<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Check One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For Quarterly Period Ended June 30, 1996 Commission File Number: 0-12798
CHIRON CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 94-2754624
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4560 Horton Street, Emeryville, California 94608
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(Address of principal executive offices) (Zip code)
(510) 655-8730
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name, former address and former
fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
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Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at August 2, 1996
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Common Stock, $0.01 par value 169,902,356 shares
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CHIRON CORPORATION
TABLE OF CONTENTS
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PAGE NO.
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
Consolidated Balance Sheets as of
June 30, 1996 and December 31, 1995 . . . . . . . . . . . . . . . .3
Consolidated Statements of Operations for the
three months and six months ended June 30, 1996 and 1995. . . . . .4
Consolidated Statements of Cash Flows for the
six months ended June 30, 1996 and 1995 . . . . . . . . . . . . . .5
Notes to Consolidated Financial Statements. . . . . . . . . . . . .6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS . . . . . . . . 17
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . 25
ITEM 2. CHANGES IN SECURITIES . . . . . . . . . . . . . . . . . . . . 25
ITEM 3. DEFAULTS UPON SENIOR SECURITIES . . . . . . . . . . . . . . . 25
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS . . . . . 25
ITEM 5. OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . 25
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. . . . . . . . . . . . . . . 26
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
2
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CHIRON CORPORATION
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
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<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
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(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 54,345 $ 74,318
Short-term investments in marketable debt securities 61,197 61,066
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Total cash and short-term investments 115,542 135,384
Accounts receivable 323,008 285,779
Inventories 181,454 165,941
Other current assets 61,950 49,899
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Total current assets 681,954 637,003
Noncurrent investments in marketable debt securities 54,458 88,833
Property, plant, equipment and leasehold improvements, at cost:
Land and buildings 209,937 208,233
Laboratory, production and office equipment 332,388 292,828
Leasehold improvements 104,903 95,472
Construction in progress 74,923 62,046
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722,151 658,579
Less: accumulated depreciation and amortization (174,616) (140,761)
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Net property, plant, equipment and leasehold improvements 547,535 517,818
Purchased technology, net 76,643 80,600
Other intangible assets, net 77,361 71,571
Investments in equity securities and affiliated companies 53,109 54,359
Other assets 49,141 40,014
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$ 1,540,201 $ 1,490,198
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 86,017 $ 81,081
Accrued compensation and related expenses 45,746 56,994
Short-term borrowings 32,198 50,036
Current portion of unearned revenue 21,463 20,838
Taxes payable 32,579 27,551
Other current liabilities 148,997 132,095
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Total current liabilities 367,000 368,595
Long-term debt 417,162 413,248
Other noncurrent liabilities 33,793 35,943
Commitments and contingencies
Stockholders' equity:
Common stock 424 417
Additional paid-in capital 1,756,762 1,727,711
Accumulated deficit (1,059,601) (1,087,699)
Cumulative foreign currency translation adjustment (4,918) 721
Unrealized gain from investments 29,579 31,262
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Total stockholders' equity 722,246 672,412
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$ 1,540,201 $ 1,490,198
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</TABLE>
THE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ARE AN INTEGRAL PART
OF THIS STATEMENT.
3
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CHIRON CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
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<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------------ ------------------------
June 30, June 30, June 30, June 30,
1996 1995 1996 1995
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<S> <C> <C> <C> <C>
Revenues:
Product sales, net $ 251,088 $ 248,333 $ 489,347 $ 432,242
Equity in earnings of unconsolidated joint businesses 22,008 21,360 45,616 39,538
Collaborative agreement revenues 23,147 4,956 54,561 10,522
Other revenues 19,492 7,103 31,962 17,695
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Total revenues 315,735 281,752 621,486 499,997
Expenses:
Cost of sales 107,133 108,547 209,112 198,829
Research and development 91,789 71,904 175,837 170,959
Selling, general and administrative 98,730 88,364 191,059 173,259
Write-off of purchased in-process technologies -- 1,759 -- 232,415
Costs related to Ciba transaction -- (43) -- 49,478
Restructuring and reorganization costs -- 1,414 -- 39,055
Other operating expenses 2,492 3,512 5,600 5,791
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Total expenses 300,144 275,457 581,608 869,786
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Income (loss) from operations 15,591 6,295 39,878 (369,789)
Other income (expense), net 6,761 (2,110) 942 (3,499)
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Income (loss) before income taxes 22,352 4,185 40,820 (373,288)
Provision for income taxes 6,997 3,355 12,722 11,661
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Net income (loss) $ 15,355 $ 830 $ 28,098 $(384,949)
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Net income (loss) per share $ 0.09 $ 0.01 $ 0.16 $ (2.40)
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Weighted average number of shares
used in computing per share amounts 177,870 163,582 178,084 160,346
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
THE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ARE AN INTEGRAL PART
OF THIS STATEMENT.
4
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CHIRON CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In thousands)
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<TABLE>
<CAPTION>
Six Months Ended
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June 30, June 30,
1996 1995
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<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 28,098 $ (384,949)
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Depreciation and amortization 54,379 46,223
Gain on sale of interest in affiliated company (12,066) --
Write-off of purchased in-process technologies -- 232,415
Other 4,312 25,500
Changes to:
Accounts receivable (36,715) 25,165
Inventories (32,153) (34,291)
Other current assets (14,923) (3,258)
Accounts payable (656) (8,342)
Accrued compensation and related expenses (11,213) (1,707)
Taxes payable 5,097 8,771
Other current liabilities 9,824 34,562
Other noncurrent liabilities 444 (16,974)
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Net cash used in operating activities (5,572) (76,885)
Cash flows from investing activities:
Purchase of investments in marketable debt securities (55,009) (74,332)
Sale and maturity of investments in marketable debt securities 88,589 203,094
Capital expenditures (55,350) (49,142)
Businesses acquired, net of cash acquired (374) (84,043)
Proceeds from sale of interest in affiliated company 14,000 --
Investments in equity securities and affiliates (6,240) (1,102)
Increase in other assets (6,582) (4,450)
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Net cash used in investing activities (20,966) (9,975)
Cash flows from financing activities:
Net borrowings (payments) under line of credit arrangements (25,345) 53,747
Proceeds from issuance of short-term debt 7,727 --
Repayment of notes payable and capital leases (5,035) (3,887)
Proceeds from capital contribution from Ciba -- 24,845
Proceeds from issuance of common stock 29,218 9,426
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Net cash provided by financing activities 6,565 84,131
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Net decrease in cash and cash equivalents (19,973) (2,729)
Cash and cash equivalents at beginning of the period 74,318 84,876
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Cash and cash equivalents at end of the period $ 54,345 $ 82,147
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</TABLE>
THE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ARE AN INTEGRAL PART
OF THIS STATEMENT.
5
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CHIRON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1996
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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
THE COMPANY
Chiron Corporation (the "Company" or "Chiron") is a science-driven
healthcare company that applies biotechnology and other techniques of
modern biology and chemistry to develop, produce and sell products intended
to improve the quality of life by diagnosing, preventing and treating human
disease. Chiron participates in four global human healthcare markets:
diagnostics, therapeutics, pediatric and adult vaccines, and ophthalmic
surgical products. Chiron also has research programs underway in gene
therapy and gene transfer, combinatorial chemistry, cardiovascular disease
and critical care.
Chiron's diagnostic business includes immunodiagnostics, critical care
diagnostics and quantitative probe tests. Chiron, through its subsidiary
Ciba Corning Diagnostics Corp. ("CCD"), provides critical blood analyte
systems which are used by hospitals to diagnose and monitor patients in
critical care settings. Chiron also provides blood screening tests, used to
detect the presence of hepatitis viruses and retroviruses, through its
joint business with Ortho Diagnostic Systems, Inc. ("Ortho"), a Johnson &
Johnson company. Chiron's therapeutics business emphasizes oncology and
infectious diseases and provides products to hospitals and large clinics in
the United States and Europe. Chiron's vaccine business is based primarily
on the sale of pediatric and flu vaccines in Italy and other non-U.S., non-
European geographic regions and to certain international health services.
Chiron is also involved in the development and marketing of new pediatric
and adult vaccines. Through its ophthalmic business, Chiron provides
products for the surgical correction of vision, as well as intraocular
implants that deliver drugs to the eye. Chiron's ophthalmic business markets
its products in the United States, Europe, and other geographic regions.
BASIS OF PRESENTATION
The information at June 30, 1996, and for the periods ended June 30,
1996 and 1995, is unaudited, but includes all normal recurring adjustments
which Chiron's management believes to be necessary for fair presentation of
the periods presented. The consolidated balance sheet amounts at December
31, 1995, have been derived from audited financial statements. Certain
previously reported amounts have been reclassified to conform with the
current period presentation. Interim results are not necessarily
indicative of results for a full year. This information should be read in
conjunction with Chiron's audited consolidated financial statements for the
year ended December 31, 1995.
The consolidated financial statements include the accounts of the
Company and its majority-owned subsidiaries. All significant intercompany
accounts and transactions have been eliminated in consolidation.
Investments in joint ventures, partnerships and interests in which Chiron
has an equity interest of 50 percent or less are accounted for using the
equity or cost method, or in accordance with Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in Debt
and Equity Securities," as appropriate. Certain foreign subsidiaries are
accounted for on a one-month lag. The preparation of financial statements
in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ materially from those estimates.
6
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FISCAL YEAR
The fiscal year of the Company is a 52 or 53-week year ending on the
Sunday nearest the last day in December of each year. As a result, the
second quarters of 1996 and 1995 represent the thirteen-week periods ended
June 30, 1996, and July 2, 1995, respectively. For presentation purposes,
dates used in the consolidated financial statements and notes refer to the
calendar month end.
INVENTORIES
Pharmaceutical inventories are stated at the lower of cost or market
using the average cost method or, in the case of vaccine products, using
the last-in, first-out ("LIFO") method. Diagnostic and ophthalmic products
are valued at cost, using the first-in, first-out ("FIFO") method which is
less than market value. Inventories consist of the following:
JUNE 30, DECEMBER 31,
1996 1995
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(IN THOUSANDS)
Finished goods $ 102,725 $ 96,327
Work in progress 34,936 28,794
Raw materials 43,793 40,820
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$ 181,454 $ 165,941
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INCOME TAXES
Income tax expense for the quarter ended June 30, 1996 is based on an
estimated annual effective income tax rate. Income tax expense for the
quarter ended June 30, 1995 includes a provision for state and foreign
taxes based on estimated annual effective rates applicable to certain of
the Company's subsidiaries.
PER SHARE DATA
Per share information is based on the weighted average number of
common and dilutive common equivalent shares outstanding. Common
equivalent shares result from the assumed exercise of outstanding options
and warrants that have a dilutive effect when applying the treasury stock
method. Shares assumed to be issued upon conversion of the Company's
convertible debentures are not included for any of the periods presented
since their inclusion would be anti-dilutive. Fully diluted per share data
has not been presented, as the amounts would not differ materially from
primary per share data.
At the annual meeting of stockholders in May 1996, stockholders
approved an amendment to the Company's restated certificate of
incorporation, increasing the number of authorized common shares from 100
million to 500 milion. Subsequently, Chiron's Board of Directors declared
a 4-for-1 stock split effected in the form of a dividend on the Company's
common stock that was distributed on August 2, 1996, to stockholders of
record on July 19, 1996. Following the distribution date, the Company
increased its common stock balance by $1.3 million for the par value of the
common stock issued to effect the stock split, and correspondingly reduced
additional paid-in capital. All warrants, stock options and convertible
bond conversion rates were adjusted for the effect of the split. All
references in these financial statements to number of shares and per share
amounts have been retroactively restated to reflect the increased number of
common shares outstanding.
7
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2. BUSINESS COMBINATIONS
FIRST QUARTER 1995 ACQUISITIONS
Effective January 1, 1995, under a series of agreements between Chiron
and Ciba-Geigy Ltd. and its affiliates ("Ciba"), Chiron acquired all of the
outstanding common stock of CCD and Ciba's interests in Chiron Biocine
Company (formerly The Biocine Company) and Biocine S.p.A. On March 31,
1995, Chiron Vision acquired the ophthalmic surgical product division of
IOLAB from Johnson & Johnson. These acquisitions were accounted for under
the purchase method of accounting. As a result of the acquisitions and as
required by generally accepted accounting principles, during the first
quarter of 1995, Chiron recognized as an expense the amount allocated to
purchased in-process technology resulting in a charge against earnings of
$230.7 million. Costs related to the Ciba transaction totaling $49.5
million were also included in the first quarter of 1995, primarily
representing employee payments and related taxes, and legal and investment
advisor fees.
ACQUISITION OF VIAGENE, INC. ("VIAGENE")
On September 29, 1995, Chiron acquired all of the outstanding common
stock of Viagene, not previously owned by the Company, in exchange for
approximately $35.5 million in cash and 916,000 shares of Chiron common
stock. Additionally, on September 29, 1995, unexercised options to
purchase Viagene common stock were converted into options to purchase
approximately 132,000 shares of Chiron common stock. Prior to the
acquisition, Chiron had an ongoing collaboration with Viagene in the area
of gene therapy and, pursuant to the collaboration arrangement, held an
investment in the outstanding voting stock of Viagene with a carrying
value, net of unrealized gains and a realized loss, of approximately $14.1
million as of September 29, 1995. The Viagene acquisition has been
accounted for under the purchase method of accounting, and accordingly,
Viagene's financial results are included in Chiron's consolidated operating
results from September 29, 1995 forward.
The following unaudited pro forma information presents the results of
operations of Chiron and Viagene for the three and six-month periods ended
June 30, 1995, with pro forma adjustments as if the acquisition had been
consummated on January 1, 1995. This pro forma information does not
purport to be indicative of what would have occurred had the acquisition
been made as of those dates or of results which may occur in the future.
The pro forma information does not include the write-off of purchased in-
process technology of $130.3 million related to the acquisition recognized
as an expense in the third quarter of 1995.
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 1995 JUNE 30, 1995
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(IN THOUSANDS, EXCEPT PER SHARE DATA)
Total revenues $ 284,210 $ 504,713
Loss before non-recurring charges (4,392) (394,695)
Loss before non-recurring charges
per share (0.03) (2.41)
AGREEMENT WITH BEHRINGWERKE AG
Effective July 1, 1996, Chiron purchased a 49 percent interest in the
human vaccine business of Behringwerke AG, a subsidiary of Hoechst AG, for
$117.2 million in cash. The final purchase price is subject to adjustment
pending the completion of a final audited balance sheet. A significant
portion of the purchase price is expected to be allocated to intangible
assets.
Under the terms of the agreement, Chiron has an option to purchase
the remaining 51 percent interest in March 1998, 1999, 2000 or 2001, and
Behringwerke AG has the option to have Chiron acquire the remaining 51
percent interest in March 2001. During the period of mutual ownership,
Chiron and Behringwerke AG will operate the vaccine business as a joint
venture.
8
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Chiron will report its share of the joint venture's results, including
amortization of the aforementioned intangible assets, as equity in
earnings of unconsolidated joint businesses.
3. RESTRUCTURING AND REORGANIZATION COSTS
During 1995, Chiron recorded $39.1 million in restructuring and
reorganization charges, including $16.9 million arising from the
acquisition and integration of IOLAB, representing the expected costs of
integrating the acquired business with Chiron's existing business as well
as write-downs of previously capitalized costs. Of the total charge of
$39.1 million, $8.0 million is due to a change in plans to expand the
Company's Emeryville research and development facilities, $7.7 million is
related to the idling of the Company's Puerto Rico manufacturing facility
and $1.0 million is related to a scale-back of manufacturing operations at
the Company's Amsterdam facility. The majority of these facility-related
charges, as well as $3.7 million of other facility-related charges, were
paid in 1995. Of the $16.9 million recorded as a result of the acquisition
of IOLAB, approximately $6.7 million related to write-downs of previously
capitalized facility and inventory costs. The remaining $10.2 million
consists of $5.5 million of employee termination costs and $4.7 million of
lease termination and other costs. The integration process is expected to
be substantially complete by the end of 1997.
The current status of the accrued restructuring charges is summarized
below:
<TABLE>
<CAPTION>
AMOUNT
AMOUNT OF UTILIZED AMOUNT TO
TOTAL THROUGH BE UTILIZED
RESTRUCTURING JUNE 30, IN FUTURE
CHARGE 1996 PERIODS
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(IN THOUSANDS)
<S> <C> <C> <C>
Chiron Vision restructuring charges:
Employee-related costs $ 5,506 $ (5,498) $ 8
Facility and lease termination costs 6,242 (2,759) 3,483
Duplicate and excess inventory 3,476 (2,366) 1,110
Other 1,724 (620) 1,104
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16,948 (11,243) 5,705
Puerto Rico manufacturing facility 7,650 (3,653) 3,997
Postponement of Emeryville facility expansion 7,990 (7,990) --
Amsterdam manufacturing facility 1,000 (1,000) --
Other facility-related 3,718 (3,718) --
Other 1,750 (1,348) 402
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$ 39,056 $ (28,952) $ 10,104
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</TABLE>
4. COLLABORATIONS AND JOINT BUSINESS ARRANGEMENTS
GENERAL
The Company has entered into a number of collaborative arrangements
with other pharmaceutical and biotechnology companies for the development
and marketing of certain technologies and products. The majority of these
collaborations are in the development or clinical trial phase. Chiron and
its collaborative partners generally contribute certain technologies and
research efforts to the collaboration. In addition, Chiron and its
collaborative partners commit, subject to certain limitations and
cancellation clauses, to share in the funding of the collaborations'
ongoing research and clinical trial costs. Chiron, under certain of the
arrangements, has purchased equity securities, including common and
preferred stock and warrants to purchase common and preferred stock, of the
collaborative partner.
9
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JAPAN TOBACCO INC. ("JT")
In March 1996, the Company and JT entered into a technology transfer
and development agreement whereby the pharmaceutical division of JT
acquired a non-exclusive, perpetual license to apply certain of Chiron's
combinatorial chemistry technologies in JT's research and product
development programs. Both Chiron and JT will share in certain
improvements to the technology made by either party, subject to certain
conditions. The agreement provides an initial technology transfer term of
two years and may be extended at the option of JT for an additional two
years. Through June 30, 1996, Chiron received initial collaborative
research agreement revenues from JT of $7.5 million, pursuant to the
agreement.
CIBA AND FOCAL INC. ("FOCAL")
In April 1996, Chiron, Ciba and Focal entered into an agreement in the
area of restenosis, the reclosure of arteries following angioplasty.
Chiron and Ciba will individually utilize its own cardiovascular drugs
together with Focal's drug delivery technology to develop products designed
to prevent restenosis. Under the terms of the agreement, Chiron and Ciba
will receive exclusive worldwide rights to Focal's technology in selected
restenosis fields for their respective drug compounds entered into the
research program. Chiron and Ciba will be individually responsible for
developing and marketing the resulting products, and Focal will retain
manufacturing rights for the final products. Chiron and Ciba will jointly
provide funding for certain preclinical studies, after which each company
will fund development for its own products. Each company will also be
individually responsible to make milestone payments to Focal for its
products developed, totaling $10.0 million per product. Through June 30,
1996, Chiron paid Focal $0.3 million for its share of costs which was
recorded as research and development expense.
RIBOZYME PHARMACEUTICALS INC. ("RPI")
In May 1996, Chiron and RPI entered into a collaboration to use RPI's
ribozyme technology to determine the function of a number of genetic
sequences. Chiron will select a certain number of gene sequences and RPI
will synthesize ribozymes that will selectively inhibit the action of the
target sequences in Chiron's assays. Chiron will have the option to
develop, and, in certain circumstances, manufacture ribozymes or other
products found to be important in disease pathology. Under the terms of
the agreement, Chiron will pay RPI for the ribozymes used in the research
and make milestone payments depending upon the number of products
successfully developed. Chiron also agreed to pay RPI royalties from the
sale of commercialized products. The royalty payments will be reduced by
up to 50 percent of the milestone payments made as it relates to specific
products.
BEN VENUE LABORATORIES, INC. ("BEN VENUE")
Effective May 1, 1996, Chiron sold its 50 percent interest in a
generic oncology business to Ben Venue, Chiron's joint venture partner, for
$14.0 million in cash, resulting in a $12.1 million gain which has been
included in other income (expense), net in the accompanying consolidated
statements of operations.
5. FINANCIAL INSTRUMENTS
FOREIGN CURRENCY CONTRACTS
To reduce its exposure to foreign currency risk, the Company enters
into forward currency contracts ("forwards") and, starting in 1996,
purchases average rate put options ("options"). Forward currency contracts
are used to hedge material foreign currency denominated receivables and
payables, while the options are used to hedge anticipated transactions.
10
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The Company does not use these financial instruments for trading or
speculative purposes.
The Company has purchased, and may in the future purchase options to
reduce the exchange rate impact of a strengthening U.S. dollar on the
underlying hedged amounts. The Company's exposure is limited to the amount
paid for the options. The cost of the options, which is recorded in other
current assets, is deferred and amortized over the relevant term of the
period hedged. Any corresponding gains are reported in income at the
conclusion of the period hedged.
At June 30, 1996, the notional amount of the forwards and options
totaled $61.8 million and $38.2 million, respectively. The options were
denominated in the following currencies: Japanese yen, French francs,
Australian dollars, Canadian dollars, Belgian francs and Spanish pesetas.
All option contracts expire through December 1996. The fair value of the
options at June 30, 1996, based upon dealer quotes, totaled approximately
$0.6 million.
CROSS CURRENCY INTEREST RATE SWAPS
The Company selectively enters into cross currency interest rate swaps
("swaps") through major financial institutions to modify the interest
and/or currency characteristics of specific outstanding debt obligations.
Each swap agreement corresponds to all or a portion of the principal
balance and term of a specific debt obligation. These swap agreements
involve the exchange of foreign currency denominated interest payments for
U.S. dollar interest payments, based upon the terms described in the swap
agreements, with an exchange of the underlying notional principal amounts
upon maturity. The net difference between the interest amounts paid and
received is recognized as an adjustment of interest expense. The related
interest amount payable or receivable from the major financial institutions
is included in other current liabilities or assets.
In May 1996, the Company entered into a swap agreement that matures in
June 1997 with a notional amount of $24.9 million. The Company effectively
converted debt denominated in U.S. dollars to Japanese yen. The agreement
provides for the Company to make quarterly interest payments starting June
30, 1996, based on a variable rate tied to three-month Japanese LIBOR (0.6%
at June 30, 1996) while receiving interest based on a variable rate tied to
three-month U.S. dollar LIBOR (5.7% at June 30, 1996).
In July 1996, the Company also entered into swap agreements that
mature in July 2001 with an aggregate notional amount of $112.6 million.
The Company effectively converted debt denominated in U.S. dollars to
German marks. The agreements provide for the Company to make quarterly
interest payments based upon a fixed German mark rate of 6.2% while
receiving interest based on a variable rate tied to three-month U.S.
dollar LIBOR.
6. LINE OF CREDIT ARRANGEMENTS
Effective in May and subsequently July 1996, the Company entered into
two separate one-year revolving, unsecured credit agreements with major
financial institutions for borrowing capabilities up to $50.0 million and
$100.0 million, respectively. Both credit facilities are guaranteed by Ciba
and provide for various borrowing rate options, as defined in the
agreements. As of June 30, 1996, no borrowings were outstanding under the
$50.0 million credit facility.
7. OPERATING LEASE
In June 1996, the Company entered into a seven-year operating lease
agreement with a group of financial institutions to rent a research and
development facility to be constructed in Emeryville, California. Under
the terms of the lease agreement, the financial institutions have committed
$195.0 million toward the total construction cost of the project. No lease
payments are required during the construction period which is expected to
last less than three years.
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Thereafter, rent amounts will be due quarterly, based upon the total
construction costs incurred.
Under the lease arrangement, which has been guaranteed by Ciba through
December 31, 1999, the Company has the option to purchase the constructed
properties. Alternatively, Chiron can cause the property to be sold to a
third party. The Company is also contingently liable, under residual value
guarantees in the event of market value declines.
8. CONTINGENCIES
ABBOTT LABORATORIES. On December 13, 1993, Chiron filed a patent
infringement action against Abbott Laboratories ("Abbott") in the United
States District Court for the Northern District of California, alleging
infringement of Chiron's U.S. Patent No. 5,156,949 ("the '949 patent").
The suit claims the use of recombinant envelope antigens in immunoassays
for Human Immunodeficiency Virus ("HIV") antibodies. On April 1, 1996,
Chiron and Ortho, Chiron's exclusive licensee under the '949 patent,
entered into a settlement agreement with Abbott under which Abbott will be
granted a royalty-bearing, non-exclusive license under the '949 patent and
foreign counterparts thereof. It is expected that the subject litigation
will be dismissed upon the execution of definitive agreements.
On September 12, 1995, the United States Patent & Trademark Office
("PTO") declared an interference between the '949 patent and an application
owned by the U.S. Government and Centocor, Inc. ("Centocor"). Chiron is
the junior party. In the above described litigation with Abbott, the
District Court granted Chiron's request for summary judgment that the U.S.
Government/Centocor application in the subject interference neither enabled
the claimed invention nor disclosed the best mode of practicing the
invention. If the PTO makes a similar ruling on either enablement or best
mode, then Chiron will become the senior party. It is not known when or on
what basis the PTO will resolve the subject interference.
On April 26, 1994, Abbott filed suit against Chiron in the United
States District Court for the Northern District of Illinois alleging that
the Company's bDNA probe assays infringed three patents licensed or
acquired by Abbott from third parties. On April 1, 1996, Chiron and Abbott
entered into a settlement agreement under which Chiron will be granted a
royalty-bearing, non-exclusive license under the three patents in suit and
the foreign counterparts thereof. It is expected that the subject
litigation will be dismissed upon the execution of definitive agreements.
BIOANALYSIS/GEN-PROBE. On March 22, 1996, CCD filed suit in the
United States District Court for the Southern District of California against
Bioanalysis Limited, Gen-Probe Incorporated and the University of Wales
College of Medicine alleging, among other things, patent infringement,
intentional interference with contractual rights and breach of contract.
CCD's claims arise under its 1984 license from Bioanalysis of
chemiluminescent technology used by CCD in its ACS-TM- and Magic-Registered
Trademark- Lite diagnostic test kits. After CCD filed suit, Bioanalysis
made certain demands and counterclaims. On July 1, 1996, the parties
entered into a settlement agreement. Under the terms of the settlement,
among other things, CCD and Bioanalysis have entered into an amended and
restated license, CCD and Gen-Probe Incorporated agreed to certain
cross-licenses, and each of the actions brought among the parties has been
dismissed.
DANIEL W. BRADLEY. On December 20, 1994, Dr. Daniel W. Bradley, a
former scientist at the U.S. Centers for Disease Control (the "CDC")
brought suit in the United States District Court for the Northern
District of California against Chiron, Ortho, certain employees of
Chiron, and the United States government. Subsequently, Bradley dismissed
the United States as a defendant. Bradley, who collaborated with Chiron
scientists on the research that led to the discovery of HCV, alleged he
has been wrongly excluded as an inventor of HCV. He requested various
forms of relief, including declarations that he was an inventor of
Chiron's patents related to HCV and that these patents were
unenforceable. Bradley further sought monetary damages and a
constructive trust on all past and future profits, as well as penalties
under federal and state Racketeering and Corrupt Organization (RICO)
statutes. On July 15, 1996, the Court dismissed Bradley's complaint with
prejudice and without further leave to amend.
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EVANS. Biocine S.p.A. ("Biocine") filed an action against Evans Medical
Limited (a division of Medeva plc) ("Evans") in the Tribunal of Milan on
October 23, 1995, alleging invalidity of Evans' Italian counterpart to its
European Patent No. 0 162 639 ("the '639 patent"), allegedly relating to the
p69 antigen of BORDATELLA PERTUSSIS. Biocine later filed a claim against
Evans with the Milan court which seeks a judgment establishing that
Biocine's Acelluvax-TM- and Acelluvax-TM- DTP vaccines do not infringe the
Italian counterpart to the '639 patent. Evans' response to the Milan
actions, filed in February 1996, asserts that Biocine's vaccines infringe
the '639 patent. The Milan court has appointed a technical consultant to
investigate issues raised in this dispute. Also, in February 1996, Chiron
and Chiron B.V. filed an action alleging invalidity and non-infringement of
Evans' Dutch equivalent to the '639 patent in the District Court of The
Hague in The Netherlands. On April 4, 1996, a similar claim was filed by
Chiron against Evans' U.K. equivalent to the '639 patent in the High Court
of Justice, Chancery Division, Patents Court of the U.K. SmithKline Beecham
Biologicals S.A. ("SKBB"), Evans' exclusive licensee to the '639 patent for
England and Wales, and Medeva plc were also named as defendants. In July
1996, Chiron was served with a suit filed by Evans in the United States
District Court for the Eastern District of Texas. This suit claims that
Chiron infringes the U.S. counterpart of the '639 patent. Evans seeks a
permanent injunction, plus damages. Chiron believes that the Biocine
vaccines do not infringe any valid claim of the '639 patent or its
counterparts. Biocine previously had opposed issuance of the '639 patent
before the European Patent Office ("EPO") and, along with other parties,
has appealed the EPO opposition decision which maintained the patent in
amended form.
INTERNATIONAL MUREX TECHNOLOGIES CORPORATION. Chiron, Ortho, and
certain Ortho affiliates have been involved in a series of legal actions
against subsidiaries of International Murex Technologies Corporation
("IMTC"). Beginning on March 2, 1992, Chiron, Ortho and Ortho Diagnostics
Systems, Ltd. ("Ortho Ltd."), brought two successive actions in the High
Court for England and Wales against Murex Diagnostics, Ltd. ("MD"),
alleging infringement of Chiron's U.K. Patent No. 2,212,511 ("the '511
patent") which covers certain HCV immunodiagnostic tests. On May 27, 1994,
the High Court granted judgment for Chiron, Ortho and Ortho Ltd., holding
the '511 patent valid and infringed, and ordered MD to pay damages in an
amount to be determined. On November 30, 1994, the High Court granted
Chiron's, Ortho's and Ortho Ltd.'s request for an injunction. Both MD and
the Chiron/Ortho parties appealed various aspects of the High Court's
judgments. In rulings on November 2 and 7, 1995, the U.K. Court of Appeal
held that, with the exception of one claim, the '511 patent is valid and
infringed, and that Chiron could amend the patent by deleting the invalid
claim, thus allowing damages proceedings in the High Court to continue. The
Court of Appeal also reversed a ruling by the High Court that MD had a
defense to the damages claimed by Ortho Ltd. prior to October 13, 1993 on
the basis of provisions in a licensing agreement between Chiron and Ortho.
The Court of Appeal denied all parties leave to appeal to the House of
Lords. Nevertheless, the parties have applied directly to the House of
Lords for leave to appeal. While the Appeal Committee of the House of
Lords has granted preliminary leave to appeal, it is not known when the
House of Lords will make a final decision regarding leave to appeal.
On February 16, 1996, the High Court ordered MD to make an interim
damages payment of 6.0 million British pounds to the Chiron/Ortho parties
by February 23, 1996. On February 22, 1996, MD made it known that it had
changed its name to Specialist Diagnostics Ltd. ("SDL"), and filed a
petition for voluntary liquidation. The High Court has ordered that a
damages inquiry be held with respect to SDL in November 1996. It is not
known how much (if any) of the original 6.0 million British pounds interim
award or any further damages award will be collected from the allegedly
insolvent SDL, or when such collection could be effected.
Infringement proceedings against IMTC subsidiaries on German and
European patents corresponding to the '511 patent were also brought by
Chiron (and in some cases with Ortho and/or its affiliated companies) in
Germany, Italy, The Netherlands and Belgium. On January 23, 1995, Chiron
was granted
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an injunction in Germany by the Dusseldorf District Court on Chiron's
German and European patents for HCV. On May 8, 1995, Chiron was granted a
cross-border preliminary injunction by the District of The Hague in The
Netherlands based on Chiron's European HCV patent, preventing infringement
by IMTC subsidiaries in The Netherlands, Belgium, France, Spain and
Luxembourg. An infringement action also has been brought against IMTC and
certain of its subsidiaries in the Federal Court of Australia, New South
Wales District Registry, in response to a suit seeking revocation of the
Australian counterpart of the '511 patent. Trial in the Australian
litigation commenced on June 24, 1996.
On April 11, 1996, the Opposition Division of the EPO upheld Chiron's
European HCV patent (Pat. No. 0 318 216) ("the '216 patent") in amended
form over the oppositions of MD/SDL, United Biomedical, Inc., F. Hoffmann-La
Roche & Co. AG., Behringwerke AG and the Research Foundation for Microbial
Diseases of Osaka University. The Opposition Division's decision is subject
to appeal.
On March 5, 1996, IMTC filed a complaint against Chiron, Johnson
& Johnson ("J&J"), Institut Pasteur and Abbott Laboratories with the
European Commission in Belgium ("EC"), alleging violations of Articles 85
and 86 of the EC Treaty and Articles 53 and 54 of the European Economic Area
Agreement concerning licensing practices under Chiron's '511 patent and the
'216 patent. The EC complaint charges that Chiron and J&J have entered into
license agreements with competitors which constitute market sharing and
price fixing in the HCV and other blood testing fields, thus abusing an
allegedly dominant position in the HCV market. IMTC claims that Chiron's
HCV patents constitute an "essential facility" which must be "freely
licensed on reasonable commercial terms." The EC complaint seeks, among
other things, interim measures in the form of a compulsory license from
Chiron to IMTC applicable in all European Union member states for the
manufacture of HCV antigen and nucleic acids for immunodiagnostic reasons.
The EC has taken no formal action on IMTC's complaint to date.
On June 11, 1996, Murex Diagnostics Australia, Pty. Limited ("MDAUS")
filed an action against Chiron and Ortho in the Federal Court of Australia,
New South Wales District Registry, General Division, alleging violation of
the Australian 1974 Trade Practices Act and seeking an order which would
restrain Chiron and Ortho from engaging in allegedly anti-competitive
activities in connection with their HCV tests. MDAUS further seeks orders
under which it would be granted, among other things, a license to
manufacture, import, supply, and sell certain MDAUS HCV products in
Australia, and damages. Chiron expects to file its defenses to this action
in August 1996.
SICOR. As of April 10, 1996, Chiron entered into a settlement
agreement which will result in dismissal of a 1991 lawsuit filed in the
United States District Court for the Northern District of California
against Cetus Oncology Corporation ("Cetus"), Ben Venue Laboratories, Inc.
("Ben Venue"), Cetus Ben Venue Therapeutics ("CBVT") and Erbamont, Inc.
("Erbamont") and its affiliates by Alco Chemicals, Ltd. ("Alco") and Sicor,
S.p.A. ("Sicor"). The Sicor complaint alleged breach of a CBVT contract to
purchase bulk doxorubicin from Sicor, as well as antitrust violations and
interference with contract and prospective advantage, and sought
unspecified damages. Cetus denied any entitlement to recovery in this
lawsuit and had filed counterclaims. In February 1995, Sicor and Alco
filed a further action in the United States District Court for the Northern
District of California and an arbitration against CBVT for amounts
allegedly owed by CBVT to Sicor and Alco for the supply of doxorubicin,
plus interest and attorneys' fees. Under the April 10, 1996 settlement
agreement, each of the actions brought among the parties was dismissed with
prejudice.
SMITHKLINE BEECHAM BIOLOGICALS S.A. ("SKBB"). Chiron owns issued
European Patent No. 0 120 551 ("the '551 patent") which relates to yeast
expression vectors containing foreign gene sequences including, for
example, Hepatitis B virus ("HBV") surface antigen, and expression methods
thereof. Chiron also owns European Patent No. 0 460 716 ("the '716
patent") which contains related claims. Chiron believes that
SKBB's Engerix-B-Registered Trademark- vaccine against HBV
infringes the
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'551 patent and the '716 patent. In April 1996, SKBB filed suit against
Chiron in the Tribunal of First Instance of Brussels seeking a declaration
that the '551 and '716 patents are: (1) null and void in Belgium; and (2)
not infringed by SKBB in a variety of European countries. SKBB also filed
an application for preliminary relief which, if granted, would suspend the
effects of the '551 and '716 patents and would allow SKBB to continue
production and commercialization of Engerix-B-Registered Trademark- in all
designated countries until a decision on validity and infringement is
rendered. A substantive hearing on SKBB's preliminary relief application
is expected to be held in October 1996.
STOCKHOLDER LITIGATION. In November 1994, Chiron, its directors, and
certain of its officers were sued in three essentially identical lawsuits
filed as class actions on behalf of Chiron stockholders, alleging that the
directors had violated their fiduciary duty by failing to maximize
stockholder value in connection with the series of transactions affected
with Ciba-Geigy, Ltd. which were announced on November 20, 1994. Two of
the actions filed respectively on November 14, 1994 and November 22, 1994
(HANNA V. CHIRON CORP., ET AL., C.A. NO. 13874, AND DEZUBE V. CHIRON
CORPORATION ET AL., C.A. 13896) were filed in the Court of Chancery of the
State of Delaware in and for New Castle County. These complaints sought
injunctive relief, rescission and attorneys' fees. Plaintiff in the HANNA
action additionally sought damages in an unspecified amount. Plaintiff in
the DEZUBE action additionally sought an accounting. The complaints were
answered by all defendants, who deny the material allegations of the
complaints. The third action was filed in the Superior Court of California,
Alameda County, Northern Division, on December 1, 1994 (PERERA ET AL., V.
CHIRON CORPORATION ET AL., C.A. NO. 744522-2). Plaintiffs there sought
injunctive and declaratory relief, and an accounting, costs and
disbursements, including attorneys' and experts' fees, and other relief.
On October 17, 1995, the PERERA plaintiffs commenced a new action (the
"Federal Action") in the United States District Court for the Northern
District of California, against the same defendants and Ciba-Geigy, Ltd.,
Ciba-Geigy's Chairman Alex Krauer, Ciba-Geigy Corporation, and Ciba Biotech
Partnership, Inc. (collectively, the "Ciba Defendants"). The Federal
Action asserts both state and federal claims, including a claim under
Sections 10(b), 14(d) and 14(e) of the Securities Exchange Act of 1934, and
seeks damages and injunctive relief. On October 23, 1995, in light of the
filing of the Federal Action, the PERERA action was dismissed by
stipulation of the parties.
Plaintiffs and all of the defendants other than the Ciba Defendants
entered into an agreement to settle the Federal Action on a class-wide
basis, subject to approval by the Court. Under the terms of that settlement
agreement, Chiron has paid attorneys fees and expenses to plaintiffs'
counsel and agreed to redeem or otherwise render ineffective the stockholder
rights plan created under that certain Rights Agreement dated as of August
25, 1994, as amended. Chiron has no other obligations under the settlement
agreement. The HANNA and DEZUBE actions are to be dismissed as moot
following approval of the settlement and dismissal of the Federal
Action. The settlement received final approval of the court on May 21,
1996.
SUMMIT TECHNOLOGY, INC. On June 11, 1996, the German Federal Patent
Court dismissed an action filed by Chiron Technolas, a subsidiary of Chiron
Vision, which sought to invalidate the German part of a European patent
held by an affiliate of Summit Technology, Inc. a manufacturer of
ophthalmic lasers. The Company is considering whether to appeal this
decision. Summit's German patent is also the subject of a separate
infringement action filed on September 24, 1994 by Summit against Chiron
Technolas and another subsidiary of Chiron Vision, Chiron Adatomed, in the
German Regional Court. The Regional Court granted judgment for Summit in
August 1995, including an injunction, and awarded damages in an amount to be
determined. The Company's appeal of the judgment is pending.
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UNITED BIOMEDICAL, INC. On May 4, 1994, Chiron instituted summary
legal proceedings against Organon Teknika, B.V., Akzo Pharma, B.V.,
subsidiaries of Akzo N.V. (all subsidiaries of Akzo N.V. (collectively
referred to as "Organon")), and United Biomedical, Inc. ("UBI"), the
supplier of Organon's HCV antigens and kits, in the District Court of The
Hague, The Netherlands, alleging infringement of the '216 patent as a
result of the defendants' manufacture and sale of HCV immunoassay kits. On
July 22, 1994, Chiron was granted a cross-border preliminary injunction
against further infringement, including sale of the UBI kit, by Organon in
Austria, Belgium, Switzerland, Germany, Spain, France, Italy,
Liechtenstein, Luxembourg, The Netherlands and Sweden. Organon and UBI
appealed the injunction. The '216 patent and the '511 patent both are
described under the heading INTERNATIONAL MUREX TECHNOLOGIES CORPORATION
above. Chiron, Ortho, Ortho Ltd. and Organon settled all European HCV
litigation pending between them on October 9, 1995, and Chiron and Ortho
were compensated for past infringement. UBI did not participate in the
settlement and has been ordered to pay Ortho Ltd. damages by the U.K. Court
of Appeal, along with Murex, as described above. A damages inquiry has not
yet been scheduled.
OTHER MATTERS. The Company is party to other matters of litigation,
certain of which is described in Item 3, Legal Proceedings, on page 10 of
the Company's report on Form 10-K for the period ended December 31, 1995,
and as to which there have been no material changes since such Form 10-K was
filed.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
The discussion below contains forward-looking statements that involve risks
and uncertainties relating to the future financial performance of Chiron
Corporation (the "Company" or "Chiron"), and actual events or results may differ
materially. In evaluating such statements, stockholders and investors should
specifically consider the various factors identified below and under the caption
"Factors That May Affect Future Operating Results" which could cause actual
results to differ materially from those indicated by such forward-looking
statements.
Chiron is a science-driven healthcare company that applies biotechnology
and other techniques of modern biology and chemistry to develop, produce and
sell products intended to improve the quality of life by diagnosing, preventing
and treating human disease. Chiron participates in four human healthcare
markets: diagnostics, including blood screening tests, automated
immunodiagnostic systems, critical blood analyte systems and new quantitative
probe tests; therapeutics, with an emphasis on oncology, serious infectious
diseases and critical care diseases; adult and pediatric vaccines; and
ophthalmic surgical products, including instruments and devices used for the
surgical correction of vision and an intraocular implant to deliver drugs into
the eye. Chiron also develops or acquires new technologies, employing these
technologies to discover and develop new products for the Company or for its
partners.
RESULTS OF OPERATIONS
Revenues
The Company's revenues are derived from a variety of sources, including
product sales, joint business arrangements, collaborative agreements and product
royalty agreements. Product sales, Chiron's largest revenue category, consists
of the following product lines for each of the three-month and six-month periods
ended June 30:
Three Months Six Months
Ended June 30, Ended June 30,
1996 1995 1996 1995
---- ---- ---- ----
(In thousands)
Diagnostic products $ 143,132 $ 137,826 $ 277,484 $ 265,267
Ophthalmic products 59,513 52,436 104,454 76,756
Vaccine products 19,472 19,591 40,306 35,435
Betaseron-Registered
Trademark- sales 12,251 22,400 33,142 24,216
Oncology products 15,671 15,168 31,820 27,936
Other products 1,049 912 2,141 2,632
--------- --------- --------- ---------
$ 251,088 $ 248,333 $ 489,347 $ 432,242
--------- --------- --------- ---------
As Chiron continues to expand its presence in international markets,
particularly European markets, seasonal fluctuations in product sales and the
related gross profit amounts have become more significant. For this reason,
revenues and gross profit amounts from certain product lines are generally
higher in the first half and fourth quarter of the year. As a result, Chiron's
results in any one quarter are not necessarily indicative of results to be
expected for a full year.
Diagnostic product sales include direct sales and sales-type leases of
fully-automated, random-access immunodiagnostic (ACS-TM-) testing systems and
reagents for these systems, as well as sales of critical blood analyte
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systems (CBA-TM-), clinical chemistry products and manual immunodiagnostic
systems. Sales of diagnostic products increased in both the second quarter and
first half of 1996 over that of 1995 primarily due to growth in immunodiagnostic
product sales resulting from increased penetration of the instruments market and
increased sales volume resulting from increased system placements and an
expanded menu of tests on the ACS-TM- system, partially offset by reduced sales
of manual immunodiagnostics.
Sales of ophthalmic products increased for both the second quarter of 1996
and on a year-to-date basis as compared to 1995 due to increased
phacoemulsification and viscoelastic product sales as well as growth in
intraocular lens sales as a result of the March 1995 acquisition of the surgical
product division of IOLAB from Johnson & Johnson, and the continuing evolution
in the marketplace favoring foldable lens technology-based products. In
addition, during the first quarter of 1996, Chiron received approval by the U.S.
Food and Drug Administration ("FDA") to market its Vitrasert-TM- Implant
(Cytovene-Registered Trademark-; Roche Laboratories) product, the first drug
delivery system to provide local, sustained therapy for the eye. The Company
recorded $4.8 million and $5.9 million of Vitrasert-TM- Implant sales during the
second quarter and first six months of 1996, respectively.
Vaccine product sales consist of sales of pediatric and adult vaccines
primarily in Italy and to international public health organizations by Chiron's
Biocine S.p.A. subsidiary ("Chiron Biocine"). Chiron Biocine's vaccine
products include Acelluvax-Registered Trademark-, a recombinant acellular
pertussis vaccine; Agrippal-Registered Trademark-, a flu vaccine; and
Polioral-TM-, an oral polio vaccine. Vaccine product sales remained relatively
constant between the second quarter of 1996 and 1995 as a result of the
temporary idling of Chiron's Italian vaccine facilities to allow for the
expansion of existing capacity and to prepare the FDA filing for commercial
production of a new genetically engineered acellular pertussis vaccine,
combined with diptheria and tetanus ("DTaP"). On a year-to-date basis, the
increase in Chiron Biocine's vaccine product sales in 1996 over 1995 is due to
Chiron Biocine's expansion into new export markets for its polio vaccine as
well as additional sales of Chiron Biocine's DTaP vaccine in Italy.
Under the terms of a development and supply agreement with Schering AG,
Germany ("Schering"), and its U.S. affiliate, Berlex Laboratories, Inc.
("Berlex"), Chiron manufactures Betaseron-Registered Trademark- (interferon
beta-1b) for Berlex. Under the terms of the agreement, Chiron earns a partial
payment for Betaseron-Registered Trademark- upon shipment to Berlex and a
subsequent payment upon Berlex's net sales of the product. Betaseron-Registered
Trademark- product sales during the second quarter of 1996 are comprised of
secondary revenues arising from net sales by Berlex, revenues from product
shipped to Schering for its Canadian and European markets, and revenues for
Betaseron-Registered Trademark- distributed by Schering for use in an early
access program for European patients prior to commercial approval in Europe.
Betaseron-Registered Trademark- product sales during the second quarter of 1995
relate primarily to initial payments for shipments of Betaseron-Registered
Trademark- product to Berlex. On a year-to-date basis, Betaseron-Registered
Trademark- sales increased in 1996 compared to 1995 primarily due to secondary
revenues arising from net sales by Berlex, and European revenues arising from
product distributed by Schering for use in an early access program for European
patients. Chiron elected not to ship Betaseron-Registered Trademark- product
for the U.S. market to Berlex during the second quarter of 1996 pending FDA
approval of labelling changes. The changes have not been finalized and,
therefore, Chiron may not ship Betaseron-Registered Trademark- product to
Berlex for the U.S. market during the third quarter of 1996. Chiron will
receive secondary revenues from Berlex's final net sales of
Betaseron-Registered Trademark- and revenues from sales into non-U.S. markets
in the third and fourth quarters of 1996.
Future levels of Chiron's Betaseron-Registered Trademark- shipments will
depend upon the rate at which new patients are enrolled from existing and future
markets, the extent to which patients, once enrolled, remain compliant with the
prescribed treatment regimen and continue to regularly receive
Betaseron-Registered Trademark-, and the impact of competing products, including
another beta interferon product that was approved for sale in the U.S. during
the second quarter of 1996. Chiron anticipates that 1996 shipments of
Betaseron-Registered Trademark- will be lower than 1995 levels, however,
reported revenue from Betaseron-Registered Trademark- will be approximately
equal to, or slightly less than, that of 1995. Based upon the level of
inventories carried by Berlex, the timing of future shipments to Berlex in 1996,
and the related revenue, may vary by quarter.
Sales of oncology products, principally Proleukin-Registered
Trademark-(aldesleukin, interleukin-2), increased during the three and
six-month periods ended June 30, 1996, over the same periods in 1995,
primarily due to increased unit sales. Average worldwide selling prices
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remained roughly constant between the second quarters of 1996 and 1995, but
increased for the first six months of 1996 compared to 1995.
The Company markets many of its commercial products internationally. As a
result, product revenues in almost all product lines are affected by fluctuating
foreign currency exchange rates. Foreign product sales were approximately $141.2
million and $274.8 million for the three-month and six-month periods ended June
30, 1996, respectively, versus $129.9 million and $247.4 million for the three-
month and six-month periods ended June 30, 1995, respectively. International
sales of diagnostic and ophthalmic products accounted for the majority of the
increase in foreign product sales between periods. For the three-month and six-
month periods ended June 30, 1996, approximately 56 percent of Chiron's product
sales were denominated in foreign currencies. Product sales would have been
approximately three percent higher for the second quarter of 1996 if currency
exchange rates had remained constant with the comparable period in 1995. For
the first six months of 1996, the net effect of changing foreign currency
exchange rates did not significantly impact product sales when compared with
1995. Changing currency exchange rates have had, and will continue to have, an
impact on Chiron's results. The Company's other revenues, discussed below, are
largely denominated in U.S. dollars but are impacted by the Company's joint
partners' and collaborators' non-U.S. operations.
Chiron's one-half interest in the pretax operating earnings of its joint
diagnostic business with Ortho Diagnostic Systems, Inc. ("Ortho") represents the
largest component of joint business revenues. The joint business receives a
royalty from Abbott Laboratories ("Abbott") for Abbott's sales of hepatitis C
virus ("HCV") tests which use the Chiron technology and which compete directly
with tests marketed by Ortho. Results from the joint venture are recorded by
Chiron on a one-month lag based upon estimates supplied by Ortho and are subject
to a final annual accounting during the first quarter of the subsequent year.
During the second quarter of 1996, the joint venture recorded increased sales
from the introduction of a new HIV antigen test. This increase, as well as
increased royalties received from Abbott's sales of HCV tests, was offset by
increased sales and marketing costs associated with the introduction of Ortho's
new HIV antigen test and by reduced profits from sales to Ortho's foreign
affiliates. Chiron's share of the pretax earnings of the joint business
increased by $4.1 million in the first six months of 1996 as compared to 1995,
primarily due to adjustments arising from the final 1995 accounting. In
addition, the joint venture experienced a growing volume of HCV tests sold to
overseas markets and increased royalties received from Abbott's sales of HCV
tests. These increases more than offset a reduction between periods in gross
profit margins and an increase in sales and marketing, and research and
development expenses.
Collaborative agreement revenues consist of fees received for research
services as they are performed, fees received for completed research or
technology, fees received upon attainment of benchmarks specified in the related
research agreements, and proceeds from sales of biological materials to research
partners for clinical and preclinical testing. Collaborative agreement revenues
for the second quarter and first six months of 1996 increased when compared to
the comparable periods of 1995. The increase between periods is primarily
attributable to $15.0 million and $31.0 million received during the second
quarter and first six months of 1996, respectively, from Ciba-Geigy Limited of
Basel, Switzerland ("Ciba") under the terms of a research funding agreement. In
1995, Ciba agreed to provide $250 million (which may be increased up to $300
million subject to certain conditions) in support of research at Chiron. Chiron
anticipates continued utilization of the research funding provided by Ciba under
the terms of the research funding agreement.
Also contributing to the increase in collaborative agreement revenues are
amounts earned by Chiron's wholly owned subsidiary, Viagene, Inc. ("Chiron
Viagene") which was acquired in September 1995. During the second quarter and
first six months of 1996, Chiron recognized revenues of $2.4 million and $4.6
million, respectively, from Chiron Viagene's collaborative agreement with Green
Cross Corporation of Japan for HIV gene therapy research and clinical
development. In addition, during the first six months of 1996, Chiron received
initial revenues of $7.5 million from Japan Tobacco Inc. ("JT") pursuant to the
terms of a technology transfer and development agreement whereby the
pharmaceutical division of JT acquired
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a non-exclusive, perpetual license to apply certain of Chiron's combinatorial
chemistry technologies in JT's research and product development programs.
Other revenues consist principally of product royalties, government grants
and sales fees earned by the Company for sales and marketing services rendered
on behalf of Ciba. Other revenues increased in the second quarter and first six
months of 1996 primarily due to increased sales fees received from Ciba for
sales of Aredia-Registered Trademark- (pamidronate disodium), as well as
increased nucleic acid probes reference laboratory service revenues and the
first royalties to Chiron from Schering's European sales of Betaferon-TM-. A
portion of the growth in Aredia-Registered Trademark- sales fees during the
second quarter of 1996 is due to customer anticipation of a scheduled
price increase effective July 1, 1996. Chiron currently promotes
Aredia-Registered Trademark- for Ciba on an exclusive basis in the U.S. under
the terms of a contract which expires in March 1997. Ciba has informed Chiron
that it will resume marketing of the product following the expiration of the
contract. Chiron and Ciba are negotiating the transition of the marketing
responsibilities for Aredia-Registered Trademark-, including whether Chiron
will have any ongoing role in the promotion of the product.
Costs and Expenses
Although product sales increased for the second quarter of 1996 compared to
1995, cost of sales decreased between periods. On a year-to-date basis, cost of
sales increased consistent with the increase in product sales between years.
For both the three months and six months ending June 30, 1996, gross profit
margins increased to 57 percent from 56 percent and 54 percent, respectively,
for the comparable periods in 1995. The gross profit margin increased during
the second quarter of 1996 and on a year-to-date basis due to the impact of
additional higher-margin revenues received from Berlex's net sales of
Betaseron-Registered Trademark-, and European Betaseron-Registered Trademark-
revenues arising from product distributed by Schering for use in an early access
program for European patients. Also contributing to the increase in gross
profit margins are improved margins arising from ophthalmic sales of
viscoelastic products and an improved ophthalmic product mix. These increases
in gross profit margin were partially offset by reduced margins on vaccine sales
arising from the costs of temporarily idled manufacturing facilities in Italy.
Gross margin percentages may fluctuate significantly in future periods as the
Company's product mix continues to evolve and as the costs of new facilities are
included in cost of goods sold.
Research and development expenses increased in the second quarter and first
six months of 1996, as compared to 1995, partially due to the Company's
acquisition of Chiron Viagene in the third quarter of 1995.
Chiron Viagene is engaged in the discovery and development of gene transfer
drugs for the treatment of severe viral infections, cancers and other diseases
and added $4.2 million and $9.1 million of research and development expense
during the second quarter and first six months of 1996, respectively. In
addition, research and development expense increased by $4.5 million and $6.3
million during the second quarter and first six months of 1996, respectively,
due to Chiron's effort to obtain FDA approval of its DTaP vaccine. During the
second quarter and first six months of 1996, Chiron incurred an additional $3.5
million and $6.7 million related to continued development of improvements to
existing immunodiagnostic instrument systems as well as continued development of
the branched DNA probe tests, used to quantify levels of virus and other
indicators of disease. Also contributing to the increase during the second
quarter of 1996 is an additional $5.8 million as a result of ongoing basic
research efforts focused on identifying potentially promising new drug
compounds.
Partially offsetting these increases to research and development expense
during the first six months of 1996 are the following items, recognized as
research and development expense pursuant to collaborative arrangements with
other pharmaceutical and biotechnology companies in the first six months of
1995:
- The Company paid $8.8 million to G.D. Searle & Co. for the development
and marketing of Tissue Factor Pathway Inhibitor products;
- Chiron made a $3.5 million milestone payment to DepoTech Corporation
("DepoTech") for the research, development and marketing of products
incorporating certain drug delivery technologies developed by DepoTech;
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- An initial license payment of $2.5 million was paid by Chiron to
Progenitor, Inc. ("Progenitor"), pursuant to a collaboration for the
development and commercialization of therapeutic and vaccine products
incorporating Progenitor's proprietary gene therapy technology;
- The Company reached an agreement with Genelabs Technologies, Inc.
("Genelabs"), whereby Chiron and Genelabs cross-licensed certain
rights to HCV virus, hepatitis G virus, human T-cell leukemia virus -
I and human T-cell leukemia virus - II diagnostic tests. From
payments totaling $8.5 million, approximately $6.4 million was
recognized as expense during the first six months of 1995;
- Chiron made a $5.0 million initial payment to New York University
("NYU") under an agreement whereby Chiron and its sublicensee, Ciba,
acquired certain rights to NYU's optical gene mapping technology.
Selling, general and administrative expenses ("SG&A expenses") increased in
the second quarter and first six months of 1996 over the same periods of 1995
primarily due to additional sales and marketing efforts related to branched DNA
probe tests, critical blood analyte and immunodiagnostic instrument systems.
SG&A expenses in the ophthalmic business were also higher in 1996 due to the
acquisition of IOLAB in March 1995 and increased costs related to an expanded
ophthalmic sales force, resulting from the integration of Chiron's operations
with IOLAB. Selling and marketing expenses represent the largest portion of
total SG&A expenses, as Chiron devoted significant resources to support sales
volumes in its product lines.
In the second quarter of 1995, the write-off of purchased in-process
technology consists of $1.8 million from an increase in Chiron's ownership of
Technolas GmbH, a German laser business. In the first six months of 1995, the
write-off of purchased in-process technology also includes $220.4 million for
the acquisitions from Ciba of Ciba Corning Diagnostics Corp. ("CCD") and Ciba's
interests in Biocine S.p.A. and The Biocine Company ("Chiron Biocine Company"),
and $10.3 million for the acquisition of IOLAB.
In 1995, costs related to the Ciba transaction consist primarily of
employee payments and related tax liabilities and legal and investment advisor
fees.
Restructuring and reorganization costs for the first six months of 1995
represent certain accrued costs of integrating the acquired businesses with
Chiron's existing businesses, costs related to the idling of the Company's
Puerto Rico manufacturing facility and the scaling-back of manufacturing
operations at the Company's Amsterdam facility, and costs related to the write-
down of duplicate facilities at the Company's Emeryville, California,
headquarters. Also included was a charge related to the change in plans to
expand the Company's Emeryville research and administrative facilities.
Other Items
Other income (expense), net, consists primarily of investment income on the
Company's cash and investment balances and interest expense on convertible
subordinated debentures, other debt and capital leases. Other income (expense),
net, was negatively effected during the second quarter and the first half of
1996 over the comparable periods of 1995 by reduced investment income arising
from lower cash balances in the Company's investment portfolio. This reduction
was more than offset by a $12.1 million gain arising from the sale of the
Company's one-half interest in a generic cancer chemotherapeutics business,
effective May 1, 1996.
Through May 1, 1996, Chiron recognized $2.5 million of equity in earnings
of joint businesses from its one-half interest in the generic cancer
chemotherapeutics business that is described above. During the six months ended
June 30, 1995, Chiron recognized $1.3 million of equity in earnings.
The provision for income taxes in the second quarter and the first half of
1996 is based on an estimated annual effective income tax rate. The provision
for income taxes in the second quarter and the first half of 1995 was comprised
primarily of foreign taxes on certain foreign operations of the Company.
Substantially all of the write-
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off of purchased in-process technologies was not deductible for income tax
purposes and thus did not create a tax benefit in 1995.
LIQUIDITY AND CAPITAL RESOURCES
Chiron's capital requirements are generally funded from public and private
sales of equity and debt. In addition to these sources of capital, future
capital requirements may be financed through a combination of debt, utilization
of research funding from Ciba, possible off-balance sheet financing (such as R&D
limited partnerships and operating leases), and the use of existing cash and
investment balances. Until required for operations, Chiron's policy is to keep
its cash and investments, which totaled approximately $170.0 million at June 30,
1996, in a diversified portfolio of investment grade financial instruments,
including money market instruments, corporate notes and bonds, government or
government agency securities, or other debt securities. By policy, the amount
of credit exposure to any one institution is limited. These investments are
generally not collateralized and primarily mature within three years.
Investments with maturities in excess of one year are presented on the balance
sheet as noncurrent investments.
Chiron attempts to reduce its exposure to fluctuations in foreign currency
exchange rates by entering into forward currency contracts ("forwards") and
average rate put options ("options"). Forwards are used to hedge balance sheet
exposure resulting from completed transactions denominated in a foreign
currency, and options are used to hedge anticipated transactions. Forward
contracts are settled quarterly and currently outstanding option contracts
mature within six months. As of June 30, 1996, the Company held forward and
option contracts totaling $61.8 million and $38.2 million, respectively.
In future periods, Chiron expects to incur substantial capital spending
consistent with the Company's commitment to expand its manufacturing capacity
for specific products. Through the six months ended June 30, 1996, Chiron
continued the expansion of certain vaccine production facilities in Italy as
well as the planned expansion of its research and development and certain
administrative facilities in Emeryville. The expansion of the Emeryville
facilities is projected to occur in stages over the next thirty years. In June
1996, Chiron entered into a seven-year operating lease agreement with a group of
financial institutions to rent a research and development facility to be
constructed as part of the Emeryville expansion project. Under the terms of
this agreement, the financial institutions have committed $195.0 million
towards the total construction cost of the project. No lease payments will be
required during the construction period which is expected to last less than
three years.
Effective in May and July, 1996, Chiron expanded its short-term borrowing
capacity by entering into two separate one-year revolving, unsecured credit
agreements with major financial institutions for borrowing capabilities up to
$50.0 million and $100.0 million, respectively. The new credit facilities
are guaranteed by Ciba and provide for various borrowing rate options, as
defined in the agreements.
During 1996, Chiron selectively entered into cross currency interest rate
swaps ("swaps") to modify the interest and/or currency characteristics of
specific outstanding debt obligations. During the second quarter of 1996,
Chiron entered into a one-year swap agreement with a notional amount of $24.9
million, effectively converting debt denominated in U.S. dollars to Japanese yen
and lowering the effective variable interest rate. During July 1996, Chiron
also entered into swap agreements that mature in July 2001 with an aggregate
notional amount of $112.6 million, effectively converting debt denominated in
U.S. dollars to German marks and modifying the interest rate from a variable
rate to a fixed German mark rate of 6.2 percent.
In July 1996, Chiron purchased a 49 percent interest in the human vaccine
business of Behringwerke AG, a subsidiary of Hoechst AG, for $117.2 million in
cash. This amount is subject to adjustment pending the completion of a final
audited balance sheet. Under the terms of the agreement, Chiron has an option
to purchase the remaining 51 percent interest over the next five years and
Behringwerke AG has the option to have Chiron acquire the remaining interest in
March 2001. In addition, during the first quarter of 1996, Chiron entered into
a binding heads of agreement with a third party pursuant to which Chiron expects
to invest approximately $30.0 million for a combination of preferred
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stock and debt. Consummation of this transaction is subject to the negotiation
and execution of definitive agreements, as well as regulatory approvals and
customary closing conditions.
Chiron's liquidity may be further impacted in future periods by its
decision to fund its share of expenses in certain of its joint ventures and
collaboration agreements. Over the next several years, Chiron anticipates
funding collaborations with a number of research partners, and may make
additional equity investments in collaborative partners.
During the six months ended June 30, 1996, cash and cash equivalents
decreased by $20.0 million. Of this amount, $5.6 million was used in the
Company's operating activities, compared to $76.9 million used during the six
months ended June 30, 1995.
Investing activities consumed cash of $21.0 million during the first six
months of 1996, versus $10.0 million in 1995. During 1996, net sales of
marketable debt securities and capital expenditures totaled $33.6 million and
$55.4 million, respectively, versus $128.8 million and $49.1 million,
respectively, during 1995. Additionally, in 1995 Chiron received $14.2 million,
net of cash paid, through its acquisition of CCD, Biocine S.p.A. and Chiron
Biocine Company and paid $95.0 million in cash for the acquisition of IOLAB. In
1996, Chiron received $14.0 million from the sale of its one-half interest in a
generic cancer chemotherapeutics business.
Cash provided by financing activities of $6.6 million during the first six
months of 1996 reflects cash proceeds of $29.2 million received from the
exercise of stock options and issuance of stock under the Company's employee
stock purchase plan, offset by net debt payments of $22.6 million. Cash
provided by financing activities of $84.1 million during the comparable period
in 1995 includes approximately $53.7 million primarily related to borrowings
under a line of credit arrangement, and a capital contribution of $24.8 million
pursuant to the 1995 agreements with Ciba.
Chiron believes that its cash and investments, funds provided by operations,
and funding arrangements discussed above, together with Ciba's agreement in 1995
to guarantee $425.0 million of new debt for Chiron and Chiron's option to issue
up to $500.0 million of new equity to Ciba, will be sufficient to meet its cash
requirements during the upcoming twelve months and through the foreseeable
future.
FACTORS THAT MAY AFFECT FUTURE OPERATING RESULTS
Chiron wishes to caution stockholders and investors that the following
important factors, among others, in some cases have affected, and in the future
could affect, Chiron's actual results and could cause Chiron's actual
consolidated results for the third quarter of 1996, and beyond, to differ
materially from those expressed in any forward-looking statements made by, or on
behalf of, Chiron. The statements under this caption are intended to serve as
cautionary statements within the meaning of the Private Securities Litigation
Reform Act of 1995. The following information is not intended to limit in any
way the characterization of other statements or information under other captions
as cautionary statements for such purpose:
- Delays, difficulties or failure in obtaining regulatory approval
(including approval of its facilities for production) for the
Company's products. These may include, for example, approval of the
Company's Italian manufacturing facilities and processes as
satisfying FDA requirements for production of the Company's DTaP
vaccines, and approval for Myotrophin, a drug under development by
Chiron and Cephalon, Inc., for which additional clinical trials may be
required by the FDA.
- Inability to maintain or initiate third party arrangements which
generate revenues, in the form of license fees, research and
development support, royalties and other payments, in return for
rights in technology or products under development or services
provided by the Company.
- The issuance and use of patents and proprietary technology by
Chiron and its competitors, including the possible negative effect
on the Company's ability to develop, manufacture and sell its
products if it is unable to obtain licenses to patents which may be
required for such products.
- Delays or difficulties in developing and acquiring technology and
technical and managerial personnel to manufacture and/or deliver the
Company's products in commercial quantities at reasonable costs and in
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compliance with applicable quality assurance and environmental
regulations and governmental permitting requirements.
- The ability and willingness of customers to substitute competitive
products for the Company's products once other products for similar
indications are approved for marketing. For example, another beta
interferon product was approved for sale in the U.S. in the second
quarter of 1996.
- Difficulties in obtaining key raw materials and supplies for the
manufacture of the Company's products.
- Increased costs of development, regulatory approval, manufacture,
sales, and marketing associated with the introduction of novel
products and fluctuation of such costs between periods.
- Difficulties in launching or marketing the Company's products, many of
which are novel products based on biotechnology, and unpredictability
of customer acceptance of such products.
- Continued flattened growth rate in the Betaseron-Registered Trademark-
customer base in the U.S.; the extent to which patients, once
enrolled, remain compliant with the prescribed treatment regimen and
continue to regularly receive Betaseron-Registered Trademark-; the
impact of competing products, including another beta interferon
product; pricing, promotional and marketing decisions by the Company's
partner, Schering.
- Continued lower product margins resulting from the Chiron-Ortho joint
business' renegotiated contract with the American Red Cross; changes
in the product mix whereby the proportion of higher margin HCV tests
sold relative to other lower margin products is less; expanding
sales of competing HCV tests by unlicensed third parties.
- Continued increases in research and development spending in order to
develop new products and increase market share.
- Continued or increased pressure to reduce selling prices of the
Company's products.
- Underutilization of the Company's existing or new manufacturing
facilities or of any facility expansions, resulting in production
inefficiencies and higher costs; start-up costs and inefficiencies and
delays and increased depreciation costs in connection with the start
of production in new plants and expansions.
- The cost of acquiring in-process technology, either by license,
collaboration or purchase of another entity.
- Increased financing costs resulting from the expanded use of debt
for operating and acquisition-related activities.
- Amount and rate of growth in Chiron's selling, general and
administrative expenses; and the impact of unusual or infrequent
charges resulting from Chiron's ongoing evaluation of its business
strategies and organizational structures, including the continued
costs of integration of newly acquired businesses.
- The acquisition of fixed assets and other assets, including
inventories and receivables; and the making or incurring of any
expenditures and expenses, including, among others, depreciation and
research and development expenses; any revaluation of assets,
including, among others, the Company's investments in the equity
securities of other companies with whom it collaborates, or related
expenses, and the amount of, and any changes to, tax rates.
- The ability or inability of Chiron to obtain, or hedge against,
foreign currency, foreign exchange rates and fluctuations in those
rates.
- The costs and other effects of legal and administrative cases and
proceedings (whether civil, such as product-related or environmental,
or criminal); settlements and investigations; developments or
assertions by or against Chiron relating to intellectual property
rights and licenses.
- Failure of corporate partners to commercialize successfully the
Company's products or to retain and expand the markets served by the
commercial collaborations; conflicts of interest, priorities and
commercial strategies which may arise between the Company and such
corporate partners.
- Seasonal fluctuations in product sales and resulting gross margin
amounts.
- Possible negative effect on future revenues from the Company's
potential participation in the Direct Access Diagnostics home HIV
testing service business with Johnson & Johnson resulting from an
arbitration decision against Johnson & Johnson, purporting to award
ownership of certain assets of that business to a third party.
- The ability of Chiron to maintain or revise third party arrangements
which generate sales fees or other revenues in return for promotional
or other services provided by Chiron.
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ITEM 1. LEGAL PROCEEDINGS.
Information responding to Item 1 is set forth in Part 1., Item 1.,
Notes to Consolidated Financial Statements, Note 8. "Contingencies,"
which information is incorporated herein by reference.
ITEM 2. CHANGES IN SECURITIES.
Under the terms of an agreement approved and entered on May 21, 1996,
settling certain litigation relating to the Company's strategic
alliance with Ciba Geigy, Ltd., the Company agreed to terminate,
redeem or otherwise render ineffective the Rights Agreement dated
August 25, 1994, and as amended on November 20, 1994, between the
Company and its stock transfer agent, and the stockholder rights plan
thereunder, relating to the Company's common stock, $0.01 par value
(the "Rights Agreement"). (See the paragraph entitled "Stockholder
Litigation" in footnote 8, "Contingencies", to the Notes to the
Consolidated Financial Statements for a description of the underlying
litigation.) Accordingly, the Company has amended the Rights Agreement
to change the final expiration date of that Agreement to the close of
business on August 23, 1996, whereupon the Rights Agreement and
related stockholder rights plan will expire and have no further effect.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES. None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The Annual Meeting of Stockholders of Chiron Corporation was held on
May 16, 1996. The following items were voted upon by the
stockholders:
(a) The following persons, who were the only nominees, were elected
as Class III directors to hold office for three years until 1999
and received the following number of votes:
For Withheld
William J. Rutter 37,531,118 176,378
Jack W. Schuler 37,529,761 177,735
Lewis W. Coleman 37,530,074 177,422
The terms of office of Donald Glaser, Alex Krauer, Pierre Douaze,
Edward E. Penhoet, Pieter Strijkert and Henri Schramek continued
after the meeting.
(b) A proposal to approve and adopt an amendment to the Company's
Restated Certificate of Incorporation to increase the authorized
number of shares of Common Stock of the Company from 100 million
to 500 million as set forth in the Chiron Corporation Proxy
Statement dated April 11, 1996, was approved by the stockholders.
The following votes were cast as to such proposal: For:
33,852,006; Against: 3,800,601; Abstain: 54,889.
(c) A proposal to approve the amended Chiron 1991 Stock Option Plan
to change the formula for granting automatic annual stock options
to non-employee directors, to add an annual grant of automatic
share rights for non-employee directors, and to add performance
units, which are restricted shares, share rights and share units
awarded to corporate vice presidents and other executive officers
which comply with the requirements of Internal Revenue Code
Section 162(m) as set forth in the Chiron Corporation Proxy
Statement dated April 11, 1996, was approved by the stockholders.
The following votes were cast as to such proposal: For:
35,735,559; Against: 1,462,516; Abstain: 87,495; Broker Non-
Votes: 421,926.
(d) A proposal to ratify the selection of KPMG Peat Marwick LLP as
independent public accountants for the Company for the fiscal
year ending December 31, 1996, was approved by the stockholders.
The following votes were cast as to such proposal: For:
37,630,912; Against: 44,693; Abstain: 31,891.
ITEM 5. OTHER INFORMATION. None.
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) EXHIBITS.
Exhibit
Number Exhibit
- ------- -------
2.01 Agreement and Plan of Merger, made as of February 6, 1987,
incorporated by reference to Exhibit 2.01 of the Registrant's Form
10-Q report for the period ended September 30, 1994.
3.01 Restated Certificate of Incorporation of the Registrant, dated August
18, 1987, incorporated by reference to Exhibit 3.01 of the
Registrant's Form 10-K report for fiscal year 1991.
3.02 Certificate of Amendment of Restated Certificate of Incorporation of
the Registrant, dated December 12, 1991, incorporated by reference to
Exhibit 3.01 of the Registrant's Form 10-K report for fiscal year
1991.
3.03 Bylaws of the Registrant, as amended, incorporated by reference to
Exhibit 3.03 of the Registrant's Form 10-K report for fiscal year
1994.
3.04 Certificate of Amendment of Restated Certificate of Incorporation of
the Registrant, dated May 21, 1996.
4.01 Indenture, dated as of May 21, 1987, between Cetus Corporation and
Bankers Trust Company, Trustee, incorporated by reference to Exhibit
4.01 of the Registrant's Form 10-Q report for the period ended
September 30, 1994.
4.02 First Supplemental Indenture, dated as of December 12, 1991, by and
among Registrant, Cetus Corporation, and Bankers Trust Company,
incorporated by reference to Exhibit 4.02 of the Registrant's Form
10-K report for fiscal year 1992.
4.03 Second Supplemental Indenture, dated as of March 25, 1996, by and
among the Registrant, Cetus Oncology Corporation (formerly Cetus
Corporation), and Bankers Trust Company.
4.04 Indenture, dated as of November 15, 1993, between Registrant and The
First National Bank of Boston, as Trustee, incorporated by reference
to Exhibit 4.03 of the Registrant's Form 10-K report for fiscal year
1993.
4.05 Rights Agreement, dated as of August 25, 1994, between the Company and
Continental Stock Transfer & Trust Company, which includes the
Certificate of Designations for the Series A Junior Participating
Preferred Stock as Exhibit A, the form of Right Certificate as Exhibit
B and the Summary of Rights to Purchase Preferred Shares as Exhibit C,
incorporated by reference to Exhibit 4.04 of the Registrant's current
report on Form 8-K dated August 25, 1994.
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4.06 Amendment No. 1 to Rights Agreement dated as of November 20, 1994,
between Chiron Corporation and Continental Stock Transfer & Trust
Company, incorporated by reference to Exhibit 4.05 of the Registrant's
current report on Form 8-K, dated November 20, 1994.
4.07 $1,000,000 County of Lorain, Ohio Variable Rate Industrial Revenue
Bonds dated as of July 1, 1984, due July 1, 2014, incorporated by
reference to Exhibit 4.06 of the Registrant's Form 10-Q report for the
period ended April 2, 1995. The Registrant agrees to furnish to the
Commission upon request a copy of such agreement which it has elected
not to file under the provisions of Regulation 601(b)(4)(iii).
4.08 $1,000,000 Walpole Industrial Development Authority 6.75% Industrial
Revenue Bonds dated as of July 1, 1979, due July 1, 2004, incorporated
by reference to Exhibit 4.07 of the Registrant's Form 10-Q report for
the period ended April 2, 1995. The Registrant agrees to furnish to
the Commission upon request a copy of such agreement which it has
elected not to file under the provisions of Regulation 601(b)(4)(iii).
4.09 Amendment No. 2 to Rights Agreement dated as of August 9, 1996,
between Chiron Corporation and Continental Stock Transfer & Trust
Company.
10.01 Lease between Registrant and BGR Associates, a California limited
partnership, dated May 26, 1989, incorporated by reference to Exhibit
10.01 of the Registrant's Form 10-Q report for the period ended
September 30, 1994.
10.02 First Amendment to Lease between Registrant and BGR Associates, a
California limited partnership, incorporated by reference to Exhibit
10.02 of the Registrant's Form 10-K report for fiscal year 1995.
10.03 Lease between Registrant and BGR Associates II, a California limited
partnership, dated May 26, 1989, incorporated by reference to Exhibit
10.02 of the Registrant's Form 10-Q report for the period ended
September 30, 1994.
10.04 First Amendment to Lease between Registrant and BGR Associates II, a
California limited partnership, dated as of March 15, 1995,
incorporated by reference to Exhibit 10.04 of the Registrant's Form
10-K report for fiscal year 1995.
10.05 Agreement and Plan of Merger dated as of April 23, 1995 between
Viagene, Inc., a Delaware corporation, and Chiron Corporation,
incorporated by reference to Exhibit 10.67 of the Registrant's current
report on Form 8-K dated April 24, 1995.
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10.06 Stockholders' Agreement dated as of April 23, 1995 among certain
stockholders of Viagene, Inc., a Delaware corporation, and Chiron
Corporation, incorporated by reference to Exhibit 10.68 of the
Registrant's current report on Form 8-K dated April 24, 1995.
10.07 Stock and Asset Purchase Agreement dated as of March 6, 1995, by and
among Johnson & Johnson, a New Jersey corporation, Site Microsurgical
Systems, Inc., a Pennsylvania corporation, and Chiron Corporation and
Amendment No. 1 to Stock and Asset Purchase Agreement, entered into
March 31, 1995 by and among Johnson & Johnson, Site Microsurgical
Systems, Inc. and Chiron Corporation, incorporated by reference to
Exhibit 10.05 of the Registrant's Form 10-Q report for the period
ended April 2, 1995.
10.08 Revolving Credit Facility dated as of March 24, 1995, between Chiron
Corporation and Swiss Bank Corporation, San Francisco Branch,
incorporated by reference to Exhibit 10.06 of the Registrant's Form
10-Q report for the period ended April 2, 1995.
10.09 Joint Venture Agreement by and between Chiron Biocine Corporation, a
California corporation, and CIBA-GEIGY Biocine Corporation, a Delaware
corporation, dated April 15, 1987 (with certain confidential
information deleted), incorporated by reference to Exhibit 10.23 of
the Registrant's Form 8 filed with the Commission on February 14,
1992.
10.10 Amendment to Biocine Joint Venture Agreement by and between Chiron
Biocine Corporation, a California corporation, and CIBA-GEIGY Biocine
Corporation, a Delaware corporation, effective as of January 1, 1992,
incorporated by reference to Exhibit 10.63 to Registrant's Form 10-Q
report for the period ended June 30, 1992.
10.11 Research and License Agreement by and between Registrant and The
Biocine Company, a Delaware partnership, dated April 15, 1987 (with
certain confidential information deleted), incorporated by reference
to Exhibit 10.24 of the Registrant's Form 8 filed with the Commission
on February 14, 1992.
10.12 License Agreement by and between CIBA-GEIGY Biocine Corporation, a
Delaware corporation, and The Biocine Company, a Delaware partnership,
dated April 15, 1987 (with certain confidential information deleted),
incorporated by reference to Exhibit 10.25 of the Registrant's Form 8
filed with the Commission on February 14, 1992.
