs and expenses of such
Recall, MDR or Field Correction if such Recall, MDR or Field Correction is the
direct result of any fault or omission attributable to ALK. Should such
Recall, MDR or Field Correction result from the equal fault of both parties,
or should it prove impossible to assign fault to either party, the parties
shall share such costs and expenses equally.
The parties agree that costs and expenses under this Article shall be defined
to include the (i) cost of replacement EpiPen products, (ii) cost of shipping
such replacement EpiPen products, (iii) costs of postage and mailing, (iv)
chargeback costs from wholesalers implementing any such Recall or Field
Correction, and (v) any other costs and expenses the parties agree to include
prior to implementing a Recall or Field Correction.
In performing this Agreement, each party shall comply with all applicable
treaties, laws and regulations and shall not be required to perform or omit to
perform any act required or
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<PAGE>
permitted under this Agreement if such performance or omission would violate
the provisions of any such treaty, law or regulation.
Upon reasonable prior notice, ALK shall, from time to time during the term of
this Agreement, allow representatives of CENTER to tour and inspect all
facilities utilized by ALK in relabeling, storage and shipment of EpiPen
products sold to ALK under this Agreement, shall provide reasonable access to
its manufacturing quality control documentation, and shall cooperate with such
representatives in every reasonable manner.
The parties shall allow representatives of the appropriate regulatory agencies
having jurisdiction over CENTER's distribution and/or ALK's marketing and
distribution of EpiPen products to tour and inspect all facilities utilized by
each party in the labeling, testing, packaging, storage, and shipment of
EpiPen products sold under this Agreement, and will cooperate with such
representatives in every reasonable manner. Each party agrees to notify the
other immediately whenever one party receives notice of a pending inspection
of any facility, which is used in the manufacturing, packaging, storage or
shipment of EpiPen product, by the FDA or any other regulatory agency with
jurisdiction over CENTER's distribution of EpiPen product, and/or ALK's
marketing and distribution of EpiPen product. Each party shall also provide
the other party with a copy of any FDA Form 483 notices of adverse findings,
regulatory letters or similar writings it receives from any governmental
authority alleging adverse findings or non-compliance with applicable laws,
regulations or standards relating to the items supplied by it hereunder within
one (1) week of its own receipt. Each party shall also provide the other party
with a copy of the party's written response to such governmental authority
within one (1) week of its submission thereof.
In the event that either party receives any customer complaint regarding
products covered by this Agreement, the parties receiving such complaint shall
give the other written notice of the complaint within five (5) days of its own
receipt. All customer complaint evaluations and closed records relating
thereto shall be forwarded to the other on a timely basis. Each party shall
assist the other party in follow-up and correction of product complaints.
Article 14
CENTER shall not be liable for any delay in the delivery of an order caused by
conditions beyond its control.
Article 15
For the purposes of this Agreement, the term "Confidential Information" shall
be any information embodying technology, concepts, ideas, techniques,
know-how, specifications, formulations, design data, market data, customer
lists, product specifications and accounting data which: (a) is disclosed by
one party hereto to the other; (b) is claimed by the disclosing party to be
secret, confidential and proprietary to the disclosing party; and (c) if
disclosed in
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<PAGE>
writing, is marked by the disclosing party to indicate its confidential nature
or if disclosed orally, is claimed in writing by the disclosing party to be
confidential within ten (10) days following disclosure.
During the period this Agreement remains in effect and for a period of three
(3) years following termination hereof, each party (except as is explicitly
otherwise required hereby) shall keep confidential, shall not use for itself
or for the benefit of others and shall not copy or allow to be copied in whole
or in part any Confidential Information disclosed to such party by the other.
The obligations of confidentiality imposed upon the parties by the foregoing
paragraph shall not apply with respect to any alleged Confidential Information
which: (a) is known to the recipient thereof, as evidenced by said recipient's
written records, prior to receipt thereof from the other party hereto; (b) is
disclosed to the recipient after the day hereof by a third party who has the
right to make such disclosure; (c) is or becomes a part of the public domain
through no fault of the said recipient; or (d) is independently developed by
the recipient.
Article 16
All notices, requests, demands and other communications under this Agreement
shall be in writing and shall be deemed to have been duly given on the date of
delivery if delivered personally to the party to whom or which notice is to be
given, or on the seventh (7th) day after mailing if mailed to the party to
whom or which notice is to be given, by first class mail, registered or
certified, postage prepaid, properly addressed to the party to receive the
notice at the following address or at any other address given to the other
party in the manner provided by this Article 14.
If to CENTER:
Center Laboratories
35 Channel Drive
Port Washington, NY 11050
Attn: President
With a copy to:
EM Industries, Incorporated
5 Skyline Drive
Hawthorne, NY 10532
Attn: Legal Department
If to ALK:
ALK Laboratories
Boge Alle 10-12
Postbox 408
DK-2970 Horsholm
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<PAGE>
Denmark
Attn: President
If notice shall be sent by telefax or cable, a confirming copy of such telefax
or cable shall be sent by mail to the addressee. Nothing contained herein
shall justify or excuse failure to give oral notice for the purpose of
informing the other party hereto when prompt notification is required, but, it
is understood that such oral notice shall in no way satisfy the requirement of
a written notice.
Article 17
If any provision of this Agreement is determined to be invalid or
unenforceable, the provision shall be deemed to be severable from the
remainder of this Agreement and shall not cause the invalidity or
unenforceability of the remainder of this Agreement.
Article 18
This Agreement constitutes a personal contract with ALK. ALK may not transfer
or assign this Agreement or any part thereof without the prior written
approval of CENTER. This Agreement shall be binding upon and shall inure to
the benefit of CENTER and its successors and assigns, and shall be binding
upon and inure to the benefit of ALK and its permitted assignees.
Article 19
This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one
and the same instrument.
Article 20
Any claim or controversy arising out of or related to this Agreement shall be
adjudicated pursuant to the laws of the State of New York.
Article 21
This Agreement supersedes all prior agreements, representations, and
understanding between the parties.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the day and year above written.
FOR ALK LABORATORIES
/s/ Lars Ingemann
-------------------------------------------------------
Lars Ingemann, Vice President, International Operations
FOR CENTER LABORATORIES, division of
EM INDUSTRIES, INCORPORATED
/s/ Alan Pernick
-------------------------------------------------------
Alan Pernick, President, Center Laboratories
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<PAGE>
SCHEDULE A
Countries on an Exclusive Basis Countries on an Non-Exclusive Basis
------------------------------- -----------------------------------
United Kingdom Switzerland
Austria Spain
Denmark
Sweden
Norway
Finland
Netherlands
Belgium
Poland
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<PAGE>
SCHEDULE B
PRODUCTS PRICE per UNIT
-------- --------------
EpiPen(R) Junior USD $ *
EpiPen(R) Senior USD $ *
EpiPen(R) Trainer USD $ *
Once ALK has purchased * units per year, the EpiPen(R) Junior and Senior
products' price per unit shall be reduced by USD $ * each for the balance of
any such year.
* Confidential material omitted and filed separately with the Securities and
Exchange Commission.
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<PAGE>
SCHEDULE C
Country Specific Minimum Annual Purchases (units)
Year 1 Year 2 Year 3
------ ------ ------
Norway 1,000 2,000 3,500
Denmark 2,500 2,500 2,500
Sweden 5,000 6,000 7,000
Finland 5,000 7,000 9,000
United Kingdom 18,000 27,000 35,000
Austria 6,000 11,000 15,000
Netherlands 6,000 20,000 25,000
Belgium 1,000 2,000 4,000
Poland 1,000 5,000 8,000
Spain 500 500 3,000
Switzerland 4,000 8,000 12,000
---------- --------- ---------
50,000 91,000 124,000
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<PAGE>
ANNEX 5
DISTRIBUTION AGREEMENT
This Agreement made as of the lst day of January, 1997 between CENTER
LABORATORIES ("Center"), a division of EM Industries, Incorporated, with its
office and place of business located at 35 Channel Drive, Port Washington, New
York 11050, and ALLEREX LABORATORY LTD. ("Allerex") having its principal
office located at 580 Terry Fox Drive, Suite 408, Kanata, Ontario, Canada K2L
4B9.
WHEREAS, Center has been granted by Meridian Medical Technologies,
Inc., ("MTEC") the exclusive right to market MTEC's epinephrine auto-injector
products EpiPen(R), EpiPen(R) Jr., Epi-EZ-Pen(TM), Epi-EZ-Pen(TM) Jr. (the
"Products") and their respective training devices, (the "Trainers") conforming
to the Product and Trainer specifications attached as Exhibit A and any
improvements thereon throughout Canada from the date hereof through December
31, 2010; and
WHEREAS, Center previously has granted Allerex an exclusive right to
distribute and sell the Products and Trainers , and in connection therewith,
Allerex and Center have previously entered into a certain Agreement dated
April 1, 1981, which was modified by several subsequent agreements and
understandings; and
WHEREAS, Allerex and Center wish to modify and restate in their
entirety their previous agreements and understandings relating to the Products
and the Trainers so as to reflect the terms and conditions contained herein;
NOW THEREFORE, upon the foregoing premises and in consideration of
the mutual covenants herein provided, the parties hereto agree as follows:
Article 1: Center hereby grants to Allerex the exclusive right to market and
sell the Products and Trainers throughout Canada for the term commencing the
date hereof through December 31, 2010. Allerex's exclusive rights are subject
to Center maintaining its exclusive rights to the Products and, furthermore,
to Allerex's satisfaction of the provisions of Article 2.
Canada shall be defined as the geographic area that comprises the Dominion of
Canada as it exists as of the effective date of this Agreement, and this
geographic area will continue to be the territory of distribution during the
term of this Agreement, regardless of any political redefinition of this
geographic area, e.g., the province of Quebec becoming an independent state.
Article 2: During the term of this Agreement, Allerex agrees to purchase and
Center agrees to sell to Allerex, all of Allerex's requirements for the
Products and Trainers. Center shall have the option to convert the exclusive
right in Allerex to a non-exclusive right to market and sell the Products in
Canada in the event Allerex fails to order for delivery in the designated
years the following minimum quantities:
1
<PAGE>
1997 - 1995 Product unit volume plus 1996 Product unit volume multiplied by .55.
1998 - 1996 Product unit volume plus 1997 Product unit volume multiplied by .55.
1999 - 1997 Product unit volume plus 1998 Product unit volume multiplied by .55.
2000 - 1998 Product unit volume plus 1999 Product unit volume multiplied by .55.
2001 - 1999 Product unit volume plus 2000 Product unit volume multiplied by .55.
2002 - 2000 Product unit volume plus 2001 Product unit volume multiplied by .55.
2003 - 2001 Product unit volume plus 2002 Product unit volume multiplied by .55.
2004 - 2002 Product unit volume plus 2003 Product unit volume multiplied by .55.
2005 - 2003 Product unit volume plus 2004 Product unit volume multiplied by .55.
2006 - 2004 Product unit volume plus 2005 Product unit volume multiplied by .55.
2007 - 2005 Product unit volume plus 2006 Product unit volume multiplied by .55.
2008 - 2006 Product unit volume plus 2007 Product unit volume multiplied by .55.
2009 - 2007 Product unit volume plus 2008 Product unit volume multiplied by .55.
2010 - 2008 Product unit volume plus 2009 Product unit volume multiplied by .55.
Said option for the remainder of the term of this Agreement must be exercised
by Center, if at all, within thirty (30) days of the close of any calendar
year.
Article 3: The purchase price of Products ordered by Allerex commencing
January 1, 1997, shall be as set forth on Exhibit B. In addition, and as long
as Center agrees to provide product liability insurance as afforded by
Center's own policy covering the sale of Products by Allerex, Allerex agrees
to pay Center, in addition, an insurance cost factor of $.30 per unit. Allerex
shall have the option, however, to provide said product liability insurance
directly for its own account, in which event the additional insurance cost
factor shall cease.
The purchase price of Trainers ordered by Allerex commencing January 1, 1997,
shall be as set forth on Exhibit B.
All purchases shall be F.O.B. Port Washington, New York.
Article 4: Center reserves the right to increase the price per Product
effective January 1, 1998, and each January lst thereafter, by the percentage
which the U.S. Consumer Price Index for all urban consumers (all items; U.S.
City average) compiled by the United States Department of Labor for the month
of December immediately preceding the commencement of the next calendar year
exceeds the Index for the prior month of December.
The price for Trainers is established on a cost plus basis and therefore,
Center reserves the right to increase the price of Trainers whenever MTEC
increases its price of Trainers to Center.
2
<PAGE>
Article 5: Due to the separate labeling requirements of the Product prepared
for delivery to Allerex, Allerex agrees to pay Center, thirty (30) days in
advance of the scheduled delivery date, 50% of the purchase price of each unit
ordered, and the balance thirty (30) days after the date of actual delivery.
Article 6: Center warrants that all Products and Trainers shipped to Allerex
shall be packaged for direct resale, shall meet all Product and Trainer
specifications set forth in Exhibit A attached, and meet the Allerex label
specifications for sale of the Products and Trainers in Canada. Center agrees
to accept for return or refund only those Products and Trainers deemed by
Center to be defective and then only upon the prior consent of Center that
they be returned physically.
Article 7: Center shall defend, indemnify and hold harmless Allerex, its
officers, directors, agents and employees from any losses, expenses, costs
(including reasonable attorney fees and expenses), claims and/or judgments
arising out of bodily injury, property damage, or any other damage or injury
if and to the extent such bodily injury, property damage or other damage or
injury is caused by a defect in the Product or Trainer at the time of
shipment.
Allerex agrees to notify Center within 15 days of any negative
Product or Trainer information which comes to its attention.
Allerex shall defend, indemnify and hold harmless Center, its
officers, directors, agents and employees from any losses, expenses, costs
(including reasonable attorney fees and expenses), claims and/or judgments
arising out of bodily injury, property damage, or any other damage or injury
if and to the extent such bodily injury, property damage or other damage or
injury is caused by the negligence of Allerex.
Article 8: Neither party to this Agreement shall disclose to any third party
or commercially use any confidential concepts, information and knowledge
concerning the business and products of the other party which it may come to
know in dealing with the other party pursuant to the terms of this Agreement
provided that such obligation shall not apply to concepts, information and
knowledge:
a) which were already known at the time of receipt from the other
party;
b) which are subsequently acquired from sources under no obligation
of secrecy to the other party; and
c) which are at the time of receipt from or thereafter become part
of the public domain through no fault of the other party.
Article 9: The rights and obligations of the parties under this Agreement
shall be construed under, and governed by the substantive laws of the State of
New York without regard to its conflict of laws provisions. The United Nations
Convention on Contracts for the International Sales of Goods expressly does
not apply. Any controversy or claim arising out of or relating to this
Agreement, or the breach thereof, shall be settled by arbitration, in
accordance with the Rules of the American Arbitration
3
<PAGE>
Association, and judgment upon the award rendered may be entered in any court
having jurisdiction thereof.
Article 10: This Agreement shall not be assignable by either party hereto
without the prior written consent of the other party, except by a party to its
parent or to a wholly owned subsidiary of such party or of such parent.
Article 11: A failure to perform any part of this Agreement shall not subject
either party to any liability to the other party or be a cause for termination
of this Agreement if such failure is reasonably beyond the control of the
party failing to perform.
Article 12: In the event Allerex shall be in arrears in payments pursuant to
this Agreement for a period of 60 days after the due date thereof, Center
shall have the right to terminate this Agreement upon giving Allerex 60 days'
written notice, such termination to be effective at the end of such 60-day
period unless Allerex shall have paid the arrearages due within such time.
In the event MTEC permanently discontinues its business of producing
the Products for any reason, whether voluntary or involuntary, Center may
terminate this Agreement without liability to Allerex by giving not less than
three months prior written notice to Allerex.
In the event MTEC discontinues Center's exclusive rights to the
Products for any reason, Center may terminate this Agreement without liability
to Allerex by giving not less than three months prior written notice to
Allerex.
Either party shall have the right to terminate this Agreement if the
other materially breaches any of the material provisions of this Agreement,
provided that the terminating party gives the other party written notice of
such termination and a 30-day period from the receipt of said notice to cure
said breach.
Any election to terminate the Agreement pursuant to the provisions of
this Article shall affect neither party's available remedies at law or in
equity or as otherwise provided herein.
Under no circumstances shall termination of this Agreement under this
Article 12 or otherwise relieve the parties of their respective obligations to
make any payments due under this Agreement. The provisions of Articles 3, 5,
7, 8, 9 and 15 shall survive any such termination of this Agreement.
Article 13: This Agreement is subject to force majeure and failure to perform
any part hereof shall not subject any party to any liability to the other or
be a cause for termination of this Agreement if such failure is caused by a
strike (whether or not the demands of employees involved are reasonable and
within the party's power to concede), accident, act of God or the public
enemy, weather conditions, default by
4
<PAGE>
supplier either in late delivery or delivery of defective goods, or other
circumstances of like or different character which are reasonably beyond the
control of the party failing to perform.
Article 14: Unless previously terminated pursuant to Article 12, this
Agreement shall be for an initial term ending December 31, 2010. Thereafter,
this Agreement shall renew automatically for successive two-year terms unless
either party shall have provided a notice of termination not less than one
year in advance of the original expiration date or of the expiration date of
any renewal term.
Article 15: This Agreement may be executed in any two counterparts, which are
in all respects similar and each of which shall be deemed to be complete in
itself so that any one may be introduced in evidence or used for any other
purpose without the production of the other counterpart.
Any and all notices hereunder shall be in writing and sufficient if
delivered personally or sent by registered or certified mail, postage prepaid,
or by overnight express service, addressed to the parties hereto as follows:
If to Allerex:
Allerex Laboratory Ltd.
580 Terry Fox Drive
Suite 408
Kanata, Ontario, Canada K2L 4B9
Attention: President
If to Center:
Center Laboratories
35 Channel Drive
Port Washington, New York 11050
Attention: President
This Agreement contains the entire agreement between the parties with
respect to the subject matter hereof and supersedes all prior arrangements or
understandings with respect thereto, written or oral. The terms and conditions
of this Agreement shall inure to the benefit of and be binding upon the
parties hereto and thereto and their respective successors and assigns.
Nothing in this Agreement, expressed or implied, is intended to confer upon
any party, other than the parties hereto and their respective successors and
assigns, any rights, remedies, obligations or liabilities.
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the day and year first above written.
ATTEST: CENTER LABORATORIES
Division of EM Industries, Incorporated
/s/Illegible By: /s/ Alan Pernick
- ---------------------- ------------------------------
ATTEST: ALLEREX LABORATORY LTD.
/s/Illegible By: /s/ Anna Maria Solinas
- ---------------------- ------------------------------
6
<PAGE>
EXHIBIT A
PRODUCT SPECIFICATIONS
- - Epi E-Z Pen(TM) Product Specifications
- - Epi E-Z Pen(TM) Jr. Product Specifications
- - Epi E-Z Pen(TM) Trainer Product Specifications
- - EpiPen(R) Product Specifications
- - EpiPen(R) Jr. Product Specifications
- - EpiPen(R) Trainer
- - Testing Protocol
<PAGE>
EXHIBIT
EPI E-Z PEN PRODUCT SPECIFICATIONS
<PAGE>
Exhibit
June, 1996
STI(R) PRODUCT SPECIFICATIONS
-----------------------------
EPI EZPEN(R) AUTO-INJECTOR
--------------------------
- ------------------------------------------------------------------------------
Epi EZPen Epinephrine Injection
1:1,000; 0.3 mL/dose
- ------------------------------------------------------------------------------
POST 100% INSPECTION: Sampled per MIL-STD-105D Level II, Single
Sampling, Normal Inspection
TEST: VISUAL AUDIT (BASIC UNIT)
TEST - CRITICAL DEFECTS LIMITS - AQL *
- ---- ------
Definition - Could, through use, present clear hazard to the user/patient. The
product will not function as intended by delivering the specified dose, and
therefore, causes misdiagnosis or subjects the user to significant risk. The
fact that the product will not function is not clearly obvious prior to use.
1. Crack in glass (jeopardizes functionality or sterility).
2. Any visual indication of contamination/degradation of solution.
3. Hole or split in sheath, sheath missing or sheath penetrated by needle.
4. Wrong or missing component - renders the unit non-functional.
5. Other (must meet definition of "Critical").
TEST - MAJOR DEFECTS LIMITS - AQL *
- ---- ------
DEFINITION Could, through use, cause extreme discomfort to the user/patient.
The product will function as intended, but may result in customer
dissatisfaction. The defect may or may not be obvious to the user/patient
prior to use.
1. Leakage (obvious prior to use).
2. Loose hub (jeopardizes functionality; precludes use).
3. Chip in glass (does not jeopardize functionality or sterility).
4. Other (must meet definition of "Major").
* Confidential material omitted and filed separately with the Securities and
Exchange Commission.
Page 1 of 5
<PAGE>
Exhibit
June, 1996
STI(R) PRODUCT SPECIFICATIONS
-----------------------------
EPI EZPEN(R) AUTO-INJECTOR
--------------------------
TEST - MAJOR DEFECTS LIMITS - AQL *
- ---- ------
1. Visual (unmagnified) particulate contamination in solution (using
white/black background).
2. Other (must meet definition of "Major").
TEST: FUNCTIONALITY TESTING (ASSEMBLED AUTOINJECTOR)
TEST - CRITICAL DEFECTS LIMITS - AQL *
- ---- ------
1. Extended needle length less than * or greater than * .
2. Gross injection of foreign material.
3. Slow dispensing time (greater than * seconds).
4. Delivered volume is less than * or greater than * .**
5. Leakage.
6. Injector self-activates during arming.
7. Missing component renders the unit non-functional.
8. Fails functionality test (unable to remove safety cap or expel
contents).
9. Other (must meet definition of "Critical").
** Regardless of MIL-STD
TEST - MAJOR DEFECTS LIMITS - AQL *
------
1. Delivered volume not within specification ( * ).
2. Extended needle length not within limits ( * ).
3. Nose cone loose or not properly seated.
4. Slow dispensing time; greater than * but less than * seconds.
5. Other (must meet definition of "Major").
6. Activation force less than * lbs. or greater than * lbs.
7. Gross hook or burr. Reversed needles or missing needle point.
* Confidential material omitted and filed separately with the Securities and
Exchange Commission.
Page 2 of 5
<PAGE>
Exhibit
June, 1996
STI(R) PRODUCT SPECIFICATIONS
-----------------------------
EPI EZPEN(R) AUTO-INJECTOR
--------------------------
TEST - MINOR DEFECTS LIMITS - AQL *
- ---- ------
1. Difficult to arm.
2. Other (must meet definition of "Minor").
TEST: FINAL PRODUCT INSPECTION I (LABELED AUTOINJECTOR)
TEST - CRITICAL DEFECTS LIMITS - AQL *
- ---- ------
1. Incorrect, missing, or illegible product name, potency/strength,
volume/contents, lot number or expiration date on injector label.
2. Incorrect product component/label (product mix-up).
3. Wrong color of safe pincap or nose cone.
4. Injector label oriented in opposite direction.
5. Non-coapted plunger/barb.
6. Missing component, renders the unit non-functional.
7. Other (must meet definition of "Critical").
TEST - MAJOR DEFECTS LIMITS - AQL *
------
1. Nose cone loose or not properly seated.
2. Smearable, removable label markings (including imprinting).
3. Poor label adhesion.
4. Cap is not secure on tube.
5. Other (must meet definition of "Major").
TEST - MINOR DEFECTS LIMITS - AQL *
- ---- ------
1. Label not on straight.
2. Poor workmanship.
3. Particle or fiber [greater than] * .
4. Incorrect orientation of injectors inside product tube.
5. Other (must meet definition of "Minor").
* Confidential material omitted and filed separately with the Securities and
Exchange Commission.
Page 3 of 5
<PAGE>
Exhibit
June, 1996
STI(R) PRODUCT SPECIFICATIONS
-----------------------------
EPI EZPEN(R) AUTO-INJECTOR
--------------------------
TEST: FINAL PRODUCT INSPECTION II (FINAL PACKAGE)
TEST - CRITICAL DEFECTS (Blister Pack) LIMITS - AQL *
- ---- ------
1. Incorrect, missing, or illegible product name, potency/strength,
volume/contents, lot number or expiration date on reply card.
2. Incorrect product component (product mix-up).
3. Patient insert, physician outsert, or business reply card missing.
4. Missing component, renders the unit non-functional.
5. Other (must meet definition of "Critical").
TEST - CRITICAL DEFECTS (12 Pack Tray) LIMITS - AQL *
- ---- ------
1. Incorrect, missing, or illegible product name, potency/strength,
volume/contents, lot number or expiration date on 12 pack tray.
2. Incorrect 12 pack tray.
3. Other (must meet definition of "Critical").
TEST - CRITICAL DEFECTS (Shipper) LIMITS - AQL *
------
1. Incorrect, missing or illegible product name, potency/strength,
volume/contents, lot number or expiration date on injector shipper.
2. Incorrect shipper.
3. Other (must meet definition of "Critical").
TEST - MAJOR DEFECTS (Blister Tray) LIMITS - AQL *
- ---- ------
1. Smearable, removable lid stock marking.
2. Lidstock print reversed.
3. Defective tray.
4. Incomplete seal of blister tray.
5. Other (must meet definition of "Major").
* Confidential material omitted and filed separately with the Securities and
Exchange Commission.