10.13 License Agreement by and between Chiron Biocine Corporation, a
California corporation, and The Biocine Company, a Delaware
partnership, dated April 15, 1987 (with certain confidential
information deleted), incorporated by reference to Exhibit 10.26 of
the Registrant's Form 8 filed with the Commission on February 14,
1992.
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10.14 Letter Agreement signed by CIBA-GEIGY Corporation, dated April 15,
1987, incorporated by reference to Exhibit 10.13 of the Registrant's
Form 10-Q report for the period ended September 30, 1994.
10.15 Agreement between the Registrant and Ortho Diagnostic Systems, Inc., a
New Jersey corporation, dated August 17, 1989, and Amendment to
Collaboration Agreement between Ortho Diagnostic Systems, Inc. and
Registrant, dated December 22, 1989 (with certain confidential
information deleted), incorporated by reference to Exhibit 10.14 of
the Registrant's Form 10-Q report for the period ended September 30,
1994.
10.16 License and Supply Agreement between Ortho Diagnostic Systems, Inc., a
New Jersey corporation, the Registrant and Abbott Laboratories, an
Illinois corporation, dated August 17, 1989 (with certain confidential
information deleted), incorporated by reference to Exhibit 10.15 of
the Registrant's Form 10-Q report for the quarter ended June 30, 1994.
10.17 Chiron 1991 Stock Option Plan, as amended, incorporated by reference
to Annex 2 of the Registrant's Proxy Statement dated April 11, 1996.*
10.18 Forms of Option Agreements, Chiron 1991 Stock Option Plan, as amended,
incorporated by reference to Exhibit 10.17 of the Registrant's Form
10-K report for fiscal year 1993.*
10.19 Forms of Option Agreements, Cetus Corporation Amended and Restated
Common Stock Option Plan, incorporated by reference to Exhibit 10.33
of Registrant's Form 10-K report for fiscal year 1991.*
10.20 Forms of Supplemental Letter concerning the assumption of Cetus
Corporation options by Chiron, incorporated by reference to Exhibit
10.34 of Registrant's Form 10-K report for fiscal year 1991.*
10.21 Agreement and Plan of Reorganization dated as of October 11, 1991 by
and among the Registrant, Chiron Ophthalmics, Inc., COI Acquisition
Corp., IntraOptics, Inc. and James R. Cook, M.D., incorporated by
reference to Exhibit 28.2 of Registrant's current report on Form 8-K
dated October 14, 1991.
10.22 Indemnification Agreement between the Registrant and Dr. William J.
Rutter, dated as of February 12, 1987 (which form of agreement is used
for each member of Registrant's Board of Directors), incorporated by
reference to Exhibit 10.21 of the Registrant's Form 10-Q report for
the period ended September 30, 1994.
10.23 Stock Purchase Agreement by and between the Registrant and Johnson &
Johnson Development Corporation, a corporation organized and existing
under the laws of the State of New Jersey, dated as of October 3,
1986, incorporated by reference to Exhibit 10.22 of the Registrant's
Form 10-Q report for the period ended September 30, 1994.
29
<PAGE>
10.24 Revolving Credit Agreement, dated as of July 12, 1996, between
Registrant and Bank of America National Trust and Savings Association.
10.25 Form of Debenture Purchase Agreement between the Registrant and CIBA-
GEIGY, Limited, a Swiss corporation, dated June 22, 1990, incorporated
by reference to Exhibit 10.25 of the Registrant's Form 10-K report for
fiscal year 1994.
10.26 Chiron Corporation 1.90% Convertible Subordinated Note due 2000,
Series B, incorporated by reference to Exhibit 10.25 of the
Registrant's Form 10-K report for fiscal year 1993.
10.27 Investment Agreement dated as of November 20, 1994 among Ciba-Geigy
Limited, Ciba-Geigy Corporation, Ciba Biotech Partnership, Inc. and
Chiron Corporation, incorporated by reference to Exhibit 10.54 of the
Registrant's current report on Form 8-K dated November 20, 1994.
10.28 Governance Agreement dated as of November 20, 1994 among Ciba-Geigy
Limited, Ciba-Geigy Corporation and Chiron Corporation, incorporated
by reference to Exhibit 10.55 of the Registrant's current report on
Form 8-K dated November 20, 1994.
10.29 Subscription Agreement dated as of November 20, 1994 among Ciba-Geigy
Limited, Ciba-Geigy Corporation, Ciba Biotech Partnership, Inc. and
Chiron Corporation, incorporated by reference to Exhibit 10.56 of the
Registrant's current report on Form 8-K dated November 20, 1994.
10.30 Cooperation and Collaboration Agreement dated as of November 20, 1994,
between Ciba-Geigy Limited and Chiron Corporation, incorporated by
reference to Exhibit 10.57 of the Registrant's current report on Form
8-K dated November 20, 1994.
10.31 Registration Rights Agreement dated as of November 20, 1994 between
Ciba Biotech Partnership, Inc. and Chiron Corporation, incorporated by
reference to Exhibit 10.58 of the Registrant's current report on Form
8-K dated November 20, 1994.
10.32 Market Price Option Agreement dated as of November 20, 1994 among
Ciba-Geigy Limited, Ciba-Geigy Corporation, Ciba Biotech Partnership,
Inc. and Chiron Corporation, incorporated by reference to Exhibit
10.59 of the Registrant's current report on Form 8-K dated
November 20, 1994.
10.33 Amendment dated as of January 3, 1995 among Ciba-Geigy Limited, Ciba-
Geigy Corporation, Ciba Biotech Partnership, Inc. and Chiron
Corporation, incorporated by reference to Exhibit 10.60 of the
Registrant's current report on Form 8-K dated January 4, 1995.
30
<PAGE>
10.34 Supplemental Agreement dated as of January 3, 1995 among Ciba-Geigy
Limited, Ciba-Geigy Corporation, Ciba Biotech Partnership, Inc. and
Chiron Corporation, incorporated by reference to Exhibit 10.61 of the
Registrant's current report on Form 8-K dated January 4, 1995.
10.35 Amendment with Respect to Employee Stock Option Arrangements dated as
of January 3, 1995 among Ciba-Geigy Limited, Ciba-Geigy Corporation,
Ciba Biotech Partnership, Inc. and Chiron Corporation, incorporated by
reference to Exhibit 10.62 of the Registrant's current report on Form
8-K dated January 4, 1995.*
10.36 Supplemental Benefits Agreement, dated July 21, 1989, between the
Registrant and Dr. William J. Rutter, incorporated by reference to
Exhibit 10.27 of the Registrant's Form 10-Q report for the period
ended September 30, 1994.*
10.37 Lease dated as of July 1, 1983 between Cetus Corporation and H.B.
Chapman, Jr., incorporated by reference to Exhibit 10.28 of the
Registrant's Form 10-Q report for the period ended September 30, 1994.
10.38 Amendment to Lease, made as of March 20, 1990, amending Lease dated
July 1, 1983, between Harold B. Chapman, Jr. and Cetus Corporation,
incorporated by reference to Exhibit 10.37 of the Registrant's Form
10-Q report for the period ended April 2, 1995.
10.39 Second Amendment to Lease made as of January 1, 1995 between Harold B.
Chapman, Jr. and the Registrant, incorporated by reference to Exhibit
10.39 of the Registrant's Form 10-K report for fiscal year 1995.
10.40 Lease commencing March 1, 1987, between EuroCetus B.V. and the
Municipal Land Company of the City of Amsterdam (Translation),
incorporated by reference to Exhibit 10.40 of the Registrant's Form
10-K report for fiscal year 1995.
10.41 Form of Option Agreement (with Purchase Agreements attached thereto)
between Cetus Corporation and each former limited partner of Cetus
Healthcare Limited Partnership, a California limited partnership,
incorporated by reference to Exhibit 10.31 of the Registrant's Form
10-Q report for the period ended September 30, 1994.
10.42 Form of Option Agreement (with forms of Purchase Agreements attached
thereto), dated December 30, 1986, between Cetus Corporation and each
former limited partner of Cetus Healthcare Limited Partnership II, a
California limited partnership, incorporated by reference to Exhibit
10.32 of the Registrant's Form 10-Q report for the period ended
September 30, 1994.
31
<PAGE>
10.43 Big-O Property Purchase and Leaseback Agreement, dated as of October
31, 1988, between Cetus Corporation and Richard K. Robbins,
incorporated by reference to Exhibit 10.33 of the Registrant's Form
10-Q report for the period ended September 30, 1994.
10.44 Triple Net Lease dated as of January 20, 1989, between Cetus
Corporation and BGR Associates III, a California limited partnership,
and Marin County Exchange Corporation, incorporated by reference to
Exhibit 10.34 of the Registrant's Form 10-Q report for the period
ended September 30, 1994.
10.45 License Agreement between the Registrant and the Board of Trustees of
the Leland Stanford Junior University, dated December 15, 1981,
incorporated by reference to Exhibit 10.07 of the Registrant's Form
10-Q report for the period ended September 30, 1994.
10.46 Stock Purchase and Warrant Agreement dated May 9, 1989, between Cetus
Corporation and Hoffmann-La Roche Inc., incorporated by reference to
Exhibit 10.36 of the Registrant's Form 10-Q report for the period
ended September 30, 1994.
10.47 Letter Agreement, dated as of December 12, 1991, relating to Stock
Purchase and Warrant Agreement between Registrant and Hoffmann-La
Roche Inc., incorporated by reference to Exhibit 10.59 of Registrant's
Form 10-K report for fiscal year 1991.
10.48 Agreement and Plan of Merger dated as of July 21, 1991, by and among
Registrant, Chiron Acquisition Subsidiary, Inc. and Cetus Corporation,
incorporated by reference to Exhibit 28.2 of Registrant's Form 8-K
report dated July 22, 1991.
10.49 Letter Agreement dated September 26, 1990 between the Registrant and
William G. Green, incorporated by reference to Exhibit 10.41 of the
Registrant's Form 10-K report for fiscal year 1992.*
10.50 Letter Agreement dated December 18, 1991 between Registrant and Jack
Schuler, incorporated by reference to Exhibit 10.42 of the
Registrant's Form 10-K report for fiscal year 1992.*
10.51 Lease between Sclavo S.p.A. and Biocine Sclavo S.p.A., dated January
7, 1992, incorporated by reference to Exhibit 10.49 of the
Registrant's Form 10-Q report for the period ended April 2, 1995.
32
<PAGE>
10.52 Agreement made as of November 11, 1993 by and between Kodak Clinical
Diagnostics Limited, a company registered in England, and Ciba Corning
Diagnostics Corp., a Delaware corporation, and Letter dated October 7,
1994 from Kodak Clinical Diagnostics Limited to Ciba Corning
Diagnostics Corp., incorporated by reference to Exhibit 10.50 of
Amendment No. 1 to the Registrant's Form 10-Q report for the period
ended April 2, 1995. [Certain information has been omitted from the
Agreement pursuant to a request by Registrant for confidential
treatment pursuant to Rule 24b-2.]
10.53 Letter Agreement dated September 9, 1991 between the Registrant and
Walter Moos, incorporated by reference to Exhibit 10.47 of the
Registrant's Form 10-K report for fiscal year 1992.*
10.54 Letter Agreement between the Registrant and Walter Moos, dated
February 1, 1993, incorporated by reference to Exhibit 10.48 of the
Registrant's Form 10-K report for fiscal year 1992.*
10.55 Letter Agreement between Registrant and Renato Fuchs, dated May 13,
1993, incorporated by reference to Exhibit 10.47 of the Registrant's
Form 10-K report for fiscal year 1993.*
10.56 Amended and Restated License Agreement effective April 1, 1996 between
Ciba Corning Diagnostics Corp., a Delaware corporation, and
Bioanalysis Limited, a corporation organized under the laws of the
United Kingdom of Great Britain and Northern Ireland. [Certain
confidential information has been omitted from the Agreement and filed
separately with the Securities and Exchange Commission pursuant to a
request by Registrant for confidential treatment pursuant to Rule
24b-2.]
10.57 Description of Executive Officer Variable Compensation Program,
incorporated by reference to Exhibit 10.57 of the Registrant's Form
10-K report for fiscal year 1995.
10.58 Chiron Corporation 1995 Executive Officer Variable Cash Compensation
Plan, incorporated by reference to Annex 2 of the Registrant's Proxy
Statement dated April 18, 1995.*
10.59 Regulatory Filing, Development and Supply Agreement between the
Registrant, Cetus Oncology Corporation, a wholly-owned subsidiary of
the Registrant, and Schering AG, a German company, dated as of May 10,
1993 (with certain confidential information deleted), incorporated by
reference to Exhibit 10.50 of the Registrant's current report on Form
8-K dated February 9, 1994.
10.60 Letter Agreement dated December 30, 1993 by and between Registrant and
Schering AG, a German company (with certain confidential information
deleted), incorporated by reference to Exhibit 10.51 of the
Registrant's Form 10-K report for fiscal year 1993.
33
<PAGE>
10.61 Guaranty, dated as of September 29, 1994, made by Registrant, in favor
of Bankers Trust Company, as trustee, incorporated by reference to
Exhibit 10.52 of the Registrant's Form 10-Q report for the period
ended September 30, 1994.
10.62 Guaranty, dated as of September 29, 1994, made by Cetus Corporation,
in favor of The First National Bank of Boston, as trustee,
incorporated by reference to Exhibit 10.53 of the Registrant's Form
10-Q report for the period ended September 30, 1994.
10.63 Letter Agreements dated September 11, 1992, July 15, 1994 and
September 14, 1994 between the Registrant and Lewis T. Williams,
incorporated by reference to Exhibit 10.54 of the Registrant's Form
10-Q report for the period ended September 30, 1994.*
10.64 Letter dated January 4, 1995 to C. William Zadel, incorporated by
reference to Exhibit 10.65 of the Registrant's Form 10-K report for
fiscal year 1994.*
10.65 Letter dated June 28, 1995 to C. William Zadel, incorporated by
reference to Exhibit 10.65 of the Registrant's Form 10-K report for
fiscal year 1995.*
10.66 Letter to Dino Dina dated April 24, 1984, incorporated by reference to
Exhibit 10.66 of the Registrant's Form 10-K report for fiscal year
1994.*
10.67 Research Agreement, dated as of July 15, 1985, between Ciba-Geigy
Limited, a Swiss corporation, and Ciba Corning Diagnostics Corp., a
Delaware corporation, incorporated by reference to Exhibit 10.64 of
the Registrant's Form 10-Q report for the period ended April 2, 1995.
10.68 Licensing Agreement, effective December 18, 1986, by and between Miles
Laboratories, Inc., a Delaware corporation, and Ciba Corning
Diagnostics Corp., a Delaware corporation, and Letter dated December
18, 1992 from Ciba Corning Diagnostics Corp. to Miles Laboratories,
Inc., incorporated by reference to Exhibit 10.65 of Amendment No. 1 to
the Registrant's Form 10-Q report for the period ended April 2, 1995.
[Certain information has been omitted from the Agreement pursuant to a
request by Registrant for confidential treatment pursuant to Rule
24b-2.]
10.69 Magnetocluster Binding Assay Technology Agreement, dated as of January
21, 1983, by and between Bioclinical Group, Inc., a Delaware
corporation, and Corning Glass Works, a New York corporation,
incorporated by reference to Exhibit 10.66 of Amendment No. 1 to the
Registrant's Form 10-Q report for the period ended April 2, 1995.
[Certain information has been omitted from the Agreement pursuant to a
request by Registrant for confidential treatment pursuant to Rule
24b-2.]
34
<PAGE>
10.70 Turn-back License Agreement, dated as of May 30, 1986, by and between
Ciba Corning Diagnostics Corp., a Delaware corporation, and Advanced
Magnetics, Inc., a Delaware corporation, incorporated by reference to
Exhibit 10.67 of the Registrant's Form 10-Q report for the period
ended April 2, 1995. [Certain information has been omitted from the
Agreement pursuant to a request by Registrant for confidential
treatment pursuant to Rule 24b-2.]
10.71 Settlement Agreement, dated August 30, 1989, between Ciba Corning
Diagnostics Corp. and Advanced Magnetics, Inc., incorporated by
reference to Exhibit 10.68 of the Registrant's Form 10-Q report for
the period ended April 2, 1995. [Certain information has been omitted
from the Agreement pursuant to a request by Registrant for
confidential treatment pursuant to Rule 24b-2.]
10.72 Lease made and entered into December 17, 1984 between BGR Associates,
a California limited partnership, and Cetus Corporation and Amendment
to Lease dated December 17, 1984, entered into effective February 1,
1986, incorporated by reference to Exhibit 10.69 of the Registrant's
Form 10-Q report for the period ended April 2, 1995.
10.73 Second Amendment to Lease dated as of March 15, 1995 between BGR
Associates, a California limited partnership, and Registrant,
incorporated by reference to Exhibit 10.73 of the Registrant's Form
10-K report for fiscal year 1995.
10.74 Agreement, effective as of December 21, 1988, by and between Hoffmann-
La Roche Inc., a New Jersey corporation, and Cetus Corporation,
incorporated by reference to Exhibit 10.70 of the Registrant's Form
10-Q report for the period ended April 2, 1995. [Certain information
has been omitted from the Agreement pursuant to a request by
Registrant for confidential treatment pursuant to Rule 24b-2.]
10.75 Agreement, effective as of December 21, 1988, by and among F.
Hoffmann-La Roche Ltd., a Swiss corporation, Cetus Corporation, and
EuroCetus International, B.V., a Netherlands Antilles corporation,
incorporated by reference to Exhibit 10.71 of the Registrant's Form
10-Q report for the period ended April 2, 1995. [Certain information
has been omitted from the Agreement pursuant to a request by
Registrant for confidential treatment pursuant to Rule 24b-2.]
10.76 Agreement, by and between Cetus Oncology Corporation, EuroCetus
International, N.V., and F. Hoffmann-La Roche Ltd., incorporated by
reference to Exhibit 10.72 of the Registrant's Form 10-Q report for
the period ended April 2, 1995. [Certain information has been omitted
from the Agreement pursuant to a request by Registrant for
confidential treatment pursuant to Rule 24b-2.]
35
<PAGE>
10.77 Agreement commencing January 1, 1991, between EuroCetus B.V. and the
Municipal Development Corporation (Translation), incorporated by
reference to Exhibit 10.41 of the Registrant's Form 10-K report for
fiscal year 1994.
10.78 Settlement Agreement on Purified IL-2, made as of April 14, 1995, by
and between Cetus Oncology Corporation, dba Chiron Therapeutics, a
Delaware corporation, and Takeda Chemical Industries, Ltd., a Japanese
corporation, incorporated by reference to Exhibit 10.74 of the
Registrant's Form 10-Q report for the period ended July 2, 1995.
[Certain information has been omitted from the Agreement pursuant to a
request by Registrant for confidential treatment pursuant to Rule
24b-2.]
10.79 License Agreement made and entered into December 1, 1987, by and
between Sloan Kettering Institute for Cancer Research, a not-for-
profit New York corporation, and Cetus Corporation, incorporated by
reference to Exhibit 10.75 of the Registrant's Form 10-Q report for
the period ended July 2, 1995. [Certain information has been omitted
from the Agreement pursuant to a request by Registrant for confidential
treatment pursuant to Rule 24b-2.]
10.80 Chiron Funding L.L.C. Limited Liability Company Agreement, entered
into and effective as of December 28, 1995, among the Registrant,
Chiron Biocine Company and Biocine S.p.A. and Ciba-Geigy Corporation,
incorporated by reference to Exhibit 10.80 of the Registrant's Form
10-K report for fiscal year 1995. [Certain information has been
omitted from the Agreement and filed separately with the Securities
and Exchange Commission pursuant to a request by Registrant for
confidential treatment pursuant to Rule 24b-2. The omitted
confidential information has been identified by the following
statement: "Confidential Treatment Requested".]
10.81 Agreement between Ciba-Geigy Limited and the Registrant made November
15, 1995, incorporated by reference to Exhibit 10.81 of the
Registrant's Form 10-K report for fiscal year 1995. [Certain
information has been omitted from the Agreement and filed separately
with the Securities and Exchange Commission pursuant to a request by
Registrant for confidential treatment pursuant to Rule 24b-2. The
omitted confidential information has been identified by the following
statement: "Confidential Treatment Requested".]
10.82 Reimbursement Agreement dated as of March 24, 1995, between Ciba-Geigy
Limited, a Swiss corporation, and the Registrant, incorporated by
reference to Exhibit 10.76 of the Registrant's Form 10-Q report for
the period ended July 2, 1995.
10.83 Promissory Note, as amended and restated, dated January 1, 1995 by
Ciba Corning Diagnostics Corp., incorporated by reference to Exhibit
10.83 of the Registrant's Form 10-K report for fiscal year 1995.
36
<PAGE>
10.84 Commercial lease between Domilyon Corporation and Domilens
Laboratories and Amendment No. 1 to Commercial Lease dated May 9,
1994, incorporated by reference to Exhibit 10.84 of the Registrant's
Form 10-K report for fiscal year 1995.
10.85 Agreement between the Registrant and Cephalon, Inc. dated as of
January 7, 1994, and Letter Agreements between the Registrant and
Cephalon dated January 13, 1995 and May 23, 1995, incorporated by
reference to Exhibit 10.85 of the Registrant's Form 10-K report for
fiscal year 1995. [Certain information has been omitted from the
Agreements and filed separately with the Securities and Exchange
Commission pursuant to a request by Registrant for confidential
treatment pursuant to Rule 24b-2. The omitted confidential
information has been identified by the following statement:
"Confidential Treatment Requested".]
10.86 Purchase and Assignment Agreement between Behringwerke
Aktiengesellschaft, on the one side, and 31. CORSA
Verwaltungsgesellschaft mbH and the Registrant, on the other side,
dated February 17, 1996, Closing Agreement, by and among Behringwerke
Aktiengesellschaft, on the one side, and the Registrant and 31. CORSA
Verwaltungsgesellschaft mbH, on the other side, dated June 29, 1996
and Letter Agreement dated June 29, 1996 between the Registrant, 31.
CORSA Verwaltungsgesellschaft mbH and Behringwerke Aktiengesellschaft.
[Certain confidential information has been omitted from the Agreements
and filed separately with the Securities and Exchange Commission
pursuant to a request by Registrant for confidential treatment
pursuant to Rule 24b-2.]
10.87 Royalty Projects Agreement by and between Ciba Corning Diagnostics
Corp., a Delaware corporation, and Ciba-Geigy Limited, a Swiss
corporation. [Certain confidential information has been omitted from
the Agreement and filed separately with the Securities and Exchange
Commission pursuant to a request by Registrant for confidential
treatment pursuant to Rule 24b-2.]
10.88 Letter Agreement between the Registrant and Dr. Richard W. Barker
dated May 1, 1996.*
10.89 Revolving Credit Agreement, dated as of March 23, 1996, between the
Registrant and Morgan Guaranty Trust Company of New York.
10.90 Purchase Agreement between BNP Leasing Corporation and the Registrant,
dated June 28, 1996.
10.91 Lease Agreement between BNP Leasing Corporation and the Registrant,
dated June 28, 1996.
10.92 Ground Lease between BNP Leasing Corporation and the Registrant, dated
June 28, 1996.
37
<PAGE>
10.93 Reimbursement Agreement, dated as of July 12, 1996, between Ciba-Geigy
Limited, a Swiss corporation, and the Registrant.
10.94 Reimbursement Agreement, dated as of June 28, 1996, between Ciba-Geigy
Limited, a Swiss corporation, and the Registrant.
10.95 Reimbursement Agreement, dated as of May 20, 1996, between Ciba-Geigy
Limited, a Swiss corporation, and the Registrant.
11 Statement of Computation of Earnings per Share.
27 Financial Data Schedule.
- ------------------------------------------
*Management contract, compensatory plan or arrangement.
(b) Reports on Form 8-K
Chiron filed a current report on Form 8-K dated May 22, 1996, reporting
under Item 5 that, on May 20, 1996, Chiron Corporation issued a press
release announcing that its Board of Directors has declared a 4-for-1 stock
split effected in the form of a dividend on the Company's common stock
distributed on or about August 2, 1996, to stockholders of record on July
19, 1996.
38
<PAGE>
CHIRON CORPORATION
------------------
June 30, 1996
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CHIRON CORPORATION
DATE: August 14, 1996 BY: /s/ Edward E. Penhoet
------------------------ ------------------------
Edward E. Penhoet
President and Chief
Executive Officer
DATE: August 14, 1996 BY: /s/ Dennis L. Winger
------------------------ ------------------------
Dennis L. Winger
Senior Vice President, Finance
and Administration, Chief Financial
Officer, and Principal Accounting
Officer
39
<PAGE>
Exhibit 3.04
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
---------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF AMENDMENT
OF "CHIRON CORPORATION", FILED IN THIS OFFICE ON THE TWENTY-SECOND DAY OF MAY,
A.D. 1996, AT 8:30 O'CLOCK A.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE
COUNTY RECORDER OF DEEDS FOR RECORDING.
/s/ Edward J. Freel
-----------------------------------
EDWARD J. FREEL, SECRETARY OF STATE
AUTHENTICATION: 7957926
DATE: 05-23-96
<PAGE>
CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE OF INCORPORATION
CHIRON CORPORATION, a corporation organized and existing under and by virtue of
the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of CHIRON CORPORATION,
resolutions were duly adopted setting forth a proposed amendment of the Restated
Certificate of Incorporation of said corporation, declaring said amendment to be
advisable and calling a meeting of the stockholders of said corporation for
consideration thereof. The resolution setting for the proposed amendment is as
follows:
RESOLVED, that the Restated Certificate of Incorporation of this corporation be
amended by changing the Article thereof numbered "FIFTH" so that, as amended,
said Article shall be read as follows:
Article FIFTH of the Restated Certificate of Incorporation is amended to
read in full as follows:
FIFTH: This corporation is authorized to issue two classes of shares
to be designated, respectively, "Preferred Stock" and "common stock."
The total number of shares which this corporation is authorized to
issue is five hundred five million (505,000,000). Five million
(5,000,000) shares shall be Preferred Stock and five hundred million
(500,000,000) shares shall be common stock. The Preferred Stock shall
have a par value of $0.01 per share; the common stock shall have a par
value of $0.01 per share.
1. PREFERRED STOCK.
The Preferred Stock may be issued from time to time in one or
more series. The Board of Directors is expressly authorized, in the
resolution or resolutions providing for the issuance of any wholly
unissued series Preferred Stock, to fix, state and express the powers,
rights, designations, preferences, qualifications, limitations and
restrictions thereof, including without limitation: the rate of
dividends upon which and the times at which dividends of shares of
such series shall be payable and the preference, if any, which such
dividends shall have relative to dividends on shares of any other
class or classes or any other series of stock of the corporation;
whether such dividends shall be cumulative or noncumulative, and if
cumulative, the date or dates from which dividends on shares of such
series shall be cumulative; the voting rights, if any, to be provided
for shares of such series; the rights, if any, which the holders of
1
<PAGE>
shares of such series shall have in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the affairs of
the corporation; the rights, if any, which the holders of shares of
such series shall have to convert such shares into or exchange
such shares for shares of stock of the corporation, and the terms and
conditions, including price and rate of exchange of such conversion or
exchange; and the redemption rights (including sinking fund provisions), if
any, for shares of such series; and such other powers, rights,
designations, preferences, qualifications, limitations and restrictions as
the Board of Directors may desire to so fix. The Board of Directors is
also expressly authorized to fix the number of shares constituting such
series and to increase or decrease the number of shares of any series prior
to the issuance of shares of that series and to increase or decrease the
number of shares of any series subsequent to the issuance of shares of that
series, but not to decrease such number below the number of shares
outstanding. In case the number of shares of any series shall be so
decreased, the shares constituting such decrease shall resume the status
which they had prior to the adoption of the resolution originally fixing
the number of shares of such series.
2. COMMON STOCK.
The common stock may be issued from time to time in one or more
series. Four hundred ninety-nine million five hundred thousand
(499,500,000) shares of common stock are designated `Common Stock.'
All other series of common stock shall collectively consist of five
hundred thousand (500,000) shares and shall be designated, as a group,
`Restricted Common Stock.'
3. RESTRICTED COMMON STOCK.
(a) AUTHORITY OF BOARD TO FIX RIGHTS OF RESTRICTED COMMON STOCK.
The Board of Directors is expressly authorized, in the resolution or
resolutions providing for the issuance of any wholly unissued series
of Restricted Common Stock, to fix, state and express, within the
limits expressed hereinbelow, the powers, designations, preferences
and rights of the Restricted Common Stock, and the qualifications,
limitations or restrictions thereof. The Board of Directors is also
expressly authorized to fix the number of shares constituting such
series and to increase or decrease the number of shares of any series
prior to the issuance of shares of that series and to increase or
decrease the number of shares of any series subsequent to the issue of
shares of that series, but not to decrease such number below the
number of such series then outstanding. In case the number of shares
of any series shall be so decreased, the shares constituting such
decrease shall resume the status which they had prior to the adoption
of the resolution originally fixing the number of shares of such
series.
2
<PAGE>
(b) SPECIFIC RIGHTS. The rights, preferences, privileges and
restrictions of the Common Stock and Restricted Common Stock shall be
identical in all respects, except as follows, or, for the Restricted
Common Stock, as fixed and determined by the Board of Directors within
the limitations which follow:
i) CONVERSION RIGHTS. The Restricted Common Stock may
be convertible into or exchangeable for Common Stock, at a
conversion or exchange ratio of not more than one share of Common
Stock for each share of Restricted Common Stock and upon such
other terms and conditions as the Board of Directors may
establish.
ii) VOTING RIGHTS. Subject to the special voting rights
(if any) of the Preferred Stock set forth or determined as
provided in this Article FIFTH, each holder of Common Stock of
this corporation shall be entitled to one vote for each share of
such stock outstanding in the name of such holder on the books of
this corporation on the record date designated for the purpose of
such vote, and each holder of Restricted Common Stock of the
corporation shall be entitled, for each share of such Restricted
Common Stock outstanding in the name of such holder on the books
of the corporation on the record date designated for the purpose
of such vote, to the number of votes as has been fixed by the
Board of Directors, but the vote per share of Restricted Common
Stock shall not be more than the proportionate vote of the Common
Stock into which such Restricted Common Stock is convertible or
exchangeable.
iii) DIVIDEND RIGHTS. Subject to the prior rights (if
any) of the holders of the Preferred Stock as to dividends, the
holders of outstanding shares of Common Stock and Restricted
Common Stock shall be entitled to receive, when and as declared
by the Board of Directors, out of the assets of the corporation
at the time legally available therefor, dividends at the rate
determined by the Board of Directors; provided, however, that the
dividend on each share of Restricted Common Stock shall be less
than the proportionate dividend on each share of Common Stock
into which it is convertible or exchangeable.
iv) LIQUIDATION RIGHTS. In the event of any liquidation,
dissolution or winding up of this corporation either voluntarily
or involuntarily, but subject to the liquidation preference (if
any) of the holders of Preferred Stock by reason of their
ownership thereof, the holders of Common Stock and Restricted
Common Stock shall be entitled to receive pro rata the remaining
assets of the corporation available for distribution to
shareholders except that the amount per share paid in liquidation
on each share of Restricted Common Stock shall
3
<PAGE>
be less than the proportionate amount per share paid on each share of
the Common Stock into which it is convertible or exchangeable.
v) ADJUSTMENTS. The Board of Directors shall make
appropriate adjustments to the conversion or exchange ratio and
to the voting, dividend and liquidation rights of the Restricted
Common Stock in the event of any stock split, stock dividend or
similar transaction affecting the number of outstanding shares of
Common Stock or Restricted Common Stock without the corporation's
receipt of consideration thereof.
SECOND: That thereafter, pursuant to resolutions of its Board of Directors, a
meeting of the stockholders of said corporation was duly called and held, upon
notice in accordance with Section 222 of the General Corporation Law of the
State of Delaware at which meeting the necessary number of shares as required by
statute were voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with the provisions
of Section 242 of the General Corporation Law of the State of Delaware;
IN WITNESS WHEREOF, said CHIRON CORPORATION, has caused this certificate to be
signed by EDWARD E. PENHOET, its President and Chief Executive Officer, and
attested by WILLIAM G. GREEN, its Secretary, this 21st day of May, 1996.
BY: /s/ Edward E. Penhoet
-----------------------
Edward E. Penhoet
President and
Chief Executive Officer
(SEAL)
Attest: /s/ William G. Green
--------------------
William G. Green
Secretary
4
<PAGE>
Exhibit 4.03
- --------------------------------------------------------------------------------
CHIRON CORPORATION
AND
CETUS ONCOLOGY CORPORATION
(FORMERLY CETUS CORPORATION)
TO
BANKERS TRUST COMPANY,
TRUSTEE
--------------
SECOND SUPPLEMENTAL INDENTURE
Dated as of March 25, 1996
--------------
5-1/4 PER CENT CONVERTIBLE SUBORDINATED DEBENTURES DUE 2002
- --------------------------------------------------------------------------------
<PAGE>
SECOND SUPPLEMENTAL INDENTURE, dated as of the 25th day of March,
1996, by and among Chiron Corporation, a Delaware corporation, having its
principal office at 4560 Horton Street, Emeryville, California 94608 (the
"Company"), Cetus Oncology Corporation (formerly Cetus Corporation), a Delaware
corporation, having its principal office at 4560 Horton, Emeryville, California
94608 ("Cetus"), and Bankers Trust Company, a New York State banking corporation
having its principal corporate trust and agency office at Four Albany Street,
New York, New York 10015, Trustee (the "Trustee").
WHEREAS, Cetus has heretofore executed and delivered to the Trustee an
indenture, dated as of May 21, 1987 (as amended by the First Supplemental
Indenture referred to below, the "Indenture"), permitting the issuance of 5-1/4
per cent Convertible Subordinated Debentures Due 2002 (the "Securities");
WHEREAS, effective on or about December 12, 1991, Chiron Acquisition
Subsidiary, Inc., a Delaware corporation and a wholly owned subsidiary of the
Company, merged with and into Cetus pursuant to Section 253 of the General
Corporation Law of the State of Delaware, and Cetus became a wholly owned
subsidiary of the Company;
WHEREAS, pursuant to Section 801 of the Indenture, the Company, Cetus
and the Trustee entered into a First Supplemental Indenture dated as of December
12, 1991 (the "First Supplemental Indenture"), whereby the Company assumed the
obligations of Cetus for the issuance of shares of its common stock upon the
conversion of a Security after the date thereof;
1.
<PAGE>
WHEREAS, effective on or about March 25, 1996, the Company and Cetus
propose to merge Cetus with and into the Company pursuant to Section 253 of the
General Corporation Law of the State of Delaware (the "Merger"), with the
Company being the surviving corporation (the effective date of the Merger being
referred to herein as the "Merger Date").
WHEREAS, Section 701 of the Indenture provides that Cetus may not
merge into another Person unless (i) the Person into which Cetus is merged is a
"corporation organized and validly existing under the laws of the United States
of America, any State thereof or the District of Columbia," that expressly
assumes by a supplemental indenture the "due and punctual payment of the
principal of (and premium, if any) and interest (including all additional
interest payable pursuant to Section 1004) on all the Securities and the
performance of every covenant of the Indenture on the part of [Cetus] to be
performed or observed and shall have provided for conversion rights in
accordance with Section 1211, and shall expressly waive, by such supplemental
indenture . . . , any right to redeem the Securities under circumstances in
which [Cetus] would not have been entitled to redeem the Securities if such
merger had not occurred", (ii) immediately after giving effect to such
transaction no Event of Default and no event which, after notice or lapse of
time or both, would become an Event of Default, shall have happened and be
continuing, and (iii) Cetus shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such merger and such
supplemental indenture comply with Article Seven, the Indenture, and that all
the conditions precedent provided for in the Indenture relating to such
transaction have been complied with; and thereafter, pursuant to Section 702 of
the Indenture, the Company shall succeed to, and be substituted for, and may
exercise every right
2.
<PAGE>
and power of, Cetus under the Indenture, and Cetus shall "be relieved of all
obligations and covenants" under the Indenture and the Securities and coupons;
WHEREAS, the Company and Cetus have determined that this Second
Supplemental Indenture complies with Section 801(1) of the Indenture and does
not require the consent of any Holders of Securities;
WHEREAS, in accordance with Sections 701(3) and 803 of the Indenture,
Cetus has delivered to the Trustee an Officers' Certificate and an Opinion of
Counsel, each stating that the Merger and this Second Supplemental Indenture
complies with Articles Seven and Eight of the Indenture and that all conditions
precedent set forth in the Indenture relating to the Merger and this Second
Supplemental Indenture have been complied with; and
WHEREAS, all things necessary to make this Second Supplemental
Indenture a valid agreement of the Company, Cetus and the Trustee and a valid
amendment of and supplement to the Indenture have been done;
NOW, THEREFORE, THIS SECOND SUPPLEMENTAL INDENTURE Witnesseth:
For and in consideration of the premises, it is mutually covenanted
and agreed, for the equal and proportionate benefit of the holders of the
Securities, as follows:
3.
<PAGE>
ARTICLE ONE
ASSUMPTION OF OBLIGATIONS
SECTION 1.1 SOLE OBLIGATION OF THE COMPANY.
On and after the Merger Date, the Company assumes full and sole
obligation for the due and punctual payment of the principal of (and premium, if
any) and interest (including all additional interest payable pursuant to Section
1004) on all the Securities and the performance of every covenant of the
Indenture on the part of Cetus to be performed or observed and hereby waives any
right to redeem the Securities under circumstances in which Cetus would not have
been entitled to redeem the Securities if the Merger had not occurred. On and
after the Merger Date, Cetus shall be relieved of all obligations and Covenants
under the Indenture and the Securities and Coupons.
ARTICLE TWO
AMENDMENTS OF INDENTURE
SECTION 2.1 AMENDMENT OF DEFINITIONS.
(a) Section 101 of the Indenture is hereby amended as follows:
(i) the definition of "Common Stock" is hereby amended to read
in full as follows:
4.
<PAGE>
"Common Stock" includes any stock of any class of the Company which
has no preference in respect of dividends or of amounts payable in the event of
any voluntary or involuntary liquidation, dissolution or winding up of the
Company and which is not subject to redemption by the Company. However, subject
to the provisions of Section 1211, shares issuable on conversion of Securities
shall include only shares of the class designated as Common Stock of the Company
at the date of this instrument or shares of any class or classes resulting from
any reclassification or reclassifications thereof and which have no preference
in respect of dividends or of amounts payable in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Company and which are
not subject to redemption by the Company; PROVIDED that if at any time there
shall be more than one such resulting class, the shares of each such class then
so issuable shall be substantially in the proportion which the total number of
shares of such class resulting from all such reclassifications bears to the
total number of shares of all such classes resulting from all such
reclassifications.
(ii) The definition of "COMPANY" is hereby amended to read in
full as follows:
"Company" means Chiron Corporation, a Delaware corporation, until a
successor Person shall have become such pursuant to the applicable provisions of
this Indenture, and thereafter "Company" shall mean such successor Person.
SECTION 2.2 AMENDMENT OF PROVISIONS OF GENERAL APPLICATION.
5.
<PAGE>
(a) Section 103(a) of the Indenture is hereby amended by deleting at
the end of the second sentence thereof "or the Parent" and by deleting the
fourth sentence thereof and substituting therefore the following sentence:
"Proof of execution of any such instrument or of a writing appointing
any such agent or proxy, or of the holding by any Person of a Security, shall be
sufficient for any purpose of this Indenture and (subject to Section 601)
conclusive in favor of the Trustee and the Company if made in the manner
provided in this Section."
(b) Section 104 of the Indenture is hereby amended by deleting
subsections (1) and (2) in their entireties and substituting therefor the
following:
(1) the Trustee by any Holder of Securities or by the Company
shall be sufficient for every purpose hereunder if made, given, furnished or
filed in writing to or with the Trustee at its Corporate Trust Office, or
(2) the Company by the Trustee or by any Holder of Securities
shall be sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if in writing, mailed, first-class postage prepaid, or
telexed or telecopied and confirmed by mail, first-class postage prepaid,
addressed to it at the address of its principal office specified in the first
paragraph of this instrument or any supplement to this instrument, to the
attention of its Treasurer, or at any other address previously furnished in
writing to the Trustee by the Company.
SECTION 2.3 AMENDMENT OF PROVISIONS REGARDING SUPPLEMENTAL
INDENTURES.
6.
<PAGE>
(a) Section 801 of the Indenture is hereby amended in its entirety to
read as follows:
SECTION 801 SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.
Without the consent of any Holders of Securities or coupons, the
Company, when authorized by a Board Resolution, and the Trustee at any time and
from time to time, may enter into one or more indentures supplemental hereto, in
form satisfactory to the Trustee, for any of the following purposes:
(1) to evidence the succession of another corporation to the Company
and the assumption by any such successor of the covenants of the Company
herein in the Securities and in the coupons; or
(2) to add to the covenants of the Company for the benefit of the
Holders of Securities or coupons, or to surrender any right or power herein
conferred upon the Company; or
(3) to relax or eliminate the restrictions on payment of principal of
(and premium, if any) and interest on Bearer Securities in the United
States under the circumstances described in the last sentence of the first
paragraph of the face of the form of Bearer Securities set forth in Section
202; or
(4) to cure any ambiguity, to correct or supplement any provision
herein which may be inconsistent with any other provision herein, or to
make any other provisions with respect to matters or questions arising
under this Indenture, PROVIDED such action pursuant
7.
<PAGE>
to this clause (4) shall not adversely affect the interest of the Holders
of Securities or coupons in any material respect.
Without the consent of any Holders of Securities or coupons, the
Company, when authorized by a Board Resolution, and the Trustee at any time and
from time to time, may enter into one or more indentures supplemental hereto, in
form satisfactory to the Trustee, for the following purpose:
(1) to make provision with respect to the conversion rights of
Holders of Securities pursuant to Section 1211.
(b) Section 806 of the Indenture is hereby amended to read in full as
follows:
SECTION 806 NOTICE OF SUPPLEMENTAL INDENTURES.
Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to the provisions of Section 802, the Company
shall give notice, setting forth in general terms the substance of such
supplemental indenture, in the manner provided in Section 105. Any failure of
the Company to give such notice, or any defect therein, shall not in any way
impair or affect the validity of any such supplemental indenture.
SECTION 2.4 AMENDMENT OF PROVISIONS RELATING TO THE TRUSTEE.
Section 602(b) of the Indenture is hereby amended in its entirety to
read in full as follows:
8.
<PAGE>
(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order, and, any
resolution of the Board of Directors may be sufficiently evidenced by a Board
Resolution.
SECTION 2.5 AMENDMENT OF CONVERSION OF SECURITIES.
(c) Section 1203 of the Indenture is hereby amended to read in full
as follows:
SECTION 1203. FRACTIONS OF SHARES.
No fractional shares or scrip representing fractional shares of Common
Stock shall be issued upon conversion of Securities. If more than one Security
shall be surrendered for conversion at one time by the same Holder, the number
of full shares which shall be issuable upon conversion thereof shall be computed
on the basis of the aggregate principal amount of the Securities (or, in the
case of Registered Securities, specified portions thereof) so surrendered.
Instead of any fractional share of Common Stock which would otherwise be
issuable upon the conversion of any Security or Securities (or in the case of
Registered Securities, specified portions thereof), the Company shall pay a cash
adjustment in respect of such fraction in an amount equal to the current market
value of such fractional interest computed to the nearest cent on the basis of
the Closing Market Price Per Share of the Common Stock on the last day prior to
the day of conversion on which there is such a Closing Market Price Per Share.
(d) Section 1204 of the Indenture is hereby amended to read in full
as follows:
SECTION 1204. ADJUSTMENT OF CONVERSION PRICE.
9.
<PAGE>
(1) In case at any time after March 25, 1996, the Company shall (i)
pay or make a dividend or other distribution on any class or series of capital
stock of the Company in shares of Common Stock, (ii) subdivide its outstanding
shares of Common Stock, (iii) combine its outstanding shares of Common Stock
into a smaller number of shares, (iv) issue by reclassification of its Common
Stock any shares of its capital stock, or (v) make a distribution on its Common
Stock in shares of its capital stock other than Common Stock, the Conversion
Price in effect immediately prior thereto shall be adjusted so that the Holder
of a Security thereafter converted may receive the number of shares of Common
Stock or capital stock of the Company which he would have owned immediately
following such action if he had converted the Security immediately prior to such
action. Such adjustment shall become effective immediately at the opening of
business on the day following the record date, if any, in the case of a
dividend, distribution, subdivision, combination or reclassification with
respect to which the Company has fixed a record date for the determination of
shareholders entitled to receive such dividend, distribution, subdivision,
combination or reclassification, or if no such record date has been fixed, such
reduction shall become effective immediately after the opening of business on
the day following the effective date of such dividend, distribution,
subdivision, combination or reclassification. For the purposes of paragraph
(1)(i), the number of shares of Common Stock at any time outstanding shall not
include shares held in the treasury of the Company but shall include shares
issuable in respect of scrip certificates issued in lieu of fractions of shares
of Common Stock. The Company will not pay any dividend or make any distribution
on shares of Common Stock held in the treasury of the Company.
10.
<PAGE>
(2) In case at any time after March 25, 1996 the Company shall issue
rights or warrants to all holders of its Common Stock entitling them initially
to subscribe for or purchase shares of Common Stock at a price per share less
than the current market price per share (determined as provided in paragraph (4)
of this Section 1204) of the Common Stock on the date fixed for the
determination of stockholders entitled to receive such rights or warrants, the
Conversion Price in effect at the opening of business on the day following the
date fixed for such determination shall be reduced by multiplying such
Conversion Price by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding at the close of business on the date fixed
for such determination plus the number of shares of Common Stock which the
aggregate of the offering price of the total number of shares of Common Stock so
offered for subscription or purchase would purchase at such current market price
and the denominator shall be the number of shares of Common Stock outstanding at
the close of business on the date fixed for such determination plus the number
of shares of Common Stock so offered for subscription or purchase, such
reduction to be made whenever such rights or warrants are issued and will become
effective immediately at the opening of business on the day following the date
fixed for such determination. For the purposes of this paragraph (2), the
number of shares of Common Stock at any time outstanding shall not include
shares held in the treasury of the Company but shall include shares issuable in
respect of scrip certificates issued in lieu of fractions of shares of Common
Stock. The Company will not issue any rights or warrants in respect of shares
of Common Stock held in the treasury of the Company.
11.
<PAGE>
(3) In case at any time after March 25, 1996 the Company shall, by
dividend or otherwise, distribute to all holders of its Common Stock evidences
of its indebtedness or any of its assets, or any rights or warrants entitling
holders thereof to subscribe for or purchase securities of the Company or any
other securities (but excluding any rights or warrants referred to in paragraph
(2) of this Section 1204, any dividend or distribution paid in cash, any
dividend or distribution paid out of the surplus of the Company or the
consolidated net profits for the then current or preceding fiscal year of the
Company and any dividend or distribution referred to in paragraph (1) of this
Section), the Conversion Price shall be adjusted so that the same shall equal
the price determined by multiplying the Conversion Price in effect immediately
prior to such action by a fraction of which the numerator shall be the current
market price per share (determined as provided in paragraph (4) of this Section)
of the Common Stock on the date fixed for the determination of stockholders
entitled to receive such distribution less the then fair market value (as
determined by the Board of Directors, whose determination shall be conclusive
and described in a Board Resolution) of the portion of such assets or evidences
of indebtedness or shares or rights or warrants so distributed applicable to one
share of Common Stock and the denominator shall be such current market price per
share of the Common Stock, such adjustment to be made whenever such distribution
is made and shall become effective immediately at the opening of business on the
day following the date fixed for the determination of stockholders entitled to
receive such distribution. In the event that the Company shall distribute or
shall have distributed to all holders of shares of Common Stock, rights or
warrants to purchase securities that are not
12.
<PAGE>
initially detachable from the Common Stock (whether or not such distribution
shall have occurred prior to the date of this Indenture), then the distribution
of separate certificates representing such rights or warrants subsequent to
their initial distribution shall be deemed to be the distribution of such rights
or warrants for purposes of this paragraph (3). Notwithstanding the foregoing,
in the event that the Company shall distribute rights or warrants to purchase
securities ("Rights") to holders of Common Stock, the Company may, in lieu of
making the foregoing adjustment pursuant to this paragraph (3) and to the extent
such Rights would be issued with other shares of Common Stock issued at the time
of conversion, make proper provision so that each Holder of a Security who
converts such Security (or any portion thereof) (a) before the record date for
such distribution shall be entitled to receive upon such conversion shares of
Common Stock issued with Rights and (b) after the record date for such
distribution (but prior to the expiration or redemption of the Rights) shall be
entitled to receive upon such conversion, in addition to the shares of Common
Stock issuable upon such conversion, the same number of Rights to which a holder
of the number of shares of Common Stock into which the principal amount of the
Security so converted was convertible immediately prior to the record date for
such distribution would have been entitled on the record date for such
distribution in accordance with the terms and provisions of and applicable to
the Rights.
(4) For the purpose of any computation under paragraphs (2) and (3) of
this Section, the current market price per share of Common Stock in any case
shall be deemed to be the average of the Closing Market Prices Per Share for 20
consecutive trading days selected by the Company during the period commencing 30
trading days before the day in question.
13.
<PAGE>
(5) No adjustment in the Conversion Price shall be required unless
such adjustment would require an increase or decrease of at least 1 percent in
the Conversion Price; PROVIDED, HOWEVER, that any adjustments which by reason of
this paragraph (5) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations shall be made
to the nearest cent or to the nearest one-hundredth of a share, as the case may
be.
(6) No adjustment in the Conversion Price shall be required in the
case of transactions (i) in which the Holders of Securities are entitled to
participate on a basis and with notice that the Board of Directors determines to
be fair and appropriate or (ii) which effectuate a change in the par value or
lack thereof of the Common Stock.
(7) The Company from time to time may reduce the Conversion Price by
any amount for any period of time, provided that the reduction is effective for
at least 20 days and that the reduction is irrevocable during such period.
Whenever the Conversion Price is reduced, the Company shall publish notice of
the reduction to Holders of Securities. The Company shall publish such notice
at least 15 days before the date the reduced Conversion Price takes effect. The
notice shall state the reduced Conversion Price and the period it will be in
effect. After the expiration of such period, the Conversion Price shall revert
to the price immediately preceding such reduction. The Company may also, from
time to time, reduce the Conversion Price in order to avoid taxation of the
Company's stockholders in connection with the transactions described in this
Section 1204. The Company may, but is not required to, reduce the Conversion
Price if the
14.
<PAGE>
making of, or a failure to make, an adjustment in the Conversion Price under
this Article would cause imposition of a tax on the Company's stockholders.
(8) In any case in which this Section 1204 shall require that an
adjustment be made, the Company may elect to defer (but only until five Business
Days in the Place of Conversion following the effective date of such adjustment)
the issuance to the holder of any Securities converted after such effective date
of the shares of Common Stock or rights or warrants issuable on such conversion
in excess of or in addition to the shares of Common Stock issuable on such
conversion on the basis of the Conversion Price prior to such adjustment.
(e) Section 1205 of the Indenture is hereby amended to read in full
as follows:
SECTION 1205. NOTICE OF ADJUSTMENTS OF CONVERSION PRICE.
Whenever the Conversion Price is adjusted as herein provided:
(a) the Company shall compute the adjusted Conversion Price in
accordance with Section 1204 and shall prepare a certificate signed by the
Treasurer of the Company setting forth the adjusted Conversion Price and
showing in reasonable detail the facts upon which such adjustment is based,
and such certificate shall forthwith be filed with the Trustee and at each
office or agency maintained for the purpose of conversion of Securities
pursuant to Section 1002; and
(b) a notice stating that the Conversion Price has been adjusted and
setting forth in reasonable detail the facts upon which such adjustment is
based and the adjusted
15.
<PAGE>
Conversion Price shall as soon as practicable after the effectiveness of such
adjustment be mailed by the Company to all Registered Holders at their last
addresses as they shall appear in the Security Register and shall be published
(but only once) in accordance with Section 105.
(f) Section 1206 of the Indenture is hereby amended to read in full
as follows:
SECTION 1206. NOTICE OF CERTAIN CORPORATE ACTION.
In case at any time after March 25, 1996:
(a) the Company shall declare a dividend (or any other distribution)
on its Common Stock payable otherwise than in cash or out of its surplus or
its consolidated net profits for its then current or preceding fiscal year;
or
(b) the Company shall authorize the granting to all holders of its
Common Stock of rights or warrants to subscribe for or purchase Common
Stock or of any other rights; or
(c) there shall occur any reclassification of the Common Stock of the
Company (other than a subdivision or combination of its outstanding shares
of Common Stock), or any consolidation or merger to which the Company is a
party and for which approval of any stockholders of the Company is
required, or the sale or transfer of all or substantially all of the assets
of the Company; or
(d) there shall occur the voluntary or involuntary dissolution,
liquidation or winding up of the Company;
16.
<PAGE>
then (unless the Company has filed and mailed a notice pursuant to Section
1205 with respect to the events described in this Section 1206) the
Company shall cause to be filed with the Trustee and at each office or
agency maintained for the purpose of conversion of Securities pursuant
to Section 1002, and shall cause to be mailed to all Registered Holders
at their last addresses as they shall appear in the Security Register
and shall publish (but only once) in accordance with Section 105, in
each case, at least 20 days (or 10 days in any case specified in clause
(a) or (b) above) prior to the applicable record date hereinafter
specified, a notice stating (x) the date on which a record is to be
taken for the purpose of such dividend, distribution, rights or
warrants, or, if a record is not to be taken, the date as of which the
holders of Common Stock of record to be entitled to such dividend,
distribution, rights or warrants are to be determined, or (y) the date
on which such reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding up is expected to become effective,
and the date as of which it is expected that holders of Common Stock of
record shall be entitled to exchange their shares of Common Stock for
securities, cash or other property deliverable upon such
reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding up. Failure to give any such notice, or any
defect therein, shall not affect the validity of the proceedings
referred to in clauses (a), (b), (c) or (d) above.
(h) Section 1207 of the Indenture is hereby amended to read in full
as follows:
SECTION 1207. COMPANY TO RESERVE COMMON STOCK.
17.
<PAGE>
The Company shall at all times reserve and keep available, free from
preemptive rights, out of its authorized but unissued Common Stock, for the
purpose of effecting the conversion of Securities, the full number of shares of
Common Stock then issuable upon the conversion of all Outstanding Securities.
The Company shall promptly after the issuance of the Global Security
endeavor (i) to cause all registrations with, and to obtain any approval by, any
governmental authority under any Federal or state law of the United States that
may be required before the shares of Common Stock may be lawfully issued or
transferred and delivered pursuant to this Article and (ii) to list or arrange
for the quotation of the shares of Common Stock required to be issued or
delivered upon conversion of Securities prior to such issue or delivery on each
national securities exchange or quotation system on which the outstanding Common
Stock is listed or quoted at the time of such delivery.
(g) Section 1208 of the Indenture is hereby amended to read in full
as follows:
SECTION 1208. TAXES ON CONVERSIONS.
The Company will pay any and all stamp, excise or similar taxes or
duties that may be payable in respect of the issue or delivery of shares of
Common Stock on conversion of Securities pursuant hereto. The Company shall
not, however, be required to pay any tax or duty which may be payable in respect
of any transfer involved in the issue and delivery of shares of Common Stock in
a name other than that of the Holder of the Security or Securities to be
converted, and no such issue or delivery shall be made unless and until the
person requesting such
18.
<PAGE>
issue has paid to the Company the amount of any such tax or duty, or has
established to the satisfaction of the Company that such tax or duty has been
paid.
(i) Section 1209 of the Indenture is hereby amended to read in full
as follows:
SECTION 1209. COVENANT AS TO COMMON STOCK.
The Company covenants that all shares of Common Stock which may be
issued upon conversion of Securities will upon issue be fully paid and
nonassessable and, except as provided in Section 1208, the Company will pay all
taxes or duties, liens and charges with respect to the issue thereof.
(j) Section 1211 of the Indenture is hereby amended to read in full
as follows:
19.
<PAGE>
SECTION 1211. PROVISIONS IN CASE OF CONSOLIDATION, MERGER, SALE OF
ASSETS OR RECLASSIFICATION.
(a) In case of any consolidation of the Company with, or merger of the
Company into, any other corporation (other than a merger or consolidation in
which the Company is the continuing corporation), or in case of any sale or
transfer of all or substantially all of the properties and assets of the Company
as an entirety, the corporation formed by such consolidation or resulting from
such merger or which acquires such assets, as the case may be, shall execute and
deliver to the Trustee a supplemental indenture providing that the Holder of
each Security then outstanding shall have the right thereafter, during the
period such Security shall be convertible as specified in Section 1201, to
convert such Security, in lieu of conversion into the shares of Common Stock
deliverable on conversion immediately prior to such event, only into the kind
and amount of securities and/or cash and/or other property, if any, receivable
upon such consolidation, merger, sale or transfer by a holder of the number of
shares of Common Stock into which such Security might have been converted
immediately prior to such consolidation, merger, sale or transfer, assuming, if
such consolidation, merger, sale or transfer is prior to the Exchange Date, that
the Securities were convertible at the time of such consolidation, merger, sale
or transfer at the initial Conversion Price specified in Section 1201 as
adjusted from March 25, 1996 to such time pursuant to Section 1204.
(b) In case of any reclassification or change of the shares of Common
Stock (other than a change in par value, or from par value to no par value, or
as a result of a subdivision or combination) or in case of any consolidation or
merger of another corporation into the Company
20.
<PAGE>
in which the Company is the continuing corporation and in which the holders of
the shares of Common Stock thereafter receive securities and/or cash and/or
other property for such shares of Common Stock (including for this purpose
shares reflecting a change in par value or from par value to no par value or as
a result of a subdivision or combination of the shares of Common Stock), the
Company (and any issuer of securities and/or cash and/or property exchanged for
Common Stock) shall execute and deliver to the Trustee a supplemental indenture
providing that the Holder of each Security then outstanding shall have the right
thereafter, during the period such Security shall be convertible as specified in
Section 1201, to convert such Security, in lieu of conversion into the shares of
Common Stock deliverable on such conversion immediately prior to such event,
only into the kind and amount of securities and/or cash and/or other property,
if any, receivable upon such reclassification, change, consolidation or merger
by a holder of the number of shares of Common Stock into which such Security
might have been converted immediately prior to such reclassification, change,
consolidation or merger, assuming, if such reclassification, change,
consolidation or merger is prior to the Exchange Date, that the Securities were
convertible at the time of such reclassification, change, consolidation or
merger at the initial Conversion Price specified in Section 1201 as adjusted
from March 25, 1996 to such time pursuant to Section 1204. If, as a result of
this subsection (b), the holder of any Securities thereafter surrendered for
conversion shall become entitled to receive shares of two or more classes of
capital stock of the Company, the Board of Directors (whose determination shall
be conclusive and shall be described in a Board Resolution) shall determine the
allocation of the Conversion Price between or among shares of such classes of
capital stock.
21.
<PAGE>
(c) Supplemental indentures referred to in subsections (a) and (b)
above shall provide for adjustments which shall be as nearly equivalent as may
be practicable to the adjustments provided for in this Article. The above
provisions of this Section shall similarly apply to successive consolidations,
mergers, sales, transfers, reclassifications or changes.
(j) Section 1212 of the Indenture is hereby amended to read in full
as follows:
22.
<PAGE>
SECTION 1212. RESPONSIBILITY OF TRUSTEE FOR CONVERSION PROVISIONS.
The Trustee, subject to the provisions of Section 601, and any
Conversion Agent shall not at any time be under any duty or responsibility to
any Holder to determine whether any facts exist which may require any adjustment
of the Conversion Price, or with respect to the nature or extent of any such
adjustment when made, or with respect to the method employed, or herein or in
any supplemental indenture provided to be employed, in making the same. Neither
the Trustee, subject to the provisions of Section 601, nor any Conversion Agent
shall be accountable with respect to the validity or value (or the kind or
amount) of any shares of Common Stock, or of any other securities or property,
which may at any time be issued or delivered upon the conversion of any
Security; and it or they do not make any representation with respect thereto.
Neither the Trustee, subject to the provisions of Section 601, nor any
Conversion Agent shall be responsible for any failure of the Company to make any
cash payment or to issue, transfer or deliver any shares of stock or stock
Certificates or other securities or property upon the surrender of any Security
for the purpose of conversion; and the Trustee, subject to the provisions of
Section 601, and any Conversion Agent shall not be responsible for any failure
of the Parent to comply with any of the covenants of the Company contained in
this Article.
ARTICLE THREE
MISCELLANEOUS
SECTION 3.1. DEFINITIONS.
23.
<PAGE>
Except as otherwise expressly provided or unless the context otherwise
requires, all terms used herein which are defined in the Indenture shall have
the meanings assigned to them in the Indenture.
SECTION 3.2. EFFECTIVE DATE.
This Second Supplemental Indenture shall be effective as of the date
first set forth above.
SECTION 3.3. RECITALS.
The recitals contained herein shall be taken as the statements of
Cetus and the Company, and the Trustee assumes no responsibility for their
correctness. The Trustee makes no representations as to the validity or
sufficiency of this Second Supplemental Indenture.
SECTION 3.4. GOVERNING LAW.
This Second Supplemental Indenture shall be governed by and construed in
accordance with the laws of the jurisdiction which governs the Indenture and its
construction.
SECTION 3.5. COUNTERPARTS.
This Second Supplemental Indenture may be executed in any number of
counterparts each of which shall be an original, but such counterparts shall
together constitute but one and the same instrument.
24.
<PAGE>
SECTION 3.6. INDENTURE RATIFIED.
Except as expressly amended hereby the Indenture is in all respects
ratified and confirmed, and all the terms, conditions and provisions thereof
shall remain in full force and effect. This Second Supplemental Indenture shall
form a part of the Indenture for all purposes, and every holder of Securities
heretofore or hereafter authenticated and delivered shall be bound hereby.
25.
<PAGE>
IN WITNESS WHEREOF, the parties here to have caused this Second
Supplemental Indenture to be duly executed, and have caused their respective
seals to be hereunto affixed and attested, all as of the day and year first
above written.
CHIRON CORPORATION, a Delaware
corporation
By: /s/ Edward E. Penhoet
------------------------------
Title: President
--------------------------------
[Seal]
Attest:
/s/ William G. Green
- ----------------------------------
Title: Secretary
----------------------------
CETUS ONCOLOGY CORPORATION, a Delaware
corporation
By: /s/ Edward E. Penhoet
------------------------------
Title: President
--------------------------------
[Seal]
Attest:
/s/ William G. Green
- ----------------------------------
Title: Secretary
----------------------------
26.
<PAGE>
BANKERS TRUST COMPANY,
as Trustee
By: /s/ Jenna Kaufman
------------------------------
Title: Vice President
--------------------------------
[Seal]
Attest:
/s/ Jacki Bartruk
- ----------------------------------
Title: Assistant Vice President
----------------------------
27.
<PAGE>
AMENDMENT NO. 2 TO RIGHTS AGREEMENT
THIS AMENDMENT NO. 2 (this "Amendment"), dated as of August 9, 1996,
to the Rights Agreement, dated as of August 25, 1994 and amended by Amendment
No. 1 thereto dated November 20, 1994 (the "Rights Agreement"), between Chiron
Corporation, a Delaware corporation (the "Company"), and Continental Stock
Transfer & Trust Company, as Rights Agent (the "Rights Agent").
A. The Company and the Rights Agent have heretofore executed and
entered into the Rights Agreement. Pursuant to Section 26 of the Rights
Agreement, the Company and the Rights Agent may from time to time supplement or
amend the Rights Agreement in accordance with the provisions of such Section.
B. Pursuant to the Agreement of Compromise and Settlement approved
and entered on May 21, 1996 by the United States District Court for the Northern
District of California Chiron Corporation (the "Corporation") has agreed to
terminate, redeem or otherwise render ineffective the Rights Agreement;
C. The Board of Directors of Chiron Corporation deems it desirable
and in the best interests of the corporation and its stockholders that the
Agreement be amended to change the Final Expiration Date to the Close of
Business on August 23, 1996.
In consideration of the foregoing and the mutual agreements set forth
herein, the parties hereto agree as follows:
1. Section 7(a)(i) of the Shareholder Rights Agreement dated August
25, 1994 is hereby amended to read as follows;
"the Close of Business on August 23, 1996 (the "Final Expiration
Date"),".
2. The amendment made to the Rights Agreement in this Amendment No.
2 shall be deemed to apply retroactively as well as prospectively.
3. This Amendment shall be governed by and construed in accordance
with the laws of the State of Delaware and for all purposes shall be governed by
and construed in accordance with all laws of such State applicable to contracts
to be made and performed entirely within such State.
4. This Amendment may be executed in any number of counterparts,
each of which shall be an original, but such counterparts shall together
constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed and attested, all as of the date and year first above written.
Attest: CHIRON CORPORATION
By: /s/ Claudia M. Belcher By: /s/ William G. Green
------------------------ ---------------------------
Assistant Secretary Senior Vice President and General Counsel
Attest: CONTINENTAL STOCK TRANSFER &
TRUST COMPANY
By: /s/ Thomas Jennings By: /s/ William F. Seegraber
------------------------ --------------------------
Thomas Jennings William F. Seegraber
Assistant Secretary Vice President
<PAGE>
Exhibit 10.24
REVOLVING CREDIT AGREEMENT
REVOLVING CREDIT AGREEMENT (this "AGREEMENT") dated as of July 12, 1996,
between CHIRON CORPORATION, a Delaware corporation (the "BORROWER") and BANK OF
AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION (the "BANK").
NOW, THEREFORE, IT IS AGREED:
1. THE ADVANCES. Subject to and upon the terms and conditions set forth
herein, the Bank agrees to make advances (the "ADVANCES") to the Borrower at any
time and from time to time prior to July 11, 1997 (the "EXPIRY DATE"); provided,
however, that the aggregate principal amount of Advances outstanding shall at no
time exceed U.S. $100,000,000 (the "COMMITMENT").
2. PURPOSE. The Borrower shall use the proceeds of the Advances for
general corporate purposes, including acquisition financing (PROVIDED, however,
that any acquisition financed by this facility, in whole or part, shall be
undertaken in accordance with all applicable requirements of law and the prior,
effective written consent or approval to such acquisition of the board of
directors or equivalent governing body of the acquiree shall have been
obtained). The Borrower agrees to indemnify the Bank and hold the Bank harmless
from and against any and all liabilities, claims, losses, damages, costs and
expenses of any kind (including all fees and disbursements of legal counsel, the
allocated cost of internal legal services and disbursements of internal counsel
("ATTORNEY COSTS")) which may be incurred by the Bank relating to or arising out
of any actual or proposed use of proceeds of Advances hereunder.
3. AVAILABILITY. The following Advances shall be available to the
Borrower hereunder: (a) Base Rate Advances; or (b) Eurodollar Rate Advances of
one, two, three, six or nine months. For the purposes of this Agreement, it is
understood that (i) the duration of each Eurodollar Rate Advance shall be
referred to as an "INTEREST PERIOD", (ii) the Borrower is required to repay each
Eurodollar Rate Advance on the last day of the Interest Period for such Advance;
and (iii) no Eurodollar Rate Advance shall have an Interest Period which extends
beyond the Expiry Date. The Borrower shall repay to the Bank on the Expiry Date
the aggregate principal amount of the Base Rate Advances and the Eurodollar Rate
Advances outstanding on such date.
4. LOAN ACCOUNTS; NOTES. The Advances shall be evidenced by one or more
loan accounts or records maintained by the Bank in the ordinary course of
business. Any failure to record any Advance or any error in doing so shall not,
however, limit or otherwise affect the obligation of the Borrower hereunder to
pay any amount owing with respect to the Advances or otherwise owing hereunder.
1
<PAGE>
In addition, the Bank may at any time, in its discretion, require the
Borrower to sign one or more promissory notes (a "NOTE") as further evidence
of such indebtedness.
5. INTEREST. Interest shall be payable in respect of the outstanding
principal amount of each (i) Eurodollar Rate Advance on the last day of the
Interest Period thereof and on the Expiry Date, and (ii) each Base Rate Advance
on the last business day of each calendar quarter and on the Expiry Date.
Advances shall bear interest at the following rates per annum: (a) if a Base
Rate Advance, at the Base Rate; or (b) if a Eurodollar Rate Advance, 0.08 of 1%
in excess of the Eurodollar Rate.
Overdue principal and, to the extent permitted by law, overdue
interest in respect of each Advance and any other overdue amount payable by the
Borrower hereunder shall bear interest, payable on demand, at a rate per annum
equal to 2-1/2% per annum in excess of the Base Rate in effect from time to
time.
For the purposes of this Agreement, "BASE RATE" and "EURODOLLAR RATE"
have the meanings assigned to them on ATTACHMENT 1 hereto.
6. INCREASED COSTS; RESERVES; UNAVAILABILITY OF FUNDS. The Borrower
shall reimburse the Bank, upon demand, for the cost of all reserves under
regulations issued from time to time by the Board of Governors of the Federal
Reserve System for determining the reserve requirement (including any emergency,
supplemental or other marginal reserve requirement) with respect to Eurocurrency
funding (currently referred to as "Eurocurrency liabilities") applied or
allocated using reasonable attribution or allocation methods by the Bank to the
Eurodollar Rate Advances. If at any time the Bank shall have determined (which
determination shall, absent manifest error, be final, conclusive and binding on
all parties hereto) that as a result of any changes in any applicable law or
governmental rule, regulation or order (including any applicable law or
governmental rule, regulation or order respecting capital adequacy), or any
interpretation thereof, including the enactment of any law or governmental rule,
regulation or order (whether or not having the force of law) or that as a result
of compliance by the Bank with any direction, requirements or request from any
regulatory authority, whether or not having the force of law, the cost to the
Bank of maintaining its Commitment hereunder or making, funding or maintaining
any Advance shall be increased or the yield to the Bank on such Advance shall be
diminished, then the Bank shall promptly notify the Borrower thereof, showing in
reasonable detail (without revealing any proprietary or confidential
information) the basis for the calculation of such increased costs or diminished
yield, and the Borrower shall pay to the Bank an amount sufficient to indemnify
the Bank thereagainst. The Bank shall have no
2
<PAGE>
obligation to make Eurodollar Rate Advances if U.S. Dollar deposits in the
principal amount of the Eurodollar Rate Advances and for periods equal to the
requested Interest Periods are not available in the offshore U.S. Dollar inter-
bank markets.
7. COMMITMENT FEE. The Borrower shall pay the Bank a fee ("COMMITMENT
FEE") computed at a rate per annum of 0.05 of 1% on the average daily unused
portion of the Commitment. The Accrued Commitment Fee shall be payable
quarterly on the last business day of each calendar quarter and on the Expiry
Date or earlier termination of the Commitment.
8. NOTICE OF INTENTION TO BORROW. The Borrower shall give the Bank prior
notice at its address on the signature page hereof (a "NOTICE OF BORROWING") by
telephone or facsimile (to be subsequently confirmed in writing) or in writing
(effective upon receipt) of its intention to borrow, specifying the date,
amount, type and tenor of the proposed Advance. The Borrower shall give such
Notice of Borrowing (i) by 11:00 a.m. (San Francisco time) at least three
business days prior to any proposed Eurodollar Rate Advance which will bear
interest based on the Telerate Screen quote as provided in clause (i) of the
definition of the "Eurodollar Rate"; (ii) by 10:00 a.m. (San Francisco time) at
least two business days prior to any proposed Eurodollar Rate Advance which will
bear interest based on a Grand Cayman quote as provided in clause (ii) of the
definition of the "Eurodollar Rate"; and (iii) by 10:00 a.m. (San Francisco
time) on the date of any proposed Base Rate Advance.
9. PAYMENTS. All payments made hereunder or under any Note (as
hereinafter defined) shall be made to the Bank without deductions for any
present or future taxes, withholdings, deductions or any other charges
(excluding taxes imposed on or measured by the Bank's net income by the
jurisdiction (or any political subdivision thereof) under the laws of which the
Bank is organized or maintains a lending office) (the "TAXES") imposed or
required by any political or taxing authority, it being understood that the net
amount received by the Bank after payment of the Taxes by the Borrower shall not
be less than the payment provided for hereunder. All payments shall be made to
the Bank's Global Payments Operations, 1850 Gateway Blvd., Concord California
94520 in same day funds without set-off, recoupment or counterclaim; for credit
to Incoming Money Transfer Account #12331-83980; ABA #121-000-358; Ref: Chiron
Corporation. Commitment Fee and interest payments (except with respect to Base
Rate Advances bearing interest based on the Bank's "reference rate") shall be
calculated for the actual number of days elapsed on the basis of a 360-day year.
Interest payments with respect to Base Rate Advances bearing interest based on
the Bank's "reference rate" shall also be calculated for the actual number of
days elapsed but on the basis of a 365- or 366-day year, as the case may be.
3
<PAGE>
10. PREPAYMENT; COSTS. (a) Subject to subsection (b) of this Section, the
Borrower may, at any time and from time to time, upon not less than two business
days prior notice to the Bank, prepay Advances in whole or in part. Such notice
of prepayment shall specify the date and amount of such prepayment and the
type(s) of Advances to be prepaid. If such notice is given by the Borrower, the
Borrower shall make such prepayment and the payment amount specified in such
notice shall be due and payable on the date specified therein, together with
accrued interest to each such date on the amount prepaid and any amounts
required pursuant to subsection (b) of this Section.
(b) If for any reason Eurodollar Rate Advances are prepaid, as a result of
acceleration or otherwise, or if the Borrower fails for any reason to borrow in
accordance with a Notice of Borrowing, or fails to make any prepayment of such
an Advance in accordance with any notice delivered under this Section, the
Borrower shall pay to the Bank, on demand, an additional amount as shall be
required to compensate the Bank for any loss connected with its reemployment of
the amount so prepaid or failed to be prepaid or of those funds acquired by the
Bank to fund the Advance proposed in such Notice of Borrowing, as the case may
be.
11. CONDITIONS PRECEDENT. The obligation of the Bank to make Advances to
the Borrower hereunder is subject to the satisfaction of (i) the conditions set
forth in subsections (a), (c) and (d) of this Section at the time of the making
of the first Advance, and (ii) the conditions set forth in subsection (b) of
this Section, at the time of making each Advance (including the first Advance):
(a) There shall have been delivered to the Bank (i) certified copies
of (x) the Borrower's charter and by-laws and (y) resolutions of the
Borrower's board of directors or equivalent body authorizing the
transaction evidenced hereby, and (ii) evidence satisfactory to the Bank of
the authority of the Borrower's signatory (ies) hereto and to the Note.
(b) At the time of the making of each Advance, and after giving
effect thereto, there shall exist no Event of Default (as hereinafter
defined) and no condition, event or act which, with the giving of notice or
lapse of time or both, would constitute an Event of Default, and all
representations and warranties made by the Borrower herein shall be true
and correct with the same effect as if those representations and warranties
had been made on and as of such date.
(c) The Bank shall have received from Ciba-Geigy Ltd. (the
"Guarantor") an unconditional guaranty of all of the
4
<PAGE>
Borrower's obligations hereunder and under any Note (the "Guaranty"), and
such certificates, organizational documents and other documents or
instruments in connection therewith as the Bank may reasonably request.
(d) The Borrower shall have repaid to the Bank all sums due under
that certain U.S. $100,000,000 Promissory Note from the Borrower to the
order of the Bank dated as of June 26, 1996.
Each Notice of Borrowing submitted by the Borrower hereunder shall
constitute a representation and warranty by the Borrower hereunder, as of
the date of the notice and as of the proposed borrowing date, that the
conditions in subsection (b) of this Section are satisfied.
12. REPRESENTATIONS AND WARRANTIES. The Borrower makes the following
representations and warranties, all of which shall survive the execution and
delivery of this Agreement.
(a) The Borrower is duly organized and validly existing in good
standing in the jurisdiction of its incorporation.
(b) This Agreement is and any Note will be duly and properly
authorized and executed by the Borrower and constitutes or will constitute,
as applicable, its legal, valid and binding obligations enforceable in
accordance with their respective terms.
13. COVENANTS. The Borrower covenants and agrees that, until all
obligations incurred by the Borrower under this Agreement are paid in full and
so long as the Commitment is in effect, the Borrower will:
(a) Provide to the Bank (i) as soon as they are available, copies of
all financial statements of the Borrower required to be filed with the
Securities and Exchange Commission; and (ii) with reasonable promptness,
any other information as the Bank may from time to time reasonably request.
(b) Promptly give written notice to the Bank of any condition, event
or act which, with or without the giving of notice or the lapse of time, or
both, would constitute an Event of Default (as hereinafter defined).
(c) Not wind up, liquidate or dissolve its affairs or merge or
consolidate into any entity, or convey, sell, lease or otherwise dispose of
(or agree to do any of the foregoing at any future time) all or
substantially all or a substantial part of its property or assets, except
that (i) any
5
<PAGE>
corporation may merge or liquidate into the Borrower provided that either
(x) the Borrower shall be the surviving corporation, or (y) if the Borrower
is not the surviving corporation, the Guaranty shall remain in full force
and effect on behalf of the surviving corporation, and (ii) the Borrower
may merge into the Guarantor.
14. EVENTS OF DEFAULT. If any of the following events ("EVENTS OF
DEFAULT") shall occur and be continuing:
(a) The Borrower shall default in the payment of any principal amount
due hereunder or under any Note or shall default in the payment of any
interest amount due hereunder or under any Note and such default shall not
be cured within five days;
(b) The Borrower shall fail to perform or observe any term or
covenant contained in this Agreement and such failure shall not be remedied
within 30 days, or any representation or warranty made by the Borrower in
this Agreement or in any certificate or other document or statement
furnished at any time hereunder or in connection herewith shall prove to
have been incorrect or untrue in any material respect on the date as of
which made;
(c) A default or event of default with respect to payment shall occur
in respect of bonds, notes, other loans or similar evidences of
indebtedness of the Borrower or any subsidiary in a principal amount of at
least U.S. $5,000,000.00, the effect of which is to cause, or to permit the
holder of such indebtedness to cause, such indebtedness to become due prior
to its stated maturity, or any such indebtedness shall not be paid within
any applicable grace period after the due date thereof;
(d) The Guarantor shall materially breach any term or provision
under, or default under, the Guaranty, or the Guaranty shall cease to be in
full force and effect for any reason whatsoever; or
(e) The Borrower or the Guarantor shall (i) make an assignment for
the benefit of creditors, (ii) generally fail to pay its debts as they
become due, (iii) file a petition commencing a voluntary case under any
reorganization or bankruptcy laws, or (iv) an involuntary case under such
laws shall be commenced against the Borrower or the Guarantor and such
proceeding shall remain undismissed or unstayed for a period of 60 days;
then, and in any such event, the Bank may by notice to the Borrower take either
or both of the following, actions: (i)
6
<PAGE>
terminate the Commitment, whereupon the same shall terminate forthwith,
and/or (ii) declare the Advances and all interest accrued and unpaid thereon,
any accrued Commitment Fee, and all other sums due hereunder, to be
immediately due and payable without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived by the Borrower;
PROVIDED, that, upon the occurrence of any event specified in subsection (e)
of this Section (in the case of clause (iv) thereof, upon the expiration of
the 60-day period mentioned therein), the Commitment shall automatically
terminate and the unpaid principal amount of the Advances and all interest
and other amounts as aforesaid shall automatically become due and payable
without further act of the Bank.
15. GOVERNING LAW AND JURISDICTION: WAIVER OF JURY TRIAL. THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
CALIFORNIA. THE BORROWER AND THE BANK EACH WAIVE THEIR RESPECTIVE RIGHTS TO A
TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR
RELATED TO THIS AGREEMENT, ANY NOTE OR ANY OTHER DOCUMENT GIVEN IN CONNECTION
HEREWITH, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION,
PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST
ANY OTHER PARTY, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR
OTHERWISE. THE BORROWER AND THE BANK EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF
ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY.
16. MISCELLANEOUS. (a) The Borrower shall pay the Bank, on demand, all
(i) reasonable out-of-pocket expenses and reasonable Attorney Costs incurred by
the Bank in connection with the development, preparation, delivery,
administration and execution of, and any amendment, supplement, waiver or
modification to (in each case, whether or not consummated), and (ii) all out-of
- -pocket expenses and Attorney Costs incurred by the Bank in connection with the
enforcement of this Agreement and any instruments or agreements executed in
connection with this Agreement.
(b) This Agreement supersedes all prior agreements and oral negotiations
with respect to the subject matter of this Agreement. Neither this Agreement
nor any Note is assignable by the Borrower, except in connection with a merger
permitted under Section 13(c)(i)(y) or 13(c)(ii).
(c) No delay or omission by Bank to exercise any right under this
Agreement or under any Note or other document related hereto shall impair such
right, nor shall it be construed as a waiver thereof. No waiver of any breach
or default shall be deemed a waiver of any subsequent breach or default. Any
waiver, consent or approval under this Agreement or any Note or other document
related hereto must be in writing to be effective.
7
<PAGE>
(d) Section headings in this Agreement are for reference only and shall
not affect the interpretation of any provision of this Agreement.
8
<PAGE>
IN WITNESS WHEREOF, the Borrower and the Bank have caused their duly
authorized officers to execute and deliver this Agreement as of the date first
above written.
CHIRON CORPORATION
By: /s/ James E. Kent
------------------------------------
James E. Kent
Title: Treasurer
ADDRESS FOR NOTICES
4560 Horton Street
Emeryville, CA 94608-2916
Phone: (510) 655-8730
Fax: (510) 601-3343
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION
By: /s/ Kevin McMahon
------------------------------------
Name: Kevin McMahon
Title:
ADDRESS FOR NOTICES
Credit Products-High Technology-
SF #3697
555 California Street, 41st Floor
San Francisco, CA 94104
Attn: Kevin Mc Mahon, Vice President
Phone: (415) 622-8088
Fax: (415) 622-2514
9
<PAGE>
ATTACHMENT 1
BASE
RATE: means, for any day, the higher of: (a) 0.50% per annum above the
latest Federal Funds Rate, which means, for any day, the rate set
forth in the weekly statistical release designated as H.15(519), or
any successor publication, published by the Federal Reserve Bank of
New York (including any such successor, "H.15(519)") on the preceding
business day opposite the caption "Federal Funds (Effective)"; or, if
for any relevant day such rate is not so published on any such
preceding business day, the rate for such day will be the arithmetic
mean as determined by the Bank of the rates for the last transaction
in overnight Federal funds arranged prior to 9:00 a.m. (New York City
time) on that day by each of three leading brokers of Federal funds
transactions in New York City selected by the Bank; and (b) the rate
of interest in effect for such day as publicly announced from time to
time by the Bank in San Francisco, California, as its "reference
rate." (The "reference rate" is a rate set by the Bank based upon
various factors including the Bank's costs and desired return, general
economic conditions and other factors, and is used as a reference
point for pricing some loans, which may be priced at, above, or below
such announced rate.) Any change in the reference rate announced by
the Bank shall take effect at the opening of business on the day
specified in the public announcement of such change.
EURODOLLAR
RATE: means for each applicable Interest Period, (i) the rate of interest
per annum equal to the rate for deposits in the Applicable Currency
for a period equal to the applicable Interest Period which appears on
the Telerate Page 3750 as of 11:00 a.m., London time, on the day that
is two London business days prior to the commencement of such Interest
Period, or (ii) if such rate does not appear on the Telerate Page
3750, or if the Borrower has not given a Notice of Borrowing prior to
the date and time specified in clause (i) of Section 8, the Eurodollar
Rate shall mean for each applicable Interest Period the rate of
interest at which U.S. Dollar deposits for such Interest Period and in
an amount approximately equal to the principal amount of the advance
to be made or maintained would be offered by Bank's Grand Cayman
Branch, Grand Cayman, British West Indies, to major banks in the
offshore U.S. Dollar inter-bank markets
10
<PAGE>
upon the request of such banks at or about 11:00 a.m. San Francisco
time two business days prior to -the first day of such Interest
Period.
11
<PAGE>
EXHIBIT 10.56
[CONFIDENTIAL TREATMENT REQUESTED]
[Certain confidential information has been omitted from the Agreement and filed
separately with the Securities and Exchange Commission pursuant to a request by
Registrant for confidential treatment pursuant to Rule 24b-2. The omitted
confidential information has been identified by the following statement:
"CONFIDENTIAL TREATMENT REQUESTED".]
AMENDED AND RESTATED LICENSE AGREEMENT
This AMENDED AND RESTATED LICENSE AGREEMENT effective as of April 1, 1996
(this "Agreement") between CIBA CORNING DIAGNOSTICS CORP., a corporation
organized under the laws of the State of Delaware, U.S.A., that intends to
change its name to Chiron Diagnostics Corp. effective on or about November 1,
1996 (hereinafter "Chiron") and BIOANALYSIS LIMITED, a corporation organized
under the laws of the United Kingdom of Great Britain and Northern Ireland
(hereinafter "Bioanalysis").
WHEREAS, Chiron (as assignee of Corning Glass Works) and Bioanalysis are
parties to an agreement dated as of December 6, 1984 (the "Original Agreement")
relating to the sublicense to Chiron by Bioanalysis of certain technology
licensed by Bioanalysis from the University of Wales College of Medicine
(formerly known as the Welsh National School of Medicine and hereinafter
referred to as "UWCM"); and
WHEREAS, certain disputes have arisen between Chiron and Bioanalysis under
the Original Agreement, which disputes the parties wish to resolve pursuant to a
Settlement Agreement of even date herewith (the "Settlement Agreement"); and
WHEREAS, the terms of the Settlement Agreement provide for the amendment
and restatement of the Original Agreement as set forth herein;
NOW, THEREFORE, Chiron and Bioanalysis agree to amend and restate the
Original Agreement to read in its entirety as follows:
<PAGE>
1.DEFINITIONS
When used in this Agreement with initial capitals, the terms defined in
this Section 1 shall have the respective meanings set forth below:
a."ADDITIONAL ROYALTY ACCOUNT" shall have the meaning specified in Section
3(c).
b."AE" shall mean any chemiluminescent aryl acridinium esters.
c."AFFILIATE" of a party shall mean a corporation or any other business
entity, in whatever country organized, which, directly or indirectly, controls,
is controlled by or is under common control with such party. For this purpose,
control shall mean the ownership of more than 50% of the issued share capital or
the legal power to direct or cause the direction of the general management and
policies of the party in question. Notwithstanding the foregoing, in the case
of Chiron, "Affiliate" shall (i) include Ciba Corning Diagnostics de Mexico S.A.
(which intends to change its name on or about November 1, 1996 to Chiron S.A. de
C.V.), so long as Chiron continues to own at least 49% of the voting stock of
that corporation, and (ii) exclude Ciba-Geigy Limited, a Switzerland corporation
("Ciba"), and any subsidiaries of Ciba, unless and until such time as Ciba and
Chiron Corporation may mutually agree upon the terms and conditions upon which
Ciba may be deemed an Affiliate of Chiron for purposes of this Agreement.
d."BAYER AGREEMENT" means the Licensing Agreement dated as of December 18,
1986 between Bayer Corporation (formerly known as Miles Laboratories, Inc.) and
Chiron.
e."BAYER OFFSET ACCOUNT" shall have the meaning specified in Section 3(b).
f."BIOANALYSIS PRODUCTS" shall mean the products identified in Schedule A.
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g."CAMPBELL PATENTS" shall mean U.S. Patent No. 4,946,958, any foreign
counterpart patent of U.S. Patent No. 4,946,958 or any continuation, division,
re-issue or re-examination either the U.S. patent above named or its foreign
counterpart.
h."CLAIM" shall mean an issued patent claim which defines an invention
which the patentee has been granted the right to exclude others from making,
using, or selling throughout the granting country. The term does not include
any patent claim which has been disclaimed, canceled, or finally adjudicated to
be invalid.
i."CLOSING DATE" shall mean July 1, 1996.
j."IMMUNOASSAY" shall mean any assay wherein the analyte of interest is an
antibody or protein or is determined by the binding thereto of an antibody or
other specific binding protein.
k."LICENSED PATENTS" shall mean all patents relating to Immunoassays
employing AE labels now or hereafter legally or beneficially owned or controlled
by Bioanalysis ("Bioanalysis Patents") or UWCM ("UWCM Patents"), including all
of the Campbell Patents, provided that "Licensed Patents" shall not include any
patent arising out of an invention first conceived on or after, and with an
earliest claimed priority date on or after, April 1, 1996. The list of the
Licensed Patents and the pending applications which may result in the issuance
of Licensed Patents ("Licensed Patent Applications") is attached hereto as
Schedule B, provided that any omission from such list shall not affect the
status of a patent which would otherwise be a Licensed Patent hereunder.
l."LICENSED PRODUCTS" shall mean Immunoassays or components for
Immunoassays for use in (i) human healthcare and (ii) pre-clinical and
laboratory research whether or not directed to human healthcare, the
manufacture, use or sale of which would, in the absence of a license, infringe a
Claim of a Licensed Patent.
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m."NET SALES REVENUE" shall mean the amount billed by Chiron or its
Affiliates or sublicensees to third parties for the sale of Royalty Products or
performance of assays using Royalty Products, less discounts allowed; less
credits for customers' returns and allowances; less the value of the instrument
and service components of an operating or capital lease for which the charges
are included in the price of Royalty Products purchased by the lessee; less
charges for freight handling and transportation paid by Chiron; and less sales
and use taxes and other similar taxes incurred, all to the extent reasonable and
as determined in accordance with generally accepted accounting practices and
industry practices. Notwithstanding the foregoing, if Chiron or its Affiliates
or sublicensees bills a third party for performance of an assay using a Royalty
Product, the amount of Net Sales Revenue shall be equal to the average Net Sales
Revenue for sales of such Royalty Product in the country in which such assay is
performed during the quarter in which such assay is performed, or, if such
Royalty Product is not sold for commercial use in such country during such
quarter, the worldwide average Net Sales Revenue for sales of such Royalty
Product for such quarter, or, if such Royalty Product is not sold commercially
in any country, a reasonable apportionment shall be made of the gross amount
invoices for performance of the assay between the value of the assay and the
value of the laboratory services associated therewith, taking into account the
average selling prices of similar products, such apportionment to be negotiated
in good faith between the parties and arbitrated if they are unable to agree.
No royalty shall be due upon a sale of a Royalty Product by Chiron to an
Affiliate. Instead, royalty shall be due when such Royalty Product is re-sold
to or used to perform an assay for a third party, and Net Sales Revenue shall be
calculated based on the invoiced price to such party. Royalty shall accrue only
once as to any Royalty Product.
n."PRIME RATE" shall mean, as to each of Chiron's fiscal quarters, the
prime rate of interest as published on the last business day of such quarter in
the Wall Street Journal, provided that Chiron may substitute for the Wall Street
Journal any comparable print or electronic publication, provided that such
substitute publication is used generally by Chiron for such purposes in its
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accounting operations. Chiron agrees to notify Bioanalysis of any change in the
source it uses for the Prime Rate.
o."PROPRIETARY INFORMATION" - Information of any kind, including without
limitation, inventions, technology, disclosures, processes, systems, methods,
formulae, patent applications, machinery, materials, research activities and
plans, costs of production, contract forms, prices, volume of sales, promotional
methods, and lists of names or classes of customers, know-how and trade secrets,
owned or controlled by a party which such party regards as valuable and holds
confidentially other than information which (i) was known by the receiving party
prior to its disclosure by the disclosing party; (ii) is or becomes public
knowledge without fault of the receiving party; (iii) is obtained or derived by
the receiving party from a third party which, to the best knowledge of the
receiving party after appropriate inquiry, is lawfully in possession of such
information and has the right to disclose the information to the receiving party
on a non-confidential basis; or (iv) is developed or derived by the receiving
party, prior or subsequent to its disclosure by the disclosing party,
independently and without resort to the information which was disclosed by the
disclosing party.
p."ROYALTY ADVANCE" shall have the meaning specified in Section 3(a)(ii).
q."ROYALTY PRODUCTS" shall have the following meanings at the respective
times specified below:
i.Until the earlier of August 7, 2007 or depletion of the Bayer Offset
Account, "Royalty Products" shall mean (A) so long as at least one Claim of a
Campbell Patent remains in force anywhere in the world, Immunoassays or
components for Immunoassays that use an AE label, regardless of whether such
products constitute Licensed Products hereunder, except as to any product which
is an Independent Sublicensee Product referred to in clause (ii) of this
Paragraph 1(q); or (B) if no Claim of a Campbell Patent remains in force,
Immunoassays or components of Immunoassays, the manufacture, use or sale of
which would, in the absence of a license, infringe a
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Claim of a Licensed Patent in force in country in which such manufacture, use or
sale occurs, as determined by applicable principles of patent law.
ii.Thereafter, and at all times with respect to any products of a
sublicensee which are not designed for use on a Chiron instrument and are not
labelled with a Chiron trademark ("Independent Sublicensee Products"), "Royalty
Products" shall mean Immunoassays or components for Immunoassays the
manufacturer, use or sale of which would, in the absence of a license, infringe
a Claim of a Campbell Patent in force in a country in which such manufacture,
use or sale occurs, as determined by applicable principles of patent law.
r."UWCM LICENSE" shall mean the Agreement dated as of July 12, 1984 between
UWCM and Bioanalysis pursuant to which UWCM licensed the UWCM Patents to
Bioanalysis.
2.GRANT OF LICENSE; LIMITATIONS
a.GRANT. Bioanalysis hereby grants to Chiron a world-wide sublicense under
the UWCM Patents and a world-wide license under the Bioanalysis Patents to
develop, make, have made, import, use, offer to sell and sell Licensed Products.
Such sublicense and license (i) shall be exclusive as to Licensed Products for
use in human healthcare and pre-clinical and laboratory research directed to
human healthcare and non-exclusive as to Licensed Products for use in
pre-clinical and laboratory research not directed to human health care and (ii)
shall include the right to grant sublicenses in accordance with the terms of
Section 5 hereof; provided, however, that pre-clinical and laboratory research
conducted by Bioanalysis with application to human healthcare shall not infringe
Chiron's exclusive license so long as that research has potential application to
fields other than human healthcare.
b.RESERVATION OF RIGHTS IN GRANTOR. Notwithstanding the exclusive licenses
granted to Chiron hereunder, Bioanalysis reserves to itself the non-exclusive
right (with right of sublicense to
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third parties or Affiliates with whom Bioanalysis enters into collaborative
arrangements for the development, manufacture and marketing of Bioanalysis
Products) to make, have made, import, use, offer to sell and sell the
Bioanalysis Products.
c.RIGHTS LIMITED TO LICENSED PRODUCTS. Nothing herein grants to Chiron any
rights under the Licensed Patents with respect to the manufacture, use or sale
of any products other than Licensed Products. Without limiting the generality
of the foregoing, nothing herein shall be construed as a grant to Chiron of any
rights under the Licensed Patents to develop, make, have made, import, use,
offer to sell or sell nucleic acid hybridization assays or any other assays for
which rights are not specifically granted to Chiron herein.
d.NO LIMITATIONS EXCEPT UNDER PATENTS. As between the parties to this
Agreement, the field of use restrictions contained herein prohibit the
manufacture, use or sale of any product by either party only to the extent that
such manufacture, use or sale constitutes infringement of a Claim of a patent in
force in the jurisdiction in which such activity occurs.
e.PROPRIETARY INFORMATION. Bioanalysis and UWCM have provided Chiron with
information relating to the use of acridinium esters in immunoassays and binding
protein assays. To the extent that any information provided to Chiron by
Bioanalysis or UWCM constitutes Proprietary Information, Bioanalysis and UWCM
covenant not to assert any restriction on the use or communication of such
Proprietary Information, including publication, except at the direction of
Chiron. To the extent that any Proprietary Information provided to Chiron by
UWCM or Bioanalysis has entered the public domain, it has done so without the
fault of Chiron. Bioanalysis has not provided Chiron with Proprietary
Information useful in the field of nucleic acid hybridization assays.
f.OPTION. In the event that Bioanalysis obtains during the term of this
Agreement any patent rights either as owner or licensee, which relate to an AE
technology, Bioanalysis will grant to
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Chiron an option to receive a non-exclusive license at a reasonable royalty for
the Licensed Products (as defined to include such patent rights as Licensed
Patents). The terms of the license will include a most favored licensee clause
and rights to grant sublicenses to third parties with whom Chiron enters into
collaborative arrangements for the development, manufacture and marketing of the
Licensed Products, and will not include license fees or minimum royalties. The
royalty rate and other terms of the license not specified herein will be
negotiated in good faith and resolved in accordance with the dispute resolution
procedures set forth in Section 9(c) if the parties cannot agree. The option
will be exercisable no later than six months after Chiron's receipt of
Bioanalysis' written request to either exercise or waive its rights with respect
to a particular patent or patent application. Bioanalysis agrees that it will
not, without Chiron's written consent, waive its rights to a license under any
of the Patents as defined in the UWCM License.
3.LICENSE FEES AND ROYALTIES
a.RESTRUCTURING FEE AND ROYALTY ADVANCE. Chiron shall make the following
non-refundable payments to Bioanalysis on the Closing Date:
i.A license restructuring fee in the amount of [CONFIDENTIAL TREATMENT
REQUESTED], which shall not be creditable against royalties, and
ii.An advance upon future royalties in the amount of [CONFIDENTIAL
TREATMENT REQUESTED] (the "Royalty Advance").
Chiron shall not be required to make any further payments until the
Royalty Advance has been fully depleted by application to royalties earned under
Paragraph 3(d).
b.BAYER OFFSET ACCOUNT. An account (the "Bayer Offset Account") shall be
established as an accounting mechanism for the purpose of determining when
Chiron has been fully compensated for its royalty payments under the Bayer
Agreement, plus interest thereon, through reductions in the
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rate of royalty that would otherwise have been payable hereunder. The amount of
the Bayer Offset Account as of April 1, 1996 is agreed to be [CONFIDENTIAL
TREATMENT REQUESTED]. Effective as of the end of each of Chiron's fiscal
quarters, (i) there shall be added to the Bayer Offset Account (A) an amount
equal to the interest that would have accrued on the balance of the Bayer Offset
Account during such quarter if such balance earned interest at the Prime Rate
(provided that for the quarter ending June 30, 1996, such hypothetical interest
shall be deemed to accrue only from and after the Closing Date) and (B) the
amount of royalties paid by Chiron to Bayer under the Bayer Agreement for such
quarter, and (ii) there shall be subtracted from the Bayer Offset Account an
amount equal to the difference between the amount of royalties paid to
Bioanalysis for such quarter (including royalties paid by means of an
application of credit for the Royalty Advance) and the amount of royalties that
would have been payable at a royalty rate of [CONFIDENTIAL TREATMENT REQUESTED].
Nothing herein shall be construed to require Bioanalysis to make any actual
deposit or payment of funds to cover any amount of the Bayer Offset Account.
c.ADDITIONAL ROYALTY ACCOUNT. A second account (the "Additional Royalty
Account") shall be established for the purpose of determining the time at which
the rate of royalty payable hereunder shall be reduced to zero until Chiron has
been fully compensated for its royalty payments under the Bayer Agreement, plus
interest thereon. The amount of the Additional Royalty Account as of the
Closing Date shall be [CONFIDENTIAL TREATMENT REQUESTED]. Effective as
of the end of each of Chiron's fiscal quarters, (i) there shall be added to the
Additional Royalty Account an amount equal to the interest that would have
accrued on the balance of the Additional Royalty Account during such quarter if
such balance earned interest at the Prime Rate (provided that for the quarter
ending June 30, 1996, such interest shall be deemed to accrue only from and
after the Closing Date and provided further that no such interest shall accrue
after August 7, 2007) and (ii) there shall be subtracted from the Additional
Royalty Account an amount equal to the amount of royalties paid to Bioanalysis
for such quarter, other than royalties paid through application of the Royalty
Advance. The Additional Royalty Account is an accounting mechanism only, and
except
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as provided in Section 9(b), nothing herein shall require Chiron to make any
actual deposit of funds to cover the amount of the Additional Royalty Account.
d.ROYALTY RATES AND APPLICATION OF ADVANCE. Chiron shall pay Bioanalysis
royalties on its sales of Royalty Products at the rates of (i)[CONFIDENTIAL
TREATMENT REQUESTED]. All royalties shall first be credited against the Royalty
Advance and no additional cash payments in respect of royalties shall be payable
until the Royalty Advance has been fully depleted. Thereafter, royalties shall
be due and payable as provided in Paragraph 3(d), 3(e) and 4(b). Chiron will
not be liable to pay more than actual accrued royalties even if they do not
deplete the Additional Royalty Account during the term of this Agreement, and
Bioanalysis will not be responsible for any shortfall if Chiron does not recover
the amount of the Bayer Offset Account during the term hereof.
e.EFFECT OF INVALIDITY/UNENFORCEABILITY. Chiron will make all payments
provided for in this Agreement, notwithstanding that any of the Licensed Patents
may be held invalid and/or unenforceable in any proceeding at a later date, so
long as at least one Claim of a Licensed Patent remains in force and has not
been finally adjudicated to be invalid, provided, that (i) after the earlier of
August 7, 2007 or depletion of the Bayer Offset Account, royalties shall be
payable only with respect to Royalty Products as defined in Paragraph 1(q)(ii)
hereof, (ii) no royalties shall be payable after August 7, 2007 except to the
extent, if any, necessary to deplete the Additional Royalty Account; and (iii)
if no Claim of any Campbell Patent remains valid, royalties shall be payable
only with respect to Royalty Products as defined in Clause (B) of Paragraph
1(q)(i).
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4.RECORD KEEPING, PAYMENT AND REPORTS
a.RECORDS. Chiron shall maintain records of sales of Royalty Products in
sufficient detail to enable royalties payable hereunder to be determined and
shall cause its Affiliates and sublicensees to do likewise. Such records shall
be maintained for a period of at least five years after the end of quarter to
which they relate.
b.REPORTS AND PAYMENTS. Within sixty (60) days after the end of each
fiscal quarter (as Chiron may establish from time to time for its corporate
operations) Chiron shall provide Bioanalysis with a written statement of Net
Sales Revenue of Royalty Products by Chiron and its Affiliates and sublicensees,
a calculation of royalties owed, and a payment of the total amount then due.
Quarterly royalty reports will separately identify sales by Chiron and its
sublicensees and will also include a report on the value of the Royalty Advance,
the Additional Royalty Account and the Bayer Offset Account and a report of any
pending disputes under Section 6(b).
c.PRO-RATION WITHIN QUARTERS. With respect to changes in royalty rates
occurring other than at the end of a fiscal quarter, the amount of Net Sales
Revenue occurring prior to the change in rate shall be deemed to be equal to the
Net Sales Revenue for the entire quarter, times a fraction, the numerator of
which shall be the number of days from the first day of the quarter to the date
of the rate change and the denominator of which shall be the number of days in
the quarter.
d.CURRENCY. All payments hereunder shall be made in U.S. currency.
Non-US$ denominated sales will be converted into dollar sales in accordance with
the standard accounting procedure used by Chiron with respect to its sales
generally as of the Closing Date. In the event that Chiron changes its method
of converting foreign currency sales into U.S. dollars, Chiron will notify
Bioanalysis of the change. If during the first accounting period that such
change is in effect, the Net Sales Revenue determined using the new method of
currency conversion is at least 95% of the Net Sales Revenue determined using
the previous method of currency conversion, Bioanalysis'
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approval of the change in conversion method shall not be required. If the new
method of currency conversion results during such initial accounting period in a
reduction of Net Sales Revenue to less than 95% of Net Sales Revenue under the
previous method, Chiron shall continue to use its previous method of currency
conversion for purposes of this Agreement unless and until Chiron and
Bioanalysis agree on implementation of the new method. Notwithstanding the
foregoing, non-US dollar sales of sublicensees may be converted to U.S. dollars
in accordance with the method used by the sublicensee in question in its
financial statements generally.
e.TAXES. No taxes or deductions of any kind shall be made or taken from
the payments due under Section 3(a). All taxes which Chiron is required to
withhold from royalty payments shall be deducted from such payments and evidence
of actual payment to the relevant taxing authority shall be delivered to
Bioanalysis at the time the accounting for the payment is made to Bioanalysis.
The amounts deducted on account of such taxes shall be deemed to have been paid
to Bioanalysis for purposes of depleting the Additional Royalty Account.
f.AUDIT. Upon Bioanalysis' request (but not more than once per year) and on
reasonable notice, Chiron will, and will cause its Affiliates and sublicensees
to, permit, at the expense of Bioanalysis, independent certified public
accountants, reasonably acceptable to both parties, to have access during
reasonable business hours to inspect and make extracts from such records as may
be reasonably necessary to determine, in respect of any quarterly period, the
correctness of any royalty statements and payments under this Agreement,
provided that Chiron will bear any such reasonable audit expense if the review
or audit shows an underpayment of more than 10% for the applicable period,
unless the conclusions of such review or audit are determined to be incorrect by
agreement of the parties or pursuant to the dispute resolution procedures set
forth in Paragraph 9. The independent certified public accountants must sign
non-disclosure agreements prohibiting them from revealing any information to any
third party and allowing them to disclose to Bioanalysis only information
reasonably necessary to be communicated in order to carry out the purpose of the
audit.
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5.SUBLICENSES
a.RIGHT TO GRANT SUBLICENSES. Chiron shall have the right to grant
sublicenses under the rights granted in Paragraph 2(a) to Affiliates and to
third parties. Royalties shall be payable to Bioanalysis by Chiron with respect
to its sublicensees' Net Sales Revenue (determined in the same manner as Net
Sales Revenue of Chiron) for Royalty Products at the same rates and in the same
manner as provided in Paragraphs 3(d) and 4(b). If Chiron does not receive a
royalty report or payment from a sublicensee prior to the date when Chiron's
report and payment are due to Bioanalysis, Chiron shall make the royalty report
and payment to Bioanalysis based on its best estimate of the amount of royalty
due with respect to the sublicense and shall make an appropriate adjustment in
the next quarter's report and payment. If so agreed by Chiron with a
sublicensee, royalties with respect to a sublicense may be paid semi-annually
rather than quarterly and on the basis of the sublicensee's fiscal periods
rather than Chiron's fiscal periods.
b.[CONFIDENTIAL TREATMENT REQUESTED]
c.IN-KIND SUBLICENSES. In the event that Chiron receives any right
benefit, advantage, concession other than money (including, without limitation
any licenses to any patents of any Affiliate or third party or any business
discount from or any equity of any Affiliate or third party) in consideration
for a grant by Chiron of a sublicense under the licenses granted to it pursuant
to this Agreement, Chiron shall (i) nonetheless be obligated to pay Bioanalysis
royalties pursuant to
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this Agreement based on such third party's or Affiliate's sales or revenues in
connection with Royalty Products or (ii) if no such sales or revenues are to be
received from such third party or Affiliates, inform Bioanalysis of such event
and provide Bioanalysis with all reasonable documentation and information
necessary or appropriate for the parties to negotiate in good faith with respect
to the proper valuation of any such right, benefit, advantage or concession and
the corresponding amounts owing to Bioanalysis in connection therewith, which
shall be determined by allocating the total value received by Chiron between the
sublicense granted hereunder and all other items of value provided by Chiron and
dividing the value allocable to the sublicense granted hereunder equally between
Chiron and Bioanalysis. In the event that the parties do not agree on the
proper valuation or the amounts owing, such issues will be resolved in
accordance with the parties' dispute resolution procedures pursuant to Section
9.
6.PROSECUTION, MAINTENANCE AND ENFORCEMENT OF PATENTS
a.PROSECUTION AND MAINTENANCE. Bioanalysis shall pay for all expenses in
prosecuting the Licensed Patent Applications and maintaining the Licensed
Patents. Bioanalysis shall maintain the Licensed Patents listed in Schedule B.
Bioanalysis shall provide Chiron with copies of all pending Licensed Patent
Applications and inform Chiron concerning the progress of all relevant patent
prosecutions on a semi-annual basis.
b.ENFORCEMENT OF PATENTS BY CHIRON. Chiron shall have the sole,
unrestricted right to enforce the Licensed Patents against all infringers whose
products would constitute Licensed Products if sold by Chiron hereunder, without
regard to whether the infringing products compete with Chiron's products.
Chiron shall pay all costs and keep all recoveries with respect to such
enforcement. Bioanalysis shall assist Chiron as reasonably requested by Chiron,
including by making its officers and employees available as witnesses, and
providing full access to all relevant documents and records, provided that
Chiron shall reimburse all of Bioanalysis out-of-pocket costs
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in connection therewith. Bioanalysis shall join an enforcement action as party
plaintiff if required by law. Chiron will have no right to offset against any
payments otherwise due under this Agreement, any costs, expenses or damages
relating to such infringement or infringement litigation. Chiron agrees to
defend, indemnify and hold Bioanalysis and UWCM harmless from any liability
arising out of actions taken by Chiron pursuant to this sub-section, as well as
attorneys fees arising out of any failure to defend.
c.ENFORCEMENT BY BIOANALYSIS. Notwithstanding the provisions of Paragraph
6(b), if Bioanalysis notifies Chiron of activities which Bioanalysis believes
constitute infringement of the Licensed Patents within the scope of Chiron's
right to enforce as specified in Paragraph 6(b), and if Chiron does not within
12 months thereafter commence patent enforcement proceedings against the alleged
infringer or conclude licensing negotiations with the alleged infringer
(provided that such period shall be extended to the extent of any period during
which Chiron is engaged in proceedings against or negotiations with another
infringer), Bioanalysis shall thereafter have the right, but not the obligation,
to enforce the Licensed Patents against such alleged infringer at Bioanalysis'
own expense and with all recoveries of damages being for Bioanalysis' sole
benefit. Such right of Bioanalysis to enforce the Licensed Patents shall lapse
unless Bioanalysis institutes enforcement proceedings within six months of the
date Bioanalysis is first permitted to institute such proceedings in accordance
with this Paragraph. Except with respect to enforcement actions against
Ciba-Geigy or its subsidiaries, nothing herein shall be deemed to permit
Bioanalysis to grant any license under the Licensed Patents within the scope of
the exclusive license granted to Chiron hereunder.
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7.REPRESENTATIONS AND WARRANTIES.
a.Bioanalysis represents and warrants that:
i.OWNERSHIP. Bioanalysis is the sole owner of the UWCM License, a
true, complete and correct copy of which, including all amendments through the
date hereof, has been provided to Chiron, and is the sole owner or exclusive
licensee of each of the Licensed Patents and Licensed Patent Applications.
ii.THIRD PARTY RIGHTS. Bioanalysis has not granted any rights to any
third party that are inconsistent with the terms of this Agreement, no third
party has made any claim to have been granted such rights, and Bioanalysis is
not aware of any grounds for any such claim.
iii.COMPLETE LIST. To the best of Bioanalysis' knowledge after due
inquiry, Schedule B is a complete list of patents and patent applications
relating to Immunoassays using AE labels that is now or at any time since
December 6, 1984 has been legally or beneficially owned or controlled by
Bioanalysis or UWCM, except for Woodhead ET AL. EP 478,626, and the related
applications and counterparts thereof.
iv.Nothing in this Agreement shall be construed as a warranty or
representation by Bioanalysis as to the validity of any Licensed Patent.
Nothing in this Agreement shall be construed as a warranty or representation by
Bioanalysis that any product made, used, sold or imported under any Licensed
Patent is or will be free from infringement of patents not licensed hereunder or
patents of third parties. Nothing in this Agreement shall be construed as
conferring by implication, estoppel or otherwise any license or rights under any
patents belonging to Bioanalysis other than the Licensed Patents as defined in
this Agreement.
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b.Chiron represents and warrants that Net Sales Revenue for the period
January 1, 1995 - December 31, 1995 was not less than [CONFIDENTIAL TREATMENT
REQUESTED].
8.TERM AND TERMINATION
a.TERM. Except as provided in Paragraph 8(b), the licenses granted to
Chiron hereunder shall continue until the expiration of the last to expire of
the Licensed Patents. Notwithstanding the foregoing, Chiron's obligations to
pay royalties hereunder shall continue only so long as provided in accordance
with Paragraphs 3(d) and 3(e).
b.CHALLENGE TO VALIDITY. The initiation of any legal proceeding
challenging the validity of a Campbell Patent by Chiron or any party acting
under the direction and control of Chiron shall give Bioanalysis an immediate
right to terminate the license upon written notice to Chiron, such termination
to be effective thirty (30) days after notice of termination unless such
challenge to validity is dismissed with prejudice within the thirty day period.
Notwithstanding the foregoing, if the challenge to validity is asserted by a
party other than Chiron or an Affiliate and Chiron disputes whether such party
is under its direction and control, no termination shall occur unless a final
decision of an arbitral panel in a proceeding conducted in accordance with
Paragraph 9 hereof determines that such party is under the direction and control
of Chiron. If the arbitrators determine that the party challenging validity was
acting under the direction or control of Chiron, Chiron will have a period of
thirty (30) days to cause such challenge to be withdrawn and thereby avoid
termination, unless the arbitrators conclude that Chiron's contention as to
direction or control was made in bad faith, in which case the Agreement shall
terminate immediately upon such determination. Nothing herein shall prevent
Chiron from presenting evidence of prior art in connection with a dispute
regarding the proper interpretation of the scope of any Claim of any patent.
17
<PAGE>
9.DISPUTES AND REMEDIES FOR BREACH.
a.DAMAGES SOLE REMEDY. Except as provided in paragraphs 8(b) and 9(b),
Bioanalysis' sole remedy for breach of the license agreement by Chiron shall be
the recovery of an award of damages in an arbitration proceeding, which award
shall include interest at the Prime Rate compounded quarterly from the date the
damages were incurred. In any arbitration proceeding, the arbitrators shall
have authority to award attorneys' fees to the prevailing party. Nothing herein
is intended to limit Bioanalysis right to seek injunctive relief with respect to
infringement of the Licensed Patents by activities outside the scope of the
license and sublicense granted hereunder.
b.EXTRAORDINARY REMEDY. If Bioanalysis, after initiating and prevailing in
an arbitration with respect to non-payment of royalties in which the recovery
exceeds 10% of the amount of royalties due for the period with respect to which
the determination of royalties is in dispute (which period shall be a period of
at least two quarters), again initiates and prevails in such an arbitration and
recovers such an amount, and provided that Chiron has not theretofore been the
prevailing party in an arbitration between the parties, the unrecovered balance,
if any, of the Additional Royalty Account shall become immediately due and
payable as a non-refundable advance on future royalties.
c.RESOLUTION OF DISPUTES. Chiron and Bioanalysis agree that the following
procedure will govern the resolution of any dispute between or among them
arising out of or relating to this Agreement:
i.the parties will use all reasonable efforts for a period of at least
90 days to resolve the dispute through negotiation;
ii.if the dispute cannot be settled through negotiation, Chiron and
Bioanalysis agree to try in good faith to settle the dispute by mediation
administered by the American Arbitration Association under its Commercial
Mediation Rules; and
18
<PAGE>
iii.if the dispute cannot be resolved by mediation Chiron and
Bioanalysis agree that the dispute will be resolved by mandatory, binding
arbitration. The arbitration will take place in San Francisco, CA, at the
offices of the American Arbitration Association ("AAA"), pursuant to the AAA
International Commercial Rules. The dispute will be resolved by the majority
decision of three arbitrators of whom one will be nominated by the Claimant(s)
and one by Respondent(s), and a third nominated by the two party-appointed
arbitrators, unless Claimant(s) and Respondent(s) agree in any given dispute to
have it settled by a single arbitrator acceptable to both Claimant(s) and
Respondent(s). If a party fails to nominate its arbitrator to a three arbitrator
panel within 30 days after the other party has appointed its arbitrators and
served written notice of such appointment on the other party, or if within 30
days after both party-appointed arbitrators are appointed, the party appointed
arbitrators have not agreed upon the appointment of a third arbitrator, then the
missing arbitrator will be appointed by the AAA in accordance with the governing
rules. The decision of the arbitrators, or of the single arbitrator, as the
case may be, will be final and binding. Judgment on the award may be entered in
any Court of competent jurisdiction.
iv.The parties agree that, prior to the formation of the arbitral
panel, a party may apply to a state or federal court in California for
provisional or interim relief. After the arbitration panel is empaneled, it
shall have sole jurisdiction to hear such application, except that the parties
agree that any relief ordered by the arbitrators may be enforced by a California
state court.
v.If Chiron or Bioanalysis desire to join Gen-Probe as a party to an
arbitration commenced or to be commenced under this Section, then each of the
parties shall use their best efforts to convince Gen-Probe to join the
arbitration. If Gen-Probe will not agree to join the arbitration, then each of
Chiron and Bioanalysis agrees that, notwithstanding this Section, the
complaining party shall bring its dispute in federal court in California, or in
the event that the federal court does not have jurisdiction over the subject
matter of the dispute, in state court in California.
vi.Each of the parties submits to the jurisdiction of the federal
courts in California, or in the event that the federal court does not have
jurisdiction over the subject matter of the
19
<PAGE>
dispute, to the jurisdiction of the state courts in California, for purposes of
Section 9(c)(iv) and 9(c)(v) of this Agreement.
10.NOTICES.
Any notice or report required or permitted to be given under this Agreement
shall be in writing and shall be delivered by hand or overnight courier or
mailed postage prepaid by recorded, registered or certified mail return receipt
requested, addressed as set forth below unless changed by notice so given:
If to Chiron:
Ciba Corning Diagnostics Corp.
333 Coney Street
East Walpole, MA 02032
Attention: President
Copy to: General Counsel
If to Bioanalysis:
Bioanalysis Limited
Cardiff Business Technology Centre
Senghenydd Road
Cardiff CF2 4AY, United Kingdom
Attention: Managing Director
Any such notice or report shall be deemed delivered on the date received,
provided that no such notice or report shall be deemed delinquent if deposited
in the mails or delivered to a courier service on or before the date such notice
or report is required to be given.
20
<PAGE>
11.MISCELLANEOUS.
a.CONFIDENTIALITY. Bioanalysis agrees to hold in confidence all
information it may receive hereunder concerning royalty payments and sales by
Chiron and its Affiliates and sublicensees, except that Bioanalysis may disclose
such information (i) to the extent such information has previously been publicly
disclosed by Chiron, (ii) to the extent required to be disclosed by applicable
law and after using all reasonable efforts to obtain confidential treatment of
the required disclosure, (iii) to its legal counsel and accountants, or (iv) to
the arbitrators in any arbitral proceeding pursuant to Paragraph 9 hereof.
This obligation shall survive termination of this Agreement.
b.NO JOINT VENTURE. This Agreement does not constitute and shall not be
construed as an agency, joint venture or partnership between the parties.
c.BENEFIT AND ASSIGNMENT. This Agreement shall be binding upon and inure
to the benefit of the successors and assigns of the parties hereto, provided,
however, that neither party may assign or transfer its rights and obligations
without the written consent of the other party, which consent shall not be
unreasonably withheld, except that Chiron may assign its rights and obligations
without such consent to a purchaser or other transferee of Chiron's
immunodiagnostics business, and Bioanalysis may assign its rights and
obligations without such consent to UWCM and Affiliates of Bioanalysis.
d.ENTIRE AGREEMENT; AMENDMENT. This Agreement is the entire agreement
between the parties with respect to the matters set forth herein and supersedes
all other prior agreements or understandings, whether written or oral. No
representations, oral or otherwise, express or implied, other than those
expressly set forth herein or in the Settlement Agreement have been made by
either party to the other concerning the subject matter of this Agreement. This
Agreement may not be
21
<PAGE>
modified or amended other than in writing signed by the party whose rights or
obligations are modified or amended.
e.WAIVER. The failure of party to insist upon another party's strict
adherence to any term of this Agreement on any occasion will not be construed as
a waiver or deprive that party of the right to insist upon strict adherence to
that term or any other term of this Agreement.
f.GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of California, U.S.A., without giving
effect to that state's conflict of law rules.
g.SEVERABILITY. If any provision or sub-provision of this Agreement is
found invalid or unenforceable, the balance of the Agreement, and all provisions
thereof shall continue in full force and effect.
h.INTERPRETATION. References to any gender include the other gender and to
the singular number the plural number and vice versa. All headings throughout
this Agreement have been inserted for the purpose of ease of reference only and
do not define, limit or affect the meaning or interpretation of this Agreement
or of any instrument created pursuant hereto or in accordance herewith. Each
party has been provided with an opportunity to participate in the drafting and
preparation of this Agreement. Therefore, in any construction to be made of
this Agreement, the same shall not be construed against any party.
i.GEN-PROBE AGREEMENT - This Agreement does not diminish, alter, or affect
in any way, the rights of Gen-Probe under the Gen-Probe Agreement.
[REMAINDER OF THE PAGE LEFT INTENTIONALLY BLANK]
22
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement or
caused their duly authorized representatives to execute this Agreement as of the
date first above written.
CIBA CORNING DIAGNOSTICS CORP. BIOANALYSIS LIMITED
By: /s/ Kenneth J. Conway By: /s/ J.L.D. Bell
-------------------------- ----------------------------
Kenneth J. Conway Director
Senior Vice President,
Immuno/Chemistry
Date: 7/2/96 Date:
-------------------------
21
<PAGE>
SCHEDULE A
PAGE 1 OF 8
SCHEDULE A
BIOANALYSIS PRODUCTS
1. HIV 1/2 per attached description (and all reasonable improvements thereto
which do not substantially change the nature of the product).
2. Hepatitis B per attached description (and all reasonable improvements
thereto which do not substantially change the nature of the product).
3. Anti-Thyroglobulin per attached description (and all reasonable
improvements thereto which do not substantially change the nature of the
product).
4. Anti-Thyroid Peroxidase per attached description (and all reasonable
improvements thereto which do not substantially change the nature of the
product).
5. Thyrotrophin Receptor Antibodies per attached description (and all
reasonable improvements thereto which do not substantially change the nature of
the product).
6. Insulin (manual microtiter plate format).
7. Proinsulin (manual microtiter plate format).
Reasonable improvements do not include modifications to enable use on automated
instruments.
1
<PAGE>
SCHEDULE A
PAGE 2 OF 8
[CONFIDENTIAL TREATMENT REQUESTED]
2
<PAGE>
SCHEDULE A
PAGE 3 OF 8
[CONFIDENTIAL TREATMENT REQUESTED]
3
<PAGE>
SCHEDULE A
PAGE 4 OF 8
[CONFIDENTIAL TREATMENT REQUESTED]
4
<PAGE>
SCHEDULE A
PAGE 5 OF 8
[CONFIDENTIAL TREATMENT REQUESTED]
5
<PAGE>
SCHEDULE A
PAGE 6 OF 8
[CONFIDENTIAL TREATMENT REQUESTED]
6
<PAGE>
SCHEDULE A
PAGE 7 OF 8
[CONFIDENTIAL TREATMENT REQUESTED]
7
<PAGE>
SCHEDULE A
PAGE 8 OF 8
[CONFIDENTIAL TREATMENT REQUESTED]
8
<PAGE>
SCHEDULE B
PAGE 1 OF 2
[CONFIDENTIAL TREATMENT REQUESTED]
1
<PAGE>
SCHEDULE B
PAGE 2 OF 2
[CONFIDENTIAL TREATMENT REQUESTED]
2
<PAGE>
Exhibit 10.86
[CONFIDENTIAL TREATMENT REQUESTED]
[Certain confidential information has been omitted from the Agreement and filed
separately with the Securities and Exchange Commission pursuant to a request by
Registrant for confidential treatment pursuant to Rule 24b-2. The omitted
confidential information has been identified by the following statement:
"CONFIDENTIAL TREATMENT REQUESTED".]
Notarial Deed A. Prot. 1996/20
dated 17 February 1996 of the
Notary Public Dr. Werner Wenger, Basle
NOTARIAL DEED
-------------------------------------
PURCHASE AND ASSIGNMENT AGREEMENT
Negotiated in Basle, Switzerland on the 17th day of February 1996.
Before the notary public Dr. Werner Wenger with place of office in Basle
appeared today:
1. MR. BERND CROMME, born 8 August 1939, attorney-at-law, of German
nationality, domiciled at D-65812 Bad Soden,
2. DR. HANS KUPPER, born 17 July 1944, bio-chemist, of German nationality,
domiciled at D-35039 Marburg,
both acting not for themselves, but with a power of attorney for
BEHRINGWERKE AG, with an office at Marburg (Lahn), registered at the
commercial register of Marburg (Lahn) under HR B 1055, with notarial
confirmation of representation, an authenticated copy of which constitutes
APPENDIX A to this document;
3. DR. EKKEHARD MOESER, born 20 July 1947, attorney-at-law, domiciled at
D-60389 Frankfurt am Main, not acting for himself but
a) with a power of attorney for 31, CORSA VERWALTUNGSGESELLSCHAFT MBH,
with an office at Frankfurt am Main, with notarial confirmation of
representation, the original of which constitutes APPENDIX B to this
document;
<PAGE>
2
b) with a power of attorney for CHIRON CORPORATION, with an office at
California, with notarial confirmation of representation, the original
of which constitutes APPENDIX C to this document.
The foregoing persons identified themselves to the notary public by presenting
valid official national identity cards or passports.
Such persons and the notary public declared that they all have sufficient
knowledge of the English language to follow the notarization, which, at the
request of all the parties, will be conducted in English.
Such persons confirmed that they do not wish this document to be translated into
the German language nor do they wish that a German translation of this document
be added as an annex to this document.
From a conversation with such persons, the notary public took evidence that each
of them has sufficient command of the English language to follow and to
understand the document here notarized.
The foregoing persons request that the notary public notarize the following:
<PAGE>
3
PURCHASE AND ASSIGNMENT AGREEMENT
between
Behringwerke Aktiengesellschaft,
(hereinafter "Behringwerke")
- ON THE ONE SIDE -
AND
(1) 31. CORSA Verwaltungsgesellschaft mbH,
(to be renamed "Chiron Biocine GmbH")
(hereinafter "Buyer")
(2) Chiron Corporation,
(hereinafter "Guarantor")
- ON THE OTHER SIDE -.
(Behringwerke and Buyer are collectively hereinafter referred to as the
"Parties" or individually as the "Party", as the context requires.)
<PAGE>
4
TABLE OF CONTENTS
Directory of Annexes 5
Preamble 6
1. Facts; Covenants 6
2. Sale and Assignment 7
3. Put and Call; Shareholders' Agreement 8
4. Purchase Price 9
5. Condition Precedent 12
6. Operating Lease Agreement 13
7. Behringwerke's Representation and Warranties 14
8. Use of Name 20
9. Buyer's Representation and Warranties 21
10. Cooperation after the Closing Date 22
11. Non-Competition 22
12. Confidentiality 23
13. Merger Control 23
14. Indemnification; Guarantee 24
15. Miscellaneous 24
<PAGE>
5
DIRECTORY OF ANNEXES
Annex 1.4 (a) - Contribution Agreement
Annex 1.4 (b) - Partnership Agreement
Annex 3.4 - Shareholders' Agreement
Annex 4.6 - Investment Plan for 1996
Annex 4.7 - Terms and Conditions for Commission
Annex 7.1.16 - Third Party Consents Agreements
Annex 7.1.18 - Liens, Pledges, Usufructs and other Encumbrances
Annex 7.1.19 - Financial Statements
Annex 8 - Use of Name and Logo
Annex 11 - Hoechst Letter
<PAGE>
6
PREAMBLE
A. Object of Behringwerke, a stock company (AKTIENGESELLSCHAFT) incorporated
under the laws of Germany, is, inter alia, the production and distribution
of pharmaceutical products for human and animal use.
B. Object of Buyer, a GmbH organized under the laws of Germany, is the
distribution of pharmaceutical products for human use.
C. The Parties propose to enter into a joint venture in the field of human
vaccines, pursuant to which Behringwerke will contribute its human vaccine
business (hereinafter the "Business") to a newly organized limited
partnership (hereinafter "VuCo GmbH & Co."). Buyer will purchase a 49%
interest in the limited partnership and Buyer will have an option to
purchase, and Behringwerke will have an option to require Buyer to
purchase, the remaining 51% interest.
NOW, THEREFORE, the Parties hereto agree as follows:
1. FACTS; COVENTANTS
1.1 Behringwerke is the sole shareholder of 32. CORSA Verwaltungsgesellschaft
mbH (hereinafter "VuCo GmbH") and is holding two shares with a nominal
value of DM 25,000 and DM 25,000 representing 100% of the stated capital
of VuCo GmbH (hereinafter the "Shares"). VuCo GmbH is registered at the
commercial register of Amtsgericht Frankfurt a.M. under HR B 40994.
1.2 Behringwerke is the sole limited partner (KOMMANDITISTIN) of VuCo GmbH &
Co.; application has been filed for registration at the commercial register
of Amtsgericht Marburg. Behringwerke's limited partnership interest will be
fully contributed pursuant to the Contribution Agreement as defined in
clause 1.4; an application has been filed to have registered as liability
amount of Behringwerke at the commercial register an amount of DM 70,000
(in words: Deutsche Mark seventy thousand) (VOLL GELEISTETE
KOMMANDITEINLAGE UND REGISTRIERTE HAFTEINLAGE).
<PAGE>
7
1.3 Behringwerke is also the sole owner of Institut fur Produkttest und
Verbrauchsforschung GmbH. ("IPV").
1.4 Presently "IPV" is the sole general partner of VuCo GmbH & Co. Behringwerke
shall immediately after the date hereof cause VuCo GmbH to replace IPV as
general partner of VuCo GmbH & Co. and immediately after such replacement
Behringwerke shall execute, and shall cause VuCo GmbH & Co. to execute, the
Contribution Agreement attached as ANNEX 1.4 (a) ("the Contribution
Agreement") and the limited partnership agreement attached as ANNEX 1.4 (b)
(the "Partnership Agreement"), the latter with effect as of the Closing
Date and also to be entered into by Buyer.
2. SALE AND ASSIGNMENT
2.1 Behringwerke hereby sells to Buyer and Buyer hereby purchases from
Behringwerke from its share in VuCo GmbH with a nominal value of DM 25,000
(in words: Deutsche Mark twenty-five thousand) a partial share with a
nominal value of DM 24,500 (in words: Deutsche Mark twenty four thousand
five hundred) after split of such share in two shares with nominal values
of DM 500 (in words: Deutsche Mark five hundred) and DM 24,500 (in words:
Deutsche Mark twenty-four thousand five hundred). The transfer of the
purchased share shall have effect as of the Closing Date, subject to the
occurrence of all of the conditions at the Closing Date as defined in
clause 5.1. (The sold share in VuCo GmbH is hereinafter referred to as the
"GmbH Share".) From the Closing Date, Buyer shall be entitled to all
dividend rights and all other secondary rights of the GmbH Share.
2.2 Behringwerke hereby sells to Buyer and Buyer hereby purchases from
Behringwerke 49% of its limited partnership interests in VuCo GmbH & Co.
including 49% of all capital accounts and of any other rights Behringwerke
may have in VuCo GmbH & Co. (the "Limited Partnership Interest") with
economical effect as of the Closing Date subject to the occurrence of all
of the conditions at the Closing Date. Buyer shall be entitled to all
dividend rights and all other secondary rights of a limited partner of VuCo
GmbH & Co. with respect to the Limited Partnership Interest.
<PAGE>
8
2.3 Behringwerke hereby assigns to Buyer with effect in rem as of the Closing
Date the GmbH Share and the Limited Partnership Interest, and Buyer accepts
such assignment from Behringwerke.
The effectiveness in rem of the assignment of the GmbH Share and the
Limited Partnership Interest shall in any case be subject to the condition
precedent of payment of the Fixed Cash Purchase Price and of the Lease
Compensation payable to Behringwerke pursuant to clauses 4.1 and 4.2 and
the other conditions of clause 5.1.
2.4 Behringwerke shall cause VuCo GmbH to consent to the split of the DM 25,000
share and to the transfer of the Limited Partnership Interest.
3. PUT AND CALL; SHAREHOLDERS' AGREEMENT
3.1 Behringwerke herewith grants to Buyer the option (the "Chiron Call Option")
to require Behringwerke to sell to Buyer all of the remaining shares of
Behringwerke in VuCo GmbH and all of the remaining limited partnership
interests in VuCo GmbH & Co. (the "Option Interests"). Buyer may exercise
the Chiron Call Option within each of the following periods: March 1998,
March 1999, March 2000, March 2001 (the "Call Option Periods"). For the
purpose of executing the Chiron Call Option Behringwerke hereby irrevocably
offers to the Buyer to sell the Option Interests within any of the Call
Option Periods on the terms and conditions set forth herein. Buyer may
exercise the Chiron Call Option by accepting the offer of Behringwerke by
notarial deed within each of the Call Option Periods, PROVIDED THAT, Buyer
gives a notice to Behringwerke 30 days before accepting the offer.
3.2 Buyer herewith grants to Behringwerke the option to require Buyer to buy
from Behringwerke the Option Interests (the "Behring Put Option").
Behringwerke may exercise the Behring Put Option within March 2001 (the
"Put Option Period"). For the purpose of executing the Behring Put Option
Buyer hereby irrevocably offers to Behringwerke to buy the Option Interests
within the Put Option Period on the terms and conditions set forth herein.
Behringwerke may exercise the Behring Put Option by accepting the offer of
Buyer by notarial deed within the Put Option Period, PROVIDED THAT,
Behringwerke gives a notice to Buyer 30 days before accepting the offer.
<PAGE>
9
In case a bankruptcy proceeding or composition proceeding is commenced with
regard to the assets of VuCo GmbH or VuCo GmbH & Co., or the commencement
of such proceedings is rejected due to lack of assets, Behringwerke is
entitled to immediately exercise the Behring Put Option with a notice
period of thirty days, PROVIDED THAT such notice shall not become effective
if Buyer arranges that the continuation of VuCo GmbH and VuCo GmbH & Co. as
a going concern is secured within such notice period.
3.3 Subject to the condition that either the Chiron Call Option or the Behring
Put Option is exercised pursuant to clauses 3.1 or 3.2 above and subject to
the further condition that the payment of the Option Purchase Price
pursuant to clause 4.3 is made, Behringwerke hereby assigns to the Buyer
the Option Interests and the Buyer accepts such assignment. Behringwerke
represents and warrants that as of the effective date of such assignment,
it is the sole owner of such Option Interests and that the Option Interests
are fully paid, not repaid and free and clear of any encumbrances and not
subject to any restrictions on disposition, any preemptive rights, option
rights, rights of first refusal or similar rights, all with respect to
rights of third parties.
3.4 Buyer and Behringwerke herewith enter into the Shareholders' Agreement
attached as ANNEX 3.4 which governs the Parties' shareholder rights in VuCo
GmbH and VuCo GmbH & Co. for the time period until the exercise of the
Chiron Call Option or the Behring Put Option.
4. PURCHASE PRICE
4.1 The purchase price owed by Buyer for the GmbH Share and the Limited
Partnership Interest is DM 171,500,000 (in words: Deutsche Mark one hundred
and seventy-one million and five hundred thousand) (hereinafter the "Fixed
Cash Purchase Price"). The payment of the Fixed Cash Purchase Price is due
and payable on the Closing Date.
4.2 In addition to the Fixed Cash Purchase Price, Buyer shall pay to
Behringwerke on the Closing Date 49% of the amount VuCo GmbH & Co. actually
receives as rent under section 3.1 of the Operating Lease Agreement (the
"Lease Compensation") entered into pursuant to the Contribution Agreement.
4.3 The purchase price owed by Buyer for the Option Interests is DM 178,500,000
(in words: Deutsche Mark one hundred seventy-eight million and five hundred
thousand)
<PAGE>
10
plus an amount equal to 51% of the Lease Compensation and plus an option
fee calculated on such amounts at a rate of 5.125 % p.a. (in words: five
and one eighth percent) compounded annually for the time period between the
Closing Date and the due date under this clause 4.3 (the "Option Purchase
Price"). Any dividends (ENTNAHMEN) received by Behringwerke from VuCo GmbH
or VuCo GmbH & Co., plus interest, if and to the extent appropriate, on
such amounts at a rate of 5.125 % p.a. (in words: five and one eighth
percent) compounded annually for the time period between receipt of such
dividend and receipt of payment under this clause 4.3 shall be credited to
the Option Purchase Price, if due.
The Option Purchase Price shall be due and payable within five days of the
date of the notarization of the acceptance of the Chiron Call Option or the
Behring Put Option, as the case may be.
4.4 Buyer shall make any payments owed under this clause 4 by wire transfer
free of cost until 11:00 h at the respective due date to the following
account of Behringwerke:
Commerzbank AG Marburg
A/C No. 391 0023 (BLZ/Bank ID-No 533 400 24)
or any other account as designated by Behringwerke.
4.5 If the Closing Date is deferred for the sole reason that Buyer did not pay
the full amount of the Fixed Cash Purchase Price and 49 % of the Lease
Compensation or if Buyer does not pay the Option Purchase Price when due,
then starting from such date at which the Closing Date otherwise would have
occurred or the Option Purchase Price was due, the respective amount owed
by Buyer shall bear interest until receipt of payment at a rate of 3-month
FIBOR plus 10 basis points p.a.
4.6 The Fixed Cash Purchase Price and the Option Purchase Price include an
amount of DM 35,000,000 (in words: Deutsche Mark thirty-five million) as
consideration for the contribution of Stock in VuCo GmbH & Co. by
Behringwerke pursuant to the Contribution Agreement or the Operating Lease
Agreement and for investments in the Business which may be activated and
which are implemented by Behringwerke since 1 January 1996 (the "New
Investments"). The investments for 1996, as currently planned, approximate
[CONFIDENTIAL TREATMENT REQUESTED] and are shown in the investment plan
attached as ANNEX 4.6 which Behringwerke may alter at its discretion
subject to this Agreement and the Contribution Agreement at any given
time. Behringwerke will consult with Buyer from time to time regarding
the implementation of
<PAGE>
11
such plan and any amendments thereto. The Parties shall make an inventory
close to the Closing Date with respect to such Stock and the New
Investments. The Parties shall evaluate the Stock and the New Investments
considering generally accepted accounting principles in Germany and the
principle of balance sheet consistency. If the value of the Stock and the
New Investments as determined in accordance with the foregoing provisions,
exceeds DM 35,000,000, an amount of 49% of such excess amount shall be
paid by Buyer to Behringwerke within 4 weeks after the Closing Date. If the
value of the Stock and the New Investments as determined in accordance with
the foregoing provisions is lower than DM 35,000,000, an amount of 49% of
such shortfall shall be paid by Behringwerke to Buyer within 4 weeks after
the Closing Date. As from the Closing Date any such payment owed by Buyer
to Behringwerke, or by Behringwerke to Buyer, as the case may be, shall
bear interest at a rate of 3-month FIBOR p.a. compounded annually. The
remaining 51% of the balance shall be due and payable by Buyer to
Behringwerke, or vice versa, as the case may be, at the date of the payment
under clause 4.3, plus interest at a rate of 5.125% (in words: five and one
eighth percent) compounded annually for the time period between Closing
Date and receipt of such balance payment.
4.7 In addition to any purchase price payments hereunder, Buyer agrees to pay
or to cause VuCo GmbH & Co. to pay to Behringwerke a yearly commission
("Commission") on the sales of Buyer's vaccine products listed in ANNEX 4.7
in Germany calculated as [CONFIDENTIAL TREATMENT REQUESTED] of the excess
of sales as forecast in ANNEX 4.7. Any such Commission shall be payable
for each of the years through 2001, regardless of the date of exercise
of the Chiron Call Option or the Behringwerke Put Option, all further
regulated in ANNEX 4.7. To be clear: any such Commission received by
Behringwerke will not reduce the Fixed Cash Purchase Price and/or the
Option Purchase Price, if any.
4.8 Buyer cannot set off any claims including claims pursuant to clause 7 of
this Agreement, it may have against any payments under this clause 4 unless
the counterclaim is undisputed or non-appealable. The exercise of rights of
retention of Buyer, if any, is also excluded. The same applies to payment
obligations of Behringwerke pursuant to clause 4.6.
5. CONDITION PRECEDENT
5.1 The date of perfection (VOLLZUG) of the transactions contemplated in this
Agreement (the "Closing Date") is subject to the occurrence of each of the
following conditions:
<PAGE>
12
5.1.1 VuCo GmbH & Co. is holding all official approvals for the
operation of the Business as currently conducted pursuant to the
ARZNEIMITTELGESETZ, GENTECHNIKGESETZ, TIERSCHUTZGESETZ and
BUNDESSEUCHENGESETZ;
5.1.2 the Operating Lease Agreement (cf. clause 6) has been terminated
with effect as of the Closing Date;
5.1.3 the Contribution Date pursuant to the Contribution Agreement has
already occurred;
5.1.4 the approval contemplated in Art. 7 of the Contribution Agreement
shall have been obtained and the respective other contracting
party referred to therein shall have consented to an assignment
of the contract described in ANNEX 7 of the Contribution
Agreement to VuCo GmbH & Co. (as VuCo GmbH & Co. will exist upon
purchase of the GmbH Share and the Limited Partnership Interest
by Buyer contemplated hereby); and
5.1.5 the necessary merger control approvals pursuant to clause 13 have
either been granted, regardless of whether subject to any
conditions, or the implementation of this Agreement cannot be
prohibited by the merger control authorities due to lapse of
time.
5.2 The Parties shall use their best efforts that the events stated in clause
5.1 will be fulfilled as soon as possible and they will promptly inform
each other of the occurrence of any event stated in clause 5.1. All
conditions shall be deemed to have occurred as soon as the Parties informed
each other in writing of such occurrence.
5.3 Until Behringwerke shall have obtained the necessary approval referred
to in clause 5.1.4, either party may initiate the following procedure by
written notice, which may not be given earlier than 60 (sixty) days after
the date hereof. If the condition precedent stated in clause 5.1.4 has not
been fulfilled within such 60 (sixty) days period, each Party shall be
entitled to terminate this Agreement, effective on five (5) days written
notice to the other Party, without any Party being obliged to pay or
entitled to receive any compensation by reason of such termination to or
from the other Party. Neither Party is entitled to terminate this Agreement
if Behringwerke agrees at its own discretion within such period to effect
a partial universal reorganization or other ways to reorganize in order to
satisfy such condition and to indemnify Buyer against the cost and expense
of any challenge regarding the effectiveness of such reorganization to
cause the succession of VuCo
<PAGE>
13
GmbH & Co. to the contract described in Annex 7 of the Contribution
Agreement without the consent of the respective other contracting party.
5.4 This Agreement shall be terminated if Closing Date has not occurred by
October 31, 1996, unless mutually extended by the Parties.
5.5 On the Closing Date Behringwerke shall cause the managing director(s)
(GESCHAFTSFUHRER) of VuCo GmbH to resign from office and Buyer and
Behringwerke shall nominate a new managing director pursuant to the
Shareholders' Agreement. Buyer shall also render a declaration that it
waives all claims it or VuCo GmbH or VuCo GmbH & Co. may have against the
resigning managing director.
5.6 On the Closing Date, Behringwerke shall deliver to Buyer a receipt for the
purchase price received.
6. OPERATING LEASE AGREEMENT
The Operating Lease Agreement as provided for in the Contribution Agreement
shall in any case become effective and shall run until the Closing Date.
Behringwerke shall cause VuCo GmbH & Co. to agree to such effectiveness of
the Operating Lease Agreement.
7. BEHRINGWERKE'S REPRESENTATION AND WARRANTIES
7.1 Behringwerke represents and warrants in form of an independent guarantee
(SELBSTANDIGES GARANTIEVERSPRECHEN) as of the date of this Agreement and
the Closing Date, unless, otherwise stipulated and, excluding any further
claims, that:
7.1.1 it has all corporate-legal authorities to conclude and execute
this Agreement and the execution and implementation of this
Agreement have duly been authorized by all necessary corporate
actions, in particular by its supervisory and managing bodies;
7.1.2 assuming the necessary approvals referred to in clause 13 below
will be granted and, except for circumstances exclusively within
the sphere of Buyer, the execution, delivery and performance of
this Agreement by Behringwerke do not and will not
<PAGE>
14
7.1.2.1 violate, conflict with or result in the breach of any provision
of the Articles of Association or GESCHAFTSORDNUNG of
Behringwerke,
7.1.2.2 conflict with or violate any law, regulations, order, judgment,
award, injunction, writ, decree or government order applicable to
Behringwerke, nor
7.1.2.3 require the consent of any third party including public
authorities other than the approvals referred to in clauses 5.1.1
and 5.1.4;
7.1.3 it is the sole owner of the fully paid in GmbH Share and of the
Limited Partnership Interest (hereinafter collectively the "VuCo
Interests") and is entitled to sell and transfer to Buyer the full
legal and beneficial ownership of the VuCo Interests, and Buyer will
own such interests
free and clear from any encumbrances and will thereby become the sole
owner of the VuCo Interests;
VuCo GmbH has a net equity (BILANZIELLES REINVERMOGEN - Section 266
III A HGB) in the amount of at least DM 50,000;
7.1.4 the VuCo Interests are not subject to any restrictions on disposition,
any preemptive rights, option rights, rights of first refusal or
similar rights of third parties;
7.1.5 the facts stated in clause 1 are true and correct;
7.1.6 no additional contribution obligations in cash or in kind
(NACHSCHUBPFLICHTEN) exist with respect to VuCo GmbH and/or VuCo GmbH
& Co.;
7.1.7 there are no voting trusts, stockholder agreements, proxies or other
agreements or understandings in effect with respect to the voting or
transfer of the VuCo Interests except as provided for in the articles
of incorporation of VuCo GmbH and the Partnership Agreement;
7.1.8 the VuCo Interests do not constitute the entire property of
Behringwerke within the meaning of sect. 419 of the Civil Code
(BURGERLICHES GESETZBUCH);
7.1.9 The articles of incorporation (GESELLSCHAFTSVERTRAG) of VuCo GmbH are
known to the Parties and will only be changed upon mutual consent;
<PAGE>
15
7.1.10 ANNEX 1.4 (b) contains a true and correct copy of the Partnership
Agreement to be effective on or before the Closing Date;
7.1.11 VuCo GmbH has not conducted any business activities other than
administration as otherwise expressly contemplateed by this Agreement
and is not subject to rights or obligations stemming from other
business activities;
7.1.12 except for the JAHRESPRAMIENORDNUNG; ERFOLGSBETEILIGUNG, neither VuCo
GmbH nor VuCo GmbH & Co. is bound by any control, profit transfer or
other agreements of the type referred to in sect. 291, 292 ET SEQ. of
the Stock Corporation Act (AKTIENGESETZ), and no silent participations
(STILLE BETEILIGUNGEN), profit participating loans (PARTIARISCHE
DARLEHEN), profit participations of management or employees or other
similar obligations exist with respect to the profits of VuCo GmbH
and/or of VuCo GmbH & Co. except for the Operating Lease Agreement
(cf. clause 6);
7.1.13 sufficient insurance policies have been concluded and maintained to
secure against risk arising in connection with the business of VuCo
GmbH & Co. until the Closing Date; such insurance shall be continued
for the period of joint ownership, while Hoechst is holding indirectly
the majority in VuCo GmbH and VuCo GmbH & Co., unless VuCo GmbH & Co.
and/or VuCo GmbH decides otherwise;
7.1.14 all warranties and representations granted by Behringwerke under the
Contribution Agreement are true and correct, and Buyer is entitled to
claim those warranties on behalf of VuCo GmbH & Co.;
7.1.15 between the date of this Agreement and the Closing Date, the
Contribution Agreement will not be amended, the Business will be
conducted in the ordinary course and consistent with past practice,
and Behringwerke shall cause VuCo GmbH and VuCo GmbH & Co. not to
enter into any transaction outside the ordinary course of business
without the prior consent of Buyer. As amplification and not
limitation of the foregoing, VuCo GmbH and/or VuCo GmbH & Co. will
not:
7.1.15.1 make any loan to, guarantee any indebtedness of or otherwise incur any
indebtedness on behalf of Behringwerke or any third party or assume
any other unusual obligations;
<PAGE>
16
7.1.15.2 redeem any of the capital or declare, make or pay any profit
distributions (whether in cash, securities or other property);
7.1.15.3 enter into any arrangement under or similar to the Transformation Law
(UMWANDLUNGSGESETZ);
7.1.15.4 purchase any assets or make any investments in excess of DM 50,000 (in
words: Deutsche Mark fifty thousand), except as described in the
capital investment plan, without the prior written consent of Buyer;
Behringwerke will not hire new employees attributable to the Business without
the prior consent of Buyer; in case of replacement of leaving employees, such
consent of Buyer shall not be unreasonably withheld;
7.1.16 neither the execution, delivery and performance of this Agreement by
Behringwerke, the execution, delivery and performance of the
Contribution Agreement by Behringwerke, VuCo GmbH and VuCo GmbH & Co.,
nor the consummation of the transactions contemplated hereby and
thereby, will (i) violate or conflict with Articles of Incorporation
of Behringwerke or VuCo GmbH or the present partnership agreement of
VuCo GmbH & Co., (ii) subject to clause 13 violate or conflict with
any law, regulations, order, judgment, award, injunction, writ or
decree applicable to Behringwerke, VuCo GmbH or VuCo GmbH & Co., (iii)
subject to obtaining the third party consents with respect to the
contracts listed in ANNEX 7.1.16 (the "Third Party Consents"), violate
or conflict with, result in a breach of, or result in or permit the
acceleration or termination of or constitute a default under (whether
with notice or lapse of time or both) any agreement, instrument,
indenture, mortgage, lien, lease or other contract to which
Behringwerke, VuCo GmbH or VuCo GmbH & Co. is a party or by which any
of them or their property or assets is bound, provided such violation,
conflict, acceleration, termination of default individually or in the
aggregate would have a material adverse effect on the Business; (iv)
result in the creation of any lien, charge, or encumbrance on any of
the property or assets of the Business which individually or in the
aggregate would have a material adverse effect on the Business;
7.1.17 The Contribution Agreement completely and correctly identifies all
contracts with licensors, contracts with licensees, leases, employment
and labor agreements and other contracts relating to the Business
(other than contracts with an
<PAGE>
17
annual payment obligation of no more than DM 50,000 and a term of less
than one year). Except as disclosed in such Annexes, neither VuCo GmbH
nor VuCo GmbH & Co. is a party or otherwise subject to (i) any
contract, agreement or instrument evidencing or relating to any
material amount of indebtedness for borrowed money or the deferred
purchase price of property, or any direct or indirect guarantee of any
such indebtedness or deferred purchase price, or (ii) any secrecy or
other agreement or any injunction, judgment, order or award that (x)
restricts the right of VuCo GmbH or VuCo GmbH & Co. to engage in any
place in any line of business or (y) would restrict the right of VuCo
GmbH or VuCo GmbH & Co. to engage in any place in any line of business
after the Closing Date;
7.1.18 VuCo GmbH & Co. will receive good and marketable title to the
intellectual property rights contributed pursuant to clause 3.1.1.1 of
the Contribution Agreement and to the inventory and other stock
contributed pursuant to clause 3.1.2 of the Contribution Agreement,
and will also have good and marketable title to, or a valid leasehold
interest in, the machinery, equipment and other fixed assets
contributed pursuant to clause 3.1.1.2 of the Contribution Agreement,
and except as expressly set forth in the Annexes to such clause or in
ANNEX 7.1.18, all such assets are free and clear of any liens,
pledges, usufruct, and other encumbrances;
7.1.19 to the best knowledge and belief of the management board (VORSTAND) of
Behringwerke and officers (PROKURISTEN) of Behringwerke attributable
to the Business, the financial statements contained in ANNEX 7.1.19
fairly present the financial position and results of operation of the
Business at the respective dates and for the respective periods to
which they apply;
7.1.20 Behringwerke has disclosed all facts and circumstances which are or
which can reasonably be expected to be material to Buyer;
7.1.21 Behringwerke, VuCo GmbH and VuCo GmbH & Co. each is in compliance in
all material respects with all laws, regulations, orders, judgments
and decrees of any court or governmental or administrative authority
applicable to the Business so that there will be no material
detrimental impact for the Business in future;
7.1.22 Since June 30, 1995, there has not been (a) any material adverse
change in financial condition, operations, business prospects or
properties of the Business; (b)
<PAGE>
18
any acquisition or disposition of any of assets of the Business which
may have a material and adverse effect on the ability of VuCo GmbH &
Co. to conduct the Business as heretofore conducted; (c) any damage,
destruction or loss to any properties or assets of the Business which
may materially and adversely affect or impair VuCo GmbH & Co.'s
ability to conduct the Business in the manner heretofore conducted; or
(d) any other act or event outside of the ordinary course of business
which may materially and adversely affect or impair the ability of
VuCo GmbH & Co. to conduct the Business in the manner heretofore
conducted;
7.2 In case of a breach of any of the representations and warranties under
clause 7.1 the following applies:
7.2.1 Behringwerke is entitled, with respect to the warranted items, to
cure the breach. If Behringwerke fails to cure the breach within
a reasonable period of time, such period not to exceed three
months after Buyer has notified Behringwerke of the breach, or if
immediate action is necessary (GEFAHR IM VERZUG), Behringwerke
shall refund to Buyer the necessary amount spent by Buyer to
establish the warranted status and this shall be Buyer's sole
remedy.
7.2.2 Buyer may only ask for recovery based on a warranty claim or
on other claims connected therewith if the individual claim
exceeds [CONFIDENTIAL TREATMENT REQUESTED] (in words:
[CONFIDENTIAL TREATMENT REQUESTED]) and to the extent the
aggregate of all such individual claims exceeds [CONFIDENTIAL
TREATMENT REQUESTED] (in words: [CONFIDENTIAL TREATMENT
REQUESTED]). The total amount of the claims here mentioned may
not exceed [CONFIDENTIAL TREATMENT REQUESTED] (in words:
[CONFIDENTIAL TREATMENT REQUESTED]) (the "Warranty Cap"),
whereby any warranty claims of VuCo GmbH & Co. pursuant to the
Contribution Agreement must be included in calculating the
Warranty Cap and the corresponding deductible amounts. This
clause 7.2.2 shall not apply with regard to clauses 7.1.1,
7.1.2 and with regard to the net equity guarantee pursuant to
clause 7.1.3 second paragraph.
7.3 To the extent that Buyer can raise a warranty claim for the same reason
for which VuCo GmbH & Co. has raised and has got settled a warranty claim
under the Contribution Agreement, Buyer is excluded to raise its warranty
claim, notwithstanding that Buyer is entitled to claim those warranties on
behalf of VuCo GmbH & Co.
7.4 Any claims regarding cancellation (WANDLUNG), rescission (RUCKTRITT) or
challenge (ANFECHTUNG) of this Agreement or any other release from this
Agreement, including any
<PAGE>
19
claim resulting from a liability due to breach of duty prior to contract
(CULPA IN CONTRAHENDO), are excluded unless Buyer cannot reasonably be
expected to adhere to this Agreement as a result of the breach of the
guarantee pursuant to clause 7.1.22. A breach of clause 7.1.22 by way of
example and not limitation is considered as occurred if VuCo GmbH & Co's
business or plant is subject to dislocation or massive destruction of
production facilities which after insurance proceeds would result in a
decline in value in excess of DM 52,500,000 (in words: Deutsche Mark
fifty-two million five hundred thousand). Such extraordinary right of
rescission has to be exercised within two weeks after the Closing Date.
Any further claims for damages because of a breach of one or more of the
guarantees or representations and warranties made pursuant to clause 7 or
any other liability of Behringwerke as well as claims based on breach of
duty prior to contract (CULPA IN CONTRAHENDO) shall be excluded.
7.5 Claims of Buyer pursuant to this clause 7 shall become time-barred fifteen
(15) months after the Closing Date with the exception of the warranty
granted under clause 7.1.14 which shall become time-barred as soon as the
respective warranty claims of VuCo GmbH & Co under the Contribution
Agreement become time-barred. The limitation period stops running if
claims are asserted in writing by Buyer against Behringwerke and if the
reasons on which such claim is based are reasonably identified. If
Behringwerke does not accept the claim within one month, Buyer must raise
the claim before court within a further period of three months pursuant to
clause 15.5 or it becomes time-barred.
8. USE OF NAME
Buyer has the royalty free, worldwide exclusive right to use in
perpetuity the name "Behring" as part of the firm of Buyer, VuCo GmbH
and VuCo GmbH & Co. and to use such name and the logo "E. v. Behring"
as described in ANNEX 8, provided, however, that the name and logo may
only be used in connection with human vaccine products against
infectious diseases and only in connection with a clear indication of
the name of Chiron, all as also described in ANNEX 8. Such right to
use the name Behring and the logo shall be subject to the
non-exclusive right of Hoechst in India, Sri Lanka and Bangladesh and
subject to any third parties' rights including not fully controlled
affiliates.
<PAGE>
20
The parties will rename VuCo GmbH and VuCo GmbH & Co. within 6 (six)
months after the Closing Date accordingly.
Behringwerke is prepared to discuss with Buyer on a case by case basis the
use of the name Behring in connection with the name Chiron outside of the
vaccine field for human health care products based on modern biological
technology (excluding Diagnostics) in as far as this is not in conflict
with legal aspects and own interests of Behringwerke AG, Hoechst AG, and
Centeon. All parties will guarantee that all uses will not damage the
reputation of the name Behring. All discussions hereto will be conducted
in good faith.
All uses of the name by either Party will be of high quality and
consistent with the preservation of the reputation and goodwill associated
with the name.
For the avoidance of doubt: Behringwerke shall remain the sole owner of
the trade name and trademark "Behring" and of the logo "E. v. Behring",
and all use of such trade name, trademark and logo in accordance with the
aforesaid shall be governed by a "Trade Name and Trademark License
Agreement" to be entered into by the relevant parties.
9. BUYER'S REPRESENTATION AND WARRANTIES
9.1 Buyer represents and warrants in form of an independent guarantee
(SELBSTANDIGE ERFULLUNGSGARANTIE) excluding any further warranty claims
that:
9.1.1 it has all corporate-legal authorities to conclude and execute
this Agreement and the execution and implementation of this
Agreement have duly been authorized by all necessary corporate
actions, in particular by its supervisory and managing bodies;
9.1.2 assuming the necessary approvals referred to in clause 13 below
will be granted and except for circumstances exclusively within
the sphere of Behringwerke, the execution, delivery and
performance of this Agreement by Buyer do not and will not
9.1.2.1 violate, conflict with or result in the breach of any
provision of the Articles of Association or
GESCHAFTSORDNUNG of Buyer,
<PAGE>
21
9.1.2.2 conflict with or violate any law regulations, order,
judgment, award, injunction, writ, decree or government
order applicable to Buyer, nor
9.1.2.3 require the consent of any third party including public
authorities.