Page 4 of 5
<PAGE>
Exhibit
June, 1996
STI(R) PRODUCT SPECIFICATIONS
-----------------------------
EPI EZPEN(R) AUTO-INJECTOR
--------------------------
TEST - MINOR DEFECTS (Blister Tray) LIMITS - AQL *
- ---- ------
1. Incorrect orientation of injector/product tube in blister tray.
2. Poor workmanship.
3. Other (must meet definition of "Minor").
TEST - MINOR DEFECTS (12 Pack Tray) LIMITS - AQL *
- ---- ------
1. Incorrect orientation of blister tray in 12 pack tray.
2. Other (must meet definition of "Minor").
TEST - MINOR DEFECTS (Shipper) LIMITS - AQL *
- ---- ------
1. Incorrect orientation of 12 pack tray in shipper (Product name
visible, facing same direction).
2. Other (must meet definition of "Minor").
* Confidential material omitted and filed separately with the Securities and
Exchange Commission.
Page 5 of 5
<PAGE>
FP-S-A FINISHED PRODUCT SPECIFICATION
- ------------------------------------------------------------------------------
Title: EpiE-ZPen(R)
Epinephrine Injection, 1:1000
0.3 mL / Dose
- ------------------------------------------------------------------------------
TEST METHOD SPECIFICATION
---- ------ -------------
Epinephrine Assay RDL - 173 *
pH current USP *
Identification current USP *
Total Acidity current USP *
Sodium Metabisulfite RDL - 156 *
Particulate Matter RDL - 169 *
Color and Clarity current USP *
Sterility DP-MS 406.0 *
Bacterial Endotoxin Content DP-MS 503.0 *
Activation Force DP-QC 394.1 *
Volume Dispensed DP-QC 394.1 *
Dispensing Time DP-QC 394.1 *
Exposed Needle Length DP-QC 331.0 *
* Confidential material omitted and filed separately with the Securities and
Exchange Commission.
<PAGE>
EXHIBIT
EPI E-Z PEN JR. PRODUCT SPECIFICATIONS
<PAGE>
Exhibit
June, 1996
STI(R) PRODUCT SPECIFICATIONS
-----------------------------
EPI EZPEN JR.(R) AUTO-INJECTOR
------------------------------
- ------------------------------------------------------------------------------
Epi EZPen Jr. Epinephrine Injection
1:2,000; 0.3 mL/dose
- ------------------------------------------------------------------------------
POST 100% INSPECTION: Sampled per MIL-STD-105D Level II, Single
Sampling, Normal Inspection
TEST: VISUAL AUDIT (BASIC UNIT)
TEST - CRITICAL DEFECTS LIMITS - AQL *
- ---- ------
Definition - Could, through use, present clear hazard to the user/patient. The
product will not function as intended by delivering the specified dose, and
therefore, causes misdiagnosis or subjects the user to significant risk. The
fact that the product will not function is not clearly obvious prior to use.
1. Crack in glass (jeopardizes functionality or sterility).
2. Any visual indication of contamination/degradation of solution.
3. Hole or split in sheath, sheath missing or sheath penetrated by needle.
4. Wrong or missing component - renders the unit non-functional.
5. Other (must meet definition of "Critical").
TEST - MAJOR DEFECTS LIMITS - AQL *
- ---- ------
DEFINITION Could, through use, cause extreme discomfort to the user/patient.
The product will function as intended, but may result in customer
dissatisfaction. The defect may or may not be obvious to the user/patient
prior to use.
1. Leakage (obvious prior to use).
2. Loose hub (jeopardizes functionality; precludes use).
3. Chip in glass (does not jeopardize functionality or sterility).
4. Other (must meed definition of "Major").
Page 1 of 5
* Confidential material omitted and filed separately with the Securities and
Exchange Commission.
<PAGE>
Exhibit
June, 1996
STI(R) PRODUCT SPECIFICATIONS
-----------------------------
EPI EZPEN JR.(R) AUTO-INJECTOR
------------------------------
TEST - MAJOR DEFECTS LIMITS - AQL *
- ---- ------
1. Visual (unmagnified) particulate contamination in solution (using
white/black background).
2. Other (must meet definition of "Major").
TEST: FUNCTIONALITY TESTING (ASSEMBLED AUTOINJECTOR)
TEST - CRITICAL DEFECTS LIMITS - AQL *
- ---- ------
1. Extended needle length less than * or greater than * .
2. Gross injection of foreign material.
3. Slow dispensing time (greater than * seconds).
4. Delivered volume is less than * or greater than * .**
5. Leakage.
6. Injector self-activates during arming.
7. Missing component renders the unit non-functional.
8. Fails functionality test (unable to remove safety cap or expel
contents).
9. Other (must meet definition of "Critical").
** Regardless of ML-STD
TEST - MAJOR DEFECTS LIMITS - AQL *
------
1. Delivered volume not within specification ( * ).
2. Extended needle length not within limits ( * ).
3. Nose cone loose or not properly seated.
4. Slow dispensing time; greater than * but less than * seconds.
5. Other (must meet definition of "Major").
6. Activation force not less than * lbs. or greater than * lbs.
7. Gross hook or burr. Reversed needles or missing needle point.
* Confidential material omitted and filed separately with the Securities and
Exchange Commission.
Page 2 of 5
<PAGE>
Exhibit
June, 1996
STI(R) PRODUCT SPECIFICATIONS
-----------------------------
EPI EZPEN JR.(R) AUTO-INJECTOR
------------------------------
TEST - MINOR DEFECTS LIMITS - AQL *
- ---- ------
1. Difficult to arm.
2. Other (must meet definition of "Minor").
TEST: FINAL PRODUCT INSPECTION I (LABELED AUTOINJECTOR)
TEST - CRITICAL DEFECTS LIMITS - AQL *
- ---- ------
1. Incorrect, missing, or illegible product name, potency/strength,
volume/contents, lot number or expiration date on injector carton.
2. Incorrect product component/label (product mix-up).
3. Wrong nose cone.
4. Injector label oriented in opposite direction.
5. Non-coapted plunger/barb.
6. Missing component, renders the unit non-functional.
7. Other (must meet definition of "Critical").
TEST - MAJOR DEFECTS LIMITS - AQL *
------
1. Nose cone loose or not properly seated.
2. Smearable, removable label markings (including imprinting).
3. Poor label adhesion.
4. Cap is not secure on tube.
5. Other (must meet definition of "Major").
TEST - MINOR DEFECTS LIMITS - AQL *
- ---- ------
1. Label not on straight.
2. Poor workmanship.
3. Particle or fiber greater than * .
4. Incorrect orientation of injectors inside product tube.
5. Other (must meet definition of "Minor").
* Confidential material omitted and filed separately with the Securities and
Exchange Commission.
Page 3 of 5
<PAGE>
Exhibit
June 1996
STI(R) PRODUCT SPECIFICATIONS
-----------------------------
EPI EZPEN JR.(R) AUTO-INJECTOR
------------------------------
TEST: FINAL PRODUCT INSPECTION II (FINAL PACKAGE)
TEST - CRITICAL DEFECTS (Blister Pack) LIMITS - AQL *
- ---- ------
1. Incorrect, missing, or illegible product name, potency/strength,
volume/contents, lot number or expiration date on reply card.
2. Incorrect product component (product mix-up).
3. Patent insert, physician outsert, or business reply card missing.
4. Missing component, renders the unit non-functional.
5. Other (must meet definition of "Critical").
TEST - CRITICAL DEFECTS (12 Pack Tray) LIMITS - AQL *
- ---- ------
1. Incorrect, missing, or illegible product name, potency/strength,
volume/contents, lot number or expiration date on 12 pack tray.
2. Incorrect 12 pack tray.
3. Other (must meet definition of "Critical").
TEST - CRITICAL DEFECTS (Shipper) LIMITS - AQL *
------
1. Incorrect, missing or illegible product name, potency/strength,
volume/contents, lot number or expiration date on injector shipper.
2. Incorrect shipper.
3. Other (must meet definition of "Critical").
TEST - MAJOR DEFECTS (Blister Tray) LIMITS - AQL *
- ---- ------
1. Smearable, removable lid stock marking.
2. Lidstock print reversed.
3. Defective tray.
4. Incomplete seal of blister tray.
5. Other (must meet definition of "Major").
TEST - MINOR DEFECTS (Blister Tray) LIMITS - AQL *
- ---- ------
1. Incorrect orientation of injector/product tube in blister tray.
2. Poor workmanship.
3. Other (must meet definition of "Minor").
* Confidential material omitted and filed separately with the Securities and
Exchange Commission.
Page 4 of 5
<PAGE>
Exhibit
June 1996
STI(R) PRODUCT SPECIFICATIONS
-----------------------------
EPI EZPEN JR.(R) AUTO-INJECTOR
------------------------------
TEST - MINOR DEFECTS (12 Pack Tray) LIMITS - AQL *
- ---- ------
1. Incorrect orientation of blister tray in 12 pack tray.
2. Other (must meet definition of "Minor")
TEST - MINOR DEFECTS (Shipper) LIMITS - AQL *
- ---- ------
1. Incorrect orientation of 12 pack tray in shipper (Product name
visible, facing same direction).
2. Other (must meet definition of "Minor").
Page 5 of 5
* Confidential material omitted and filed separately with the Securities and
Exchange Commission.
<PAGE>
FP-R-A FINISHED PRODUCT SPECIFICATION
Title: EpiE-ZPen(R) Jr.
Epinephrine Injection, 1:2000
0.3 mL / Dose
TEST METHOD SPECIFICATION
---- ------ -------------
Epinephrine Assay RDL - 173 *
pH current USP *
Identification current USP *
Total Acidity current USP *
Sodium Metabisulfite RDL - 156 *
Particulate Matter RDL - 169 *
Color and Clarity current USP *
Sterility DP-MS 406.0 *
Bacterial Endotoxin Content DP-MS 503.0 *
Activation Force DP-QC 394.1 *
Volume Dispensed DP-QC 394.1 *
Dispensing Time DP-QC 394.1 *
Exposed Needle Length DP-QC 331.0 *
* Confidential material omitted and filed separately with the Securities and
Exchange Commission.
<PAGE>
EXHIBIT
EPI E-Z PEN TRAINER PRODUCT SPECIFICATIONS
<PAGE>
Exhibit
June, 1996
STI(R) PRODUCT SPECIFICATIONS
-----------------------------
EPI EZPEN(R) TRAINER
--------------------
LIMITS
------
1. Cap cannot be removed unless the clip is aligned with one of the
black dots.
2. Unit is capable of being activated with prod extension.
3. Push button does not fall out when inverted.
4. Durability: Rub label with finger using moderate pressure. Text
should not become smeared or illegible.
5. Label has sufficient overlap, but does not hide text.
Page 1 of 1
<PAGE>
EXHIBIT
EPI PEN PRODUCT SPECIFICATIONS
<PAGE>
Exhibit
June, 1996
STI(R) PRODUCT SPECIFICATIONS
EPIPEN(R) AUTO-INJECTOR
- --------------------------------------------------------------------------------
Epipen Epinephrine Injection
1:1,000; 0.3 mL/dose
- --------------------------------------------------------------------------------
POST 100% INSPECTION: Sampled per MIL-STD-105D Level II, Single
Sampling, Normal Inspection
TEST: VISUAL AUDIT (BASIC UNIT)
TEST - CRITICAL DEFECTS LIMITS - AQL *
Definition - Could, through use, present clear hazard to the user/patient. The
product will not function as intended by delivering the specified dose, and
therefore, causes misdiagnosis or subjects the user to significant risk. The
fact that the product will not function is not clearly obvious prior to use.
1. Crack in glass (jeopardizes functionality or sterility).
2. Any visual indication of contamination/degradation of solution.
3. Hole or split in sheath, sheath missing or sheath penetrated by needle.
4. Wrong or missing component - renders the unit non-functional.
5. Other (must meet definition of "Critical").
TEST - MAJOR DEFECTS LIMITS - AQL *
DEFINITION Could, through use, cause extreme discomfort to the user/patient.
The product will function as intended, but may result in customer
dissatisfaction. The defect may or may not be obvious to the user/patient prior
to use.
1. Leakage (obvious prior to use).
2. Loose hub (jeopardizes functionality; precludes use).
3. Chip in glass (does not jeopardize functionality or sterility).
4. Other (must meet definition of "Major").
TEST - MAJOR DEFECTS LIMITS - AQL *
1. Visual (unmagnified) particulate matter in solution (using white/black
background).
2. Other (must meet the definition of "major").
* Confidential material omitted and filed separately with the Securities and
Exchange Commission.
Page 1 of 4
<PAGE>
Exhibit
June, 1996
STI(R) PRODUCT SPECIFICATIONS
-----------------------------
EPI PEN(R) AUTO-INJECTOR
------------------------
TEST: FUNCTIONALITY TESTING (ASSEMBLED AUTOINJECTOR)
TEST - CRITICAL DEFECTS LIMITS - AQL *
- ---- ------
1. Extended needle length less than * or greater than * .
2. Gross injection of foreign material.
3. Short outer tube separates from long outer tube on activation.
4. Slow dispensing time (greater than * seconds).
5. Delivered volume is less than * or greater than * .**
6. Leakage (not obvious prior to use).
7. Injector self-activates during arming.
8. Missing component renders the unit non-functional.
9. Fails functionality test (unable to arm injector or expel contents).
10. Other (must meet definition of "Critical").
** Regardless of MIL-STD
TEST - MAJOR DEFECTS LIMITS - AQL *
- ---- ------
1. Delivered volume not within specification ( * ).
2. Activation force less than * lbs. or greater than * lbs.
3. Extended needle length not within limits ( * ).
4. Gross hook, burr or no point or needle.
5. Nose cone loose or not properly seated.
6. Slow dispensing time; greater than * but less than * seconds.
7. Other (must meet definition of "Major").
Page 2 of 4
* Confidential material omitted and filed separately with the Securities and
Exchange Commission.
<PAGE>
Exhibit
-------
June, 1996
----------
STI(R) PRODUCT SPECIFICATIONS
-----------------------------
EPIPEN(R) AUTO-INJECTOR
-----------------------
TEST - MINOR DEFECTS LIMITS - AQL *
------
Definition - Defect will not present hazard or be injurious to user/patient.
Aesthetic defect is viewed by the customer as less than desired quality and is
clearly evident to the user/patient prior to use. Significantly impairs further
processing or assembly of the batch and results in significant cost increase.
1. Difficult to arm.
2. Other (must meet definition of "minor").
TEST: FINAL PRODUCT INSPECTION (FINISHED PRODUCT)
TEST - CRITICAL DEFECTS LIMITS- AQL *
- ---- ------
1. Incorrect, missing, or illegible product name, potency/strength,
volume/contents, lot number or expiration date on injector carton.
2. Incorrect product component/label (product mix-up).
3. Wrong nose cone.
4. Injector label oriented in opposite direction.
5. Patient and/or physician insert missing in carton.
6. Non-coapted spacer/plunger. (Spacer to be fully threaded to plunger.)
7. Missing component, renders the unit non-functional.
8. Other (must meet definition of "Critical").
TEST - CRITICAL DEFECTS LIMITS - AQL * (tray)
- ---- ------
1. Incorrect product name, potency/strangth, volume/contents, lot number or
expiration date on injector tray, missing or illegible lot number.
2. Incorrect tray.
TEST - CRITICAL DEFECTS LIMITS - AQL * (shipper)
- ---- ------
1. Incorrect product name, potency/strength, volume/contents, lot number or
expiration date on injector shipper, missing or illegible lot number.
2. Incorrect shipper.
Page 3 of 4
* Confidential material ommitted and filed seperately with the Securities
and Exchange Commision.
<PAGE>
Exhibit
June, 1996
STI(R) PRODUCT SPECIFICATIONS
-----------------------------
EPI PEN(R) AUTO-INJECTOR
------------------------
TEST - MAJOR DEFECTS LIMITS - AQL *
- ---- ------
1. Incorrect text other than product label.
2. Nose cone loose or not properly seated.
3. Smearable, removable label markings (including imprinting).
4. Poor label adhesion.
5. Plug cap is not secure on tube (Cap is able to be removed when tube
is placed upside down and shaken).
6. Other (must meet definition of "Major").
TEST - MINOR DEFECTS LIMITS - AQL *
- ---- ------
1. Label not on straight.
2. Poor workmanship.
3. Particle or fiber greater than *
4. Incorrect orientation of injectors inside tubes, (should be tip
down).
5. Other (must meet definition of "minor").
TEST - MINOR DEFECTS LIMITS - AQL * (innertray)
- ---- ------
1. Incorrect packaging of inner tray (cartons facing same direction).
2. Shrinkwrap allows cartons to be removed (aesthetically incorrect or
does not provide a proper seal).
TEST - MINOR DEFECTS LIMITS - AQL * (shipper)
- ---- ------
1. Incorrect orientation of inner trays in shipper (Print will be
visible from the front of shipper.)
2. Other (must meet definition of "Minor").
Page 4 of 4
* Confidential material omitted and filed separately with the Securities and
Exchange Commission.
<PAGE>
FP-S-X FINISHED PRODUCT SPECIFICATION
- ------------------------------------------------------------------------------
Title: EpiPen(R)
Epinephrine Injection, 1:1000
0.3 mL / Dose
- ------------------------------------------------------------------------------
TEST METHOD SPECIFICATION
---- ------ -------------
Epinephrine Assay RDL - 173 *
pH current USP *
Identification current USP *
Total Acidity current USP *
Sodium Metabisulfite RDL - 156 *
Particulate Matter RDL - 169 *
Color and Clarity current USP *
Sterility DP-MS 406.0 *
Bacterial Endotoxin Content DP-MS 503.0 *
Activation Force DP-QC 394.1 *
Volume Dispensed DP-QC 394.1 *
Dispensing Time DP-QC 394.1 *
Exposed Needle Length DP-QC 331.0 *
* Confidential material omitted and filed separately with the Securities and
Exchange Commission.
<PAGE>
EXHIBIT
EPI PEN JR. PRODUCT SPECIFICATIONS
<PAGE>
Exhibit
June, 1996
STI(R) PRODUCT SPECIFICATIONS
-----------------------------
EPIPEN JR.(R) AUTO-INJECTOR
---------------------------
- --------------------------------------------------------------------------------
Epipen Jr. Epinephrine Injection
1:2,000; 0.3 mL/dose
- --------------------------------------------------------------------------------
POST 100% INSPECTION: Sampled per MIL-STD-105D Level II, Single
Sampling, Normal Inspection
TEST: VISUAL AUDIT (BASIC UNIT)
TEST - CRITICAL DEFECTS LIMITS - AQL *
- ---- ------
Definition - Could, through use, present clear hazard to the user/patient. The
product will not function as intended by delivering the specified dose, and
therefore, causes misdiagnosis or subjects the user to significant risk. The
fact that the product will not function is not clearly obvious prior to use.
1. Crack in glass (jeopardizes functionality or sterility).
2. Any visual indication of contamination/degradation of solution
3. Hole or split in sheath, sheath missing or sheath penetrated by
needle.
4. Wrong or missing component - renders the unit non-functional
5. Other (must meet definition of "Critical").
TEST - MAJOR DEFECTS LIMITS - AQL *
- ---- ------
DEFINITION Could, through use, cause extreme discomfort to the user/patient.
The product will function as intended, but may result in customer
dissatisfaction. The defect may or may not be obvious to the user/patient
prior to use.
1. Leakage (obvious prior to use).
2. Loose hub (jeopardizes functionality; precludes use).
3. Chip in glass (does not jeopardize functionality or sterility).
4. Other (must meet definition of "Major").
TEST - MAJOR DEFECTS LIMITS - AQL *
- ---- ------
1. Visual (unmagnified) particulate contamination in solution (using
white/black background).
2. Other (must meet the definition of "major").
Page 1 of 4
* Confidential material omitted and filed separately with the Securities and
Exchange Commission.
<PAGE>
Exhibit
June, 1996
STI(R) PRODUCT SPECIFICATIONS
-----------------------------
EPIPEN JR.(R) AUTO-INJECTOR
---------------------------
TEST: FUNCTIONALITY TESTING (ASSEMBLED AUTOINJECTOR)
TEST - CRITICAL DEFECTS LIMITS - AQL *
- ---- ------
1. Extended needle length less than * or greater than * .
2. Gross injection of foreign material.
3. Short outer tube separates from long outer tube on activation.
4. Slow dispensing time (greater than * seconds).
5. Delivered volume is less than * or greater than * .**
6. Leakage (not obvious prior to use).
7. Injector self-activates during arming.
8. Missing component renders the unit non-functional.
9. Fails functionality test (unable to arm injector or expel contents).
10. Other (must meet definition of "Critical").
** Regardless of MIL-STD
TEST - MAJOR DEFECTS LIMITS - AQL *
- ---- ------
1. Delivered volume not within specification ( * ).
2. Activation force less than * lbs. or greater than * lbs.
3. Extended needle length not within limits ( * ).
4. Gross hook, burr or no point on needle.
5. Nose cone loose or not properly seated.
6. Slow dispensing time; greater than * but less than * seconds.
7. Other (must meet definition of "Major").
Page 2 of 4
* Confidential material omitted and filed separately with the Securities and
Exchange Commission.
<PAGE>
Exhibit
June, 1996
STI(R) PRODUCT SPECIFICATIONS
-----------------------------
EPIPEN JR.(R) AUTO-INJECTOR
---------------------------
TEST - MINOR DEFECTS LIMITS - AQL *
- ---- ------
Definition - Defect will not present hazard or be injurious to user/patient.
Aesthetic defect is viewed by the customer as less than desired quality and is
clearly evident to the user/patient prior to use. Significantly impairs
further processing or assembly of the batch and results in significant cost
increase.
1. Difficult to arm.
2. Other (must meet the definition of "Minor").
TEST: FINAL PRODUCT INSPECTION (FINISHED PRODUCT)
TEST - CRITICAL DEFECTS LIMITS - AQL *
- ---- ------
1. Incorrect, missing, or illegible product name, potency/strength,
volume/contents, lot number or expiration date on injector carton.
2. Incorrect product component/label (product mix-up).
3. Wrong or nose cone.
4. Injector label oriented in opposite direction.
5. Patient and/or physician insert missing in carton.
6. Non-coapted spacer/plunger. (Spacer to be fully threaded to plunger.)
7. Missing component, renders the unit non-functional.
8. Missing hub adapter.
9. Other (must meet definition of "Critical").
TEST - CRITICAL DEFECTS LIMITS - AQL * (tray)
- ---- ------
1. Incorrect, missing, or illegible product name, potency/strength,
volume/contents, lot number or expiration date on injector tray.
2. Incorrect tray.
TEST - CRITICAL DEFECTS LIMITS - AQL * (shipper)
- ---- ------
1. Incorrect, missing, or illegible product name, potency/strength,
volume/contents, lot number or expiration date on injector shipper.
2. Incorrect shipper.
Page 3 of 4
* Confidential material omitted and filed separately with the Securities and
Exchange Commission.
<PAGE>
Exhibit
June, 1996
STI(R) PRODUCT SPECIFICATIONS
-----------------------------
EPIPEN JR.(R) AUTO-INJECTOR
---------------------------
TEST: FINAL PRODUCT INSPECTION
TEST - MAJOR DEFECTS LIMITS - AQL *
- ---- ------
1. Incorrect text other than product label.
2. Nose cone loose or not properly seated.
3. Smearable, removable label markings (including imprinting).
4. Poor label adhesion.
5. Plug cap is not secure on tube. (Cap is able to be removed when tube
is placed upside down and shaken.)
6. Cracked or not fully seated hub adapter.
7. Other (must meet definition of "Major").
TEST - MINOR DEFECTS LIMITS - AQL *
- ---- ------
1. Label not on straight
2. Poor workmanship.
3. Particle or fiber less than * .
4. Incorrect orientation of injectors inside tubes, (should be tip
down).
5. Other (must meet definition of "minor").
TEST - MINOR DEFECTS LIMITS - AQL * (inner tray)
- ---- ------
1. Incorrect packaging of inner tray (cartons facing same direction).
2. Shrinkwrap allows cartons to be removed (aesthetically incorrect or
does not provide a proper seal).
TEST - MINOR DEFECTS LIMITS - AQL * (shipper)
- ---- ------
1. Incorrect orientation of inner trays in shipper. (Print will be visible
from the front of shipper.)
2. Other (must meet definition of "Minor").
Page 4 of 4
* Confidential material omitted and filed separately with the Securities and
Exchange Commission.
<PAGE>
FP-R-X FINISHED PRODUCT SPECIFICATION
- --------------------------------------------------------------------------------
Title: EpiPen(R) Jr.
Epinephrine Injection, 1:2000
0.3 mL / Dose
- --------------------------------------------------------------------------------
TEST METHOD SPECIFICATION
---- ------ -------------
Epinephrine Assay RDL - 173 *
pH current USP *
Identification current USP *
Total Acidity current USP *
Sodium Metabisulfite RDL - 156 *
Particulate Matter RDL - 169 *
Color and Clarity current USP *
Sterility DP-MS 406.0 *
Bacterial Endotoxin Content DP-MS 503.0 *
Activation Force DP-QC 394.1 *
Volume Dispensed DP-QC 394.1 *
Dispensing Time DP-QC 394.1 *
Exposed Needle Length DP-QC 331.0 *
* Confidential material omitted and filed separately with the Securities and
Exchange Commission.
<PAGE>
EXHIBIT
EPI PEN TRAINER PRODUCT SPECIFICATIONS
<PAGE>
Exhibit
June, 1996
STI PRODUCT SPECIFICATIONS
--------------------------
EPIPEN CLICK TRAINER
--------------------
LIMITS
------
1. Assembly will successfully activate and recock.
2. Assembly simulates activation, with audible click.
3. The front end or tip of the assembly will be black, the safe pin will
be gray. The safe pin will be intact.