9.2 In the event that any of the representations and warranties made in clause
9.1 is incorrect, Buyer shall indemnify Behringwerke for such damage
Behringwerke may suffer as a result thereof.
10. COOPERATION AFTER THE CLOSING DATE
10.1 Behringwerke and Buyer agree to cooperate after the Closing Date to achieve
a smooth and efficient transfer of the VuCo Interests to Buyer.
Behringwerke and Buyer shall initiate all acts necessary, or cause to be
initiated such acts, respectively, to implement this Agreement.
10.2 Behringwerke and Buyer shall, without undue delay, pass to each other any
payment, notice, correspondence, information or inquiry relating to the
Business which may be received by either of them after the Closing Date
and which the other is entitled to or is of concern to the other, taking
into account the terms and conditions of this Agreement. Clause 12 is
applicable to both Parties in this respect.
11. NON-COMPETITION
For a period of five years from the Closing Date, Behringwerke and
affiliated companies except for VuCo GmbH or VuCo GmbH & Co. shall refrain
from developing, producing, marketing, selling or otherwise distributing
human vaccine products in the world; for such purposes an affiliated
company of Behringwerke is a company in which Behringwerke either holds a
majority interest or which is controlled by Behringwerke. In the letter
attached hereto as ANNEX 11 Hoechst AG is undertaking a separate
non-compete covenant and other covenants with respect to this Agreement
(the "Hoechst Letter").
<PAGE>
22
12. CONFIDENTIALITY
Except as otherwise provided in this Agreement, after the date of this
Agreement Behringwerke shall not use or disclose to third Parties any
information disclosed, transferred, assigned, licensed or otherwise made
available by or to Buyer hereunder and relating to the transfer of the
Business, unless (i) such information is needed by Behringwerke to
continue its commercial activities, (ii) is or becomes public knowledge
through no fault of Behringwerke, (iii) is passed to Behringwerke after
the Closing Date by a third party which is not under an obligation of
confidentiality, or (iv) has to be disclosed by Behringwerke pursuant to
law, judicial, or official order; in such case Behringwerke shall notify
Buyer in advance about the impending disclosure.
13. MERGER CONTROL
13.1 Immediately after the date hereof, the Parties' respective counsel shall
determine whether this Agreement is subject to the merger control by the
Commission of the European Union (hereinafter "Commission") pursuant to
the Regulation (EEC) No. 4064/89 of the Council of the European
Communities of December 21, 1989 on the Control of Mergers between
Undertakings. If so, they will notify the Commission on the merger
contemplated in this Agreement promptly, but not later than one week after
the date of notarization. Each party is obligated to provide all
information and addresses necessary and useful in connection herewith in a
timely, complete and correct manner and to take all steps necessary and
useful to achieve a positive outcome of the merger control proceeding.
13.2 All legal acts relating to the consummation of this Agreement are subject
to the condition precedent that either the Commission has found this
Agreement to be compatible with the common market or that after the
notification the prohibition of consummation shall be suspended for
whatever reason.
Both Parties shall only be released from the obligation resulting from
this Agreement in the event that the Commission should deny its approval
with respect to a transfer of the Business in total. In this context,
Buyer shall conduct all negotiations with the Commission within due course
and shall render to the Commission all additional details which shall
enable the Commission to approve this Agreement, even if under conditions;
furthermore, Buyer shall offer to the Commission or accept, respectively,
to implement all acts the Commission deems necessary and shall then
implement such acts accordingly.
<PAGE>
23
13.3 In case that the Commission forbids the implementation of this Agreement
in its entirety, the Parties shall regard such decision as final unless
they agree otherwise until the decision becomes non-appealable.
13.4 In case the German Federal Cartel Office is in charge, clause 13.1 to 13.3
shall apply respectively.
14. INDEMNIFICATION; GUARANTEE
14.1 Buyer shall assume responsibility (SELBSTANDIGE ERFULLUNGSGARANTIE) by way
of fulfillment of all obligations of VuCo GmbH & Co. stemming from the
Contribution Agreement arising after the Closing Date.
Buyer shall furthermore indemnify Behringwerke against any liability of
Behringwerke as (former) limited partner after exercise of the Chiron Call
Option or the Behring Put Option stemming from any repayment of the
registered liability amount (HAFTEINLAGE) after the Closing Date.
14.2 The Guarantor shall assume responsibility (SELBSTANDIGEERFULLUNGSGARANTIE)
by way of fulfillment of all obligations of Buyer stemming from this
Agreement and its Annexes.
14.3 With respect to the Guarantor's obligation under clause 14.2 , it is
agreed that the Guarantor shall enter into such reasonable and appropriate
facilities as the Guarantor, Buyer and Behringwerke may from time to time
agree.
15. MISCELLANEOUS
15.1 This Agreement including the Annexes contains the entire understanding of
the Parties hereto in respect of the subject matter contained herein. No
agreements other than those expressly set forth herein exist between the
Parties.
15.2 Any modifications or amendments of this Agreement including this clause
15.2. shall be effective only if made in writing, unless the law provides
for a stricter form.
15.3 Each party shall pay its own costs and expenses (including costs and
expenses of its advisors) incurred in connection with this Agreement and
the execution of the transac-
<PAGE>
24
tions contemplated hereby, except for the cost of notarization of this
Agreement, which shall be borne by Buyer. The expenses for the
cancellation of encumbrances not assumed by Buyer shall be borne by
Behringwerke. Any taxes or court expenses and cost in connection with the
merger control clearance which may arise from implementing this Agreement
shall be borne by Buyer excluding any taxes based on income or capital
gain which may arise upon the sale or transfer of the GmbH Share or the
Limited Partnership Interest from Behringwerke to Buyer, which taxes shall
remain the obligation of Behringwerke.
15.4 This Agreement shall be governed by and construed in accordance with the
law of the Federal Republic of Germany (without rules of conflict of
laws), unless the application of foreign law is compulsory.
15.5 Any disputes arising from, and in connection with, this Agreement shall be
finally decided by an arbitration court consisting of three arbitrators
following the rules of arbitration proceedings of the International
Chamber of Commerce (ICC). The arbitration court shall meet in Frankfurt
am Main. The language of the proceedings shall be German. The jurisdiction
of the ordinary courts shall be excluded except for summary judgment
(EINSTWEILIGER RECHTSSCHUTZ) and writs of execution. The arbitration court
may also decide about the validity of this document if necessary. The
costs of any arbitration shall be borne by the Parties pursuant to sect.
91 et seq. of the Civil Procedure Code (ZIVILPROZEBORDNUNG).
15.6 To the extent possible, each provision of this Agreement will be
interpreted in such manner as to be effective and valid under the
applicable law. If any provision of this Agreement is held to be
prohibited by or invalid under applicable law, such provision will be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions
of this Agreement. To the extent that a provision is ineffective or
invalid, it shall be replaced by an effective and valid provision which
comes as close as possible to the economic purpose of the ineffective or
invalid provision.
15.7 All notices and other communications under this Agreement shall be in
writing and shall be given or made to the following addresses, unless
specified otherwise in this contract:
<PAGE>
25
To Behringwerke:
Behringwerke AG
attn. Vorstand
Postfach 1140
D-35001 Marburg
Fax: (49-6421) 39-4880
To Buyer/Guarantor:
Chiron Corporation
attn. President, Chiron Biocine
4560 Horton Street
Emeryville, CA 94608-2916
U.S.A.
Fax: (1-510) 654-5360
with a copy to General Counsel of Chiron Corporation, same address
15.8 It is agreed that Behringwerke shall cause the Behring/Armour joint
venture to continue to have distributed in Germany by VuCo GmbH & Co. the
products currently distributed by Behringwerke on behalf of such joint
venture on existing terms for so long as VuCo GmbH & Co. is jointly owned.
Further, it is agreed that the Parties shall cause VuCo
GmbH & Co. to continue the existing arrangements between Behringwerke
and Hoechst with respect to the distribution of human vaccine products
outside Germany at arm's length terms to be agreed upon for not less
than three years.
15.9 With respect to the Master Service Agreement as attached to the
Contribution Agreement the following is agreed:
As contemplated by sections 1.3 and 8.4 of the Master Service
Agreement, the Services are to be defined in the Annexes and are to be
divided into categories based upon the length of notice required to be
given to terminate any such service. Neither the Annexes nor the
division of the services into categories are complete as of the date
hereof. The parties agree to complete the Annexes and the
determination of which Services fall into which categories within six
months of the Closing Date. Notwithstanding the foregoing the Parties
agree that the Services will continue uninterrupted after the Closing
Date. Buyer agrees that Category I will in particular include Services
such as filling and packaging, production, logistics, materials
management, engineering, safety and environment.
15.10After signature of this Agreement, the Parties shall jointly issue a press
release. Neither party shall, without the prior consultation of the other,
issue any oral or written statement
<PAGE>
26
to the press or the public regarding this Agreement, except as required by
law. This, in particular, applies with respect to the Purchase Price.
The present document with the annexes attached hereto was read aloud in the
presence of the appeared persons and signed by their own hands in my
presence as follows:
Basle, this 17th (seventeenth) day of February 1996 (nineteenhundred-
ninetysix).
<PAGE>
ANNEX 1.4 (a)
to the Purchase Agreement
AGREEMENT
ON CONTRIBUTION TO CAPITAL
between
Behringwerke Aktiengesellschaft
Emil-von-Behring-Strasse 76
35041 Marburg
- - HEREINAFTER "BEHRINGWERKE" -
a n d
Behring Vakzine GmbH & Co.
Emil-von-Behring-Strasse 76
35041 Marburg
represented by 32. CORSA Verwaltungsgesellschaft mbH in its capacity as general
partner of VuCo GmbH & Co., with same place of business
- - HEREINAFTER "VUCO GMBH & CO." -
(Behringwerke and VuCo GmbH & Co. are hereinafter collectively referred to as
the "Parties" or individually as the "Party", as the context requires.)
<PAGE>
2
TABLE OF CONTENTS
Directory of Annexes . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Preamble . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Article 1 - Contribution . . . . . . . . . . . . . . . . . . . . . . . . 4
Article 2 - Consideration. . . . . . . . . . . . . . . . . . . . . . . . 4
Article 3 - Assets and Contracts to be Contributed . . . . . . . . . . . 5
Article 4 - Transfer of Ownership; Implementation of the Contribution. . 8
Article 5 - Takeover of Business; Periodical Delimitation. . . . . . . .10
Article 6 - Warranties . . . . . . . . . . . . . . . . . . . . . . . . .15
Article 7 - Contracts to be Contributed at a Later Date. . . . . . . . .18
Article 8 - Use of Name. . . . . . . . . . . . . . . . . . . . . . . . .18
Article 9 - Transition Period. . . . . . . . . . . . . . . . . . . . . .18
Article 10 - Operating Lease Agreement . . . . . . . . . . . . . . . . .19
Article 11 - Contracts to be Concluded . . . . . . . . . . . . . . . . .19
Article 12 - Tax Law . . . . . . . . . . . . . . . . . . . . . . . . . .19
Article 13 - Confidentiality . . . . . . . . . . . . . . . . . . . . . .19
Article 14 - Miscellaneous . . . . . . . . . . . . . . . . . . . . . . .20
<PAGE>
3
DIRECTORY OF ANNEXES
Annex 3.1.1.1 (a) - Contributed intellectual property
Annex 3.1.1.1 (b) - Licensed intellectual property
Annex 3.1.1.1 (c) - License Agreement (in favor of VuCo GmbH & Co.)
Annex 3.1.1.1 (d) - License Agreement (in favor of Behringwerke)
Annex 3.1.1.2 - Fixed assets
Annex 3.1.3.1 - Contracts with licensors
Annex 3.1.3.2 - Contracts with licensees
Annex 3.1.3.3 - Other contracts with third parties
Annex 5.1.1 - Transferred employees
Annex 6.1.6 - Shop agreements
Annex 6.1.7 - Employment contracts with an annual remuneration
exceeding DM 300,000
Annex 7 - Contracts to be contributed at a later time
Annex 10 - Operating Lease Agreement
Annex 11.1 - Master Service Agreement
Annex 11.2 - Lease Agreement
<PAGE>
4
PREAMBLE
Behringwerke and 32. CORSA Verwaltungsgesellschaft have formed VuCo GmbH & Co.
Pursuant to the Purchase and Assignment Agreement between Behringwerke and 31.
CORSA Verwaltungsgesellschaft mbH (to be renamed "Chiron Biocine GmbH") (the
"Purchase Agreement"), Behringwerke undertook the obligation to transfer its
human vaccine unit (the "Business") to VuCo GmbH & Co. as investment in kind.
NOW, THEREFORE, the Parties agree as follows:
ARTICLE 1 - CONTRIBUTION
1.1 As fulfillment of Behringwerke's obligation stemming from the Purchase
Agreement described in the Preamble, Behringwerke contributes to the
capital of VuCo GmbH & Co. the Business subject to the terms and conditions
stated hereinafter and consisting of the assets and contracts described in
Art. 3 with effect as of 1 April 1996, 00:00 h (the "Contribution Date").
1.2 VuCo GmbH & Co. accepts such contribution.
1.3 The value of the contribution of assets shall be determined pursuant to a
balance sheet per the Contribution Date (the "Contribution Balance Sheet"),
which shall include all assets and liabilities, if any, contributed hereby
and assessed at their respective book values of Behringwerke. The
Contribution Balance Sheet shall be prepared on a basis consistent with
that adopted for previous fiscal time periods and in any case in accordance
with the German generally accepted accounting principles ("GRUNDSATZE
ORDNUNGSGEMASSER BUCHFUHRUNG UND BILANZIERUNG / GOB"). The Contribution
Balance Sheet shall be testified by C&L Treuarbeit and the costs shall be
borne by Behringwerke.
ARTICLE 2 - CONSIDERATION
2.1 Behringwerke shall receive as consideration a fixed capital interest in the
capital account I kept by VuCo GmbH & Co. in the amount of DM 5,000,000 (in
words:
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5
Deutsche Mark five million) as per the Contribution Date (the Kapitalkonto
I - HAFTEINLAGE "Fixed Capital Interest").
2.2 To the extent that the Contribution Balance Sheet reflects a higher net
equity value than the Fixed Capital Interest, VuCo GmbH & Co. shall credit
the surplus in the capital account II of Behringwerke. The same shall apply
for any subsequent contribution of Stock at the termination date of the
Operating Lease Agreement (cf. Art. 3.1.2).
ARTICLE 3 - ASSETS AND CONTRACTS TO BE CONTRIBUTED
3.1 The assets and contracts to be contributed (hereinafter collectively
referred to as the "Vaccine Assets") consist of the following:
3.1.1 INTANGIBLE/TANGIBLE FIXED ASSETS
3.1.1.1 All copyrights, patents, trademarks, drug licenses and other
intellectual property rights and registrations and
applications for registration with respect to any of the
foregoing, trade and operational secrets, know-how,
procedures, formulas and other intangible assets which are
not covered by the aforementioned intellectual property
rights, incorporation of such assets and ancillary
documents, such as application documents for drug licenses,
descriptions, product specifications, production
documentation and examination certificates, as well as all
sales literature, customers- and suppliers-lists,
transferable operational permits and approvals, all of the
aforesaid predominantly relating to the Business. The
registered intellectual property rights and trademarks are
listed in ANNEX 3.1.1.1 (a), which is to be updated as of
the Contribution Date and thereafter as provided for in
Article 3.2, 3.3 and 3.4;
Not part of the intangible assets contributed hereunder are
the rights listed in ANNEX 3.1.1.1 (b) which is to be
updated as of the Contribution Date and thereafter as
provided for in Article 3.2, 3.3 and 3.4. Behringwerke
grants to VuCo GmbH & Co. upon the terms and conditions of
the License Agreement attached as ANNEX 3.1.1.1 (c) and
concluded herewith a royalty-free license to make use of
such rights. In return VuCo GmbH & Co. grants to
Behringwerke upon the terms and conditions of the License
Agreement attached as ANNEX 3.1.1.1 (d) and concluded
herewith a royalty-free license to make use of the rights
listed in ANNEX 3.1.1.1 (a) except for the trademarks.
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6
3.1.1.2 All machinery, equipment, office equipment and other fixed
assets including software shown in the books of Behringwerke
as being in a cost center related to the Business as listed
in ANNEX 3.1.1.2 which is to be updated as of the
Contribution Date and thereafter as provided for in Article
3.2, 3.3 and 3.4.
3.1.2 STOCK
All inventories, finished and semifinished products, raw materials,
stocks, spare parts, information and promotional material and
supplies allocated to the Business as well as advance payments for
products previously sold but still held by Behringwerke, whereby
Behringwerke shall have the right to exclude such products from
inventory, all to be identified pursuant to a joint stocktaking close
to the Contribution Date (hereinafter "Stock"). Stock which is
produced under a license agreement is contributed and transferred
subject to the condition subsequent that the respective licensor
agrees to the transfer of the respective license agreement. In case
that the respective licensor does not agree to the transfer of the
respective license agreement, Behringwerke is free to sell such stock
to any third party. If the Operating Lease Agreement provided for in
Art. 10 becomes effective, no Stock shall be contributed by
Behringwerke to VuCo GmbH & Co. pursuant to this Art. 3.1.2.
3.1.3 CONTRACTS
The following contracts of Behringwerke as well as offers relating to
the Business:
3.1.3.1 contracts with licensors attached as ANNEX 3.1.3.1;
3.1.3.2 contracts with licensees attached as ANNEX 3.1.3.2;
3.1.3.3 other contracts with third Parties including, without
limitation, with Hoechst and its affiliates other than
contracts otherwise dealt with in this Contribution
Agreement and/or the Purchase Agreement, attached as ANNEX
3.1.3.3, such annex, however, is limited to contracts
covering annual payment obligations of more than DM 50,000
or having a term of more than one year and not containing
purchase orders in the ordinary course of business;
Behringwerke and VuCo GmbH & Co. shall use their best efforts to
obtain the consent of the respective contract partners for the
transfer to VuCo GmbH & Co. with-
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7
out undue delay after signature of this Agreement. Behringwerke
herewith grants to VuCo GmbH & Co. a power of attorney to exercise
all rights stemming from such contracts with respect to the time
period between the Contribution Date and the date that such consent
has been granted. As from the Contribution Date, VuCo GmbH & Co.
shall hold Behringwerke free and harmless in respect of any
obligations stemming from such contracts.
3.1.4 All goodwill of and pertaining to the Business, including the right
to use the name "Behring" in accordance with the further provisions
of this Agreement.
3.2 As far as assets and contracts attributable to the Business are
inadvertently not mentioned or not included in the respective Annexes, the
Parties shall agree on a subsequent transfer or assumption in respect
thereof and the Parties shall accept such transfer or assumption without
consideration. Art. 7 remains unaffected.
3.3 As far as assets and contracts not attributable to the Business are
inadvertently included in the respective Annexes, the Parties shall agree
on a subsequent retransfer to or reassumption by Behringwerke thereof
without consideration.
3.4 The exact identity of such Vaccine Assets which are to be identified by
Annexes shall be governed exclusively by the Annexes updated as of the
Contribution Date. With respect to ANNEX 3.1.1.1(b) it is agreed that any
patent applications of Behringwerke filed with the relevant authorities
within a period of one year after the Closing Date as defined in the
Purchase Agreement shall be included in such annex and in the respective
annex of the License Agreement attached as ANNEX 3.1.1.1(c), all subject to
third parties' rights. With respect to ANNEX 3.1.1.1(a) it is agreed that
any patent applications of VuCo GmbH & Co. filed with the relevant
authorities within a period of one year after the Closing Date as defined
in the Purchase Agreement shall be included in such annex and in the
respective annex of the License Agreement attached as ANNEX 3.1.1.1(d).
3.5 The above provisions of Article 3.1.1.1 and 3.4 with respect to ANNEX
3.1.1.1(b) shall apply MUTATIS MUTANDIS to any patents and patent
applications of Hoechst AG arising out of an ongoing collaboration with
Behringwerke or relating to existing products of the Business, PROVIDED
THAT such right shall be granted on reasonable commercial terms, all
subject to third parties' rights and to the consent of Hoechst AG.
<PAGE>
8
ARTICLE 4 - TRANSFER OF OWNERSHIP; IMPLEMENTATION OF THE CONTRIBUTION
4.1 Behringwerke and VuCo GmbH & Co. are in agreement that the transfer of
ownership of the Vaccine Assets from Behringwerke to VuCo GmbH & Co. shall
be effected as of the Contribution Date. VuCo GmbH & Co. is entitled to
take possession of the movable assets contributed to it under Art. 3.1.1.2
and of the Stock, if contributed. As far as immediate possession is not
possible, Behringwerke will possess the items with VuCo GmbH & Co.'s
approval and according to its instructions (BESITZMITTLER). As far as the
movable assets contributed according to Art. 3.1.1.2 are in the possession
of a third party on the Contribution Date, Behringwerke hereby assigns its
respective rights and claims it may have against such third party with
respect to such assets to VuCo GmbH & Co. with effect as of the
Contribution Date.
4.2 If, due to the retention of title or other security interests of third
Parties, Behringwerke has rights vested but not yet fully effective
(ANWARTSCHAFTSRECHTE) with respect to the Vaccine Assets, Behringwerke
hereby transfers these rights to VuCo GmbH & Co.
4.3 If and to the extent the transfer of ownership or assignment of other
rights relating to the Vaccine Assets to be contributed requires additional
acts which are not provided for in this Agreement, the Parties shall
execute such acts promptly.
4.4 Behringwerke and VuCo GmbH & Co. shall take all action necessary for the
implementation of this Agreement, including obtaining the necessary
approvals of public authorities for the transfer of existing permits or
applying for new permits and soliciting for necessary approvals of contract
partners or other third parties.
4.5 If and to the extent an assignment of contractual rights and duties cannot
be effected in relation to third parties, other than provided for in Art.
7, Behringwerke shall be obliged to exercise the respective contractual
rights and fulfill obligations in the interest of VuCo GmbH & Co. to the
extent possible. The same shall apply to the extent necessary and possible
with respect to the use of public permits. Behringwerke shall internally
place VuCo GmbH & Co. in the same economic position as it would be in if
such assignments had been valid and if that is not practicable it shall
indemnify VuCo GmbH & Co. against all damages associated therewith. VuCo
GmbH & Co. shall indemnify and internally place Behringwerke in the same
economic position with respect to the performance by VuCo GmbH & Co.
directly or indirectly of obligations of Behringwerke under such contracts,
as though Behringwerke had been discharged from any further liabilities in
respect
<PAGE>
9
thereof, but not for any breach caused by the transfer to or assumption by
VuCo GmbH & Co. of such obligation.
4.6 As of the Contribution Date, all benefits and encumbrances (NUTZEN UND
LASTEN) related to the Business as well as the risk of accidental loss and
accidental deterioration of the Business shall pass to VuCo GmbH & Co.
4.7 If due, Behringwerke shall pay all public fees, charges and taxes relating
to the Business attributable to the time before the Contribution Date,
irrespective of whether such fees, charges and taxes have been levied at
the Contribution Date including taxes attributable to the portion of any
tax period which includes the Contribution Date from the beginning of the
tax period through the Contribution Date.
4.8 Behringwerke shall pay any and all taxes based on income or capital gain
imposed as a result of the contribution of assets to VuCo GmbH & Co.
pursuant to this Agreement.
ARTICLE 5 - TAKEOVER OF BUSINESS; PERIODICAL DELIMITATION
5.1 With respect to the assumption of employees, the following is agreed:
5.1.1 As of the Contribution Date, VuCo GmbH & Co. shall assume all rights
and obligations including pension entitlements, all pursuant to
Section 613a of the German Civil Code (BGB), arising from the
employment contracts of the employees of Behringwerke as listed in
Annex 5.1.1.
5.1.2 To the extent employees object to the transfer of their employment to
VuCo GmbH & Co., such employees shall work in the Business until the
earliest date at which such employments can be terminated, if
possible, and VuCo GmbH & Co. shall compensate Behringwerke for all
salaries and fringe payments and other costs related to continuing
employment. All costs, if any, in connection with the termination of
such employments shall be borne by Behringwerke. Behringwerke shall
give priority to investigate whether there are comparable employment
opportunities within Behringwerke, otherwise the employment of such
employees shall be terminated with effect as of the earliest date
possible.
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10
Behringwerke has the right to nominate employees replacing objecting
employees with comparable qualification and salary and reasonably
acceptable to VuCo GmbH & Co. VuCo GmbH & Co. may decline to accept
such nominees, whether or not reasonably acceptable, but if a
reasonably acceptable nominee is rejected, then VuCo GmbH & Co. shall
bear all costs connected with the termination of the employment of
the objecting employee to be replaced and shall hold Behringwerke
free and harmless in this respect, unless Behringwerke decides at its
sole discretion to employ such objecting employee elsewhere in its
business. If the nominee is accepted, the provisions of this Article
5 shall apply mutatis mutandis. Starting with the date at which VuCo
GmbH & Co. employs any replacement employee, Behringwerke shall bear
all costs connected with an employee who has been replaced because
she/he objected to the transfer of her/his employment.
5.1.3 To the extent that VuCo GmbH & Co. has assumed hereunder claims of
employees pursuant to Section 613a of the German Civil Code (BGB) and
such claims are attributable to the time prior to the Contribution
Date, in particular claims for salary (including Christmas and
vacation pay), vacation claims, bonus claims, settlements (including
payments for employee inventions), life insurance premiums, and other
payments to be made in addition to the regular salary, Behringwerke
shall hold VuCo GmbH & Co. free and harmless therefrom.
5.1.4 To the extent that VuCo GmbH & Co. has assumed hereunder pension
obligations for employees pursuant to Section 613 a of the German
Civil Code (BGB) attributable to the time prior to the Contribution
Date, Behringwerke shall pay to VuCo GmbH & Co. an amount which
approximates full cost of the pension liability. Full costs should be
calculated in accordance with the provisions of FAS 87 using the
biometric tables of Dr. Klaus Heubeck (amended as follows: mortality
100%; disability 50%) and applying an interest rate of 7%, future
salary rate increase of 4% and a fluctuation rate of 15% until age
30, 10% until age 40, 5% until age 50, and 0% for 50+. The amount
shall be calculated on the basis of an actuarial report
(versicherungsmathematisches Gutachten) as of the Closing Date of the
Purchase Agreement, to be prepared at Behringwerke's cost. Upon
determination of the amount, such amount shall be payable within ten
banking days to VuCo GmbH & Co. but in no case prior to the Closing
Date of the Purchase Agreement.
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11
5.1.5 Behringwerke shall hold VuCo GmbH & Co. free and harmless against any
taxes, social security contributions and contributions to workers'
social associations (Berufsgenossenschaften) to be paid for the
employees listed in Annex 5.1.1 or replacement employees transferred
to VuCo GmbH & Co. pursuant to the second paragraph of clause 5.1.2
attributable to the time period prior to the Contribution Date.
5.1.6 If any employees other than those listed in Annex 5.1.1 are
transferred to VuCo GmbH & Co. pursuant to Section 613a BGB,
Behringwerke shall indemnify VuCo GmbH & Co. against all liabilities
and expenses arising from such employments. VuCo GmbH & Co. shall
terminate such employments as soon as legally possible. VuCo GmbH &
Co. shall take all actions necessary or advisable to minimize any
such liabilities or expenses of Behringwerke, including, without
limitation, the use in any legal proceeding of all legal remedies
available to it and the filing of appeals, all after due consultation
with Behringwerke. VuCo GmbH & Co. may enter into settlements,
provided, however, that it shall notify Behringwerke in writing in
advance of such intention to settle and that Behringwerke does not
object to such settlement within a period of three weeks after receipt
of such written notification. The aforementioned provision shall not
be applicable for the first seven employees who are attributable to
the Business and have not been listed in Annex 5.1.1 as updated on the
Contribution Date if and to the extent Behringwerke does not exercise
its right to nominate replacement employees and VuCo GmbH & Co.
employs such replacement employees or bears the severance costs. For
such seven employees this Art. 5.1 shall apply mutatis mutandis.
5.2 Notwithstanding anything to the contrary contained in this Agreement, VuCo
GmbH & Co. shall not assume any costs, liabilities or expenses, whether or
not related to the Business, other than (a) the pension obligations
expressly assumed under clause 5.1.1, and (b) contractual obligations of
the Business which accrue after the Contribution Date and which (i) are
related to the contracts set forth in ANNEXES 3.1.3.1, 3.1.3.2, 3.1.3.3 AND
7 or (ii) involve expenditures of less than DM 50,000 annually under
contracts with a term of less than one year, or (iii) are related to
purchase orders in the ordinary course of Business, or (iv) involve
expenditures in connection with the License Agreements provided for in
clause 3.1.1 (the "Assumed Liabilities"). With the exception of the Assumed
Liabilities, VuCo GmbH & Co. shall not assume or otherwise be responsible
for any liability or obligation of any nature of Behringwerke, whether or
not related to the Business, or any claims of such liability or obligation,
whether matured or unmatured, liquidated or unliquidated, fixed or
contingent, known or unknown, whether arising out of occurrences prior to,
at or
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12
after the Contribution Date. Subject to the foregoing, VuCo GmbH & Co.
shall be responsible for any liabilities, obligations or damages incurred
or caused after the Contribution Date in connection with the operation of
the Business.
5.3 Notwithstanding anything to the contrary contained in this Agreement,
Behringwerke shall hold VuCo GmbH & Co. free and harmless from all taxes,
costs, liabilities and expenses related to the Business, in particular
those arising from the contracts contributed and transferred under Art.
3.1.3, attributable to the time prior to the Contribution Date. All costs,
liabilities and expenses related to the Business and which are attributable
to the time after the Contribution Date shall be borne by VuCo GmbH & Co.
For the avoidance of doubt: Any capital expenses with respect to
maintenance, repair and similar works incurred after the Contribution Date
are attributable to the period after the Contribution Date unless the
specific works causing the capital expense have been executed prior to the
Contribution Date; ongoing works shall be split up accordingly.
5.4 All rents, rates, gas, water, electricity, and telecommunication costs,
ancillary costs and other periodic expenditures relating to the Business
incurred before the Contribution Date shall be borne by Behringwerke unless
these are considered expenses related to a certain period after the
Contribution Date and would therefore be shown as appertainment of payments
pursuant to sec. 250 para. 1 Commercial Code (HGB) on the asset side. In
the latter case they shall be borne by VuCo GmbH & Co. On or around the
Contribution Date, the Parties will determine the uncharged consumption of
gas, water, electricity, heating and other charges as basis for the
apportionment of the expenses as stated above. To the extent that an exact
apportionment is not possible, these expenses will be estimated.
5.5 All incoming payments received before the Contribution Date relating to the
Business shall belong to Behringwerke except for incoming payments
attributable to the time after the Contribution Date which would be shown
as appertainment of payments pursuant to sec. 250 para. 1 Commercial Code
(HGB) on the liabilities side. All incoming payments received after the
Contribution Date relating to VuCo GmbH & Co. shall belong to VuCo GmbH &
Co. except for incoming payments if attributable to the time before the
Contribution Date. Receivables attributable to any period starting before
the Contribution Date and ending after the Contribution Date shall be split
between Behringwerke and VuCo GmbH & Co. pro rata.
5.6 Behringwerke and VuCo GmbH & Co. shall initiate all action necessary for
implementation of this Agreement and the takeover of the Business by VuCo
GmbH & Co.
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13
5.7 Behringwerke and VuCo GmbH & Co. agree to cooperate after the Contribution
Date to achieve a smooth and efficient transfer of the Business to VuCo
GmbH & Co.
5.8 Behringwerke and VuCo GmbH & Co. shall, without undue delay, pass to each
other any payment, notice, correspondence, information or inquiry relating
to the Business which is received by either of them after the Contribution
Date and which the other is entitled to or which is of concern to the
other, taking into account the terms and conditions of this Agreement; Art.
13 is applicable to both Parties in this respect.
5.9 On or shortly after the Contribution Date or the termination of the
Operating Lease Agreement, Behringwerke shall hand over to VuCo GmbH & Co.
all documents, files, books etc., including the personnel files of the
employees assumed by VuCo GmbH & Co. pursuant to Art. 5.1, except for such
documents which Behringwerke must keep in its hands for legal reasons.
Behringwerke hereby permits VuCo GmbH & Co. to review and to take copies of
all retained documents to the extent necessary to continue the operation of
the Business. Documents of the Business shall remain Behringwerke's
property, as far as these are required to exercise rights and meet duties
arising from the period prior to the Contribution Date, in particular if
matters of taxation are involved.
5.10 Tax returns relating to the fiscal years prior to the Contribution Date
are to be prepared by Behringwerke at its costs; with respect to the
ongoing fiscal year of the Contribution Date, tax returns shall be jointly
prepared by Behringwerke and VuCo GmbH & Co. and the costs shall be shared
pro rata temporis. Behringwerke is entitled to designate the accountants
for testifying the balance sheets and to file any legal remedies against
levies and/or inspections of the tax authorities and social insurance
institutions, relating to the time period until the Contribution Date.
To the extent only VuCo GmbH & Co. can initiate the relevant action, it
shall do so upon request and as directed by Behringwerke at Behringwerke's
cost.
5.11 In case the Operating Lease Agreement provided for in Art. 10 becomes
effective, this Art. 5 shall not be applicable as of the Contribution
Date but as of such date the termination of the Operating Lease Agreement
becomes effective, save that Art. 5.1.1 is applicable at both dates.
ARTICLE 6- WARRANTIES
6.1 Behringwerke hereby warrants and represents in form of an independent
guarantee (selbstandiges Garantieversprechen), excluding any further claims
that on the date of signature of this Agreement and as of the Contribution
Date
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14
6.1.1 the Vaccine Assets comprise all assets and contracts used in the
operation of the Business as currently conducted, other than (a) the
contract listed in Annex 7, which will be governed by the provisions
of Article 7, (b) certain patent rights which are also used in the
operation of Behringwerke's other business units, for which VuCo
GmbH & Co. will have a royalty-free license to use in accordance with
the provisions of clause 3.1.1.1, (c) certain machinery, equipment,
office equipment and other fixed assets which are also used in the
operation of Behringwerke's other business units; such fixed assets
will be operated on behalf of the Business by Behringwerke or its
sub-contractors in accordance with the provisions of the Master
Service Agreement, (d) certain real property, which will be leased to
VuCo GmbH & Co. pursuant to the terms of the Lease Agreement, and (e)
the contracts with Hoechst AG otherwise dealt with in this Agreement
and/or the Purchase Agreement. Except as expressly set forth in the
preceding sentence, upon contribution of the Vaccine Assets, VuCo
GmbH & Co. will have all assets and contracts required for the
continuation of the operation of the Business by VuCo GmbH & Co.,
other than public permits that are person-related;
6.1.2 it has full corporate power and authority to conclude and execute
this Contribution Agreement, and that the execution and
implementation of this Contribution Agreement have been duly
authorized by all necessary corporate actions, in particular by its
supervisory and managing bodies;
6.1.3 it is the sole owner of the respective intellectual property rights
sold and transferred under Art. 3.1.1.1, except as set forth
otherwise in the respective Annexes to Art. 3.1.1.1 or in Annex
7.1.18 of the Purchase Agreement and said rights are free and clear
of any liens, pledges, usufruct, and other encumbrances except as
stated in the respective Annexes to Art. 3.1.1.1 and all measures
necessary to maintain the protection of the intellectual property
rights have been taken and, to the best knowledge, it does not
infringe the rights of any other person;
6.1.4 it is entitled to contribute all assets as provided for under Art.
3.1.1.2 and that such assets are free and clear of all unusual liens,
pledges, usufruct, option and use rights or any other encumbrances or
rights of third parties, unless such encumbrances serve as security
for obligations assumed by VuCo GmbH & Co. or unless otherwise stated
in the respective Annexes;
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15
6.1.5 all public permits object-related, but not person-related, and
necessary for the operation of the Business have been issued and
there are no indications that such permits or licenses will be
limited, recalled or revoked or become subject to new conditions
(Auflagen), with the exception of those mentioned in the respective
annexes;
6.1.6 with respect to the Business no shop agreements
(Betriebsvereinbarungen) have been concluded with the exception of
those mentioned in Annex 6.1.6;
6.1.7 except for those mentioned in Annex 6.1.7, it has not concluded any
employment contracts attributable to the Business with an annual
remuneration of more than [CONFIDENTIAL TREATMENT REQUESTED];
6.1.8 there are no judicial or arbitration proceedings pending or to the
best of its knowledge threatened with an amount in dispute of more
than DM 300,000 in the aggregate and, to the best knowledge of the
Vorstand of Behringwerke, it is not subject to any tax proceedings,
all only to the extent that there are facts involved that could have
a material detrimental impact on the Business;
6.1.9 the Business between 30 June 1995 and the date hereof has been
conducted in the customary manner, in particular, with respect to
investments and maintenance of the assets and Stocks and no material
assets outside the ordinary business have been acquired, sold,
pledged or otherwise encumbered;
6.1.10 all pension arrangements for the employees listed in ANNEX 5.1.1
and transferred to VuCo GmbH & Co. pursuant to Section 613 a Civil
Code (BGB) and the handling and documentation of respective rights
including payments thereunder are in accordance with the present
German legislation; except for those pension plans, no other
commitments have been made nor additional pension claims exist.
6.2 In case of breach of warranty under Art. 6.1 the following applies:
6.2.1 With respect to the warranted items Behringwerke is entitled to
establish the warranted status. If Behringwerke fails to establish
the warranted status within a reasonable period of time, such
period not to exceed three months after VuCo GmbH & Co. has
notified Behringwerke of the breach, or if immediate action is
necessary (GEFAHR IM VERZUG), Behringwerke shall refund to VuCo
GmbH & Co. the necessary amount spent by VuCo GmbH & Co. to
establish the warranted status and this shall be VuCo GmbH & Co.'s
sole remedy
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16
6.2.2 VuCo GmbH & Co. may only ask for recovery based on a warranty claim
or on other claims connected therewith if the individual claim
exceeds [CONFIDENTIAL TREATMENT REQUESTED] (in words: [CONFIDENTIAL
TREATMENT REQUESTED]) and the aggregate of all such individual
claims exceeds [CONFIDENTIAL TREATMENT REQUESTED] (in words:
[CONFIDENTIAL TREATMENT REQUESTED]). The total amount of the claims
here mentioned may not exceed [CONFIDENTIAL TREATMENT REQUESTED] (in
words: [CONFIDENTIAL TREATMENT REQUESTED]) (the "Warranty Cap)",
whereby any warranty claims of Buyer pursuant to the Purchase
Agreement must be included in calculating the Warranty Cap and the
corresponding deductible amounts.
6.3 Beyond the remedies mentioned in this Art. 6, VuCo GmbH & Co. shall have no
further claims in connection with a breach of a warranty or corresponding
claims. In particular, to the extent legally possible, all claims of VuCo
GmbH & Co. going beyond the aforementioned remedies striving for additional
capital contribution, cancellation (WANDELUNG) or any other form of
rescission as well as a liability of Behringwerke based on breach of duty
prior to contract (CULPA IN CONTRAHENDO) are excluded to the extent legally
possible.
6.4 Claims of VuCo GmbH & Co. under this Art. 6 shall become time-barred
fifteen (15) months after the Closing Date of the Purchase Agreement. The
statute of limitation shall be interrupted if claims are asserted in
writing by VuCo GmbH & Co. against Behringwerke and if the reason on which
any such claim is based are reasonably identified. If Behringwerke does not
accept the claim within one month, VuCo GmbH & Co. must raise the claim
before court within a further period of three months; otherwise it becomes
time-barred.
ARTICLE 7- CONTRACTS TO BE CONTRIBUTED AT A LATER DATE
VuCo GmbH & Co. acknowledges that the assignment of rights and duties under the
contracts listed in ANNEX 7 requires the approval of the respective contracting
partner. Behringwerke shall seek to retain the approval for an assumption of
such contracts by VuCo GmbH & Co. If Behringwerke succeeds to obtain the
respective approvals, Behringwerke shall assign all rights and duties under such
contracts listed in ANNEX 7 to VuCo GmbH & Co. and the terms of this
Contribution Agreement shall be applicable to such contracts. If Behringwerke
cannot obtain the approvals, VuCo GmbH & Co shall not be entitled to any
compensation claims.
VuCo GmbH & Co. cannot assert any claims against Behringwerke based on this Art.
7.
ARTICLE 8- USE OF NAME
Use of the name "Behring" and the logo "E. v. Behring" is governed by clause 8
of the Purchase Agreement.
<PAGE>
17
ARTICLE 9- TRANSITION PERIOD
Between the date of signature of this Agreement and the Contribution Date
(hereinafter "Transition Period"), Behringwerke shall continue to operate the
Business in the ordinary course, consistent with prior practice and maintain it
as an active operation and shall notify VuCo GmbH & Co. without undue delay upon
becoming aware of any circumstances which (would) lead to a breach of the
warranties set forth in Art. 6. During the Transition Period Behringwerke shall
not employ additional employees attributable to the Business other than such
necessary to replace leaving employees without the prior consent of VuCo GmbH &
Co.
ARTICLE 10- OPERATING LEASE AGREEMENT
In the event that VuCo GmbH & Co. does not receive the necessary permits prior
to or on the Contribution Date and will thus not be able to continue the
operation of the Business, the Parties enter simultaneously herewith into the
Operating Lease Agreement attached as ANNEX 10.
ARTICLE 11- CONTRACTS TO BE CONCLUDED
11.1 Behringwerke and VuCo GmbH & Co. enter simultaneously herewith into
the Master Service Agreement attached as Annex 11.1.
11.2 Behringwerke and VuCo GmbH & Co. enter simultaneously herewith into
the Lease Agreement attached as Annex 11.2.
ARTICLE 12- TAX LAW
VuCo GmbH & Co. shall continue the valuation of assets as shown in the tax
balance sheet (STEUERBILANZ) of Behringwerke as of the Contribution Date.
Accordingly, no hidden reserves shall be disclosed and any goodwill shall not be
(newly) activated. The same applies for the commercial balance sheet
(HANDELSBILANZ) for which the book values of the VuCo Assets as determined in
the Contribution Balance Sheet are decisive.
<PAGE>
18
ARTICLE 13- CONFIDENTIALITY
Except as otherwise provided in this Agreement, after the date of this Agreement
Behringwerke shall not use or disclose to third Parties any information
disclosed, transferred, assigned, licensed or otherwise made available to VuCo
GmbH & Co. hereunder and relating to the transfer of the Business, unless (i)
such information is needed by Behringwerke to continue its commercial activities
or in connection with the Operating Lease Agreement, (ii) is or becomes public
knowledge through no fault of Behringwerke, (iii) is passed to Behringwerke
after the Contribution Date by a third party which is not under an obligation of
confidentiality, or (iv) has to be disclosed by Behringwerke pursuant to law,
judicial, or official compulsion; in such case Behringwerke shall notify VuCo
GmbH & Co. in advance about the impending disclosure.
ARTICLE 14- MISCELLANEOUS
14.1 This Agreement including the Annexes contains the entire understanding
of the Parties hereto in respect of the subject matter contained
herein. No agreements exist other than those expressly set forth
herein.
14.2 Any modifications or amendments of this Agreement or of any provision
of this Agreement including this Art. 14.2 shall be effective only if
made in writing, unless the law provides for a stricter form.
14.3 All expenses incurred in connection with this Agreement and the
execution of the transactions contemplated hereby shall be borne by
Behringwerke.
14.4 This Agreement shall be governed by and construed in accordance with
the law of the Federal Republic of Germany, unless the application of
foreign law is compulsory.
14.5 To the extent possible, each provision of this Agreement will be
interpreted in such manner as to be effective and valid under the
applicable law. If any provision of this Agreement is held to be
prohibited by or invalid under applicable law, such provision will be
ineffective only to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining
provisions of this Agreement. To the extent that a provision is
ineffective or invalid, it shall be replaced by an effective and valid
provision which comes as close as possible to the economic purpose of
the ineffective or invalid provision.
<PAGE>
19
Marburg, ______________ 1996
Behringwerke Aktiengesellschaft
by:
- ---------------------------- ------------------------------
VuCo GmbH & Co.
by:
- ---------------------------- ------------------------------
<PAGE>
Annex 3.1.1.1(a)
to Contribution Agreement
[CONFIDENTIAL TREATMENT REQUESTED]
(5 Pages)
<PAGE>
Annex 3.1.1.1(b)
to Contribution Agreement
[CONFIDENTIAL TREATMENT REQUESTED]
(5 Pages)
<PAGE>
ANNEX 3.1.1.1 (c)
to the Contribution Agreement
LICENSE AGREEMENT
between
Behringwerke Aktiengesellschaft
Postfach 1140
D-35001 Marburg
(hereinafter "Behringwerke")
and
Behring Vaccine GmbH & Co.
(hereinafter "VuCo GmbH & Co.")
<PAGE>
2
Content
- -------
Preamble . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1. Granting of License. . . . . . . . . . . . . . . . . . . . . . . 3
2. Royalty. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3. Term.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4. Approval by Contract Partners. . . . . . . . . . . . . . . . . . 5
5. Covenants by VuCo GmbH & Co. . . . . . . . . . . . . . . . . . . 5
6. Maintenance of Protected Rights. . . . . . . . . . . . . . . . . 5
7. Warranties by Behringwerke . . . . . . . . . . . . . . . . . . . 6
8. Further Developments . . . . . . . . . . . . . . . . . . . . . . 7
9. Assignment; Sub-Licensing. . . . . . . . . . . . . . . . . . . . 7
10. Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . 7
<PAGE>
3
PREAMBLE
Pursuant to the "Contribution Agreement" to which this License Agreement is an
annex, Behringwerke is contributing its human vaccine unit (the "Business") to
VuCo GmbH & Co. Some patents of, and actually used by, Behringwerke cannot be
transferred to VuCo GmbH & Co. as its property without restrictions because
these industrial property rights are also used by other units of Behringwerke.
In consideration hereof the parties agree as follows:
1. GRANTING OF LICENSE
1.1. Behringwerke is the holder of the patents and applications for
registration of patents listed in APPENDIX 1.1 (A) UNDER NO. 1, and
respective know-how (hereinafter the "Patents"). The term Patent
shall include continuations, divisionals, continuations-in-part,
reissues, priority applications, and corresponding foreign
counterparts. Furthermore, Behringwerke is co-owner of the patents
and applications for registration of patents listed in APPENDIX 1.1
(A) UNDER NO. 2 (hereinafter the "Co-owned/Acquired Patents and Co-
owned/Acquired Patents hereinafter collectively referred to as the
"Protected Rights").
1.2 Behringwerke hereby grants to VuCo GmbH & Co. subject to the terms
and conditions set forth hereinafter a license or sublicense, as the
case may be, under the Protected Rights to develop, manufacture, use
and sell human vaccine products. As to the Patents, such license
shall be worldwide and exclusive. As to the Co-owned/Acquired
Patents, the territory and degree of exclusivity shall be as
provided in the relevant agreement, if any, provided that if there
is no such agreement the license will be worldwide and exclusive,
all with respect to human vaccine products.
2. ROYALTY
The license under the Patents shall be royalty free. Royalty obligations
in respect of the development, manufacture, use or sale of human vaccine
products under
<PAGE>
4
the Co-owned/Acquired Patents shall flow through directly to VuCo GmbH &
Co. in the amount specified in the relevant agreement, if any, with no
addition by Behringwerke. Payments shall be made directly to the relevant
licensor or co-owner. Fixed sum royalties, if any, shall be shared between
the parties in proportion to their respective use of such Protected Rights
as measured by net sales of covered products.
3. TERM
3.1 This License Agreement becomes effective at the Contribution Date or,
in case the Operating Lease Agreement becomes effective, upon
termination of the Operating Lease Agreement.
3.2 The licenses to the patents included in the Protected Rights shall
expire on a country-by-country basis with the last to expire Protected
Right. The licenses to know-how included in the Protected Rights
shall continue in perpetuity. The licenses to Co-owned/Acquired
Patents shall expire in accordance with the provisions of the relevant
license agreement.
3.3 VuCo GmbH & Co. may at any time terminate this License Agreement in
its entirety or for single Protected Rights with a termination period
of six months.
3.4 Behringwerke may also terminate this License Agreement in its entirety
or for single Protected Rights at any time with a termination period
of six months, PROVIDED THAT Behringwerke offers to VuCo GmbH & Co. to
transfer to VuCo GmbH & Co. without consideration all its rights and
obligations with respect to such Protected Rights to be terminated.
If VuCo GmbH & Co. accepts such an offer of transfer. VuCo GmbH & Co.
shall bear all costs incurred by the transfer. Furthermore,
Behringwerke may terminate this License Agreement as to the Protected
Right in question after respective warning and fruitless expiration of
a period of 30 days after the warning without observing any notice
period and without an offer to transfer any Protected Rights if VuCo
GmbH & Co. is in breach of any material clause hereunder and such
breach makes it unac-
<PAGE>
5
ceptable for Behringwerke to continue this License Agreement.
Possible claims for damages by Behringwerke shall not be affected
hereby.
4. APPROVAL BY CONTRACT PARTNERS
To the extent the consummation of this License Agreement requires
approvals of third parties under the terms of the agreements for the
Co-owned/Acquired Patents, Behringwerke shall make every effort to
receive such approvals without delay after the date hereof. The
provisions of Article 4.5 of the Contribution Agreement shall apply
MUTATIS MUTANDIS to this License Agreement.
5. COVENANTS BY VUCO GMBH & CO.
Within the limits of statutory liability VuCo GmbH & Co. shall
indemnify and hold Behringwerke free and harmless against any claim
(other than claims which would be covered by Article 6.1.3 of the
Contribution Agreement, regardless of when such claims arise) which
may be brought against Behringwerke by any third parties arising out
of any use of the Protected Rights by VuCo GmbH & Co., except if such
damages are caused by willful acts of Behringwerke or its personnel or
any, licensee or its personnel.
6. MAINTENANCE OF PROTECTED RIGHTS
6.1 For the term of this License Agreement Behringwerke is obligated
to file, prosecute and maintain the Protected Rights, including
all interferences and oppositions thereto, at its own cost. In
case Behringwerke intends to abandon a Protected Right it shall
first make an offer of transfer to VuCo GmbH & Co. If the offer
will not be accepted within 30 days, it shall be deemed to be
rejected. In case of acception VuCo GmbH & Co. shall bear all
further costs. In case of rejection Behringwerke may abandon the
Protected Right. Behringwerke shall make every reasonable effort
to find a similar solution with respect to the Co-owned/Acquired
Patents.
<PAGE>
6
6.2 In the event a third party infringes or may be infringing any of
the Protected Rights in the field of human vaccines, the parties
shall confer and consider whether any infringement proceedings
should be filed against such third party. Factors to be
considered include, without limitation, the extent of such
infringement, the identity of the infringer, the territory in
question, the strength of the patent in that territory, the
status of the patent in other territories, the likelihood of
success, cost and resource allocation, and other possible methods
of resolution. The parties will make every effort to mutually
agree whether to file any action, including if necessary
conferring with an independent third party, although in the event
the parties are unable to agree, the final decision will be made
by the owner of the patent at issue. If the parties decide to
proceed, VuCo GmbH & Co. shall control and bear the costs of such
proceeding, and shall retain any recovery. Behringwerke shall
reasonably cooperate with and assist VuCo GmbH in connection
therewith.
6.3 To the extent the use of a Co-owned/Acquired Patent is linked to
the exercise of an option, Behringwerke hereby authorizes VuCo
GmbH & Co.to exercise such option in its own name or in the name
of Behringwerke in order to enable VuCo GmbH & Co. to use the
respective Protective Rights in accordance with this License
Agreement. Furthermore, Behringwerke undertakes to make all
necessary further declarations in order to enable VuCo GmbH & Co.
to exercise the rights under the respective options. VuCo GmbH &
Co. shall bear all costs incurred in connection with such
exercise of options, including any royalty, as long as
Behringwerke does not use the respective Protected Right. Art. 2
of this License Agreement shall be applicable.
7. WARRANTIES BY BEHRINGWERKE
Except as expressly set forth in the Contribution Agreement or the
Purchase Agreement, any warranties and representations of Behringwerke
are disclaimed.
<PAGE>
7
8. FURTHER DEVELOPMENTS
Except as expressly set forth in clause 3.4 of the Contribution
Agreement, any new developments/improvements developed by Behringwerke
or VuCo GmbH & Co. in connection with the Protected Rights remain the
exclusive intellectual property of the respective party and are not
subject to any disclosure obligation. Each party is entitled to
register such new developments/improvements and to make exclusive use
of them for its own benefit.
9. ASSIGNMENT; SUB-LICENSING
9.1 VuCo GmbH & Co. may assign or otherwise transfer the rights and
obligations hereunder in whole or in part to a third party,
PROVIDED THAT such third party is to be bound by the terms and
conditions hereof and related hereto.
9.2 VuCo GmbH & Co. is entitled to grant sub-licenses but restricted
to the field of human vaccines.
9.3 Behringwerke is free to assign any or all of its rights and
obligations hereunder (i) in connection with a corporate
restructuring, (ii) to Hoechst AG or companies affiliated with
Hoechst AG or (iii) to an acquiror of the know-how and/or the
Patents and Co-owned/Acquired Patents.
9.4 Any assignment, sub-licensing and transfer of the Protected
Rights is only admissible if the respective recipient undertakes
to comply with the provisions of this License Agreement.
10. MISCELLANEOUS
10.1 Unless otherwise defined herein, all terms used herein shall have
the same meanings and definitions as in the Contribution
Agreement.
10.2 Unless otherwise specifically amended hereby all other terms of
the Contribution Agreement shall remain in full force and
effect.
<PAGE>
8
10.3 To the extent possible, each provision of this License Agreement
will be interpreted in such manner as to be effective and valid
under the applicable law. If any provision of this License
Agreement is held to be prohibited by or invalid under applicable
law, such provision will be ineffective only to the extent of
such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this
License Agreement. To the extent that a provision is ineffective
or invalid, it shall be replaced by an effective and valid
provision which comes as close as possible to the economic
purpose of the ineffective or invalid provision.
10.4 Any modifications or amendments of this License Agreement or of
any provision of this License Agreement shall be effective only
if made in writing, unless the law provides for a stricter form.
10.5 This License Agreement is governed by the laws of the Federal
Republic of Germany.
10.6 The exclusive place of jurisdiction shall be Marburg.
Marburg, the_______________
Behringwerke AG by:
____________________________________ ______________________________________
VuCo GmbH & Co. by:
____________________________________ ______________________________________
<PAGE>
APPENDIX 1. 1 (a)
to License Agreement in favor of VuCo GmbH
[CONFIDENTIAL TREATMENT REQUESTED]
(5 Pages)
<PAGE>
ANNEX 3.1.1.1 (d)
to the Contribution Agreement
LICENSE AGREEMENT
between
Behringwerke Aktiengesellschaft
Postfach 1140
D-35001 Marburg
(hereinafter "Behringwerke")
and
Behring Vaccine GmbH & Co.
(hereinafter "VuCo GmbH & Co.")
<PAGE>
2
CONTENT
Preamble . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
1. Granting of License. . . . . . . . . . . . . . . . . . . . . . .3
2. Royalty. . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
3. Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
4. Approval by Contract Partners. . . . . . . . . . . . . . . . . .5
5. Covenants by Behringwerke. . . . . . . . . . . . . . . . . . . .5
6. Maintenance of Protected Rights; Exercise of Options . . . . . .5
7. Warranties by VuCo GmbH & Co . . . . . . . . . . . . . . . . . .6
8. Further Development. . . . . . . . . . . . . . . . . . . . . . .7
9. Assignment; Sub-Licensing. . . . . . . . . . . . . . . . . . . .7
10. Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . .8
<PAGE>
3
PREAMBLE
Pursuant to the "Contribution Agreement" to which this License Agreement is an
annex, Behringwerke is contributing its human vaccine unit (the "Business") to
VuCo GmbH & Co. Parts of the assets transferred to VuCo GmbH & Co. are also
patents which Behringwerke or affiliated companies intend to (further) use for
activities outside the Business.
In consideration hereof the parties agree as follows:
1. GRANTING OF LICENSE
1.1 Pursuant to the Contribution Agreement Vuco GmbH & Co. will become
owner of the patents and applications for registration of patents
listed in APPENDIX 1.1. (a) UNDER NO.1 (the "Patents") and
respective know-how and a coowner of the patents and applications
for registration of patents listed in APPENDIX 1.1.(a) UNDER NO. 2
(hereinafter the "Co-owned/Acquired Patents"). The term Patent
shall include continuations, divisionals, continuations-in-part,
reissues, priority applications, and corresponding foreign
counterparts. Furthermore, Behringwerke transferred to Vuco GmbH &
Co. rights and obligations relating to the license and option
agreements listed in APPENDIX 1.1 (b) (hereinafter the "Licensed
Patents"). (Patents, Co-owned/Acquired Patents and Licensed Patents
hereinafter collectively referred to as "Protected Rights").
1.2 VuCo GmbH & Co. hereby grants to Behringwerke subject to the terms
and conditions set forth hereinafter a license or sublicense, as the
case may be, under the Protected Rights to develop, manufacture,
use, and sell any product other than human vaccine products. As to
the Patents, such license shall be worldwide and exclusive. As to
the Licensed Patents and the Co-owned/Acquired Patents, the
territory and the degree of exclusivity shall be as provided in the
relevant agreement, if any, provided tha that if there is no such
agreement, the license will be worldwide and exclusive, all with
respect to any products other than human vaccine products.
VuCo GmbH & Co. shall have an option to obtain a non-exclusive
sublicense back from Behringwerke to such Protected Rights on
commercially
<PAGE>
4
reasonable terms for uses outside the field of human vaccines, but
not for diagnostics.
2. ROYALTY
The license under the Patents shall be royalty free. Royalty
obligations in respect of the development, manufacture, use or sale of
products under the Licensed Patents and the Coowned/Acquired Patents
shall flow through directly to Behringwerke in the amount specified in
the relevant agreement, with no addition by VuCo GmbH & Co. Payments
shall be made directly to the relevant licensor. Fixed sum royalties,
if any, shall be shared between the parties in proportion to their
respective use of such protected rights as measured by net sales of
covered products.
3. TERM
3.1 This License Agreement becomes effective at the Contribution Date
or, in case the Operating Lease Agreement becomes effective, upon
termination of the Operating Lease Agreement.
3.2 The licenses to patents included in the Protected Rights shall
expire on a country-by-country basis with the last to expire
Protected Right. The licenses to know-how included in the
Protected Rights shall continue in perpetuity. The licenses to
Licensed Patents shall expire in accordance with the provisions
of the relevant license agreement.
3.3 Behringwerke may at any time terminate this License Agreement in
its entirety or for single Protected Rights with a termination
period of six months.
3.4 VuCo GmbH & Co. may also terminate this License Agreement in its
entirety or for single Protected Rights at any time with a
termination period of six months, PROVIDED THAT VuCo GmbH & Co.
offers to Behringwerke to transfer to Behringwerke without
consideration all its rights and obligations with respect to such
Protected Rights to be terminated. If Behringwerke accept such
an offer of transfer, Behringwerke shall
<PAGE>
5
bear all costs incurred by the transfer. Furthermore, VuCo GmbH
& Co. may terminate this License Agreement as to the Protected
Right in question after respective warning and fruitless
expiration of a period of 30 days after the warning without
observing any notice period and without an offer to transfer the
Protected Rights, if Behringwerke is in breach of any material
clause hereunder and such breach makes it unacceptable for VuCo
GmbH & Co. to continue this License Agreement. Possible claims
for damages by VuCo GmbH & Co. shall not be affected hereby.
4. APPROVAL BY CONTRACT PARTNERS
To the extent the consummation of this License Ageement requires
approvals of third parties under the terms of the agreements for
Protected Rights, the parties shall make any effort to receive such
approvals without delay after the date hereof. If any required
approvals are not granted, the parties will make every effort to agree
on an alternative solution with equal economic results; VuCo GmbH & Co.
shall not be obligated to bear any costs thereby incurred.
5. COVENANTS BY BEHRINGWERKE
Within the limits of statutory liability Behringwerke shall indemnify
and hold VuCo GmbH & Co. free and harmless against any claim which
may be brought against VuCo GmbH & Co. by any third parties arising
out of any use of the Protected Rights by Behringwerke, except if
such damages are caused by willful acts of VuCo GmbH & Co. or its
personnel or any licensee or its personnel.
6. MAINTENANCE OF PROTECTED RIGHTS; EXERCISE OF OPTIONS
6.1 For the term of this License Agreement VuCo GmbH & co. is
obligated to file, prosecute and maintain the Patents and the Co-
owned/Acquired Patents, including all interferences and
oppositions thereto, at its own cost. In case VuCo GmbH & Co.
intends to abandon a Patent or a Co-owned/Acquired Patent it
shall first make an offer of transfer to Behringwerke. If the
offer will not be accepted within 30 days, it is deemed to be
rejected. In case of acception Behringwerke shall bear all
further costs. In case of rejection VuCo GmbH & Co. may abandon
the Protected Right. VuCo GmbH & Co. shall make any reasonable
effort to find a similar solution with respect to the Licensed
Patents.
<PAGE>
6
6.2 To the extent the use of a Licensed Patent is linked to the
exercise of an option, Vuco GmbH & Co. hereby authorizes
Behringwerke to exercise such option in its own name or in the
name of VuCo GmbH & Co. in order to enable Behringwerke to use
the respective Protected Rights in accordance with this License
Agreement. Furthermore, VuCo GmbH & Co. undertakes to make all
necessary further declarations in order to enable Behringwerke to
exercise the rights under the respective options. Behringwerke
shall bear all costs, incurred in connection with such exercise
of options, including any royalty as long as VuCo GmbH & Co. does
not use the respective Protected Right. Art. 2 of this License
Agreement shall be applicable.
6.3 In the event a third party infringes or may be infringing any of
the Protected Rights other than in the field of human vaccines,
the parties shall confer and consider whether any infringement
proceedings should be filed against such third party. Factors to
be considered include, without limitation, the extent of such
infringement, the identity of the infringer, the territory in
question, the strength of the patent in that territory, the
status of the patent in other territories, the likelihood of
success, cost and resource allocation, and other possible methods
of resolution. The parties will make every effort to mutually
agree whether to file any action, including if necessary
conferring with an independent third party, although in the event
the parties are unable to agree, the final decision will be made
by the owner of the patent at issue. If the parties decide to
proceed, Behringwerke shall control and bear the costs of such
proceeding, and shall retain any recovery. VuCo GmbH & Co. shall
reasonably cooperate with and assist Behringwerke in connection
therewith.
7. WARRANTIES BY VUCO GMBH & CO.
Any warranties and representations of VuCo GmbH & Co. are disclaimed.
<PAGE>
7
8. FURTHER DEVELOPMENT
Except as expressly provided in Art. 3.4 of the Contribution Agreement,
any new developments/improvements developed by Behringwerke or VuCo GmbH
& Co. in connection with the Protected Rights remain the exclusive
intellectual property of the respective party and are not subject to any
disclosure obligation. Each party is entitled to register such new
developments/improvements and to make exclusive use of them for its own
benefit.
9. ASSIGNMENT; SUB-LICENSING
9.1 Behringwerke shall not assign or otherwise transfer the rights
and obligations hereunder to a third party without the prior
approval of VuCo GmbH & Co. In case Behringwerke sells its
business operations or part thereof for which the Patents and
Licensed Patents are needed, VuCo GmbH & Co. shall not withhold
such approval, unless for good reason. In any case, Behringwerke
may transfer all its rights and obligations under this License
Agreement to Hoechst AG or any company affiliated with Hoechst AG
pursuant to Sec. 15 et seq. stock corporation act (AKTIENGESETZ)
without the approval by VuCo GmbH & Co.
9.2 Behringwerke is entitled to grant sub-licenses, with the
exception of the production of human vaccines.
9.3 VuCo GmbH & Co. is free to assign any or all of its rights and
obligations hereunder (i) in connection with a corporate
restructuring, (ii) to Chiron Corporation or companies affiliated
with Chiron Corporation or (iii) to an acquiror of the know-how
and/or Protected Rights.
9.4 Any assignment, sub-licensing and transfer of the Protected
Rights is only admissible if the respective recipient undertakes
to comply with the provisions of this License Agreement.
<PAGE>
8
10. MISCELLANEOUS
10.1 Unless otherwise defined herein, all terms used herein shall have
the same meanings and definitions as in the Contribution
Agreement.
10.2 Unless otherwise specifically amended hereby, all other terms of
the Contribution Agreement shall remain in full force and effect.
10.3 To the extent possible, each provision of this License Agreement
will be interpreted in such manner as to be effective and valid
under the applicable law. If any provision of this License
Agreement is held to be prohibited by or invalid under applicable
law, such provision will be ineffective only to the extent of
such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this
License Agreement. To the extent that a provision is ineffective
or invalid, it shall be replaced by an effective and valid
provision which comes as close as possible to the economic
purpose of the ineffective or invalid provision.
10.4 Any modifications or amendments of this License Agreement or of
any provision of this License Agreement shall be effective only
if made in writing, unless the law provides for a stricter form.
10.5 This License Agreement is governed by the laws of the Federal
Republic of Germany.
10.6 The exclusive place of jurisdiction shall be Marburg.
<PAGE>
9
Marburg, this _____th day of _______________________________ 1996
Behringwerke AG
by:
- ---------------------------------- --------------------------------------
VuCo GmbH & Co.
by:
- ---------------------------------- --------------------------------------
<PAGE>
Appendix 1.1(a)
to License Agreement in favor of Behringwerke
[CONFIDENTIAL TREATMENT REQUESTED]
(4 Pages)
<PAGE>
Appendix 1.1(b)
to License Agreement in favor of Behringwerke
[CONFIDENTIAL TREATMENT REQUESTED]
(1 Page)
<PAGE>
Annex 3.1.1.2
to Contribution Agreement
This annex 3.1.1.2 is to be prepared by Behringwerke at the time of the
execution of the Contribution Agreement.
<PAGE>
Annex 3.1.3.1
to Contribution Agreement
[CONFIDENTIAL TREATMENT REQUESTED]
(1 Page)
<PAGE>
Annex 3.1.3.2
to Contribution Agreement
[CONFIDENTIAL TREATMENT REQUESTED]
(1 Page)
<PAGE>
Annex 3.1.3.3
to Contribution Agreement
[CONFIDENTIAL TREATMENT REQUESTED]
(3 Pages)
<PAGE>
Appendix 1
to Annex 3.1.3.3
to Contribution Agreement
[CONFIDENTIAL TREATMENT REQUESTED]
(3 Pages)
<PAGE>
Annex 5.1.1
to Contribution Agreement
[CONFIDENTIAL TREATMENT REQUESTED]
(27 Pages)
<PAGE>
Annex 6.1.6
to Contribution Agreement
[CONFIDENTIAL TREATMENT REQUESTED]
(3 Pages)
<PAGE>
Annex 6.1.7
to Contribution Agreement
negative report
<PAGE>
Annex 7
to Contribution Agreement
[CONFIDENTIAL TREATMENT REQUESTED]
(192 Pages)
<PAGE>
ANNEX 10
to the Contribution Agreement
OPERATING LEASE AGREEMENT
between
Behringwerke Aktiengesellschaft
Postfach 1140
D-35001 Marburg
(hereinafter "Behringwerke")
and
Behring Vakzine GmbH & Co.
(hereinafter "VuCo GmbH & Co.).
PREAMBLE
Pursuant to the (Contribution Agreement, of which this Operating Lease Agreement
is an annex, Behringwerke transfers its human vaccines unit (hereinafter the
"Business") to VuCo GmbH & Co. Since VuCo GmbH & Co. needs various permissions
to continue the Business, which it presently does not possess, the parties agree
that Behringwerke shall continue to operate the Business for a transfer period
on the basis of an operating lease agreement.
In consideration hereof, the parties hereto agree as follows:
<PAGE>
2
1. SUBJECT OF AGREEMENT
Subject of this Operating Lease Agreement is the Business containing all of
the Vaccine Assets operating property with the exception of the Stock which
is owned by Behringwerke.
2. BEGINNING AND DURATION OF THE AGREEMENT
2.1 The lease shall come into force on the Contribution Date.
2.2 The lease runs for an indefinite period.
2.3 This Agreement is deemed to be terminated if all other
conditions necessary for the occurrence of the Closing Date as defined
in the Purchase Agreement are satisfied or waived.
2.4 The right of the Parties to terminate the agreement without
notice for good cause remains unaffected.
3. RENT
3.1 Behringwerke shall have the right to determine the
amount of the rent as it deems appropriate. It shall be paid at the
end of each calendar month.
3.2 Upon request of Behringwerke, VuCo GmbH & Co. shall submit an invoice
separately showing the v.a.t.
4. OPERATION OF BUSINESS
4.1 As of the Contribution Date. Behringwerke shall operate the Business
on its own account.
4.2 Behringwerke is obliged to operate the Business in accordance with
Art. 9 of the Contribution Agreement. A sublet is not permitted.
Behringwerke is not entitled to dispose any of the fixed assets of the
Business.
<PAGE>
3
4.3 Behringwerke shall observe the regulations of the Industrial Act
(Gewerbeordnung), the security regulations and all other regulations
under public law.
4.4 By the end of this Agreement, Behringwerke shall transfer all new
investments to VuCo GmbH & Co. pursuant to Article 7 para. 2 of this
Agreement.
4.5 Behringwerke shall be fully liable for all damages caused in
connection with the Business and shall hold VuCo GmbH free and
harmless from all claims in that respect.
4.6 Behringwerke shall insure the assets in the previous extent.
5. ASSIGNMENT OF EMPLOYMENT CONTRACTS
Behringwerke assumes pursuant to sect. 613 a BGB (Civil Code) for the
duration of this Agreement the entire workforce of the Business and the
rights and obligations as of the Contribution Date stemming from the
employment contracts and pension liabilities relating to employees still
active.
6. WARRANTY
Any warranties and representations by VuCo GmbH & Co. are excluded.
7. TERMINATION OF THE OPERATING LEASE AGREEMENT
7.1 Upon the termination of this Agreement, the transfer of the Business
is governed by Articles 4 and 5 of the Contribution Agreement and by
the regulations set forth hereinafter.
7.2 At the date of the end of this Agreement, Behringwerke shall transfer
to VuCo GmbH & Co. the Stock which belongs to the Business and the new
investments according Article 4 para. 4 of this Agreement. For this
purpose, VuCo GmbH & Co. and Behringwerke shall conduct a stock-taking
of the Stock and of the new investments (hereinafter "Stock-Taking")
close to the
<PAGE>
4
day of the termination of this Agreement. The book value of the
aforementioned objects shall be credited to capital accounts I and II
as provided in Art. 2 of the Contribution Agreement.
7.3 To the extent meaningful, the regulations of the Contribution
Agreement shall be applicable, mutatis mutandis, with respect to the
retransfer of the Business to VuCo GmbH & Co.
8. MISCELLANEOUS
8.1 Unless otherwise defined herein, all terms shall have the same
meanings and definitions as in the Contribution Agreement.
8.2 Unless otherwise specifically amended hereby, all other terms of the
Contribution Agreement shall remain in full force and effect.
8.3 To the extent possible, each provision of this Agreement will be
interpreted in such manner as to be effective and valid under the
applicable law. If any provision of this Agreement is held to be
prohibited by or invalid under applicable law, such provision will be
ineffective only to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining
provisions of this Agreement. To the extent that a provision is
ineffective or invalid, it shall be replaced by an effective and valid
provision which comes as close as possible to the economic purpose of
the ineffective or invalid provision.
8.4 Any modifications or amendments of this Agreement or of any provision
of this Agreement including this Art. 8.4 shall be effective only if
made in writing, unless the law provides for a stricter form.
8.5 This Agreement is governed by the laws of the Federal Republic of
Germany.
8.6 The exclusive place of jurisdiction shall be Marburg.
<PAGE>
Annex 11.1
to the Contribution Agreement
MASTER SERVICE AGREEMENT
between
Behringwerke AG
35001 Marburg
- - hereinafter "Behringwerke" -
and
Behring Vakzine GmbH & Co.
hereinafter "VuCo GmbH & Co." -
<PAGE>
2
PREAMBLE
A. Pursuant to the Contribution Agreement to which this Agreement is an Annex
and to the Purchase and Assignment Agreement entered into by Behringwerke
and 31. CORSA Verwaltungsgesellschaft mbH (the "Purchase Agreement"),
Behringwerke is contributing its human vaccine unit (the "Business") to
VuCo GmbH & Co. VuCo GmbH & Co. will, for the foreseeable future,
continue to conduct the Business within the premises of Behringwerke on a
lease basis. Therefore, and due to the numerous operational and
technological interdependencies between the business operations of
Behringwerke and VuCo GmbH & Co., the Parties agree that both will
require supply of certain goods and services from the respective other
Party.
B. In this Agreement, the Parties wish to stipulate the terms and conditions
applicable to such supply of goods and services.
C. In order to facilitate the efficient supply of goods and services by
Behringwerke to VuCo GmbH & Co. and vice versa and to ensure that each
Party may plan ahead to remain cost-effective and within the terms and
conditions set forth herein, it is important that the Parties advise each
other on a cooperative basis of their requirements and timetables.
Article I - Services Supplied under this Agreement
1.1 Subject to the terms and conditions set forth herein, Behringwerke will
supply VuCo GmbH & Co. with goods and services listed in ANNEXES (the
"Behringwerke Services"), VuCo GmbH & Co. will receive and accept such
Behringwerke Services from Behringwerke.
Behringwerke may use Hoechst or Centeon Pharma GmbH or affiliates residing
on Behringwerke's premises or other third parties, the latter only to the
extent the services do not require the trust of VuCo GmbH & Co. such as
painting (hereinafter collectively "Internal Partners") as a sub-contractor
in order to meet its obligations under this Agreement with respect to such
Behringwerke Service. and nothing in this Agreement shall limit such right
of sub-contracting.
<PAGE>
3
1.2 Subject to the terms and conditions set forth herein, VuCo GmbH & Co. will
supply Behringwerke with goods and services listed in ANNEXES - (the `VuCo
Services"; Behringwerke Services and VuCo Services are hereinafter
collectively referred to as the "Services"). Behringwerke will receive and
accept such Services from VuCo GmbH & Co. It is further understood that
Behringwerke may pass on and transfer any VuCo GmbH & Co. Services to
Internal Partners.
1.3 The Services are individually defined as to their nature in Annexes. All
Services will be provided in the same amount as provided in 1995, adjusted
to reflect Behringwerke's projections for 1996: provided, that either Party
may request an additional amount of any Service, and the provider of such
Service shall use reasonable commercial efforts to provide such additional
amount.
1.4 Due to the Business being located within the Behringwerke premises and the
said technological interdependence, it is mandatory that Behringwerke
supplies and VuCo GmbH & Co. receives the Behringwerke Services listed in
ANNEXES - (such as utilities and fire brigades). VuCo GmbH & Co. will
receive such Behringwerke Services exclusively from Behringwerke. For the
same reasons, it is mandatory that VuCo GmbH & Co. supplies and
Behringwerke receives the VuCo GmbH & Co. Services listed in ANNEXES - .
These Services cannot be terminated during the term of the Lease Agreement.
1.5 Services other than those defined in the Annexes hereto are not part of
this Agreement and may be agreed upon separately in each single case
pursuant to Art. 1.8. In particular, the Parties will enter into a separate
lease agreement regarding the use by VuCo GmbH & Co. of parts of
Behringwerke's premises.
1.6 Whenever one of the Parties and/or any of the Internal Partners needs goods
and services in addition to those listed in ANNEXES - and the other Party
could also be considered as a supplier of such additional goods and
services, the other Party shall be requested to tender them. If such goods
and services are nevertheless obtained from an outside supplier, the other
Party is to be advised of the reasons for such decision. At equal cost-
effectiveness and comparable other terms and conditions, the respective
other Party shall be preferred to any outside supplier.
<PAGE>
4
1.7 If VuCo GmbH & Co. in addition requires special goods and services which
are not available or are not available in the desired quality or quantity
or at the desired time(s), Behringwerke will make every reasonable effort
to supply these additional goods and services, too, without, however, being
obliged to do so. Any additional costs resulting from the supply of these
additional goods and services will be borne by VuCo GmbH & Co. at a price
to be negotiated between the Parties. If the additional goods and services
are also used by other internal customers of Behringwerke, the additional
costs will be shared proportionately, based on use, between Behringwerke
and VuCo GmbH & Co.
1.8 If and when such additional goods and services referred to in Art. 1.6 or
1.7, above, are purchased from the respective other Party, the respective
Services shall be listed in new Annexes in the form of ANNEXES - setting
forth all information necessary and signed on behalf of each Party by a
duly authorized signatory (the supply of such goods and services shall be
considered "Behringwerke Services" or "Vu-Co Services", as the case may be,
and "Services" in each case) and the provisions of this Agreement shall be
applicable to such goods and services.
Article 2 - Principles Governing the Supply of Services
2.1 The Parties shall supply the Services in the same kind and quality as if it
were for captive use (SORGFALT IN EIGENEN ANGELEGENHEITEN). They will
allocate qualified staff to the supply of the Services. Employees
transferred to VuCo GmbH & Co pursuant to the Contribution Agreement shall
be deemed qualified for the position held as of the Closing Date.
2.2 Each Party shall observe that the Services supplied by it are supplied, and
that its operations for which the other Party supplies such Services are
conducted, in accordance with the applicable legislation.
The Parties shall observe in particular the technical regulations in
respect of pharmaceutical products for human use and the products comprised
in the business of the respective other Party, as well as applicable law,
ordinances or orders of public authorities. In addition, the Parties shall
comply with any health and safety regulations or requirements protecting
employees and third parties in the sites and buildings or parts thereof
occupied by the Parties.
<PAGE>
5
2.3 When supplying Services under this Agreement, each Party shall comply with
the respective other Party's requests as to the specific circumstances of
such supply to the extent reasonable and possible. Neither Party is,
however, obliged to comply with such requests if there are reasons to
assume that compliance would breach any legislation in force, lead to
damages to its installations or its property or property of third parties
or could be associated with exposure to danger of persons. In such case,
the respective Party shall promptly inform the other Party of the reasons
of its concern and discuss appropriate actions with the other Party to
avoid disadvantages to such other Party as far as reasonably possible.
2.4 If either Party needs official authorization for its supply of Services
hereunder such Party will prepare the appropriate applications together
with, and in consultation with, the Party receiving the Services and submit
them to the authorities. Behringwerke and VuCo GmbH & Co. will keep each
other regularly informed on the progress made in such matter and on their
respective negotiations with the authorities and will discuss in advance
any necessary measures.
Behringwerke and VuCo GmbH & Co. shall, in particular, promptly inform each
other if official action is likely to be initiated which could result in
the withdrawal or revocation of any authorization for those operations of
VuCo GmbH & Co. and of Behringwerke which relate to the Services under this
Agreement.
2.5 Behringwerke and VuCo GmbH & Co. will regularly discuss questions of common
interest regarding the supply of Services hereunder and regarding those
units supplying such Services. Should one of the Parties intend to modify
its operations in a way which would have significant effects on its future
need for Services supplied by the other Party, it will inform the other
Party without delay in order to allow for a joint examination and
discussion of the effects of such modification on the mutual service
relationships and to enable the respective other Party to provide an
initial assessment of the resulting cost increases or reductions to serve
as a basis for such discussions. In such case, the Parties will make every
reasonable effort to supply each other with additional amounts of Services
in the most economical way.
<PAGE>
6
Article 3 - Quantity and Measurement of Services
3.1 Unless otherwise provided for in ANNEXES - , the amount of any Services
continuously supplied in accordance with such Annexes shall be reviewed by
the Parties on or before September 30 of each year for the following year.
To the extent the Parties are unable to reach an agreement on the amount of
any
Services to be supplied during the following year, the following applies:
3.1.1 in case of increased demand, the supplying Party will endeavor to
meet such demand, but will only be obliged to supply such
Services in the amount agreed upon for the current year;
3.1.2 in case of reduced demand, the supplying Party will supply only
the requested amount of such Services; however, if the supplying
Party proves that it incurred any residual costs due to such
reduction, it shall be indemnified by the receiving Party, unless
otherwise provided for herein.
3.2 Subject to Art. 1.3, the methods, places and other particulars of
measurement of any measurable Services (e.g., in time, quantities of
energy, etc.), and the allocation method with regard to any non-measurable
Services (e.g., security, fire brigade) or for which metering devices are
not available, are provided for in the respective Annexes. The Parties
shall review such provisions as part of the annual review pursuant to Art.
3.1.
Article 4 - Remuneration
4.1 Services shall be provided at Cost as defined in Art. 4.2.
4.2 "Cost" means the fully burdened, fairly allocated cost of providing the
relevant Services, which shall include a reasonable return on employed
capital and reasonable depreciation and amortization of employed assets
over their useful lives, and a fairly allocated charge for underutilized
plant and equipment, provided that each Party uses its best efforts to
employ such plant and equipment otherwise. Cost shall be determined
pursuant to reasonable and customary allocation and calculation
methodologies as consistently applied by Hoechst AG and Guarantor and which
are consistent with German GAAP; provided that neither Parties' method-
<PAGE>
7
ologies will be applied in a manner that would cause the Costs charged to
the other Party to exceed the costs as would be calculated in accordance
with the methodologies reflected in the financial statements as attached in
Annex 7.1.19 of the Purchase Agreement. The Parties will meet and confer
within three months of the Closing Date, as defined in the Purchase
Agreement, regarding their respective methodologies.
4.3 Each Party has the right to audit the other Party's books and records by an
independent Wirtschaftsprufer, at reasonable times and upon reasonable
notice, solely for the purpose of confirmation of such Party's calculation
of Costs. Auditing shall be no more frequent than once a year.
4.4 If either Party believes that the costs of Services provided to it
hereunder are substantially higher than the costs at which such Services
generally are available, the Parties shall meet and confer to consider
appropriate action.
Article 5 - Invoicing and Payment
The Parties' respective financial departments will negotiate reasonable and
appropriate
invoicing and payment terms including compensation for the time value of money.
Article 6 - Liability
6.1 Each Party shall monitor continuously whether the other Party is supplying
Services in the agreed amount and quality. Unless otherwise provided in
the Annexes the following applies: Any incorrect amount and any obvious
defect shall be notified in writing to the other Party promptly after
detection. however no later than 30 (thirty) working days after the date on
which the respective Service was rendered. Other defects shall be notified
in writing to the other Party promptly after detection,, however no later
than 6 (six) months after the date on which the respective Service was
rendered. No Party is obliged to accept late notification of complaints.
6.2 The Parties shall only be liable for lack of diligence as applied in their
own business (SORGFALT IN EIGENEN ANGELEGENHEITEN), Liability for
consequential damages is hereby excluded.
<PAGE>
8
6.3 In any case, liability of each Party for damages due to, or in connection
with, Services supplied under this Agreement which are not in accordance
with the requirements stipulated herein is limited to an amount of
[CONFIDENTIAL TREATMENT REQUESTED] (in words: [CONFIDENTIAL TREATMENT
REQUESTED]) per damaging event and to a total of [CONFIDENTIAL TREATMENT
REQUESTED] (in words: [CONFIDENTIAL TREATMENT REQUESTED]) per calendar year,
all to the extent legally possible. Such limits are not applicable to the
extent the damaging Party can recover compensation for such damages from
third parties including insurance companies.
6.4 Damages which amount with respect to a single damaging event to less than
DM 5,000 (in words: Deutsche Mark five thousand) shall not be recoverable,
provided that the aggregate amount of such small damages during one
calendar year is not exceeding DM 25,000 (in words: Deutsche Mark
twenty-five thousand).
Article 7 - Force Majeure
7.1 Unexpected interruptions in the operations of suppliers, unexpected delays
in delivery or failure to make deliveries on the part of suppliers,
strikes, lock outs, official restrictions and other eventualities which
cannot reasonably be controlled or avoided by the respective Party ("Force
Majeure") shall relieve such Party to the extent and for the duration of
such event from its obligations under this Agreement and will not justify a
claim for damages for any losses suffered by the other Party.
7.2 If a Party is forced to interrupt the supply of Services in whole or in
part due to Force Majeure and if such situation is foreseeable, such Party
shall inform the respective other Party promptly of the reasons for, and
the expected extent and duration of, such interruption. The Parties will
make every reasonable effort to keep the negative effects of such an event
as small as possible.
7.3 After an event of Force Majeure, the Parties shall agree amicably on how
and to what extent Services not supplied are to be made up.
7.4 If the supply of Services is reduced owing to an event of Force Majeure,
the respective Party will share the capacity it has available among its
internal customers, the respective other Party and any other outside
customers with respect to
<PAGE>
9
whom it has undertaken obligations, in accordance with the proportion
of its Services previously accounted for by them.
Article 8 - Duration and Termination
8.1 This Agreement shall commence on the Contribution Date or in case the
Operating Lease Agreement becomes effective upon the termination of the
Operating Lease Agreement and shall run indefinitely, unless otherwise
provided for in this Agreement.
8.2 Either Party may terminate this Agreement with immediate effect with regard
to the relevant Service(s) if the other Party fails to observe significant
obligations under this Agreement and does not, within a period of 60
(sixty) days after having been warned by the other Party in writing to do
so, return to a course of action which is in line with this Agreement and,
as far as possible, remedy the infringement of this Agreement.
8.3 Either Party may terminate this Agreement with immediate effect if the
other Party becomes insolvent or, in particular, if composition or
insolvency proceedings are instituted with regard to its assets or if such
procedures have been denied due to lack of assets.
8.4 Furthermore, each Party is entitled to terminate this Agreement, on a
Service by Service basis, with respect to Services received by it by giving
prior written notice of termination; provided that no such notice may be
given before two years in case of category I Services or six months for any
other Services, all after Closing Date as defined in the Purchase
Agreement.
Category I Services: two years prior written notice
Category II Services: one year prior written notice
Category III Services: six months prior written notice
8.5 In the event VuCo GmbH & Co. terminates in accordance with Art. 8.4 filling
and packaging Services less than five years after the Closing Date as
defined in the Purchase Agreement, and Behringwerke proves that it incurs,
in connection with such termination, costs which cannot be eliminated even
though Behringwerke uses its best efforts to reduce or eliminate such costs
("Residual
<PAGE>
10
Costs"), VuCo GmbH & Co. shall compensate Behringwerke for (i) in the first
year after such termination becomes effective: 50% of such Residual Costs,
(ii) in the second year: 25%, and (iii) in the third year: 12.5% of such
Residual Costs.
8.6 In case a Party has - upon specific request of the other Party terminating
this Agreement partially or entirely - made investments with regard to
operations rendering Services to the other Party which it would not have
made without such request, such other Party shall bear 100% of any Residual
Costs after termination, until such Residual Costs have been completely
reimbursed.
8.7 The Party claiming Residual Costs shall submit to the other Party a
detailed record of such Residual Costs by the end of each calendar quarter.
8.8 The Residual Costs shall be invoiced separately for each month and shall
become due and payable on the 15th day of the month following the date on
which the respective other Party receives such invoice. Art. 4.3 shall
apply MUTATIS MUTANDIS.
8.9 Any notice of termination of this Agreement, in its entirety or in part,
shall only be valid if given in writing.
8.10 In case that either Party terminating Services wishes to establish its
own functions with regard to such Services, it shall give priority to
employees of the existing functions of the respective other Party.
8.11 Upon notice of termination of any Services hereunder, the Parties shall
meet and confer regarding reasonable and appropriate steps to minimize
the impact of such termination on remaining operations, in particular
the possibility of gradually phasing out such Services over the course
of the termination period.
Article 9 - Confidentiality
9.1 Any information whether written, oral or otherwise provided by a Party or a
Party's sub-contractor to the other Party and any information obtained by a
Party in connection with this Agreement, including the terms and conditions
of this Agreement, shall be treated as confidential by the Party, receiving
such information, shall only be used for purposes consistent with this
Agreement and shall not
<PAGE>
11
be disclosed to any third party unless the Party or sub-contractor who
provided such information has given its prior written consent to such other
use or disclosure; provided, however, that each Party may disclose such
information for purposes consistent with this Agreement to its employees,
agents and sub-contractors, if any such employee, agent or sub-contractor
agrees to keep such information confidential as if it were a party hereto.
9.2 The obligations of confidentiality, including the obligations of restricted
use, shall continue for a period of ten years after the termination of this
Agreement.
9.3 Excluded from the restrictions provided for in Art. 9.1 and 9.2 above is
all information that has been disclosed by one Party or a sub-contractor to
the other Party and which is:
9.3.1 information that such other Party possessed in its own right
before disclosure by the first Party or the sub-contractor;
9.3.2 information that is in the public domain at the time of
disclosure by a Party or a sub-contractor or has become part of
the public domain through no fault of the other Party having
received such information;
9.3.3 information that such other Party has received, without
restriction on its disclosure, legitimately from a third party
not deriving the same from the Party or sub-contractor who made
the original disclosure.
9.4 Information which is necessary for the enforcement of this Agreement or for
compliance with applicable law, ordinances or orders of public authorities
may be disclosed accordingly, provided that all reasonable steps are taken
to preserve the confidentiality and the restricted use of such information.
9.5 All drawings, plans and other documents produced or commissioned by a Party
or sub-contractor regarding any Service to be rendered shall remain the
property of such Party or sub-contractor, unless agreement to the contrary
has been reached. Subject to Art. 9.3, such documents and any other
confidential information received and any copies thereof shall be destroyed
or returned upon request of the disclosing Party or sub-contractor or in
the event of termination or rescission of this Agreement in total or in
part.
<PAGE>
12
Article 10 - Governing Law; Arbitration
10.1 This Agreement shall be governed by, and construed in accordance with,
the law of the Federal Republic of Germany.
10.2 In case of any question or difference which may arise concerning the
validity, construction, meaning or effect of this Agreement or
concerning the rights and liabilities of the Parties hereunder or any
matter arising out of, or in connection with, this Agreement cannot be
amicably resolved, such question or difference shall be referred to,
and determined by, an ad hoc arbitration tribunal of three arbitrators
(the "Tribunal").
10.3 The arbitrators shall be appointed as follows:
10.3.1 each party shall appoint one arbitrator, and the two arbitrators
so appointed shall appoint a third arbitrator who shall be
qualified to sit as a judge (Befahigung zum Richteramt) and who
shall act as president of the Tribunal;
10.3.2 if either Party fails to appoint its own arbitrator within
twenty-one days of receipt of a written request by the other
Party or if the two arbitrators are unable to jointly select a
president within twenty-one days from the last appointment, such
arbitrator or president shall be appointed by the President of
the Court of Appeal of Frankfurt am Main (Prasident des
Oberlandesgerichts) at the request of either Party.
10.4 The venue of such arbitration shall be Frankfurt am Main and the
language shall be German.
10.5 The award of the Tribunal, which shall state the reasons for the
decision, shall be final and binding upon the Parties. The
arbitrators shall have power to direct any interim measures.
10.6 With respect to aspects not expressly stipulated in this Art. 10, the
arbitration shall be in accordance with the rules
(Schiedsgerichtsordnung) of the Deutsche Institute for
Schiedsgerichtswesen e.V.
<PAGE>
13
Article 11 - Access to Behringwerke-Premises
11.1 With regard to the access to the Behringwerke-premises by employees of VuCo
GmbH & Co. and/or third parties doing business with VuCo GmbH & Co. the
following applies:
11.1.1 At the entrance to the premises controls will be held in
accordance with the Behringwerke-guidelines as amended from time
to time. To the extent technical appliances are required (e.g.,
code cards), the specifications of which have to be agreed upon
with Behringwerke, VuCo GmbH & Co. shall obtain such appliances
at its own cost, to the extent possible by law. It is VuCo GmbH
& Co.'s responsibility that any orders of Behringwerke control
personnel are followed and that the specific identification
requirements imposed by Behringwerke under its guidelines are
met.
11.1.2 In order to meet the obligations hereunder, buildings, plants and
parts of the Behringwerke-premises not expressly designated for
such purpose may only be entered with the consent of
Behringwerke.
11.2 VuCo GmbH & Co. undertakes to comply with the Behringwerke-guidelines, as
applicable at any given time, to the use of its premises, in particular
those regarding fire prevention, security or traffic in non-public areas.
Such obligation is applicable also to VuCo GmbH & Co. personnel and to
third parties doing business with VuCo GmbH & Co.; and VuCo GmbH & Co.
shall inform such third parties of said obligations and guidelines.
Article 12 - Final Provisions
12.1 Unless otherwise defined herein, all terms shall have the same meanings and
definitions as those in the Contribution Agreement.
12.2 Unless otherwise specifically amended hereby, all other terms of the
Contribution Agreement shall remain in full force and effect.
12.3 Any rights of set-off (Aufrechnung) and/or retention (Zuruckbehaltung)
based on claims for damages under this Agreement shall be excluded unless
such claims
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14
are undisputed between the Parties or confirmed by a non-appealable
court/arbitration decision.
12.4 Each Party may only assign this Agreement to a fully controlled affiliate
which has the means to fulfill the obligations under this Agreement.
12.5 From time to time after the date hereof, at the request of either Party,
the Parties shall execute and deliver to such requesting Party such
documents and take such other action as such requesting Party may
reasonably need in order to consummate more effectively the transactions
contemplated hereby and to satisfy any legal requirements.
12.6 Any notification or amendment to this Agreement, including this Art. 12.6,
must be in writing in order to be valid, unless more stringent requirements
as to the form are stipulated by applicable law.
12.7 The Annexes hereto will become integral parts of this Agreement, and all
references herein to this "Agreement" shall also include the Annexes.
12.8 To the extent possible, each provision of this Agreement will be
interpreted in such manner as to be effective and valid under the
applicable law. If any provision of this Agreement is held to be
prohibited by or invalid under applicable law, such provision will be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions
of this Agreement. To the extent that a provision is ineffective or
invalid, it shall be replaced by an effective and valid provision which
comes as close as possible to the economic purpose of the ineffective or
invalid provision.
________________,this ___ day of _______,1996.
BEHRINGWERKE AG [VuCo GmbH & Co.]
- ----------------------------------- ---------------------------------
By: By:
Title: Title:
<PAGE>
ANNEX 11.2
to the Contribution Agreement
LEASE AGREEMENT
between
Behringwerke AG
35001 Marburg
- - hereinafter "Behringwerke" -
and
- ------------------------
- ------------------------
- - hereinafter "VuCo GmbH & Co." -
<PAGE>
2
TABLE OF CONTENTS
Preamble 4
Article 1 - Object of Lease 4
Article 2 - Term of Lease 5
Article 3 - Rent 5
Article 4 - Ancillary Costs 6
Article 5 - Value Added Tax 8
Article 6 - Condition of the Premises 8
Article 7 - Liability, Encumbrances, Responsibility 8
Article 8 - Insurance 9
Article 9 - Use of Premises 10
Article 10 - Maintenance and Repairs 12
Article 11 - Destruction of Premises 12
Article 12 - Structural Changes by Behringwerke 13
Article 13 - Assignment and Subletting 13
Article 14 - Change of legal entity, Sale of Business 14
Article 15 - Signs 14
Article 16 - Indemnification 14
Article 17 - Default, Termination 15
Article 18 - Hazardous Materials 17
Article 19 - Force Majeure 18
Article 20 - Confidentiality 18
<PAGE>
3
Article 21 - Arbitration 19
Article 22 - Final Provisions 20
<PAGE>
4
PREAMBLE
Pursuant to the Contribution Agreement to which this Lease Agreement is an
annex, Behringwerke is contributing its human vaccine unit (the "Business") to
VuCo GmbH & Co. VuCo GmbH & Co. intends, for the foreseeable future, to conduct
the Business within the premises of Behringwerke on a lease basis.
Therefore, the parties hereto agree as follows:
ARTICLE 1 - OBJECT OF LEASE
1.1 Behringwerke hereby leases to VuCo GmbH & Co. and VuCo GmbH & Co. hereby
leases from Behringwerke certain parcels rentable land offices space,
production facilities including fixtures and integral parts (WESENTLICHE
BESTANDTEILE) within Behringwerke's Marburg sites which are particularly
described and fully enumerated in ANNEX 1.1, (a) and marked in black in
ANNEX 1.1, (b) (the "Premises"). Under this lease, VuCo GmbH & Co. is also
entitled to enter and use common areas (GEMEINFLACHEN), designated access
and delivery areas, if any, waste disposal facilities and access to ingress
and egress of the site, to parking spaces, and to the cafeteria, subject to
Behringwerke-guidelines which shall be exercised by Behringwerke in
accordance with sect. 315 et seq. Civil Code (BGB).
1.2 The Premises shall be occupied and used by VuCo GmbH & Co. for the business
of human health care and shall not be used for any other purpose whatsoever
without the prior written consent of Behringwerke, which shall not be
unreasonably withheld.
Any consent by Behringwerke, even if not explicitly stated, shall always be
granted subject to all official authorizations as may be required for the
envisaged change of the use of the Premises. Upon request, VuCo GmbH & Co.
shall provide Behringwerke with proof that all necessary official
authorizations have been duly granted.
1.3 The supply of utilities and services such as electricity, water etc. by
Behringwerke and VuCo GmbH & Co.'s obligation to receive, and pay for, any
such utilities and services are specifically settled in the Master Service
Agreement.
ARTICLE 2 - TERM OF LEASE
2.1 The Lease shall commence on the Contribution Date or, in case the Operating
Lease Agreement (BETRIEBSPACHTVERTRAG) becomes effective, upon termination
of the Operating
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5
Lease Agreement (the "Closing Date"). The initial term of the lease shall
be five years (the "Initial Term"). VuCo GmbH & Co. shall have the right in
its discretion to extend the lease for an additional five years (the
"Extension Period") by providing written notice to Behringwerke no later
than March 31, 2001.
During the Extension Period, VuCo GmbH & Co. shall have the right to
terminate the lease in whole or in certain parts of the Premises upon six
months' prior written notice to Behringwerke. During the Initial Term, VuCo
GmbH & Co. shall have the right to terminate the lease in part (but not in
whole) upon six months' prior written notice to Behringwerke, PROVIDED THAT
such right of early termination shall not apply to Premises used for
manufacturing including quality control.
In case Behringwerke undertook capital investments related to the Premises
in the Extension Period on specific written request of VuCo GmbH & Co. and
VuCo GmbH & Co. terminates this Agreement under the foregoing sentence,
VuCo GmbH & Co. shall reasonably compensate Behringwerke therefore.
2.2 Section 568 German Civil Code (Section 568 BGB) shall not apply upon expiry
of the term of the Lease.
ARTICLE 3 - RENT
3.1 As of the Closing Date VuCo GmbH & Co. shall pay to Behringwerke as annual
rent an amount to be calculated on the basis of present lease agreement
agreed between Behringwerke and Hoechst but in no case more than fair
market value. For this purpose VuCo GmbH & Co. has the right to audit
Behringwerke books and records of an independent Wirtschaftsprufer
acceptable for Behringwerke at reasonable times and upon reasonable notice
solely for the purpose of confirmation of such Party's calculation of
costs. Auditing shall be no more frequent than once a year.
In case the Parties cannot agree on the fair market rent either Party is
entitled to request the President of the chamber of commerce of Frankfurt
to nominate an expert who shall resolve such matter to be binding upon the
Parties. The costs shall be borne pursuant to sec. 91 et seq. Civil
Procedure Code (ZPO).
3.2 The Rent shall be due and payable in equal quarterly installments in
arrears on January 10, April 10, July 10 and October 10 of each year
(the"Rent Payment Dates").
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6
3.3 Payments are to be made to a bank account named by Behringwerke in time to
be received at the respective Rent Payment Date. Late payment shall bear
interest at a rate of three percentage points above the relevant discount
rate of the German Federal Bundesbank.
ARTICLE 4 - ANCILLARY COSTS
4.1 In addition to the Rent VuCo GmbH & Co. shall bear certain ancillary costs.
Behringwerke AG shall use it best efforts to attribute the ancillary costs
as to the various buildings and to the various tenants. Only insofar as the
ancillary costs can not be attributed to specific buildings and/or specific
tenants the ancillary costs shall be allocated to all tenants, where
appropriate, on the basis of squarmeters rented, or on such other criteria
which is reasonable for the allocation of those costs among the various
users. Costs having been considered in calculating any fee under the Master
Service Agreement shall not be escalated to VuCo GmbH & Co. Ancillary costs
are:
4.1.1 expenses of cleaning, lightning, repairing, renewing, decorating,
maintaining and rebuilding any walls, fences, gutters, drains,
road ways, pavements, access ways, service areas and any other
common areas of the Premises which are or may be used or enjoyed
by VuCo GmbH & Co. in common with any other person or persons;
4.1.2 any insurance premiums payable by Behringwerke for insuring the
Premises or any part thereof;
4.1.3 all running expenses as defined in Appendix 3 to Section 27,
subsection 1, of the second computation order (Anlage 3 zu
Section 27 Abs. 1 der zweiten Berechnungsverordnung).
4.2 To the extent it is not possible for legal or factual reasons that VuCo
GmbH & Co. pay such costs and expenses directly and in its own name, VuCo
GmbH & Co. will reimburse to Behringwerke such costs at the respective due
date.
4.3 The costs referred to in Art. 4.1 shall be invoiced by the end of February
of each year, at the latest, for the respective preceding year.
VuCo GmbH & Co. shall make quarterly down-payments regarding the costs
referred to in Art. 4.1 amounting to one quarter of the budgeted ancillary
costs for this year. Any difference between the down-payments for a
calendar year and the respective invoice shall
<PAGE>
7
be settled between the parties by a single payment payable one month after
receipt of the annual invoice pursuant to this Art. 4.3.
4.4 Behringwerke shall adjust the quarterly down-payment in its reasonable
discretion in accordance with Section 315 BGB if circumstances affecting
such payments should change. This adjusted down-payment shall become
payable as of the Rent Payment Date following receipt of the relevant
written notice.
ARTICLE 5 - VALUE ADDED TAX
All amounts owed hereunder are net, i.e. without Value Added Tax (VAT;
UMSATZSTEUER). If a payment is subject to VAT, such tax shall be paid in
addition against presentation of an invoice in accordance with the requirements
pursuant to Section 14 VAT Act (Section 14 UMSATZSTEUERGESETZ).
ARTICLE 6 - LIABILITY, ENCUMBRANCES, RESPONSIBILITY
From the Closing Date VuCo GmbH & Co. shall be responsible for the safe
condition of the Premises including VuCo GmbH & Co.'s equipment and attachments,
whether internal or external, and for the safe operation of the Business.
Furthermore, VuCo GmbH & Co. shall fully comply with all applicable laws,
regulations, rules, ordinances and requirements, including environmental laws,
of any governmental authority having jurisdiction over the Premises or the
Business.
ARTICLE 7 - INSURANCE
7.1 Notwithstanding any other provision of this Agreement, insurance with
respect to the Premises shall be maintained to the extent reasonable as
follows:
7.1.1 Behringwerke agrees to purchase, maintain and keep in force
during the term of this Agreement, insurance against damage or
destruction as result of risks as are for the time being
reasonably required to be covered such as fire, lightning,
explosion, riot, civil commotion, acts of terrorism, aircraft and
other aerial devices or articles dropped therefrom (other than
war risks), storm, flood and burst pipes in a sum equal to the
full reinstatement costs of the Premises and fixtures, equipment
and personal property contained therein, including the costs of
demolition, shoring up and site clearance and all architect's,
surveyor's and other professional fees and incidental expenses in
connection with reinstatement and business interruption insurance
covering the Premises. Such policies shall (i) name VuCo GmbH &
Co. as an additional insured and, with respect to business
interruption insurance, as a loss
<PAGE>
8
payee, and (ii) provide that said insurances shall not be
cancelled unless 30 (thirty) day's prior written notice shall
have been given to VuCo GmbH & Co.
7.1.2 VuCo GmbH & Co. agrees to purchase, maintain and keep in force
during the term of this Agreement, a comprehensive general
liability insurance policy and such further insurance or
insurances which are necessary in respect of the Business. Such
policies shall (i) name Behringwerke as an additional insured,
and (ii) provide that said insurances shall not be cancelled
unless thirty (30) days' prior written notice shall have been
given to Behringwerke. For purposes of any general liability
claims made in respect of the Premises, VuCo GmbH & Co.'s
comprehensive general liability policy will be primary, and
Behringwerke's will be secondary.
7.2 Upon request, each party shall deliver to the other certificates evidencing
insurance coverage upon the Closing Date and upon each renewal of said
insurances.
7.3 VuCo GmbH & Co. and Behringwerke each agree that to the extent reasonably
possible the respective insurance carried by it against loss or damage by
fire or other casualty shall contain a clause whereby the insurer waives
its rights of recourse against the other party.
Pursuant to the foregoing, Behringwerke and VuCo GmbH & Co. hereby waive
all claims for recovery from the other party for any loss or damage to any
of its property insured under valid and collectible insurance policies to
the extent of any recovery collectible under such insurance. The foregoing
waiver shall be in force only if such VuCo GmbH & Co.'s and Behringwerke's
insurance policies contain a clause providing that such waiver shall not
invalidate the insurance.
7.4 If either Party fails to comply with its obligation to insure then, without
prejudice to its other remedies, the other party may effect and maintain
the relevant insurance and the premium and other costs of so doing
(including without limitation the cost of obtaining any insurance
valuations) shall be paid by the party failing to take such insurance.
ARTICLE 8 - USE OF PREMISES
8.1 VuCo GmbH & Co. shall only use the Premises or any part thereof in
accordance with the terms of this Agreement and like a diligent businessman
in the pharmaceutical business and shall comply with all legal requirements
and authorizations and security guidelines of Behringwerke.
8.2 VuCo GmbH & Co. shall not do anything that would unreasonably impair or
interfere with or tend to impair or interfere with any activities of
Behringwerke or any other party on the Marburg sites. VuCo GmbH & Co. shall
install at VuCo GmbH & Co.'s expense all equipment, safety
<PAGE>
9
device, pollution control systems or other installations required at any
time with regard to the Business. The foregoing shall apply MUTATIS
MUTANDIS to Berhingwerke. Further Behringwerke shall use its best efforts
that no unreasonable impairment of or interference with the Business is
caused by other tenants of the Behringwerke site in Marburg.
8.3 Behringwerke warrants that as of the date hereof applicable zoning and land
use law permits the use of the Premises as described in Art. 1.2. VuCo
GmbH & Co. is responsible to maintain in place all permits required by law,
regulation, ordinance or other requirement of any governmental authority
with respect to the operation of the Business, except to the extent that
only Behringwerke may obtain such permits or to the extent that such
permits are required for common areas or entire buildings in which VuCo
GmbH & Co.'s portion of the Premises is less than 100%, in which event
Behringwerke must obtain such permits. The costs for such permits shall be
apportioned between the users of these buildings equal to their portion of
the area (FLACHENANTEIL) of the buildings.
8.4 VuCo GmbH & Co. shall not make any material alterations, improvements, or
additions of or to the Premises (collectively the "Alteration") without
first submitting to Behringwerke plans and specifications therefor and
obtain Behringwerke's prior written consent in each and every instance,
which consent shall not be unreasonably withheld or delayed. All
alterations made by VuCo GmbH & Co. shall be at the expense and the sole
risk of VuCo GmbH & Co.
8.5 Before installing any heavy objects, VuCo GmbH & Co. shall ascertain from
Behringwerke the bearing capacity of the floors. The authorized bearing
capacity (in absolute terms and per square meter) may not be exceeded,
otherwise VuCo GmbH & Co. shall be liable for all damage caused thereby and
shall reimburse Behringwerke in respect of any claims resulting therefrom.
8.6 Appliances and installations may only be connected to the existing mains,
and operated, in accordance with the mains' capacity. No interferences must
be caused by such appliances and installations. VuCo GmbH & Co. shall
inform itself about the capacity not be exceeded. VuCo GmbH & Co. shall
bear the cost of any alterations or new installations of the mains or other
supply or disposal pipes necessary due to VuCo GmbH & Co.'s operations.
Behringwerke, however, assures to its best knowledge that the mains in
place are sufficient for the Business as currently conducted.
<PAGE>
10
ARTICLE 9 - MAINTENANCE AND REPAIRS
9.1 VuCo GmbH & Co. is responsible for proper servicing, maintenance and repair
of the Premises and shall maintain the Premises in good order and repair,
as required by law, necessary to ensure the safety and health of all
persons on the Premises.
9.2 Behringwerke is responsible for repairs of all common areas and of such
parts of buildings which, while not being part of the Premises, are
necessary for the Premises being used in accordance with the terms of this
Agreement. Further all necessary works and repairs which have to be
capitalized shall be performed by Behringwerke.
9.3 VuCo GmbH & Co. shall only be excused of its obligation to pay rent if
Behringwerke, having been requested by VuCo GmbH & Co. in writing with
reasonable notice to do so, has not met its obligation under Art. 9.2 and
such failure renders the affected portion of the Premises unusable for 5
(five) consecutive days. After such 5 (five) day period VuCo GmbH & Co.
will not be obligated to pay rent for such portion until such time as such
portion is repaired and returned to usable condition in compliance with all
relevant laws, regulations and administrative orders.
ARTCLE 10 - DESTRUCTION OF PREMISES
10.1 If the Premises or any part thereof are severely damaged or destroyed to an
extent that repair is likely to create costs in excess of 40 % of its
current partial value (TEILWERT) ("Damaged Property"), VuCo GmbH & Co.
shall give immediate notice thereof to Behringwerke and shall enable
Behringwerke to immediately assess the damages.
10.2 If Behringwerke determines, following its assessment of the damage which
has occurred, that the Damaged Property cannot be repaired or
reconstructed, as the case may be, within a reasonable period or with
reasonable efforts and expenses (in either circumstance, the "Loss Event")
the parties shall use their best efforts to agree on an adequate solution
acceptable to both parties. If the parties fail to agree within two months
of the Loss Event Behringwerke may elect not to repair or reconstruct the
Damaged Property and may thereupon terminate this Agreement with regard to
the respective part of the Premises delivering to VuCo GmbH & Co. notice
of such election. In such event, the rent shall be reduced
proportionately. VuCo GmbH & Co. can terminate the lease if the remaining
Premises are insufficient for the Business and Behringwerke cannot provide
for a reasonable alternative. In case the Damaged Property is not repaired
or reconstructed, Behringwerke shall be entitled to all payments made by
insurers with respect to the Damaged Property.
<PAGE>
11
ARTICLE 11 - STRUCTURAL CHANGES BY BEHRINGWERKE
11.1 Behringwerke may, even without VuCo GmbH & Co.'s consent, carry out any
improvements or structural changes necessary or expedient to maintain,
preserve, modernize or expand the Premises, to eliminate imminent danger,
or to repair defects. In such case, Behringwerke shall reasonably take into
account the interests of VuCo GmbH & Co. VuCo GmbH & Co. shall allow
Behringwerke reasonable access to the Premises at reasonable times and
shall not obstruct or delay the execution of the work.
11.2 VuCo GmbH & Co. shall only be entitled to make claims against Behringwerke
because of any work carried out pursuant to Art. 11.1 if VuCo GmbH & Co.'s
activities have been considerably impaired thereby for more than 5 (five)
consecutive days.
ARTICLE 12 - ASSIGNMENT AND SUBLETTING
12.1 VuCo GmbH & Co. is only entitled to assign or transfer all or any of its
rights, benefits and obligations under this Agreement to affiliates (as
defined in sec. 15 et seq. Stock Corporation Act - AKTIENGESETZ) of Chiron
Corporation. Any other assignment or sublet needs the prior written consent
of Behringwerke which consent shall not be unreasonably withheld.
Behringwerke is only entitled to assign all or any of its rights, benefits
and obligations under this Agreement to affiliates (as defined in Sec. 15
et.seq. Stock Corporation Act - AKTIENGESETZ) of Hoechst AG. Any other
assignment by Behringwerke needs the prior written consent of VuCo GmbH &
Co. which consent shall not be unreasonably withheld.
12.2 In the event of subtenancy, VuCo GmbH & Co. shall be absolutely liable for
all acts and omissions of the sub-tenant.
12.3 In the event of subtenancy, VuCo GmbH & Co. hereby and as of now assigns to
Behringwerke as security all claims, including any accompanying liens which
it may have against the sub-tenant.
ARTICLE 13 - CHANGE OF LEGAL ENTITY, SALE OF BUSINESS
13.1 VuCo GmbH & Co. must notify Behringwerke immediately of any change in
control of VuCo GmbH & Co. or of its intention to sell or close the
Business or any material part thereof.
13.2 In case of the sale of VuCo GmbH & Co.'s business or a part thereof, buyer
has no claim to have this Agreement assigned to him.
<PAGE>
12
ARTICLE 14 - SIGNS
Subject to all applicable zoning or regulatory requirements, VuCo GmbH &
Co. may install at its own expense and after obtaining any necessary
permits and Behringwerke's approval (which shall not be unreasonably
withheld) appropriate monument signs at the entrance to the Premises which
in any event may be comparable in number, size and overall impact to the
monuments of Behringwerke in the same or similar locations and appropriate
additional exterior signs on the buildings; provided, however, that upon
termination of this Agreement VuCo GmbH & Co. shall remove said sign(s) and
repair damages caused thereby.
ARTICLE 15 - INDEMNIFICATION
15.1 VuCo GmbH & Co. will indemnify, defend and hold Behringwerke and its
shareholders, subsidiaries, affiliates, officers, directors, agents and
employees harmless from and against any claims, costs, liabilities, fines,
damages or expenses (including reasonable attorney's fees) arising from or
alleged to arise from or out of VuCo GmbH & Co.'s operations or from or out
of an act, omission, fault, negligence or other misconduct of VuCo GmbH &
Co., its agents, ser-vants, employees, visitors or contractors with or at
the areas of the Premises over which VuCo GmbH & Co. has control occurring
after the Closing Date, except arising out of Behringwerke's gross
negligence.
15.2 Behringwerke will indemnify, defend and hold VuCo GmbH & Co. and its
general and limited partners, subsidiaries, affiliates, officers,
directors, agents and employees harmless from and against any claims,
costs, liabilities, fines, damages or expenses (including reasonable
attorney's fees) arising from or alleged to arise from or out of
Behringwerke's operations or from or out of an act, omission, fault,
negligence or other misconduct of Behringwerke, its agents, servants,
employees, visitors or contractors on the Premises or the Marburg sites,
except arising out of VuCo GmbH & Co.'s gross negligence.
15.3 To the extent the mutual obligations pursuant to Art. 15.1 and 15.2 exceed
the statutory liability, such obligations shall apply only if approved by
the respective insurance companies.
15.4 Neither Party shall be responsible for consequential damage hereunder.
ARTICLE 16 - DEFAULT, TERMINATION
16.1 The statutory provisions, except Section 554 German Civil Code (Section 554
BGB), shall apply for the termination of the Lease for serious cause.
<PAGE>
13
16.2 Behringwerke may terminate the Lease without notice in particular if one or
more of the following events of default occur during the term of this
Agreement:
16.2.1 VuCo GmbH & Co. fails to pay any regular instalment of Rent
and/or ancillary costs when due and such default continues for 15
(fifteen) days upon receipt of a written notice from
Behringwerke, provided Behringwerke needs not furnish more than 2
(two) such notices in any calendar year; or
16.2.2 VuCo GmbH & Co. defaults in the performance of any other
requirement, obligation or covenant of this Agreement and any
such failure continues for 30 (thirty) days after notice thereof
from Behringwerke (excepting, however, any default which is not
reasonably susceptible of cure within said period of 30 (thirty)
days and which VuCo GmbH & Co. shall in good faith and with due
diligence be proceeding to cure); or
16.2.3 bankruptcy or composition proceedings are instituted against VuCo
GmbH & Co. or if a petition in bankruptcy filed by VuCo GmbH &
Co. is dismissed for lack of assets; or
16.2.4 the interest of VuCo GmbH & Co. in the Premises is taken upon
execution or by other process of law directed against VuCo GmbH &
Co., or taken upon or subjected to any attachment by any creditor
of VuCo GmbH & Co. or claimant against VuCo GmbH & Co., and such
attachment is not discharged within 15 (fifteen) days.
16.3 VuCo GmbH & Co. may also terminate the Lease if the Business cannot be
operated on the Premises due to public law; provided that VuCo GmbH & Co.
shall use reasonable efforts to avoid the applicability of such law,
including obtaining a waiver.
16.4 VuCo GmbH & Co. hereby grants to Behringwerke full and free right to enter
into and upon the Premises in such event as permitted by law, to repossess
the Premises and to remove objects belonging to VuCo GmbH & Co.
16.5 Any and all objects in the possession of VuCo GmbH & Co. at termination of
the lease (irrespective of ownership) or to which VuCo GmbH & Co. has a
claim, may be removed and/or stored at the discretion of Behringwerke at
the risk, cost and expense of VuCo GmbH & Co. VuCo GmbH & Co. shall pay to
Behringwerke, upon demand any and all expenses incurred in such removal and
all storage charged against such property so long as the same shall be in
Behringwerke's possession or control. Any such objects not retaken by VuCo
GmbH & Co. from storage within 40 (forty) days after removal from the
Premises may be sold (VERWERTET) by
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14
Behringwerke without restrictions. The proceeds less any and all costs and
claims by Behringwerke shall be paid to VuCo GmbH & Co.
16.6 On termination of the Lease, whether in accordance with this Art. 16 or
Art. 2 of this Agreement, VuCo GmbH & Co. shall immediately surrender the
Premises, and deliver possession thereof to Behringwerke, properly
renovated and repaired. This shall include: all repairs pursuant to
Art. 10.1, renewal of the floor coverings and wall paper, painting of
radiators and heating pipes, as well as of doors, window frames and door
frames, all at least to the standard as of the Closing Date. Should VuCo
GmbH & Co. surrender the Premises without having carried out the work
described above, Behringwerke may carry out all necessary work at VuCo
GmbH & Co.'s expense. Behringwerke's claim in respect of the costs thereby
incurred shall also subsist if these works are carried out by the
subsequent tenant.
ARTICLE 17 - HAZARDOUS MATERIALS
17.1 Hazardous materials or material to be monitored (UBERWACHUNGSBEDURFTIG) or
waste as defined by the applicable laws, regulations and administrative
orders relating to chemicals, hazardous materials and waste (CHEMIKALIEN-,
GEFAHRSTOFF- UND ABFALLRECHT) may only be stored, handled, treated,
disposed of, discharged, produced, processed or used by VuCo GmbH & Co.
anywhere in or on the Premises or the common areas with the prior written
consent of Behringwerke and in full compliance with all applicable laws,
regulations and administrative orders. Such consent shall not unreasonably
be withheld. Such consent of Behringwerke is not required for the use of
such hazardous materials or material to be monitored or waste as are
currently in use or being created on the Premises. VuCo GmbH & Co. shall
keep and maintain updated material safety data sheets (or similar documents
required by law) and shall make them available for Behringwerke's
inspection upon request.
17.2 Each of Behringwerke and VuCo GmbH & Co. shall (i) promptly notify the
other of any complaints, notice or other correspondence received from any
third party concerning any actual or alleged violation of any applicable
law, regulation or administrative order regarding hazardous materials,
material to be monitored or waste; (ii) promptly notify the appropriate
public body in case of any emission, release, leakage or emergency of any
kind (STORFALL).
17.3 VuCo GmbH & Co.'s responsibilities, covenants and liabilities under this
Art. 17 shall survive the expiration or earlier termination of this
Agreement. Any events arising from acts or omissions occurring prior to the
Closing Date are the responsibility of Behringwerke.
<PAGE>
15
ARTICLE 18 - FORCE MAJEURE
Neither party shall be responsible for delays or inability to perform its
obligations hereunder due to force majeure or for other causes beyond the
reasonable control of such party including acts of other tenants,
governmental restriction, regulation or control, labor dispute, accident,
mechanical breakdown, shortages or inability to obtain labor, fuel, steam,
water, electricity or materials, acts of God, enemy action, civil commotion
or fire or other casualties.
ARTICLE 19 - CONFIDENTIALITY
19.1 Any information whether written, oral or otherwise provided by a party to
the other party and any information obtained by a party in connection with
this Agreement, including the terms and conditions of this Agreement, shall
be treated as confidential by the party receiving such information, shall
only be used for purposes consistent with this Agreement and shall not be
disclosed to any third party unless the party who provided such information
has given its prior written consent to such other use or disclosure;
provided, however, that each party may disclose such information for
purposes consistent with this Agreement to its employees, agents and sub-
contractors, if such employee, agent or sub-contractor agrees to keep such
information confidential as if it were a party hereto.
19.2 The obligations of confidentiality, including the obligations of restricted
use, shall continue for a period of ten years after the termination of this
Agreement.
19.3 Excluded from the restrictions provided in Art. 19.1 and 19.2 above is all
information that has been disclosed by one party to the other party and
which is:
19.3.1 information that such other party possessed in its own right
before disclosure by the first party;
19.3.2 information that is in the public domain at the time of
disclosure by a party or has become part of the public domain
through no fault of the other party having received such
information;
19.3.3 information that such other party has received, without
restriction on its disclosure, legitimately from a third party
not deriving the same from the party who made the original
disclosure.
19.4 Information which must be disclosed in order to comply with any laws,
regulations or administrative or court orders may only be disclosed to the
entities named in such laws,
<PAGE>
16
regulations or orders. Prior to such disclosure, the other party must be
informed about the nature, extent and contents of the information to be
disclosed.
ARTICLE 20 - LAW; VENUE
This Agreement shall be governed by, and construed in accordance with, the law
of the Federal Republic of Germany. The arbitration clause in the Contribution
Agreement shall not be applied.
ARTICLE 21 - FINAL PROVISIONS
21.1 Behringwerke, his agents or representatives shall, upon giving prior
notice, be entitled to inspect the Premises during VuCo GmbH & Co.'s normal
business hours and at reasonable intervals. In the event of a release or
other environmental emergency or any other emergency at the Premises
Behringwerke shall have the right to enter the Premises for purposes of
responding to such release or emergency at any time without giving VuCo
GmbH & Co. notice in advance.
21.2 The access to the Premises shall be governed by Art. 11 of the Master
Service Agreement.
21.3 VuCo GmbH & Co. may only set-off (AUFRECHNUNG), and exercise rights of
retention (ZURUCKBEHALTUNG), regarding claims against the rent or ancillary
costs if these claims are undisputed between the parties or acknowledged by
Behringwerke or confirmed by a non-appealable decision.
21.4 Any amendment, cancellation or supplement of a provision of this Agreement,
including this Art. 21.4 and any notification under this Agreement must be
in writing in order to be valid, unless more stringent requirements as to
the form are stipulated by the applicable law.
21.5 This Agreement embodies the entire agreement between the parties hereto
with regard to the subject matter hereof and there have been no agreements,
representations or warranties between the parties with regard to the
subject matter hereof other than those set forth or provided for herein.
21.6 The Annexes hereto are integral parts of this Agreement, and all references
herein to this "Agreement" shall also include the Annexes.
21.7 If any provision of this Agreement is held to be prohibited by or invalid,
such provision will be ineffective only to the extent of such prohibition
or invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement. To the extent that a provision is
<PAGE>
17
ineffective or invalid, it shall be replaced by an effective and valid
provision which comes as close as possible to the economic purpose of the
ineffective or invalid provision.
__________, this ___ day of __________, 1996
BEHRINGWERKE AG [VuCo GmbH & Co.]
______________________________ ______________________________
By: By:
Title: Title:
<PAGE>
Annex 1.1.(a) to Lease Agreement
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Usage by Vaccine Unit
-------------------------------------------
2
Building % m
- ------------------------------------------------------------------------------
<S> <C> <C>
H 6 19,5 663
- ------------------------------------------------------------------------------
H 10 30,0 1058
- ------------------------------------------------------------------------------
H 12 61,0 2312
- ------------------------------------------------------------------------------
H 15 51,0 ?
- ------------------------------------------------------------------------------
Z 20 6,0 33
- ------------------------------------------------------------------------------
Z 21 40,0 690
- ------------------------------------------------------------------------------
Z 25 6,2 404
- ------------------------------------------------------------------------------
Z 26/30 19,9 1287
- ------------------------------------------------------------------------------
H 33 49,9 1205
- ------------------------------------------------------------------------------
H 38 25,8 66
- ------------------------------------------------------------------------------
M 544 10,0 49
- ------------------------------------------------------------------------------
H 70 0,3 ?
- ------------------------------------------------------------------------------
H 11 75,0 1734
- ------------------------------------------------------------------------------
H 21 50,0 2727
- ------------------------------------------------------------------------------
H 26 100,0 1565
- ------------------------------------------------------------------------------
H 28 75,0 5400
- ------------------------------------------------------------------------------
H 32 66,0 515
- ------------------------------------------------------------------------------
H 34 80,0 317
- ------------------------------------------------------------------------------
M 218 40,0 592
- ------------------------------------------------------------------------------
M 537 100,0 1440
- ------------------------------------------------------------------------------
</TABLE>
<PAGE>
ANNEX 1.4 (b)
TO THE PURCHASE AGREEMENT
PARTNERSHIP AGREEMENT
OF
CHIRON BEHRING BIOCINE GmbH & CO. KG
(FORMER: BEHRING VAKZINE GmbH & CO. KG)
BETWEEN
BEHRINGWERKE AG
AND
32. CORSA VERWALTUNGSGESELLSCHAFT mbH ("32.CORSA GmbH")
AND
31. CORSA VERWALTUNGSGESELLSCHAFT mbH ("31.CORSA GmbH")
In consideration of the Purchase and Assignment Agreement between
Behringwerke AG and 31. Corsa GmbH (the "Purchase Agreement"), the
Contribution Agreement between Behring Vakzine GmbH & Co KG and Behringwerke
AG and the Shareholders' Agreement between Behringwerke and 3 1. Corsa GmbH.
the Parties to this Agreement agree to the following terms of their
partnership:
1. NAME, REGISTERED OFFICE
1.1 The name of the Partnership shall be
CHIRON BEHRING BIOCINE GmbH & CO. KG
1.2 The Partnership has its registered office in Marburg.
2. PURPOSE OF THE PARTNERSHIP
2.1 The purpose of the Partnership is the development, production and
distribution of pharmaceutical products, in particular human
vaccines.
<PAGE>
2
2.2 The Partnership is entitled to take all actions which are necessary
or appropriate to further the purpose of the Partnership directly or
indirectly.
2.3 The Partnership is entitled to establish other enterprises and
branches within Germany and other countries or to acquire other
business enterprises, including partnerships, thereon.
3. PARTNERS; PARTNERSHIP CAPITAL
3.1 The General Partner is 32.Corsa GmbH. The General Partner does not
make a capital contribution and does not participate in the capital
of the Partnership.
3.2 The Limited Partners of the partnership are
3.2.1 Behringwerke AG with a partnership interest of 51%
3.2.2 31. Corsa GmbH with a partnership interest of 49%.
3.3 The capital of the Partnership has been or will be contributed in
kind by Behringwerke AG pursuant to be Contribution
Agreement prior to the transfer of the 49% interest in the
Partnership pursuant to the Purchase Agreement. The capital
contribution of Behringwerke under the Contribution Agreement is
fixed and may not be withdrawn.
3.4 The capital contribution of the Limited Partners to be registered in
the commercial register (Hafteinlage) shall be:
3.4.1 Behringwerke AG DM 2,550,000 (in words: Deutsche
Mark two million five hundred fifty thousand)
3.4.2 31. Corsa GmbH DM 2,450,000 (in words: Deutsche
Mark two million four hundred fifty thousand)
<PAGE>
3
3.5 The capital accounts I and II determine the interest of each of the
Partners in the Partnership ("Partnership Interest").
4. PARTNER ACCOUNTS
4.1 For each partner,a capital account I, a capital account II, a
reserve account, a loss carry forward account and a transaction
account shall be maintained.
4.2 The contribution to be registered in the commercial register
shall be booked into the capital account I of each of the Limited
Partners. This capital account is fixed. Pursuant to the
Contribution Agreement Behringwerke has contributed DM 5,000,000
(in words: Deutsche Mark five million) in kind to the capital
account I of Behringwerke, of which 49 % will be transferred to
the capital account I of 31. Corsa GmbH.
4.3 The remainder of the capital contribution of Behringwerke in
accordance with the Contribution Agreement shall be booked into
the capital account II of Behringwerke.
4.3.1 49 % of such capital is transferred according to the
Purchase Agreement to the capital account II of 31.
Corsa GmbH.
4.3.2 Any future contribution of Behringwerke to the
Partnership pursuant to the Contribution Agreement will
be booked at 51% into the capital account II of
Behringwerke and at 49% into the capital account II of
31. Corsa GmbH.
4.3.3 The contributions to the capital accounts II are fixed
and may not be withdrawn by either Partner.
4.4 Profits of the Partnership which are not distributed are booked
into the reserve account of each Partner in proportion to their
Partnership Interest.
4.5 Losses attributable to each Partner shall be booked into the
loss-carry-forward account of each Partner in proportion to their
Partnership Interest.
<PAGE>
4
4.6 Distributable profit shares, withdrawals, compensation for
services rendered, commissions, other than commissions pursuant
to clause 4.7 of the Purchase Agreement, which shall be paid to
Behringwerke in accordance with the Purchase Agreement,
reimbursement of expenses, interest and all other payments
between the Partnership and the Partners shall be booked into the
respective transaction accounts.
4.7 In addition, separate loan accounts shall be kept to the extent
Partners grant loans to the Partnership.
4.8 The capital accounts I and II, the reserve accounts and the
transaction account shall not bear interest. Debit and credit
balances of loan accounts, if any, shall bear interest at the rate
specified in the relevant loan agreement, if any, or at due year
FIBOR.
5. FISCAL YEAR, ANNUAL FINANCIAL STATEMENTS; INDEMNIFICATION
5.1 The fiscal year runs from January 1 of each year to December 31.
5.2 Within two months after the end of each fiscal year,the General
Partner shall prepare the annual financial statements (annual
balance sheet and profit and loss statements) for the preceding
fiscal year and shall promptly submit and explain the annual
financial statements to the Advisory Board members and to the
appointed auditors for the purpose of examination.
5.3 With respect to the structure (Gliederung) and evaluation
(Bewertung), the financial statements shall comply with such
applicable for corporations (Kapitalgesellschaften) pursuant to
German generally accepted accounting principles ("GAAP"), a
supplement (Anhang) and situation report (Lagebericht) are not
necessary. As a matter of principle, the financial statements
must comply with the applicable provisions of profit
determination pursuant to German Income Tax Law
(einkommensteuerliche Gewinnermittlung), unless compulsory
commercial law provisions, this Partnership Agreement, or
partnership resolutions provide otherwise.
To the extent that assessments by the tax authorities require a
revision of the financial statements, only such revised financial
statements shall govern rights
<PAGE>
5
5.4 To the extent that assessments by the tax authorities require a
revision of the financial statements, only such revised financial
statements shall govern rights and duties of the parties
hereunder. To the extent that such tax assessment requires a
revision of the financial statements for several years, it is for
internal purposes sufficient to amend the last financial
statement. The distribution of profits pursuant to clause 6.2
shall be adapted for all financial statements subject to such
revision.
5.5 The financial statements shall be audited. Auditor may only be
an internationally recognized Wirtschaftsprufungsgesellschaft
acceptable to all parties hereof.
5.6 Upon approval of the financial statements by the Advisory Board
and the Partners' Meeting, they shall be signed by the
Geschaftsfuhrer of the General Partner.
5.7 The annual financial statements shall also be prepared in
accordance with U.S. GAAP.
5.8 Each Limited Partner may also, without approval of the General
Partner, exercise information rights and controlling rights
pursuant to sects. 118, 166 Commercial Law (HGB) whereby
each Limited Partner can exercise such rights through a third
person who is bound by a professional confidentiality
obligation.
6. Distribution of Profits and Losses
6.1 The Partners shall share in the profits and losses as calculated
after deduction of the expenses of the General Partner and of any
compensation otherwise due to the Partners in the ratio of their
Partnership Interests. Regardless of the consummation of any
transfer of the 51% Partnership Interest from Behringwerke AG to
31. Corsa GmbH pursuant to the Purchase Agreement (i.e.,
exercise of Chiron Call Option or Behring Put Option), 31. Corsa
GmbH shall at any time indemnify Behringwerke AG for any tax
obligations relating to tax periods after the Closing Date of
Behringwerke AG stemming from its Partnership Interest unless
covered by clause 6.2; the indemnification
<PAGE>
6
is limited to tax claims relating to trade tax and value added
tax but shall in no way include capital gain tax.
6.2 Profit shares necessary to balance withdrawals of Partners for
tax payments shall be booked on the transaction account. The
remainder of the profits shall be booked into the reserve
accounts or the loss carry forward accounts as appropriate,
unless the Partners unanimously provide otherwise.
6.3 As long as a loss carry forward exists in the loss carry forward
accounts, it shall be compensated by subsequent profits. Only
thereafter may any profit shares be booked into the transaction
account or the reserve accounts.
7. WITHDRAWALS
7.1 Each Partner may request withdrawals only from credit balances on
its transaction account.
7.2 Any withdrawals in excess thereof shall require a resolution by
the Partners.
8. MANAGEMENT, REPRESENTATION
8.1 The General Partner shall solely be entitled and shall have the
sole responsibility to manage and represent the Partnership.
The General Partner shall obtain the Advisory Board's approval
for all business decisions which are of material importance to
the Partnership, including, but not limited to, approval of the
annual budget and the following matters:
8.1.1 sale or acquisition of a company, parts of a company,
business (Betriebe) or parts of a business
(Betriebsteile) or entering into, or termination of
company lease agreements (Betriebspachtvertrage):
8.1.2 sale, acquisition or encumbrance of controlling
interests in any other company or business:
<PAGE>
7
8.1.3 taking up new area of business and activities or
cessation of existing areas of business and activities;
8.1.4 entering into, amendment and termination of enterprise
contracts (Unternehmensvertrage);
8.1.5 acquisition, sale and transfer, encumbrance and pledge
of fixed assets, including real property, buildings and
rights of real property nature (if the transaction
value in each individual case is in excess of DM
500,000 (in words: Deutsche Mark five hundred
thousand);
8.1.6 entering into or amending any contract with a value of
more than DM 500,000 (in words: Deutsche Mark five
hundred thousand);
8.1.7 taking up and granting of loans and credits,
assumptions of guarantees, strict guarantees and other
liabilities of similar nature if the transaction value
in each case is in excess of DM 500,000 (in words:
Deutsche Mark five hundred thousand);
8.2 The approval of the Advisory Board to be obtained pursuant to the
foregoing may also be made in form of a general authorization for
particular types of the aforementioned transactions and matters.
Any such general authorization must precisely describe the
transactions and matters in question as well as the purpose and
the time frame in which they must be completed.
9. ADVISORY BOARD
9.1 The Partnership shall have an Advisory Board. The Advisory Board
shall be composed of four (4) members. Each Limited Partner
shall appoint two members (including one senior member).
9.2 The Advisory Board shall advise the management and shall consider
for approval the consents required according to clause 8.
<PAGE>
8
9.3 The Advisory Board shall resolve its decision with a simple
majority of its votes. In the event that a majority decision
cannot be reached, the following special procedures shall be used
to break a deadlock:
9.3.1 the senior Advisory Board member appointed by
Behringwerke, following reasonable consultation with the
senior member appointed by the other party, shall have
the decisive vote in matters relating to the following
agreements:
[CONFIDENTIAL TREATMENT REQUESTED]
9.3.2 The senior Advisory Board member appointed by Chiron,
following reasonable consultation with the senior member
appointed by the other party, shall have the decisive
vote in all other matters referred to the Advisory Board.
9.4 The Advisory Board shall meet at least every 14 months or whenever
requested by the CEO or by any of the senior members of the Advisory
Board. The meetings can be held by telephone or video conference.
Meetings shall convene with a notice period of seven (7) days if
not otherwise unanimously agreed. Action can be taken by unanimous
written consent. The Advisory
<PAGE>
9
Board may adopt its own internal rules of procedure to be adapted
from time to time.
10. Partners' Resolutions, Partners' Meeting
10.1 The decisions reserved to the Partners by law or by the
Partnership Agreement regarding the affairs of the Partnership
shall be made by resolutions of the Partners.
10.2 Partners' resolutions shall be adopted in partners' meetings
unless the General Partner requests that a resolution is adopted
in writing, by telex, by telefax and no objection is raised by a
Limited Partner.
10.3 The partners' meeting shall be called by the General Partner in
its own right or upon request of any Limited Partner. The
General Partner may join the partners' meetings unless the
partners request otherwise.
10.4 The partners' meeting shall have a quorum when at least 75% of
the Limited Partnership Interest is represented. If a properly
convened meeting has no quorum within one (1) hour of the time
for which it was convened, the meeting shall automatically be
adjourned and reconvened for the same time at the same place five
business days later. Such reconvened meeting shall have a quorum
if at least one Limited Partner is present. All resolutions of
the partners' meeting require a simple majority of the votes
present or represented at the meeting unless a higher majority is
required by law.
10.5 Each DM 1,000 of the Limited Partnership is equivalent to one
vote.
10.6 Except as otherwise provided in this Partnership Agreement, the
Partners may also vote in matters of their own.
10.7 Resolutions of the Partners shall be recorded in the minutes of
the Partners' meeting or, in case of resolutions adopted outside
of such meetings, in separate minutes to be drawn up and to be
signed by the General Partner.The
Partners shall in each case receive copies of such minutes without
delay.
10
10.8 Partners may only challenge the validity of Partners' resolutions
within a period of one month following adoption in a Partners'
meeting in which they have participated, or following receipt of
the minutes recording the Partners' resolution by filing suit.
After expiration of the above period, any defect of a Partners'
resolution shall be deemed cured.
11. TRANSFER OF PARTNERSHIP INTERESTS
The Partners agree that any transfer, assignment or encumbrance of the
Partnership Interest or parts thereof requires the prior written
consent of the other Partner, which shall not be unreasonably withheld,
provide that, (i) no consent shall be required if the Limited
Partnership interests are transferred, assigned or encumbered to, or
for the benefit of, a wholly owned subsidiary of the respective Partner
and which will remain such a wholly owned subsidiary of a Partner, and
(ii) such Partner has proven to the other Partner by submission of a
written agreement that such subsidiary has agreed to be bound by be
terms of this Agreement and the Purchase Agreement. For the avoidance
of doubt: no such transfer or assignment by 31. Corsa GmbH may in any
respect impair Behringwerke AG's rights under the Purchase Agreement in
particular, its rights against the Guarantor for payment of the Option
Purchase Price in case the Chiron Call Option or the Behring Put Option
is exercised.
12. Bankruptcy
In the event a bankruptcy or judicial composition proceeding is opened
with respect to the assets of a Partner, the membership of such Partner
shall terminate as soon as the underlying court order becomes final.
13. TERM OF THE PARTNERSHIP
13.1 The partnership shall commence upon its being established.
<PAGE>
11
13.2 The partnership is established for an indefinite period of time;
the partnership may be terminated for the first time with a
written notice of 6 months to December 31, 2001.
If any of the Partners ceases to be a member of the partnership
and his Partnership Interest is not transferred to a successor,
the other Partner may take over the Partnership Interest in whole
or in part.
13.3 In case of dissolution of the partnership, the liquidation shall
be effected in accordance with the statutory rules by
liquidators. Each Limited Partner participates in the
liquidation surplus in the ratio of his Limited Partnership
Interest.
13.4 Effective as of January 1, 2002, this Partnership Agreement shall
be adjusted to reflect the German Commercial Code (HGB).
14. WITHDRAWAL COMPENSATION
In the event a Partner withdraws from the partnership or the
membership of this Partner is terminated due to Sect. 12, such Partner
shall receive a withdrawal compensation . The withdrawal compensation
shall be the nominal amount of the Partnership Interest of the
withdrawing partner plus the balance in his transaction account. The
withdrawal compensation is payable in equal installments over a period
of five years.
15. Compensation of General Partner
15.1 To the extent the General Partner's business activities are
exclusively activities in connection with or on behalf of the
Partnership, the Partnership shall reimburse the General Partner
for all expenses incurred therewith.
15.2 In addition to clause 15. 1, the General Partner shall receive at
the end of each fiscal year of the Partnership a compensation in
the amount of 2 % of the General Partner's net equity value as of
the beginning of such financial year.
15.3 Any compensation paid to the General Partner shall be booked as
cost in the profit and loss statements of the Partnership.
<PAGE>
12
16. CAPITAL INJECTION; SHAREHOLDER LOANS
16.1 Under no circumstances Behringwerke AG is obliged to inject any
capital into the partnership or to grant any shareholder loans.
16.2 31. Corsa GmbH undertakes the responsibility to ensure that the
Partnership shall have sufficient cash to meet all its
obligations for at least a period of 6 (six) months after the
Closing Date as defined in the Purchase Agreement.
17. CONCLUDING PROVISIONS
17.1 The Partners shall keep all confidential information received
from the partnership or from the other Partners in strict
confidence without limitation in time, even after their
withdrawal from the partnership.
17.2 In case individual provisions of the Partnership Agreement are or
become invalid in whole or in part, the validity of the remaining
provisions shall remain unaffected thereby. The parties shall
instead of the invalid provision agree on an appropriate valid
provision which approximates best the intent and purpose of the
invalid provision.
17.3 This Partnership Agreement and its interpretation shall be
governed by the laws of the Federal Republic of Germany. Court
venue shall be Marburg for all disputes among the Partners.
17.4 31. Corsa GmbH shall hold Behringwerke free and harmless from any
damages and shall actually conduct all relevant negotiations and
court proceedings on behalf of Behringwerke, as a consequence of
any withdrawals from the capital account I caused or otherwise
initiated by 31. Corsa GmbH, including withdrawals after exercise
of the Chiron Call Option or the Behring Put Option and shall
hold Behringwerke free and harmless; this also applies in case of
withdrawals necessary for the satisfaction of clause 4.7 of the
Purchase Agreement.
<PAGE>
ANNEX 3.4
to the Purchase Agreement
SHAREHOLDERS' AGREEMENT
For VuCo GmbH and VuCo GmbH & Co.
---------------------------------
BETWEEN
Behringwerke AG
("Behringwerke")
AND
31. CORSA Verwaltungsgesellschaft mbH
("Buyer")
(Behringwerke and the Buyer each also referred to as "Shareholder" or
"Party")
<PAGE>
2
INTRODUCTION
A. Pursuant to the purchase and assignment agreement, of which this Agreement
forms an annex (the "Purchase Agreement"), Behringwerke has sold to Buyer a
49% interest in VuCo GmbH and VuCo GmbH & Co. (hereinafter collectively the
"Companies").
B. With regard to the exercise of Behringwerke's and the Buyer's rights as
shareholders and partners of the Companies, the Parties wish to enter into
this Shareholders' Agreement in order to coordinate their cooperation with
regard to the management of the Companies.
C. All terms defined in the Purchase Agreement shall have the same meaning in
this Shareholders' Agreement.
In consideration hereof the parties agree as follows:
1. STRUCTURE OF THE COMPANIES
1.1 VuCo GmbH & Co. is organized as a limited partnership with VuCo GmbH
as its sole general partner. VuCo GmbH & Co. will be exclusively
managed and represented by VuCo GmbH.
1.2 VuCo GmbH will be managed by a Chief Executive Officer
(GESCHAFTSFUHRER). The Chief Executive Officer shall not be bound by
fiduciary obligations vis-a-vis any particular Shareholder other than
those applicable vis-a-vis all Shareholders pursuant to law, the
Articles of Association of VuCo GmbH (the "Articles"), the Partnership
Agreement of VuCo GmbH & Co. (the "Partnership Agreement") and this
Shareholders' Agreement.
1.3 VuCo GmbH & Co. shall have an Advisory Board (BEIRAT).
1.4 To the extent the Companies will be required to establish an
AUFSICHTSRAT by matter of law, the parties hereto will pursue the
intent of this Agreement regardless of such AUFSICHTSRAT.
<PAGE>
3
2. RULES GOVERNING THE SHAREHOLDERS' MEETINGS AND PARTNERS' MEETINGS
2.1 The shareholders' meetings of VuCo GmbH shall be convened at regular
intervals not exceeding 14 months and upon no less than seven (7)
business days notice in writing, such notice to include an agenda
specifying the matters to be resolved.
2.2 The shareholders' meetings of VuCo GmbH shall be called in by the
Chief Executive Officer of VuCo GmbH in its own right or upon request
of any Shareholder. The Chief Executive Officer may join the
shareholders' meetings, unless any Shareholder requests otherwise.
2.3 The shareholders' meeting shall have a quorum when at least 75 % of
the stated capital of VuCo GmbH are represented. If a properly
convened meeting has no quorum within 1 (one) hour of the time for
which it was convened, the meeting shall automatically be adjourned
and reconvened for the same time at the same place five business days
later. Such reconvened meeting shall have a quorum if at least one
Shareholder is present. All resolutions of the shareholders' meeting
require a simple majority of the votes, present or represented at the
meeting, unless a higher majority is required by law.
2.4 For the partners' meetings of VuCo GmbH & Co., the foregoing
provisions shall apply MUTATIS MUTANDIS.
3. PRINCIPLES OF MANAGEMENT
3.1 The management of VuCo GmbH shall obtain the Advisory Board's approval
for all business decisions which are of material importance to VuCo
GmbH or VuCo GmbH & Co., including, but not limited to, approval of
the annual budget and plan, and the following matters:
(a) sale or acquisition of a company, parts of a company, business
(BETRIEBE) or parts of a business (BETRIEBSTEILE) or entering
into, or termination of company lease agreements
(BETRIEBSPACHTVERTRAGE);
<PAGE>
4
(b) sale, acquisition or encumbrance of controlling interests in any
other company or business;
(c) taking up new area of business and activities or cessation of
existing areas of business and activities;
(d) entering into, amendment and termination of enterprise contracts
(UNTERNEHMENSVERTRAGE);
(e) acquisition, sale and transfer, encumbrance and pledge of fixed
assets, including real property, buildings and rights of a real
property nature, if the transaction value in each individual case
is in EXCESS of DM 500,000 (in words: Deutsche Mark five hundred
thousand);
(f) entering into or amending any contract with a value of more than
DM 500,000 (in words: Deutsche Mark five hundred thousand);
(g) taking up and granting of loans and credits, assumption of
guarantees, strict guarantees and other liabilities of the
similar nature if the transaction value in each case is in excess
of DM 500,000 (in words: Deutsche Mark five hundred thousand);
(h) any of the transactions and matters listed and referred to under
sub-para. (a) through (g) above carried out by VuCo in its
capacity as general partner of VuCo GmbH & Co. for and on behalf
of VuCo GmbH & Co.
3.2 The approval of the Advisory Board to be obtained pursuant to para. 3.1
above may also be made in form of a general authorization for particular
types of the aforementioned transactions and matters. Any such general
authorization must precisely describe the transactions and matters in
question as well as the purpose and the time frame in which they must be
completed.
<PAGE>
5
4. ADVISORY BOARD
4.1 The Advisory Board shall be composed of 4 (four) members. Each Party
shall appoint two members (including one senior member).
4.2 The Advisory Board shall advise the management and shall consider for
approval the consents required according to Sect. 3.1. The Chief
Executive Officer of VuCo GmbH shall be nominated by the Advisory
Board to the Shareholders for appointment. The Advisory Board shall
negotiate and determine the employment contract with the Chief
Executive Officer.
4.3 The Advisory Board shall resolve its decisions with a simple majority
of its votes, In the event that a majority decision cannot be reached,
the following special procedures shall be used to break the deadlock:
(a) the Senior Advisory Board Member appointed by Behringwerke,
following reasonable consultation with the Senior Member
appointed by the other party. shall have the decisive vote in
matters relating to the following agreements:
[CONFIDENTIAL TREATMENT REQUESTED]
<PAGE>
6
(b) the Senior Advisory Board Member appointed by Buyer, following
reasonable consultation with the Senior Member appointed by the
other party, shall have the decisive vote in all other matters.
4. The Advisory Board shall meet at least every 14 months or whenever
requested by the Chief Executive Officer or by any of the senior
members of the Advisory Board. The meetings can be held by telephone
or video conference. Meetings shall convene with a notice period of 7
(seven) days if not otherwise unanimously agreed. Action can be taken
by unanimous written consent. The Advisory Board may adopt its own
internal rules of procedure to be adapted from time to time.
5. EXERCISE OF VOTING RIGHTS
5.1 Shareholders' resolutions or partners' resolutions in shareholders'
meetings, as the case may be, regarding the following matters shall
require a unanimous vote of the shareholders or the partners:
(a) matters concerning capital increases and capital decreases.
(b) appointment of the Chief Executive Officer.
(c) appointment of the Companies' auditors, determination
(FESTSTELLUNG) of the annual financial statements and profit
distributions including distributions of reserves (RUCKLAGEN):
(d) exoneration (ENTLASTUNG) of the managing directors.
(e) amendments of the Articles or the Partnership Agreement to the
extent that such amendments relate to, or have an impact on, any
of the matters stipulated, mentioned or referred to in this
Shareholders' Agreement:
(f) transformation (UMWANDLUNG) of the Companies as defined in Sec. 1
Umwandlungsgesetz or dissolution of the Companies:
<PAGE>
7
(g) entering into, amendment and termination of enterprise contracts
(UNTERNEHMENSVERTRAGE);
(h) transfer of any decision powers of shareholders' meeting of VuCo
GmbH or the partners"meeting of VuCo GmbH & Co. to any
committees;
(i) the sale or acquisition of assets having a value in excess of DM
50 million;
(j) debt financing in excess of DM 50 million, other than financing
of accounts receivable;
(k) matters relating to the Overview Agreement after the consent and
approval contemplated by section 5.1.4 of the Purchase Agreement
has been obtained;
(1) matters relating to the Sales Promotion and Consignment Agreement
between Behringwerke and Centeon Pharma dated September 28, 1995
and effective as of July 1, 1995.
5.2 If Behringwerke and Buyer are unable in two consecutive shareholders'
meetings or partners' meetings, as the case may be, to reach an
unanimous decision on matters requiring their unanimous vote and if
they have not been able to resolve the matter within 30 days after the
date of the second shareholders' meeting or partners' meeting, then
Behringwerke and the Buyer can submit this matter to the respective
member of the management board (VORSTAND) of Hoechst AG in charge of
the business activities conducted by Behringwerke and of Guarantor for
resolution. They shall meet as necessary in order to discuss and
resolve the matter by mutual agreement considering, if feasible, the
use of expert advisors.
5.3 With regard to matters other than those listed and referred to in
para. 4.3.a and 5.1 above, Behringwerke shall exercise its voting
rights in shareholders' meeting of VuCo GmbH and partners' meetings of
VuCo GmbH & Co. consistent with the manner in which the Buyer
exercises its voting rights it being under-
<PAGE>
8
stood that with regard to the matters listed and referred to in para
5.1 above, Behringwerke may exercise its voting rights at its free
discretion.
6. TRANSFER, ASSIGNMENT OR ENCUMBRANCE OF SHARES OR INTERESTS
The Parties agree that any transfer, assignment or encumbrances of shares
or interests in VuCo GmbH or VuCo GmbH & Co. or parts thereof requires the
prior written consent of the other shareholder or partner not to be
unreasonably withheld, PROVIDED THAT no consent shall be required if (i)
the shares or interests are transferred, assigned or encumbered to, or for
the benefit of a wholly-owned subsidiary of the respective
shareholder/partner and (ii) such shareholder/partner has proven to the
other shareholder/partner by submission of a written agreement that such
subsidiary has agreed to be bound by the terms of this Agreement pursuant
to Sect. 11.
7. AMENDMENTS OF ARTICLES OF ASSOCIATION AND PARTNERSHIP AGREEMENT
Insofar as amendments of the Articles and the Partnership Agreement or any
other resolutions are necessary or expedient for the execution and
implementation of the provisions of this Shareholders' Agreement,
Behringwerke and the Buyer shall procure that the appropriate resolutions
are passed and all other necessary actions are taken promptly after the
Closing Date.
8. Financials; Information
8.1 The financial statements of VuCo GmbH and VuCo GmbH & Co. shall be
audited by an auditor (WIRTSCHAFTSPRUFER) nominated by the
shareholders' meeting.
8.2. Each Shareholder shall have the right to inspect (either itself or by
advisors subject to a professional obligation of secrecy) during
normal business hours (and at other times by agreement) all books,
records and other information maintained for or by the Companies and
(to the extent legally permissible) those maintained for or by its
associated undertakings. The right to inspect shall include the right
to take copies. Each Shareholder shall also have the right of
<PAGE>
9
access to the Companies' premises (either itself or by advisors
subject to a professional obligation of secrecy) during normal
business hours (and otherwise by agreement) for the above purpose and
to inspect and review the premises.
9. Duration
This Agreement shall take effect as of the Closing Date and shall expire
(a) as of the date of notarization of the acceptance of the Behring Put
Option or the Chiron Call Option, as the case may be, pursuant to Art.
3 of the Purchase Agreement, or
(b) as of the date at which the right of Behringwerke to exercise the
Behringwerke Put Option and the right of the Buyer to exercise the
Chiron Call Option pursuant to Art. 3 of the Purchase Agreement has
expired, or
(c) at such other date on which the Parties have mutually agreed.
10. NO PARTNERSHIP
None of the provisions of this Agreement shall be deemed to constitute a
partnership between the Shareholders and neither of them shall have any
authority to bind the other in any way.
11. SUCCESSORS AND ASSIGNMENTS
This Agreement shall enure for the benefit of and be binding on the
respective successors in title and permitted assignees of each Shareholder
which shall procure prior to the transfer of any of its Shares that each
such transferee shall enter into a written agreement with the other
Shareholders by which the transferee agrees to be bound by terms identical,
mutatis mutandis, to the terms of this Agreement (including the terms of
this clause as regards any subsequent transfer of the Shares).
<PAGE>
Annex 4.6 to the
Purchase Agreement
[CONFIDENTIAL TREATMENT REQUESTED]
(1 Page)
<PAGE>
Annex 4.7 to the
to the Purchase and Assignment Agreement
TERMS AND CONDITIONS FOR COMMISSION
1. Under Art. 4.7 of the Purchase and Assignment Agreement, Buyer agrees to
pay Behringwerke, in addition to the Fixed Cash Purchase Price and the
Option Purchase Price, a yearly Commission on the sales of Guarantor's
and its affiliates' vaccine products listed on ANNEX 1 hereto for use in
Germany during the years 1997 through 2001, calculated as [CONFIDENTIAL
TREATMENT REQUESTED] of the excess of net sales over the following
forecast:
- 1997: DM [CONFIDENTIAL TREATMENT REQUESTED]
- 1998: DM [CONFIDENTIAL TREATMENT REQUESTED]
- 1999: DM [CONFIDENTIAL TREATMENT REQUESTED]
- 2000: DM [CONFIDENTIAL TREATMENT REQUESTED]
- 2001: DM [CONFIDENTIAL TREATMENT REQUESTED]
Such figures shall be adjusted for actual inflation on the basis of a
consumer price index (four-person-households average income) from
Closing Date to December 31 of each of the above-mentioned years.
2. Buyer shall submit to Behringwerke by March 31 of the years 1997 through
2002 an auditable calculation and documentation of the total sales of
Buyer's vaccine products in Germany.
3. The Commission shall be due and payable on March 31 of each respective
year. Payment shall be made in Deutsche Mark by wire transfer free of
cost to the account of Behringwerke listed in clause 4.4 of the Purchase
and Assignment Agreement in time to be received on the respective due
date. Late payments shall bear interest at discount rate plus three
basis points.
4. Behringwerke's experts (as designated by Behringwerke and reasonably
acceptable to Buyer) shall be entitled to audit, together with the
respective department of
<PAGE>
2
Buyer, any such calculations presented by Buyer, shall have reasonable
access to the business sites of Behring Vakzine GmbH & Co. or any
successor and to all books, records and other documents relating to such
calculation, and shall obtain from Buyer all information reasonably
requested. The persons performing such audit on Behringwerke's behalf
shall treat confidential any information that they had access to, shall
use such information solely for the purpose of confirming the amounts due
hereunder, and shall report to Behringwerke's management exclusively.
5. To the extent an audit pursuant to clause 3 above reveals any differences
from the calculation presented by Buyer, the balance shall be settled in
accordance with clause 3 within four weeks after the parties agreed on
such difference.
6. As used herein, "net sales" means the amount invoiced for sales to
unaffiliated third parties of Guarantor, less (i) discounts, rebates,
chargebacks and allowances, (ii) returns, credits, recalls and
withdrawals, (iii) freight, insurance and packaging, (iv) V.A.T. and
other excise taxes, duties and other governmental charges, all to the
extent any of these are applicable to such sales.
<PAGE>
Annex 1 of
Annex 4.7 of the Purchase Agreement
[CONFIDENTIAL TREATMENT REQUESTED]
(1 page)
<PAGE>
Annex 7.1.16
to the Purchase Agreement
[CONFIDENTIAL TREATMENT REQUESTED]
(1 page)
<PAGE>
Annex 7.1.18
to Purchase Agreement
[CONFIDENTIAL TREATMENT REQUESTED]
(1 page)
<PAGE>
Annex 7.1.19
to the Purchase Agreement
[CONFIDENTIAL TREATMENT REQUESTED]
(2 pages)
<PAGE>
Annex 8
to Purchase Agreement
[CONFIDENTIAL TREATMENT REQUESTED]
(1 page)
<PAGE>
Annex 11
to Purchase Agreement
[CONFIDENTIAL TREATMENT REQUESTED]
(2 pages)
<PAGE>
[CONFIDENTIAL TREATMENT REQUESTED]
[Certain confidential information has been omitted from the Agreement and filed
separately with the Securities and Exchange Commission pursuant to a request by
Registrant for confidential treatment pursuant to Rule 24b-2. The omitted
confidential information has been identified by the following statement:
"CONFIDENTIAL TREATMENT REQUESTED".]
CLOSING AGREEMENT
by and among
Behringwerke Aktiengesellschaft
D-30501 Marburg
represented by its members of the Management Board,
Prof Dr. Dr. Uwe Bicker and Dr. Bernd Neuefeind
(hereinafter "Behringwerke")
- on the one side -
and
Chiron Corporation
4560 Horton Street, Emeryville, CA 94608-2916, U.S.A.
represented by its Chairman of the Board,
Dr. William J. Rutter
(hereinafter "Chiron")
and
31. CORSA Verwaltungsgesellschaft mbH
represented by power of attorney by
Dr. Dino Dina,
(hereinafter "31. CORSA")
- on the other side -
(Behringwerke, Chiron and 31. CORSA are hereinafter collectively referred to as
the "Parties" or, individually, as the "Party", as the context requires.)