4. The assembly will include the proper label, with correct and legible
printing.
5. Units will be completely and properly manufactured, without damage to
the assembly.
6. The label will be unaffected and shall remain entirely adherent when
rubbed with moderate pressure.
<PAGE>
EXHIBIT
TESTING PROTOCOL
<PAGE>
[LOGO]
Exhibit
- -------
TESTING OF EPIPEN(R) PRODUCTS BY INTERNATIONAL DISTRIBUTORS
To maintain consistency in the testing of Epipen(R) and EpiEZ Pen
products by our international distributors, the following guidelines must be
applied regarding sample preparation, test methodology and appropriate test
limits. Inclusion of these requirements in a contract format is the
appropriate vehicle for clarification.
o ANALYTICAL TESTING. A list of tests required by the international
distributor/regulatory agency must be supplied to STI(R) for
official notification. STI will then supply the distributor with
STI approved departmental procedures for conducting the tests.
Revisions to the methods, when applicable, will be forwarded to
the distributor to maintain testing consistency with STI. Only
STI approved analytical methods may be used to test the final
product.
FDA approved shelf life specifications will be provided to the
distributor for verification of product potency. Product release
specifications are only applicable when the final product is
released for sale by STI. After that date, shelf life
specifications are to be used by the distributor to verify
product potency.
o MICROBIOLOGICAL TESTING. USP sterility testing is performed by
STI for product release and is therefore deemed the official
result. Due to aseptic technique sensitivity in performing the
sterility test and issues associated with product handling in an
autoinjector configuration, further sterility testing by the
distributor is not recommended.
In the event of an international regulatory requirement for
additional sterility testing, basic unit samples representing the
beginning, middle and end of the batch production run will be
sent to the distributor for sterility testing. STI approved
methods for conducting the USP sterility test will be provided to
the distributor and must be followed. USP sterility testing of
STI products may only be performed utilizing barrier technology
or the Millipore Steritest System.
<PAGE>
Epipen(R) Test Specifications
Page 2
(Microbiological Testing continued)
Should the international regulatory requirement specify sampling
from the distributed batch to perform additional sterility testing,
autoinjector samples will be sent to STI for disassembly. Basic
unit samples will then be sent to a STI approved testing
laboratory for USP sterility testing as outlined above.
Testing for bacterial endotoxin by the distributor must be
conducted per USP requirements, utilizing the gel-clot or
turbidimetric LAL test. STI will provide the distributor with
test requirements for proper sample dilution and minimum lysate
sensitivity.
o PHYSICAL TESTING. Autoinjector functionality testing may only be
performed utilizing STI approved testing procedures and test
equipment. Sampling and testing of assembled autoinjectors is
performed by STI on every batch of distributed product. Should
the distributor/regulatory agency require additional functional
testing, equipment must be purchased from STI to conduct these
tests. Operating procedures for proper performance of these tests
will be provided by STI.
<PAGE>
EXHIBIT B
PRODUCT PRICING
Product Price per unit
- ------- --------------
EpiPen(R) $ *
EpiPen(R)Jr. $ *
Epi E-Z Pen(TM) $ *
Epi E-Z Pen(TM)Jr. $ *
EpiPen(R)Trainer $ *
Epi E-Z Pen(TM)Trainer $ *
Quantity Purchased/Prices(1)
Product * * *
EpiPen(R) $ * $ * -
EpiPen(R)Jr. $ * $ * $ *
Epi E-Z Pen(TM) - $ * $ *
Epi E-Z Pen(TM)Jr. - $ * $ *
1 Reflects surcharge for custom packaging materials (French/English) and the
price for the Training Device. Price does not reflect one time costs for Epi
E-Z Pen(TM) (French/English) artwork.
2 All surcharges are based on allocating a partial lot from one batch intended
for U.S. distribution, manufactured at the standard batch size.
* Confidential material omitted and filed separately with the Securities and
Exchange Commission.
<PAGE>
MANAGEMENT SERVICES AGREEMENT
THIS MANAGEMENT SERVICES AGREEMENT (the "Agreement") is entered into this
1 day of September 1998, by and among Lipha Americas, Inc., a Delaware
corporation with its head office at 1209 Orange Street, Willmington, DE (the
"Company"), and Dey, L.P., a Delaware limited partnership with offices at 2751
Napa Valley Corporate Drive, Napa, CA 94558 ("Dey").
W I T N E S S E T H :
WHEREAS, the Company desires that Dey provide certain services to the
Company on the terms and conditions set forth herein;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
THE SERVICES
Section 1.1 Services. Dey shall provide to the Company the services set
forth on Exhibit A (the "Services"). Dey shall use its best efforts to
complete the Services, but does not guarantee the achievement of any specific
result from the Services.
Section 1.2 Fee. In exchange for the Services, the Company shall pay to
Dey a flat fee of $5,000 paid quarterly in arrears. In addition, the Company
shall reimburse Dey for any out-of-pocket costs and expenses incurred by Dey
in providing the Services (including, without limitation, legal and accounting
fees, telephone expenses and travel expenses) excluding administrative
expenses and employment expenses of personnel performing the Services.
Section 1.3 Reports. If requested by the Company, at the end of each
calendar quarter, Dey shall report on the status of the Services.
Section 1.4 Level of Effort; Officers. Dey shall perform the Services
using the level of resources, including personnel, that Dey reasonably
determines is appropriate to perform the Services on a timely basis. If
requested by the Company, Dey may provide personnel to act as officers of the
Company in connection with the performance of the Services.
<PAGE>
ARTICLE II
TERM
Section 2.1 Term. The term of the Agreement shall commence on the date of
this Agreement and continue indefinitely, unless either party terminates the
Agreement in the manner set forth in Section 2.2 below.
Section 2.2 Termination. Either party may terminate the Agreement upon 30
days notice by a written statement signed by a duly authorized representative
of the party. Either party may terminate the Agreement in full or in part,
with respect to specific services. If the Agreement is terminated for specific
services, the parties agree to renegotiate the quarterly fee set forth in
Section 1.2 in good faith; the Agreement shall continue in full force and
effect as to the remaining services.
ARTICLE III
MISCELLANEOUS
Section 3.1 Force Majeure. Any party hereto shall be entitled to suspend
performance of this Agreement in the event that it is unable to perform by
reason, directly or indirectly, of any act of God, war, riot, civil
disturbance, fire, water, act of any government or authority, labor dispute,
electrical shortage, failure of communications or common carrier, or any cause
beyond the reasonable control of the non-performing party; provided that such
non-performing party shall use its best efforts to resume its performance
under this Agreement as soon as such event constituting an event of force
majeure shall have ended or abated.
Section 3.2 Costs; Access to Facilities. The Company shall bear any costs
or expenses of its employees in connection with the Services. Dey shall have
the right for approved representatives to have reasonable access to the
Company's files during usual business hours and with reasonable prior notice
but only to the extent necessary to perform the delivery of any of the
Services.
Section 3.3 Agency. Dey shall perform the services hereunder as an
independent contractor and none of the provisions of this Agreement shall be
deemed to constitute a relationship of partnership, agency or joint venturers
among the parties.
Section 3.4 Communications. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if (a) personally delivered, (b) sent by facsimile transmission
(with transmission confirmed), (c) sent by overnight courier (with delivery
confirmed) or (d) mailed by United States first-class, certified or registered
mail, postage prepaid, to the other party at the following addresses (or at
such other address as subsequently shall be given in writing by any party to
the other):
-2-
<PAGE>
(a) If to the Company, to:
Lipha Americas, Inc.
2571 Nappa Valley Corporate Drive
Attention: Chief Financial Officer
(b) If to Dey, to:
2751 Napa Valley Corporate Drive
Napa, CA 94558
Attention: President and Chief Financial Officer
Section 3.5 Nonassignability; Amendment; Waiver. This Agreement shall not
be assignable by either of the parties hereto without the written consent of
the other party. This Agreement may not be altered or otherwise amended except
pursuant to an instrument in writing signed by the parties hereto.
Section 3.6 Binding Effect; No Third Party Beneficiaries. This Agreement
shall inure to the benefit of and be binding upon the parties hereto, their
successors and permitted assigns. Nothing in this Agreement expressed or
implied is intended to confer on any other person, other than the parties
hereto or their permitted assigns, any rights, remedies, agreements,
undertakings, obligations or liabilities under or by reason of this Agreement.
Section 3.7 Article and Section Headings. The Article and Section
headings contained in this Agreement are for reference purposes only and shall
not constitute a part of this Agreement, nor shall they affect its meaning,
construction, interpretation or effect.
Section 3.8 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument
Section 3.9 Severability. If any provision of this Agreement shall
finally be determined to be unlawful, then such provision shall be deemed to
be deleted from this Agreement and the other provisions of this Agreement
shall remain in full force and effect.
Section 3.10 Entire Agreement. This Agreement (including any Exhibits or
other documents referred to herein) constitutes the entire agreement between
the parties and supersedes all other prior agreements and understandings, both
oral and written, between the parties, with respect to the subject matter
hereof.
Section 3.11 Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New York
without regard to its conflicts of laws principles.
-3-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
LIPHA AMERICAS, INC.
By: /s/ Pamela R. Marrs
-------------------------------
Name: Pamela R. Marrs
Title: Executive Vice President and
Chief Financial Officer
DEY, L.P.
By: Dey, Inc., general partner
By: /s/ Charles A. Rice
-------------------------------
Name: Charles A. Rice
Title: President and Chief Executive Officer
-4-
<PAGE>
EXHIBIT A
---------
THE SERVICES
Finance & Accounting
Legal
-5-
<PAGE>
MANAGEMENT SERVICES AGREEMENT
THIS MANAGEMENT SERVICES AGREEMENT (the "Agreement") is entered into
this 1 day of September 1998, by and among Allergy Free, L.P., a Delaware
limited partnership with offices at 905 Gemini, Houston, TX 77058 (the
"Company"), and Dey, L.P., a Delaware limited partnership with offices at 2751
Napa Valley Corporate Drive, Napa, CA 94558 ("Dey").
W I T N E S S E T H :
WHEREAS, the Company desires that Dey provide certain services to the
Company on the terms and conditions set forth herein;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
THE SERVICES
Section 1.1 Services. Dey shall provide to the Company the services
set forth on Exhibit A (the "Services"). Dey shall use its best efforts to
complete the Services, but does not guarantee the achievement of any specific
result from the Services.
Section 1.2 Fee. In exchange for the Services, the Company shall pay
to Dey a flat fee of $10,000 paid quarterly in arrears. In addition, the
Company shall reimburse Dey for any out-of-pocket costs and expenses incurred
by Dey in providing the Services (including, without limitation, legal and
accounting fees, telephone expenses and travel expenses) excluding
administrative expenses and employment expenses of personnel performing the
Services.
Section 1.3 Reports. If requested by the Company, at the end of each
calendar quarter, Dey shall report on the status of the Services.
Section 1.4 Level of Effort; Officers. Dey shall perform the Services
using the level of resources, including personnel, that Dey reasonably
determines is appropriate to perform the Services on a timely basis. If
requested by the Company, Dey may provide personnel to act as officers of the
Company in connection with the performance of the Services.
<PAGE>
ARTICLE II
TERM
Section 2.1 Term. The term of the Agreement shall commence on the
date of this Agreement and continue indefinitely, unless either party
terminates the Agreement in the manner set forth in Section 2.2 below.
Section 2.2 Termination. Either party may terminate the Agreement
upon 30 days notice by a written statement signed by a duly authorized
representative of the party. Either party may terminate the Agreement in full
or in part, with respect to specific services. If the Agreement is terminated
for specific services, the parties agree to renegotiate the quarterly fee set
forth in Section 1.2 in good faith; the Agreement shall continue in full force
and effect as to the remaining services.
ARTICLE III
MISCELLANEOUS
Section 3.1 Force Majeure. Any party hereto shall be entitled to
suspend performance of this Agreement in the event that it is unable to
perform by reason, directly or indirectly, of any act of God, war, riot, civil
disturbance, fire, water, act of any government or authority, labor dispute,
electrical shortage, failure of communications or common carrier, or any cause
beyond the reasonable control of the non-performing party; provided that such
non-performing party shall use its best efforts to resume its performance
under this Agreement as soon as such event constituting an event of force
majeure shall have ended or abated.
Section 3.2 Costs; Access to Facilities. The Company shall bear any
costs or expenses of its employees in connection with the Services. Dey shall
have the right for approved representatives to have reasonable access to the
Company's files during usual business hours and with reasonable prior notice
but only to the extent necessary to perform the delivery of any of the
Services.
Section 3.3 Agency. Dey shall perform the services hereunder as an
independent contractor and none of the provisions of this Agreement shall be
deemed to constitute a relationship of partnership, agency or joint venturers
among the parties.
Section 3.4 Communications. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if (a) personally delivered, (b) sent by facsimile transmission
(with transmission confirmed), (c) sent by overnight courier (with delivery
confirmed) or (d) mailed by United States first-class, certified or registered
mail, postage prepaid, to the other party at the following addresses (or at
such other address as subsequently shall be given in writing by any party to
the other):
-2-
<PAGE>
(a) If to the Company, to:
Allergy Free, L.P.
905 Gemini
Houston, TX 77058
Attention: Chief Executive Officer
(b) If to Dey, to:
2751 Napa Valley Corporate Drive
Napa, CA 94558
Attention: Chief Financial Officer
Section 3.5 Nonassignability; Amendment; Waiver. This Agreement shall
not be assignable by either of the parties hereto without the written consent
of the other party. This Agreement may not be altered or otherwise amended
except pursuant to an instrument in writing signed by the parties hereto.
Section 3.6 Binding Effect; No Third Party Beneficiaries. This
Agreement shall inure to the benefit of and be binding upon the parties
hereto, their successors and permitted assigns. Nothing in this Agreement
expressed or implied is intended to confer on any other person, other than the
parties hereto or their permitted assigns, any rights, remedies, agreements,
undertakings, obligations or liabilities under or by reason of this Agreement.
Section 3.7 Article and Section Headings. The Article and Section
headings contained in this Agreement are for reference purposes only and shall
not constitute a part of this Agreement, nor shall they affect its meaning,
construction, interpretation or effect.
Section 3.8 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original and
all of which together shall be deemed to be one and the same instrument
Section 3.9 Severability. If any provision of this Agreement shall
finally be determined to be unlawful, then such provision shall be deemed to
be deleted from this Agreement and the other provisions of this Agreement
shall remain in full force and effect.
Section 3.10 Entire Agreement. This Agreement (including any Exhibits
or other documents referred to herein) constitutes the entire agreement
between the parties and supersedes all other prior agreements and
understandings, both oral and written, between the parties, with respect to
the subject matter hereof.
Section 3.11 Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New York
without regard to its conflicts of laws principles.
-3-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
ALLERGY FREE, L.P.
By: Allergy Free II, Inc., general partner
By: /s/ Ronald Moore
---------------------------------
Name: Ronald Moore
Title: Chief Executive Officer
DEY, L.P.
By: Dey, Inc., general partner
By: /s/ Charles A. Rice
---------------------------------
Name: Charles A. Rice
Title: President and Chief Executive Officer
-4-
<PAGE>
EXHIBIT A
The Services
IS Services
Finance & Accounting Oversight
Human Resources Oversight
Materials Management and Production Planning Oversight
Legal
-5-
<PAGE>
MANAGEMENT SERVICES AGREEMENT
THIS MANAGEMENT SERVICES AGREEMENT (the "Agreement") is entered into
this 1 day of September 1998, by and among EM Pharma, Inc. a Delaware
corporation with its offices at 1209 Orange Street, Wilmington, DE (the
"Company"), and Dey, L.P., a Delaware limited partnership with offices at 2751
Napa Valley Corporate Drive, Napa, CA 94558 ("Dey").
W I T N E S S E T H :
WHEREAS, the Company desires that Dey provide certain services to the
Company on the terms and conditions set forth herein;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
THE SERVICES
Section 1.1 Services. Dey shall provide to the Company the services
set forth on Exhibit A (the "Services"). Dey shall use its best efforts to
complete the Services, but does not guarantee the achievement of any specific
result from the Services.
Section 1.2 Fee. In exchange for the Services, the Company shall pay
to Dey a flat fee of $175,000 paid quarterly in arrears. In addition, the
Company shall reimburse Dey for any out-of-pocket costs and expenses incurred
by Dey in providing the Services (including, without limitation, legal and
accounting fees, telephone expenses and travel expenses) excluding
administrative expenses and employment expenses of personnel performing the
Services.
Section 1.3 Reports. If requested by the Company, at the end of each
calendar quarter, Dey shall report on the status of the Services.
Section 1.4 Level of Effort; Officers. Dey shall perform the Services
using the level of resources, including personnel, that Dey reasonably
determines is appropriate to perform the Services on a timely basis. If
requested by the Company, Dey may provide personnel to act as officers of the
Company in connection with the performance of the Services.
<PAGE>
ARTICLE II
TERM
Section 2.1 Term. The term of the Agreement shall commence on the
date of this Agreement and continue indefinitely, unless either party
terminates the Agreement in the manner set forth in Section 2.2 below.
Section 2.2 Termination. Either party may terminate the Agreement
upon 30 days notice by a written statement signed by a duly authorized
representative of the party. Either party may terminate the Agreement in full
or in part, with respect to specific services. If the Agreement is terminated
for specific services, the parties agree to renegotiate the quarterly fee set
forth in Section 1.2 in good faith; the Agreement shall continue in full force
and effect as to the remaining services.
ARTICLE III
MISCELLANEOUS
Section 3.1 Force Majeure. Any party hereto shall be entitled to
suspend performance of this Agreement in the event that it is unable to
perform by reason, directly or indirectly, of any act of God, war, riot, civil
disturbance, fire, water, act of any government or authority, labor dispute,
electrical shortage, failure of communications or common carrier, or any cause
beyond the reasonable control of the non-performing party; provided that such
non-performing party shall use its best efforts to resume its performance
under this Agreement as soon as such event constituting an event of force
majeure shall have ended or abated.
Section 3.2 Costs; Access to Facilities. The Company shall bear any
costs or expenses of its employees in connection with the Services. Dey shall
have the right for approved representatives to have reasonable access to the
Company's files during usual business hours and with reasonable prior notice
but only to the extent necessary to perform the delivery of any of the
Services.
Section 3.3 Agency. Dey shall perform the services hereunder as an
independent contractor and none of the provisions of this Agreement shall be
deemed to constitute a relationship of partnership, agency or joint venturers
among the parties.
Section 3.4 Communications. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if (a) personally delivered, (b) sent by facsimile transmission
(with transmission confirmed), (c) sent by overnight courier (with delivery
confirmed) or (d) mailed by United States first-class, certified or registered
mail, postage prepaid, to the other party at the following addresses (or at
such other address as subsequently shall be given in writing by any party to
the other):
-2-
<PAGE>
(a) If to the Company, to:
EM Pharma, Inc.
2751 Napa Valley Corporate Drive
Napa, CA 94558
Attention: President and Chief Financial Officer
(b) If to Dey, to:
2751 Napa Valley Corporate Drive
Napa, CA 94558
Attention: Chief Financial Officer
Section 3.5 Nonassignability; Amendment; Waiver. This Agreement shall
not be assignable by either of the parties hereto without the written consent
of the other party. This Agreement may not be altered or otherwise amended
except pursuant to an instrument in writing signed by the parties hereto.
Section 3.6 Binding Effect; No Third Party Beneficiaries. This
Agreement shall inure to the benefit of and be binding upon the parties
hereto, their successors and permitted assigns. Nothing in this Agreement
expressed or implied is intended to confer on any other person, other than the
parties hereto or their permitted assigns, any rights, remedies, agreements,
undertakings, obligations or liabilities under or by reason of this Agreement.
Section 3.7 Article and Section Headings. The Article and Section
headings contained in this Agreement are for reference purposes only and shall
not constitute a part of this Agreement, nor shall they affect its meaning,
construction, interpretation or effect.
Section 3.8 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original and
all of which together shall be deemed to be one and the same instrument
Section 3.9 Severability. If any provision of this Agreement shall
finally be determined to be unlawful, then such provision shall be deemed to
be deleted from this Agreement and the other provisions of this Agreement
shall remain in full force and effect.
Section 3.10 Entire Agreement. This Agreement (including any Exhibits
or other documents referred to herein) constitutes the entire agreement
between the parties and supersedes all other prior agreements and
understandings, both oral and written, between the parties, with respect to
the subject matter hereof.
Section 3.11 Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New York
without regard to its conflicts of laws principles.
-3-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
EM PHARMA, INC.
By: /s/ Charles A. Rice
-------------------------------
Name: Charles A. Rice
Title: President and Chief Executive Officer
DEY, L.P.
By: Dey, Inc., general partner
By: /s/ Pamela R. Marrs
-------------------------------
Name: Pamela R. Marrs
Title: Executive Vice President and
Chief Financial Officer
-4-
<PAGE>
EXHIBIT A
The Services
General Sales & Marketing Oversight
Sales Contract Administration
Purchasing
Inventory Control
Customer Service/Order Entry
Distribution
Finance & Accounting
IS Services
Human Resources Services
QA/QC
Regulatory (R&D)
Legal
-5-
<PAGE>
BASIC LEASE INFORMATION
Lease Date: December 31, 1997
Tenant and its Address: DEY LABORATORIES, L.P.
2751 Napa Valley Corporate Drive
Napa, California 94558
With a copy to: Coudert Brothers
1114 Avenue of the Americas
New York, New York 10038-7703
Attention: Gerard V. Hannon, Esq.
Guarantor: DEY LABORATORIES, INC.
2751 Napa Valley Corporate Drive
Napa Valley, California 94558
With a copy to: Coudert Brothers
1114 Avenue of the Americas
New York, New York 10038-7703
Attention: Gerard V. Hannon, Esq.
Landlord and its Address: EBP 2, LTD.
455 Market Street
17th Floor
San Francisco, California 94105
Attention: Robert A. Dobbin, Esq.
Premises: Approximately 124,798 square feet
Land Description: Approximately 6.166 acre tract of land in Allen,
Collin County, Texas, as more particularly described
in Exhibit A attached hereto and incorporated herein
Project Description: The Land, the Building and all other improvements, if
any, located on the Land
Building Description: One story industrial building
Permitted Use: Warehouse, light assembly, and distribution center
with related office use
Scheduled Term
Commencement Date: May 1, 1998
Length of Term: Eighty-Four (84) Months, commencing upon the Term
Commencement Date and ending eighty-four (84) months
thereafter (subject to extension if the Term
Commencement Date does not occur on the first day of
a calendar month as provided in Section 2.1(a)).
<PAGE>
Rent:
Base Rent: $554,000 per annum, years 1 - 5
$636,500 per annum, years 6 - 7
$636,500 per annum, first Extension Term
$732,500 per annum, second Extension Term
(Estimated) Basic Operating Costs: $43,679.30 per annum
(Estimated) Taxes: $81,118.70 per annum
(Estimated) Insurance Costs: $6,239.90 per annum
Proportionate Share one hundred percent (100%)
Security Deposit: $25,000.00 (plus accrued interest as
provided in Article 11)
Exhibits: A - Legal Description of the Land
B - General Outline of the Building,
Project and Premises
B-1 - Outline Specifications
C - Sign Criteria
Guaranty of Lease
The foregoing Basic Lease Information is incorporated into and made a part of
this Lease. Each reference in this Lease to any of the Basic Lease Information
shall mean the respective information above and shall be construed to
incorporate all of the terms provided under the particular Lease paragraph
pertaining to such information. In the event of any conflict between the Basic
Lease Information and the Lease, the latter shall control.