<PAGE>
PREAMBLE
A. On February 17, 1996, the Parties entered into a Purchase and
Assignment Agreement (Notarized Deed A. Prot. 1996/20 of the notary public
Dr. Werner Wenger in Basle - hereinafter the "Purchase Agreement") with
respect to the transfer 49% of the interests in a newly organized limited
partnership which will continue to operate the human vaccine business of
Behringwerke under the name Chiron Behring GmbH & Co (presently registered
under the name Behring Vakzine GmbH & Co) and the transfer of a share in
the nominal value of DM 24,500 in Chiron Behring Biocine GmbH
Verwaltungsgesellschaft (which will be renamed into and referred to
herein- after as "Chiron Behring GmbH") being the general partner of Chiron
Behring GmbH & Co (hereinafter collectively the "Interests").
B. Under the Purchase Agreement, the effectiveness of the transfer of
the Interests requires the fulfillment of certain conditions. The Parties
now wish to clarify the status of and to modify such conditions.
C. The Parties also wish to amicably settle certain issues which have come
to their attention since the execution of the Purchase Agreement.
NOW, THEREFORE, the Parties agree as follows:
1. FULFILLMENT OF CONDITION
1.1 Behringwerke hereby declares that
(i) Chiron Behring GmbH & Co is holding all official
approvals for the operation of the Business (as defined in
the Purchase Agreement) as currently conducted pursuant to
the ARZNEIMITTELGESTZ, GENTECHNIKGESETZ, TIERSCHUTZGESETZ
and BUNDESSEUCHENGESETZ;
(ii) the Operating Lease Agreement between Behringwerke
and Chiron Behring GmbH & Co will terminate with effect as
of the Closing Date (as defined hereinafter);
(iii)the Contribution Date pursuant to the Contribution Agreement
(all as defined in the Purchase Agreement) has occurred on
April 1, 1996;
(iv) Behring Vakzine GmbH (formerly the Institut fur
Produkttest und Verbrauchsforschung GmbH) is no longer a
general partner of Chiron Behring GmbH & Co and Chiron
Behring GmbH is now the sole general partner;
<PAGE>
(vi) the management of Chiron Behring GmbH has agreed to
the split of one of the shares of Behringwerke in Chiron
Behring GmbH with a nominal value of DM 25,000 into two
shares with nominal values of DM 24,500 and DM 500,
respectively, and to the transfer of the DM 24,500 share to
31. CORSA.
1.2 Chiron hereby declares that the necessary merger control
approval for the implementation of the Purchase Agreement has
been granted.
1.3 Subject to the provisions of clause 6, the Parties
mutually waive the condition stated in clause 5.1.4 of the
Purchase Agreement, i.e., [CONFIDENTIAL TREATMENT REQUESTED]
During the interim period until the assignment of [CONFIDENTIAL
TREATMENT REQUESTED] is effected with or without amendments,
Behringwerke shall internally place Chiron Behring GmbH & Co as
it would be if such assignment had been effected as of the Closing
Date (as defined hereinafter).
2. PAYMENT OF THE PURCHASE PRICE
2.1 The Parties are in agreement that 31. CORSA shall pay the
purchase price for the Interests in the amount as agreed in
clause 4 of the Purchase Agreement (i.e., DM 171,813,430.40, of
which DM 313,430.40 represents 49% of the rent under the
Operating Lease Agreement) on July 1, 1996 to be received by,
Behringwerke by 11:00 h on such date on the following bank
account:
COMMERZBANK AG, FRANKFURT A.M.-HOCHST
ACCOUNT NO.: 251 57 57
BANK SORT CODE (BLZ): 500 400 00
Behringwerke hereby warrants that Chiron Behring GmbH & Co has
received prior to July 1, 1996 a rent under the Operating Lease
Agreement (as defined in the Purchase Agreement) for the months
of April through June in an amount of DM 639,653.88 (plus V.A.T.
if applicable). Behringwerke shall promptly deliver to 31 CORSA,
with a copy to Chiron, written evidence (bank statement) of such
receipt.
2.2 Upon receipt of the purchase price, Behringwerke shall
immediately deliver to 31 CORSA a receipt of the purchase price
received. Such receipt shall be forwarded first by telecopy and
then by overnight courier to the attention of Ms. Jessica Hoover
at Chiron, Emeryville.
<PAGE>
3. CLOSING DATE
Under the condition that Behringwerke has received the purchase price for
the Interests as agreed in clause 2 above, the transfer of the Interests
shall be effective as of July 1, 1996, 0:01 h (the "Closing Date").
4. GUARANTEE
In accordance with clause 14.3 of the Purchase Agreement Chiron agrees to
the following:
In the event that Chiron does not exercise the Chiron Call Option by March
31, 1998, and if at that time or any time thereafter the long term credit
rating of Chiron's senior debt securities falls below grade "A" of Standard
& Poor's rating or Moody's comparable rating, Chiron will provide a letter
of credit from a commercial bank, acceptable to Behringwerke, or other
credit support fully satisfactory to Behringwerke, in an amount sufficient
to satisfy 31. CORSA's obligation to pay the Option Purchase Price
(assuming Behringwerke exercise the Behring Put Option in March 2001).
The foregoing is deemed to satisfy in full Chiron's obligations under
clause 14.3 of the Purchase Agreement.
[CONFIDENTIAL TREATMENT REQUESTED]
<PAGE>
[CONFIDENTIAL TREATMENT REQUESTED]
6. PARTNERSHIP AGREEMENT
The Parties are in agreement that promptly hereinafter and with effect as
of the Closing Date, Behringwerke, 31. CORSA and Chiron Behring GmbH shall
enter into the Partnership Agreement as agreed in the Purchase Agreement.
The Parties shall promptly procure the necessary filings at the competent
commercial register with respect to the registration of 31. CORSA as a new
limited partner (Kommanditist) in Chiron Behring GmbH & Co.
7. CASH MANAGEMENT
Behringwerke hereby informs Chiron that Hoechst AG has agreed in the time
being and until further notice (which will not be given prior to September
30, 1996) to finance any negative cash flow of Chiron Behring GmbH & Co up
to an aggregate outstanding amount of DM 20,000,000. at an interest rate of
DM LIBOR plus 0. 125 % p.a. for credits with a mutually fixed term not
exceeding six months, and an interest rate equivalent to the then
applicable call money rate plus 0.125% p.a. for call money credits.
Details will be agreed upon for each individual credit in compliance with
the then applicable rules of "Konzeminterner Finanzausgleich" (Group
internal Borrowing and Lending) and/or "Tagesgeld-Aufnahme und Anlage"
(Group internal Call Money Arrangements) of Hoechst AG. Chiron hereby
unconditionally guarantees repayment of any such credit by Chiron Behring
GmbH & Co when due.
8. MISCELLANEOUS
8.1 Unless otherwise expressly stated herein, all terms of the
Purchase Agreement shall remain in force.
[CONFIDENTIAL TREATMENT REQUESTED]
<PAGE>
[CONFIDENTIAL TREATMENT REQUESTED]
<PAGE>
IN WITNESS HEREOF, the Parties have executed this Closing Agreement in triple
originals by their respective, duly authorized Board Members.
BEHRINGWERKE AKTIENGESELLSCHAFT
Date: June 29, 1996
By:
/s/ Dr. Uwe Bicker
- -------------------------------------------------
(Prof. Dr. Dr. Uwe Bicker)
/s/ Bernd Neuefiend
- -------------------------------------------------
(Dr. Bernd Neuefeind)
CHIRON CORPORATION
Date: June 29, 1996
By:
/s/ Dr. William J. Rutter
- -------------------------------------------------
(Dr. William J. Rutter)
31. CORSA VERWALTUNGSGESELLSCHAFT MBH
Date: June 29, 1996
By:
/s/ Dr. Dino Dina
- -------------------------------------------------
(Dr. Dino Dina)
<PAGE>
June 29, 1996
[CONFIDENTIAL TREATMENT REQUESTED]
[Certain confidential information has been omitted from the Agreement and filed
separately with the Securities and Exchange Commission pursuant to a request by
Registrant for confidential treatment pursuant to Rule 24b-2. The omitted
confidential information has been identified by the following statement:
"CONFIDENTIAL TREATMENT REQUESTED".]
Behringwerke Aktiengesellschaft
D-30501 Marburg
Germany
Re: Closing Agreement dated June 29, 1996 between Chiron Corporation, 31 CORSA
and Behringwerke AG
Gentlemen:
As set forth in clause 1.3 of the Closing Agreement, Chiron Corporation and 31
CORSA have agreed to waive the condition stated in clause 5.1.4 of the Purchase
Agreement. Such waiver is conditioned upon the following agreement:
(a) Subject to paragraph (b) below, in the event that [CONFIDENTIAL TREATMENT
REQUESTED] Behringwerke shall fully indemnify Chiron Behring GmbH & Co for
any damage suffered. This damage shall be calculated on the basis of the
time period of [CONFIDENTIAL TREATMENT REQUESTED]
(b) The obligation of Behringwerke to indemnify Chiron Behring GmbH & Co under
paragraph (a) is limited to an amount equal to [CONFIDENTIAL TREATMENT
REQUESTED]
(c) In the event that the [CONFIDENTIAL TREATMENT REQUESTED] are not assigned to
Chiron Behring GmbH & Co by November 30, 1996 each party shall be entitled
to rescind the Closing, in which case Behringwerke shall pay back to 31.
CORSA any purchase price paid plus an interest of 5.125% p.a. and 31. CORSA
shall retransfer to Behringwerke the Interests. Any additional damages by
either party is excluded, other than for damages incurred as a result of a
breach by either party of their obligation under clause d.
<PAGE>
June 29, 1996
Behringwerke Aktiengesellschaft
(d) Subject to the foregoing, the Parties will use their best efforts to ensure
that the assignment [CONFIDENTIAL TREATMENT REQUESTED] occurs as soon as
possible and [CONFIDENTIAL TREATMENT REQUESTED].
If the foregoing accurately reflects your understanding of our agreement, please
sign a copy of this letter for our records.
Very truly yours,
CHIRON CORPORATION
By: /s/ William J. Rutter
--------------------------
William J. Rutter
Chairman
31. CORSA Verwaltungsgesellschaft mbH
By: /s/ Dino Dina
--------------------------
Dino Dina, pursuant to a power of attorney
Agreed and Accepted:
BEHRINGWERKE AKTIENGESELLSCHAFT
By: /s/ Dr. Dr. Uwe Bicker
--------------------------
Prof. Dr. Dr. Uwe Bicker
By: /s/ Dr. Bernd Neuefeind
--------------------------
Dr. Bernd Neuefeind
<PAGE>
Exhibit 10.87
[CONFIDENTIAL TREATMENT REQUESTED]
[Certain confidential information has been omitted from the Agreement and filed
separately with the Securities and Exchange Commission pursuant to a request by
Registrant for confidential treatment pursuant to Rule 24b-2. The omitted
confidential information has been identified by the following statement:
"CONFIDENTIAL TREATMENT REQUESTED".]
ROYALTY PROJECTS AGREEMENT
This Agreement is entered into as of January 4, 1995 by and between CIBA CORNING
DIAGNOSTICS CORP., a Delaware corporation having its principal place of business
at 63 North Street, Medfield, MA 02052 U.S.A. (hereinafter "CCD"), and CIBA-
GEIGY Limited, a Swiss corporation having its principal place of business at
Klybeckstrasse 141, CH-4002 Basel, Switzerland (hereinafter Ciba).
WHEREAS, Ciba's Corporate Research Units ("CRU") conduct research projects
determined to have strategic benefit to Ciba;
WHEREAS, CCD wishes to evaluate such projects in order to identify whether they
have strategic potential for its own business in Diagnostics (as such term is
defined in Article 1.3 of this Agreement) and to obtain rights to exploit
results of such projects against compensation to Ciba in the form of royalties
and/or fees;
WHEREAS, Ciba is willing to make available results of certain projects for
exploitation in the field of Diagnostics by CCD against compensation in the form
of royalties and/or fees, under certain general conditions and project-specific
agreements, such projects being referred to herein as "Royalty Projects";
NOW, THEREFORE, in consideration of the premises and covenants, terms and
conditions set forth herein, Ciba and CCD agree as follows:
1. SCOPE OF THE AGREEMENT; DEFINITIONS
1.1 This Agreement governs the general procedures and terms to be applied
for Royalty Projects to be conducted by CRU for use by CCD in
Diagnostics upon mutual agreement by the two parties from time to time.
1.2 Projects started prior to January 4, 1995 and agreed by the parties
during the Steering Committee Meeting of April 27, 1995 to be continued
shall be considered Royalty Projects. These projects and their
agreed-upon specific terms are described in Attachments A and B to this
<PAGE>
Agreement. Costs incurred by Ciba for such Royalty Projects prior to
January 4, 1995 shall be considered as having been remunerated by the
acquisition of CCD by Chiron Corporation.
1.3 As used in this Agreement
(a) "Affiliate(s)" shall mean a corporation or any other business
entity, in whatever country organized, which, directly or
indirectly, controls, is controlled by or is under common control
with Ciba or CCD, as the case may be. For this purpose, control
shall mean the ownership of 50% or more of the issued share
capital or the legal power to direct or cause the direction of the
general management and policies of the party in question. In the
case of CCD, "Affiliates" shall also include Ciba Corning
Diagnostics de Mexico S.A., so long as CCD continues to own at
least 49% of the voting stock of that corporation.
(b) "CCD License Option" shall have the meaning specified in Article
4.4 hereof.
(c) "Designated Country" means Germany, France, Italy, the United
Kingdom of Great Britain and Northern Ireland, Japan or the
United States of America.
(d) "Diagnostics" shall mean the development, manufacture, use and
sale of processes, materials, supplies and equipment for the
diagnosis of human and veterinary health.
(e) "License Maintenance Fee" means the fee payable by CCD in
accordance with Article 5.6.
(f) "Licensed Patents" means any and all letters patent, by whatever
country issued, now or hereafter issued to Ciba and licensed to
CCD in accordance with the provisions of this Agreement.
2
<PAGE>
(g) "Net Sales" shall mean the gross sales of Royalty Products by
CCD, its Affiliates or sublicensees to third parties, less
trade, cash or volume discounts, returns and allowances,
charges for freight handling and transportation, sales and use
taxes and other similar taxes incurred, and royalties payable
by CCD or such Affiliate or sublicensee to third parties with
respect to such products, as determined in accordance with
CCD's standard accounting methods and recognized accounting
principles. Where a Royalty Product is sold in combination
with a product which is not a Royalty Product, Net Sales shall
include only the revenues allocable to the Royalty Product as
determined in accordance with CCD's standard accounting
methods and recognized accounting principles. Where a product
consists of a combination of different groups of components,
each used for the measurement of a different analyte, the
components for measurement of each particular analyte shall be
considered as a separate product in determining whether such
components constitute a Royalty Product, and the revenue
attributable to such a group of components shall be determined
by dividing the revenue for the entire product by the number
of different analytes which can be measured thereby. Where a
Royalty Product is used by CCD or one of its Affiliates or
sublicensees to provide a service to a third party, the Net
Sales attributable to such Royalty Product shall be determined
based on the amount that would have been charged for sale of a
similar volume of such Royalty Product to a non-affiliated
third party in an arms'-length transaction.
(h) "Royalty Product" shall mean either a "Patent-Protected Royalty
Product" or an "Unprotected Royalty Product."
"Patent-Protected Royalty Product" shall mean a product the
sale or use of which is covered by a valid claim of an
unexpired Licensed Patent. "Unprotected Royalty Product"
means a product the sale or use of which would be covered by a
valid claim of an
3
<PAGE>
unexpired Licensed Patent if such product were sold or used in a
Designated Country, but which is not covered by a valid
claim of a Licensed Patent in the country in which such
product is actually sold or in the country in which such
product is actually used.
(i) "Strategic Exit Fee" shall mean, as to any Royalty Project, the
amount specified in Attachment B hereto as the fee to be paid
to Ciba by CCD if CCD, after exercising the CCD License Option
with respect to such Royalty Project, abandons development of
the technology resulting from such Royalty Project prior to
commercial launch of a product incorporating such technology,
for reasons other than lack of technical success.
(j) "Technical Exit Fee" shall mean, as to any Royalty Project, the
amount specified in Attachment B hereto as the fee to be
paid to Ciba by CCD if CCD, after exercising the CCD License
Option with respect to such Royalty Project, abandons
development of the technology resulting from such Royalty
Project prior to commercial launch of a product incorporating
such technology, due to lack of technical success in such
development.
(k) "Technology Delivery Date" shall have the meaning specified in
Article 5.1 hereof.
(l) "Technology Transfer Criteria" shall mean, as to any Royalty
Project, the technical criteria specified in Attachment A
hereto to be satisfied through Ciba's research program prior
to transfer of the technology resulting from such Royalty
Project to CCD for further development into commercial
products.
(m) "Technology Transfer Date" shall mean, as to any Royalty
Project, the date established as such pursuant to Article 5.2
hereof.
4
<PAGE>
2. IDENTIFICATION OF ROYALTY PROJECTS
2.1 Ciba shall inform CCD periodically (at least once a year) in the form
of an overview (in writing) about CRU projects and technology possibly
of strategic interest to CCD.
2.2 CCD likewise shall inform Ciba periodically (at least once a year,
preferably during the project management meetings provided for in
Article 3.2 hereof) in the form of an overview (in writing) about its
projects, technology, and technical problems which CCD considers
possibly relevant for CRU projects and of interest to Ciba.
2.3 In order to understand each other's positions, the parties shall meet
to discuss the projects contained in the overviews and to exchange
opinions on technology of mutual interest. In preparation for such
meetings, documentation and data in sufficient detail shall be
exchanged at least three weeks before the meetings. Minutes,
including recommendations regarding Royalty Projects, shall be written
and approved by the parties within three weeks after the meetings.
2.4 If a CRU project is of interest to CCD and Ciba is willing to consider
CCD's objectives to be included into the framework of such project,
the parties shall negotiate in good faith with respect to the terms on
which such project could become a Royalty Project under this
Agreement. In such cases, the parties shall endeavor to agree within
three months on the specific details for such project to be included
in Attachments A and B. The specific details shall include: research
objectives, scope of applications, expected Technology Transfer Date,
present status and technical milestones, project management structure,
Technology Transfer Criteria, intellectual property of each party to
be made available for use in the Royalty Project and third party
intellectual property to be acquired (to the extent need for such
intellectual property is known to either part), amounts of the
Strategic Exit Fee and the Technical Exit Fee and the royalty rates
applicable to products resulting from such Royalty Project.
5
<PAGE>
2.5 In case Ciba is not willing to consider a project to become a Royalty
Project, CCD may propose such project to become a Project under the
CRU Research-Funding Agreement of even date herewith.
2.6 Both parties shall inform each other in writing, as promptly as may be
reasonably practicable, on projects and technologies of potential
mutual interest outside of the periodic information procedure provided
for in Articles 2.1 through 2.3, in order not to lose time for the
exploitation of the potential of such projects and technologies.
3. PROJECT MANAGEMENT
3.1 Ciba shall perform its research work for Royalty Projects in such a
manner as to give due consideration to CCD's interests.
3.2 Ciba shall inform CCD periodically (at least twice a year) during
project management meetings on the progress and status of the Royalty
Projects. Ciba shall also inform CCD in writing, without delay, about
changes needed in Royalty Projects which may be necessary due to
scientific reasons or other unexpected circumstances. The parties
shall discuss and agree on any changes needed in Attachment A during
the course of the Royalty Projects.
3.3 Ciba shall inform CCD in writing as promptly as is practicable about
contemplated strategic redirection of Ciba's interest in such projects
which may have an impact on CCD's interest in having a project remain
a Royalty Project as well as about the contemplated termination of a
Royalty Project. Work for CCD's purposes under a Royalty Project
shall continue, however, for at least six (6) months after Ciba has
decided and informed CCD in writing of such decision to redirect or
terminate such project.
3.4 In cases where a Royalty Project has been redirected by Ciba, CCD
shall have the option either to terminate such a project as a Royalty
Project or to propose amendments to Attachments A and B for such
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redirected project to continue as a Royalty Project. The parties
shall negotiate in good faith with respect to any such proposed
amendments and shall endeavor to reach agreement thereon within three
(3) months. If the parties are unable to reach agreement on such
amendments, such project shall terminate as a Royalty Project at the
end of the six-month period specified in Article 3.3.
3.5 CCD shall inform Ciba in writing as promptly as is practicable if CCD
wishes at any time to terminate a Royalty Project.
3.6 CCD may request a re-direction of a Royalty Project. In such cases
the parties will negotiate in good faith revised Attachments A and B
with respect to such Royalty Project. Unless new terms shall be
negotiated within three (3) months, the Royalty Project in question
shall be terminated.
3.7 In case Ciba's work on a Royalty Project is terminated before the
Technology Transfer Date, CCD - at its option - may request to acquire
rights to the technology and know-how so far developed by Ciba for use
in Diagnostics. In such a case the parties will negotiate in good
faith the terms for such grant of rights, taking into account (a) the
original terms of this Agreement applicable to such Royalty Project
upon completion by Ciba of all work necessary to satisfy the
Technology Transfer Criteria and (b) an appropriate reduction of CCD's
cost to take into account the stage of completion of such Royalty
Project at the time of termination of Ciba's work and the work
remaining to satisfy the Technology Transfer Criteria. CCD may
thereafter complete the project by itself or propose a project under
the CRU Research Funding Agreement. Ciba shall not unreasonably refuse
to continue technical support for a terminated Royalty Project on a
funded basis under the CRU Research Funding Agreement for such period
as may be reasonably necessary for CCD to develop internal resources
to take over such work.
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4. TREATMENT OF INTELLECTUAL PROPERTY RIGHTS
4.1 Any and all intellectual property, including, but not limited to,
patents, trade secrets and copyrights, that has been, is or will be
generated, developed or created by Ciba within the scope of Royalty
Projects shall be the property of Ciba, provided that any invention
made jointly by one or more employees of Ciba and one or more
employees of CCD shall be the joint property of Ciba and CCD.
4.2 Subject to any licenses granted under Article 3.7 or Article 4.4, Ciba
shall be free to exploit any and all intellectual property as
described under Article 4.1 for its own businesses.
4.3 Intellectual property rights, whether protected by patent or not, that
are now or hereafter jointly owned by CCD and Ciba shall be freely
used by either co-owner, unless the parties hereafter agree that one
party's rights to a specified invention shall be exclusive in a
specified field or fields. Royalties and license fees received by
either party from the licensing of jointly-owned patents to third
parties shall be shared equally between the parties.
4.4 Ciba grants CCD an option for a license (the "CCD License Option") to
all Ciba intellectual property, whether patented or not, which shall
be granted for exclusive worldwide use (unless a non-exclusive license
is agreed to at the start of such Royalty Project), with the right to
grant sublicenses, in Diagnostics, within the scope of each Royalty
Project set forth in Attachment A, including without limitation the
patents and patent applications described in Attachment A. For each
Royalty Project the terms of such license shall be as set, forth in
Attachment B and the other provisions of this Agreement. The CCD
License Option for each Royalty Project shall remain valid for twelve
(12) months after the Technology Transfer Date for such Royalty
Project.
4.5 If CCD intends to distribute a Royalty Product for veterinary health
through a third party, Ciba shall have the right of first negotiation
to
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distribute such product, for a period of six months after receipt of
notice from CCD of CCD's wish to negotiate a distribution agreement
for such product.
4.6 In case CCD does not exercise the CCD License Option with respect to a
Royalty Project, Ciba shall be free to exploit its intellectual
property resulting from such Royalty Project for commercialization in
Diagnostics. In such a case Ciba will remunerate CCD out of income
from the commercialization of the Royalty Project in Diagnostics for
relevant contributions made by CCD in guiding the direction of Ciba's
research for the Royalty Project. The parties will negotiate in good
faith such remuneration prior to commercialization by Ciba or their
sublicensees. In addition, if after the Technology Delivery Date with
respect to a Royalty Project, CCD invents any improvements to the Ciba
technology resulting from such Royalty Project, upon CCD's failure to
exercise the CCD License Option CCD shall grant Ciba a non-exclusive
license to practice such CCD inventions, with the right to grant
sublicenses in connection with commercialization of the Ciba
technology by a third party. If Ciba or an affiliate commercializes
the technology resulting from such Royalty Project and makes use of
the CCD inventions, CCD shall be paid a reasonable royalty to be
negotiated by the parties in good faith. If Ciba licenses its
technology resulting from such Royalty Project together with CCD
inventions to a third party upon terms more favorable to Ciba than the
terms set forth in Attachment B with respect to such Royalty Project,
Ciba's revenue resulting from the difference between such improved
terms and the terms as set forth in Attachment B shall be shared
equally between Ciba and CCD. Except as expressly provided in this
Article 4.6, nothing herein shall require CCD to grant to Ciba a
license under any CCD intellectual property in the field of
Diagnostics.
4.7 Ciba shall have the exclusive right and obligation:
(a) to file at its cost and expense applications for letters patent
on any patentable inventions made by Ciba in carrying out Royalty
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Projects, including their use in Diagnostics, in the United
States of America and in each other PCT country in which CCD has
an Affiliate, distributor or sales representative. Ciba shall
consult with CCD regarding additional countries in which such
patent applications should be filed. Should CCD wish to include
additional countries where Ciba does not intend to file, CCD
shall have the option to have assigned the patent rights in such
countries and to file at its cost and expense patent applications
in such countries.
(b) to prosecute its pending and new patent applications and to
respond to oppositions filed by third parties against the grant
of letters patent for such applications.
(c) to maintain in force its letters patent by duly filing all
necessary papers and paying the fees required by the patent
laws of the particular country in which such letters patent
were granted.
Ciba shall notify CCD in a timely manner of any decision to abandon a
pending patent application or an issued patent licensed to CCD
hereunder or for which CCD has an option for a license hereunder.
Thereafter, CCD shall have the option to have assigned the respective
patent rights and, at its cost and expense, to continue to prosecute
patent applications or to keep the issued patents in force. Ciba
shall have a non-exclusive, royalty-free license, with sublicensing
rights, in fields of use other than Diagnostics, under all patents
filed by or assigned to CCD hereunder.
4.8 In cases where Ciba's intellectual property within the scope of a
Royalty Project is licensed from a third party, Ciba shall undertake
commercially reasonable efforts - as within its usual conduct of
business - to secure sublicensing rights to CCD for use of such
intellectual property in Diagnostics or to assist CCD in obtaining a
direct license to such intellectual property for use in Diagnostics.
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4.9 It is understood that within the scope of a Royalty Project, Ciba
shall make available to CCD for use in Diagnostics intellectual
property, whether patented or not, which was generated or acquired by
Ciba's CRU whether before or after the start of this Agreement or of
any Royalty Project, provided that if Ciba is prohibited from making
any such intellectual property available to CCD by any agreement with
a third party entered into before the identification of such
intellectual property as being needed by CCD hereunder, Ciba shall be
required only to use commercially reasonable efforts to obtain the
consent of such third party to the grant of a license to CCD.
Intellectual property developed or acquired by a division or
functional unit of Ciba independently of Ciba's CRU and without use of
the results of any Royalty Project ("Ciba Non-CRU Intellectual
Property") after January 4, 1995 may not be available for use by CCD
hereunder if the management of the division or functional unit which
developed or acquired such intellectual property determines that the
financial or strategic business interests of such division or
functional unit will be materially harmed by the inclusion of such
intellectual property in the license hereunder. Ciba represents that
the management of CRU is not aware at the date hereof of any Ciba
Non-CRU Intellectual Property which is likely to be needed by CCD in
connection with a Royalty Project, and Ciba agrees to notify CCD
within thirty (30) days of the management of CRU becoming aware of any
Ciba Non-CRU Intellectual Property that is relevant to the
commercialization in Diagnostics of the results of a Royalty Project.
The royalties specified in Attachment B hereto shall be the sole
compensation to Ciba for the use by CCD of any and all Ciba
intellectual property in connection with products resulting from a
Royalty Project and shall be in lieu of, and not in addition to, any
royalties payable under the 1985 Research Agreement.
4.10 CCD shall grant Ciba a first right of negotiation, prior to CCD
negotiating a license with any third party other than an Affiliate, to
obtain a worldwide non-exclusive license, with no right to sublicense,
for use outside Diagnostics of patented and non-patented intellectual
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property related to Royalty Projects contributed or generated by CCD
prior to or during the time that Ciba is actively involved in a
Royalty Project and needed by Ciba in order to develop, make, have
made, use and sell non-Diagnostics products incorporating Ciba's
technology resulting from such Royalty Project, against an adequate
royalty rate to be negotiated in good faith, provided that if CCD is
prohibited from making any such intellectual property available to
Ciba by any agreement with a third party entered into before the
identification of such intellectual property as being needed by Ciba
hereunder, CCD shall be required only to use commercially reasonable
efforts to obtain the consent of such third party to the grant of a
license to Ciba.
4.11 In cases where CCD's intellectual property needed by Ciba for use in
commercializing non-Diagnostics products resulting from Royalty
Projects is licensed from a third party, CCD shall undertake
commercially reasonable efforts - as within its usual conduct of
business - to secure sublicensing rights to Ciba for use of such
intellectual property outside Diagnostics or to assist Ciba in
obtaining a direct license to such intellectual property for use
outside Diagnostics.
5. TECHNOLOGY TRANSFER AND COMMERCIALIZATION OF THE TECHNOLOGY
5.1 When Ciba believes that the Technology Transfer Criteria have been met
for any Royalty Project, Ciba shall so advise CCD in writing, and
shall deliver to CCD with such notice all relevant documentation
giving evidence of such fact, together with all information and
materials resulting from such Royalty Project which are necessary for
CCD to evaluate and further develop the technology resulting from such
Royalty Project, the date of such delivery being referred to herein as
the Technology Delivery Date.
5.2 At the latest within two (2) months after the Technology Delivery
Date, CCD shall notify Ciba in writing whether or not CCD agrees that
the Technology Transfer Criteria are met. In case CCD is of the
opinion that the Technology Transfer Criteria are not met, such notice
shall be
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accompanied by CCD's statement in writing on the rationale for its
opinion and its position regarding whether the Royalty Project should
be continued or terminated. If CCD agrees that the Technology
Transfer Criteria have been met, the date of CCD's notice shall be the
Technology Transfer Date.
5.3 If CCD is of the opinion that the Technology Transfer Criteria with
respect to a Royalty Project have not been met, Ciba at its option may
either agree to continue the research phase (in which case the parties
shall agree on the scope of the additional research work needed and
the provisions of Articles 5.1 and 5.2 shall be applicable upon
completion thereof) or inform CCD in writing that Ciba will terminate
the Royalty Project (in which case Article 3.7 shall be applicable).
5.4 Within one year from the Technology Transfer Date with respect to a
Royalty Project, CCD shall exercise the CCD License Option by written
notice to Ciba. If CCD does not so exercise the CCD License Option
for a Royalty Project within such period, CCD shall have no further
rights under this Agreement with respect to the Ciba intellectual
property developed in the course of such Royalty Project.
5.5 From and after the exercise of the CCD License Option with respect to
a Royalty Project, CCD shall report yearly to Ciba on the progress of
CCD's development program with respect to the technology resulting
from such Royalty Project. At the time of exercise of the CCD License
Option, CCD shall notify Ciba of the planned date for commercial
launch of the product or products to be developed. At the conclusion
of Stage II of the development plan, as defined in CCD's internal
procedure designated the "Innovation Process" as in effect on the date
hereof and which typically should occur within twenty-four months
after the Technology Transfer Date, CCD shall notify Ciba in writing
of any change in the planned commercial launch date. Thereafter, the
planned commercial launch date may be revised as reasonably necessary
due to technical difficulty in the development program.
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5.6 If CCD fails to launch a commercial product using technology resulting
from a Royalty Project by the planned launch date notified to Ciba at
the end of Stage II of CCD's, development plan, as revised in
accordance with the provisions of Article 5.5, CCD shall pay to Ciba,
on each anniversary of such planned launch date until the actual
commercial launch, the License Maintenance Fee specified in Attachment
B with respect to such Royalty Project. Such License Maintenance Fee
shall be fully creditable against royalties thereafter becoming due
with respect to Royalty Products resulting from such Royalty Project,
provided that such credit shall not be applied to more than fifty
percent (50%) of any installment of such royalties.
5.7 If, after CCD has exercised the CCD License Option with respect to a
Royalty Project, CCD ceases to pursue development of a commercial
product using the technology resulting from such Royalty Project, CCD
shall pay to Ciba (a) if such cessation is the result of a lack of
technical success in development, the Technical Exit Fee specified in
Attachment B for such Royalty Project, or (b) if such cessation is for
any other reason, the Strategic Exit Fee specified in Attachment B for
such Royalty Project, and in either case CCD's license with respect to
the technology resulting from such Royalty Project shall continue. If
at any time CCD or a CCD Affiliate or sublicensee launches a
commercial product using technology resulting from a Royalty Project
with respect to which a Strategic Exit Fee or Technical Exit Fee has
been paid, such fee shall be refunded.
5.8 Notwithstanding the provisions of Article 5.7, if in connection with
any Royalty Project, Ciba has not obtained patent protection in a
Designated Country for the products under development by CCD, or if
CCD has been unable to obtain a license to necessary third party
technology on commercially reasonable terms, or if Ciba has been
unable to obtain a consent of a third party required to license
necessary Ciba technology to CCD or a consent of a Ciba division's or
functional unit's management to license Ciba Non-CRU Intellectual
Property to
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CCD, no Strategic Exit Fee or Technical Exit Fee shall be payable by
CCD in the event of cessation of its development program.
6. PAYMENT OF ROYALTIES
6.1 CCD shall pay to Ciba a royalty on the Net Sales of Royalty Products
sold to third parties by CCD and its Affiliates and sublicensees or
used by CCD and its Affiliates and sublicensees in providing services
to third parties. The royalty rate shall be agreed upon by the
parties for each specific Royalty Project before its initiation in
accordance with Article 2.4 and shall for Unprotected Royalty Products
be fifty percent (50%) of the rate agreed upon for Patent-Protected
Royalty Products. If so agreed by the parties at the start of a
Royalty Project, for specific Royalty Projects, CCD shall have a
non-exclusive license, with the right to grant sublicenses, at a lower
royalty rate than would apply to an exclusive license, such lower rate
to be specified in the relevant Attachment B.
6.2 The royalties agreed upon under this Agreement for each Royalty
Project shall be payable in each country as follows:
(a) with respect to sales in each country with patent protection, for
the duration of the relevant patent(s), and
(b) with respect to sales in any country of the world without patent
protection, for a duration of seven (7) years from the day of the
first commercial introduction of any Unprotected Royalty Product
resulting from such Royalty Project.
6.3 After the first commercial sale of a Royalty Product resulting from a
Royalty Project, CCD shall deliver to Ciba, within sixty (60) days
after the end of each of CCD's fiscal half-years, a written statement
of the amount of royalties due hereunder for such period, by product,
and shall make payment of such royalties in United States Dollars. If
any amount used in the calculation of royalties is denominated in a
currency
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other than United States Dollars, such amount shall be translated into
United States Dollars in accordance with a method generally recognized
and consistently used by CCD in the preparation of its audited
financial statements. If governmental regulations prevent remittance
from a foreign country with respect to sales made in that country, the
obligation under this Agreement to pay royalties in respect of sales
in that country shall be suspended (but royalties shall continue to
accrue) until such remittances are possible, and Ciba shall have the
right, upon giving notice to CCD, to receive payment in that country
in the local currency.
6.4 Ciba shall have the right to have an independent certified public
accountant, to which CCD has no reasonable objection, inspect during
ordinary business hours relevant books and records of account of CCD,
its Affiliates and sublicensees to determine whether appropriate
accounting and payment have been made to Ciba, such inspection to be
made within one year after the end of the fiscal year to which such
books and records relate. Said independent certified public
accountant shall treat as confidential all information received in
connection with such inspection, and shall disclose to Ciba only
whether there has been a royalty underpayment and, if so, the amount
thereof. The fees and expenses of such accountant performing such
verification shall be borne by Ciba, unless such audit shows an
underpayment of seven and one-half percent (7 1/2%) or more. In the
case of any sublicense by CCD to any of its Affiliates or third
parties, CCD shall be responsible to Ciba for the adherence by such
Affiliates and sublicensees to the same obligations as those that
apply to CCD under this Agreement. CCD shall keep Ciba informed as to
the identity of each Affiliate and third party so sublicensed.
6.5 In case new applications in Diagnostics of the technology arising from
a Royalty Project become possible, which applications could not be
identified at the initiation of such Royalty Projects, the parties
will agree in good faith on the royalty rates for such applications.
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7. LIABILITY
CCD shall hold Ciba and its Affiliates and their officers and employees
harmless from and against any and all liability, costs, assessments, fines,
claims, actions, damages and expenses (including attorney's fees and costs
of investigation), including without limitation all product liability
claims and damages, arising in relation to the development, manufacture,
sublicense, use or sale by CCD of products incorporating the technology
resulting from a Royalty Project for use in Diagnostics, provided that
nothing herein shall require CCD to indemnify any party against such
liability, claims, etc., arising out of the gross negligence or willful
misconduct of such party, and provided, further, that any party seeking
indemnification hereunder shall promptly notify CCD of any claim for which
indemnification may be sought, shall permit CCD to assume the defense of
such claim with counsel of CCD's choice and shall cooperate as reasonably
requested by CCD in such defense.
8. INFRINGEMENT OF PATENT RIGHTS OF THIRD PARTIES
8.1 Ciba makes no representation or warranty that the practice of the
technology or manufacture, sale or use of the products resulting from
the Royalty Projects in Diagnostics, whether patented or not, does not
or will not infringe the rights of any third party.
8.2 In the event that a third party shall assert that the practice of any
of the technology or sale or use of any of the products resulting from
a Royalty Project for use in Diagnostics infringes any right of such
third party, the party having the knowledge thereof shall forthwith
give notice to the other. CCD shall have the exclusive right to
defend or otherwise dispose of such claim, provided that CCD shall
consult with Ciba regarding such defense or disposition. CCD shall be
entitled to offset fifty (50) percent of all reasonable defense costs
and all reasonable amounts paid in settlement of such claim, including
license fees and royalties under an appropriate license agreement
entered into with the third party in connection with such settlement,
or paid as damages
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for which CCD is held liable, against future royalties payable to Ciba
under this Agreement.
8.3 The License Maintenance Fees provided for in Article 5.6 hereof shall
not be payable with respect to any Royalty Project during any period
when CCD is prevented from practicing the technology arising from such
Royalty Project by reason of a claimed infringement of the rights of a
third party, and the due date of the first License Maintenance Fee
with respect to any Royalty Project shall be deferred to the extent of
any delay in CCD's product development plans arising from such claimed
infringement. If a claim of infringement affects only some of the
applications of such technology, the parties hereto shall negotiate in
good faith with respect to an appropriate reduction in the amount of
the License Maintenance Fee. If CCD abandons the development of the
technology arising out of a Royalty Project because of inability to
obtain a license under third party rights necessary to the success of
such development, no Strategic Exit Fee or Technical Exit Fee shall be
payable to Ciba as a result of such abandonment.
9. INFRINGEMENT OF PATENT RIGHTS BY THIRD PARTIES
In the event either party becomes aware that a third party is infringing
any patented intellectual property related to technology or products
resulting from a Royalty Project for use in Diagnostics, the parties shall
confer as to the manner in which they will proceed with respect to such
infringement. Ciba shall have the exclusive right to commence and
prosecute an action for patent infringement against such infringing party
(provided that Ciba shall consult with CCD with respect to such
commencement and prosecution), except that CCD shall have the right to
commence and prosecute a counterclaim in any suit defended by CCD pursuant
to Article 8 hereof (provided that CCD shall consult with Ciba with respect
to such commencement and prosecution). If Ciba undertakes such action or
CCD asserts such counterclaim, any damages recovered first shall be applied
to reimburse such party all expenses of such action not otherwise
reimbursed and next shall be paid to Ciba and CCD in proportion to
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their actual damages upon which such recovery was based. If Ciba fails to
commence action to prevent such infringement within ninety (90) days after
learning of the facts constituting such infringement, or if Ciba agrees to
settle any such action on a basis which would allow such infringement to
continue, then CCD shall cease to be obligated to pay royalties in respect
of any product or service incorporating technology or products resulting
from a Royalty Project until such infringement shall have ceased.
10. CONFIDENTIALITY
10.1 Ciba and CCD agree that they will each treat as strictly confidential
any and all proprietary information and data disclosed by the other
party in connection with the subject matter of this Agreement or
resulting from their activities hereunder (the "Information") and they
will not use such Information or disclose such Information to any
third party without the prior written consent of the other party,
except as may be required or permitted in the performance of this
Agreement or by applicable law.
10.2 Each party agrees that it will take all reasonable precautions to
ensure that it or any of its employees receiving such Information
disclosed pursuant to this Agreement will maintain the confidentiality
thereof.
10.3 Both parties agree that Information may be disclosed either orally or
in writing. When disclosed in writing, Information will be
identified, labelled and stamped as confidential. When disclosed
orally, such Information will first be identified as confidential at
the time of oral disclosure, with subsequent confirmation in writing
within thirty (30) days after such disclosure.
10.4 It is agreed, however, that such Information:
(a) which at the time of disclosure is published by a third party or
is otherwise in the public domain;
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(b) which after disclosure becomes part of the public domain
otherwise than through a breach of this Agreement by the receiving
party;
(c) which was known to the receiving party prior to receipt from the
disclosing party, provided that such prior knowledge can be
adequately substantiated by documentary evidence antedating the
disclosure by the other party;
(d) which is disclosed to the receiving party by a third party (other
than employees or agents of either party) who, in making such
Information available to the receiving party, is not in violation
of any obligation of confidentiality to the disclosing party
under this Agreement;
(e) which is shown by competent written evidence to be independently
developed by the receiving party; or
(f) which the receiving party is required to divulge either by a
court of law or in order to comply with any applicable law or
regulation (after providing the disclosing party with reasonable
notice of such requirement to divulge and with an opportunity to
obtain a protective order),
shall not be subject to the provisions of this Agreement.
10.5 Ciba recognizes the legitimate interest of CCD to publish its
Information in the field of Diagnostics. On the other hand, CCD
recognizes Ciba's interest that publications be made and lectures be
given only to the extent that it has reasonably safeguarded the
Information proprietary to Ciba through patent protection or otherwise
so that third parties cannot make commercial and/or industrial use of
Ciba's findings. For this purpose, CCD shall ensure that Ciba shall
have the opportunity to comment in advance on any publication or oral
presentation in public including disclosure of any Information of Ciba
relating to technology/products resulting from a Royalty Project and
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that no such publication or presentation shall be made by CCD without
Ciba's prior written consent. Ciba shall not unreasonably withhold or
delay its consent to such publication or presentation. CCD shall
submit to Ciba sixty (60) days in advance its request for such
publication or presentation.
11. MATERIAL TRANSFER
From time to time in connection with the activities contemplated by this
Agreement, each party may transfer to the other samples of proprietary
materials developed by the providing party. Except as otherwise expressly
provided herein or in any applicable license or supply agreement between
the parties, such materials and any materials derived therefrom a) shall
remain the property of the providing party, b) shall be used only for
purposes specified at the time such materials are provided, c) shall not be
transferred to any third party without the consent of the party by whom
such materials were provided, and d) shall be destroyed or returned to the
providing party upon request by the providing party. Unless otherwise
agreed in writing with respect to particular materials, the providing party
shall have a non-exclusive, royalty-free license to any inventions made by
the other party through use of the providing party's proprietary materials,
subject to the provisions of this Agreement.
12. TERM OF AGREEMENT
12.1 Subject to the provisions of Article 3, each party shall have the
right to terminate this Agreement upon six (6) months prior written
notice.
12.2 In the event of a termination of this Agreement, all licenses, options
and rights of negotiation granted hereunder with respect to Royalty
Projects agreed upon during the term hereof shall continue upon and
subject to the terms of this Agreement.
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13. LIMITATION OF ASSIGNMENT
This Agreement is personal in nature and neither of the parties shall,
without the consent of the other, assign or transfer its rights or
obligations hereunder to another company or person, except as herein
expressly provided or permitted, except that (a) either party may transfer
all or any portion of its rights and obligations to any of its Affiliates
which shall agree to be bound by the provisions hereof relating to the
assigned rights or obligations, in which event the assigning party shall
continue to be responsible for the performance by such Affiliate of its
obligations hereunder, and (b) CCD's rights hereunder with respect to
Royalty Projects which have been terminated or for which Ciba has proposed
that the Technology Transfer Criteria have been satisfied shall be
assignable to a successor to substantially the whole of one of its lines of
business. In the event that Ciba wishes to transfer the responsibility for
conducting the research phase of a Royalty Project to one of its
Affiliates, Ciba will first consult with CCD regarding the possible impact
of such transfer on the timely completion of the Royalty Project. If CCD
believes that CCD itself would be better able to complete such Royalty
Project than the Ciba Affiliate to whom Ciba proposes to transfer the
Project, Ciba will permit CCD to take over completion of the Royalty
Project, and the parties will negotiate in good faith with respect to the
terms on which Ciba will transfer to CCD the rights in Diagnostics to the
work already completed by Ciba, in accordance with the provisions of
Article 3.7. Subject to the foregoing provisions of this Section, this
Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assignees.
14. ENTIRE AGREEMENT; MODIFICATION AND WAIVER
This Agreement is the entire agreement between the parties with respect to
the subject matter hereof and supersedes any prior negotiations and
agreements, provided that all licenses granted by either party to the other
under the 1985 Research Agreement remain in effect. This Agreement may not
be modified or amended in any way except by mutual written agreement of the
parties. The failure of either party to enforce any provision hereof, or
any right hereunder, shall not be construed as a waiver of such provision
or right.
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15. GOVERNING LAW; JURISDICTION
This Agreement shall be governed by, and construed in accordance with, the
laws of the State of Delaware applicable to contracts executed and to be
fully performed in that State. All actions and proceedings arising out of
or relating to this Agreement shall be brought by the parties and heard and
determined only in a Delaware state court or a federal court sitting in
that State and the parties hereto consent to jurisdiction before and waive
any objections to the jurisdiction of any such court.
16. WAIVER OF JURY TRIAL
Each of the parties of this agreement hereby irrevocably waives all right
to trial by jury in any action, proceeding or counterclaim (whether based
on contract, tort, or otherwise) arising out of or relating to this
Agreement or the actions of any of them in the negotiation, administration,
performance and enforcement hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement or caused their
duly authorized representatives to execute this Agreement as of the date first
above written.
CIBA CORNING DIAGNOSTICS CIBA-GEIGY Limited
CORP.
By: /s/ Richard D. Falb By: /s/ D. Bellus
--------------------------------- --------------------
Richard D. Falb, Ph.D. Prof. D. Bellus
Senior Vice President, Research Head, CRU
& Development
and
By: /s/ A. Egloff
--------------------
Dr. A. Egloff
Legal Counsel, CRU
Attachment A Royalty Projects
Attachment B Financial Terms
23
<PAGE>
ROYALTY PROJECTS TO BE INCLUDED IN ATTACHMENTS A AND B
[CONFIDENTIAL TREATMENT REQUESTED]
24
<PAGE>
Attachment A1
[CONFIDENTIAL TREATMENT REQUESTED]
(3 pages)
<PAGE>
Attachment A2
[CONFIDENTIAL TREATMENT REQUESTED]
(3 pages)
<PAGE>
Attachment A3
[CONFIDENTIAL TREATMENT REQUESTED]
(4 pages)
<PAGE>
Attachment A4
[CONFIDENTIAL TREATMENT REQUESTED]
(4 pages)
<PAGE>
ATTACHMENT B
Ciba-Geigy/Ciba Corning Royalty Projects 3. Jan. 96
Attachment B
EXIT FEES AND ROYALTIES
(All numbers in MM CHF)
<TABLE>
<CAPTION>
Project or Application Fees Royalty rate*
- ---------------------- ---- -------------
refer to Strategic Technical License Exclusive
Attachment Failure Fee Failure Fee Maintenance License
<S> <C> <C> <C> <C> <C>
A4 7.0 3.5 0.35 3%
[CONFIDENTIAL
TREATMENT A1 5.0 2.5 0.25 3%
REQUESTED]
A2 7.0 3.5 0.35 3%
A3 4.0 2.0 0.20 3%
</TABLE>
* For products that are within the scope of a patent issued in any Designated
Country but that are sold in countries where patents are pending or are not
filed, the royalty rate shall be 50% of the rate specified in the table.
APPROVED BY:
/s/ D. Bellus 8.9.1996
- ------------------------------ -----------------------------------
SVP,R&D,CCD Head CRU, Ciba
<PAGE>
Exhibit 10.88
May 1, 1996
Dr. Richard W. Barker
199 Hills Point Road
Westport, CT 06880
Dear Richard:
I am delighted to confirm our offer of employment as Senior Vice President of
Chiron and President of Chiron Diagnostics, which includes all of Chiron's
commercial activities associated with health metrics. As you know, Metrics is
the cornerstone of our strategy for disease control, and for improving the
practice and understanding of medicine. This is currently the largest division
of Chiron and is comprised of 1) the old Ciba Corning Diagnostics which
includes two significant businesses: (a) a leadership position in critical
blood analytes (point of care), and (b) a strong position in the
immunodiagnostics sector, 2) the bDNA probes (Quantiplex) business which
pioneered quantitative therapeutic monitoring, 3) the Ortho/Chiron joint
business in viral screening and, 4) Direct Access Diagnostics, a joint business
with Johnson and Johnson, involving a home test for HIV. We believe your
previous background in healthcare and your current operational role at IBM in
medical information systems, will complement our executive team, and will
provide the leadership that will enable Chiron Diagnostics to become an industry
leader, a highly profitable business, and also make a significant impact on
clinical practice.
Beside your role at Chiron Diagnostics, we expect you to be a key participant in
determining corporate strategy and interacting significantly with the other
Chiron business units in developing therametric strategies.
<PAGE>
Dr. Richard Barker
May 1, 1996
Page 2
Your starting salary will be paid at a monthly rate of $27,083.34 ($325,000
annually). In addition, you will be eligible to participate in Chiron's
Variable Compensation Plan in 1996, which as presently structured, is paid out
in the first quarter of each calendar year based upon company and individual
performance in the preceding year. Payouts for 1996 will be made in the first
quarter of 1997. The payout potential for your position under the current
program is up to 100% of your actual salary in the prior year. In the first
year we guarantee a bonus of $225,000 prorated to the period of your service in
1996.
You will be eligible to participate in our stock option program. Subject to the
approval of the Board of Directors, you will be awarded a stock option on 25,000
shares of Chiron Common Stock. We expect that the grant will be approved
promptly following your acceptance of our offer and will be effective as of your
employment date. The exercise price of the option will be set at the actual
market price of a share of Chiron stock on the day the grant is effective.
These options have a ten year term and vest ratably over the first four years of
the term. Under the option program as it is currently administered, you will be
eligible for additional stock option grants on an annual basis based on your
performance. You will also be awarded a grant of 10,000 shares of Chiron
restricted stock which will vest at the end of five years, subject again to
Board approval which we expect to obtain promptly. In the unlikely event that
you are terminated involuntarily, this restricted stock will be vested
proportionately according to your length of service.
I have enclosed a form describing certain highlights of your Chiron benefits and
detail of the employment process.
<PAGE>
Dr. Richard Barker
May 1, 1996
Page 3
Richard, we hope the terms of this offer are satisfactory and we look forward to
a favorable response. We are all delighted at the prospect of having you as a
colleague. If you have any questions in the mean time, feel free to call me.
Sincerely,
CHIRON CORPORATION
/s/ William J. Rutter
William J. Rutter
Chairman
Dictated by Dr. Rutter
and signed in his absence.
cc: Human Resources
WJR:ss
Please indicate your acceptance of the terms of this offer by signing this
letter and returning it to me at your earliest convenience.
/s/ Richard Barker/May 4, 1996
- ---------------------------------------------
Name/Date
P.S. The terms of this offer will be effective for a period of 15 days and are
contingent upon your acceptance within that time and your willingness to
relocate as soon as practicable thereafter.
<PAGE>
Exhibit 10.89
REVOLVING CREDIT AGREEMENT
REVOLVING CREDIT AGREEMENT (this "Agreement") dated as of March 23, 1996
between CHIRON CORPORATION, a Delaware corporation (the "Borrower"), and MORGAN
GUARANTY TRUST COMPANY OF NEW YORK (the "Bank").
NOW, THEREFORE, IT IS AGREED:
1. THE ADVANCES. Subject to and upon the terms and conditions set forth
herein, the Bank agrees to make advances (the "ADVANCES") to the Borrower at any
time and from time to time prior to March 22, 1997 (the "EXPIRY DATE");
provided, however, that the aggregate principal amount of Advances outstanding
shall at no time exceed U.S. $50,000,000 (Fifty Million U.S. Dollars) (the
"COMMITMENT").
2. PURPOSE. The Borrower shall use the proceeds of the Advances for
general corporate purposes, including acquisition financing. The Borrower
agrees to indemnify the Bank and hold the Bank harmless from and against any and
all liabilities, losses, damages, costs and expenses of any kind which may be
incurred by the Bank relating to or arising out of any actual or proposed use of
proceeds of Advances hereunder.
3. AVAILABILITY. The following Advances shall be available to the
Borrower hereunder. (a) Prime Rate Advances of up to 270 days and Money Market
Rate Advances, a minimum of 7 days up to 270 days (in the Bank's discretion, on
such terms and bearing such rates of interest as may be agreed at the time of
making such Advance); or (b) Eurodollar Rate Advances of one, two, three or six
months (nine months, if available). For the purposes of this Agreement, it is
understood that (i) the duration of each Advance shall be referred to as an
"INTEREST PERIOD", (ii) the Borrower is required to repay each Advance on the
last day of the Interest Period for such Advance; and (iii) no Advance shall
have an Interest Period which extends beyond the Expiry Date.
4. INTEREST. Interest shall be payable in respect of the outstanding
principal amount of each Advance at the maturity thereof. Advances shall bear
interest at the following rates per annum: (a) if a Prime Rate Advance, at the
Bank's floating Prime Rate; (b) if a Money Market Rate Advance, at the quoted
Money Market Rate; or (c) if a Eurodollar Rate Advance, 0.08 of 1% in excess of
the Bank's Eurodollar Rate.
Overdue principal and, to the extent permitted by law, overdue interest in
respect of each Advance and any other overdue amount payable by the Borrower
hereunder shall bear interest, payable on demand, at a rate per annum equal to
2-1/2% per annum in excess of the Bank's Prime Rate in effect from time to time.
For the purposes of this Agreement, "PRIME RATE" and "MONEY MARKET RATE"
shall mean those rates so designated by the Bank or determined in accordance
with the practice of the Bank from time to time, it being understood that the
Prime Rate shall in no event be less than 1/2 of 1% in excess of the rate
payable by the Bank from time to time for overnight Federal funds. The Bank
shall determine the "EURODOLLAR RATE" by taking the rate for a loan of a
comparable amount and duration as the proposed Advance from page 3750 of the
"Telerate Screen".
5. INCREASED COSTS. If at any time the Bank shall have determined (which
determination shall, absent manifest error, be final, conclusive and binding on
all parties hereto) that as a result of any changes in any applicable law or
governmental rule, regulation or order (including any applicable law or
governmental rule, regulation or order respecting capital adequacy), or any
interpretation thereof, including the enactment of any law or governmental rule,
regulation or order (whether or not having the force of law), the cost to the
Bank of maintaining its Commitment hereunder or making, funding or
1
<PAGE>
maintaining any Advance shall be increased or the yield to the Bank on such
Advance shall be diminished, then the Bank shall promptly notify the Borrower
thereof, showing in reasonable detail (without revealing any proprietary or
confidential information) the basis for the calculation of such increased costs
or diminished yield, and the Borrower shall pay to the Bank an amount sufficient
to indemnify the Bank thereagainst.
6. COMMITMENT FEE. The Borrower shall pay the Bank a fee ("COMMITMENT
FEE") computed at a rate per annum of 0.05 of 1% on the average daily unused
portion of the Commitment. Accrued Commitment Fee shall by payable quarterly on
the last business day of each calendar quarter and on the Expiry Date or earlier
termination of the Commitment.
7. NOTICE OF INTENTION TO BORROW. The Borrower shall give the Bank prior
notice at its address on the signature page hereof (a "NOTICE OF BORROWING") by
telephone or facsimile (to be subsequently confirmed in writing) or in writing
(effective upon receipt) of its intention to borrow, specifying the date,
amount, type and tenor of the proposed Advance. The Borrower shall give such
Notice of Borrowing at least 2 business days prior to any proposed Eurodollar
Rate Advance and by 11:00 a.m. New York Time on the date of any proposed Prime
Rate Advance.
8. MONEY MARKET RATE ADVANCES. The Borrower may request a Money Market
Rate quote by telephone on any business day. If the Borrower accepts such Money
Market Rate, it must confirm such acceptance in writing.
9. PAYMENTS. All payments made hereunder or under the Note (as
hereinafter defined) shall be made to the Bank without deductions for any
present or future taxes, withholdings, deductions or any other charges (the
"TAXES") imposed or required by any political or taxing authority, it being
understood that the net amount received by the Bank after payment of the Taxes
by the Borrower shall not be less than the payment provided for hereunder. All
payments shall be made to the office of Morgan Guaranty Trust Company of New
York, New York, ABA # 021000238 for credit to loan department, module #22,
Account #999-99-090. Commitment Fee and interest payments (except with respect
to Prime Rate Advances) shall be calculated for the actual number of days
elapsed on the basis of a 360-day year. Interest payments with respect to Prime
Rate Advances shall also be calculated for the actual number of days elapsed but
on the basis of a 365- or 366-day year, as the case may be.
10. PREPAYMENT FUNDING COSTS. Any Prime Rate Advance may be prepaid
without premium or penalty upon two business days prior notice to the Bank. If
for any reason Eurodollar Rate or Money Market Rate Advances are prepaid, as a
result of acceleration or otherwise, or if the Borrower fails for any reason to
borrow in accordance with a Notice of Borrowing, the Borrower shall pay to the
Bank, on demand, an additional amount as shall be required to compensate the
Bank for any loss connected with its reemployment of the amount so prepaid or of
those funds acquired by the Bank to fund the Advance proposed in such Notice of
Borrowing, as the case may be.
11. CONDITIONS PRECEDENT. The obligation of the Bank to make Advances to
the Borrower hereunder is subject to the satisfaction of the following
conditions at the time of the making of the first Advance (except as hereinafter
indicated):
a) The Bank shall have received a duly executed note (the "NOTE") in
the form of EXHIBIT A hereto.
b) There shall have been delivered to the Bank (i) certified copies
of (x) the Borrower's charter and by-laws and (y) resolutions of the
Borrower's board of directors or equivalent body authorizing the
transaction evidenced hereby, and (ii) evidence satisfactory to the Bank of
the authority of the Borrower's signatory (ies) hereto and to the Note.
2
<PAGE>
c) At the time of the making of each Advance, and after giving
effect thereto, there shall exist no Event of Default (as hereinafter
defined) and no condition, event or act which, with the giving of notice or
lapse of time or both, would constitute an Event of Default, and all
representations and warranties made by the Borrower herein shall be true
and correct with the same effect as if those representations and warranties
had been made on and as of such date.
d) The Bank shall have received from Ciba-Geigy Ltd. (the
"Guarantor") an unconditional guaranty of all of the Borrower's obligations
hereunder and under the Note (the "Guaranty"), along with a legal opinion.
12. REPRESENTATIONS AND WARRANTIES. The Borrower makes the following
representations and warranties, all of which shall survive the execution and
delivery of this Agreement.
a) The Borrower is duly organized and validly existing in good
standing in the jurisdiction of its incorporation.
b) This Agreement and the Note are duly and properly authorized and
executed by the Borrower and will constitute its legal, valid and binding
obligations enforceable in accordance with their respective terms.
13. COVENANTS. The Borrower convenants and agrees that, until all
obligations incurred by the Borrower under this Agreement are paid in full and
so long as the Commitment is in effect, the Borrower will:
(a) Provide to the Bank (i) as soon as they are available, copies of
all financial statements of the Borrower required to be filed with the
Securities and Exchange Commission; and (ii) with reasonable promptness,
any other information as the Bank may from time to time reasonably request.
(b) Promptly give written notice to the Bank of any condition, event
or act which, with or without the giving of notice or the lapse of time, or
both, would constitute an Event of Default (as hereinafter defined).
(c) Not wind up, liquidate or dissolve its affairs or merge or
consolidate into any entity, or convey, sell, lease or otherwise dispose of
(or agree to do any of the foregoing at any future time) all or
substantially all or a substantial part of its property or assets, except
that (i) any corporation may merge or liquidate into the Borrower provided
that either (x) the Borrower shall be the surviving corporation, or (y) if
the Borrower is not the surviving corporation, the Bank shall have received
written confirmation satisfactory to it that the Guaranty shall remain in
full force and effect on behalf of the surviving corporation, and (ii) the
Borrower may merge into the Guarantor.
14. EVENTS OF DEFAULT. If any of the following events ("EVENTS OF
DEFAULT") shall occur and be continuing:
(a) The Borrower shall default in the payment of any principal amount
due hereunder or under the Note as and when due or shall default in the
payment of any interest amount due hereunder or under the Note and such
default shall not be cured within five (5) days;
(b) The Borrower shall fail to perform or observe any material term
or covenant contained in this Agreement and such failure shall not be
remedied within 30 days, or any representation or warranty made by the
Borrower in this Agreement or in any certificate or other
3
<PAGE>
document or statement furnished at any time hereunder or in connection
herewith shall prove to have been incorrect or untrue in any material
respect on the date as of which made:
(c) A default or event of default with respect to payment shall occur
in respect of bonds, notes, other loans or similar evidences of
indebtedness of the Borrower or any subsidiary in a principal amount of at
least U.S. $5,000,000.00, the effect of which is to cause, or to permit the
holder of such indebtedness to cause, such indebtedness to become due prior
to its stated maturity, or any such indebtedness shall not be paid within
any applicable grace period after the due date thereof;
(d) The Guaranty shall cease to be in full force and effect for any
reason whatsoever, or
(e) The Borrower or the Guarantor shall make an assignment for the
benefit of creditors, shall generally fail to pay its debts as they become
due, shall file a petition commencing a voluntary case under any
reorganization or bankruptcy laws, or an involuntary case under such laws
shall be commenced against the Borrower or the Guarantor and such
proceeding shall remain undismissed or unstayed for a period of 30 days;
then, and in any such event, the Bank may by notice to the Borrower take either
or both of the following, actions: (i) terminate the Commitment, whereupon the
same shall terminate forthwith, and/or (ii) declare the Advances and all
interest accrued and unpaid thereon, any accrued Commitment Fee, and all other
sums due hereunder, to be immediately due and payable without presentment,
demand, protest or further notice of any kind, all of which are hereby expressly
waived by the Borrower.
15. SUCCESSORS AND ASSIGNS: PARTICIPATIONS.
(a) This Agreement shall be binding upon the Borrower and its
successors and assigns and is for the benefit of the Bank and its
successors and assigns, except that the Borrower may not assign or
otherwise transfer its rights or obligations under this Agreement or the
Note.
(b) The Bank may at any time sell, assign, transfer, grant
participations in, or otherwise dispose of all or any portion of the
Advance or any Note or of its right, title and interest therein or thereto
or in or to the Agreement (each a "Participation") to any other lending
office or to any other entity (a "Participant"). The Borrower agrees that
each Participant shall be entitled to the benefits of Section 5, 10 and 16
hereof to the extent of its Participation as if such Participant were the
Bank.
16. MISCELLANEOUS; EXPENSES; INDEMNIFICATION. The provisions of this
Agreement may not be waived, modified or amended except by an instrument in
writing signed by the party to be charged with such waiver, modification or
amendment. No failure or delay on the part of the Bank in exercising any of its
powers or rights hereunder or under any Note, nor partial or single exercise
thereof, shall constitute a waiver thereof or shall preclude any other or future
exercise of any other power or right. The Borrower shall pay all out-of-pocket
expenses and internal charges of the Bank (including fees and disbursements of
counsel and time charges of attorneys who may be employees of the Bank) in
connection with any Event of Default and collection or other enforcement
proceedings resulting therefrom. The Borrower agrees to indemnify the Bank and
hold the Bank harmless from and against any and all liabilities, loss, damage,
costs and expenses of any kind (including, without limitation, the actual fees
and disbursements of counsel for the Bank in connection with any investigative,
administrative or judicial proceeding, whether or not the Bank shall be
designated a party thereto) which may be incurred by the Bank relating to or
arising out of this Agreement or any Note or the use of the proceeds of any
Advance.
4
<PAGE>
17. GOVERNING LAW AND JURISDICTION: WAIVER OF JURY TRIAL. THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK. THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL
BY JURY.
IN WITNESS WHEREOF, the Borrower and the Bank have caused their duly
authorized officers to execute and deliver this Agreement as of the date first
above written.
CHIRON CORPORATION
By /s/ James E. Kent
-------------------------------------
Title: James E. Kent
Treasurer
ADDRESS FOR NOTICES
4560 Horton Street
Emeryville, CA 94608-2916
Phone: (510) 655-8730
Fax: (510) 601-3343
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By /s/ Diana Imhof
-------------------------------------
Title: Vice President
ADDRESS FOR NOTICES
60 Wall Street
New York, NY 10260
Attn: Diana H. Imhof
Phone: (212) 648-6948
Fax: (212) 648-5014
5
<PAGE>
PROMISSORY NOTE
U.S. $50,000,000
FOR VALUE RECEIVED, the undersigned, CHIRON CORPORATION, a Delaware
corporation, (the "BORROWER"), hereby promises to pay to the order of Morgan
Guaranty Trust Company of New York, (the "BANK"), in lawful money of the United
States of America, in immediately available funds, at the principal office of
Morgan Guaranty Trust Company of New York, the principal amount of each advance
(an "ADVANCE") endorsed on the schedule attached hereto (the "SCHEDULE") on the
maturity date thereof.
The Borrower promises also to pay interest on the unpaid principal amount
of each Advance in like money from and including the date of each Advance until
paid in full at the rate specified in the Schedule, such interest to be paid on
the last day of the Interest Period for such Advance. Interest shall be
calculated for the actual number of days elapsed (i) on the basis of a 365 or
366 day year, as the case may be, in the case of any Advance bearing interest at
a rate based on the Bank's Prime Rate, or (ii) on the basis of a 360-day year,
for all other Advances.
The Borrower hereby authorizes the Bank to endorse on the Schedule the
date, amount and maturity date of, and interest rate with respect to, each
Advance evidenced thereby and all payments of principal thereof, provided that
the failure to make or any error in making such endorsement shall not affect the
obligations of the Borrower to the Bank.
This note is the Note referred to in the Revolving Credit Agreement dated
as of March 23, 1996 between the Borrower and the Bank (as from time to time in
effect, the "AGREEMENT") and is entitled to the benefits thereof.
If an Event of Default (as defined in the Agreement) shall occur and be
continuing, the principal of and accrued interest on this note may be declared
to be due and payable in the manner and with the effect provided in the
Agreement.
The Borrower hereby waives presentment, demand, protest or notice of any
kind in connection with this note.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK.
CHIRON CORPORATION
By ______________________________________
Title: James E. Kent
Treasurer
6
<PAGE>
Exhibit 10.90
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
$195,000,000
PURCHASE AGREEMENT
BETWEEN
BNP LEASING CORPORATION,
("BNPLC")
AND
CHIRON CORPORATION,
("CHIRON")
JUNE 28, 1996
(BUILDINGS #4 AND #7A/CHIRON'S MASTER CAMPUS PLAN, EMERYVILLE, CALIFORNIA)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PURSUANT TO AND AS MORE PARTICULARLY PROVIDED IN PARAGRAPH 12 OF THIS AGREEMENT,
THE LEASE REFERENCED HEREIN AND THIS PURCHASE AGREEMENT ARE TO CONSTITUTE, FOR
INCOME TAX PURPOSES ONLY, A FINANCING ARRANGEMENT OR CONDITIONAL SALE. AS
PROVIDED IN PARAGRAPH 12 OF THIS AGREEMENT, BNPLC AND CHIRON EXPECT THAT CHIRON
(AND NOT BNPLC) SHALL BE TREATED AS THE TRUE OWNER OF THE PROPERTY FOR INCOME
TAX PURPOSES, THEREBY ENTITLING CHIRON (AND NOT BNPLC) TO TAKE DEPRECIATION
DEDUCTIONS AND OTHER TAX BENEFITS AVAILABLE TO THE OWNER.
<PAGE>
TABLE OF CONTENTS
Page
----
1. CHIRON'S OPTIONS AND OBLIGATIONS ON THE DESIGNATED SALE DATE............ 1
(a) CHOICES............................................................ 1
(b) ELECTION BY CHIRON................................................. 2
(c) TERMINATION OF CHIRON'S OPTION TO PURCHASE......................... 2
(d) PAYMENT TO BNPLC................................................... 3
(e) EFFECT OF OPTIONS ON SUBSEQUENT TITLE ENCUMBRANCES................. 3
2. TERMS OF CONVEYANCE UPON PURCHASE....................................... 3
3. SURVIVAL OF CHIRON'S OBLIGATIONS........................................ 4
(a) STATUS OF THIS AGREEMENT........................................... 4
(b) REMEDIES UNDER THE LEASE AND THE GROUND LEASE...................... 4
4. SECURITY FOR CHIRON'S OBLIGATIONS....................................... 5
(a) PROVISIONS FOR FINANCIAL COVENANTS OR SECURITY..................... 5
(b) CONDITIONS TO CHIRON'S USE OF A FINANCIAL COVENANT AMENDMENT....... 6
(c) CONDITIONS TO CHIRON'S USE OF A PLEDGE AMENDMENT................... 6
(d) CONSEQUENCES OF A FAILURE TO AGREE................................. 7
(e) TERM AND CONDITIONS RELATING TO RESTRICTED FUNDS................... 7
5. SECURITY FOR BNPLC'S OBLIGATIONS........................................ 9
6. BNPLC'S REMEDIES CUMULATIVE............................................. 10
7. ATTORNEYS' FEES AND LEGAL EXPENSES...................................... 10
8. ESTOPPEL CERTIFICATE.................................................... 10
9. SUCCESSORS AND ASSIGNS.................................................. 10
10. MISCELLANEOUS........................................................... 10
(a) NOTICES............................................................ 10
(b) SEVERABILITY....................................................... 13
(c) NO IMPLIED WAIVER.................................................. 13
(d) NO IMPLIED REPRESENTATIONS BY BNPLC................................ 13
(e) ENTIRE AGREEMENT................................................... 13
(f) OWNERSHIP OF CHIRON................................................ 13
(g) TIME IS OF THE ESSENCE............................................. 13
(h) GOVERNING LAW...................................................... 14
(i) PARAGRAPH HEADINGS................................................. 14
(j) OTHER TERMS AND REFERENCES......................................... 14
<PAGE>
(i) NOT A PARTNERSHIP, ETC............................................. 14
(k) NO DISCRIMINATION.................................................. 14
11. WAIVER OF JURY TRIAL.................................................... 14
12. INCOME TAX REPORTING.................................................... 15
Exhibits and Schedules
EXHIBIT A......................................................Legal Description
EXHIBIT B.............................................................Grant Deed
EXHIBIT C...................................Preliminary Change of Ownership Form
EXHIBIT D............................................Bill of Sale and Assignment
EXHIBIT E.........................................Acknowledgement and Disclaimer
EXHIBIT F.......................................Documentary Transfer Tax Request
EXHIBIT G................................................Secretary's Certificate
EXHIBIT H....................................Instruction Letter to Title Insurer
EXHIBIT I.................................Certificate Concerning Tax Withholding
EXHIBIT J.........................................Amended and Restated Guarantee
EXHIBIT K..............................Matters to be Covered by Pledge Documents
LIST OF DEFINED TERMS.........................................Shared Definitions
(ii)
<PAGE>
PURCHASE AGREEMENT
This PURCHASE AGREEMENT (this "AGREEMENT"), by and between BNP LEASING
CORPORATION, a Delaware corporation ("BNPLC"), and CHIRON CORPORATION, a
Delaware corporation ("CHIRON"), is dated June 28, 1996, but intended to be
effective as of the Effective Date. ("EFFECTIVE DATE" and other capitalized
terms used and not otherwise defined in this Agreement are intended to have the
meanings assigned to them in the LIST OF DEFINED TERMS attached to and made a
part of this Agreement.)
RECITALS
Pursuant to the Ground Lease BNPLC is leasing the Land, which as of the
Effective Date is as described in EXHIBIT A, from Chiron. Pursuant to the Lease
BNPLC is also subleasing the Land to Chiron and leasing to Chiron the
Improvements to be constructed on the Land as described in the Lease. (BNPLC's
leasehold estate in the Land under the Ground Lease and BNPLC's interest in the
Improvements and other real and personal property from time to time covered by
the Lease and included within the "Property" as defined therein are hereinafter
collectively referred to as the "PROPERTY".)
Chiron and BNPLC have reached agreement upon the terms and conditions upon
which Chiron will purchase or arrange for the purchase of the Property, and by
this Agreement they desire to evidence such agreement.
AGREEMENTS
NOW, THEREFORE, in consideration of the above recitals and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. CHIRON'S OPTIONS AND OBLIGATIONS ON THE DESIGNATED SALE DATE.
(a) CHOICES. On the Designated Sale Date Chiron shall have the right
and the obligation to either:
(i) purchase or cause an Affiliate of Chiron to purchase BNPLC's
interest in the Property and in Escrowed Proceeds, if any, for a cash price
equal to the Break Even Price; or
(ii) cause an Applicable Purchaser who is not an Affiliate of
Chiron to purchase BNPLC's interest in the Property and in Escrowed
Proceeds, if any, for a net cash price not less than the Fair Market Value
of the Property. If, however, the Fair Market Value is less than the
Residual Risk Percentage of Stipulated Loss Value outstanding immediately
prior to the purchase, BNPLC may elect to keep the Property and any
Escrowed Proceeds rather than sell to the Applicable Purchaser, in which
case Chiron must (1) pay BNPLC a supplemental payment equal to (A) (x)
Stipulated Loss Value, times (y) 100% minus the Residual Risk Percentage,
less (B) any Escrowed Proceeds then held and to be retained by BNPLC, and
(2) promptly deliver to BNPLC copies of all plans and specifications for
the Property prepared in connection with the construction contemplated by
the Lease and all other books and records of Chiron which will be necessary
or useful to any future owner's or occupant's use of the Property in the
manner permitted by the Lease, including books and records evidencing the
testing and validation of
<PAGE>
Property for the uses permitted by the Lease. Unless BNPLC elects to keep
the Property pursuant to the preceding sentence, Chiron must make a
supplemental payment to BNPLC on the Designated Sale Date equal to the
excess (if any) of the Break Even Price over the cash price actually paid
to BNPLC on the Designated Sale Date by the Applicable Purchaser for
BNPLC's interest in the Property and in any Escrowed Proceeds. However,
provided no Event of Default has occurred and is continuing under the
Lease, and provided further that neither Chiron nor any Applicable
Purchaser has failed to pay any amount required to be paid by this
Agreement on the date such amount first became due, any supplemental
payment required by the preceding sentence shall not exceed (1) Stipulated
Loss Value on the Designated Sale Date, times (2) 100% minus the Residual
Risk Percentage. (Any supplemental payment payable to BNPLC by Chiron,
rather than by the Applicable Purchaser, pursuant to this clause (ii) is
herein referred to as the "SUPPLEMENTAL PAYMENT.") If the cash price
actually paid by the Applicable Purchaser to BNPLC exceeds the Break Even
Price and all other sums that are then due from Chiron to BNPLC, Chiron
shall be entitled to such excess.
(b) ELECTION BY CHIRON. Chiron shall have the right to elect whether
it will satisfy the obligations set out in clause (i) or (ii) of the preceding
subparagraph 1.(a); provided, however:
(i) To give BNPLC the opportunity to have the Fair Market Value
determined by an appraiser before the Designated Sale Date, Chiron must,
unless Chiron concedes that Fair Market Value will be no less than the
Residual Risk Percentage of Stipulated Loss Value on the Designated Sale
Date, provide BNPLC with a Remarketing Notice. As used in this Agreement,
"REMARKETING NOTICE" means a notice given by Chiron to BNPLC (and to each
of the Participants) no earlier than two hundred seventy days before the
Designated Sale Date and no later than one hundred and eighty days before
the Designated Sale Date, specifying that Chiron reserves the right to
dispute that the Fair Market Value will be greater than the Residual Risk
Percentage of the Stipulated Loss Value. No Remarketing Notice will be
required unless Chiron will reserve the right to dispute that Fair Market
Value will equal or exceed the Residual Risk Percentage of Stipulated Loss
Value on the Designated Sale Date. But if for any reason (including any
acceleration of the Designated Sale Date as in the definition of Designated
Sale Date in the LIST OF DEFINED TERMS) Chiron fails to provide a
Remarketing Notice within the time periods specified in the definition of
Remarketing Notice above, Fair Market Value shall, for purposes of this
Agreement, be deemed to be no less than the Residual Risk Percentage of
Stipulated Loss Value on the Designated Sale Date.
(ii) To give BNPLC the opportunity to prepare the grant deed and
other documents that BNPLC must tender pursuant to Paragraph 2
(collectively, the "SALE CLOSING DOCUMENTS") before the Designated Sale
Date, Chiron must, if it is to satisfy the obligations set forth in
subparagraph 1.(a) by causing an Affiliate of Chiron or an Applicable
Purchaser to purchase BNPLC's interest in the Property, irrevocably specify
the Affiliate or the Applicable Purchaser in notice to BNPLC given at least
fifteen days prior to the Designated Sale Date. If for any reason Chiron
fails to so specify an Affiliate or an Applicable Purchaser, Chiron shall
be deemed to have irrevocably elected to satisfy the obligations set forth
in subparagraph 1.(a)(i) by itself purchasing the BNPLC's interest in the
Property.
(c) TERMINATION OF CHIRON'S OPTION TO PURCHASE. Without limiting
BNPLC's right to require Chiron to satisfy the obligations imposed by
subparagraph 1.(a), Chiron shall have no further option hereunder to purchase
the Property if either:
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(i) Chiron shall have elected to satisfy its obligations under
subparagraph 1.(a)(ii) on a Designated Sale Date and BNPLC shall have
elected to keep the Property on such Designated Sale Date in accordance
with subparagraph 1.(a)(ii); or
(ii) Chiron shall have failed on a Designated Sale Date to make
or cause to be made all payments to BNPLC required by this Agreement or by
the Lease and such failure shall have continued beyond the thirty day
period for tender specified in the next sentence.
If BNPLC does not receive all payments due under the Ground Lease, under the
Lease or hereunder on a Designated Sale Date, Chiron may nonetheless tender to
BNPLC the full Break Even Price and all amounts then due under the Ground Lease
or the Lease, together with interest on the total Break Even Price computed at
the Default Rate from the Designated Sale Date to the date of tender, and if
presented with such a tender within thirty days after the applicable Designated
Sale Date, BNPLC must accept it and promptly thereafter deliver any Escrowed
Proceeds and a deed and all other Sale Closing Documents listed in Paragraph 2.