<PAGE>
SCHEDULE OF DEFINED TERMS
Additional Space - Article 19
Additional Work - Section 2.6
Allowance - Section 2.6
Bankruptcy Event - Section 16.6
Base Rent - Basic Lease Information
Basic Operating Charges - Section 5.1
Basic Operating Cost Adjustment - Section 5.7
Basic Operating Costs - Section 5.1
Building - Section 1.1
Cancellation Notice - Section 2. 1 (a)
Capital Costs - Section 5. 1 (g)
Common Areas - Section 1.2
Debtor - Section 16.6(a)
Environmental Laws - Section 3.4(b)
Environmental Requirements - Section 3.4(c)
Environmental Taxes - Section 3.4(i)
Estimated Basic Operating Cost - Section 5.6
Event of Default - Section 16.1
Expiration Date - Section 20.18
Extension Term - Section 2.1(b)
Force Majeure Delays - Section 2.3
Governmental Authorities - Section 3.4(a)
Governmental Requirements - Section 3.3
Guarantor - Basic Lease Information
Guaranty - Section 10.3
Hazardous Materials - Section 3.4(a)
Hazardous Use - Section 3.4(e)
Improvements - Section 2.4
Initial Term - Section 2. 1 (a)
Interior Drawings - Section 2.3(c)
Interior Improvements - Section 2.3(c)
Land - Basic Lease Information
Landlord - Introduction
Lease - Introduction
Length of Term - Basic Lease Information
Losses - Section 3.6
New Premises - Article 17
Outline Specifications - Section 2.3(a)
Permitted Expenses - Section 2.6
Permitted Use - Basic Lease Information
Premises - Section 1.1
Project - Section 1.1
Proportionate Share - Basic Lease Information
Reimbursable Costs - Section 16.2(b)(ii)
Release - Section 3.4(d)
Report - Section 3.4(f)
<PAGE>
Scheduled Term Commencement Date - Basic Lease Information
Security Deposit - Basic Lease Information
Shell Building - Section 2.3(a)
Shell Plaza - Section 2.2(b)
Substantial Completion - Section 2.5
Taxes - Section 5.1 (a)
Tenant - Introduction
Tenant's Parties - Section 3.4(e)
Term - Section 2.1(c)
Term Commencement Date - Basic Lease Information
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C> <C>
ARTICLE 1: PROJECT....................................................... 1
1.1 Premises Described....................................... 1
1.2 Common Areas............................................. 1
(a) Common Areas-Changes............................ 1
(b) Common Area Maintenance......................... 2
ARTICLE 2: TERM, CONSTRUCTION, POSSESSION AND LEASE COMMENCEMENT......... 2
2.1 Term..................................................... 2
(a) Initial Term.................................... 2
(b) Extension Option................................ 2
(c) Term............................................ 3
2.2 Term Commencement Date................................... 3
2.3 Plans.................................................... 3
(a) Outline Specifications.......................... 3
(b) Shell Plans..................................... 3
(c) Interior Drawings............................... 3
(d) Changes......................................... 3
2.4 Construction of Improvements............................. 4
2.5 Substantial Completion................................... 4
2.6 Allocation of Construction Costs......................... 5
2.7 Early Entry by Tenant.................................... 5
ARTICLE 3: USE........................................................... 5
3.1 Permitted Use............................................ 5
3.2 Objectionable Actions.................................... 5
3.3 Compliance with Law...................................... 6
3.4 Hazardous Materials...................................... 6
(a) Hazardous Materials Defined..................... 6
(b) Environmental Laws Defined...................... 6
(c) Environmental Requirements Defined.............. 7
(d) Release Defined................................. 7
(e) Use of Hazardous Materials...................... 7
(f) Hazardous Materials Report; When Required....... 7
(g) Hazardous Materials Report; Contents............ 8
(h) Release of Hazardous Materials: Notification
and Cleanup.................................. 8
(i) Inspection and Testing by Landlord.............. 9
(j) Other Taxes..................................... 9
3.5 Compliance with Rules.................................... 10
3.6 Indemnities.............................................. 10
ARTICLE 4: RENT.......................................................... 10
4.1 Payment.................................................. 10
4.2 Late Payments............................................ 11
ARTICLE 5: TAXES AND INSURANCE, BASIC OPERATING COSTS..................... 11
</TABLE>
i
<PAGE>
<TABLE>
<S> <C> <C> <C>
5.1 Basic Operating Costs.................................... 11
5.2 [Intentionally Deleted].................................. 13
5.3 Base Year Increases in Taxes and Insurance Costs......... 13
(a) Taxes........................................... 13
(b) Insurance Costs................................. 13
5.4 Proportionate Share...................................... 13
5.5 Standard................................................. 13
5.6 Payment of Estimated Basic Operating Cost................ 13
5.7 Computation of Basic Operating Cost Adjustment........... 14
5.8 [Intentionally Deleted]
......................................................... 14
5.9 Tenant Audit............................................. 14
5.10 Disputes................................................. 14
5.11 Tenant's Taxes........................................... 15
ARTICLE 6: INSURANCE AND INDEMNIFICATION................................ 15
6.1 Casualty Insurance....................................... 15
6.2 Liability Insurance...................................... 15
6.3 Indemnification.......................................... 16
6.4 Waiver of Subrogation.................................... 16
ARTICLE 7: REPAIRS, SERVICES & MAINTENANCE.............................. 16
7.1 Landlord's Obligations................................... 16
7.2 Tenant's Obligations..................................... 17
7.3 Utilities................................................ 17
7.4 Liens.................................................... 18
ARTICLE 8: ALTERATIONS AND SIGNS........................................ 18
8.1 Alterations.............................................. 18
(a) Performance..................................... 19
(b) Removal......................................... 19
(c) Costs........................................... 19
(d) Plans........................................... 19
8.2 Signs.................................................... 19
ARTICLE 9: INSPECTION AND NOTICES....................................... 19
ARTICLE 10: LENDER AND FINANCING PROVISIONS.............................. 20
10.1 Subordination............................................ 20
10.2 Financial Statements..................................... 20
10.3 Estoppel Certificates.................................... 20
ARTICLE 11: SECURITY DEPOSIT............................................. 21
ARTICLE 12: ASSIGNMENT AND SUBLETTING.................................... 21
12.1 Consent Required......................................... 21
12.2 Bonus Rent............................................... 21
12.3 [Intentionally Deleted].................................. 22
12.4 Other Transfers.......................................... 22
12.5 No Release............................................... 22
ii
<PAGE>
ARTICLE 13: CONDEMNATION................................................. 22
13.1 Substantial Taking....................................... 22
13.2 Partial Taking........................................... 22
13.3 Award.................................................... 22
ARTICLE 14: CASUALTY DAMAGE.............................................. 22
14.1 Casualty................................................. 22
14.2 Minor Damage............................................. 23
14.3 Partial Damage........................................... 23
14.4 Major Damage............................................. 24
14.5 Lender Requirements...................................... 24
14.6 [Intentionally Deleted].................................. 24
14.7 [Intentionally Deleted].................................. 24
14.8 Repair Costs............................................. 24
ARTICLE 15: HOLDING OVER................................................. 24
ARTICLE 16: DEFAULT...................................................... 25
16.1 Events of Default........................................ 25
(a) Abandonment..................................... 25
(b) Nonpayment of Rent.............................. 25
(c) Other Obligations............................... 25
(d) General Assignment.............................. 25
(e) Receivership.................................... 25
(f) Attachment...................................... 25
(g) Repudiation of the Guaranty..................... 25
16.2 Rights and Remedies Upon Default......................... 25
(a) Remedies Upon Default........................... 25
(iii) Landlord Performance of Tenant's Obligations ...... 26
(b) Tenant Payments................................. 26
(c) Measure of Certain Damages...................... 27
(d) No Election of Remedies......................... 27
(e) [Intentionally Deleted]......................... 27
16.3 Late Charge.............................................. 27
16.4 Interest................................................. 27
16.5 Remedies Cumulative...................................... 27
16.6 Bankruptcy............................................... 28
ARTICLE 17: EXPANSION.................................................... 28
ARTICLE 18: TRANSFERS BY LANDLORD AND CURE RIGHTS........................ 28
18.1 Transfer by Landlord..................................... 28
18.2 Cure Rights.............................................. 29
18.3 Waiver of Certain Damages................................ 29
ARTICLE 19: INTENTIONALLY DELETED........................................ 29
ARTICLE 20: MISCELLANEOUS................................................ 29
20.1 Limitation............................................... 29
20.2 Quiet Enjoyment.......................................... 29
</TABLE>
iii
<PAGE>
<TABLE>
<S> <C> <C> <C>
20.3 Waiver................................................... 29
20.4 Notices.................................................. 30
20.5 Attorneys' Fees.......................................... 30
20.6 Successors and Assigns................................... 30
20.7 Force Majeure............................................ 30
20.8 Reference................................................ 30
20.9 Time of the Essence...................................... 30
20.10 Governing Law ........................................... 30
20.11 Integration ............................................. 30
20.12 Modifications ........................................... 31
20.13 Severability ............................................ 31
20.14 Counterparts ............................................ 31
20.15 Lease Effective Date .................................... 31
20.16 Brokers ................................................. 31
20.17 Additional Architectural Fees ........................... 31
20.18 Offer ................................................... 31
</TABLE>
iv
<PAGE>
NET LEASE
THIS NET LEASE (this "Lease") is made as of December 31, 1997, by and
between EBP 2, LTD., a Texas limited partnership ("Landlord") and DEY
LABORATORIES, L.P., a Delaware limited partnership ("Tenant").
ARTICLE 1: PROJECT
1.1 Premises Described. Landlord leases to Tenant and Tenant leases
from Landlord, upon the terms and conditions hereafter set forth, those premises
(the "Premises") outlined in Exhibit B and described in the Basic Lease
Information. The Premises may be all or part of the building (the "Building") or
of the project (the "Project"), which may consist of more than one building. The
Building and Project are highlighted on Exhibit B. The legal description for the
Land is set forth in Exhibit A.
1.2 Common Areas. The term "Common Areas" as used herein means all
areas and facilities outside the Premises, and within the exterior boundaries of
the Project, that are provided and designated by Landlord from time to time for
the general non-exclusive use and convenience of Tenant and of other tenants of
Landlord having the common use of such areas, and their respective authorized
representatives and invitees. Common Areas include, without limitation,
driveways, parking areas, sidewalks, and landscaped areas, all as generally
described or shown on Exhibit B attached hereto. Exhibit B is tentative, and
Landlord reserves the right to make alterations and changes thereto from time to
time (provided, however, that Landlord shall not, without Tenant's prior written
consent, which consent shall not be unreasonably withheld or delayed, reduce the
total parking spaces for the Premises to include less than one hundred and
seventy (170) spaces). Landlord hereby grants to Tenant, for the benefit of
Tenant and its employees, suppliers, shippers, customers and invitees, during
the Term of this Lease, the non-exclusive right to use, in common with others
entitled to such use, the Common Areas as they exist from time to time, subject
to any rights, powers, and privileges reserved by Landlord under the terms
hereof or under the terms of any rules and regulations or restrictions governing
the use of the Building or the Project. Under no circumstances shall the right
herein granted to use the Common Areas be deemed to include the right to store
any property, temporarily or permanently, in the Common Areas.
(a) Common Areas-Changes. Landlord shall have the right, in
Landlord's sole discretion, and upon prior notice to Tenant (except in
the event of emergency for which no notice shall be required) from time
to time:
(1) To make changes and reductions to the Common
Areas, including, without limitation, changes in the location,
size, shape and number of driveways, entrances, parking
spaces, parking areas, loading and unloading areas, ingress,
egress, direction of traffic, landscaped areas and walkways
(provided, however, that Landlord shall not make any changes
(A) to the parking spaces to reduce the total parking spaces
for the Project below 170 spaces, (B) to the parking areas or
loading or unloading areas adjacent to the Premises, or (C)
which reduce the Common Area by more than twenty percent
(20%), without in any such case obtaining Tenant's prior
written consent, which consent shall not be unreasonably
withheld or delayed);
(2) To close temporarily any of the Common Areas for
maintenance purposes so long as reasonable access to the
Premises remains available;
(3) To designate other land outside the boundaries of
the Building to be a part of the Common Areas;
<PAGE>
(4) To add additional improvements to the Common
Areas;
(5) To use the Common Areas while engaged in making
additional improvements, repairs or alterations to the
Building or Project, or any portion thereof; and
(6) To do and perform such other acts and make such
other changes in, to or with respect to the Common Areas and
Project as Landlord may, in the exercise of sound business
judgment, deem to be appropriate.
(b) Common Area Maintenance. Landlord shall, in Landlord's
sole discretion, maintain the Common Areas (subject to reimbursement
pursuant to this Lease), and establish and enforce reasonable rules and
regulations concerning such areas, so long as such rules and
regulations are not applied by Landlord in a discriminatory manner with
respect to tenants of the Project.
ARTICLE 2: TERM, CONSTRUCTION, POSSESSION AND LEASE COMMENCEMENT
2.1 Term.
(a) Initial Term. The Initial Term (herein so called) of this
Lease shall commence on the Term Commencement Date and continue in full force
and effect for the number of months specified as the Length of Term in the Basic
Lease Information or until this Lease is terminated as otherwise provided
herein. If the Term Commencement Date is a date other than the first day of a
calendar month, the Term shall be the number of months of the Length of Term in
addition to the remainder of the calendar month following the Term Commencement
Date. If the Term Commencement Date is other than the first day of a calendar
month, the first month shall include the remainder of the calendar month in
which the Term Commencement Date occurs plus the first full calendar month
thereafter, and the monthly Base Rent for such first month shall include the
full monthly rent for the first full calendar month plus monthly rent for the
partial month in which the Term Commencement Date occurs, prorated on a daily
basis at the monthly rent provided for the first calendar month.
Notwithstanding the foregoing, and so long as no
Event of Default has occurred and is continuing, Tenant may, upon not less than
one hundred and eighty (180) days prior written notice (the "Cancellation
Notice"), cancel the Initial Term as of June 1, 2003. Once given, the
Cancellation Notice shall be irrevocable. Upon timely receipt of the
Cancellation Notice, the Initial Term shall terminate on June 1, 2003. and from
and after said date tenant shall have no obligations for the
balance of the initial term as cancelled, including any rent obligations
(addition initiated 1/8/98 and 1/9/97(sic)).
(b) Extension Option. So long as this Lease is in full force
and effect, and no Event of Default has occurred hereunder, Tenant shall have
the right and option to extend the Initial Term of this Lease for two (2)
additional terms of thirty-six (36) months (the "Extension Term"). Each such
extension of the Initial Term shall be on the same terms, covenants and
conditions as provided for in this Lease for the Initial Term, except that the
Base Rent during each Extension Term shall be at the applicable Base Rent as
provided in the Basic Lease Information. This option shall not be available if
Tenant assigns this Lease to any person or entity other than an affiliate of
Tenant. Notice of Tenant's intention to exercise this option must be given to
Landlord in writing not less than nine (9) months prior to the expiration of the
Initial Term or the immediately preceding Extension Term, as applicable, of this
Lease. In the event the Tenant fails to deliver such written notice within the
time period set forth above, Tenant's right to extend the Initial Term of the
immediately preceding Extension Term, as applicable, shall expire and be of no
further force and effect.
2
<PAGE>
(c) Term. The Term (herein so called) shall refer to the
Initial Term and, if all conditions thereto as set forth herein are timely
satisfied, the Extension Term.
2.2 Term Commencement Date. The "Term Commencement Date" shall be
the earlier of the date on which (a) subject to Section 2.7 hereof, Tenant takes
possession of some or all of the Premises, or (b) Substantial Completion shall
have occurred. Tenant shall, upon demand, execute and deliver to Landlord a
letter of acceptance of delivery of the Premises and a confirmation of the
number of square feet in the Premises and the Building.
2.3 Plans.
(a) Outline Specifications. Attached as Exhibit B-1 are
the preliminary site plans and outline specifications and elevations for the
construction of the shell of the Building (the "Shell Building") which are
hereby approved by Landlord and Tenant (the "Outline Specifications").
(b) Shell Plans. Landlord shall cause to be prepared all
plans and specifications for the improvements depicted on the Outline
Specifications, including, without limitation, working drawings, construction
drawings, electrical, plumbing and mechanical drawings necessary to construct
the Shell Building ("Shell Plans"). The Shell Plans shall be prepared in
accordance with the Outline Specifications.
(c) Interior Drawings. Landlord shall cause to be prepared (at
Tenant's cost as provided below) the "Interior Drawings" (herein so called) for
the interior improvements (the "Interior Improvements") to be constructed in the
Shell Building, which shall include all construction drawings, plans, documents
and mechanical, electrical, and plumbing drawings necessary to construct the
Interior Improvements and shall be accompanied by an estimate of the cost of
constructing the Interior Improvements. The Interior Drawings shall provide for
Interior Improvements to be constructed in accordance with Landlord's standard
finish specifications. The initial Interior Drawings shall be delivered to
Tenant as soon as reasonably practicable after preparation of the Shell Plans.
Tenant shall notify Landlord whether it approves of the submitted Interior
Drawings within ten (10) days after Landlord's submission thereof. If Tenant
disapproves of such Interior Drawings, then Tenant shall notify Landlord thereof
specifying in detail the reasons for such disapproval, in which case, Landlord
shall correct the submitted Interior Drawings and deliver them to Tenant for its
approval within ten (10) days after Landlord receives Tenant's notice
disapproving the submitted drawings. Tenant shall have ten (10) days to approve
or disapprove any resubmitted Interior Drawings (provided that Tenant may not
disapprove of any resubmitted Interior Drawings for any reason other than based
on objections made to the Interior Drawings which were initially submitted to
Tenant), and Landlord shall have five (5) days to correct any such resubmitted
Interior Drawings disapproved by Tenant. This process shall be repeated until
the Interior Drawings have been finally approved. If Tenant fails to notify
Landlord that it disapproves of the initial Interior Drawings within ten (10)
days or any resubmitted Interior Drawings within ten (10) days after the
submission thereof, then Tenant shall be deemed to have approved the Interior
Drawings. At least eighty percent (80%) of the rentable area of the Premises
must be finished out as open-to-the-deck, air conditioned warehouse space,
unless Landlord agrees otherwise in writing.
(d) Changes. After approval of the Interior Drawings, Landlord
and Tenant shall initial the plans in question. Tenant may from time to time
make changes to the Interior Drawings by delivering written notice to Landlord,
specifying in detail the requested change. If Tenant requests any changes to any
submitted Interior Drawings that relate to matters other than changes necessary
to conform such drawings to the Outline Specifications or requests any changes
to the approved Interior Drawings, then (i) such changes shall require
Landlord's approval, (ii) Tenant shall pay all additional costs in designing and
constructing the Improvements as a result of any such changes before any such
changes will
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be made, and (iii) all delays in designing and constructing the
Improvements caused by such changes shall not delay the Term Commencement Date.
2.4 Construction of Improvements. Landlord shall diligently construct
the Shell Building and the Interior Improvements in accordance with the Shell
Plans and the Interior Drawings in a good and workmanlike manner using materials
specified in the Shell Plans and Interior Drawings and in compliance with Law.
The Shell Building and Interior Improvements are collectively referred to as the
"Improvements." Landlord assumes no liability for special, consequential, or
incidental damages of any kind whatsoever in connection with the design or
construction of the Improvements except with respect to actual damages incurred
by Tenant and caused solely by the negligence or willful misconduct of Landlord,
and makes no representations, warranties, or guaranties regarding the same,
expressed or implied, including, without limitation, warranties of
merchantability, fitness for a particular purpose, or of habitability, except as
expressly set forth herein. Landlord shall competitively bid the work for all
Interior Improvements to at least three (3) qualified contractors; provided,
however, that one of such qualified contractors may be selected by Tenant so
long as the contractor selected by Tenant meets Landlord's criteria for a
qualified contractor.
2.5 Substantial Completion. "Substantial Completion" shall occur when
the Improvements are substantially completed as certified by the architect
preparing the Shell Plans utilizing AIA document G704. Certificate of
Substantial Completion, and Landlord has obtained all requisite governmental
approvals relating to substantial completion such that Tenant may lawfully
occupy the Building. Substantial Completion shall have occurred even though
minor details of construction, decoration, landscaping, and mechanical
adjustments remain to be completed by Landlord. When the Certificate of
Substantial Completion is issued, Landlord and the architect shall prepare a
punch list of incomplete, minor, detail items and Landlord shall use all
reasonable efforts to complete such items within thirty (30) days after the
Certificate of Substantial Completion is issued, except as to such items that,
by their nature, will take a longer period to complete as set forth in the punch
list. "Force Majeure Delay Days" means the number of days of delay for
Substantial Completion caused by Force Majeure Events. "Force Majeure Event"
means any strike, riot, act of God, shortage of labor or materials, war,
governmental law, regulation, or restriction, or any other cause of any kind
whatsoever which is beyond the reasonable control of Landlord. "Tenant Delay
Days" means the number of days of delay for Substantial Completion caused by (a)
any acts of a Tenant Party, (b) changes requested by Tenant in the approved
Interior Drawings, or (c) any specifications by Tenant of materials or
installations which are not readily available. If Substantial Completion is
delayed because of Tenant Delay Days, then the Term Commencement Date shall not
be extended, but rather shall start on the date on which Substantial Completion
would have occurred but for such Tenant Delay Days. As a clarification to the
foregoing, and notwithstanding the provisions of Section 2.3(c) hereof setting
forth certain review and response periods with respect to the Interior Drawings,
if Tenant for any reason fails to deliver to Landlord, on or before Friday,
January 9, 1998, preliminary plans for the Interior Improvements ("Tenant's
Preliminary Plans") in form reasonably satisfactory for Landlord to prepare (or
cause its architect to prepare) the Interior Drawings, each day after January 9,
1998, for which Tenant fails to furnish Tenant's Preliminary Plans to Landlord
shall be a Tenant Delay Day for purposes of determining the Term Commencement
Date hereunder; if Tenant for any reason fails to approve Landlord's initial
Interior Drawings (prepared in accordance with Tenant's Preliminary Plans)
within five (5) business days after the date Landlord delivers such initial
Interior Drawings to Tenant, each day after such fifth day until Tenant finally
approves the Interior Drawings shall be a Tenant Delay Day for purposes of
determining the Term Commencement Date hereunder; and if Tenant at any time
after submission of Tenant's Preliminary Plans to Landlord changes any item with
respect to the Tenant's Preliminary Plans, the number of days of delay caused
thereby shall constitute Tenant Delay Days for purposes of determining the Term
Commencement Date hereunder.
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2.6 Allocation of Construction Costs. Landlord shall design and
construct the Shell Building, and all costs incurred in connection therewith
shall be at Landlord's expense, other than costs relating to the Interior
Drawings. The costs relating to the Interior Drawings, and, except as provided
in the preceding sentence, all other work required to design and construct the
Interior Improvements, including the costs of Tenant's signs (the "Additional
Work") shall be performed at Tenant's expense. Landlord shall provide to Tenant
an allowance (the "Allowance") of $805,189. The Allowance may be applied toward
the expenses for the Additional Work (including design costs for the Interior
Drawings) (the "Permitted Expenses"), without duplication of costs. However, a
minimum of $715,000 must be applied towards Additional Work for the Premises.
Tenant shall pay to Landlord 100% of the amount by which the estimated cost of
designing and constructing the Additional Work exceeds the Allowance (the
"Tenant Deficit"), which amount shall be payable as and when payments are
required to be made to third parties for such Additional Work. Landlord shall
have no obligation to commence or continue the Additional Work unless and until
Tenant pays to Landlord the Tenant Deficit at the time(s) set forth above. If
the actual cost of the Additional Work is less than the Allowance, monthly Base
Rent will be reduced by an amount determined by dividing (a) the amount by which
the Allowance exceeds the actual costs of the Additional Work, by (b) the number
of remaining months in the Initial Term of this Lease from and after the date
the amount of such excess is determined.
2.7 Early Entry by Tenant. Tenant may enter the Shell Building before
the Term Commencement Date with Landlord's prior consent (which shall not be
unreasonably withheld) to perform work therein, provided that (a) Landlord is
given prior written notice of any such entry, (b) such entry shall be
coordinated with Landlord and shall not interfere with Landlord's work, (c)
Tenant shall deliver to Landlord evidence that any insurance required by
Landlord has been obtained, and (d) Tenant shall pay all utility charges
reasonably allocable to Tenant by Landlord in connection with such early entry.
Any such entry shall be on the terms of this Lease, but no rent shall accrue in
respect of Base Rent or Basic Operating Charges during the period that Tenant so
enters the Premises. Tenant shall conduct its activities therein so as not to
interfere with Landlord's construction activities, and shall do so at its risk
and expense. If, in Landlord's judgment, Tenant's activities therein interfere
with Landlord's construction activities, Landlord may terminate Tenant's right
to enter the Premises before the Term Commencement Date.
ARTICLE 3: USE
3.1 Permitted Use. Tenant shall use the Project for the
Permitted Use and for no other use or purpose without prior written consent of
Landlord. Tenant and its employees, customers, visitors, and licensees shall
have the non-exclusive right to use the Project, in common with other parties
occupying the Building or Project, the parking areas and driveways of the
Project, subject to such reasonable rules and regulations as Landlord may from
time to time prescribe, so long as such rules and regulations are not applied by
Landlord in a discriminatory manner with respect to tenants of the Project.
3.2 Objectionable Actions. Tenant shall not permit any
unreasonable odors, smoke, dust, gas, substances, noise or vibrations to emanate
from the Project, nor take any action which would constitute a nuisance or would
disturb, obstruct or endanger any owner, tenant, invitee or licensee of any
adjacent property or unreasonably interfere with their use of their respective
premises. Tenant shall not use or allow the Project to be used for any improper,
immoral, unlawful or objectionable purpose, nor shall Tenant cause or maintain
or permit any nuisance in, on or about the Project. Tenant shall not commit or
suffer the commission of any waste in, on or about the Project. Tenant shall not
allow any sale by auction upon the Project, or place any loads upon the floors,
walls or ceilings which endanger the structure, or place any harmful liquids in
the drainage system of, the Building or Project. No waste, materials or refuse
shall be dumped upon or permitted to remain on the Project except in trash
containers placed inside exterior enclosures designated for that purpose by
Landlord. Tenant shall not do or permit anything to be
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done in, on or about the Project or bring or keep anything which will in any way
increase the rate of any insurance upon the Building or Project, or upon any
contents therein or cause a cancellation of said insurance or otherwise affect
said insurance in any manner.
3.3 Compliance with Law. Tenant, shall, at its sole cost and expense,
comply with all local, state and federal statutes, laws, rules, regulations,
ordinances, mandates and requirements now in force, or which may hereafter be in
force, whether foreseeable or unforeseeable, because of the manner of use of the
Project (collectively, the "Governmental Requirements"), and shall faithfully
observe in the use or occupancy of the Project all Governmental Requirements
including, without limitation, the Environmental Laws (as hereinafter defined),
and the Americans with Disabilities Act, 42 U.S.C. (ss) 12101-12213 (and any
rules, regulations, restrictions, guidelines, requirements or publications now
or hereafter promulgated or published pursuant thereto) and the Texas
Elimination of Architectural Barriers Act, whether or not any of the foregoing
were foreseeable or unforeseeable at the time of the execution of this Lease.