(d) PAYMENT TO BNPLC. All amounts payable under the preceding
subparagraphs 1.(a) or 1.(c) by Chiron and, if applicable, by the Applicable
Purchaser must be paid directly to BNPLC, and no payment to any other party
shall be effective for the purposes of this Agreement. In addition to the
payments required under subparagraph 1.(a), on the Designated Sale Date Chiron
must pay all amounts then due to BNPLC under the Lease. BNPLC will remit any
excess amounts due Chiron pursuant to the last sentence of
subparagraph 1.(a)(ii) promptly after BNPLC's receipt of the same.
(e) EFFECT OF OPTIONS ON SUBSEQUENT TITLE ENCUMBRANCES. It is the
intent of BNPLC and Chiron that any conveyance of the Property to Chiron or any
Applicable Purchaser pursuant to this Agreement shall cut off and terminate any
interest in the Property claimed by, through or under BNPLC, including the
Participants (but not any obligations of Chiron to BNPLC under the Lease, the
Ground Lease or this Agreement then due or that may become due thereafter
because of any expense or liability incurred by BNPLC resulting in whole or in
part from events or circumstances occurring before such conveyance), including
any Liens Removable by BNPLC and including any leasehold or other interests
conveyed by BNPLC in the ordinary course of BNPLC's business. Anyone accepting
or taking any interest in the Property by or through BNPLC after the date of
this Agreement without the express prior consent of Chiron and with actual or
constructive notice of this Agreement shall acquire such interest subject to the
rights and options granted Chiron hereby. Further, Chiron and any Applicable
Purchaser shall be entitled to pay any payment required by this Agreement for
the purchase of the Property directly to BNPLC notwithstanding any prior
conveyance or assignment by BNPLC, voluntary or otherwise, of any right or
interest in this Agreement or the Property, and neither Chiron nor any
Applicable Purchaser shall be responsible for the proper distribution or
application of any such payments by BNPLC. The parties shall record a
memorandum of this Agreement on the Effective Date for purposes of effecting
such constructive notice.
2. TERMS OF CONVEYANCE UPON PURCHASE. Immediately after Chiron tenders
all payments to BNPLC as required by and pursuant to the preceding Paragraph 1,
BNPLC must, unless it is to keep the Property as permitted by
subparagraph 1.(a)(ii), deliver Escrowed Proceeds, if any, and convey all of its
right, title and interest in the Property by grant deed to Chiron or the
Applicable Purchaser, as the case may be, subject only to the Permitted
Encumbrances and any other encumbrances that do not constitute Liens Removable
by BNPLC. However, such conveyance shall not include the right to receive any
payment under the Ground Lease then due BNPLC or that may become due thereafter
because of any expense or liability incurred by BNPLC resulting in whole or in
part from events or circumstances occurring before such conveyance, nor shall
such conveyance include (except to the extent expressly provided in the Bill of
Sale and Assignment of Contract Rights and Intangible Assets delivered by BNPLC
as one of the Sale Closing Documents) the right to receive any payment under the
Lease then due BNPLC or that may become due thereafter because of any expense or
liability incurred by BNPLC resulting in whole or in part from
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<PAGE>
events or circumstances occurring before such conveyance. All costs of such
purchase and conveyance of every kind whatsoever, both foreseen and unforeseen,
shall be the responsibility of the purchaser, and the form of grant deed used to
accomplish such conveyance shall be substantially in the form attached as
EXHIBIT B. With such grant deed, BNPLC shall also tender to Chiron or the
Applicable Purchaser, as the case may be, the following, each fully executed
and, where appropriate, acknowledged on BNPLC's behalf by an officer of BNPLC:
(1) a Preliminary Change of Ownership Report in the form attached as EXHIBIT C,
(2) a Bill of Sale and Assignment of Contract Rights and Intangible Assets in
the form attached as EXHIBIT D, (3) an Acknowledgment of Disclaimer of
Representations and Warranties in the form attached as EXHIBIT E, which Chiron
or the Applicable Purchaser must execute and return to BNPLC, (5) a Documentary
Transfer Tax Request in the form attached as EXHIBIT F, (6) a Secretary's
Certificate in the form attached as EXHIBIT G, (7) a letter to the title
insurance company insuring title to the Property in the form attached as EXHIBIT
H, and (8) a certificate concerning tax withholding in the form attached as
EXHIBIT I. If for any reason BNPLC fails to tender the Sale Closing Documents
as required by this Paragraph 2, BNPLC may cure such refusal at any time before
thirty days after receipt of a demand for such cure from Chiron.
3. SURVIVAL OF CHIRON'S OBLIGATIONS.
(a) STATUS OF THIS AGREEMENT. Except as expressly provided herein,
this Agreement shall not terminate, nor shall Chiron have any right to terminate
this Agreement, nor shall Chiron be entitled to any reduction of the Break Even
Price or Supplemental Payment hereunder, nor shall the obligations of Chiron to
BNPLC under Paragraph 1 be affected by reason of (i) any damage to or the
destruction of all or any part of the Property from whatever cause, (ii) the
taking of or damage to the Property or any portion thereof under the power of
eminent domain or otherwise for any reason, (iii) the prohibition, limitation or
restriction of Chiron's use of all or any portion of the Property or any
interference with such use by governmental action or otherwise, (iv) any
eviction of Chiron or any party claiming under Chiron by paramount title or
otherwise, (v) Chiron's prior acquisition or ownership of any interest in the
Property, (vi) any default on the part of BNPLC under this Agreement, the Ground
Lease, the Lease or any other agreement to which BNPLC is a party, or (vii) any
other cause, whether similar or dissimilar to the foregoing, any existing or
future law to the contrary notwithstanding. It is the intention of the parties
hereto that the obligations of Chiron to make payment to and, if applicable, to
cause the Applicable Purchaser to make payment to BNPLC under Paragraph 1 shall
be separate and independent covenants and agreements from BNPLC's obligations
under this Agreement or any other agreement between BNPLC and Chiron; provided,
however, that nothing in this subparagraph shall excuse BNPLC from its
obligation to tender a grant deed and the other Sale Closing Documents in
substantially the form attached hereto as exhibits as required by Paragraph 2
immediately after the tender by Chiron and/or the Applicable Purchaser of such
payments and of the other documents to be executed in favor of BNPLC at the
closing of the sale. Accordingly, the Break Even Price or the Supplemental
Payment, as the case may be under Paragraph 1, shall continue to be payable by
Chiron in all events, and the obligations of Chiron hereunder shall continue
unaffected.
(b) REMEDIES UNDER THE LEASE AND THE GROUND LEASE. No repossession
of or re-entering upon the Property or exercise of any other remedies available
under the Lease or the Ground Lease shall relieve Chiron of its liabilities and
obligations hereunder, all of which shall survive the exercise of remedies under
the Lease and Ground Lease. Chiron acknowledges that the consideration for this
Agreement is separate and independent of the
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<PAGE>
consideration for the Lease and the Ground Lease, and Chiron's obligations
hereunder shall not be affected or impaired by any event or circumstance that
would excuse Chiron from performance of its obligations under the Lease or the
Ground Lease.
Notwithstanding the foregoing, if BNPLC is paid the full amount of the
Termination Fee (under and as defined in the Ground Lease) in connection with
any termination of the Ground Lease or transfer of BNPLC's rights thereunder as
expressly provided in Paragraph 2 thereof, Chiron shall be excused from its
obligation to buy or arrange for the purchase of BNPLC's interest in the
Property pursuant to this Agreement, unless the payment of the Termination Fee
is later held to constitute a preference or a voidable transfer under Applicable
Law, or for any other reason BNPLC is required to refund such payment or any
part of it to Chiron or to any other Person, in which case the payment of the
Termination Fee shall not constitute a release of Chiron from any liability
hereunder. Further, promptly after any payment of the Termination Fee to BNPLC
and the expiration of any period during which such payment could be claimed to
constitute a preference or voidable transfer, BNPLC shall release and return any
Restricted Funds or collateral received by BNPLC and pledged to it pursuant to
Paragraph 4, other than Restricted Funds or collateral that Chiron itself has
transferred to BNPLC as contemplated in the definition of the Termination Fee in
the Ground Lease.
4. SECURITY FOR CHIRON'S OBLIGATIONS. Chiron shall be excused from the
requirements set forth below in the various subparagraphs of this Paragraph 4,
if (but only if) on or prior to the first Business Day in September, 1999: (1)
Chiron shall have purchased or caused an Applicable Purchaser to have purchased
BNPLC's interest in the Property pursuant to subparagraph 1.(a), and Chiron
shall have paid to BNPLC all amounts required in connection with the purchase;
or (2) Chiron shall have delivered to BNPLC a new amended and restated guarantee
by Guarantor (or by any surviving corporation that may result from a merger of
Guarantor with another Person) of the payment obligations of Chiron under the
Ground Lease, the Lease and this Agreement in the form attached hereto as
EXHIBIT J; or (3) Chiron shall have obtained from BNPLC and all Participants a
waiver in writing of the requirements of this Paragraph 4 (it being understood
that, if asked for such a waiver, BNPLC or any of the Participants may in its
sole and absolute discretion decline to provide the waiver, as more particularly
provided in subparagraph 10.(f) below). Unless Chiron is so excused:
(a) PROVISIONS FOR FINANCIAL COVENANTS OR SECURITY. Chiron must do
one (but only one) of the following:
(i) after satisfying the conditions set forth in
subparagraph 4.(b), and no later than the first Business Day of September,
1999, Chiron must execute and deliver an amendment of this Agreement (the
"FINANCIAL COVENANT AMENDMENT"), committing Chiron to comply with financial
covenants set forth therein; or
(ii) after satisfying the conditions set forth in
subparagraph 4.(c), and no later than the first Business Day of September,
1999, Chiron must execute and deliver Pledge Documents (as defined below)
and thereby grant to BNPLC before a first priority perfected security
interest in Qualified Securities or in a Qualified Right to Stock Sale
Proceeds; or
(iii) no later than the first Business Day of September, 1999,
Chiron must deliver immediately available funds to BNPLC in an amount equal
to Stipulated Loss Value ("RESTRICTED FUNDS"), which BNPLC shall be
entitled to hold as security and apply as hereinafter provided.
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<PAGE>
(b) CONDITIONS TO CHIRON'S USE OF A FINANCIAL COVENANT AMENDMENT.
Before Chiron may choose to satisfy the requirements of the preceding
subparagraph by delivering a Financial Covenant Amendment (in lieu of Pledge
Documents or the delivery of Restricted Funds to BNPLC), the following condition
must be satisfied:
No later than ten Business Days prior to the first Business Day
of September, 1999 Chiron must have received the prior approval of BNPLC
and each of the Participants of the form and substance of the Financial
Covenant Amendment, including the financial covenants therein that will be
incorporated into this Agreement. Neither BNPLC nor Participants shall,
however, be required to approve of any such amendment or of any financial
covenants therein proposed by Chiron before the same are in form and
substance satisfactory to each of BNPLC and the Participants in its sole
and absolute discretion. To facilitate Chiron's satisfaction of this
condition, BNPLC will cause its counsel to prepare and submit drafts of a
Financial Covenant Amendment, if Chiron requests such drafts from BNPLC in
a notice given to BNPLC and the Participants no later than June 1, 1999,
and if Chiron unconditionally confirms in such notice that Chiron will pay
the Attorney's Fees and any other reasonable costs incurred by BNPLC or the
Participants in connection with the preparation or approval of the drafts
or otherwise incurred in responding to the request.
(c) CONDITIONS TO CHIRON'S USE OF A PLEDGE AMENDMENT. Before Chiron
may choose to satisfy the requirements of subparagraph 4.(a) by delivering
Pledge Documents (in lieu of a Financial Covenant Amendment or the delivery of
Restricted Funds to BNPLC), the following conditions must be satisfied:
(i) No later than ten Business Days prior to the first Business
Day of September, 1999 Chiron must have received the prior approval of
BNPLC and each of the Participants of the form and substance of the pledge
agreements, financing statements and other documents (the "PLEDGE
DOCUMENTS") which will (to secure Chiron's PA Obligations) create, evidence
and perfect BNPLC's security interest in Qualified Securities or a
Qualified Right to Stock Sale Proceeds. Neither BNPLC nor the Participants
shall, however, be required to approve of any such Pledge Documents until
they are in form and substance satisfactory to each of BNPLC and the
Participants in its sole and absolute discretion. Some but not all of the
matters that may be covered by the Pledge Documents are listed in EXHIBIT K
attached hereto. To facilitate Chiron's satisfaction of this condition,
BNPLC will cause its counsel to prepare and submit drafts of a Pledge
Documents to Chiron and to the Participants, if Chiron requests such drafts
from BNPLC in a notice given to BNPLC and the Participants no later than
June 1, 1999, if such notice specifies which type of collateral (Qualified
Securities or a Qualified Right to Stock Sale Proceeds) it to be covered
thereby and if Chiron unconditionally confirms in such notice that Chiron
will pay the Attorney's Fees and any other reasonable costs incurred by
BNPLC or the Participants in connection with the preparation or approval of
the drafts or otherwise incurred in responding to the request.
(ii) If the Pledge Documents will provide for a pledge of
Qualified Securities, no later than five Business Days prior to the
expected date of any such pledge, Chiron must have delivered (A)
unencumbered funds with which BNPLC or a custodian to be appointed under
the Pledge Documents can purchase the Qualified Securities to be pledged to
BNPLC, or (B) the
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<PAGE>
Qualified Securities to be pledged under the Pledge Documents together with
such certificates and other documents as will be required by the Pledge
Documents to establish that such securities are subject to no prior
encumbrances.
(iii) If the Pledge Documents will provide for a pledge of a
Qualified Right to Stock Sale Proceeds, no later than five Business Days
prior to the expected date of any such pledge, Chiron must have delivered
to BNPLC the such certificates and other documents as will be required by
the Pledge Documents to establish that the rights to be pledged by Chiron
are enforceable against Guarantor and subject to no prior encumbrances.
(iv) No later than first Business Day of September, 1999, Chiron
must have provided, at its expense, one or more written legal opinions, in
form and substance approved by BNPLC and the Participants, opining that if
duly authorized and executed by the parties thereto other than Chiron, the
Pledge Documents are enforceable and shall provide in favor of BNPLC a
valid, first priority, perfected security interest to secure Chiron's PA
Obligations. If the Pledge Amendment contemplates a pledge of a Qualified
Right to Stock Sale Proceeds, such opinion or opinions must also opine that
the documents which create the rights of Chiron to be pledged are duly
authorized, executed and enforceable by Chiron against Guarantor. Such
opinion or opinions must also cover such other matters as BNPLC or any
Participant deems to be customary in such opinions, must be addressed to
BNPLC and the Participants and must be issued by one or more law firms
reasonably acceptable to BNPLC and the Participants with nationally
recognized expertise in the subject matter thereof.
(d) CONSEQUENCES OF A FAILURE TO AGREE. To meet deadlines of Chiron
for the execution of this Agreement, and to save legal fees payable by Chiron in
connection with the execution of this Agreement, Chiron and BNPLC are postponing
the negotiation of the form and substance of a Financial Covenant Amendment, of
Pledge Documents and of related legal opinions. In doing so they recognize that
in the future they may disagree upon, or Participants may not approve of, all or
any documents required for Chiron's satisfaction of the conditions set forth in
subparagraphs 4.(b) and 4.(c). Chiron and BNPLC do not, however, want to submit
themselves to a risk of liability or loss of rights hereunder for being judged
unreasonable with respect to such conditions. Accordingly, both Chiron and
BNPLC hereby disclaim any obligation express or implied to be reasonable in
negotiating any amendment to this Agreement or the Pledge Documents or the
requirements for related legal opinions, and in lieu of any such obligation to
be reasonable they are providing herein for the deposit of Restricted Funds as
an alternative to the execution of any Financial Covenant Amendment or Pledge
Amendment. If for any reason whatsoever (including any disagreement of Chiron
and BNPLC over financial covenants or the form of Pledge Documents and any
refusal of any Participant to approve any amendment to this Agreement negotiated
by BNPLC and Chiron) Chiron does not satisfy the conditions listed above in
subparagraphs 4.(b) or 4.(c) prior to the deadlines specified therein, then
Chiron shall have the right and the obligation to deliver the Restricted Funds
no later than the first Business Day of September, 1999.
(e) TERM AND CONDITIONS RELATING TO RESTRICTED FUNDS. Any Restricted
Funds which Chiron does deliver will be held by BNPLC in accordance with and
governed by the following provisions:
(i) The Restricted Funds shall not be considered an advance
payment of amounts due under this Agreement or a measure of BNPLC's damages
should a breach of this Agreement by Chiron occur.
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(ii) So long as Restricted Funds are in BNPLC's possession, BNPLC
shall keep the Restricted Funds deposited in one or more accounts (as BNPLC
shall from time to time determine to be appropriate in its sole discretion)
maintained by one or more Deposit Takers. Accounts into which Restricted
Funds are deposited shall be interest bearing, but BNPLC does not guarantee
a rate of interest or other earnings on such accounts, and BNPLC shall not
be required to place Restricted Funds into any account or other investment
in which BNPLC cannot obtain a perfected, first priority security interest.
Further, if Restricted Funds or any interest thereon are lost because of
any failure of a Deposit Taker to return the same, whether caused by the
insolvency of such Deposit Taker or otherwise, BNPLC shall be responsible
for such loss only if the Deposit Taker is an Affiliate of BNPLC. However,
at the time BNPLC deposits Restricted Funds into any account maintained by
a Deposit Taker that is not an Affiliate of BNPLC: (1) such Deposit Taker
must either be approved by Chiron or be rated no lower than AA or the
equivalent thereof by Standard and Poor's Corporation or A-1 or the
equivalent thereof by Moody's Investor Service, Inc; and (2) Chiron must
have been provided with and approved (a) the agreement concerning such
Deposit Taker's obligation to periodically remit interest to BNPLC as
described in the definition of Deposit Taker IN THE LIST OF DEFINED TERMS,
and (b) in the case of any Deposit Taker that is an Affiliate of a
Participant, the written guaranty of such Participant described in the
definition of Deposit Taker. The interest accruing on the accounts into
which BNPLC deposits Restricted Funds from time to time shall be reported
by Chiron as Chiron's income for income tax purposes. All interest earned
on the Restricted Funds will be added to and made a part of the Restricted
Funds, but prior to any Designated Sale Date, BNPLC shall remit all such
interest to Chiron no less often than once during each calendar quarter,
whereupon such interest shall be deemed released from the security interest
hereinafter granted. Except for interest remitted to Chiron by BNPLC
pursuant to the preceding sentence, Chiron shall have no right to withdraw
or to recover the Restricted Funds or to assign or encumber any interest
Chiron may have in the Restricted Funds until all payments to BNPLC
required by this Agreement are received by BNPLC.
(iii) As security for Chiron's PA Obligations Chiron hereby grants
to BNPLC a security interest, a lien and a right of offset, each of which
shall be in addition to BNPLC's rights at common law, in and against all
Restricted Funds, all investments made with Restricted Funds, all interest
and other earnings thereon (subject to the provisions herein requiring
periodic remittance of interest earned on Restricted Funds to Chiron), and
all deposit accounts and/or security accounts into which such Restricted
Funds, investments, interest and other earnings are held at any time and
all proceeds of the foregoing. Chiron hereby authorizes and directs all
Deposit Takers to allow BNPLC to offset the Restricted Funds against any
amount past due under this Agreement and to reflect on their books and
records the pledge to BNPLC of all Restricted Funds they may hold on
deposit from time to time. These provisions are self-operative. No
further instrument is required to effect the security interest, lien and
right of offset in and against Restricted Funds as provided above. In
confirmation thereof, however, Chiron agrees to execute, acknowledge, and
deliver promptly any certificate, financing statement or other document
requested by BNPLC as necessary or helpful to evidence, perfect or preserve
the security interest, lien and right of set-off. Chiron also agrees to
provide to BNPLC contemporaneously with the delivery of any Restricted
Funds one or more written legal opinions in form and substance approved by
BNPLC and the Participants before then, opining that pursuant to this
Agreement (or other documents described in the preceding sentence) BNPLC
has a valid, first priority, perfected security interest in the Restricted
Funds to secure Chiron's PA Obligations. Such opinion or opinions must
also be addressed to BNPLC and the Participants and must be issued by one
or more law firms reasonably acceptable to BNPLC and the Participants with
nationally recognized expertise in the subject matter thereof.
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(iv) Any Restricted Funds (including any interest accrued on
Restricted Funds that BNPLC has not yet remitted to Chiron as set forth
herein) not applied to satisfy Chiron's PA Obligations shall be promptly
returned to Chiron by BNPLC, free from any security interest or lien
granted pursuant to this Agreement, after (but only after) Chiron's PA
Obligations (including payments of interest on past due amounts owing to
BNPLC which may accrue as provided herein) are satisfied in full (and in
any event within thirty days after Chiron's PA Obligations are satisfied in
full); provided, however: (A) this provision shall not excuse BNPLC from
its obligation to remit interest earned on Restricted Funds as provided
above; (B) if subsequent to Chiron's delivery of Restricted Funds Chiron
and BNPLC do agree upon (1) Pledge Documents and other arrangements for
Chiron's pledge of Qualified Securities or a Qualified Right to Receive
Stock Sale Proceeds, or (2) an amendment to this Agreement providing for
the incorporation of financial covenants herein, in either case in lieu of
the deposit of Restricted Funds and all in form and substance satisfactory
to Chiron, BNPLC and the Participants in their sole and absolute
discretion, then the Restricted Funds (including any interest accrued on
Restricted Funds that BNPLC has not yet remitted to Chiron) will be
promptly returned to Chiron when such pledge or amendment becomes effective
(or, if directed by Chiron in any notice delivered to BNPLC at least three
days prior to the date when any such pledge becomes effective, BNPLC shall
on the date the pledge is to become effective withdraw the Restricted Funds
from the accounts in which they are deposited and use the same to acquire
any Qualified Securities which will be so pledged); and (C) if directed by
Chiron to do so in any notice delivered to BNPLC at least three days prior
to any Designated Sale Date, BNPLC shall on the Designated Sale Date
withdraw the Restricted Funds from the accounts in which they are deposited
and apply the same against payments due to BNPLC hereunder on such
Designated Sale Date.
(v) Nothing in this Agreement shall authorize any party holding
any Restricted Funds (other than BNPLC and its permitted assigns under this
Agreement) to offset the Restricted Funds against any obligation of Chiron.
BNPLC may require as a condition to placing any Restricted Funds with a
Deposit Taker that such Deposit Taker waive any rights it may have to
offset the Restricted Funds against any obligation owed to it by Chiron or
others, that such Deposit Taker note BNPLC's rights hereunder on such
Deposit Taker's books with respect to the accounts it maintains for the
Restricted Funds and that such Deposit Taker agree to such other
requirements as BNPLC then deems appropriate to preserve the Restricted
Funds as security for Chiron's PA Obligations.
(vi) If by an assignment permitted by this Agreement BNPLC
assigns its interest in the Property prior to any sale thereof pursuant to
this Agreement, BNPLC may also transfer its interest in the Restricted
Funds to the assignee and thereafter BNPLC will have no liability for the
return or proper application of the Restricted Funds, it being agreed that
Chiron shall look solely to the new owner of the Property for the return or
proper application of the same.
5. SECURITY FOR BNPLC'S OBLIGATIONS. To secure Chiron's right to recover
any damages caused by a breach of Paragraph 2 by BNPLC, including any such
breach caused by a rejection or termination of this Agreement in any bankruptcy
or insolvency proceeding instituted by or against BNPLC, as debtor, BNPLC does
hereby grant to Chiron a lien and security interest against all rights, title
and interests of BNPLC from time to time in and to the leasehold estate created
by the Ground Lease, the Improvements and other Property. Chiron may enforce
such lien and security interest judicially after any such breach by BNPLC, but
not otherwise. Chiron waives any right it has to seek a deficiency judgement
against BNPLC in any action brought for a judicial
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foreclosure of such lien and security interest, and in connection therewith,
BNPLC hereby acknowledges that it shall have no right of redemption following
any such judicial foreclosure pursuant to Cal. Code Civ. Procedure Section 729.
6. BNPLC'S REMEDIES CUMULATIVE. No right or remedy herein conferred upon
or reserved to BNPLC is intended to be exclusive of any other right or remedy
BNPLC has with respect to the Property, and each and every right and remedy
shall be cumulative and in addition to any other right or remedy given hereunder
or now or hereafter existing at law or in equity or by statute. In addition to
other remedies available under this Agreement, either party shall be entitled,
to the extent permitted by applicable law, to a decree compelling performance of
any of the other party's agreements hereunder.
7. ATTORNEYS' FEES AND LEGAL EXPENSES. If either party commences any
legal action or other proceeding to enforce any of the terms of this Agreement
or the documents and agreements referred to herein, or because of any breach by
the other party or dispute hereunder or thereunder, the successful or prevailing
party, shall be entitled to recover from the nonprevailing party all Attorneys'
Fees incurred in connection therewith, whether or not such controversy, claim or
dispute is prosecuted to a final judgment. Any such Attorneys' Fees incurred by
either party in enforcing a judgment in its favor under this Agreement shall be
recoverable separately from such judgment, and the obligation for such
Attorneys' Fees is intended to be severable from other provisions of this
Agreement and not to be merged into any such judgment.
8. ESTOPPEL CERTIFICATE. Either party to this Agreement will, upon not
less than twenty days' prior request by the other party hereto, execute,
acknowledge and deliver to the requesting party a written statement certifying
that this Agreement is unmodified and in full effect (or, if there have been
modifications, that this Agreement is in full effect as modified, and setting
forth such modification) and either stating that no default exists hereunder or
specifying each such default of which the responding party has knowledge. Any
such statement may be relied upon by any Participant or permitted assignee of
BNPLC or Chiron with respect to the Property.
9. SUCCESSORS AND ASSIGNS. The terms, provisions, covenants and
conditions hereof shall be binding upon Chiron and BNPLC and their respective
permitted successors and assigns and shall inure to the benefit of Chiron and
BNPLC and all permitted transferees, mortgagees, successors and assignees of
Chiron and BNPLC with respect to the Property; provided, that the rights of
BNPLC hereunder shall not pass to Chiron or any Applicable Purchaser or any
subsequent owner claiming through Chiron or an Applicable Purchaser. Prior to
the Designated Sale Date BNPLC may transfer, assign and convey, in whole or in
part, the Property and any and all of its rights under this Agreement (subject
to the terms of this Agreement) by any conveyance that constitutes a Permitted
Transfer, but not otherwise. If BNPLC sells or otherwise transfers the Property
and assigns its rights under this Agreement and the Lease pursuant to a
Permitted Transfer, and if BNPLC's successor in interest assumes in writing for
the benefit of Chiron liability for the obligations imposed upon BNPLC by this
Agreement and the Lease on and subject to the express terms set out herein and
therein, then BNPLC shall thereby be released from any further obligations
arising under this Agreement or the Lease after the date of such assumption, and
Chiron agrees to look solely to each successor in interest of BNPLC for
performance of such obligations.
10. MISCELLANEOUS.
(a) NOTICES. Each provision of this Agreement, or of any Applicable
Laws with reference to the sending, mailing or delivery of any notice or demand
hereunder, or with reference to the making of any payment required hereunder,
shall be deemed to be complied with when and if the following steps are taken:
-10-
<PAGE>
(i) All payments required to be paid by Chiron to BNPLC hereunder
shall be paid to BNPLC in immediately available funds by wire transfer to:
Federal Reserve Bank of San Francisco
ACCOUNT: Banque Nationale de Paris
ABA #: 121027234
REFERENCE: Chiron-Emeryville Facility.
or at such other place and in such other manner as BNPLC may designate in a
notice to Chiron. Time is of the essence as to all payments of Chiron
under this Agreement.
-11-
<PAGE>
(ii) All payments required to be made by BNPLC to Chiron pursuant to
the last sentence of subparagraph 1.(a)(ii) shall be paid to Chiron in
immediately available funds at the address of Chiron set forth below or as
Chiron may otherwise direct by notice sent in accordance herewith.
(iii) All notices, demands, approvals, consents and other
communications to be made hereunder to or by the parties hereto must, to be
effective for purpose of this Agreement, be in writing. Notices, demands
and other communications required or permitted hereunder are to be sent to
the addresses set forth below (or in the case of communications to
Participants, at the addresses set forth in SCHEDULE 1 attached to the
Lease) and shall be given by any of the following means: (A) personal
service; (B) electronic communication, whether by telex, telegram or
telecopying (if confirmed in writing sent by United States first class
mail, return receipt requested); or (C) registered or certified first class
mail, return receipt requested. Such addresses may be changed by notice to
the other parties given in the same manner as provided above. Any notice
or other communication sent pursuant to clause (A) or (C) hereof shall be
deemed received (whether or not actually received) upon first attempted
delivery at the proper notice address on any Business Day between 9:00 A.M.
and 5:00 P.M., and any notice or other communication sent pursuant to
clause (B) hereof shall be deemed received upon dispatch by electronic
means.
ADDRESS OF BNPLC:
BNP Leasing Corporation
717 North Harwood Street
Suite 2630
Dallas, Texas 75201
Attention: Lloyd Cox
Telecopy: (214) 969-0060
WITH A COPY TO:
Banque Nationale de Paris, San Francisco
180 Montgomery Street
San Francisco, California 94104
Attention: Katherine Wolfe
Telecopy: (415) 296-8954
AND WITH A COPY TO:
Clint Shouse
Thompson & Knight, P.C.
1700 Pacific Avenue
Suite 3300
Dallas, Texas 75201
Telecopy: (214) 969-1550
-12-
<PAGE>
ADDRESS OF CHIRON:
Chiron Corporation
Attn: Corporate Secretary
4560 Horton Street
Emeryville, CA 94608-2916
Telecopy: (510) 654-5360
WITH A COPY TO:
Chiron Corporation
Attn: Treasurer
4560 Horton Street
Emeryville, CA 94608-2916
Telecopy: (510) 601-3343
AND WITH A COPY TO:
Brobeck, Phleger & Harrison
550 West "C" Street, Suite 1300
San Diego, CA 92101
Attention: Todd J. Anson, Esq.
Telecopy: (619) 234-3848
(b) SEVERABILITY. If any term or provision of this Agreement or the
application thereof shall to any extent be held by a court of competent
jurisdiction to be invalid and unenforceable, the remainder of this Agreement,
or the application of such term or provision other than to the extent to which
it is invalid or unenforceable, shall not be affected thereby.
(c) NO IMPLIED WAIVER. The failure of BNPLC or Chiron to insist at
any time upon the strict performance of any covenant or agreement or to exercise
any option, right, power or remedy contained in this Agreement shall not be
construed as a waiver or a relinquishment thereof for the future. The waiver of
or redress for any breach of this Agreement shall not prevent a similar
subsequent act from constituting a violation. Any express waiver shall affect
only the term or condition specified in such waiver and only for the time and in
the manner specifically stated therein. A receipt by BNPLC of any payment
hereunder with knowledge of the breach of any covenant or agreement contained in
this Agreement shall not be deemed a waiver of such breach, and no waiver of any
provision of this Agreement shall be deemed to have been made unless expressed
in writing and signed by the waiving party.
(d) NO IMPLIED REPRESENTATIONS BY BNPLC. BNPLC AND BNPLC'S AGENTS
HAVE MADE NO REPRESENTATIONS OR PROMISES WITH RESPECT TO THE PROPERTY EXCEPT AS
EXPRESSLY SET FORTH HEREIN AND IN THE OTHER PURCHASE DOCUMENTS, THE GROUND LEASE
AND THE LEASE, AND NO RIGHTS, EASEMENTS OR LICENSES ARE ACQUIRED BY CHIRON BY
IMPLICATION OR OTHERWISE EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, THE
OTHER PURCHASE DOCUMENTS, THE GROUND LEASE AND THE LEASE.
-13-
<PAGE>
(e) ENTIRE AGREEMENT. This Agreement, the other Purchase Documents,
the Ground Lease, the Lease and the other documents dated June 28, 1996 which
are being executed by Chiron and executed or accepted by BNPLC contemporaneously
with the execution of this Agreement supersede any prior negotiations and
agreements between BNPLC and Chiron concerning the Property, and no amendment or
modification of this Agreement shall be binding or valid unless expressed in a
writing executed by both parties hereto. Chiron ratifies and confirms the Lease
and the Ground Lease as a separate and independent continuing obligations of
Chiron.
(f) OWNERSHIP OF CHIRON. Without limiting the foregoing, this
Agreement supersedes prior negotiations which included discussions of Chiron's
obligations under Paragraph 4 prior to any reduction in the percentage ownership
of Chiron's Voting Stock by Guarantor to less than 40%. Although the ownership
of Chiron's Voting Stock by Guarantor may be one of many relevant factors to be
considered by BNPLC and Participants if they are asked to waive or approve a
waiver of Chiron's obligations under Paragraph 4 of this Agreement, BNPLC and
each Participant may decline to provide or approve such a waiver in its sole and
absolute discretion.
(g) TIME IS OF THE ESSENCE. Time is of the essence as to all
obligations of Chiron and BNPLC and all notices required of Chiron and BNPLC
under this Agreement.
(h) GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of California without regard to
conflict or choice of laws.
(i) PARAGRAPH HEADINGS. The paragraph headings contained in this
Agreement are for convenience only and shall in no way enlarge or limit the
scope or meaning of the various and several paragraphs hereof.
(j) OTHER TERMS AND REFERENCES. Words of any gender used in this
Agreement shall be held and construed to include any other gender, and words in
the singular number shall be held to include the plural and vice versa, unless
the context otherwise requires. References herein to Paragraphs, subparagraphs
or other subdivisions shall refer to the corresponding Paragraphs, subparagraphs
or subdivisions of this Agreement, unless specific reference is made to another
document or instrument. References herein to any Schedule or Exhibit shall
refer to the corresponding Schedule or Exhibit attached hereto, which shall be
made a part hereof by such reference. All capitalized terms used in this
Agreement which refer to other documents shall be deemed to refer to such other
documents as they may be renewed, extended, supplemented, amended or otherwise
modified from time to time, provided such documents are not renewed, extended or
modified in breach of any provision contained herein or therein or, in the case
of any other document to which BNPLC is a party or of which BNPLC is an intended
beneficiary, without the consent of BNPLC. All accounting terms used but not
specifically defined herein shall be construed in accordance with GAAP. The
words "this Agreement", "herein", "hereof", "hereby", "hereunder" and words of
similar import when used in this Agreement refer to this Agreement as a whole
and not to any particular subdivision unless expressly so limited. The phrases
"this Paragraph" and "this subparagraph" and similar phrases used herein refer
only to the Paragraphs or subparagraphs in which the phrase occurs. As used
herein the word "or" is not exclusive. As used herein the words "include",
"including" and similar terms shall be construed as if followed by "without
limitation to".
(i) NOT A PARTNERSHIP, ETC. NOTHING IN THIS PURCHASE AGREEMENT IS
INTENDED TO BE OR TO CREATE ANY PARTNERSHIP, JOINT VENTURE, OR OTHER JOINT
ENTERPRISE BETWEEN BNPLC AND CHIRON. NEITHER THE EXECUTION OF THIS PURCHASE
AGREEMENT NOR THE ADMINISTRATION OF THIS PURCHASE AGREEMENT OR OTHER DOCUMENTS
REFERENCED HEREIN BY BNPLC, NOR ANY OTHER RIGHT, DUTY OR OBLIGATION OF BNPLC
UNDER OR PURSUANT TO THIS PURCHASE
-14-
<PAGE>
AGREEMENT OR SUCH DOCUMENTS IS INTENDED TO BE OR TO CREATE ANY FIDUCIARY
OBLIGATIONS OF BNPLC TO CHIRON.
(k) NO DISCRIMINATION. As required by one of the Development
Contracts, Chiron agrees for itself and its successors and permitted assigns
that:
There shall be no discrimination against or segregation of any person or
group of persons on account of race, color, creed, religion, sex, marital
status, national origin or ancestry in the sale, lease, sublease, transfer,
use, occupancy, tenure or enjoyment of the premises, nor shall Chiron or
any Applicable Purchaser, or any person claiming under or through it,
establish or permit any such practice or practices of discrimination or
segregation with reference to the selection, location, number, use or
occupancy of tenants, lessees, subtenants, sublessees or vendees of the
land.
11. WAIVER OF JURY TRIAL. BNPLC AND CHIRON EACH HEREBY WAIVES ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY OTHER DOCUMENT OR DEALINGS BETWEEN THEM
RELATING TO THIS AGREEMENT OR THE PROPERTY. The scope of this waiver is
intended to be all-encompassing of any and all disputes that may be filed in any
court and that relate to the subject matter of this transaction, including
contract claims, tort claims, breach of duty claims, and all other common law
and statutory claims. Chiron and BNPLC each acknowledge that this waiver is a
material inducement to enter into a business relationship, that each has already
relied on the waiver in entering into this Agreement and the other documents
referred to herein, and that each will continue to rely on the waiver in their
related future dealings. Chiron and BNPLC each further warrants and represents
that it has reviewed this waiver with its legal counsel, and that it knowingly
and voluntarily waives its jury trial rights following consultation with legal
counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR TO ANY OTHER
DOCUMENTS OR AGREEMENTS RELATING TO THIS AGREEMENT OR THE PROPERTY. In the
event of litigation, this Agreement may be filed as a written consent to a trial
by the court.
12. INCOME TAX REPORTING. BNPLC and Chiron intend this Agreement and the
Lease to have a form for income taxes which is different than the form of this
Agreement and the Lease for other purposes, and thus the parties acknowledge and
agree as follows:
(i) FOR PURPOSES OF DETERMINING THEIR RESPECTIVE FEDERAL, STATE AND
LOCAL INCOME TAX OBLIGATIONS, BNPLC and Chiron believe and intend that this
Agreement and the Lease constitute a financing arrangement or conditional
sale. Both BNPLC and Chiron agree to report this Agreement and the Lease
as a financing arrangement or conditional sale on their respective income
tax returns (the "REQUIRED REPORTING"), unless such Required Reporting is
challenged in writing by the Internal Revenue Service or another
governmental authority with jurisdiction (a "TAX CHALLENGE"). Consistent
with the foregoing, BNPLC and Chiron expect that Chiron (and not BNPLC)
shall be treated as the true owner of the Property for income tax purposes,
thereby entitling Chiron (and not BNPLC) to take depreciation deductions
and other tax benefits available to the owner. Chiron shall also report
all interest earned on Escrowed Proceeds or any collateral pledged pursuant
to the Purchase Documents as Chiron's income for federal, state and local
income tax purposes. REFERENCES IN THIS AGREEMENT OR IN THE LEASE TO A
"LEASE" OF THE "PROPERTY" ARE NOT INTENDED FOR INCOME TAX PURPOSES TO
REFLECT THE INTENT OF BNPLC OR CHIRON AS TO THE FORM OF THE TRANSACTIONS
COVERED BY, OR THE PROPER CHARACTERIZATION OF, THIS AGREEMENT AND THE
LEASE.
-15-
<PAGE>
(ii) FOR ALL OTHER PURPOSES, INCLUDING THE DETERMINATION OF THE
APPROPRIATE FINANCIAL ACCOUNTING FOR THIS AGREEMENT AND THE DETERMINATION
OF THEIR RESPECTIVE RIGHTS AND REMEDIES UNDER STATE LAW, BNPLC and Chiron
believe and intend that (i) the Lease constitutes a true Lease, not a mere
financing arrangement, enforceable in accordance with its express terms
(and neither this Paragraph 12 nor the provisions referencing this
Paragraph on the title page of this Agreement nor the corresponding
provisions in the Lease are intended to affect the enforcement of any other
provisions of this Agreement or the Lease) and (ii) this Agreement shall
constitute a separate and independent contract, enforceable in accordance
with the express terms and conditions set forth herein. In this regard,
Chiron acknowledges that Chiron asked BNPLC to participate in the
transactions evidenced by this Agreement and the Lease as a landlord and
owner of the Property, not as a lender. Although other transactions might
have been used to accomplish similar results, Chiron expects to receive
certain material accounting and other advantages through the use of a lease
transaction. Accordingly, and notwithstanding the Required Reporting for
income tax purposes, Chiron cannot equitably deny that this Agreement and
the Lease should be construed and enforced in accordance with their
respective terms, rather than as a mortgage or other security device, in
any action brought by BNPLC to enforce this Agreement or the Lease.
In the event of a Tax Challenge, BNPLC and Chiron shall each provide to the
other copies of all notices from the Internal Revenue Service or any other
governmental authority presenting the Tax Challenge. Further, before changing
from the Required Reporting because of a Tax Challenge, BNPLC and Chiron shall
each consider in good faith any reasonable suggestions received from the other
party to this Agreement about an appropriate response to the Tax Challenge;
provided, however, that the suggestions are set forth in a notice delivered no
later than thirty days after the suggesting party is first notified of the Tax
Challenge; and, provided further, that when presented with a Tax Challenge,
BNPLC shall have the right to change from the Required Reporting rather than
participate in any litigation or other legal proceeding against the Internal
Revenue Service or another governmental authority. In any event, Chiron shall
indemnify BNPLC and defend and hold BNPLC harmless from and against all Losses
imposed on or asserted against or incurred by BNPLC by reason of, in connection
with or arising out of any such challenge or any resulting recharacterization of
this Agreement or the Lease required by the Internal Revenue Service or another
governmental authority, including any additional taxes that may become due upon
any sale under this Agreement, to the extent (if any) that such Losses are not
offset by tax savings to BNPLC resulting from additional depreciation deductions
or other tax benefits of the recharacterization.
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]
-16-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
"BNPLC"
BNP LEASING CORPORATION, a Delaware corporation
By: /s/ Lloyd G. Cox
-----------------------------------------
Lloyd G. Cox, Vice President
"Chiron"
CHIRON CORPORATION, a Delaware corporation
By: /s/ James Kent
-----------------------------------------
Name: James Kent
----------------------------------------
Title: Treasurer
---------------------------------------
-17-
<PAGE>
EXHIBIT A
LEGAL DESCRIPTION
REAL PROPERTY IN CITY OF EMERYVILLE, COUNTY OF ALAMEDA, STATE OF CALIFORNIA
DESCRIBED AS FOLLOWS:
PARCEL ONE:
BEING A PORTION OF BLOCKS 9, 10 AND 11, AS SHOWN ON THE UNFILED MAP ENTITLED
"MAP OF MONUMENT LOCATION EMERYVILLE INDUSTRIAL TRACT", DATED JANUARY 5, 1921,
BY PUNNETT AND PAREZ ENGINEERS, BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
BEGINNING AT THE INTERSECTION OF THE NORTHERLY LINE OF 53RD STREET (FORMERLY
SANTA FE AVENUE), AS SHOWN ON SAID MAP, AND THE WESTERLY LINE OF HOLLIS STREET;
THENCE ALONG SAID WESTERLY LINE, NORTH 17DEG. 32' 00" WEST, 443.61 FEET; THENCE
NORTH 27DEG. 46' 45" WEST, 381.28 FEET TO THE BEGINNING POINT OF A NON-TANGENT
CURVE CONCAVE SOUTHEASTERLY, HAVING A RADIUS OF 274.38 FEET (A RADIAL LINE
THROUGH SAID POINT BEARS NORTH 31DEG. 43' 39" WEST); THENCE LEAVING SAID
WESTERLY LINE ALONG SAID CURVE, THROUGH A CENTRAL ANGLE OF 72DEG. 44' 21", AN
ARC DISTANCE OF 348.34 FEET; THENCE SOUTH 17DEG. 32' 00" EAST, 567.48 FEET TO A
POINT LYING ON SAID NORTHERLY LINE OF 53RD STREET; THENCE ALONG SAID NORTHERLY
LINE, NORTH 72DEG. 28' 00" EAST, 274.53 FEET TO THE POINT OF BEGINNING.
ASSESSOR'S PARCEL NO. 049-1041-028
PARCEL TWO:
THAT PARCEL OF LAND SITUATE IN THE CITY OF EMERYVILLE, COUNTY OF ALAMEDA, STATE
OF CALIFORNIA, AND BEING ALL OF PARCEL 2 OF PARCEL MAP NO. 5719, FILED DECEMBER
28, 1989, IN BOOK 187 OF PARCEL MAPS, AT PAGES 97 - 98, IN RECORDS OF SAID
COUNTY.
EXCEPTING THEREFROM:
ALL MINERALS AND MINERAL RIGHTS, INTERESTS, AND ROYALTIES, INCLUDING, WITHOUT
LIMITING THE GENERALITY THEREOF, OIL, GAS AND OTHER HYDROCARBON SUBSTANCES, AS
WELL AS METALLIC OR OTHER SOLID MINERALS, MORE THAN FIVE HUNDRED (500) FEET
BELOW THE SURFACE OF SAID PROPERTY; HOWEVER, GRANTOR OR ITS SUCCESSORS AND
ASSIGNS, SHALL NOT HAVE THE RIGHT FOR ANY PURPOSE WHATSOEVER TO ENTER UPON, INTO
OR THROUGH THE SURFACE OF SAID PROPERTY IN CONNECTION THEREWITH.
ASSESSOR'S PARCEL NO. 049-1041-060
<PAGE>
EXHIBIT B
CORPORATION GRANT DEED
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
- -------------------------
NAME: Chiron Corporation
ADDRESS: 4560 Horton Street
ATTN: Corporate Secretary
CITY: Emeryville
STATE: California
Zip: 94608-2916
MAIL TAX STATEMENTS TO:
- ----------------------
NAME: Chiron Corporation
ADDRESS: 4560 Horton Street
ATTN: Corporate Secretary
CITY: Emeryville
STATE: California
Zip: 94608-2916
CORPORATION GRANT DEED
FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, BNP
LEASING CORPORATION, a Delaware corporation, hereby grants to [Chiron or the
Applicable Purchaser] all of BNPLC's interest in the land situated in the County
of Alameda, State of California, described on Annex A attached hereto and hereby
made a part hereof, together with the improvements currently located on such
land and any easements, rights-of-way, privileges, appurtenances and other
rights pertaining to such land; provided, however, that this grant is subject to
the following, as well as the Permitted Encumbrances described on Annex B:
1. Real Estate Taxes not yet due and payable;
2. General or Special Assessments due and payable after the date hereof;
3. Encroachments, variations in area or in measurements, boundary line
disputes, roadways and other matters not of record which would be
disclosed by a survey and inspection of the property conveyed
hereby; and
4. By acceptance of this Deed, the grantee herein named agrees as
follows, as required by Section 403 of the Participation
Agreement dated as of August 8, 1995, by and between the
Emeryville Redevelopment Agency and Chiron Corporation, approved
by Resolution of City Council of Emeryville on August 8, 1995, by
Resolution No. 95-143 and by Resolution of the Emeryville
Redevelopment Agency on August 8, 1995, by Resolution No. RD 56-
95:
"The grantee herein covenants by and for himself or herself,
his or her heirs, executors, administrators and assigns, and
all persons claiming under or through them, that there shall
be no discrimination against or segregation of any person or
group of persons on account of race, color, creed, religion,
<PAGE>
sex, marital status, national origin or ancestry in the
sale, lease, sublease, transfer, use, occupancy, tenure or
enjoyment of the premises herein conveyed, nor shall the
grantee himself or herself, or any person claiming under or
through him or her, establish or permit any such practice or
practices of discrimination or segregation with reference to
the selection, location, number, use or occupancy of
tenants, lessees, subtenants, sublessees or vendees in the
premises herein conveyed. The foregoing covenants shall run
with the land."
BNP LEASING CORPORATION
Date: As of ____________ By:_____________________________________
Its: Vice President
Attest:_________________________________
Its: Assistant Secretary
STATE OF TEXAS )
) SS
COUNTY OF DALLAS )
On ____________ before me,______________ , personally appeared____________
and_____________________, personally known to me (or proved to me on the
basis of satisfactory evidence) to be the persons whose names are subscribed to
the within instrument and acknowledged to me that they executed the same in
their authorized capacities, and that by their signatures on the instrument the
person, or the entity upon behalf of which the persons acted, executed the
instrument.
WITNESS my hand and official seal.
Signature ____________________________________
Exhibit B - Page 2
<PAGE>
ANNEX A
LEGAL DESCRIPTION
[DRAFTING NOTE: TO THE EXTENT THAT THE "LAND" COVERED BY THE GROUND LEASE
CHANGES FROM TIME TO TIME AS PROVIDED THEREIN OR BECAUSE OF ADJUSTMENTS FOR
WHICH CHIRON REQUESTS BNPLC'S CONSENT OR APPROVAL AS PROVIDED IN THE LEASE, SO
TOO WILL THE DESCRIPTION OF THE LAND BELOW CHANGE. ANY SUCH CHANGES WILL BE
INCORPORATED INTO THE DESCRIPTION BELOW AND THIS "DRAFTING NOTE" WILL BE DELETED
BEFORE THE DEED TO WHICH THIS DESCRIPTION IS ATTACHED IS ACTUALLY EXECUTED AND
DELIVERED.]
REAL PROPERTY IN CITY OF EMERYVILLE, COUNTY OF ALAMEDA, STATE OF CALIFORNIA
DESCRIBED AS FOLLOWS:
PARCEL ONE:
BEING A PORTION OF BLOCKS 9, 10 AND 11, AS SHOWN ON THE UNFILED MAP ENTITLED
"MAP OF MONUMENT LOCATION EMERYVILLE INDUSTRIAL TRACT", DATED JANUARY 5, 1921,
BY PUNNETT AND PAREZ ENGINEERS, BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
BEGINNING AT THE INTERSECTION OF THE NORTHERLY LINE OF 53RD STREET (FORMERLY
SANTA FE AVENUE), AS SHOWN ON SAID MAP, AND THE WESTERLY LINE OF HOLLIS STREET;
THENCE ALONG SAID WESTERLY LINE, NORTH 17DEG. 32' 00" WEST, 443.61 FEET; THENCE
NORTH 27DEG. 46' 45" WEST, 381.28 FEET TO THE BEGINNING POINT OF A NON-TANGENT
CURVE CONCAVE SOUTHEASTERLY, HAVING A RADIUS OF 274.38 FEET (A RADIAL LINE
THROUGH SAID POINT BEARS NORTH 31DEG. 43' 39" WEST); THENCE LEAVING SAID
WESTERLY LINE ALONG SAID CURVE, THROUGH A CENTRAL ANGLE OF 72DEG. 44' 21", AN
ARC DISTANCE OF 348.34 FEET; THENCE SOUTH 17DEG. 32' 00" EAST, 567.48 FEET TO A
POINT LYING ON SAID NORTHERLY LINE OF 53RD STREET; THENCE ALONG SAID NORTHERLY
LINE, NORTH 72DEG. 28' 00" EAST, 274.53 FEET TO THE POINT OF BEGINNING.
ASSESSOR'S PARCEL NO. 049-1041-028
PARCEL TWO:
THAT PARCEL OF LAND SITUATE IN THE CITY OF EMERYVILLE, COUNTY OF ALAMEDA, STATE
OF CALIFORNIA, AND BEING ALL OF PARCEL 2 OF PARCEL MAP NO. 5719, FILED DECEMBER
28, 1989, IN BOOK 187 OF PARCEL MAPS, AT PAGES 97 - 98, IN RECORDS OF SAID
COUNTY.
EXCEPTING THEREFROM:
ALL MINERALS AND MINERAL RIGHTS, INTERESTS, AND ROYALTIES, INCLUDING, WITHOUT
LIMITING THE GENERALITY THEREOF, OIL, GAS AND OTHER HYDROCARBON SUBSTANCES, AS
WELL AS METALLIC OR OTHER SOLID MINERALS, MORE THAN FIVE HUNDRED (500) FEET
BELOW THE SURFACE OF SAID PROPERTY; HOWEVER, GRANTOR OR ITS SUCCESSORS AND
ASSIGNS, SHALL NOT HAVE THE RIGHT FOR ANY PURPOSE WHATSOEVER TO ENTER UPON, INTO
OR THROUGH THE SURFACE OF SAID PROPERTY IN CONNECTION THEREWITH.
Exhibit B - Page 3
<PAGE>
ASSESSOR'S PARCEL NO. 049-1041-060
Exhibit A -
<PAGE>
ANNEX B
PERMITTED ENCUMBRANCES
[DRAFTING NOTE: TO THE EXTENT THAT ENCUMBRANCES (OTHER THAN "LIENS REMOVABLE BY
BNPLC") ARE IDENTIFIED IN ADDITION TO THOSE DESCRIBED BELOW, SUCH ADDITIONAL
ENCUMBRANCES WILL BE ADDED TO THE LIST BELOW AND THIS "DRAFTING NOTE" WILL BE
DELETED BEFORE THIS DEED IS ACTUALLY EXECUTED AND DELIVERED BY BNPLC. SUCH
ADDITIONAL ENCUMBRANCES WOULD INCLUDE ANY NEW ENCUMBRANCES APPROVED BY BNPLC AS
"PERMITTED ENCUMBRANCES" UNDER THE GROUND LEASE AND THE LEASE IN CONNECTION WITH
ANY ADJUSTMENT TO THE "LAND" COVERED BY THE GROUND LEASE FROM TIME TO TIME AS
PROVIDED THEREIN OR BECAUSE OF CHIRON'S REQUEST FOR BNPLC'S CONSENT OR APPROVAL
TO AN ADJUSTMENT AS PROVIDED IN THE LEASE.]
This conveyance is subject to the following matters to the extent the same are
still valid and in force:
1. County and city taxes for the Fiscal Year _______, a lien not yet due or
payable.
(AFFECTS PARCELS ONE AND TWO)
2. The Lien of Supplemental Taxes arising as the result of an event or
occurrence on or after the date of the policy assessed pursuant to the
provisions of Chapter 3.5, Revenue and Taxation Code, Sections 75 et seq.
No supplemental taxes now due and payable.
(AFFECTS PARCELS ONE AND TWO)
3. Assessments for BAY ST./SHELLMOUND ST. EXTENSION A.D. under Act 1915
Assessment No. 204, Series NOT SHOWN
Issued JANUARY 7, 1994, for original principal of $9,421.00 payable in 25
annual installments. Said bond payable to the CITY OF EMERYVILLE. No
installments now due and payable.
(AFFECTS PARCEL TWO)
4. Agreement on the terms, provisions, covenants and conditions contained
therein,
For : Development
Dated : September 14, 1995
Executed By : The City of Emeryville, a municipal corporation
And Between : Chiron Corporation, a Delaware corporation
Recorded : January 16, 1996, Series No. 96-009969, Official Records of
Alameda County, California
(AFFECTS PARCELS ONE AND TWO)
Exhibit B - Page 5
<PAGE>
5. Non-exclusive easement for the purposes stated herein and incidental
purposes created in that certain instrument entitled "Grant of Easement and
Easement Agreement"
Dated : March 20, 1996
Recorded : March 21, 1996, Series No. 96-070723, Official Records of
Alameda County, California
Granted to : BGR Associates III, a California limited partnership
Purposes : Construction, installation, operation, use, maintenance,
repair, replacement and removal of utilities, including,
without limitation, gas, electricity, water, storm and
sanitary sewer, telephone, cable television, and fiber-
optic, data and other cabling under the Easement Area
referred to hereafter, and, for ingress and egress to and
from the Easement Area for such purposes.
Easement Area: The westerly 10 feet of Parcel Two
and the terms, provisions, covenants and conditions contained in such Grant of
Easement and Easement Agreement.
(AFFECTS PARCEL TWO)
6. Lease Agreement dated June 28, 1996 by and between BNP Leasing
Corporation, as lessor, and Chiron Corporation, as lessee.
7. Any encumbrances claimed by, through or under Chiron Corporation, and
any other encumbrances that do not constitute "Liens Removable by BNPLC,"
determined in accordance with the following definitions:
"BNPLC" means BNP Leasing Corporation, a Delaware corporation.
"CHIRON" means Chiron Corporation, a Delaware corporation.
"DEVELOPMENT CONTRACTS" means the contracts, ordinances and other documents
described in SCHEDULE 2 attached to the Lease, as the same may have been
modified from time to time in accordance with the Ground Lease and the Lease
(including modifications authorized pursuant to paragraph 7 of the Lease), and
any applications, permits or certificates concerning or affecting the use or
development of the Property that may have been submitted, issued or executed
from time to time as contemplated in such contracts, ordinance and other
documents or that BNPLC may hereafter execute, approve or consent to at the
request of Chiron.
"EFFECTIVE DATE" means July 1, 1996.
"GROUND LEASE" means the separate Ground Lease dated June 28, 1996 executed
by Chiron, as lessor, and BNPLC, as lessee, pursuant to which Chiron is
leasing the Land to BNPLC for a term of approximately 34 1/2 years, as such
Ground Lease may have been extended, supplemented, amended, restated or
otherwise modified from time to time in accordance with its terms.
"LAND" means the land described in Annex A attached to this Deed.
"LIEN" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including any agreement to give any of the foregoing, any
conditional sale or other title retention agreement, any lease in the nature
thereof, any agreement to sell receivables with recourse, and the filing of or
agreement to give any financing statement under the Uniform Commercial Code of
any jurisdiction).
"LIENS REMOVABLE BY BNPLC" means, and is limited to, Liens encumbering the
Property that are asserted (1) other than as contemplated by the Lease or the
Purchase Documents or the Ground Lease, by BNPLC itself,
Exhibit B - Page 6
<PAGE>
(2) by third parties lawfully claiming through or under BNPLC (which for
purposes of this Deed shall include any judgment liens established against
the Property because of a judgment rendered against BNPLC and shall also
include any liens established against the Property to secure past due
Excluded Taxes [as defined in the Lease]), or (3) by third parties claiming
under a deed or other instrument duly executed by BNPLC; provided, however,
Liens Removable by BNPLC shall not include (A) any Permitted Encumbrances or
Development Contracts (regardless of whether claimed through or under BNPLC),
(B) the Lease, the Ground Lease, the Purchase Documents or any other document
executed by BNPLC contemporaneously with the execution of the Lease, (C)
Liens which are neither lawfully claimed through or under BNPLC (as described
above) nor claimed under a deed or other instrument duly executed by BNPLC,
(D) Liens claimed by Chiron or claimed through or under a conveyance made by
Chiron after Chiron's conveyance of the leasehold estate to BNPLC under the
Ground Lease, (E) Liens arising because of BNPLC's compliance with Applicable
Law, the Ground Lease, Permitted Encumbrances, the Development Contracts or
any written request made by Chiron, (F) Liens securing the payment of property
taxes or other amounts assessed against the Property by any governmental
authority, other than to secure the payment of past due Excluded Taxes or to
secure damages caused by (and attributed by any applicable principles of
comparative fault to) BNPLC's own Established Misconduct [as defined in the
Lease], or (G) Liens resulting from or arising in connection with any breach by
Chiron of the Lease, the Purchase Documents or the Ground Lease.
"PERMITTED ENCUMBRANCES" means (i) the encumbrances and other matters
affecting the Property that are set forth in EXHIBIT B attached to the Lease
(all of which are also listed above in this Annex B), (ii) any easement
agreement or other document affecting title to the Property executed by BNPLC
at the request of or with the consent of Chiron, and (iii) any liens from
time to time imposed to secure only ad valorem taxes on the Property which,
at the time in question, are not delinquent.
"PERSONAL PROPERTY" means assignable rights or interests of BNPLC in, to
or under the following that were acquired by BNPLC under the Ground Lease or
acquired by BNPLC pursuant to Paragraph 8 of the Lease:
(a) any goods, equipment, furnishings, furniture and other tangible
personal property of whatever nature that are located on the Real Property
and all renewals or replacements of or substitutions for any of the foregoing;
(b) the Permitted Encumbrances; and
(c) any general intangibles, permits, licenses, franchises,
certificates, and other rights and privileges related to the Real Property.
"PROPERTY" means the Personal Property and the Real Property, collectively.
"PURCHASE AGREEMENT" means the Purchase Agreement dated June 28, 1996
between BNPLC and Chiron pursuant to which Chiron has agreed to purchase or
to arrange for the purchase by a third party of BNPLC's interest in the
Property, as such Purchase Agreement may have been extended, supplemented,
amended, restated or otherwise modified from time to time in accordance with
its terms.
"PURCHASE DOCUMENTS" me ans collectively (1) the Purchase Agreement, (2)
from and after they are executed, Pledge Documents (as defined in Paragraph 4
of the Purchase Agreement) and (3) the Memorandum of Purchase Agreement
executed by BNPLC and Chiron as of the Effective Date and recorded to
provide notice of the Purchase Agreement.
Exhibit B - Page 7
<PAGE>
"REAL PROPERTY" means BNPLC's leasehold estate under the Ground Lease and:
(a) BNPLC's interest in any and all buildings and improvements on the
Land, including the fixtures, attachments, elevators, built-in appliances
and building service equipment and machinery attached to such buildings and
improvements (collectively, the "IMPROVEMENTS");
(b) all easements and other rights appurtenant to BNPLC's leasehold
estate in the Land under the Ground Lease or to the Improvements, whether
now owned or hereafter acquired by BNPLC;
(c) all right, title and interest of BNPLC, now owned or hereafter
acquired, in and to (A) any land lying within the right-of-way of any
street, open or proposed, adjoining the Land, (B) any sidewalks and alleys
adjacent to the Land and (C) any strips and gores between the Land and
abutting land.
Exhibit B - Page 8
<PAGE>
<TABLE>
<S> <C>
EXHIBIT C THIS SPACE FOR RECORDER'S USE
PRELIMINARY CHANGE OF OWNERSHIP REPORT
THIS REPORT IS NOT A PUBLIC DOCUMENT
(To be completed by transferee (buyer) prior to transfer of the subject property in accordance with
Section 480.3of the Revenue and Taxation Code.)
- ------------------------------------------------------------------------------------------------------------------------------------
SELLER/TRANSFEROR: FOR ASSESOR'S USE ONLY
SELLER RECORDING DATE: DOCUMENT NO.
Cluster
BUYER/TRANSFEREE: OC1 OC2
DT INT
ASSESSOR'S IDENTIFICATION NUMBER(S) RC SP$
LA Page Parcel DTT$ #Pcl.
PROPERTY ADDRESS OR LOCATION:
No Street
City State Zip Code
MAIL TAX INFORMATION TO:
NAME:
ADDRESS:
Street No City State Zip Code -------------------------------
A Preliminary Change in
Ownership Report must be filed
with each conveyance in the
County Recorder's office for
the county where the property
is located; this particular
form may be used in all 58
counties of California.
- ------------------------------------------------------------------------------------------------------------------------------------
NOTICE: A lien for property taxes applies to your property on March 1 of each year for the taxes owing in the following fiscal
year, July 1 through June 30. One-half of those taxes is due November 1 and one-half is due February 1. The first installment
becomes delinquent on December 10 and the second installment becomes delinquent on April 10. One tax bill is mailed before
November 1 to the owner of record. IF THIS TRANSFER OCCURS AFTER MARCH 1 AND ON OR BEFORE DECEMBER 31, YOU MAY BE RESPONSIBLE FOR
THE SECOND INSTALLMENT OF TAXES ON FEBRUARY 1.
The property which you acquired may be subject to a supplemental tax assessment in an amount to be determined by the Alameda County
Assessor. For further information on your supplemental roll obligation, please call the ALAMEDA COUNTY ASSESSOR AT ( ) -
- ------------------------------------------------------------------------------------------------------------------------------------
PART I: TRANSFER INFORMATION Please answer all questions.
YES NO
/ / / / A. Is this transfer solely between husband and wife (Addition of a spouse, death of a spouse, divorce settlement,
etc.)?
/ / / / B. Is this transaction only a correction of the name(s) of the person(s) holding title to the property (For example,
a name change upon marriage)?
/ / / / C. Is this document recorded to create, terminate, or reconvey a lender's interest in the property?
/ / / / D. Is this transaction recorded only to create, terminate, or reconvey a security interest (e.g., cosigner)?
/ / / / E. Is this document recorded to substitute a trustee under a deed of trust, mortgage, or other similar document?
/ / / / F. Did this transfer result in the creation of a joint tenancy in which the seller (transferor) remains as one of
the joint tenants?
/ / / / G. Does this transfer return property to the person who created the joint tenancy (original transferor)?
/ / / / H. Is this transfer of property:
1. to a trust for the benefit of the grantor, or grantor's spouse?
2. to a trust revocable by the transferor?
3. to a trust from which the property reverts to the grantor within 12 years?
/ / / / I. If this property is subject to a lease, is the remaining lease term 35 years or more including written options?
/ / / / J. Is this a transfer from parents to children or from children to parents?
/ / / / K. Is this transaction to replace a principal residence by a person 55 years of age or older?
/ / / / L. Is this transaction to replace a principal residence by a person who is severely disabled as defined by Revenue
and Taxation Code Section 69.5?
If you checked yes to J, K or L, an applicable claim form must be filed with the County Assessor.
Please provide any other information that would help the Assessor to understand the nature of the transfer.
- ------------------------------------------------------------------------------------------------------------------------------------
IF YOU HAVE ANSWERED "YES" TO ANY OF THE ABOVE QUESTIONS EXCEPT J, K, OR L, PLEASE SIGN AND DATE.
OTHERWISE COMPLETE BALANCE OF THE FORM.
- ------------------------------------------------------------------------------------------------------------------------------------
PART II: OTHER TRANSFER INFORMATION
A. Date of transfer if other than recording date.
B. Type of transfer. Please check appropriate box.
/ / Purchase / / Foreclosure / / Gift / / Trade or Exchange / / Merger, Stock or Partnership
Acquisition
/ / Contract of Sale -- Date of Contract
/ / Inheritance -- Date of Contract / / Other: Please explain:
/ / Creation of a lease: / / Assignment of a lease; / / Termination of a lease
Date lease began
Original term in years (including written options)
Remaining term in years (including written options)
- ------------------------------------------------------------------------------------------------------------------------------------
<PAGE>
- ------------------------------------------------------------------------------------------------------------------------------------
C. Was only a partial interest in the property transferred? / / Yes / / No
If yes, indicate the percentage transferred %
- ------------------------------------------------------------------------------------------------------------------------------------
Please answer, to the best of your knowledge, all applicable questions, sign and date. If a question does not apply, indicate with
"N/A".
- ------------------------------------------------------------------------------------------------------------------------------------
PART III: PURCHASE PRICE & TERMS OF SALE
D. CASH DOWN PAYMENT OR Value of Trade or Exchange (excluding closing cost) Amount $
E. FIRST DEED OF TRUST @ % interest for years. Pymts./Mo. = $ (Prin. & Int. only) Amount $
/ / FHA / / Fixed Rate / / New Loan
/ / Conventional / / Variable Rate / / Assumed Existing Loan Balance
/ / VA / / All Inclusive D.T. ($ Wrapped) / / Bank or Savings & Loan
/ / Cal-Vet / / Loan Carried by Seller / / Finance Company
Balloon Payment / / Yes / / No Due Date Amount $
F. SECOND DEED OF TRUST @ % interest for years. Pymts./Mo. = $ (Prin. & Int. only) Amount $
/ / Bank or Savings & Loan / / Fixed Rate / / New Loan
/ / Loan Carried by Seller / / Variable Rate / / Assumed Existing Loan Balance
Balloon Payment / / Yes / / No Due Date Amount $
G. OTHER FINANCING: Is other financing involved not covered in (b) or (c) above? / / Yes / / No Amount $
Type @ % interest for years. Pymts./Mo. = $ (Prin. & Int. only)
/ / Bank or Savings & Loan / / Fixed Rate / / New Loan
/ / Loan Carried by Seller / / Variable Rate / / Assumed Existing Loan Balance
Balloon Payment / / Yes / / No Due Date Amount $
H. IMPROVEMENT BOND / / Yes / / No Outstanding Balance: Amount $
I. TOTAL PURCHASE PRICE: (or acquisition price, if traded or exchanged, include real estate commission if paid.)
Total items A through $
J. PROPERTY PURCHASED: / / Through a broker; / / Direct form seller; / / Other (Explain)
If purchased through a broker, provide broker's name and phone no.:
Please explain any special terms or financing and many other information that would
help the Assessor understand the purchase price and terms of sale.
- ------------------------------------------------------------------------------------------------------------------------------------
PART IV: PROPERTY INFORMATION
A. IS PERSONAL PROPERTY INCLUDED IN THE PURCHASE PRICE
(other than a mobilehome subject to local property tax)? / / Yes / / No
If yes, enter the value of the personal property included in the purchase price $ (Attach itemized list of personal property)
B. IS THIS PROPERTY INTENDED AS YOUR PRINCIPAL RESIDENCE? / / Yes / / No
If yes, enter date of occupancy / /, 19 or intended occupancy / , 19
Month Day Month Day
C. TYPE OF PROPERTY TRANSFERRED:
/ / Single-Family residence / / Agricultural / / Timeshare
/ / Multiple-Family residence (no. of units: ) / / Coop/Own-your-own / / Mobilehome
/ / Commercial/Industrial / / Condominium / / Unimproved lot
/ / Other (Description: )
D. DOES THE PROPERTY PRODUCE INCOME? / / Yes / / No
E. IF THE ANSWER TO QUESTION D IS YES, IS THE INCOME FROM:
/ / Lease/Rent / / Contract / / Mineral rights / / Other - explain
F. WHAT WAS THE CONDITION OF THE PROPERTY AT THE TIME OF SALE?
/ / Good / / Average / / Fair / / Poor
Enter here, or on an attached sheet, any other information that would assist the Assessor in determining value of the property
such as the physical condition of the property, restrictions, etc.
- ------------------------------------------------------------------------------------------------------------------------------------
I certify that the foregoing is true, correct and complete to the best of my knowledge and belief.
Signed
-------------------------------------------------------------------------------------------------------------------------
(New Owner/Corporate Officer)
Please Print Name of New Owner/Corporate Officer
-------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Exhibit C-Page 2
<PAGE>
Phone No. where you are available from 8:00 a.m. - 5:00 p.m. ( )
(Note: The Assessor may contact you for further information)
- ------------------------------------------------------------------------------------------------------------------------------------
If a document evidencing a change of ownership is presented to the recorder for recordation without the concurrent filing of a
PRELIMINARY CHANGE OF OWNERSHIP REPORT, the recorder may charge an additional recording fee of twenty dollars ($20).
</TABLE>
Exhibit C-Page 3
<PAGE>
EXHIBIT D
BILL OF SALE, ASSIGNMENT OF CONTRACT
RIGHTS AND INTANGIBLE ASSETS
Reference is made to: (1) that certain Ground Lease between Assignor, as
lessee, and Chiron Corporation, as lessor, dated June 28, 1996 (the "GROUND
LEASE"); (2) that certain Purchase Agreement between Assignor and Chiron
Corporation, dated June 28, 1996 (the "PURCHASE AGREEMENT"); and (3) that
certain Lease Agreement between Assignor, as landlord, and Chiron Corporation,
as tenant, dated June 28, 1996 (the "LEASE").
As contemplated by the Purchase Agreement, Assignor hereby sells, transfers
and assigns unto [CHIRON OR THE APPLICABLE PURCHASER, AS THE CASE MAY BE], a
_____________ ("ASSIGNEE"), all of Assignor's right, title and interest in and
to the following property, if any, to the extent such property is assignable:
(a) any pending or future award made because of any condemnation affecting
the Property or because of any conveyance to be made in lieu thereof, and any
unpaid award for damage to the Property and any unpaid proceeds of insurance or
claim or cause of action for damage, loss or injury to the Property; and
(b) all other property included within the definition of "Property" as set
forth in the Purchase Agreement, including but not limited to any of the
following transferred to Assignor by the tenant pursuant to Paragraph 8 of the
Lease or otherwise acquired by Assignor, at the time of the execution and
delivery of the Lease and Purchase Agreement or thereafter, by reason of
Assignor's status as the owner of any interest in the Property: (1) any goods,
equipment, furnishings, furniture, chattels and tangible personal property of
whatever nature that are located on the Property and all renewals or
replacements of or substitutions for any of the foregoing; (ii) the rights of
Assignor, existing at the time of the execution of the Lease and Purchase
Agreement or thereafter arising, under Permitted Encumbrances or Development
Contracts (both as defined in the Lease); and (iii) any other general
intangibles, permits, licenses, franchises, certificates, and other rights and
privileges related to the Property that Assignee would have acquired if Assignee
had itself acquired a leasehold estate in the land included in the Property as
the lessee under the Ground Lease.
Provided, however, excluded from this conveyance and reserved to Assignor are
any rights or privileges of Assignor under the following ("EXCLUDED RIGHTS"):
(1) the indemnities set forth in the Ground Lease and the Lease, whether such
rights are presently known or unknown, including rights of the Assignor to be
indemnified against environmental claims of third parties as provided in the
Ground Lease which may not presently be known, (2) provisions in the Lease that
establish the right of Assignor to recover any accrued unpaid rent under the
Lease which may be outstanding as of the date hereof, (3) agreements between
Assignor and "BNPLC's Parent" or any "Participant," both as defined in the
Lease, or any modification or extension thereof, or (4) any other instrument
being delivered to Assignor contemporaneously herewith pursuant to the Purchase
Agreement. As used in the preceding sentence, "accrued unpaid rent under the
Lease" shall not include, and thus this conveyance is intended to cover, any
rights Assignor may have to recover damages as provided in Paragraphs
17.(c)(iii)a), 17.(c)(iii)b) and 17.(c)(iii)c) of the Lease to the extent that
such damages are attributable to "Base Rent" and other "Income Payments" (both
as defined in the Lease) that would not have accrued and become payable until
after the date hereof but for a termination of the Lease or a default thereunder
by the tenant. To the extent that this conveyance does include the rights to
receive future payments under the Lease itself, including any payment of damages
as described in the preceding sentence, such rights ("INCLUDED RIGHTS") shall be
subordinate to Assignor's Excluded Rights, and Assignee hereby waives any rights
to enforce Included Rights until such time as Assignor has received all payments
to which it remains entitled by reason of Excluded Rights. If any amount shall
be paid to Assignee on account of any Included Rights at any time before
Assignor has received all payments to which it is entitled because of Excluded
Rights, such amount shall be held in trust by Assignee for the benefit of
Assignor, shall be segregated from the other funds of Assignee and shall
<PAGE>
forthwith be paid over to Assignor to be held by Assignor as collateral for, or
then or at any time thereafter applied in whole or in part by Assignor against,
the payments due to Assignor because of Excluded Rights, whether matured or
unmatured, in such order as Assignor shall elect.
Assignor does for itself and its heirs, executors and administrators,
covenant and agree to warrant and defend the title to the property assigned
herein against the just and lawful claims and demands of any person claiming
under or through a Lien Removable by BNPLC, but not otherwise.
Assignee hereby assumes and agrees to keep, perform and fulfill Assignor's
obligations, if any, relating to any permits or contracts, under which Assignor
has rights being assigned herein.
IN WITNESS WHEREOF, the parties have executed this instrument as of
________________, ______.
ASSIGNOR:
BNP LEASING CORPORATION
a Delaware corporation
By:
----------------------------------------------------
Its:
---------------------------------------------------
ASSIGNEE:
[CHIRON, OR THE APPLICABLE PURCHASER], a
______________ corporation
By:
----------------------------------------------------
Its:
---------------------------------------------------
Exhibit D - Page 2
<PAGE>
ANNEX A
LEGAL DESCRIPTION
[DRAFTING NOTE: TO THE EXTENT THAT THE "LAND" COVERED BY THE GROUND LEASE
CHANGES FROM TIME TO TIME AS PROVIDED THEREIN OR BECAUSE OF ADJUSTMENTS FOR
WHICH CHIRON REQUESTS BNPLC'S CONSENT OR APPROVAL AS PROVIDED IN THE LEASE, SO
TOO WILL THE DESCRIPTION OF THE LAND BELOW CHANGE. ANY SUCH CHANGES WILL BE
INCORPORATED INTO THE DESCRIPTION BELOW AND THIS "DRAFTING NOTE" WILL BE DELETED
BEFORE THE DOCUMENT TO WHICH THIS DESCRIPTION IS ATTACHED IS ACTUALLY EXECUTED
AND DELIVERED.]
REAL PROPERTY IN CITY OF EMERYVILLE, COUNTY OF ALAMEDA, STATE OF CALIFORNIA
DESCRIBED AS FOLLOWS:
PARCEL ONE:
BEING A PORTION OF BLOCKS 9, 10 AND 11, AS SHOWN ON THE UNFILED MAP ENTITLED
"MAP OF MONUMENT LOCATION EMERYVILLE INDUSTRIAL TRACT", DATED JANUARY 5, 1921,
BY PUNNETT AND PAREZ ENGINEERS, BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
BEGINNING AT THE INTERSECTION OF THE NORTHERLY LINE OF 53RD STREET (FORMERLY
SANTA FE AVENUE), AS SHOWN ON SAID MAP, AND THE WESTERLY LINE OF HOLLIS STREET;
THENCE ALONG SAID WESTERLY LINE, NORTH 17DEG. 32' 00" WEST, 443.61 FEET; THENCE
NORTH 27DEG. 46' 45" WEST, 381.28 FEET TO THE BEGINNING POINT OF A NON-TANGENT
CURVE CONCAVE SOUTHEASTERLY, HAVING A RADIUS OF 274.38 FEET (A RADIAL LINE
THROUGH SAID POINT BEARS NORTH 31DEG. 43' 39" WEST); THENCE LEAVING SAID
WESTERLY LINE ALONG SAID CURVE, THROUGH A CENTRAL ANGLE OF 72DEG. 44' 21", AN
ARC DISTANCE OF 348.34 FEET; THENCE SOUTH 17DEG. 32' 00" EAST, 567.48 FEET TO A
POINT LYING ON SAID NORTHERLY LINE OF 53RD STREET; THENCE ALONG SAID NORTHERLY
LINE, NORTH 72DEG. 28' 00" EAST, 274.53 FEET TO THE POINT OF BEGINNING.
ASSESSOR'S PARCEL NO. 049-1041-028
PARCEL TWO:
THAT PARCEL OF LAND SITUATE IN THE CITY OF EMERYVILLE, COUNTY OF ALAMEDA, STATE
OF CALIFORNIA, AND BEING ALL OF PARCEL 2 OF PARCEL MAP NO. 5719, FILED DECEMBER
28, 1989, IN BOOK 187 OF PARCEL MAPS, AT PAGES 97 - 98, IN RECORDS OF SAID
COUNTY.
EXCEPTING THEREFROM:
ALL MINERALS AND MINERAL RIGHTS, INTERESTS, AND ROYALTIES, INCLUDING, WITHOUT
LIMITING THE GENERALITY THEREOF, OIL, GAS AND OTHER HYDROCARBON SUBSTANCES, AS
WELL AS METALLIC OR OTHER SOLID MINERALS, MORE THAN FIVE HUNDRED (500) FEET
BELOW THE SURFACE OF SAID PROPERTY; HOWEVER, GRANTOR OR ITS SUCCESSORS AND
ASSIGNS, SHALL NOT HAVE THE RIGHT FOR ANY PURPOSE WHATSOEVER TO ENTER UPON, INTO
OR THROUGH THE SURFACE OF SAID PROPERTY IN CONNECTION THEREWITH.