Tenant's obligation to comply with and observe the Governmental Requirements
shall apply regardless of whether such Governmental Requirements regulate or
relate to Tenant's particular use of the Project or regulate or relate to the
use of premises in general, and regardless of the cost thereof. The judgment of
any court of competent jurisdiction, or the admission of Tenant in any action or
proceeding against Tenant, whether Landlord be a party thereto or not, that any
such Governmental Requirement pertaining to the Project has been violated, shall
be conclusive of that fact as between Landlord and Tenant.
3.4 Hazardous Materials.
(a) Hazardous Materials Defined. As used herein, the term
"Hazardous Materials" means any waste, material or substance (whether in the
form of liquids, solids or gases, and whether or not air-borne) (i) the presence
or Release of which requires reporting, investigation or remediation under any
Environmental Requirement, (ii) which is defined or listed as a "hazardous
waste", "hazardous substance", "extremely hazardous waste", "restricted
hazardous waste", "hazardous material", "toxic substance", or other similar or
related term under any Environmental Law, (iii) which is toxic, radioactive, or
otherwise classified as hazardous or toxic and is or becomes regulated by any
governmental authority, the United States of America, or any subdivision of the
foregoing, or any agency, department, commission, board, authority or
instrumentality, bureau or court having jurisdiction over the Property or any
occupant or user of the Property (collectively, the "Governmental Authorities")
as a threat to human health or the environment, (iv) the presence of which on
the Project causes or threatens to cause a nuisance upon the Project or to
adjacent property, (v) the presence of which on adjacent properties could
constitute a trespass by Landlord or Tenant, (vi) which is asbestos, (vii) which
is polychlorinated biphenyls, or (viii) which contains petroleum or any
petroleum-derived product.
(b) Environmental Laws Defined. As used herein, the term
"Environmental Laws" means all statutes and ordinances of any Governmental
Authority and relating to the protection of human health and the environment,
whether now existing or hereafter adopted, including without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended (42 U.S.C. Section 9601, et seq.), the Solid Waste Disposal Act, as
amended (42 U.S.C. Section 6901 et seq.), the Hazardous Materials Transportation
Act, as amended (49 U.S.C. Section 1801, et seq.), the Clean Air Act, as
amended (42 U.S.C. Section 7401, et seq.), the Federal Water Pollution Control
Act, as amended (33 U.S.C. Section 1251, et seq.), the Toxic Substances Control
Act, as amended (15 U.S.C. Section 2601 et seq.), the Safe Drinking Water Act,
as amended (42 U.S.C. Section 300f et seq.), the Atomic Energy Act, as amended
(42 U.S.C. Section 2014 et seq.), the Federal Insecticide, Fungicide and
Rodenticide Act, as amended (7 U.S.C. Section 136, et seq.), the Oil Pollution
Act of 1990, as amended (33 U.S.C. Section 2701, et seq.), the Emergency
Planning and Community Right-to-Know Act of 1986, as amended (42 U.S.C. Section
11001, et seq.), the Texas Water Code, as amended, and the Texas Health and
Safety
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Code, as amended, and the regulations adopted and publications from time to time
promulgated pursuant to any of the foregoing.
(c) Environmental Requirements Defined. As used herein,
the term "Environmental Requirements" means all applicable present and future
Environmental Laws and all rules, regulations, orders, decrees, permits,
licenses, concessions, franchises, or other restrictions or requirements of any
Governmental Authority relating to protection of human health or the environment
and all applicable judicial, regulatory, or administrative decisions, decrees,
judgments, or orders thereunder.
(d) Release Defined. As used herein, the term "Release"
means any spilling, leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, dumping, or disposing into the environment
(including the abandonment or discarding of barrels, containers or other closed
receptacles containing any Hazardous Substance).
(e) Use of Hazardous Materials. Tenant agrees that during the
Term of this Lease, there shall be no use, presence, disposal, use, storage,
generation, processing, removal, disposal, leakage,treatment, manufacture,
import, handling, processing, Release, or threatened Release of Hazardous
Materials on, from or under the Building or Project (individually and
collectively, "Hazardous Use") by Tenant or any of its directors, officers,
members, managers, partners, employees, shareholders, invitees, agents,
contractors or occupants (collectively, "Tenant's Parties"), except to the
extent that, and in accordance with such conditions as, Landlord may have
previously approved in writing in its sole and absolute discretion. It is
further agreed that Tenant shall be entitled to use and store only those
Hazardous Materials which are (i) set forth in a list prepared by Tenant and
approved in writing by Landlord (and which list may in any event include asthma
medication and inhalers and other pharmaceuticals held at the Premises for
distribution for human consumption in the ordinary course of Tenant's business
and in accordance with all Governmental Requirements), (ii) necessary for
Tenant's business, but then only in the amounts and for the purposes previously
disclosed in writing to and approved in writing by Landlord, and (iii) in full
compliance with Environmental Requirements, and all judicial and administrative
decisions pertaining thereto. Tenant shall not be entitled to install any tanks
under, on or about the Building or Project for the storage of Hazardous
Materials without the express written consent of Landlord, which consent may be
given or withheld in Landlord's sole discretion. For the purposes of this
Section 3.4(e), the term "Hazardous Use" shall include Hazardous Use(s) on, from
or under the Building or Project by Tenant or any of Tenant's Parties, whether
known or unknown to Tenant.
(f) Hazardous Materials Report: When Required. Tenant
shall submit to Landlord a written report with respect to Hazardous Materials
("Report") in the form prescribed in Subsection (g) below on the following
dates:
(i) At any time within thirty (30) days after
written request by Landlord, but in no event more than twice in any twelve (12)
month period; and
(ii) At any time when there has been a violation
of any Environmental Requirement, or in connection with any proposed request for
Landlord's consent to any change in the list of materials previously approved in
writing by Landlord or for an increase in the intensity of usage or storage of
such previously approved materials.
(g) Hazardous Materials Report: Contents. The Report
shall contain, without limitation, the following information:
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(i) Whether on the date of the Report and (if
applicable) during the period since the last Report there has been any Hazardous
Use on, from or under the Project.
(ii) If there was such Hazardous Use, the exact
identity of the Hazardous Materials, the dates upon which such materials were
brought upon the Project, the dates upon which the Hazardous Materials were
removed therefrom, and the quantity, location, use and purpose thereof.
(iii) If there was such Hazardous Use, any
governmental permits maintained by Tenant with respect to such Hazardous
Materials, the issuing agency, original date of issue, renewal dates (if any)
and expiration date. Copies of any such permits and applications therefor shall
be attached.
(iv) If there was such Hazardous Use, any
governmental reporting or inspection requirements with respect to such Hazardous
Materials, the governmental agency to which reports are made and/or which
conducts inspections, and the dates of all such reports and/or inspections (if
applicable) since the last Report. Copies of any such Reports shall be attached.
(v) If there was such Hazardous Use,
identification of any operation or business plan prepared for any government
agency with respect to Hazardous Use.
(vi) Any liability insurance carried by Tenant
with respect to Hazardous Materials, the insurer, policy number, date of issue,
coverage amounts, and date of expiration. Copies of any such policies or
certificates of coverage shall be attached.
(vii) Any notices of violation of Environmental
Requirements, written or oral, received by Tenant from any governmental agency
since the last Report, the date, name of agency, and description of violation.
Copies of any such written notices shall be attached.
(viii) Any knowledge, information or communication
which Tenant has acquired or received relating to (1) any enforcement, cleanup,
removal or other governmental or regulatory action threatened or commenced
against Tenant or with respect to the Project pursuant to any Environmental
Requirements; (2) any claim made or threatened by any person or entity against
Tenant or the Project on account of any alleged loss or injury claimed to result
from any alleged Hazardous Use on or about the Project; or (3) any report,
notice or complaint made to or filed with any governmental agency concerning any
Hazardous Use on or about the Project. The Report shall be accompanied by copies
of any such claim, report, complaint, notice, warning or other communication
that is in the possession of or is available to Tenant.
(ix) Such other pertinent information or documents as
are requested by Landlord in writing.
(h) Release of Hazardous Materials: Notification and
Cleanup.
(i) At any time during the Term, if Tenant knows
or has received written notice that any Release of any Hazardous Materials has
come or will come to be located upon, about, beneath or from the Project,
Building or Project, then Tenant shall immediately, either prior to the Release
or following the discovery thereof by Tenant, give verbal and follow-up written
notice of that condition to Landlord.
(ii) At its sole cost and expense, Tenant
covenants to investigate, clean up and otherwise remediate any Release of
Hazardous Materials which were caused or created by Tenant or any
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of Tenant's Parties. Such investigation, clean-up and remediation shall be
performed only after Tenant has obtained Landlord's written consent, which may
be exercised by Landlord in its discretion; provided, however, that Tenant shall
be entitled to respond immediately to an emergency without first obtaining
Landlord's written consent. All clean-up and remediation shall be done in strict
compliance with Environmental Requirements and to the reasonable satisfaction of
Landlord in its discretion; provided, however, that if Landlord fails to consent
to such clean-up and remediation plans as are reasonably suggested by Tenant,
Tenant shall not be in default under this Lease for failing to commence such
clean up and remediation so long as Tenant continues to cooperate with Landlord
to submit a plan reasonably acceptable to Landlord.
(iii) Notwithstanding the foregoing, Landlord
shall have the right, but not the obligation, in Landlord's discretion,
exercisable by written notice to Tenant at any time, to undertake within or
outside the Project all or any portion of any investigation, clean-up or
remediation with respect to such Hazardous Materials caused or created by Tenant
or any of Tenant's Parties (or, once having undertaken any of such work, to
cease same, in which case Tenant shall perform the work), all at Tenant's cost
and expense, which shall be paid by Tenant as additional rent within thirty (30)
days after receipt of written request therefor by Landlord (and which Landlord
may require to be paid prior to commencement of any work by Landlord). No such
work by Landlord shall create any liability on the part of Landlord to Tenant or
any other parry in connection with such Hazardous Materials or constitute an
admission by Landlord of any responsibility with respect to such Hazardous
Materials.
(iv) It is the express intention of the parties
hereto that Tenant shall be liable under this Section 3.4(h) for any and all
conditions covered hereby which were caused or created by Tenant or any of
Tenant's Parties. Tenant shall not enter into any settlement agreement, consent
decree or other compromise with respect to any claims relating to any Hazardous
Materials in any way connected to the Project without first (1) notifying
Landlord of Tenant's intention to do so and affording Landlord the opportunity
to participate in any such proceedings, and (2) obtaining Landlord's written
consent, which consent shall not be unreasonably withheld or delayed except that
Landlord may in any event withhold its consent to any such proposed agreement,
decree or compromise which includes an admission of liability or culpability by
Landlord or which, in Landlord's judgment, would adversely affect the value or
use of the Project.
(i) Inspection and Testing by Landlord. Landlord shall
have the right at all times during the term of this Lease to (i) inspect the
Project, as well as Tenant's material safety data sheets, and to (ii) conduct
tests and investigations to determine whether Tenant is in compliance with the
provisions of this Section 3.4. Except in case of emergency, Landlord shall give
reasonable notice to Tenant before conducting any inspections, tests, or
investigations. The cost of all such inspections, tests and investigations shall
be borne by Tenant, if Landlord reasonably believes them to be necessary.
Neither any action nor inaction on the part of Landlord pursuant to this Section
3.4(i) shall be deemed in any way to release Tenant from, or in any way modify
or alter, Tenant's responsibilities, obligations, and/or liabilities incurred
pursuant to Section 3.4 hereof.
(j) Other Taxes. Tenant shall also pay prior to
delinquency all Environmental Taxes (hereinafter defined) and other taxes in
connection with any testing, investigation, abatement, Release, remediation,
removal, transportation and/or disposal of any Hazardous Materials by Tenant or
any of Tenant's Parties (or by Landlord, pursuant to any provision of this Lease
granting to Landlord the right to do any of the foregoing and to bill Tenant
therefor). For purposes of this subsection (i) only, the terms "Environmental
Taxes" and "environmental taxes" shall include, without limitation, any fees,
charges, fines, penalties and costs (including, without limitation, permit,
approval or licensing fees, charges or
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costs) imposed, charged or otherwise assessed upon or as a result of such act or
omission by Tenant or any of Tenant's Parties.
3.5 Compliance with Rules. Tenant and Tenant's agents, employees,
and invitees shall faithfully observe and comply with any rules and regulations
Landlord may from time to time prescribe in writing for the purpose of
maintaining the proper care, cleanliness, safety, traffic flow and general order
of the Project. Landlord shall not be responsible to Tenant for the
non-compliance by any other party of the Building or Project with any of such
rules and regulations.
3.6 Indemnities.
(a) Indemnity by Tenant. Tenant shall indemnify, hold
harmless, and, defend Landlord and Landlord's officers, directors, trustees,
members, managers, shareholders, partners, attorneys, employees, contractors,
property managers, agents and mortgagees and other lien holders, from and
against any and all Losses (hereinafter defined) arising from or related to: (a)
any violation or alleged violation by Tenant or any of Tenant's Parties of any
of the requirements, ordinances, statutes, regulations or other laws referred to
in this Article 3, including, without limitation, the Environmental
Requirements; (b) any breach of the provisions of this Article 3 by Tenant or
any of Tenant's Parties; or (c) any Hazardous Use by Tenant or any of Tenant's
Parties on, about or from the Building, or Project, whether or not approved by
Landlord. The term "Losses" shall mean all claims, demands, expenses, actions,
judgments, damages (whether consequential, direct or indirect, known or unknown,
foreseen or unforeseen), penalties, fines, liabilities (including strict
liability), encumbrances, liens, losses of every kind and nature (including,
without limitation, property damage, diminution in value of Landlord's interest
in the Building or Project, damages for the loss or restriction on use of any
space or amenity within the Building or Project, damages arising from any
adverse impact on marketing space in the Building or Project, sums paid in
settlement of claims and any costs and expenses associated with injury, illness
or death to or of any person), suits, administrative proceedings, costs and
fees, including, but not limited to, attorneys' and consultants' fees and
expenses, damages for personal injury or injury to property or natural resources
occurring upon or off the Project, and the costs of cleanup, remediation,
removal and restoration, that are in any way related to any matter covered by
the foregoing indemnity. The provisions of this Section 3.6(a) shall survive the
expiration or termination of this Lease.
(b) Indemnity by Landlord. Landlord hereby agrees that if at
any time during or after the Lease Term the Project is found to be contaminated
as a result of the Release of Hazardous Substances caused by Landlord or any
other tenant of the Project, Landlord shall indemnify, hold harmless and at
Tenant's option (with such attorneys as Tenant may approve in advance and in
writing), defend Tenant from all claims, demands, actions, liabilities
(including strict liability), costs, expenses, judgments, damages and
obligations of any nature arising from or as a result of such contamination by
Landlord or any other tenant of the Project including, without limitation, any
suit by any third party or any suit, order, demand or directive by any
Governmental Authority, including any cost of removal cleanup, restoration, or
renovation incurred by Tenant resulting therefrom. The provisions of this
Section 3.6(b) shall survive the expiration or termination of this Lease.
ARTICLE 4: RENT
4.1 Payment. Tenant shall pay to Landlord, without demand throughout
the term, Rent as specified in the Basic Lease Information, payable in monthly
installments in advance on or before the fifth day of each calendar month. All
payments of Rent and all other sums under this Lease shall be in lawful money of
the United States, without deduction, offset or recoupment whatsoever to
Landlord at the address
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specified in the Basic Lease Information or to such other firm or to such other
place as Landlord may from time to time designate in writing. Rent for the first
full month of the Term shall be paid by Tenant upon Tenant's execution of this
Lease. If the obligation for payment of Rent commences on other than the first
day of a month, then Rent shall be prorated and the prorated installment shall
be paid on the first day of the Term Commencement Date.
4.2 Late Payments. Notwithstanding the provisions of Section 4.1 to the
contrary, if during any twelve (12) month period Tenant fails on more than three
occasions to make any payment of monthly Rent to Landlord on or before the date
due, then Landlord, in addition to all other rights and remedies available to
Landlord, may by giving written notice to Tenant require that Tenant pay the
monthly Rent to Landlord quarterly in advance. Nothing contained herein shall be
deemed or construed as a waiver of Tenant's obligation to make all payments
under this Lease as and when due.
ARTICLE 5: TAXES AND INSURANCE, BASIC OPERATING COSTS
5.1 Basic Operating Costs. In addition to the Base Rent required to be
paid hereunder, Tenant shall pay as additional Rent Tenant's Proportionate Share
of Basic Operating Charges (such amount to be referred to herein as "Basic
Operating Costs"). "Basic Operating Charges" shall mean all expenses and costs
of every kind and nature which Landlord shall pay or become obligated to pay, or
would be required to pay if the Project were fully occupied because of or in
connection with the management, maintenance, preservation and operation of the
Project and its supporting facilities servicing the Project (determined in
accordance with generally accepted accounting principles, consistently applied
as determined by Landlord) including, but not limited to, the following:
(a) Repairs, replacements and general maintenance for the
Premises, Building and Project, except for those repairs to the extent paid for
by proceeds of insurance or by Tenant or other third parties.
(b) All management, maintenance, janitorial and service
agreements and costs of supplies and equipment used in maintaining the Premises,
Building and Project and the equipment therein and the adjacent sidewalks,
driveways, parking and service areas, including, without limitation, alarm
service, window cleaning, elevator maintenance, Building exterior maintenance
and landscaping.
(c) Utilities which benefit all or a portion of the Project.
(d) All capital and other improvements comprising a part of
"Capital Costs" (hereinafter defined). "Capital Costs" are defined as: (i) those
expenditures which do not normally recur more frequently than at five (5) year
intervals in the normal course of operation and maintenance of the Project; (ii)
all costs of capital improvements made by Landlord to the Building or Project
for the purpose of reducing recurring expenses or utility costs; and (iii) all
costs of capital improvements made by Landlord that are required by Governmental
Requirements and regardless of the nature of the work. The portion thereof to be
included each year in Basic Operating Costs shall be that fraction allocable to
the fiscal year in question calculated by amortizing the cost over the
reasonably useful life of such improvement, as determined in accordance with
GAAP (or, if shorter, the useful life of such improvement as reasonably
determined by Landlord), with interest on the unamortized balance at ten percent
(10%) per annum or such higher rate as may have been paid by Landlord for funds
borrowed for the purpose of constructing such improvements, but in no event to
exceed the highest rate permissible by law.
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Notwithstanding the foregoing, Basic Operating Charges shall in any
event exclude the following:
(i) costs of decorating or special cleaning of tenant spaces not provided
on a regular basis to all tenants of the Project;
(ii) wages, salaries, fees, and fringe benefits paid to executive personnel,
officers or partners of Landlord;
(iii) all charges for depreciation of the Project and equipment;
(iv) any debt service paid by Landlord;
(v) all charges for Landlord's income taxes, excess profit taxes, franchise
taxes, and similar taxes on Landlord's business;
(vi) all costs relating to activities for the solicitation and execution of
leases of space in the Project;
(vii) the cost of correcting defects in the construction of the Project or in
the Project equipment;
(viii) all increases in insurance premiums to the extent that Landlord is
reimbursed by a tenant for any increases caused or attributable to the
use, occupancy or act of another tenant of the Project;
(ix) the cost of all items for which Landlord is reimbursed by insurance or
otherwise compensated by parties other than the Tenant;
(x) all charges representing amounts paid to one or more related
corporations, entities or persons which are in excess of the amount
which would be paid in the absence of such relationship;
(xi) the cost of all work or service performed for or facilities furnished
to one or more tenants of the Project to a greater extent or in a
manner significantly more favorable to such tenant or tenants than that
performed for or furnished to the Tenant;
(xii) the cost of improvements to tenant space in the Project leased or
leasable to other tenants;
(xiii) the cost of any interest, penalties or other charges resulting from
Landlord's default of its obligations under any tenant lease;
(xiv) the cost of capital improvements or other modifications to the Project,
except as permitted by subparagraph 5.1 (a) or (d);
(xv) the cost of capital improvements or other modifications to the Project
required to comply with Governmental Requirements shall exclude any
improvements or modifications required to bring the Project into
compliance with Governmental Requirements existing as of the Lease
Date;
(xvi) fines and/or penalties paid by Landlord and incurred due to violation
by Landlord of any Governmental Requirement;
(xvii) Landlord's cost to test, survey, cleanup, contain, abate, remove, or
otherwise remove Hazardous Materials from the Project, unless such
Hazardous Materials are on the Project because of the Tenant's
negligence or intentional acts;
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(xviii) other expenses of Landlord which under generally accepted accounting
principles consistently applied would not be considered normal
maintenance, repair, management, or operating expenses;
(xix) Landlord's advertising charges;
(xx) Landlord's legal fees;
(xxi) Landlord's management fees in excess of those customarily charged for
managing comparable properties; and
(xxii) cost of repairs caused by Landlord's negligence.
5.2 [Intentionally Deleted]
5.3 Base Year Increases in Taxes and Insurance Costs. Tenant
shall pay to Landlord its Proportionate Share of Taxes and Insurance
Costs as additional Rent as hereinafter provided.
(a) Taxes. The term "Taxes" shall mean all real estate taxes,
assessments, public improvement district assessments, levies, fees or charges,
general and special, ordinary and extraordinary, unforeseen as well as foreseen,
of any kind (including fees or taxes "in-lieu" of any such tax or assessment)
which are assessed, levied, charged, confirmed, or imposed by any public or
governmental authority or agency upon the Project, its operations or the rent
(or any portion or component thereof) and the costs to Landlord of contesting
the amount, validity, or applicability of any such taxes, except (i) inheritance
or estate taxes imposed upon or assessed against the Project, or any part
thereof or interest therein, and (ii) taxes computed on the basis of the net
income of Landlord or the owner of any interest therein.
(b) Insurance Costs. The term "Insurance Costs" shall mean all
insurance premiums and costs, including, but not limited to, any deductible
amounts, premiums and cost of fire, casualty, liability and environmental
coverage, rental abatement and special hazard insurance applicable to the
Project and Landlord's personal property used in connection therewith; provided,
however, that Landlord may, but shall not be obligated to, carry special hazard
insurance covering losses caused by casualty not insured under standard fire and
extended coverage insurance; provided further that Landlord may obtain all or
any part of such coverage under a blanket policy(ies).
5.4 Proportionate Share. "Tenant's Proportionate Share" shall be
one hundred percent (100%).
5.5 Standard. All costs and expenses shall be determined in
accordance with generally accepted accounting principles. Basic Operating Cost,
Taxes and Insurance Costs shall not include specific costs incurred for the
account of, separately billed to and paid by specific tenants. Notwithstanding
anything herein to the contrary, if water to the Project is not separately
metered and Tenant's water use is disproportionately more than water use by
other tenant's of the Project, Landlord shall have the right to allocate the
cost of water to the Project in a fair and reasonable manner to reflect Tenant's
disproportionate water use.
5.6 Payment of Estimated Basic Operating Cost. "Estimated Basic
Operating Cost" for any particular year shall mean Landlord's estimate of the
Basic Operating Costs, Taxes and Insurance Costs for such fiscal year, and shall
be made prior to commencement of such fiscal year as hereinafter provided.
Landlord shall have the right from time to time to revise its fiscal year and
interim accounting periods so
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long as the revised periods are reconciled with prior periods in accordance with
generally accepted accounting principles applied in a consistent manner. During
the last month of each fiscal year during the Term, or as soon thereafter as
practicable, Landlord shall give Tenant written notice of the Estimated Basic
Operating Cost for ensuing fiscal year. Tenant shall pay Tenant's Proportionate
Share of the Estimated Basic Operating Costs with installments of Base Rent for
the fiscal year to which the Estimated Basic Operating Costs applies in monthly
installments on the fifth day of each calendar month during such year, in
advance. If at any time during the course of the fiscal year, Landlord
determines that the sum of Basic Operating Costs, Taxes and Insurance Costs will
apparently vary from the then Estimated Basic Operating Cost by more than five
percent (5%), Landlord may, by written notice to Tenant, revise the Estimated
Basic Operating Cost for the balance of such fiscal year and Tenant shall pay
Tenant's Proportionate Share of the Estimated Basic Operating Cost as so revised
for the balance of the then current fiscal year on the first of each calendar
month thereafter. Late payments with respect to payments of Estimated Basic
Operating Costs as provided in Section 4.2 shall be assessed only if during any
twelve (12) month period Tenant fails on more than three occasions to make any
monthly payment of Estimated Basic Operating Cost (or any other monthly Rent due
hereunder) on or before the date when it is due.
5.7 Computation of Basic Operating Cost Adjustment. "Basic Operating
Cost Adjustment" shall mean the difference between Estimated Basic Operating
Costs and Basic Operating Costs plus Taxes plus Insurance Costs over the Base
Year Taxes and Base Year Insurance Costs, respectively, for any fiscal year
determined as hereinafter provided. Within one hundred twenty (120) days after
the end of each fiscal year, as determined by Landlord, or as soon thereafter as
practicable, Landlord shall deliver to Tenant a statement of Basic Operating
Costs, Taxes and Insurance Costs for the fiscal year just ended, accompanied by
a computation of Basic Operating Cost Adjustment. If such statement shows that
Tenant's payments for each category of such item is less than Tenant's
Proportionate Share of such item, then Tenant shall pay to Landlord the
difference within thirty (30) days after receipt of such statement. If such
statement shows that Tenant's payments of Estimated Basic Operating Cost exceed
Basic Operating Costs plus Taxes plus Insurance Costs then (provided that Tenant
is not in default under this Lease), Landlord shall credit such overpayment
against future payments of Basic Operating Cost and Taxes and Insurance Costs,
as the case may be, and if there is any outstanding sum remaining due Tenant at
the expiration of this Lease, the balance shall be refunded to Tenant within
twenty (20) days of delivery of such statement. If this Lease has been
terminated or the Term hereof has expired prior to the date of such statement,
then the Basic Operating Cost Adjustment shall be paid by the appropriate party
within twenty (20) days after the date of delivery of the statement. Should this
Lease commence or terminate at any time other than the first day of the fiscal
year, Basic Operating Cost Adjustment shall be prorated by reference to the
exact number of calendar days during such fiscal year for which Tenant is
obligated to pay Base Rent.
5.8 [Intentionally Deleted]
5.9 Tenant Audit. Tenant shall have the right, at Tenant's expense and
upon not less than twenty (20) days prior written notice to Landlord given
within sixty (60) days after receipt of the applicable Basic Operating Cost
Adjustment to review at reasonable times, in Landlord's office or at another
location designated by Landlord, Landlord's books and records applicable to
Tenant's Lease and for the prior year's Basic Operating Costs, Taxes and
Insurance Costs for purposes of reviewing Landlord's calculation of such items
in the statement of the Estimated Basic Operating Cost and Basic Operating Cost
Adjustment. If Tenant shall not request an audit in accordance with the
provisions of this Section 5.9 within sixty (60) days of receipt of Landlord's
statement of Basic Operating Cost Adjustment, such statement shall be final and
binding for all purposes hereof.
5.10 Disputes. In the event that Tenant shall dispute the amount set
forth in a statement of Basic Operating Cost Adjustment provided by Landlord for
the immediately preceding fiscal year, Tenant
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shall have the right, not later
than sixty (60) days following the receipt of such statement, to cause
Landlord's books and records with respect to such costs for such fiscal year to
be audited by certified public accountants used by Landlord or a "Big 6"
accounting firm or another certified public accounting firm selected by Tenant
and licensed in Texas or California which is reasonably acceptable to Landlord.
The Basic Operating Cost Adjustment shall be appropriately adjusted on the basis
of such audit. If such audit discloses a liability for unpaid Basic Operating
Costs, Tenant shall pay such unpaid amount to Landlord on demand, together with
interest on such amounts at the rate specified in Section 16.4 hereof, from the
date such amount was originally requested by Landlord to be paid by Tenant until
the date actually paid. If such audit discloses a liability for a refund in
excess of ten percent (10%) of Tenant's Proportionate Share of the Basic
Operating Cost Adjustment previously reported, the cost of such audit shall be
borne by Landlord; otherwise, the cost of such audit shall be paid by Tenant.
5.11 Tenant's Taxes. Tenant shall pay prior to delinquency all
Taxes assessed against and levied upon trade fixtures, furnishings, equipment
and all other personal property of Tenant contained in the Project or elsewhere.
When possible, Tenant shall cause such trade fixtures, furnishings, equipment
and all other personal property to be assessed and billed separately from the
real property of Landlord. If any of Tenant's personal property shall be
assessed with Landlord's real property, or if any other Taxes or taxes which are
payable by Tenant pursuant to this Lease or otherwise are assessed against
Landlord or Landlord's real property, Tenant shall pay Landlord the Taxes and
other taxes attributable to Tenant within ten (10) days after receipt of a
written statement setting forth the Taxes and other taxes attributable to
Tenant.
ARTICLE 6: INSURANCE AND INDEMNIFICATION
6.1 Casualty Insurance. Landlord agrees to maintain insurance
insuring the Building and the Project against fire, lightning, extended
coverage, vandalism and malicious mischief in an amount not less than one
hundred percent (100%) of the replacement cost thereof, and to furnish Tenant
with certificates of insurance evidencing such insurance. Such insurance shall
be for the sole benefit of Landlord and under its sole control. Landlord shall
not be obligated to insure any furniture, equipment, machinery, goods or
supplies not covered by this Lease which Tenant may keep or maintain in the
Project or any leasehold improvements, additions or alterations which Tenant may
make upon the Project.
6.2 Liability Insurance. Tenant shall purchase at its own expense and
keep in force during this Lease a policy or policies of commercial general
liability insurance, including personal injury and property damage, in the
amount of not less than Five Hundred Thousand Dollars ($500,000.00) for property
damage and Two Million Dollars ($2,000,000.00) per occurrence for personal
injuries or deaths of persons occurring in or about the Project. Said policies
shall (a) name Landlord and, if applicable, its agent, and any party holding an
interest to which this Lease may be subordinated as additional insureds, (b) be
issued by an insurance company with a Best's rating of A-VI or better, or which
is otherwise acceptable to Landlord, and in any event which is licensed to do
business in the State in which the Project is located, (c) provide that said
insurance shall not be canceled unless thirty (30) days prior written notice
shall have been given to Landlord, (d) provide coverage on a claims-made basis;
(e) (deletion initialed 1/5/98 and 1/9/98) (f) contain cross liability
endorsement; and (g) shall be primary, not contributing with, and not in excess
of coverage which Landlord may carry. Said policy or policies or certificates
thereof shall be delivered to Landlord by Tenant upon commencement of the Lease
and at least thirty (30) days prior to the expiration of said insurance. Tenant
may maintain the insurance required by this Section 6.2 under a blanket policy
so long as such blanket coverage otherwise complies with the requirements of
this Section 6.2. Tenant
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warrants that coverage under the claims-made policy shall remain in force for
any claims made (as specified in Section 6.2) after the termination of the
Lease, but that occurred during the term of the Lease.
6.3 Indemnification. Landlord shall not be liable to Tenant for any
loss or damage to person or property caused by theft, fire, act of God, acts of
a public enemy, riot, strike, insurrection, war, court order, requisition or
order of governmental body or authority or for any damage or inconvenience which
may arise through repair or alteration of any part of the Building or Project or
failure to make any such repair or alteration. Tenant shall indemnify Landlord
and hold Landlord harmless from any and all loss, cost, damage, injury or
expense arising out of or related to (a) claims of injury to or death of persons
or damage to property occurring or resulting directly or indirectly from the use
or occupancy of the Project or from activities of Tenant or any of Tenant's
Parties or anyone in or about the Project or from any cause whatsoever with
respect to the Project, other than claims arising solely from the negligence or
willful misconduct of Landlord or its agents or employees, (b) claims for work
or labor performed or for materials or supplies furnished to or at the request
of Tenant or in connection with performance of any work done for the account of
Tenant within the Project, and (c) any suit, investigation or proceeding in
which Landlord is named or threatened to be named as a defendant or which is
brought by Tenant against any other party or against Tenant in connection with
or arising out of Tenant's occupancy of the Project. Such indemnity shall
include without limitation the obligation to provide all costs of defense
against any such claims including any action or proceeding brought against
Landlord. The foregoing indemnity shall not be applicable to claims arising
solely from the negligence or willful misconduct of Landlord or its agents or
employees.
Landlord shall indemnify Tenant and hold Tenant harmless from any and
all loss, cost, damage, injury or expense arising out of or related to
Landlord's negligence or willful misconduct in the performance of Landlord's
duties under this Lease. Such indemnity shall include without limitation the
obligation to provide all costs of defense against any such claims including any
action or proceeding brought against Tenant. The foregoing indemnity shall not
be applicable to claims arising solely from the negligence or willful misconduct
of Tenant.
The provisions of this Section 6.3 shall survive the expiration or
termination of this Lease with respect to any claims or liability occurring
prior to such expiration or termination.
6.4 Waiver of Subrogation. To the extent permitted by law and without
affecting the coverage provided by insurance required to be maintained
hereunder, Landlord and Tenant each waive any right to recover against the other
(a) damages for injury to or death of persons, (b) damages to property, (c)
damages to the Project or any part thereof, or (d) claims arising by reason of
the foregoing, to the extent such damages and claims are insured against or
required to be insured against by Landlord or Tenant under this Lease. This
provision is intended to waive fully, and for the benefit of each party, any
rights and/or claims which might give rise to a right of subrogation by any
insurance carrier. The coverage obtained by each party pursuant to this Lease
shall include, without limitation, a waiver of subrogation by the carrier which
conforms to the revisions of this paragraph.
ARTICLE 7: REPAIRS, SERVICES & MAINTENANCE
7.1 Landlord's Obligations. Landlord shall at Landlord's expense
maintain the roof (excluding skylights, smoke hatches and roof vents) and the
structural components of the Premises including, the structural components of
the roof, foundations and exterior walls of the Building in good repair,
reasonable wear and tear excepted. The term "walls" as used herein shall not
include windows, glass or plate glass, doors, special store fronts or office
entries. The reference to structural components
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of the roof as used herein shall not include skylights, smoke hatches or roof
vents. Landlord shall perform on behalf of Tenant and other tenants of the
Project the maintenance of the public and Common Areas of the Project including,
but not limited to, repairs and maintenance to the roof (including skylights,
smoke hatches and roof vents), the landscaped areas, parking areas, driveways,
the truck staging areas, rail spur areas, fire sprinkler systems, sanitary and
storm sewer lines, utility services, electric and telephone equipment servicing
the building(s), exterior lighting, and anything which affects the operation and
exterior appearance of the Project, which determination shall be at Landlord's
reasonable discretion. Tenant shall reimburse Landlord for all such costs in
accordance with Article V hereof. Any damage caused by or repairs necessitated
by any act of Tenant may be repaired by Landlord at Landlord's option and at
Tenant's expense. Tenant shall immediately give Landlord written notice of any
defect or need of repairs. Landlord shall have reasonable opportunity after
Tenant notifies Landlord with respect thereto or Landlord otherwise has actual
knowledge of such defect or need of repairs, to make such repairs. Landlord's
liability with respect to any defects, repairs, or maintenance for which
Landlord is responsible under any of the provisions of this Lease shall be
limited to the cost of such repairs or maintenance.
7.2 Tenant's Obligations. Tenant shall, at Tenant's expense, maintain
all non-structural parts of the Premises in a good clean and secure condition
promptly making all necessary repairs and replacements including, but not
limited to, all windows, glass, doors and any special office entries, walls and
wall finishes, floor covering, heating, ventilating and air conditioning
systems, truck doors, dock bumpers, dock plates and levelers, plumbing work and
fixtures and down spouts. Tenant shall at Tenant's expense also perform
necessary pest extermination (including termite treatments) and regular removal
of trash and debris. Tenant shall, at its own expense, enter into a regularly
scheduled preventive maintenance and service contract with a maintenance
contractor for servicing all hot water, heating and air conditioning systems and
equipment within or serving the Premises. The maintenance contractor and the
contract must be reasonably approved by Landlord. The service contract must
include all services suggested by the equipment manufacturer within the
operation/maintenance manual and must become effective and a copy thereof
delivered to Landlord within thirty (30) days of the Term Commencement Date.
Tenant shall not damage any demising wall or disturb the integrity and support
provided by any demising wall and shall, at its sole expense, immediately repair
any damage to any demising wall caused by Tenant or any Tenant's Parties.
7.3 Utilities. Tenant shall pay for all water, gas, heat, air
conditioning, light, power, telephone, sewer, sprinkler charges and other
utilities and services used on or from the Premises, together with any taxes,
penalties, surcharges or the like pertaining thereto, and maintenance charges
for utilities and shall furnish all electric light bulbs, ballasts and tubes. If
any such services are not separately metered to Tenant, Tenant shall pay a
reasonable proportion, as determined by Landlord, of all charges jointly serving
other premises. Landlord shall not be liable for any damages directly or
indirectly resulting from nor shall the Rent or any monies owed Landlord under
this Lease herein reserved be abated by reason of (a) the installation, use or
interruption of use of any equipment used in connection with the furnishing of
any of the foregoing utilities and services, (b) failure to furnish or delay in
furnishing any such utilities or services when such failure or delay is caused
by acts of God or the elements, labor disturbances of any character or any other
accidents or other conditions beyond the reasonable control of Landlord, or (c)
the limitation, curtailment, rationing or restriction on use of water,
electricity, gas or any other form of energy or any other service or utility
whatsoever serving the Project, except for actual damages incurred by Tenant
arising from the foregoing and also arising solely from the gross negligence or
willful misconduct of Landlord. Landlord shall be entitled to cooperate
voluntarily and in a reasonable manner in the efforts of national, state or
local governmental agencies or utility suppliers in reducing energy or other
resource consumption. The obligation to make services available hereunder shall
be subject to the limitations of any such voluntary, reasonable program.
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7.4 Liens. Tenant shall keep the Project free from liens arising out of
or related to work performed, materials or supplies furnished or obligations
incurred by Tenant or in connection with work made, suffered or done by Tenant
in or on the Project. In the event that Tenant shall not, within thirty (30)
days following the imposition of any such lien, cause the same to be released of
record by payment or posting of a proper bond, Landlord shall have, in addition
to all other remedies provided herein and by law, the right, but not the
obligation, to cause the same to be released by such means as it shall deem
proper, including payment of the claim giving rise to such lien. In addition,
Tenant may refrain from causing a lien arising in the manner described in this
Section 7.3 and which attaches solely to Tenant's leasehold estate hereunder,
from being released or bonded around as otherwise required hereby so long as, in
Landlord's reasonable discretion, such lien does not adversely affect the value
or marketability of the Project or involve a reasonable risk of forfeiture. All
sums paid by Landlord on behalf of Tenant and all expenses incurred by Landlord
in connection therefore shall be payable to Landlord by Tenant on demand with
interest at the maximum rate allowable by law. Landlord shall have the right at
all times to post and keep posted on the Project any notices permitted or
required by law, or which Landlord shall deem proper, for the protection of
Landlord, the Project and any other party having an interest herein, from
mechanics' and materialmen's liens, and Tenant shall give Landlord not less than
ten (10) business days prior written notice of the commencement of any work in
the Project which could lawfully give rise to a claim for mechanics' or
materialmen's lien.
ARTICLE 8: ALTERATIONS AND SIGNS
8.1 Alterations. Except for (a) furniture, trade fixtures and equipment
which are not located on or attached to the roof and do not adversely affect the
structure, operating systems or value of the Project, and (b) alterations (which
are not located on or attached to the roof) with a cost of less than $25,000 in
any twelve (12) month period, and which are not structural and do not adversely
affect the structure, operating systems or value of the Project, Tenant shall
not make, or allow to be made, any alternations or physical additions in, about
or to the Project including, without limitation, any alterations, additions or
improvements that result in increased telecommunication demands or require the
addition of new communication wires, cables and related devices or expand the
number of telephone or communication lines dedicated to the Premises by the
Building's telecommunication design, without obtaining the prior written consent
of Landlord, which consent shall not be unreasonably withheld or delayed with
respect to proposed alterations and additions which (a) comply with all
Governmental Requirements, (b) in Landlord's opinion, are compatible with the
Project and its mechanical, plumbing, electrical, and heating/ventilation/air
conditioning systems, (c) in Landlord's opinion, will not affect or impair any
telecommunication or utility line or facility at the Building or Project, (d) in
Landlord's opinion will not interfere with the use and occupancy of any other
portion of the Building or Project by any other tenant or its invitees, and (e)
will not require any rezoning or zoning variances. Specifically, but without
limiting the generality of the foregoing, Landlord shall have the right of
consent for all plans and specifications for the proposed alterations or
additions, construction means and methods, any contractor or subcontractor to be
employed on the work of alternations or additions, and the time for performance
of such work. Landlord shall have the right to require, at Tenant's expense, the
delivery of performance and payment bonds showing Landlord as a beneficiary.
Tenant shall also supply to Landlord any documents and information reasonably
requested by Landlord in connection with its consideration of a request for
approval hereunder. Tenant must have Landlord's written approval and all
appropriate permits and licenses prior to the commencement of said alterations
and additions. Prior to commencement of construction of any alterations, Tenant
shall deliver a copy of all permits to Landlord. Tenant shall in any event be
required to pay Landlord a construction management fee equal to three percent
(3%) of the cost of any alterations or additions to the Premises which
alterations or additions cost in excess of $50,000.
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(a) Performance. All alternations and additions
permitted hereunder shall be made and performed by Tenant in a good and
workmanlike manner without cost or expense to Landlord including any costs or
expenses which Landlord may incur in electing to have an outside agency review
said plans and specifications.
(b) Removal. Landlord shall have the right to require
Tenant to remove any or all alterations, additions, improvements and partitions
made by Tenant and restore the Project to their original condition by the
termination of this Lease, by lapse of time or otherwise, all at Tenant's
expense. All such removals and restoration shall be accomplished in a good
workmanlike manner so as not to cause any damage to the Project whatsoever. If
Landlord so elects, such alternations, physical additions or improvements shall
become the property of Landlord and surrendered to Landlord upon the termination
of this Lease by lapse of time or otherwise; provided, however, that this clause
shall not apply to trade fixtures or furniture owned by Tenant.
(c) Costs. In addition to and wholly apart from its obligation
to pay Tenant's Proportionate Share of Basic Operating Costs, Tenant shall be
responsible for and shall pay prior to delinquency any taxes or governmental
service fees, possessory interest taxes, fees or charges in lieu of any such
taxes, capital levies, or other charges imposed upon, levied with respect to or
assessed against its personal property, on the value of its alternations,
additions or improvements and on its interest pursuant to this Lease. To the
extent that any such taxes are not separately assessed or billed to Tenant,
Tenant shall pay the amount thereof as invoiced to Tenant by Landlord.
(d) Plans. Tenant shall not make any change in the plans
for any alterations approved by Landlord without the prior written consent of
Landlord. Upon completion of such alterations, Tenant shall deliver to Tenant a
copy of the "as-built" plans, building permits (with all inspection approvals
signed by the local governmental agency) and certificates of occupancy.
8.2 Signs. All signs, notices and graphics of every kind or character,
visible in or from public view or corridors, the Common Areas or the exterior of
the Premises or the Project, shall be subject to Landlord's prior written
approval, which approval shall not be unreasonably withheld, and shall in any
event comply with all Governmental Requirements, restrictive covenants and rules
and regulations affecting the Project, and Landlord's sign criteria (a copy of
which sign criteria is attached hereto as Exhibit C). Landlord shall have the
right to withhold in its absolute and sole discretion. Tenant shall not place or
maintain any banners whatsoever or any window decor in or on any exterior window
or window fronting upon any Common Area or service area or upon any truck doors
or man doors without Landlord's prior written approval which Landlord shall have
the right to give or withhold in its absolute and sole discretion. Any
installation of signs or graphics on or about the Premises or Project shall be
subject to Governmental Requirements and any other requirements imposed by
Landlord. Tenant shall remove all such signs and graphics by the termination of
this Lease. Such installations and removals shall be made in such manner as to
avoid injury to or defacement of the Premises, Building or Project and any other
improvements contained therein, and Tenant shall repair any injury or defacement
including, without limitation, discoloration caused by such installation or
removal.
ARTICLE 9: INSPECTION AND NOTICES
After reasonable notice, except in emergencies where no such notice
shall be required, Landlord, its agents and representatives, shall have the
right to enter the Premises to inspect the same, to clean, to perform such work
as may be permitted or required hereunder, to make repairs, modifications or
additions to the Premises, Building or Project or to other tenant spaces
therein, to deal with emergencies, to post such notices as may be permitted or
required by law to prevent the perfection of liens against Landlord's
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interest in the Project or to exhibit the Project to prospective tenants,
purchasers, encumbrances or others, or for any other purpose as Landlord may
deem necessary or desirable; provided, however, that Landlord shall not
unreasonably interfere with Tenant's business operations and Landlord shall not
exhibit the Premises to prospective tenants until the last twelve (12) months of
the Lease Term. Tenant shall not be entitled to any abatement of Rent by reason
of the exercise of any such right of entry, and shall have the right to have a
representative present if so requested by Tenant in writing. Six months prior to
the end of the Lease, Landlord shall have the right to erect on the Premises,
Building and/or Project a suitable sign indicating that the Premises are
available for lease. Tenant shall give written notice to Landlord at least
thirty (30) days prior to vacating the Premises and shall meet with Landlord for
a joint inspection of the Premises at the time of vacating. In the event of
Tenant's failure to give such notice or participate in such joint inspection,
Landlord's inspection at or after Tenant's vacating the Premises shall
conclusively be deemed correct for purposes of determining Tenant's
responsibility for repairs and restoration.
ARTICLE 10: LENDER AND FINANCING PROVISIONS
10.1 Subordination. Without the necessity of any additional document
being executed by Tenant for the purpose of effecting a subordination, this
Lease shall be subject and subordinate at all times to (a) all ground leases or
underlying leases which may now exist or hereafter be executed affecting the
Premises and/or the Land, and (b) any mortgage or deed of trust which may now
exist or be placed upon the Land or Premises, and Landlord's interest or estate
in any of said items, which is specified as security, but only if the holder of
any such ground lease, underlying lease, mortgage or deed of trust agrees in
writing that, subject to the terms and conditions of this Lease, such holder
will respect Tenant's rights and interests under this Lease. Notwithstanding the
foregoing, Landlord shall have the right to subordinate or cause to be
subordinated any such ground leases or underlying leases or any such liens to
this Lease. In the event that any ground lease or underlying lease terminates
for any reason or any mortgage or deed of trust is foreclosed or a conveyance in
lieu of foreclosure is made for any reason, Tenant shall, notwithstanding any
subordination, attorn to and become the Tenant of the successor in interest to
Landlord at the option of such successor in interest. Tenant shall execute and
deliver, upon demand by Landlord and in the form requested by Landlord, any
additional documents evidencing the priority of subordination of this Lease with
respect to any such ground leases or underlying leases or any such mortgage or
deed of trust.
10.2 Financial Statements. At the request of Landlord, Tenant
shall provide to Landlord current financial statements for Tenant and Guarantor
and other information discussing the financial worth of Tenant and Guarantor,
which information Landlord shall use solely for purposes of this Lease and in
connection with the ownership, management and disposition of the property
subject hereto.
10.3 Estoppel Certificates. Tenant agrees from time to time within ten
(10) days after request of Landlord, to deliver to Landlord, or Landlord's
designee, an estoppel certificate executed by Tenant and Guarantor stating that
this Lease and the Guaranty executed by Guarantor (the "Guaranty") is in full
force and effect, the date to which Rent has been paid, the unexpired portion of
this Lease and such other matters pertaining to this Lease and the Guaranty as
may be reasonably requested by Landlord. Failure by Tenant or Guarantor to
execute and deliver such certificate shall constitute an acceptance of the
Premises and acknowledgment by Tenant and Guarantor that the statements included
are true and correct without exception. Landlord and Tenant intend that any
statement delivered pursuant to this paragraph may be relied upon by any
mortgagee, beneficiary, purchaser or prospective purchaser of the Project or any
interest therein. The parties agree that obligation of Tenant and Guarantor to
furnish such estoppel certificates in a timely fashion is a material inducement
for Landlord's execution of the Lease. Landlord hereby agrees to provide an
estoppel certificate signed by Landlord, containing the same types of
information, and within the same period of time, as set forth above, with such
changes as are reasonably
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necessary to reflect that the estoppel certificate is being granted and signed
by Landlord to Tenant, rather than from Tenant to Landlord or a lender of
Landlord.
ARTICLE 11: SECURITY DEPOSIT
Tenant agrees to deposit with Landlord upon execution of this Lease, a
Security Deposit as stated in the Basic Lease Information which sum shall be
held by Landlord as security for the performance of Tenant's covenants and
obligations under this Lease, it being expressly understood and agreed that such
deposit is not an advance rental deposit or a measure of damages incurred by
Landlord in case of Tenant's default. The Security Deposit shall accrue interest
at the rate of six percent (6%) per annum (calculated on a simple basis) from
the date paid until returned to Tenant or applied by Landlord to satisfy
Tenant's obligations hereunder, which interest shall be applied to and
constitute a portion of the Security Deposit for all purposes under this Lease.
Upon the occurrence of any Event of Default, Landlord may, from time to time,
without prejudice to any other remedy provided herein or provided by law, use
such fund to the extent necessary to make good any arrears of Rent or other
payments due to Landlord hereunder, and any other damage, injury, expense or
liability caused by such Event of Default, and Tenant shall pay to Landlord, on
demand, the amount so applied in order to restore the Security Deposit to its
original amount. Although the Security Deposit shall be deemed the property of
Landlord, any remaining balance of such deposit shall be returned by Landlord to
Tenant at such time after termination of this Lease that all of the Tenant's
obligations under this Lease have been fulfilled.
ARTICLE 12: ASSIGNMENT AND SUBLETTING
12.1 Consent Required. Tenant shall not assign or sublet the Premises
or any part thereof without Landlord's prior written approval, which approval
may be granted or withheld in Landlord's reasonable discretion, except as
provided herein. Notwithstanding anything in this Lease to the contrary, Tenant
may assign or sublease to an affiliate of Tenant without Landlord's consent, and
Tenant shall promptly notify Landlord in writing of such assignment or sublease.
If Tenant desires to assign this Lease or sublet any or all of the Premises to
any person or entity other than an affiliate of Tenant, Tenant shall give
Landlord written notice ninety (90) days prior to the anticipated effective date
of the assignment or sublease. Landlord shall then have a period of thirty (30)
days following receipt of such notice and the information required hereunder to
notify Tenant in writing that Landlord elects to either (a) terminate this Lease
as to the space so affected as of the date so requested by Tenant, or (b) permit
Tenant to assign this Lease or sublet such space, subject, however, to
Landlord's prior written approval of the proposed assignee or subtenant and of
any related documents or agreements associated with the assignment or sublease,
such consent not to be unreasonably withheld so long as (i) the use of the
Premises by such proposed assignee or subtenant would be a Permitted Use and
would not in Landlord's opinion increase the use of the Premises or the Common
Areas of the Project, (ii) the proposed assignee or subtenant is of sound
financial condition and is not an existing tenant or subtenant in the Project,
(iii) the proposed assignment or sublease would not be likely to result in any
decrease in Rent, and (iv) the proposed assignee or subtenant's use and
operation will be compatible with other tenants in the Project. If Landlord
should fail to notify Tenant in writing of such election within said period,
Landlord shall be deemed to have waived option (a) above, but written approval
by Landlord of the proposed assignee or subtenant shall be required. Failure by
Landlord to approve a proposed assignee or subtenant shall not cause a
termination of this Lease.
12.2 Bonus Rent. Any Rent or other lease consideration realized
by Tenant under any such sublease or assignment in excess of the Rent payable
hereunder, after amortization of (a) the reasonable cost of any improvements
which Tenant has made for the purpose of assigning or subletting all or part of
the Project and (b) reasonable subletting and assignment leasing commissions
paid by Tenant to
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unaffiliated third parties, shall be divided and paid, fifty percent (50%) to
Tenant, fifty percent (50%) to Landlord.
12.3 [Intentionally Deleted]
12.4 Other Transfers. If Tenant is a corporation whose equity
securities are not publicly traded, a transfer of corporate shares by sale,
assignment, bequest, inheritance, operation of law or other disposition
(including such a transfer to or by a receiver or trustee in federal or state
bankruptcy, insolvency or other proceedings), so as to result in a change in the
present control of such corporation or any of its parent corporations by the
person or persons owning a majority of said corporate shares, shall constitute
an assignment for purposes of this paragraph. If Tenant is a partnership, joint
venture, limited liability company, trust or other unincorporated business form,
a transfer of the interest of persons, firms or entities responsible for
managerial control of Tenant by sale, assignment, bequest, inheritance, or
operation of law or other disposition (including such a transfer to or by a
receiver or trustee in federal or state bankruptcy, insolvency or other
proceedings), so as to result in a change in the present control of said entity
and/or a change in the identity of the persons responsible for the general
credit obligations of said entity shall constitute an assignment for an purposes
of this paragraph. Notwithstanding the foregoing, a public offering of Tenant's
equity securities shall not constitute an "assignment" for purposes of this
Lease (except that Section 12.5 shall apply thereto) so long as such assignee
continues to use the Property for a Permitted Use.
12.5 No Release. No assignment or subletting by Tenant shall
relieve Tenant of any obligations under this Lease. Any assignment or subletting
which conflicts with the provisions hereof shall be void.
ARTICLE 13: CONDEMNATION
13.1 Substantial Taking. If the whole or any substantial portion
of the Project should be taken or condemned for any public use under
governmental law, ordinance, or regulation, or by right of eminent domain, or by
private purchase in lieu thereof, and the taking would prevent or materially
interfere with Tenant's Permitted Use of the Premises, this Lease shall
terminate and the Rent shall be abated during the unexpired portion of this
lease, effective when the physical taking of said Premises shall have occurred.
13.2 Partial Taking. If a portion of the Project should be taken
or condemned for any public use under any governmental law, ordinance, or
regulation, or by right of eminent domain, or by private purchase in lieu
thereof, and this Lease is not terminated as provided in Section 13.1 above,
this Lease shall not terminate, but the Rent payable hereunder during the
unexpired portion of the Lease shall be reduced to such extent as may be fair
and reasonable under all of the circumstances.
13.3 Award. Landlord shall be entitled to any and all payment,
income, rent, award, or any interest therein whatsoever which may be paid or
made in connection with such taking or conveyance and Tenant shall have no claim
against Landlord or otherwise for the value of any unexpired portion of this
Lease. Notwithstanding the foregoing, any compensation specifically awarded
Tenant for loss of business, Tenant's personal property, moving cost or loss of
goodwill, shall be and remain the property of Tenant.
ARTICLE 14: CASUALTY DAMAGE
14.1 Casualty. If the Premises or any portion thereof should be damaged
or destroyed by any casualty, Tenant shall give prompt written notice thereof to
Landlord. Within thirty (30) days of such notice, Landlord shall notify Tenant
whether in Landlord's reasonable opinion such repairs can be made
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either (a) within thirty (30) days, (b) in more than thirty (30) days, but in
less than one hundred eighty (180) days, or (c) in more than one hundred eighty
(180) days from the date of such notice. If Tenant disagrees with Landlord's
determination of the time necessary to make such repairs, Tenant shall notify
Landlord of such dispute, and Tenant and Landlord shall attempt to resolve such
dispute promptly. If Landlord and Tenant are not able to agree within ten (10)
days following Tenant's notice to Landlord, Landlord and Tenant shall select a
licensed architect with substantial experience in the construction and repair of
similar industrial buildings to determine the estimated period of time which
will be required to complete such repairs; such architect's determination shall
be binding on Landlord and Tenant. Landlord and Tenant shall share equally in
the cost of obtaining such architect's determination. In the event Tenant
disputes Landlord's estimate of the time required to complete repairs, the
commencement date for the time periods available to Landlord to complete such
repairs under this Article 14 shall be automatically extended until the date
such dispute is finally resolved and the estimated number of repair days are
finally determined. All estimates of the time required to complete repairs shall
include overtime, weekend and other "holiday" work only to the extent insurance
proceeds are available to pay such increased costs.
14.2 Minor Damage. If the Premises should be damaged by any casualty
but only to such extent that rebuilding or repairs can be completed within
thirty (30) days, this Lease shall not terminate, and Landlord shall at its sole
cost and expense thereupon proceed with reasonable diligence to rebuild and
repair the Premises to substantially the condition in which they existed prior
to such damage, except that Landlord shall not be required to rebuild, repair or
replace any part of the partitions, fixtures, additions and other improvements
which may have been placed in, on or about the Premises by Tenant. If the
Premises is untenantable in whole or in part following such damage, the Rent
payable hereunder during the period in which they are untenantable shall be
abated or reduced on a pro rata basis depending on whether all or a portion of
the Premises are rendered untenantable by reason of such casualty. If Landlord
fails to complete any such repairs within thirty (30) days following the date
the estimated repair period is finally determined hereunder, Tenant may provide
written notice to Landlord of Tenant's need for such repairs and, if Landlord
fails to complete such repairs within ten (10) days following Landlord's receipt
of such notice, Tenant may complete such repairs. Upon completion, Tenant shall
deliver to Landlord copies of contracts, invoices and receipts evidencing the
costs incurred by Tenant to third parties in completing such repairs. If
Tenant's third party repair costs do not exceed $50,000, Tenant may offset such
third party repair costs against the next installment(s) of Base Rent due and
owing hereunder. If Tenant's third party repair costs exceed $50,000, Landlord
shall reimburse Tenant for such third party repair costs within thirty (30) days
after Tenant delivers copies of all such contracts, invoices and receipts to
Landlord; if Landlord fails to pay such amount within thirty (30) days after
delivery to Landlord of such contracts, invoices and receipts, Tenant may offset
such third party repair costs against the next installment(s) of Base Rent due
and owing hereunder.
14.3 Partial Damage. If the Premises should be damaged by any casualty,
but only to such extent that rebuilding or repairs can be completed in more than
thirty (30) days but in less than one hundred eighty (180) days, then Landlord
shall rebuild or repair the Premises to substantially the condition in which
they existed prior to such damage except that Landlord shall not be required to
rebuild, repair or replace any part of the partitions, fixtures, additions and
other improvements which may have been placed in, on or about the Premises by
Tenant. If the Premises are untenantable in whole or in part following such
damage, the Rent payable hereunder during the period in which they are
untenantable shall be abated or reduced on a pro rata basis depending on whether
all or a portion of the Premises are rendered untenantable by reason of such
casualty. In the event that Landlord should fail to complete such repairs and
rebuilding within the estimated repair period as finally determined hereunder
(which period for repairs shall not commence until the estimated repair period
is finally determined hereunder), such period of time to be extended for delays
caused by the fault or neglect of Tenant or because of acts of God, acts of
public agencies, labor disputes, strikes, fires, freight embargoes, windy,
stormy or inclement
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weather, inability to obtain materials, supplies or fuels, or delay of the
contractors or subcontractors due to such causes or other contingencies beyond
the reasonable control of Landlord, Tenant may at its option terminate this
Lease by delivering thirty (30) days prior written notice of termination to
Landlord as Tenant's exclusive remedy, whereupon all rights and obligations
hereunder shall cease and terminate.
14.4 Major Damage. If the Premises should be damaged by any
casualty and rebuilding or repairs cannot in Landlord's reasonable estimation be
completed within one hundred eighty (180) days after the date upon which
Landlord is notified by Tenant of such damage, this Lease shall terminate and
the Rent shall be abated during the unexpired portion of this Lease, effective
upon the date of the occurrence of such damage.
14.5 Lender Requirements. Notwithstanding anything herein to the
contrary, in the event that holder of any indebtedness secured by a mortgage or
deed of trust covering the Premises requires that the insurance proceeds be
applied to such indebtedness, then Landlord shall have the right to terminate
this Lease by delivering written notice of termination to Tenant within fifteen
(15) days after such requirement is made by any such holder, whereupon all
rights and obligations hereunder shall cease and terminate.
14.6 [Intentionally Deleted]
14.7 [Intentionally Deleted]
14.8 Repair Costs. Landlord shall only be obligated to make repairs
pursuant to Article 14 of this Lease out of the insurance proceeds paid to
Landlord. Subject to the last sentence of this Section 14.8, Tenant shall
reimburse Landlord upon completion of the repairs for the amount of any
deductible under Landlord's insurance policy, or if other premises are also
repaired, a pro rata share based on total costs of repair equitably apportioned
to the Premises; provided, however, that if the casualty was caused by another
tenant of the Project, the other tenant will be solely responsible for such
deductible. Notwithstanding the foregoing, Tenant shall not be responsible to
pay any deductible or its share of any deductible to the extent that Tenant's
payment would be in excess of $10,000 unless the casualty was caused by Tenant
or any of Tenant's Parties, in which case Tenant shall be solely responsible for
the amount of the deductible.
ARTICLE 15: HOLDING OVER
If Tenant shall retain possession of the Premises or any portion
thereof without Landlord's consent following the expiration of the Lease or
sooner termination for any reason, then Tenant shall pay to Landlord for each
day of such retention double the amount of the monthly rental (prorated on a
daily basis) for the first month prior to the date of expiration or termination.
Tenant shall also indemnify and hold Landlord harmless from any loss or
liability resulting from delay by Tenant in surrendering the Premises including,
without limitation, any claims made by any succeeding tenant founded on such
delay. Alternatively, if Landlord gives notice of Landlord's consent to Tenant's
holding over, such holding over shall constitute renewal of the Lease on
whatever terms are specified in such notice from Landlord. Acceptance of Rent by
Landlord following expiration or termination shall not constitute a renewal of
this Lease, and nothing contained in this paragraph shall waive Landlord's right
of reentry or any other right. Unless Landlord exercises the option hereby given
to it, Tenant shall be only a tenant at sufferance, whether or not Landlord
accepts any Rent from Tenant while Tenant is holding over without Landlord's
written consent. Additionally, in the event that upon termination of the Lease,
Tenant has not fulfilled its obligation with respect to repairs and cleanup of
the Premises or any other Tenant obligations as set forth in this Lease, then
Landlord shall have the right to perform any such obligations as it deems
necessary
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at Tenant's sole cost and expense, and any time required by Landlord
to complete such obligations shall be considered a period of holding over and
the terms of this Article 15 shall apply.
ARTICLE 16: DEFAULT
16.1 Events of Default. The occurrence of any of the following
shall constitute an "Event of Default" on the part of Tenant:
(a) Abandonment. Vacation or abandonment of the
Building for a continuous period in excess of thirty (30) days.
(b) Nonpayment of Rent. Failure to pay any installment of Rent
or any other amount due hereunder within five (5) days after written notice from
Landlord that said payment is due (provided, however, that Landlord shall not be
required to give such notice more than one (1) time in any twelve (12)-month
period, and for twelve (12) months following the date Landlord gives any such
notice, Tenant shall be in default hereunder if any Rent or other amount due
hereunder is not paid within five (5) days after the date due). All failures to
pay any monetary obligation to be paid by Tenant under this Lease shall be
construed as obligations for payment of Rent.
(c) Other Obligations. Failure to perform any obligation,
agreement or covenant under this Lease other than those matters specified in
Subsections (a) and (b) of this Section 16.1, such failure continuing for thirty
(30) days after written notice of such failure, or such longer period as may be
reasonably necessary under the circumstances, provided that Tenant shall
continuously and diligently pursue such remedy at all times until such default
is cured.
(d) General Assignment. A general assignment by Tenant or
Guarantor for the benefit of its creditors.
(e) Receivership. The employment of a receiver, trustee
or liquidator to take possession of all or substantially all of the assets of
Tenant or Guarantor or of the Project, if such attachment or other seizure
remains undismissed or undischarged for a period of sixty (60) days after the
levy thereof.
(f) Attachment. The attachment, execution or other
judicial seizure of all or substantially all of the assets of Tenant or
Guarantor or of the Project, if such attachment or other seizure remains
undismissed or undischarged for a period of sixty (60) days after the levy
thereof.
(g) Repudiation of the Guaranty. The Guaranty shall for
any reason cease to be in full force and effect or be declared null and void or
unenforceable in whole or in part, or the validity or enforceability of the
Guaranty, shall be challenged or denied by Guarantor.
16.2 Rights and Remedies Upon Default.
(a) Remedies Upon Default. On the occurrence of an Event
of Default, Landlord may pursue any one or more of the following remedies
without any notice or demand whatsoever, except as otherwise indicated:
(i) Lease Termination. Terminate this Lease by
giving written notice of termination to Tenant, in which event Tenant shall
immediately surrender the Project to Landlord. If
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Tenant fails to so surrender the Project, then Landlord may, without prejudice
to any other remedy it has for possession of the Project or arrearages in Rent
or other damages, re-enter and take possession of the Project and expel or
remove Tenant and any other person occupying the Project or any part thereof,
without being liable for any damages, whether caused by the negligence of
Landlord or otherwise, all of which damages are hereby waived by Tenant.
(ii) Reletting. Landlord may re-enter and take
possession of the Project without terminating this Lease and without being
liable for any damages, whether caused by the negligence of Landlord or
otherwise (all of which damages are hereby waived by Tenant), and relet the
Project and apply the rent received to the account of Tenant. No reletting by
Landlord is considered to be for its own account unless Landlord has notified
Tenant in writing that this Lease has been terminated. Landlord may relet the
Project on whatever terms and conditions Landlord, in its sole discretion, deems
advisable. Landlord's action under this Subsection 16.2(a)(ii) is not considered
an acceptance of Tenant's surrender of the Project unless Landlord so notifies
Tenant in writing.
(iii) Landlord Performance of Tenant's Obligations.
Re-enter the Project without terminating this Lease and without being liable for
any damages, whether caused by the negligence of Landlord or otherwise, and do
whatever Tenant is obligated to do under the terms of this Lease. Tenant shall
pay to Landlord, on demand, the expenses incurred by Landlord in effecting
compliance with Tenant's obligations under this Lease, plus interest thereon at
the rate provided in Section 16.4 until repaid.
(b) Tenant Payments. Upon the occurrence of an Event of
Default by Tenant with respect to which Landlord elects to either terminate this
Lease or terminate Tenant's possession of the Project without terminating this
Lease (and without limiting Tenant's obligations provided elsewhere in this
Lease, including under Subsection 16.2(c) below):
(i) Until Landlord relets the Project, Tenant
shall pay to Landlord, by the first day of each calendar month, the amount owed
by Tenant under this Lease. After the Project has been relet by Landlord, Tenant
shall pay to Landlord, on the 20th day of each calendar month, the difference
between the amount owed by Tenant under this Lease and the amount actually
collected by Landlord for that month. If Landlord brings suit to collect a
deficiency, Landlord may allow the deficiency to accumulate and may bring an
action on several or all of the accrued deficiencies at one time. No suit shall
prejudice Landlord's right to bring a similar action for any deficiency or
deficiencies that arise later. Any amount collected by Landlord for any calendar
month from subsequent tenants which exceeds the amounts owed by Tenant shall be
credited to reduce Tenant's future liability in a calendar month for which the
amount collected by Landlord is less than the amount owed by Tenant, as Tenant's
sole right to that excess.
(ii) Tenant shall pay to Landlord in cash on
demand an amount equal to all "Reimbursable Costs" (as hereinafter defined) for
which Tenant has not yet vested (as defined below), and any remaining rental
abatement and/or other concessions, if any, that have not yet accrued under this
Lease shall terminate. "Reimbursable Costs" means the total of: the aggregate
dollar value of all rental abatements, if any, that Tenant has received with
respect to this Lease; any amount paid by Landlord for tenant leasehold
improvements in the Project or any reimbursements of same; and the aggregate
dollar amount that has been paid to or on behalf of Tenant under this Lease,
including any brokerage commission paid or payable by Landlord with respect to
this Lease. Because the Reimbursable Costs were incurred by Landlord in reliance
on Tenant's full performance under this Lease, Tenant acknowledges that Landlord
will be damaged on Tenant's default in an amount equal to the aggregate dollar
value of the Reimbursable Costs for which Tenant has not yet vested, in addition
to (and not in lieu of) any other damages suffered
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by Landlord. Tenant shall vest as to Reimbursable Costs at the rate of (A) 100%
divided by the number of months in the initial Term for which Tenant is
obligated to pay full rent multiplied by (B) the number of months for which
Tenant has paid full rent and is not otherwise in default hereunder. No vesting
shall occur for any month for which Tenant has not paid rent or in which Tenant
is otherwise in default hereunder. (For example, if Tenant is obligated to pay
full rent for 50 months, then Tenant shall vest hereunder at the rate of 2% for
each month for which Tenant pays full rent and is not otherwise in default
hereunder.)
(c) Measure of Certain Damages. In all events, Tenant is
liable for all damages of whatever kind or nature, direct or indirect, suffered
by Landlord as a result of the occurrence of an Event of Default. If Tenant
fails to promptly pay Landlord for the damages suffered, Landlord may pursue a
monetary recovery from Tenant. Included among those damages are all expenses
incurred by Landlord in repossessing the Project (including increased insurance
premiums resulting from Tenant's vacancy), all expenses incurred by Landlord in
reletting the Project (including those incurred for advertisements and brokerage
fees and needed repairs, remodeling and replacements), all concessions granted
to a new tenant on a reletting, all losses incurred by Landlord as a result of
Tenant's default, a reasonable allowance for Landlord's administrative costs
attributable to Tenant's default, and all reasonable attorney's fees and
expenses incurred by Landlord in enforcing any of Landlord's rights or remedies
against Tenant.
(d) No Election of Remedies. Pursuit of any of the foregoing
remedies does not constitute an irrevocable election of remedies nor preclude
pursuit of any other remedy provided elsewhere in this Lease or by applicable
law, and none is exclusive of another unless so expressly provided in this Lease
or by applicable law. Likewise, forbearance by Landlord to enforce one or more
of the rights or remedies available to it upon an Event of Default does not
constitute a waiver of that default or of the right to exercise that right or
remedy later or of any rent, damages or other amounts due to Landlord hereunder.
(e) [Intentionally Deleted]
16.3 Late Charge. In addition to its other remedies, Landlord shall
have the right without notice or demand to add to the amount of any payment
required to be made by Tenant hereunder, and which is not paid on or before the
date the same is due, an amount equal to five percent (5%) of the delinquency
for each month or portion thereof that the delinquency remains outstanding to
compensate Landlord for the loss of the use of the amount not paid and the
administrative costs caused by the delinquency, the parties agreeing that
Landlord's damage by virtue of such delinquencies would be difficult to compute
and the amount stated herein represents a reasonable estimate thereof.
16.4 Interest. Any amount owed by Tenant to Landlord which is not paid
when due shall bear interest at the lesser of (a) the rate per annum which shall
from day to day be equal to the sum of three percent (3%) plus the variable rate
of interest announced by The Bank of Boston as of such date as its base or prime
rate of interest, each change in such rate to become effective, without notice,
on the effective date of each change in such quoted rate, or the (b) the maximum
rate of interest permitted to be contracted for by applicable law. However,
interest shall not be payable on late charges to be paid by Tenant under this
Lease. The payment of interest on such amounts shall not excuse or cure any
default by Tenant under this Lease.
16.5 Remedies Cumulative. All rights, privileges and elections or
remedies of the parties are cumulative and not alternative to the extent
permitted by law and except as otherwise provided herein.
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16.6 Bankruptcy. If at any time during the term of this Lease there
shall be filed by or against Tenant or Guarantor in any court pursuant to any
statute either of the United States or of any State a petition in bankruptcy or
insolvency or for reorganization or for the appointment of a receiver or trustee
of all or a portion of the property of Tenant or Guarantor, or if a receiver or
trustee takes possession of any of the assets of Tenant or Guarantor, or if the
leasehold interest herein passes to a receiver, or if Tenant or Guarantor makes
an assignment for the benefit of creditors or petitions for or enters into an
arrangement (any of which are referred to herein as "a Bankruptcy Event"), then
the following provisions shall apply:
(a) In all events any receiver or trustee in bankruptcy
of Tenant or Guarantor as debtor in possession ("Debtor") shall either expressly
assume or reject this Lease (with respect to Tenant's bankruptcy) or the
Guaranty (with respect to Guarantor's bankruptcy) within sixty (60) days
following the entry of an "Order for Relief."
(b) In the event of an assumption of the Lease or the
Guaranty by a Debtor, receiver, or trustee, such Debtor, receiver, or trustee
shall immediately after such assumption (i) cure any default or provide adequate
assurances that defaults will be promptly cured; and (ii) compensate Landlord
for actual pecuniary loss or provide adequate assurances that compensation will
be made for actual pecuniary loss; and (iii) provide adequate assurance of
future performance.
(c) If an Event of Default has occurred, the party
assuming the Lease or Guaranty, as applicable, may not require Landlord to
provide services or supplies incidental to the Lease before its assumption by
such trustee or Debtor, unless Landlord is compensated under the terms of the
Lease or Guaranty for such services and supplies provided before the assumption
of such Lease or Guaranty.
(d) Landlord specifically reserves any and all remedies
available to Landlord in Article 16 hereof or at law or in equity in respect of
a Bankruptcy Event by Tenant or Guarantor to the extent such remedies are
permitted by law, and the occurrence of any Bankruptcy Event shall constitute an
additional Event of Default under this Lease.
ARTICLE 17: EXPANSION
During the Initial Term of this Lease, it is hereby agreed and
understood that in the event Tenant requires additional warehouse space and
intends to vacate the Premises, and Landlord and Tenant execute a new lease
agreement for a larger space, this Lease may, at Tenant's option, be canceled as
of the commencement date of the new lease covering the larger space, provided
that no Event of Default has occurred hereunder and that Tenant delivers the
Premises to Landlord in the condition required by this Lease including, but not
limited to, payment of all accrued taxes and insurance and other charges. Upon
such cancellation, the parties shall be released from any further obligations
hereunder, except with respect to liabilities and obligations accrued prior to
such cancellation and the provisions hereof which expressly survive termination
of this Lease.
ARTICLE 18: TRANSFERS BY LANDLORD AND CURE RIGHTS
18.1 Transfer by Landlord. In the event of a sale or conveyance by
Landlord of the Project, the same shall operate to release Landlord from any
future liability upon any of the covenants or conditions, express or implied,
herein contained in favor of Tenant, and in such event Tenant agrees to look
solely to the responsibility of the successor in interests of Landlord in and to
this Lease. Notwithstanding the foregoing, in the event of a sale or conveyance
of the Project, the selling Landlord shall not be released from its obligation
to return the Security Deposit to Tenant as and to the extent
28
<PAGE>
required hereby unless and until the successor owner of the Project assumes such
obligation. This Lease shall not be affected by any such sale and Tenant agrees
to attorn to the purchaser or assignee.
18.2 Cure Rights. All covenants and agreements to be performed by
Tenant under any of the terms of this Lease shall be performed by Tenant, at
Tenant's sole cost and expense, and without any abatement of Rent. If Tenant
shall fail to pay any sum of money other than Rent, required to be paid by it
hereunder, or shall fail to perform any other act on its part to be performed
hereunder, and such failure shall continue for five (5) days after notice
thereof by Landlord, Landlord may, but shall not be obligated to do so, and
without waiving or releasing Tenant from any obligations of the Tenant, make any
such payment or perform any such act on the Tenant's part to be made or
performed. All sums so paid by Landlord and all necessary incidental costs
together with interest thereon at the rate provided in Section 16.4 of this
Lease from the date of such payment by the Landlord and shall be payable to
Landlord on demand, and Tenant covenants to pay such sums, and Landlord shall
have, in addition to any other right or remedy of Landlord, the same right and
remedies in the event of the nonpayment thereof by Tenant as in the case of
default by Tenant in the payment of Rent.
18.3 Waiver of Certain Damages. In no event shall Landlord be
liable to Tenant for any punitive, exemplary or consequential damages, and
Tenant hereby waives and releases any right or claim Tenant may have to same.
ARTICLE 19: INTENTIONALLY DELETED
ARTICLE 20: MISCELLANEOUS
20.1 Limitation. Tenant shall look solely to Landlord's interest in the
Project for recovery of any judgment from Landlord. Landlord, or if Landlord is
a partnership, its partners whether general or limited, or if it is a
corporation, its directors, officers or shareholders, or if Landlord is a trust,
its trustees, officers and employees, or it Landlord is a limited liability
company or other entity, its members or managers or owners, shall never be
personally liable for any such judgment. Any lien obtained to enforce any such
judgment and any levy of execution thereon shall be subject and subordinate to
any lien, mortgage or deed of trust on the Project. Tenant acknowledges that no
trustee, shareholder, officer, employee or agent of Landlord shall be held for
any personal liability, jointly or severally, for any obligation of or claim
against Landlord.
20.2 Quiet Enjoyment. Landlord represents that it has full right
and authority to enter into this Lease and that Tenant, upon paying the Rent and
performing its other covenants and agreements herein set forth, shall peaceably
and quietly have, hold and enjoy the Premises for the Term hereof without
hindrance or molestation from Landlord, subject to the terms and provisions of
this Lease.
20.3 Waiver. If either Landlord or Tenant waives the performance of any
term, covenant or condition contained in this Lease, such waiver shall not be
deemed to be a waiver of any subsequent breach of the same or any other term,
covenant or condition contained herein. The acceptance of rent by Landlord shall
not constitute a waiver of any preceding breach by Tenant of any term, covenant
or condition of this Lease, regardless of Landlord's knowledge of such preceding
breach at the time Landlord accepted such Rent. Failure by Landlord to enforce
any of the terms, covenants or conditions of this Lease for any length of time
shall not be deemed to waive or to decrease the right of Landlord to insist
thereafter upon strict performance by Tenant. Waiver of Landlord of any term,
covenant or condition contained in this Lease may only be made by a written
document signed by Landlord.
29
<PAGE>
20.4 Notices. Each provision of this Lease or of any Governmental
Requirements with reference to the sending, mailing or delivery of any notice or
the making of any payment by Landlord or Tenant to the other shall be deemed to
be complied with when and if the following steps are taken:
(a) All Rent and other payments required to be made by
Tenant to Landlord hereunder shall be payable to Landlord at the address set
forth in the Basic Lease Information, or at such other address as Landlord may
specify from time to time by written notice delivered in accordance herewith.
Tenant's obligation to pay Rent and any other amounts to Landlord under the
terms of this Lease shall not be deemed satisfied until such Rent and other
amounts have been actually received by Landlord.
(b) All notices, demands, consents and approvals which may or
are required to be given by either party to the other hereunder shall be in
writing and shall be deemed to have been fully given when deposited in the
United States mail, certified or registered, postage prepaid, and addressed to
the party to be notified at the address for such party specified in the Basic
Lease Information or to such other place as the party to be notified may from
time to time designate by at least fifteen (15) days notice to the notifying
party. Tenant appoints as its agent to receive the service of all default
notices and notice of commencement of unlawful detainer proceedings the person
in charge of or apparently in charge of or occupying the Premises at the time,
and, if there is no such person, then such service may be made by attaching the
same on the main entrance of the Premises.
20.5 Attorneys' Fees. In the event of any litigation or
arbitration proceeding between the parties with respect to this Lease, then all
costs and expenses including, without limitation, all reasonable professional
fees such as appraisers', accountants' and attorneys' fees, incurred by the
prevailing party therein shall be paid or reimbursed by the other party.
20.6 Successors and Assigns. This Lease shall be binding upon and
inure to the benefit of Landlord, its successors and assigns, and shall be
binding upon and inure to the benefit of Tenant, its successors, and to the
extent assignment may be approved by Landlord hereunder, Tenant's assigns.
20.7 Force Majeure. Whenever a period of time is herein prescribed
for action to be taken by Landlord or Tenant, such party shall not be liable or
responsible for, and there shall be excluded from the computation for any such
period of time, any delays due to strike, riots, acts of God, shortages of labor
or materials, war, governmental laws, regulations or restrictions or any other
causes of any kind whatsoever which are beyond the control of such party. The
foregoing provision shall not in any event apply to relieve Tenant of its
obligation to pay Rent or other amounts as and when required hereby, and
notwithstanding the occurrence of any force majeure matters.
20.8 Reference. The term "Tenant" or any pronoun used in place
thereof shall indicate and include the masculine or feminine, the singular or
plural number, individuals, firms or corporations, and their and each of their
respective successors, executors, administrators and permitted assigns,
according to the context hereof.
20.9 Time of the Essence. Time is of the essence regarding this
Lease and all of its provisions.
20.10 Governing Law. This Lease shall in all respects be governed
by the laws of the State in which the Land is located.
20.11 Integration. This Lease, together with its exhibits, contains
all the agreements of the parties hereto and supersedes any previous
negotiations. There have been no representations made by the
30
<PAGE>
Landlord or understandings made between the parties other than those set forth
in this Lease and its exhibits. All references to this Lease shall include all
exhibits attached hereto.
20.12 Modifications. This Lease may not be modified except by a
written instrument by the parties hereto.
20.13 Severability. If, for any reason whatsoever, any of the
provisions hereof shall be unenforceable or ineffective, all of the other
provisions shall be and remain in full force and effect.
20.14 Counterparts. This Lease may be executed on one or more
counterparts, each of which shall be deemed an original, but all of which when
taken together shall constitute one agreement.
20.15 Lease Effective Date. Submission of this instrument for
examination or signature by Tenant does not constitute a reservation or option
for lease, and it is not effective as a lease or otherwise until execution by
Landlord and Tenant.
20.16 Brokers. Landlord and Tenant hereby represent and warrant to
each other that they have had no dealings with any real estate broker or agent
in connection with the negotiation of this Lease, except Trammell Crow
Dallas/Fort Worth, Inc. (the "Broker"), and that they know of no real estate
broker or agent other than the Brokers who are entitled to a commission in
connection with this Lease. Landlord shall pay the Brokers pursuant to separate
written agreement. Each party agrees to indemnify and defend the other party
against and hold the other party harmless from any and all claims, demands,
losses, liabilities, lawsuits, judgments, and costs and expenses (including,
without limitation, reasonable attorneys' fees) with respect to any leasing
commission or equivalent compensation alleged to be owing on account of the
indemnifying party's dealings with any other real estate broker or agent.
20.17 Additional Architectural Fees. In addition to the Allowance
described in Section 2.6 of this Lease, Landlord shall contribute up to an
additional $15,000 to pay for Tenant's additional architectural work for the
Premises to be performed by Centek.
20.18 Offer. Execution and delivery of this Lease by Landlord
constitutes an offer to lease the Premises on the terms contained herein. The
offer will be irrevocable until 5:00 p.m. Dallas time, Thursday, January 8, 1998
(the "Expiration Date"). In the event Tenant has not countersigned and delivered
four (4) counterparts of this Lease to Landlord on or before the Expiration
Date, this Lease will be null and void without further action of the parties.
Delivery by Tenant of a copy of the fully executed Lease by facsimile
transmission on or before the Expiration Date, followed by delivery on the next
business day of four original executed counterparts of this Lease, shall
constitute Tenant's acceptance as of the date of the facsimile transmission.
IN WITNESS WHEREOF, the parties hereto have executed this Lease as of
the date first above written.
LANDLORD TENANT
EBP 2. LTD., DEY LABORATORIES, L.P.,
a Texas limited partnership a Delaware limited partnership
By: MIT Unsecured, Inc. By: DEY LABORATORIES, INC.,
a California corporation. a Delaware corporation.
31
<PAGE>
the general partner the general partner
By: /s/ Timothy B. Keith By: /s/ G. Michaud 1/5/98
------------------------ ---------------------
Name: Timothy B. Keith Name: G. Michaud
------------------------ ---------------------
Title: Vice President Title: V.P. Operations
------------------------ ---------------------
32
<PAGE>
EXHIBIT A
Legal Description
BEING, a 6.166 acre tract of and out of the William Perrin Survey, Abstract No.
708 and the Rufus Sewell Survey, Abstract No. 875, Collin County, Texas and
being part of Lot 1B, Block 1, Enterprises Addition No. 2, an addition to the
City of Allen, Texas according to the plat recorded at County Clerk No.
96-0100363 of the Deed Records of Collin County, Texas and in Volume J, Page 479
of the Plat Records of Collin County, Texas; said 6.166 acre tract being more
particularly described as follows:
COMMENCING at a 1/2-inch iron rod found at the intersection of the south
right-of-way line of Bethany Drive (a 110-foot wide right-of-way) with the east
right-of-way line of Enterprise Boulevard (a 60-foot wide right-of-way); said
point being the westernmost corner of Lot 1A, Block 1, Enterprises Addition No.
2, an addition to the City of Allen, Texas according to the plat recorded in
Volume J, Page 562 of the Plat Records of Collin County, Texas;
THENCE, in a southerly direction, along the said east line of Enterprise
Boulevard and the west line of said Lot 1, the following three (3) calls:
South 20 degrees, 33 minutes, 10 seconds East, a distance of 153.71
feet to a 1/2-inch iron rod found at the beginning of a curve to the
right whose center bears South 69 degrees, 26 minutes, 50 seconds West,
a distance of 180.00 feet from said point;
Along said curve to the right, through a central angle of 34 degrees,
36 minutes, 10 seconds, an arc distance of 108.71 feet to a 1/2-inch
iron rod found at the end of said curve;
South 14 degrees, 03 minutes. 00 seconds West, continuing along the
said east line of Enterprise Boulevard, at a distance of 69.64 feet
passing a 1/2-inch iron rod with "Pacheco Koch" cap found at the
northwest corner of said Lot 1B, in all a distance of 452.32 feet to a
1/2-inch iron rod with "Pacheco Koch" cap set at the POINT OF
BEGINNING; said point being in the west line of said Lot 1B;
THENCE, South 75 degrees, 57 minutes, 00 seconds East, departing the said east
line of Enterprise Boulevard and the said west line of Lot 1B, a distance of
34.83 feet to a 1/2-inch iron rod with "Pacheco Koch" cap set at an angle point;
THENCE, South 68 degrees, 03 minutes, 17 seconds East, a distance of 715.64 feet
to a 1/2-inch iron rod with "Pacheco Koch" cap set in the west right-of-way line
of Southern Pacific Railroad (a 100-foot wide railroad right-of-way); said point
also being in the east line of said Lot 1B;
THENCE, South 21 degrees, 56 minutes, 43 seconds West, along the said west line
of Southern Pacific Railroad and the said east line of Lot 1B, a distance of
249.82 feet to a 1/2-inch iron rod found at an angle point;
THENCE, South 22 degrees, 08 minutes, 57 seconds West, continuing along the said
west line of Southern Pacific Railroad and the said east line of Lot 1B, a
distance of 123.91 feet to a 1/2-inch iron rod with "Pacheco Koch" cap found for
corner; said point being the southeast corner of said Lot 1B;
THENCE, North 68 degrees, 03 minutes, 17 seconds West, departing the said west
line of Southern Pacific Railroad and along the south line of said Lot 1B, a
distance of 684.35 feet to a 1/2-inch iron rod with
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<PAGE>
"Pacheco Koch" cap found for corner in the said east line of Enterprise
Boulevard; said point being the southwest corner of said Lot 1B;
THENCE, North 11 degrees, 30 minutes, 00 seconds East, along the said east line
of Enterprise Boulevard and the west line of said Lot 1B, a distance of 315.97
feet to a 1/2-inch iron rod found at an angle point;
THENCE, North 14 degrees, 03 minutes, 00 seconds East, continuing along the said
east line of Enterprise Boulevard and the said west line of Lot 1B, a distance
of 58.77 feet to the POINT OF BEGINNING;
CONTAINING 268,597 square feet or 6.166 acres of land, more or less.
34
<PAGE>
EXHIBIT B
General Outline of the Building, Project and Premises
<PAGE>
EXHIBIT B
[Map of Building, Project and Premises]
<PAGE>
EXHIBIT B-1
Outline Specifications
36
<PAGE>
Exhibit B-1
Tract 'B' - Allen, Texas - Outline Specification
<TABLE>
<S> <C>
Clear Height 24' to Bottom of Joist (not Girder)
Bay Size 40' X 40'
Dock Height 48"
Truck Court Shared 200' with Building 'A'
Site
Truck Paving/Drives 6"
Car Paving/Walks 5"
Landscape As per City of Allen requirements
Building Slab - 4000 PSI - 6"
- Ff 35, Fl 25 minimum
- Seal w/Lipidolith Sealer
Building Structure/Skin - Tilt panels - smooth w/revels & painted accent band, interior is unfinished.
- Bar joist and 1 1/2" metal deck, both w/aluminum primer
- Storefront @ "Office Entry" 1/4" single pane glass
- Mezzanine (7,000 sq. ft. with elevator)
Roof - 4 ply asphalt, type IV felts - FM I-60 rating
- 2 year system guarantee, 10 year membrane guarantee
- 4' x 8' Skylights in alternating structural bays
- R-10 Insulation Value built-in
- Vulcraft off/white deck (coated underneath)
Equipment - 9' x 10' dock doors w/ Bumpers (22 total)
- Steps and personnel doors as per plan and bollards @ all dock doors
Mechanical Systems
HVAC Finish allowance item
Fire Protection Automatic wet sprinkler, ESFR designed per State Board of Insurance
specifications including a fire pump. Rack sprinklers NIC.
Electrical Systems - House panel for exterior wall packs, & fire pump.
</TABLE>
<PAGE>
EXHIBIT C
Sign Criteria
37
<PAGE>
EXHIBIT C
[Graphic of Sign Criteria]
<PAGE>
GUARANTY OF LEASE
In consideration of EBP 2, LTD., a Texas limited partnership
("Landlord"), entering into that certain Net Lease (the "Lease") dated as of
December 31, 1997, by and between Landlord and DEY LABORATORIES, L.P., a
Delaware limited partnership ("Tenant"), and the benefits to be derived by
Tenant and the undersigned, DEY LABORATORIES, INC., a Delaware corporation
("Guarantor"), Guarantor hereby unconditionally guarantees to Landlord the
absolute, complete and punctual performance of the agreements of Tenant
contained in the Lease including, without limitation, the timely payment of all
rent and all other sums now or hereafter owed by Tenant to Landlord thereunder.
The obligation of Guarantor hereunder is an absolute, unconditional, continuing
guarantee of payment and performance by Tenant and will not terminate until
Tenant has paid in full all amounts owing to Landlord and performed all of
Tenant's obligations under the Lease.
Tenant hereby acknowledges and agrees that Landlord required, as a
condition to Landlord's execution of the Lease, that Guarantor execute this
Guaranty, and Guarantor, by virtue of Guarantor's interest in and relationship
with Tenant, hereby deems it to be in Guarantor's best interest (based on sound
business judgment and the fact that valuable, direct benefits will be derived by
Guarantor by virtue of the Lease) to execute and deliver to Landlord this
Guaranty.
Guarantor hereby acknowledges and agrees that Guarantor's liability
hereunder will not be released, reduced, impaired or affected by the occurrence
of any event save Tenant's full performance including, but not limited to, any
one or more of the following events: Landlord's obtaining collateral from Tenant
or any other person to secure payment or performance under the Lease; any
assumption of liability by any other person (whether as guarantor or otherwise)
for payment or performance under the Lease; any release, surrender, exchange,
loss, termination, waiver or other discharge of any collateral securing payment
or performance under the Lease; any subordination, relinquishment or discharge
of Landlord's rights relating to the Lease or any collateral described therein;
any full or partial release from liability of Tenant or any other person or
entity now or hereafter liable for payment or performance under the Lease; any
dissolution, termination, death, insolvency, bankruptcy, reorganization,
disability, discharge, waiver or other exoneration of Tenant or any other person
or entity now or hereafter liable for payment or performance under the Lease;
any assignment or sublease by Tenant with respect to the Lease; any assignment
by Landlord; any renewal, extension, modification or amendment from time to time
of the Lease or any one or more of the terms of the Lease; any failure, delay,
waiver or refusal by Landlord to exercise any right or remedy held by Landlord
under the Lease or by law; any sale, encumbrance, transfer or other modification
of Tenant's interest under the Lease; any invalidity, unenforceability or
insufficiency of the entirety of or any one or more of the terms of the Lease or
any collateral securing payment or performance thereunder; or any failure of
Guarantor to receive notice of any one or more of the foregoing actions or
events.
Guarantor waives diligence, presentment, protest, notice of dishonor,
demand for payment, notice of non-payment or non-performance, notice of
acceptance of this Guaranty and all other notices of any nature in connection
with the exercise of Landlord's right under the Lease or this Guaranty.
Guarantor waives all rights to setoffs and counterclaims against Landlord and
agrees that any rights which Guarantor might now or hereafter hold against
Tenant will be subordinate, junior and inferior to all rights which Landlord
might now or hereafter hold against Tenant.
In addition to all other sums due and owing by Guarantor hereunder,
Guarantor shall pay to Landlord upon demand all reasonable costs and expenses
incurred by Landlord in endeavoring to enforce this Guaranty.
This Guaranty is an irrevocable, absolute, continuing guarantee of
payment and not a guarantee of collection. This Guaranty may not be revoked by
Guarantor without Landlord's prior written consent and
40
Guaranty of Lease - Page 1
<PAGE>
shall continue to be effective with respect to sums due under the Lease arising
after any attempted revocation by Guarantor.
This Guaranty is binding on Guarantor and the successors and assigns of
Guarantor and will inure to the benefit of Landlord and the successors and
assigns of Landlord. Guarantor consents to the assignment of all or any portion
of the rights of Landlord under the Lease without notice to Guarantor.
If Guarantor consists of more than one person, this Guaranty is jointly
and severally binding on each Guarantor.
IN WITNESS WHEREOF, Guarantor has duly executed this Guaranty as of the
day and date set forth above.
DEY LABORATORIES, INC.,
a Delaware corporation
By: /s/ G. Michaud 1/5/98
Name: G. Michaud
Title: V.P. Operations
Guaranty of Lease - Page 2
<PAGE>
ASSIGNMENT AGREEMENT
ASSIGNMENT AGREEMENT (the "Agreement") dated as of September 1, 1998,
between DEY, L.P., a Delaware limited partnership with its principal place of
business at 2751 Napa Valley Corporate Drive, Napa, California ("Dey") and EM
PHARMA, INC., a Delaware corporation with its principal place of business at
1209 Orange Street, Wilmington, Delaware ("EM Pharma") (Dey and EM Pharma
sometimes collectively being referred to as the "Parties").
W I T N E S S E T H :
WHEREAS, pursuant to that certain letter dated September 1, 1998 from
Dey to EM Pharma, Dey has offered to contribute to the capital of EM Pharma,
all the tangible and intangible assets belonging to, and certain liabilities
and other obligations of, Dey which are used solely in connection with or
directly result from the manufacture and sale of hypothyroid products by Dey
(the "Hypothyroid Business") as of the close of business on August 31, 1998
without the issuance of additional shares of common stock of EM Pharma; and
WHEREAS, EM Pharma has accepted such offer of the contribution of the
Hypothyroid Business to the capital of EM Pharma on such terms;
NOW, THEREFORE, for and in consideration of the mutual promises
contained herein, the parties hereby agree as follows:
<PAGE>
1. Dey hereby transfers, assigns, conveys and sets over to EM Pharma,
effective September 1, 1998, all right, title and interest of Dey in and to
the Hypothyroid Business as of the close of business on August 31, 1998,
including the assets set forth in Appendix A attached hereto and hereby made a
part hereof. The estimated value of the assets and certain liabilities of the
Hypothyroid Business are set forth in Appendix B attached hereto and hereby
made a part hereof.
2. EM Pharma hereby assumes and agrees to pay, perform and discharge
when due (subject to the provisions of this Agreement) the obligations and
liabilities of Dey in respect of the Hypothyroid Business as of the close of
business on August 31, 1998 listed in Appendix C attached hereto and hereby
made a part hereof, which excludes amounts owed to affiliates of Dey.
3. The Parties agree that certain persons employed by Dey as of the
close of business on August 31, 1998 who are allocated to the Hypothyroid
Business, including approximately twenty-two (22) persons engaged in the sale
and marketing of Dey's hypothyroid product line, shall be transferred to EM
Pharma.
4. To the best knowledge of the Parties, the transfer, assignment and
conveyance of the Hypothyroid Business to EM Pharma as provided herein will
not (i) result in any breach of, constitute any default under or result in a
termination of or an acceleration under any term or
-2-
<PAGE>
provision of any commitment, contract, agreement, license or other instrument
or obligation which is part of the Hypothyroid Business or to which Dey or EM
Pharma is a party; (ii) result in any violation of any law, or any rule or
regulation of any administrative agency or governmental body or any judgment,
order, injunction or decree of any court, administrative agency or
governmental body; or (iii) cause EM Pharma to lose the benefit of any right
or privilege which Dey presently enjoys in connection with the Hypothyroid
Business. To the best knowledge of Dey, no proceedings have been instituted or
are pending or threatened which challenge the rights of Dey or EM Pharma in or
to the Hypothyroid Business.
5. Dey makes no other warranties or representations, either express
or implied, with respect to the Hypothyroid Business.
6. This Agreement shall be governed by and interpreted in accordance
with the laws of the State of Delaware. This Agreement contains the entire
agreement and understanding between the parties hereto with respect to the
subject matter hereof, and merges and supersedes all prior discussions and
writings with respect thereto. No modification of this Agreement shall be
effective unless made in writing and signed by both parties hereto.
-3-
<PAGE>
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed by their duly authorized representatives effective as of the date
first above written.
DEY, L.P.
By DEY, INC., its general partner
By: /s/ Charles Rice
--------------------------------------
Charles Rice, President and
Chief Executive Officer
EM PHARMA, INC.
By: /s/ Pamela Marrs
--------------------------------------
Pamela Marrs, Executive Vice President and
Chief Financial Officer
-4-
<PAGE>
Appendix A
----------
Hypothyroid Business Assets
Dey hereby transfers, assigns, conveys and sets over to EM Pharma all
right, title and interest of Dey in and to all properties, assets, rights,
interests and goodwill of any kind, whether tangible or intangible, wherever
located to the extent that such assets are used by Dey solely in connection
with the Hypothyroid Business of Dey as of the close of business on August 31,
1998, including the following assets:
(i) all right, title and interest of Dey in, to and under
all contracts, indentures, agreements (including sales and rebate
agreements), commitments, insurance policies, warranties and all
other legally binding arrangements, written or oral, relating to the
Hypothyroid Business, including that certain Agreement for
Manufacturing, Selling and Distribution of Products by and between
MOVA Pharmaceutical Corporation and Dey dated December 30, 1996;
(ii) all right, title and interest of Dey in, to and under
all leases, including without limitation all automobile leases and
that certain office lease between Stone Mill Properties, Inc. and Dey
dated March 11, 1997 concerning office space in Hockessin, Delaware;
(iii) all right, title and interest of Dey in and to all
ideas, software, drawings, diagrams, designs, specifications, trade
secrets, know-how, formulae, processes, proprietary information or
other rights with respect thereto, trademarks, trademark
registrations, trademark registration applications, service marks,
service mark registrations, service mark registration applications,
tradenames and all names, logos, emblems, and slogans embodying
business, product or service goodwill relating to the Hypothyroid
Business;
(iv) all books of account, general, financial, accounting,
marketing and personnel records and files, contracts files, invoices,
customers' and suppliers' lists and other records, files,
information, data or knowledge in recorded form relating to the
Hypothyroid Business;
(v) all rights, claims, causes of action and choses in
action (including, but not limited to, rights of collection, set-off
and counterclaims, rights under express and implied warranties and
rights to indemnification) relating to the Hypothyroid Business;
(vi) all computer software (including documentation and
related object and source codes) relating to the Hypothyroid
Business;
<PAGE>
(vii) all governmental licenses, permits, orders,
certificates authorizations, consents or approvals of any nature
relating to the Hypothyroid Business;
(viii) all inventory (including raw materials, work in
process and finished goods), equipment, computers, tools, vehicles,
furnishings, supplies, purchase and sale forms and sales literature
relating to the Hypothyroid Business;
(ix) all accounts receivable of Dey accrued as of the date
hereof relating to the Hypothyroid Business;
(x) all unbilled fees and costs of Dey relating to the
Hypothyroid Business;
(xi) all cash in transit relating to the Hypothyroid
Business; and
(xii) copies of all material contained in Dey's personnel
records for all employees of the Hypothyroid Business hired by or
transferred to EM Pharma.
-2-
<PAGE>
Appendix B
Estimated Assets and Liabilities
of the Hypothyroid Business
as of 8/31/98
Accounts Receivable $16,077
Inventory $719,195
Prepaid Items $3,200
Fixed Assets (NBV) $107,560
----------
Total Assets $846,032
Accounts Payable and Accrued Expenses $818,427
Net Assets $27,605
<PAGE>
Appendix C
Assumed Liabilities
EM Pharma hereby assumes and agrees to pay, perform and discharge
when due the following obligations and liabilities of Dey in respect of the
Hypothyroid Business as of the close of business on August 31, 1998:
(i) certain liabilities totaling $818,427 set forth on
or reserved against in the balance sheet of Dey's
Hypothyroid Business as of the close of business on
August 31, 1998, detailed as follows:
Trade Payables $ 2,691
Accrued Guaranteed Payment to Mova 666,667
Unvouchered Inventory 14,354
Accrued Medicaid Rebates 17,432
Accrued Administrative Fees 308
Accrued Commissions 54,125
Accrued Vacation 40,183
Accrued Pension 22,667
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Total $ 818,427
(ii) except as otherwise provided in the Agreement, all
contractual obligations arising from legal
commitments to which Dey is a party in connection
with the Hypothyroid Business made in the ordinary
course of the business prior to the close of
business on August 31, 1998;
(iii) any additional liabilities or obligations
incurred by Dey in connection with the
Hypothyroid Business not recorded on the
books of Dey as of the close of business
on August 31, 1998.