Exhibit D - Page 3
<PAGE>
ASSESSOR'S PARCEL NO. 049-1041-060
Exhibit D - Page 4
<PAGE>
EXHIBIT E
ACKNOWLEDGMENT OF DISCLAIMER OF REPRESENTATIONS AND WARRANTIES
THIS ACKNOWLEDGMENT OF DISCLAIMER OF REPRESENTATIONS AND WARRANTIES (this
"CERTIFICATE") is made as of ___________________, ____, by [Chiron or the
Applicable Purchaser, as the case may be], a ___________________ ("GRANTEE").
Contemporaneously with the execution of this Certificate, BNP Leasing
Corporation, a Delaware corporation ("BNPLC"), is executing and delivering to
Grantee (1) a Corporation Grant Deed and (2) a Bill of Sale, Assignment of
Contract Rights and Intangible Assets (the foregoing documents and any other
documents to be executed in connection therewith are herein called the
"CONVEYANCING DOCUMENTS" and any of the properties, rights or other matters
assigned, transferred or conveyed pursuant thereto are herein collectively
called the "SUBJECT PROPERTY").
NOTWITHSTANDING ANY PROVISION CONTAINED IN THE CONVEYANCING DOCUMENTS TO
THE CONTRARY, GRANTEE ACKNOWLEDGES THAT BNPLC MAKES NO REPRESENTATIONS OR
WARRANTIES OF ANY NATURE OR KIND, WHETHER STATUTORY, EXPRESS OR IMPLIED, WITH
RESPECT TO ENVIRONMENTAL MATTERS OR THE PHYSICAL CONDITION OF THE SUBJECT
PROPERTY, AND GRANTEE, BY ACCEPTANCE OF THE CONVEYANCING DOCUMENTS, ACCEPTS THE
SUBJECT PROPERTY "AS IS," "WHERE IS," "WITH ALL FAULTS" AND WITHOUT ANY SUCH
REPRESENTATION OR WARRANTY BY GRANTOR AS TO ENVIRONMENTAL MATTERS, THE PHYSICAL
CONDITION OF THE SUBJECT PROPERTY, COMPLIANCE WITH SUBDIVISION OR PLATTING
REQUIREMENTS OR CONSTRUCTION OF ANY IMPROVEMENTS. Without limiting the
generality of the foregoing, Grantee hereby further acknowledges and agrees that
warranties of merchantability and fitness for a particular purpose are excluded
from the transaction contemplated by the Conveyancing Documents, as are any
warranties arising from a course of dealing or usage of trade. Grantee hereby
assumes all risk and liability (and agrees that BNPLC shall not be liable for
any special, direct, indirect, consequential, or other damages) resulting or
arising from or relating to the ownership, use, condition, location,
maintenance, repair, or operation of the Subject Property, except for damages
proximately caused by (and attributed by any applicable principles of
comparative fault to) the Established Misconduct of BNPLC. As used in the
preceding sentence, "ESTABLISHED MISCONDUCT" is intended to have, and be limited
to, the meaning given to it in the List of Definitions attached to the Purchase
Agreement between BNPLC and Chiron Corporation dated June 28, 1996, pursuant to
which BNPLC is delivering the Conveyancing Documents.
The provisions of this Certificate shall be binding on Grantee, its
successors and assigns and any other party claiming through Grantee. Grantee
hereby acknowledges that BNPLC is entitled to rely and is relying on this
Certificate.
EXECUTED as of ________________, ____.
[CHIRON, OR THE APPLICABLE PURCHASER]
By:
-----------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
<PAGE>
EXHIBIT F
DOCUMENTARY TRANSFER TAX REQUEST
ACCOUNTABLE FORM #__________
DATE:________________
To: Alameda County Recorder
Subject: REQUEST THAT DOCUMENTARY TRANSFER TAX DECLARATION BE MADE IN
ACCORDANCE WITH REVENUE CODE 11932.
Re: Instrument Title: Corporation Grant Deed
Name of Party Conveying Title: BNP Leasing Corporation
The Documentary Transfer Tax is declared to be in the amount of $_______________
for the referenced instrument and is:
/ / Computed on full value of property conveyed.
/ / Computed on full value less liens/encumbrances remaining thereon
at time of sale.
This separate declaration is made in accordance with
_________________________________. It is requested that the amount paid be
indicated on the face of the document after the permanent copy has been made.
Sincerely,
-------------------------------------------------
Individual (or his agent) who made, signed or
issued instrument
PART I
RECORDING REFERENCE DATA:
Serial #______________ Date Recorded_____________________________________
SEPARATE PAPER AFFIXED TO INSTRUMENT:
"Tax paid" indicated on the face of instrument and the separate request
(DRA 3-A) was affixed for Recorder by:
_____________________________ Date_________________________________________
Documentary Transfer Tax Collector
Witnessed by:____________________ Date_____________________________________
Mail Clerk
(Note: Prepare photo for Recorder file.)
<PAGE>
PART II ACCOUNTABLE FORM #______________
REFERENCE DATA: Title:_________________________________________________________
Serial:____________________ Date:___________________________________
INSTRUCTIONS:
1. This slip must accompany document.
2. Mail Clerk hand carry document to Tax Collector to indicate the amount
of tax paid.
Exhibit F - Page 2
<PAGE>
EXHIBIT G
SECRETARY'S CERTIFICATE
The undersigned, __________________ Secretary of BNP Leasing Corporation, a
Delaware corporation (the "CORPORATION"), hereby certifies as follows:
1. That he is the duly, elected, qualified and acting Secretary [or
Assistant Secretary] of the Corporation and has custody of the corporate
records, minutes and corporate seal.
2. That the following named persons have been properly designated,
elected and assigned to the office in the Corporation as indicated below; that
such persons hold such office at this time and that the specimen signature
appearing beside the name of such officer is his or her true and correct
signature.
[THE FOLLOWING BLANKS MUST BE COMPLETED WITH THE NAMES AND SIGNATURES OF THE
OFFICERS WHO WILL BE SIGNING THE DEED AND OTHER SALE CLOSING DOCUMENTS ON BEHALF
OF THE CORPORATION.]
NAME TITLE SIGNATURE
_______________________ _________________________ ____________________________
_______________________ _________________________ ___________________________
3. That the resolutions attached hereto and made a part hereof were duly
adopted by the Board of Directors of the Corporation in accordance with the
Corporation's Articles of Incorporation and Bylaws, as evidenced by the
signatures of all directors of the Corporation affixed thereto. Such
resolutions have not been amended, modified or rescinded and remain in full
force and effect.
IN WITNESS WHEREOF, I have hereunto signed my name and affixed the seal of
the Corporation on this _____, day of ___________, ____.
_____________________________________________
[signature]
<PAGE>
CORPORATE RESOLUTIONS OF
BNP LEASING CORPORATION
WHEREAS, pursuant to that certain Purchase Agreement (herein called the
"PURCHASE AGREEMENT") dated June 28, 1996, by and between BNP Leasing
Corporation (the "CORPORATION") and [CHIRON OR THE APPLICABLE PURCHASER AS THE
CASE MAY BE] ("PURCHASER"), the Corporation agreed to sell and Purchaser agreed
to purchase or cause the Applicable Purchaser (as defined in the Purchase
Agreement) to purchase the Corporation's interest in the property (the
"PROPERTY") located in Emeryville, California more particularly described
therein.
NOW THEREFORE, BE IT RESOLVED, that the Board of Directors of the
Corporation, in its best business judgment, deems it in the best interest of the
Corporation and its shareholders that the Corporation convey the Property to
Purchaser or the Applicable Purchaser pursuant to and in accordance with the
terms of the Purchase Agreement.
RESOLVED FURTHER, that the proper officers of the Corporation, and each of
them, are hereby authorized and directed in the name and on behalf of the
Corporation to cause the Corporation to fulfill its obligations under the
Purchase Agreement.
RESOLVED FURTHER, that the proper officers of the Corporation, and each of
them, are hereby authorized and directed to take or cause to be taken any and
all actions and to prepare or cause to be prepared and to execute and deliver
any and all deeds and other documents, instruments and agreements that shall be
necessary, advisable or appropriate, in such officer's sole and absolute
discretion, to carry out the intent and to accomplish the purposes of the
foregoing resolutions.
IN WITNESS WHEREOF, we, being all the directors of the Corporation, have
hereunto signed our names as of the dates indicated by our signatures.
---------------------------------------------
[signature and date]
---------------------------------------------
[signature and date]
---------------------------------------------
[signature and date]
Exhibit G - Page 2
<PAGE>
EXHIBIT H
BNP LEASING CORPORATION
717 N. HARWOOD
SUITE 2630
DALLAS, TEXAS 75201
_______________, ____
[Title Insurance Company]
_________________
_________________
_________________
Re: Recording of Grant Deed to [Chiron or the Applicable Purchaser]
("PURCHASER")
Ladies and Gentlemen:
BNP Leasing Corporation has executed and delivered to Purchaser a Grant
Deed in the form attached to this letter. You are hereby authorized and
directed to record the Grant Deed at the request of Purchaser.
Sincerely,
<PAGE>
EXHIBIT I
FIRPTA STATEMENT
Section 1445 of the Internal Revenue Code of 1986, as amended, provides
that a transferee of a U.S. real property interest must withhold tax if the
transferor is a foreign person. Sections 18805, 18815 and 26131 of the
California Revenue and Taxation Code, as amended, provide that a transferee of a
California real property interest must withhold income tax if the transferor is
a nonresident seller.
To inform [CHIRON OR THE APPLICABLE PURCHASER, AS THE CASE MAY BE] (the
"TRANSFEREE") that withholding of tax is not required upon the disposition of a
California real property interest by transferor, BNP Leasing Corporation (the
"SELLER"), the undersigned hereby certifies the following on behalf of the
Seller:
1. The Seller is not a foreign corporation, foreign partnership, foreign
trust, or foreign estate (as those terms are defined in the Internal Revenue
Code and Income Tax Regulations);
2. The United States employer identification number for the Seller is
_____________________;
3.The office address of the Seller is ______________
__________________________________________.
[NOTE: BNPLC MUST INCLUDE EITHER ONE, BUT ONLY ONE, OF THE FOLLOWING
REPRESENTATIONS IN THE FIRPTA STATEMENT, BUT IF THE ONE INCLUDED STATES THAT
BNPLC IS DEEMED EXEMPT FROM CALIFORNIA INCOME AND FRANCHISE TAX, THEN BNPLC MUST
ALSO ATTACH A WITHHOLDING CERTIFICATE FROM THE CALIFORNIA FRANCHISE TAX BOARD
EVIDENCING THE SAME:
4. THE SELLER IS QUALIFIED TO DO BUSINESS IN CALIFORNIA.
OR
4. THE SELLER IS DEEMED TO BE EXEMPT FROM THE WITHHOLDING REQUIREMENT OF
CALIFORNIA REVENUE AND TAXATION CODE SECTION 26131(E), AS EVIDENCED BY THE
WITHHOLDING CERTIFICATE FROM THE CALIFORNIA FRANCHISE TAX BOARD WHICH IS
ATTACHED.]
The Seller understands that this certification may be disclosed to the
Internal Revenue Service and/or to the California Franchise Tax Board by the
Transferee and that any false statement contained herein could be punished by
fine, imprisonment, or both.
The Seller understands that the Transferee is relying on this affidavit in
determining whether withholding is required upon said transfer. The Seller
hereby agrees to indemnify and hold the Transferee harmless from and against any
and all obligations, liabilities, claims, losses, actions, causes of action,
demands, rights, damages, costs, and expenses (including but not limited to
court costs and attorneys' fees) incurred by the Transferee as a result of any
false misleading statement contained herein.
<PAGE>
Under penalties of perjury I declare that I have examined this
certification and to the best of my knowledge and belief it is true, correct and
complete, and I further declare that I have authority to sign this document on
behalf of the Seller.
Dated: ___________, ____.
By:
---------------------------
Name:
-------------------------
Title:
------------------------
Exhibit I - Page 2
<PAGE>
EXHIBIT J
[DRAFTING NOTE: IF BEFORE THIS AMENDED AND RESTATED GUARANTY IS EXECUTED AND
DELIVERED, CIBA-GEIGY, LIMITED CONSUMMATES A MERGER WITH ____________ , WHICH AS
OF THE DATE OF THIS PURCHASE AGREEMENT IS EXPECTED, THE NAME OF THE SUCCESSOR TO
CIBA-GEIGY WILL BE SUBSTITUTED FOR CIBA-GEIGY IN THIS GUARANTY.]
AMENDED AND RESTATED GUARANTY
This Guaranty is made effective as of _______, 199__ by Ciba-Geigy Limited,
Basle, Switzerland (the "GUARANTOR") in favor of BNP Leasing Corporation, a
Delaware corporation ("BNPLC"), Credit Suisse ("CREDIT SUISSE") and Union Bank
of Switzerland, New York Branch ("UBS"). This Guaranty amends, restates and
replaces a prior Guaranty dated June 28, 1996 by Guarantor in favor of BNPLC,
Credit Suisse and UBS; the prior Guaranty included a deadline in Paragraph 5,
not included below, for the request of any payment from Guarantor.
WHEREAS,
At the request of Chiron Corporation, a Delaware corporation ("CHIRON"), in
which the Guarantor is a major shareholder, BNPLC has advanced dollars and may
advance dollars in the future pursuant to the "Lease and Purchase Agreements"
(as defined hereinafter),
WHEREAS,
the Lease and Purchase Agreements provide that BNPLC's obligation to advance
dollars is, in part, conditioned upon BNPLC's receipt from Credit Suisse and UBS
of their respective percentages of the dollars to be advanced, pursuant to
"Participation Agreements" (as defined hereinafter) between BNPLC and Credit
Suisse and UBS,
WHEREAS,
it was a condition of BNPLC to its execution of the Lease and Purchase
Agreements, and it is a condition of Credit Suisse and UBS to their execution of
the Participation Agreements, that the Guarantor guarantee the obligations of
Chiron under the Lease and Purchase Agreements, and
WHEREAS,
it is a condition to certain rights of Chiron under the Lease and Purchase
Agreements that Chiron cause the Guarantor to deliver this Amended and Restated
Guaranty,
NOW, THIS GUARANTY WITNESSES as follows:
<PAGE>
1. GUARANTY. The Guarantor irrevocably and unconditionally undertakes to
secure to BNPLC the due and punctual payment of all money that may become
due from time to time to BNPLC from Chiron under or as provided in the
following documents (the "LEASE AND PURCHASE AGREEMENTS"):
(a) the Ground Lease dated June 28, 1996 [as previously amended],
providing (among other things) for the lease by Chiron to BNPLC of
land described therein (the "LAND");
(b) the Lease Agreement dated June 28, 1996 [as previously amended],
providing (among other things) for the construction of improvements on
the Land by Chiron with funds advanced or to be advanced by BNPLC and
the use and lease by Chiron from BNPLC of the Land and the
improvements; and
(c) the Purchase Agreement dated June 28, 1996 [as previously amended],
providing (among other things) for the sale by BNPLC of Land and
improvements thereon to Chiron or to a third party designated by
Chiron.
The Guarantor therefore undertakes to pay on first demand of BNPLC any
amount payable under or as provided in the Lease and Purchase Agreements
(the "GUARANTEED PAYMENTS") up to a maximum total amount of USD
$195,000,000 (in words: ONE HUNDRED NINETY-FIVE MILLION United States
Dollars) ("GUARANTOR'S MAXIMUM LIABILITY") irrespective of the validity and
the legal effects of the Lease and Purchase Agreements, waiving all rights
of objection and defense arising therefrom upon receipt of the written
request for payment and the statement in writing by BNPLC that Chiron has
not made payment on the date(s) specified and the amount called under the
Guaranty.
2. BNPLC'S OBLIGATION TO DISTRIBUTE PAYMENTS TO CREDIT SUISSE AND UBS:
Guarantor has been advised that the following agreements (the
"PARTICIPATION AGREEMENTS") establish the respective rights and obligations
of BNPLC, Credit Suisse and UBS concerning advances of dollars to Chiron
required by the Lease and Purchase Agreements and concerning the allocation
among BNPLC, Credit Suisse and UBS of payments required of Chiron by the
Lease and Purchase Agreements:
(a) the Participation Agreement between BNPLC and Credit Suisse dated June
28, 1996, providing (among other things) for (1) the advance by Credit
Suisse of a percentage ("CREDIT SUISSE'S PERCENTAGE") of the
$195,000,000 that Chiron may request from BNPLC under the Lease and
Purchase Agreements and (2) the payment to Credit Suisse of Credit
Suisse's Percentage of certain payments received by BNPLC from Chiron
under the Lease and Purchase Agreements; and
(b) the Participation Agreement between BNPLC and UBS dated June 28, 1996,
providing (among other things) for (1) the advance by UBS of a
percentage ("UBS'S PERCENTAGE") of the $195,000,000 that Chiron may
request from BNPLC under the Lease and Purchase Agreements and (2) the
payment to UBS of UBS's Percentage of certain payments received by
BNPLC from Chiron under the Lease and Purchase Agreements.
Except as provided in the next paragraph, any demand for payment made by
BNPLC upon Guarantor under this Guaranty will constitute a demand made not
only for BNPLC itself, but also on behalf of Credit Suisse and UBS.
Further, if BNPLC does make a such a demand for itself and for Credit
Suisse and UBS, BNPLC shall distribute a portion of any payments BNPLC
receives from Guarantor to Credit Suisse in accordance with the
Participation Agreement between BNPLC and Credit Suisse, and BNPLC shall
also
Exhibit J - Page 2
<PAGE>
distribute a portion of any payments BNPLC receives from Guarantor to UBS
in accordance with the Participation Agreement between BNPLC and UBS.
3. SEPARATE DEMANDS BY BNPLC, CREDIT SUISSE AND UBS: If Chiron shall fail to
pay an amount for which BNPLC can demand payment from Guarantor under this
Guaranty, BNPLC, Credit Suisse and UBS may agree among themselves to each
make a separate demand directly upon Guarantor. However, to be effective
for purposes of this Guaranty, any such agreement by BNPLC, Credit Suisse
and UBS must be in writing; must be provided to Guarantor before BNPLC
makes a demand upon Guarantor for itself and for Credit Suisse and UBS; and
must specify the respective amounts that each of BNPLC, Credit Suisse and
UBS will demand of Guarantor. Also, the total of all amounts specified in
any such agreement as amounts that will be demanded of Guarantor must not
exceed (before any addition required by the next paragraph) Guarantor's
Maximum Liability. If Guarantor receives an agreement among BNPLC, Credit
Suisse and UBS that satisfies the requirements set forth in the preceding
sentences, Guarantor shall honor any separate demands made by BNPLC, Credit
Suisse and UBS in accordance with such agreement by making payments
directly to BNPLC, Credit Suisse and UBS, rather than by making a single
payment to BNPLC.
4. GROSS UP: The Guarantor hereby expressly undertakes and secures that
payments under this Guaranty will not be less than as stipulated in the
Lease and Purchase Agreements. In implementation of this undertaking and
in case Swiss withholding taxes are imposed in respect of payments made
under this Guaranty, the Guarantor undertakes, as a separate and
independent obligation, to pay an increased amount so that the payments
received by BNPLC shall equal the amount actually owed by Chiron to BNPLC
under the Lease and Purchase Agreements.
5. GUARANTOR'S OBLIGATIONS CONTINUING: The Guarantor's obligations under this
Guaranty are and will remain in full force and effect by way of continuing
security until no sum remains payable under the Lease and Purchase
Agreements. Furthermore, these obligations of the Guarantor are additional
to, and not instead of, any security or other guarantee or indemnity at any
time existing in favor of BNPLC, whether from the Guarantor or otherwise.
The Guarantor irrevocably waives all notices and demands whatsoever.
6. REPAYMENTS IN LIQUIDATION: If any payment received by BNPLC or payable to
BNPLC under the Lease and Purchase Agreements is, on the liquidation or
insolvency of Chiron, excused, reduced or avoided under any laws relating
to liquidation or insolvency, such payment or the excuse, reduction or
avoidance of such payment will not be considered as having discharged or
diminished the liability of the Guarantor and this Guaranty will continue
to apply as if such payment had at all times remained owning by Chiron.
7. STATUS OF GUARANTY: The payment obligations of the Guarantor under this
Guaranty constitute direct, unconditional and unsecured obligations of the
Guarantor and rank and will rank pari passu with all other outstanding
unsecured and unsubordinated indebtedness and monetary obligations of the
Guarantor, present or future, including those in respect of deposits, but,
in the event of insolvency, bankruptcy, reorganization or similar
proceedings, only to the extent permitted by applicable laws to creditors'
rights.
8. POWER TO EXECUTE: The Guarantor hereby warrants, represents and covenants
that it has all corporate power, and has taken all necessary corporate or
other steps, to enable it to execute, deliver and perform this Guaranty,
and that this Guaranty constitutes a legal, valid and binding obligation of
the Guarantor in accordance with its terms.
Exhibit J - Page 3
<PAGE>
9. TRANSFER OF RIGHTS: If and to the extent the Guarantor has made payment
under the Guaranty the Guarantor is entitled to the transfer of BNPLC's
rights against Chiron and the right of recovery from Chiron. However, the
Guarantor shall not by virtue of this Guaranty be entitled to the transfer
of any rights of BNPLC or claim in competition with BNPLC until all amounts
which may be payable under the Lease and Purchase Agreements have been paid
in full.
10. GOVERNING LAW AND JURISDICTION: This Guaranty is governed by and shall be
construed in accordance with Swiss law. Exclusive jurisdiction and venue
for any suit brought to enforce this Guaranty will be in Basle,
Switzerland.
Ciba-Geigy Limited
Exhibit J - Page 4
<PAGE>
EXHIBIT K
NONEXCLUSIVE LIST OF MATTERS
TO BE COVERED BY ANY FUTURE PLEDGE DOCUMENTS
With respect to any pledge of Qualified Securities, the Pledge Documents may,
among other things:
a) establish (and evidence Chiron's pledge to BNPLC of) one or more
custodial accounts, in which the Qualified Securities can be held, and appoint a
custodian satisfactory to Chiron, BNPLC and the Participants to maintain such
accounts;
b) provide that all pledged securities shall either be newly acquired by
BNPLC or such a custodian with funds provided by Chiron (and thus not subject to
possible prior encumbrances) or be covered by certificates provided to BNPLC by
the custodian or by others satisfactory to BNPLC which certify facts necessary
to establish that the securities are unencumbered except by the pledge to BNPLC;
and
c) provide for procedures to allow the liquidation of Qualified Securities
immediately prior to the Designated Sale Date at the request of Chiron as needed
to provide funds for payments required of Chiron on the Designated Sale Date,
provided that such procedures can be established without jeopardizing the
perfection or priority of BNPLC's security interest.
With respect to any pledge of a Qualified Right to Stock Sale Proceeds From
Guarantor, the Pledge Documents may, among other things, provide for procedures
to allow BNPLC or a custodian acting at the request of BNPLC to make a payment
demand for Chiron upon Guarantor or to otherwise satisfy conditions, if any, to
Guarantor's obligation to make the payments required by the pledged Qualified
Right to Stock Sale Proceeds.
<PAGE>
LIST OF DEFINED TERMS
FOR AGREEMENTS BETWEEN
BNP LEASING CORPORATION
AND
CHIRON CORPORATION
DATED JUNE 28, 1996
<PAGE>
TABLE OF CONTENTS
PAGE
DEFINED TERM NUMBER
- --------------------------------------------------------------------------------
ACTIVE NEGLIGENCE....................................................... 1
ADDITIONAL RENT......................................................... 1
ADMINISTRATIVE FEE...................................................... 1
ADVANCE DATE............................................................ 1
AFFILIATE............................................................... 1
APPLICABLE LAWS......................................................... 1
APPLICABLE PURCHASER.................................................... 1
APPROVED PLANS.......................................................... 1
ATTORNEYS' FEES......................................................... 2
BANKING RULES CHANGE.................................................... 2
BASE RENT............................................................... 2
BASE RENT COMMENCEMENT DATE............................................. 2
BASE RENT DATE.......................................................... 3
BASE RENT PERIOD........................................................ 3
BNPLC................................................................... 4
BNPLC'S PARENT.......................................................... 4
BREAKAGE COSTS.......................................................... 4
BREAK EVEN PRICE........................................................ 4
BUSINESS DAY............................................................ 5
CAPITAL ADEQUACY CHARGES................................................ 5
CARRYING COSTS.......................................................... 5
CHIRON.................................................................. 5
CHIRON'S PA OBLIGATIONS................................................. 5
CODE.................................................................... 5
COMMITMENT FEE.......................................................... 5
COMPLETION NOTICE....................................................... 5
CONSTRUCTION ADVANCES................................................... 5
CONSTRUCTION ALLOWANCE.................................................. 5
CONSTRUCTION PERIOD..................................................... 5
CONSTRUCTION PROJECTS................................................... 6
DEBT.................................................................... 6
DEFAULT................................................................. 6
DEFAULT RATE............................................................ 6
DEMAND DEADLINE......................................................... 6
DEPOSIT TAKER........................................................... 7
DESIGNATED SALE DATE.................................................... 7
DEVELOPMENT CONTRACTS................................................... 8
EFFECTIVE DATE.......................................................... 8
EFFECTIVE RATE.......................................................... 8
ENVIRONMENTAL CONSULTANT................................................ 8
ENVIRONMENTAL CUTOFF DATE............................................... 8
ENVIRONMENTAL LAWS...................................................... 8
ENVIRONMENTAL LOSSES.................................................... 9
ENVIRONMENTAL REPORTS................................................... 9
ERISA................................................................... 11
-i-
Exhibit K - Page i
<PAGE>
PAGE
DEFINED TERM NUMBER
- --------------------------------------------------------------------------------
ERISA AFFILIATE......................................................... 11
ERISA TERMINATION EVENT................................................. 11
ESCROWED PROCEEDS....................................................... 11
ESTABLISHED MISCONDUCT.................................................. 11
EUROCURRENCY LIABILITIES................................................ 12
EURODOLLAR RATE RESERVE PERCENTAGE...................................... 12
EVENT OF DEFAULT........................................................ 12
EXCLUDED TAXES.......................................................... 12
EXISTING PARTICIPATION AGREEMENTS....................................... 12
FAIR MARKET VALUE....................................................... 12
FED FUNDS RATE.......................................................... 13
FUNDING ADVANCES........................................................ 13
GAAP.................................................................... 13
GROUND LEASE............................................................ 13
GUARANTY................................................................ 14
GUARANTOR............................................................... 14
HAZARDOUS SUBSTANCE..................................................... 14
HAZARDOUS SUBSTANCE ACTIVITY............................................ 14
HAZWOPER REGULATIONS.................................................... 14
IMPOSITIONS............................................................. 14
IMPROVEMENTS............................................................ 15
INDUSTRIAL HYGIENIST.................................................... 15
INITIAL FUNDING ADVANCE................................................. 15
INTERESTED PARTY........................................................ 15
LAND.................................................................... 15
LEASE................................................................... 15
LIBOR................................................................... 15
LIBOR PERIOD ELECTION................................................... 16
LIEN.................................................................... 16
LIENS REMOVABLE BY BNPLC................................................ 16
LIST OF DEFINED TERMS................................................... 17
LOSSES.................................................................. 17
MATERIAL ENVIRONMENTAL COMMUNICATION.................................... 17
MAXIMUM CONSTRUCTION ALLOWANCE.......................................... 17
OUTSTANDING CONSTRUCTION ALLOWANCE...................................... 17
PARCEL 7A............................................................... 17
PARTICIPANT............................................................. 17
PARTICIPATION AGREEMENTS................................................ 17
PERMITTED ENCUMBRANCES.................................................. 18
PERMITTED HAZARDOUS SUBSTANCE USE....................................... 18
PERMITTED HAZARDOUS SUBSTANCES.......................................... 18
PERMITTED TRANSFER...................................................... 18
PERSON.................................................................. 19
PERSONAL PROPERTY....................................................... 19
PLAN.................................................................... 19
POTENTIAL LIEN CLAIMANTS................................................ 19
-ii-
Exhibit K - Page ii
<PAGE>
PAGE
DEFINED TERM NUMBER
- --------------------------------------------------------------------------------
PRIME RATE.............................................................. 19
PROPERTY................................................................ 19
PURCHASE AGREEMENT...................................................... 19
PURCHASE DOCUMENTS...................................................... 19
QUALIFIED PAYMENTS...................................................... 19
QUALIFIED SECURITIES.................................................... 20
QUALIFIED RIGHT TO STOCK SALE PROCEEDS.................................. 20
REAL PROPERTY........................................................... 20
REMEDIAL WORK........................................................... 20
RENT.................................................................... 20
RESIDUAL RISK PERCENTAGE................................................ 20
RESPONSIBLE FINANCIAL OFFICER........................................... 20
RESTRICTED FUNDS........................................................ 21
SCOPE CHANGE............................................................ 21
SPREAD.................................................................. 21
STIPULATED LOSS VALUE................................................... 21
SUBSIDIARY.............................................................. 21
SUPPLEMENTAL PAYMENT.................................................... 22
TERM.................................................................... 22
TRANSACTION EXPENSES.................................................... 22
UPFRONT FEE............................................................. 22
UNFUNDED BENEFIT LIABILITIES............................................ 22
VOTING STOCK............................................................ 22
-iii-
Exhibit K - Page iii
<PAGE>
LIST OF DEFINED TERMS
As used in the documents to which this List of Defined Terms is attached:
"ACTIVE NEGLIGENCE" of any Person (including BNPLC) means, and is limited
to, the negligent conduct on the Property (and not mere omissions) by such
Person or by others acting and authorized to act on such Person's behalf in a
manner that proximately causes actual bodily injury or property damage for which
Chiron does not carry (and is not obligated by the Lease to carry) insurance.
"ACTIVE NEGLIGENCE" shall not include (1) any negligent failure of BNPLC to act
when the duty to act would not have been imposed but for BNPLC's status as owner
of the Property or as a party to the transactions described in the Lease, (2)
any negligent failure of any other Interested Party to act when the duty to act
would not have been imposed but for such party's contractual or other
relationship to BNPLC or participation or facilitation in any manner, directly
or indirectly, of the transactions described in the Lease, or (3) the exercise
in a lawful manner by BNPLC (or any party lawfully claiming through or under
BNPLC) of any right or remedy provided in or under the Lease, the Purchase
Documents or the Ground Lease.
"ADDITIONAL RENT" shall have the meaning assigned to it in subparagraph
4.(c) of the Lease.
"ADMINISTRATIVE FEE" shall have the meaning assigned to it in subparagraph
4.(f) of the Lease.
"ADVANCE DATE" means, regardless of whether any Construction Advance shall
actually be made thereon, the first Business Day of every calendar month,
beginning with August 1, 1996 and continuing regularly thereafter to and
including the Base Rent Commencement Date.
"AFFILIATE" of any Person means any other Person controlling, controlled by
or under common control with such Person. For purposes of this definition, the
term "control" when used with respect to any Person means the power to direct
the management of policies of such Person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise, and the
terms "controlling" and "controlled" have meanings correlative to the foregoing.
"APPLICABLE LAWS" means any or all of the following, to the extent
applicable to Chiron or the Property or the Lease, the Purchase Documents or the
Ground Lease: restrictive covenants; zoning ordinances and building codes; flood
disaster laws; health, safety and environmental laws and regulations; the
Americans with Disabilities Act and other laws pertaining to disabled persons;
and other laws, statutes, ordinances, rules, permits, regulations, orders,
determinations and court decisions.
"APPLICABLE PURCHASER" means any third party designated by Chiron to
purchase BNPLC's interest in the Property and in any Escrowed Proceeds as
provided in the Purchase Agreement.
"APPROVED PLANS" means: (i) that certain "Removal Action Workplan for the
Ramp Area on the Former PG&E/City of Emeryville Redevelopment Agency Property,"
prepared by Erler & Kalinowski, Inc., dated June 21, 1996, which DTSC has
approved for public comment (subject to revision) pursuant to the letter dated
June 21, 1996, from Barbara J. Cook, DTSC, to Ric Notini, Chiron, re "Chiron
Corporation Site, Former Pacific Gas & Electric Property, Emeryville, California
- - Draft Removal Action Workplan"; (ii) that certain "Final Risk Management Plan
for Construction of the Chiron Life Sciences Center Project Properties North of
53rd Street Emeryville, California," prepared by Erler & Kalinowski, Inc., dated
May 21, 1996, with which the RWQCB
Exhibit K - Page 1
<PAGE>
concurred pursuant to that letter dated May 22, 1996, from Stephen I. Morse,
RWQCB, to Ric Notini, Chiron, re "Properties North of 53rd Street, Chiron Life
Sciences Center Project, Emeryville, Alameda County"; (iii) the Voluntary
Cleanup Agreement, IN THE MATTER OF CHIRON CORPORATION, Docket
No. HSA-95/96-059, dated April 1, 1996; (iv) that certain "Classification of
Soil to be Excavated During Chiron Corporation's Campus Expansion Property North
of 53rd Street, Chiron Corporation, Emeryville, California," prepared by Erler &
Kalinowski, Inc., dated September 22, 1995, with which the Department of Toxic
Substances Control ("DTSC") concurred pursuant to that letter dated April 9,
1996, from Ronald Pilorin, DTSC, to Vera H. Nelson, Erler & Kalinowski, Inc., re
"Request for Concurrence for Excavated Soils Generated from Chiron Corporation's
(Chiron) Campus Expansion Properties Located North of 53rd Street in Emeryville,
California - Waste Evaluation Unit File #F155 (WEU File #F155)"; (v) that
certain "Final Health and Environmental Risk Assessment Property North of 53rd
Street, Chiron Corporation, Emeryville, California, Volumes I and II," prepared
by Erler & Kalinowski, Inc., dated March 10, 1995, as approved by the RWQCB
pursuant to that letter dated March 20, 1995, from Steven R. Ritchie and Stephen
I. Morse, RWQCB, to Ric Notini, Chiron, re "Approval of Health and Environmental
Risk Assessment Properties North of 53rd Street Chiron Master Plan Development
Emeryville, Alameda County," and with which the Alameda County Health Care
Services Agency, Department of Environmental Health ("ACDEH") concurred pursuant
to that letter dated March 15, 1995, from Susan L. Hugo and Ravi Arulanantham,
ACDEH, to Ric Notini, Chiron re "Approval of Health and Environmental Risk
Assessment Properties North of 53rd Street Chiron Master Plan Development
Emeryville, California"; (vi) a long-term risk management plan that is
consistent with the RWQCB's Non-Attainment Area policy and the State Water
Quality Control Board's Containment Zone policy and is approved by the RWQCB and
the ACDEH; and (vii) any other proposal, plan, workplan, risk assessment, or
report approved or required by any regulatory agency with jurisdiction over the
Property and which has not been determined to be inadequate by any other
governmental authority asserting jurisdiction over the Property.
"ATTORNEYS' FEES" means the reasonable fees and expenses of counsel to the
parties incurring the same, which may include fairly allocated costs of in-house
counsel, printing, photostating, duplicating and other expenses, air freight
charges, and fees billed for law clerks, paralegals, librarians and others not
admitted to the bar but performing services under the supervision of an
attorney. Such terms shall also include all such reasonable fees and expenses
incurred with respect to appeals, arbitrations and bankruptcy proceedings, and
whether or not any manner of proceeding is brought with respect to the matter
for which such fees and expenses were incurred.
"BANKING RULES CHANGE" means either: (1) the introduction of or any change
after the Effective Date (other than any change by way of imposition or increase
of reserve requirements included in the Eurodollar Rate Reserve Percentage) in
any law or regulation applicable to BNPLC, BNPLC's Parent or any Participant, or
in the generally accepted interpretation by the institutional lending community
of any such law or regulation, or in the interpretation of any such law or
regulation asserted by any regulator, court or other governmental authority or
(2) the compliance by BNPLC, BNPLC's Parent or any Participant with any new
guideline or new request after the Effective Date from any central bank or other
governmental authority (whether or not having the force of law).
"BASE RENT" means the rent payable by Chiron pursuant to subparagraph
4.(a) of the Lease.
"BASE RENT COMMENCEMENT DATE" means the earlier of (1) the first Business
Day of March, 1999, (2) the first Business Day of the first calendar month to
follow by ten days or more BNPLC's receipt of the Completion Notice, or (3) the
first Business Day of the first calendar month upon which the then Outstanding
Construction Allowance (including any Construction Advance and Carrying Costs
added to the Outstanding Construction Advance on that
List of Defined Terms - Page 2
Exhibit K - Page 2
<PAGE>
Business Day) shall equal or exceed the Maximum Construction Allowance available
under the Lease. For example, if on the first Business Day of December, 1998
construction of the initial Construction Project is continuing, the Outstanding
Construction Allowance is $190,000,000 (before adding any Carrying Costs for the
preceding month) and the Maximum Construction Allowance is $190,035,118.68
(assuming the Initial Funding Advance is $4,964,881.32), and if Carrying Costs
of $1,000,000 would be added to the Outstanding Construction Allowance on such
day if the Construction Allowance were not limited to the Maximum Construction
Allowance, then such day shall be the Base Rent Commencement Date and on such
day $35,118.68 will be added to the Outstanding Construction Allowance as
Carrying Cost and $964,881.32 will be payable as Base Rent pursuant to
subparagraph 4.(b)(i) of the Lease.
"BASE RENT DATE" means a date upon which Base Rent must be paid under the
Lease, all of which dates shall be the first Business Day of a calendar month.
The FIRST Base Rent Date shall be determined as follows:
a) If a LIBOR Period Election of one month is in effect on the
Base Rent Commencement Date, then the first Business Day of the FIRST
calendar month following the Base Rent Commencement Date shall be the
first Base Rent Date.
b) If the LIBOR Period Election in effect on the Base Rent
Commencement Date is three months or longer, then the first Business
Day of the THIRD calendar month following the Base Rent Commencement
Date shall be the first Base Rent Date.
Each SUCCESSIVE BASE RENT DATE AFTER THE FIRST BASE RENT DATE shall be the first
Business Day of the first or third calendar month following the calendar month
which includes the preceding Base Rent Date, determined as follows:
a. If a LIBOR Period Election of one month is in effect on a Base
Rent Date, then the first Business Day of the FIRST calendar month
following such Base Rent Date shall be the next following Base Rent Date.
b. If a LIBOR Period Election of three months or longer is in effect
on a Base Rent Date, then the first Business Day of the THIRD calendar
month following such Base Rent Date shall be the next following Base Rent
Date.
Thus, for example, if the Base Rent Commencement Date falls on June 2, 1997 and
a LIBOR Period Election of six months commences on the Base Rent Commencement
Date, then the first Base Rent Date shall be the first Business Day of
September, 1997, and the second Base Rent Date shall be the first Business Day
of December, 1997.
"BASE RENT PERIOD" means a period for which Base Rent must be paid under
the Lease, each of which periods shall correspond to the LIBOR Period Election
for such period. The first Base Rent Period shall begin on and include the Base
Rent Commencement Date, and each successive Base Rent Period shall begin on and
include the Base Rent Date upon which the preceding Base Rent Period ends. Each
Base Rent Period, including the first Base Rent Period, shall end on but not
include the first, second, third or fourth Base Rent Date after the Base Rent
Date upon which such period began, determined as follows:
List of Defined Terms - 3
Exhibit K - Page 3
<PAGE>
c. If the LIBOR Period Election for a Base Rent Period is one month
or three months, then such Base Rent Period shall end on the FIRST Base
Rent Date after the Base Rent Date upon which such period began.
d. If the LIBOR Period Election for a Base Rent Period is six months,
then such Base Rent Period shall end on the SECOND Base Rent Date after the
Base Rent Date upon which such period began.
e. If the LIBOR Period Election for a Base Rent Period is nine
months, then such Base Rent Period shall end on the THIRD Base Rent Date
after the Base Rent Date upon which such period began.
f. If the LIBOR Period Election for a Base Rent Period is twelve
months, then such Base Rent Period shall end on the FOURTH Base Rent Date
after the Base Rent Date upon which such period began.
The determination of Base Rent Periods can be illustrated by two examples:
1) If Chiron makes a LIBOR Period Election of three months for a
hypothetical Base Rent Period beginning on the first Business Day in
January, 2000, then such Base Rent Period will end on but not the include
the first Base Rent Date after it begins; that is, such Base Rent Period
will end on the first Business Day in April, 2000, the third calendar month
after January, 2000.
2) If, however, Chiron makes a LIBOR Period Election of six months
for the hypothetical Base Rent Period beginning the first Business Day in
January, 2000, then such Base Rent Period will end on but not include the
second Base Rent Date after it begins; that is, the first Business Day in
July, 2000.
"BNPLC" means BNP Leasing Corporation, a Delaware corporation.
"BNPLC'S PARENT" means BNPLC's Affiliate, Banque Nationale de Paris, a bank
organized and existing under the laws of France and any successors of such bank.
"BREAKAGE COSTS" means any and all costs, losses or expenses incurred or
sustained by BNPLC's Parent or any Participant, for which BNPLC's Parent or the
Participant shall request reimbursement from BNPLC, because of the resulting
liquidation or redeployment of deposits or other funds:
(1) used to make or maintain Funding Advances upon application of a
Qualified Payment or upon any sale of the Property pursuant to the Purchase
Agreement, if such application or sale occurs on any day other than the
last day of a Construction Period or Base Rent Period; or
(2) reserved to provide a Construction Advance that Chiron requests,
but thereafter declines to take for any reason, or that Chiron requests but
is not permitted to take because of its failure to satisfy any of the
conditions specified in Paragraph of the Lease.
List of Defined Terms - Page 4
Exhibit K - Page4
<PAGE>
Breakage Costs will include, for example, losses attributable to any decline in
LIBOR as of the effective date of any application described in the clause (1)
preceding, as compared to LIBOR used to determine the Effective Rate then in
effect. Each determination by BNPLC's Parent or the applicable Participant of
Breakage Costs shall, in the absence of clear and demonstrable error, be
conclusive and binding upon Chiron.
"BREAK EVEN PRICE" means an amount equal to Stipulated Loss Value
outstanding on the Designated Sale Date, plus all costs and expenses (including
appraisal costs, withholding taxes (if any) and reasonable Attorneys' Fees, as
defined in the Lease) incurred in connection with any sale of the Property by
BNPLC under the Purchase Agreement or in connection with collecting sales
proceeds due thereunder.
"BUSINESS DAY" means any day that is (1) not a Saturday, Sunday or day on
which commercial banks are generally closed or required to be closed in New York
City, New York or San Francisco, California, and (2) a day on which dealings in
deposits of dollars are transacted in the London interbank market; provided that
if such dealings are suspended indefinitely for any reason, "Business Day" shall
mean any day described in clause (1).
"CAPITAL ADEQUACY CHARGES" means any additional amounts BNPLC's Parent or
any Participant requests BNPLC to pay as compensation for an increase in
required capital as provided in subparagraph 5.(c)(iii) of the Lease.
"CARRYING COSTS" means the charges (accruing at a rate equal to the sum of
the Effective Rate and the Spread) added to and made a part of the Outstanding
Construction Allowance from time to time on and before the Base Rent
Commencement Date pursuant to and as more particularly described in subparagraph
6.(a)(ii) of the Lease.
"CHIRON" means Chiron Corporation, a Delaware corporation.
"CHIRON'S PA OBLIGATIONS" means the obligations of Chiron under the
Purchase Agreement, including Chiron's obligations for payments required by or
in respect of subparagraph 1(a) of the Purchase Agreement and for any damages
suffered by BNPLC because of any breach of that subparagraph.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMITMENT FEE" shall have the meaning assigned to it in subparagraph
4.(g) of the Lease.
"COMPLETION NOTICE" means the notice required by subparagraph 6.(e)
of the Lease from Chiron to BNPLC, advising BNPLC when construction of
the initial Construction Project is substantially complete.
"CONSTRUCTION ADVANCES" means actual advances of funds made by or on behalf
of BNPLC to Chiron pursuant to subparagraph 6.(a) of the Lease for (1) the
payment or reimbursement to Chiron of Commitment Fees and Administrative Fees,
and (2) costs, fees and expenses incurred to construct Construction Projects,
including without limitation hard and soft costs, fees and costs paid in
connection with
List of Defined Terms - Page 5
Exhibit K - Page 5
<PAGE>
obtaining project approvals including application and processing fees, fees and
other payments made pursuant to the Development Contracts and all costs incurred
in connection with onsite and offsite Improvements.
"CONSTRUCTION ALLOWANCE" means the allowance, consisting of all
Construction Advances and Carrying Costs, which is to be provided for
Construction Projects as more particularly described in Paragraph 6
of the Lease.
"CONSTRUCTION PERIOD" means each successive period of approximately one (1)
month, except that the first Construction Period shall be a shorter period
beginning on and including the Effective Date and ending on but not including
the first Advance Date. Each successive Construction Period after the first
Construction Period shall begin on and include the day on which the preceding
Construction Period ends and shall end on but not include the next following
Advance Date, until the last Construction Period, which shall end on but not
include the earlier of the Base Rent Commencement Date or the Designated Sale
Date.
"CONSTRUCTION PROJECTS" include (1) the "initial Construction Project"
which means the construction of the improvements described in EXHIBIT 0 to the
Lease and contemplated by any plans, renderings and budgets referenced in such
Exhibit, consistent with the uses permitted by the Lease, and (2) "subsequent
Construction Projects" which means any other project to be undertaken by Chiron
during the Term and in accordance with the Lease for the construction of new
buildings or other substantial Improvements or for the alteration of then
existing Improvements. Subject to the requirements of Paragraph 6.(b) of the
Lease, a Construction Project may involve demolition of then existing
Improvements which are no longer needed or which must be removed to accommodate
new Improvements. All construction work planned or done contemporaneously
shall constitute a single Construction Project for purposes of the Lease,
notwithstanding that such work may be done in stages or performed by more than
one general contractor. However, it is understood that any number of distinct
Construction Projects may be undertaken by Chiron during the Term of (and in
accordance with the provisions of) the Lease, and that Construction Projects
(including the initial Construction Project) may include offsite and other
public improvements required as conditions of governmental approvals for the
Construction Projects, environmental remediation and other work, dedications,
fees or contributions required by any governmental authority in connection
with the Construction Projects.
Notwithstanding the foregoing, although refinishing, reconfiguring and
refitting space or other interior nonstructural alterations within any completed
building will be subject to subparagraph 12.(e) of the Lease, it will not for
purposes of the Lease constitute a Construction Project if done in manner that
is not likely to have any material adverse affect on the value of the Property
taken as a whole, unless Chiron expects to receive Construction Advances for
the cost thereof.
"DEBT" of any Person means: (i) indebtedness of such Person for borrowed
money; (ii) obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments; (iii) obligations of such Person to pay the deferred
purchase price of property or services; (iv) obligations of such Person as
lessee under leases which shall have been or should be, in accordance with GAAP,
recorded as capital leases; (v) obligations of such Person, contingent or
otherwise, under any lease of real property or related documents (including a
separate purchase agreement) which provide that such Person must purchase or
cause another to purchase any interest in the leased property and thereby
guarantee a minimum residual value of the leased property to the lessor; (vi)
obligations under direct or indirect guaranties in respect of, and obligations
(contingent or otherwise) to purchase or otherwise acquire, or otherwise to
assure a another Person against loss in respect of, indebtedness or obligations
of others
List of Defined Terms - Page 6
Exhibit K - Page 6
<PAGE>
of the kinds referred to in the preceding clauses (i) through (v); (vii)
liabilities of another Person secured by a Lien on, or payable out of the
proceeds of production from, property of such Person even though such obligation
shall not be assumed by such Person (but in the case of such liabilities not
assumed by such Person, the liabilities shall constitute Debt of such Person
only to the extent of the value of such Person's property encumbered by the Lien
securing such liabilities); and (viii) Unfunded Benefit Liabilities.
"DEFAULT" means any event which, with the passage of time or the giving of
notice or both, would (if not cured within any applicable cure period)
constitute an Event of Default.
"DEFAULT RATE" means a floating per annum rate equal to two percent (2%)
above the Prime Rate. However, in no event will the "Default Rate" exceed the
maximum interest rate permitted by law.
"DEMAND DEADLINE" means any date specified in the Guaranty as the date
after which no new demand for payment may be made upon the Guarantor pursuant to
the Guaranty. As of the Effective Date, the Demand Deadline is December 31,
1999.
"DEPOSIT TAKER" means any of Banque Nationale de Paris or its Affiliates
authorized to take deposits and any of the Participants or their Affiliates
authorized to take deposits; provided, an Affiliate of any Participant shall not
qualify as a Deposit Taker unless such Participant has guaranteed the return of
any Restricted Funds (and interest thereon) which BNPLC may have on deposit with
such Affiliate from time to time pursuant to a written guaranty in form and
substance approved by Chiron; and, provided further, that any Deposit Taker
other than an Affiliate of BNPLC must agree unconditionally (pursuant to an
agreement acceptable to Chiron) to remit all interest earned on Restricted Funds
deposited with it to BNPLC at least once each calendar quarter, so that BNPLC
may itself remit all such interest to Chiron as provided in Paragraph 4 of the
Purchase Agreement.
"DESIGNATED SALE DATE" means the earlier of:
(1) any Business Day designated as such in a notice given by BNPLC to
Chiron after:
(A) an Event of Default or a breach by Chiron of any of the Purchase
Documents (and the expiration of any applicable cure or notice periods
which may be expressly provided in the Purchase Documents), including any
breach by Chiron of Paragraph 4 of the Purchase Agreement, which concerns
Chiron's obligation to deposit Restricted Funds if certain conditions
specified in that Paragraph are not satisfied; or
(B) any failure of Chiron for any reason whatsoever (other than
because of a refusal by BNPLC to fund requested Construction Advances in
breach of the Lease or when, but for the condition specified in
subparagraph 6.(c)(x) of the Lease, such refusal would constitute a breach
of the Lease), on the date which is 120 days before any Demand Deadline
under the Guaranty, to have (1) caused the initial Construction Project and
any subsequent Construction Projects which are commenced prior to such date
to have been completed in a good and workmanlike manner, substantially in
accordance with Applicable Laws, and otherwise in compliance with the
provisions of (x) the Lease, (y) the Permitted Encumbrances and (z) the
Development Contracts, and (2) satisfied the conditions required to obtain
with respect to then existing Improvements any final certificates of
occupancy required for the use and occupancy
List of Defined Terms - Page 7
Exhibit K - Page 7
<PAGE>
thereof, a certificate of compliance from the City of Emeryville and a
certificate of completion from the Redevelopment Agency as contemplated by the
Development Contracts;
(2) any Business Day designated as such in an irrevocable,
unconditional notice given by Chiron to BNPLC; provided, the Business Day
so designated by Chiron must be no earlier than thirty days after the date
of such notice, unless the notice is given as contemplated in
subparagraph 17.(b) of the Lease when an Event of Default has occurred and
is continuing, in which case the Business Date so designated must be
consistent with the requirements for an effective cure as specified in
subparagraph 17.(b) of the Lease; or
(3) the first Business Day of the fifty-second calendar month after
the calendar month which includes the Base Rent Commencement Date.
If BNP sends a notice to Chiron pursuant to the preceding clause (1) properly
designating a Designated Sale Date, and Chiron sends a notice to BNP pursuant to
the preceding clause (2) properly designating a different Designated Sale Date,
the earlier of the two dates so designated shall be the "Designated Sale Date"
hereunder regardless of which notice was first sent.
"DEVELOPMENT CONTRACTS" means the contracts, ordinances and other documents
described in SCHEDULE 2 attached to the Lease, as the same may be modified from
time to time in accordance with the Ground Lease and the Lease (including
modifications authorized pursuant to subparagraphs 7.(b) and 7.(c) of the
Lease), and any applications, permits or certificates concerning or affecting
the use or development of the Property that may be submitted, issued or
executed from time to time as contemplated in such contracts, ordinance and
other documents or that BNPLC may hereafter execute, approve or consent to at
the request of Chiron.
"EFFECTIVE DATE" means July 1, 1996.
"EFFECTIVE RATE" means for each Construction Period and for each Base Rent
Period, the per annum rate determined by dividing (A) LIBOR for such
Construction Period or Base Rent Period, as the case may be, by (B) 100% minus
the Eurodollar Rate Reserve Percentage for such Construction Period or Base Rent
Period. If LIBOR or the Eurodollar Rate Reserve Percentage changes from
Construction Period to Construction Period or from Base Rent Period to Base Rent
Period, then the Effective Rate shall be automatically increased or decreased as
of the date of such change, as the case may be, without prior notice to Chiron.
If for any reason BNPLC determines that it is impossible or unreasonably
difficult to determine the Effective Rate with respect to a given Construction
Period or Base Rent Period in accordance with the foregoing, then the "EFFECTIVE
RATE" for that Construction Period or Base Rent Period shall equal any published
index or per annum interest rate determined in good faith by BNPLC's Parent to
be comparable to LIBOR at the beginning of the first day of that period. A
comparable interest rate might be, for example, the then existing yield on short
term United States Treasury obligations (as compiled by and published in the
then most recently published United States Federal Reserve Statistical Release
H.15(519) or its successor publication), plus or minus a fixed adjustment based
on BNPLC's Parent's comparison of past eurodollar market rates to past yields on
such Treasury obligations. Any determination by BNPLC of the Effective Rate
under this definition shall, in the absence of clear and demonstrable error, be
conclusive and binding upon Chiron.
List of Defined Terms - Page 8
Exhibit K - Page 8
<PAGE>
"ENVIRONMENTAL CONSULTANT" means a qualified individual employed by a
qualified firm. Individuals shall be deemed qualified if they (i) possess at
least five years of experience in performing environmental, engineering and
consulting services; (ii) have performed or supervised at least five projects
involving remediation of soil contaminated with hazardous substances, including
at least one project similar to the Remedial Work; (iii) have all licenses
required under applicable law for the Remedial Work; and (iv) have at least a
bachelor's degree in the physical sciences or a related field from an accredited
college or university. A firm shall be deemed qualified if it is: (i) a
nationally recognized, reputable environmental and/or engineering firm in the
business of providing professional environmental engineering and consulting
services; (ii) has experience and expertise in projects involving the Remedial
Work; (iii) maintains policies of insurance which are approved by BNPLC in its
reasonable discretion. Erler & Kalinowski, Inc., shall be deemed to be an
Environmental Consultant.
"ENVIRONMENTAL CUTOFF DATE" means the later of the dates upon which (i) the
Lease terminates, (ii) Chiron surrenders possession of the Property or (iii)
Chiron ceases to have any leasehold or other interest in the Property under the
Lease or otherwise.
"ENVIRONMENTAL LAWS" means any and all existing and future Applicable Laws
pertaining to safety, health or the environment, or to Hazardous Substances or
Hazardous Substance Activities, including the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended by the Superfund
Amendments and Reauthorization Act of 1986 (as amended, "CERCLA"), and the
Resource Conservation and Recovery Act of 1976, as amended by the Used Oil
Recycling Act of 1980, the Solid Waste Disposal Act Amendments of 1980, and the
Hazardous and Solid Waste Amendments of 1984 (as amended, "RCRA").
"ENVIRONMENTAL LOSSES" means Losses suffered or incurred by any Interested
Party relating to or arising out of, based on or as a result of: (i) any
Hazardous Substance Activity that occurs or is alleged to have occurred on or
prior to the Environmental Cutoff Date; (ii) any violation on or prior to the
Environmental Cutoff Date of Environmental Laws relating to the Property or to
the ownership, use, occupancy or operation thereof; (iii) any investigation,
inquiry, order, hearing, action, or other proceeding by or before any
governmental or quasi-governmental agency or authority in connection with any
Hazardous Substance Activity that occurs or is alleged to have occurred in whole
or in part on or prior to the Environmental Cutoff Date; or (iv) any claim,
demand, cause of action or investigation, or any action or other proceeding,
whether meritorious or not, brought or asserted against any Interested Party
which relates to, arises from, is based on, or results from any of the matters
described in clauses (i), (ii) or (iii) of this definition, or any allegation of
any such matters. For purposes of determining whether Losses constitute
"Environmental Losses," any actual or alleged Hazardous Substance Activity or
violation of Environmental Laws relating to the Property will be presumed to
have occurred prior to the Environmental Cutoff Date unless Chiron establishes
by clear and convincing evidence to the contrary that the relevant Hazardous
Substance Activity or violation of Environmental Laws did not occur or commence
prior to the Environmental Cutoff Date. Even if after the Environmental Cutoff
Date Losses are incurred by or asserted against a particular Interested Party
that would not have been incurred or asserted, but for any matter described in
clauses (i), (ii) or (iii) of this definition, or an allegation of any such
matter, then such Losses will constitute Environmental Losses.
"ENVIRONMENTAL REPORTS" means collectively:
List of Defined Terms - Page 9
Exhibit K - Page 9
<PAGE>
(i) the letter dated June 21, 1996, from Barbara J. Cook, DTSC,
to Ric Notini, Chiron, re "Chiron Corporation Site, Former Pacific Gas
& Electric Property, Emeryville, California - Draft Removal Action
Workplan";
(ii) that certain "Removal Action Workplan for the Ramp Area on
the Former PG&E/City of Emeryville Redevelopment Agency Property,"
prepared by Erler & Kalinowski, Inc., dated June 21, 1996;
(iii) the letter dated June 18, 1996, from Karen M. Toth, DTSC,
to Ric Notini, Chiron, re "Chiron Corporation Site, Former Pacific Gas
& Electric Property, Emeryville, California - Removal Action Workplan
Comments";
(iv) the letter dated May 22, 1996, from Stephen I. Morse, RWQCB,
to Ric Notini, Chiron, re "Properties North of 53rd Street, Chiron
Life Sciences Center Project, Emeryville, Alameda County";
(v) that certain "Final Risk Management Plan for Construction of
the Chiron Life Sciences Center Project Properties North of 53rd
Street, Emeryville, California," prepared by Erler & Kalinowski, Inc.,
dated May 21, 1996;
(vi) that certain "Site Safety and Health Plan for the Chiron
Life Sciences Center, Emeryville, California, Phase 1 - Soil
Excavation Activities", prepared by James T. Dufour, dated May 15,
1996;
(vii) the memorandum dated May 2, 1996, from Vera Nelson and
Steve Tarantino, Erler & Kalinowski, Inc., to Ric Notini, Chiron, re
"Estimated Incremental Costs for Anticipated Environmental Response
Activities Phase I Development of Former PG&E Property and Chapman
Property Chiron Corporation Emeryville, California (EKI 930028.99)";
(viii) the letter dated April 9, 1996, from Ronald Pilorin, DTSC,
to Vera H. Nelson, Erler & Kalinowski, Inc., re "Request for
Concurrence for Excavated Soils Generated from Chiron Corporation's
(Chiron) campus Expansion Properties Located North of 53rd Street in
Emeryville, California - Waste Evaluation Unit File #F155 (WEU File
#F155)";
(ix) that Voluntary Cleanup Agreement, IN THE MATTER OF CHIRON
CORPORATION, Docket No. HSA-95/96-059, dated April 1, 1996;
(x) the letter dated September 22, 1995 from Barbara Cook, DTSC,
to Ric Notini, Chiron, re "Chiron Corporation Site, Former Pacific Gas
& Electric Property, Emeryville, California - Voluntary Cleanup
Agreement";
(xi) "Classification of Soil to be Excavated During Chiron
Corporation's Campus Expansion Property North of 53rd Street, Chiron
Corporation, Emeryville, California," prepared by Erler & Kalinowski,
Inc., dated September 22, 1995;
List of Defined Terms - Page 10
Exhibt K - Page 10
<PAGE>
(xii) that certain Memorandum to Jerry Hoekwater, Steve Johnson,
and Ric Notini of Chiron Corporation, from Michelle King and Vera
Nelson of Erler & Kalinowski, Inc., re "Summary of Soil and
Groundwater Sampling Analytical Results for the Designated
Construction Areas North of 53rd Street, Chiron Corporation,
Emeryville, California," dated March 29, 1996;
(xiii) the letter dated March 20, 1995, from Steven R. Ritchie
and Stephen I. Morse, RWQCB, to Ric Notini, Chiron re "Approval of
Health and Environmental Risk Assessment Properties North of 53rd
Street Chiron Master Plan Development Emeryville, Alameda County";
(xiv) the letter dated March 15, 1995, from Susan L. Hugo and
Ravi Arulanantham, ACDEH, to Ric Notini, Chiron, re "Approval of
Health and Environmental Risk Assessment Properties North of 53rd
Street Chiron Master Plan Development Emeryville, California";
(xv) "Final Health and Environmental Risk Assessment Property
North of 53rd Street, Chiron Corporation, Emeryville, California,
Volumes I and II," prepared by Erler & Kalinowski, Inc., dated
March 10, 1995;
(xvi) "Preliminary Site Investigation Report Chapman Property,
Chiron Corporation, Emeryville, California," prepared by Erler and
Kalinowski, Inc., dated January 26, 1994;
(xvii) the letter dated January 10, 1995 from Ric Notini, Chiron,
the Chemical Emergency Planning and Response Commission;
(xviii) the letter dated October 21, 1993, from Brian P. Oliva,
ACDEH, to Harrold B. Chapman, re "Underground Storage Tanks at Chiron
Corporation, 4560 Horton Street, Emeryville, CA 94608"; and
(xix) "Preliminary Site Investigation Report, Chiron Site, Chiron
Corporation, Emeryville, California, Volumes I and II" prepared by
Erler & Kalinowski, Inc., dated September 8, 1993.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, together with all rules and regulations promulgated
with respect thereto.
"ERISA AFFILIATE" means any Person who for purposes of Title IV of ERISA is
a member of Chiron's controlled group, or under common control with Chiron,
within the meaning of Section 414 of the Internal Revenue Code, and the
regulations promulgated and rulings issued thereunder.
"ERISA TERMINATION EVENT" means (i) the occurrence with respect to any Plan
of a reportable event described in Section 4043(c) of ERISA for which any
penalty or notice thereof has not been waived pursuant to regulations, rulings,
or notices issued by the Pension Benefit Guaranty Corporation pursuant to a
waiver by such corporation under Section 4043(a) of ERISA, or (ii) the filing of
a notice of intent to terminate any Plan or the treatment of any Plan amendment
as a termination under Section 4041 of ERISA (other than in connection with a
standard termination of a fully funded Plan pursuant to Section 4041 of ERISA),
or (iii) the institution of proceedings to terminate any Plan by the Pension
Benefit Guaranty Corporation under Section 4042 of ERISA, or (iv) any other
List of Defined Terms - Page 11
Exhibit K - Page 11
<PAGE>
event or condition which would constitute grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any Plan.
"ESCROWED PROCEEDS" means any proceeds that are received by BNPLC from time
to time during the Term (and any interest earned thereon), which BNPLC is
holding for the purposes specified in the next sentence, from any party (1)
under any property insurance policy as a result of damage to the Property, (2)
as compensation for any restriction placed upon the use or development of the
Property or for the condemnation of the Property or any portion thereof, (3)
because of any judgment, decree or award for injury or damage to the Property or
(4) under any title insurance policy or otherwise as a result of any title
defect or claimed title defect with respect to the Property; provided, however,
in determining the amount of "Escrowed Proceeds" there shall be deducted all
expenses and costs of every type, kind and nature (including Attorneys' Fees)
incurred by BNPLC to collect such proceeds; and provided, further, "Escrowed
Proceeds" shall not include any payment to BNPLC by a Participant or an
Affiliate of BNPLC that is made to compensate BNPLC for the Participant's or
Affiliate's share of any Losses BNPLC may incur as a result of any of the events
described in the preceding clauses (1) through (4). "Escrowed Proceeds" shall
include only such proceeds as are held by BNPLC (A) pursuant to Paragraph
11 of the Lease for the payment to Chiron for the restoration or repair of the
Property or (B) for application as a Qualified Payment or as reimbursement of
Breakage Costs or other costs incurred in connection with a Qualified Payment.
"Escrowed Proceeds" shall not include any proceeds that have been applied as a
Qualified Payment or to pay any Breakage Costs or other costs incurred in
connection with a Qualified Payment. Until Escrowed Proceeds are paid to
Chiron pursuant to Paragraph 11 of the Lease or applied as a Qualified Payment
or as reimbursement for costs incurred in connection with a Qualified Payment,
BNPLC shall keep the same deposited in an interest bearing account, and all
interest earned on such account shall be added to and made a part of Escrowed
Proceeds.
"ESTABLISHED MISCONDUCT" of a Person means, and is limited to: (1) if the
Person is bound by the Lease or the Purchase Documents or the Ground Lease, a
breach by such Person of the express provisions of the Lease or the Purchase
Documents or the Ground Lease that continues beyond any period for cure provided
therein, and (2) conduct of such Person or its Affiliates that has been
determined to constitute wilful misconduct or Active Negligence in or as a
necessary element of a final judgment rendered against such Person by a court
with jurisdiction to make such determination. Established Misconduct of one
Interested Party shall not be attributed to a second Interested Party unless the
second Interested Party is an Affiliate of the first. Negligence which does not
constitute Active Negligence shall not in any event constitute Established
Misconduct. For purposes of this definition, "conduct of a Person" will include
the conduct of an employee of that Person, but only to the extent that the
employee is acting within the scope of his employment by that Person, as
determined in or as a necessary element of a final judgment rendered against
such Person by a court with jurisdiction to make such determination. For
purposes of this definition, "conduct of a Person" will also include the conduct
of an agent of that Person (such as an independent environmental consultant
engaged by that Person), but only to the extent that the agent is, as determined
in or as a necessary element of a final judgment rendered against such Person by
a court with jurisdiction to make such determination, (x) acting within the
scope of the authority granted to him by such Person, (y) not acting with the
consent or approval of or under the direction of Chiron or Chiron's Affiliates,
employees or agents, and (z) not acting in good faith to mitigate Losses that
such Person may suffer because of a breach by Chiron of the Lease or the Ground
Lease.
"EUROCURRENCY LIABILITIES" shall have the meaning assigned to it in
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
List of Defined Terms - Page 12
Exhibit K - Page 12
<PAGE>
"EURODOLLAR RATE RESERVE PERCENTAGE" means, for purposes of determining the
Effective Rate for any Construction Period or Base Rent Period, the reserve
percentage applicable two Business Days before the first day of such period
under regulations issued from time to time by the Board of Governors of the
Federal Reserve System (or any successor) for determining the maximum reserve
requirement (including any emergency, supplemental or other marginal reserve
requirement) for BNPLC's Parent with respect to liabilities or deposits
consisting of or including Eurocurrency Liabilities (or with respect to any
other category or liabilities by reference to which LIBOR is determined) having
a term comparable to such period.
"EVENT OF DEFAULT" shall have the meaning assigned to it in subparagraph
17.(a) of the Lease.
"EXCLUDED TAXES" means (1) all federal, state and local income taxes upon
Base Rent, the Upfront Fee, Administrative Fees, Commitment Fees, any interest
paid to BNPLC pursuant to subparagraph 4.(h) of the Lease and any additional
compensation claimed by BNPLC pursuant to subparagraph 5.(c)(iii) of the
Lease; (2) all federal, state and local income taxes upon any amounts paid as
reimbursement for or to satisfy Losses incurred by BNPLC to the extent such
taxes are offset by a corresponding reduction of BNPLC's incometaxes because
of BNPLC's deduction of the reimbursed Losses from BNPLC's taxable income or
because of any tax credits attributable thereto; (3) taxes imposed by any
governmental authority outside the United States of America; and (4) any
transfer or change of ownership taxes assessed because of BNPLC's transfer or
conveyance to any third party of BNPLC's rights or interests in the Lease,
the Purchase Documents, the Ground Lease or the Property, but excluding any
such taxes assessed because of any Permitted Transfer. For purposes of this
definition, income taxes shall include any income taxes (whether or not so
designated) imposed under the Code or California Bank and Corporation Tax Law
as well as Texas corporate franchise taxes.
"EXISTING PARTICIPATION AGREEMENTS" means the Participation Agreements
dated June 28, 1996 between BNPLC and the Participants listed in SCHEDULE 1
attached to the Lease, as such Participation Agreements may be extended,
supplemented, amended, restated or otherwise modified from time to time in
accordance with their terms.
"FAIR MARKET VALUE" means the fair market value of the Property on or about
the Designated Sale Date (calculated under the assumptions, whether or not then
accurate, that Chiron has fulfilled and can be expected to continue to fulfill
its obligations under the Ground Lease; that Chiron has maintained the Property
in compliance with all Applicable Laws [including Environmental Laws]; that
Chiron has completed all Construction Projects, the construction of which was
commenced prior to the Designated Sale Date; that all such Construction Projects
are self-sufficient in the sense that any easements or offsite facilities needed
under the Development Contracts or otherwise for the use of the Improvements
will be available at no additional cost to the owner of the Improvements; that
Chiron has repaired and restored the Property after any damage following fire or
other casualty; that Chiron has restored the remainder of the Property after any
partial taking by eminent domain; that Chiron has completed any contests of and
paid any taxes due [other than Excluded Taxes] or other amounts secured by or
allegedly secured by a lien against the Property, including any assessment
liens, but not including Liens Removable by BNPLC; that no conditions or
circumstances on or about the Property [such as the presence of an endangered
species] is discovered that will impede development of the Property; that
development of the Property will not be hindered or delayed because of the
limited availability of utilities or water; that any purchaser paying fair
market
List of Defined Terms - Page 13
Exhibit K - Page 13
<PAGE>
value for the Property will receive copies of all of Chiron's books and records
which are necessary or useful to a future owner's or occupant's use of the
Property in the manner permitted by the Lease, including books and records
evidencing the testing and validation of the Property for the uses permitted by
the Lease; that without undue cost or delay any such purchaser can obtain any
necessary permits or licenses needed to use the Property for the purposes
permitted by the Lease; and that Chiron has cured any title defects affecting
the Property other than Liens Removable by BNPLC, all in accordance with the
standards and requirements of the Lease [as though the Lease were continuing in
force] and the Ground Lease) as determined by an independent MAI appraiser
selected by BNPLC, which appraiser must have five years or more experience
appraising similar properties in northern California.
"FED FUNDS RATE" means, for any period, a fluctuating interest rate
(expressed as a per annum rate and rounded upwards, if necessary, to the next
1/16 of 1%) equal for each day during such period to the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rates are not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by BNPLC's Parent from three Federal funds brokers of
recognized standing selected by BNPLC's Parent. All determinations of the Fed
Funds Rate by BNPLC's Parent shall, in the absence of clear and demonstrable
error, be binding and conclusive upon Chiron.
"FUNDING ADVANCES" means (1) the Initial Funding Advance and (2) all future
advances (which, together with Initial Funding Advance, are expected to total
but in no event exceed $195,000,000) made by BNPLC's Parent or any Participant
to or on behalf of BNPLC to allow BNPLC to provide the Construction Allowance
under the Lease.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect from time to time, applied on a basis consistent with
those used in the preparation of the financial statements referred to in
subparagraph 16.(a) of the Lease (except for changes concurred in by Chiron's
independent public accountants).
"GROUND LEASE" means the separate Ground Lease dated June 28, 1996 executed
by Chiron, as lessor, and BNPLC, as lessee, pursuant to which Chiron is leasing
the Land to BNPLC for a term of approximately 34 1/2 years, as such Ground Lease
may be extended, supplemented, amended, restated or otherwise modified from time
to time in accordance with its terms.
"GUARANTY" means the Guaranty dated June 28, 1996 given by Guarantor to
BNPLC, guarantying the obligations of Chiron under the Lease, the Purchase
Agreement and the Ground Lease, as such Guaranty may be extended, supplemented,
amended, restated or otherwise modified from time to time with the consent of
BNPLC.
"GUARANTOR" means Ciba-Geigy, Ltd., the largest shareholder of Chiron as of
the Effective Date, and any successor of Ciba-Geigy through merger.
"HAZARDOUS SUBSTANCE" means (i) any chemical, compound, material, mixture
or substance that is now or hereafter defined or listed in, regulated under, or
otherwise classified pursuant to, any Environmental Laws as a "hazardous
substance," "hazardous material," "hazardous waste," "extremely hazardous waste
or substance," "infectious waste," "toxic substance," "toxic pollutant," or any
other formulation intended to define, list or classify
List of Defined Terms - Page 14
Exhibit K - Page 14
<PAGE>
substances by reason of deleterious properties, including ignitability,
corrosiveness, reactivity, carcinogenicity, toxicity or reproductive toxicity;
(ii) petroleum, any fraction of petroleum, natural gas, natural gas liquids,
liquified natural gas, synthetic gas usable for fuel (or mixtures of natural gas
and such synthetic gas), and ash produced by a resource recovery facility
utilizing a municipal solid waste stream, and drilling fluids, produced waters
and other wastes associated with the exploration, development or production of
crude oil, natural gas or geothermal resources; (iii) asbestos and any asbestos
containing material; (iv) "waste" as defined in section 13050(d) of the
California Water Code; and (v) any other material that, because of its quantity,
concentration or physical or chemical characteristics, poses a significant
present or potential hazard to human health or safety or to the environment if
released into the workplace or the environment.
"HAZARDOUS SUBSTANCE ACTIVITY" means any actual, proposed or threatened
use, storage, holding, release (including any spilling, leaking, leaching,
pumping, pouring, emitting, emptying, dumping, disposing into the environment,
and the continuing migration into or through soil, surface water, groundwater or
any body of water), discharge, deposit, placement, generation, processing,
construction, treatment, abatement, removal, disposal, disposition, handling or
transportation of any Hazardous Substance from, under, in, into or on the
Property, including the movement or migration of any Hazardous Substance from
surrounding property, surface water, groundwater or any body of water under, in,
into or onto the Property and any resulting residual Hazardous Substance
contamination in, on or under the Property. "HAZARDOUS SUBSTANCE ACTIVITY" also
means any existence of Hazardous Substances on the Property that would cause the
Property or the owner or operator thereof to be in violation of, or that would
subject the Property to any remedial obligations under, any Environmental Laws,
including CERCLA and RCRA, assuming disclosure to the applicable governmental
authorities of all relevant facts, conditions and circumstances pertaining to
the Property.
"HAZWOPER REGULATIONS" means the requirements set forth in Section 5192 of
title 8 of the California Code of Regulations and Section 1910.120 of title 29
of the Code of Federal Regulations, and any other applicable standards for
protecting the health and safety of workers conducting operations at hazardous
waste sites.
"IMPOSITIONS" means all sales, excise, ad valorem, gross receipts,
business, transfer, stamp, occupancy, rental and other taxes, levies, fees,
charges, surcharges, assessments or penalties which arise out of or are
attributable to the Lease or which are imposed upon BNPLC or the Property
because of the ownership, leasing, occupancy, sale or operation of the Property,
or any part thereof or interest therein, or relating to or required to be paid
by the Ground Lease or any of the Permitted Encumbrances or the Development
Contracts, excluding only Excluded Taxes. "IMPOSITIONS" shall include real
estate taxes imposed because of a change of use or ownership of the Property on
or prior to the date of any sale by BNPLC pursuant to the Purchase Agreement.
"IMPROVEMENTS" shall have the meaning assigned to it in the Ground Lease,
and will include not only existing improvements to the Land as of the Effective
Date, if any, but also any new improvements or changes to existing improvements
made by Chiron. Accordingly, any and all new improvements made to the Property
by Chiron using the Construction Allowance as contemplated in the Lease shall
constitute Improvements as that term is used in the documents to which these
definitions are attached.
"INDUSTRIAL HYGIENIST" means an industrial hygienist certified by the
American Board of Industrial Hygiene who is experienced with required and
appropriate health and safety standards and good industrial hygiene practice
related to operations at hazardous waste sites.
List of Defined Terms - Page 15
Exhibit K - Page 15
<PAGE>
"INITIAL FUNDING ADVANCE" means the advance of $4,964,881.32 made by
BNPLC's Parent (directly or through one or more of its Affiliates) and/or
Participants to or on behalf of BNPLC on or prior to the Effective Date to cover
the cost of BNPLC's acquisition of the Property and certain Transaction
Expenses.
"INTERESTED PARTY" means each of (1) BNPLC, its Affiliates and its
successors and assigns as to the Property or any part thereof or any interest
therein, (2) BNPLC's Parent, and (3) the Participants and their permitted
successors and assigns under their respective Participation Agreements with
BNPLC; provided, however, none of the following shall constitute an Interested
Party: (a) any Person to whom BNPLC may transfer an interest in the Property by
a conveyance that is not a Permitted Transfer and others that cannot lawfully
claim an interest in the Property except through or under such a transfer by
BNPLC, (b) Chiron or any Person that cannot lawfully claim an interest in the
Property except through or under a conveyance from Chiron after Chiron's
conveyance of the leasehold estate to BNPLC under the Ground Lease, or (c) any
Applicable Purchaser under the Purchase Agreement and any Person that cannot
lawfully claim an interest in the Property except through or under a conveyance
from such Applicable Purchaser.
"LAND" means the land covered by the Ground Lease from time to time. Upon
the Effective Date, the Land shall be as described in EXHIBIT A attached to the
Ground Lease, the Lease and the Purchase Agreement. However, upon any amendment
to the Ground Lease which modifies the land covered thereby, including any such
amendment executed by BNPLC and Chiron pursuant to Paragraph 4 of the Ground
Lease, the land covered by the Lease and Purchase Agreement shall automatically
be so modified.
"LEASE" means the Lease Agreement dated June 28, 1996 between BNPLC, as
landlord, and Chiron, as tenant, pursuant to which Chiron has agreed to lease
BNPLC's interest in the Property, as such Lease Agreement may be extended,
supplemented, amended, restated or otherwise modified from time to time in
accordance with its terms.
"LIBOR" means, for purposes of determining the Effective Rate for each
Construction Period or Base Rent Period, the rate determined by BNPLC's Parent
to be the average rate of interest per annum (rounded upwards, if necessary, to
the next 1/16 of 1%) of the rates at which deposits of dollars are offered or
available to BNPLC's Parent in the London interbank market at approximately
11:00 a.m. (London time) on the second Business Day preceding the first day of
such period. BNPLC shall instruct BNPLC's Parent to consider deposits, for
purposes of making the determination described in the preceding sentence, that
are offered: (i) for delivery on the first day of such Construction Period or
Base Rent Period, as the case may be, (ii) in an amount equal or comparable to
the total (projected on the applicable date of determination by BNPLC's Parent)
Stipulated Loss Value on the first day of such period, and (iii) for a time
equal or comparable to the length of such period. If BNPLC's Parent so chooses,
it may determine LIBOR for any period by reference to the rate reported by the
British Banker's Association on Page 3750 of the Telerate Service at
approximately 11:00 a.m. (London time) on the second Business Day preceding the
first day of such period. If for any reason BNPLC's Parent determines that it
is impossible or unreasonably difficult to determine LIBOR with respect to a
given Construction Period or Base Rent Period in accordance with the foregoing,
or if BNPLC's Parent shall determine that it is unlawful (or any central bank or
governmental authority shall assert that it is unlawful) for BNPLC, BNPLC's
Parent or any Participant to provide or maintain Funding Advances during any
Construction Period or Base Rent Period for which Carrying Costs or Base Rent is
computed by reference to LIBOR, then "LIBOR" for that period shall equal the
rate which is fifty basis points (50/100 of 1%) above the Fed Funds Rate for
that period. All determinations of LIBOR by BNPLC's Parent shall, in the
absence of clear and demonstrable error, be binding and conclusive upon Chiron.
List of Defined Terms - Page 16
Exhibit K - Page 16
<PAGE>
"LIBOR PERIOD ELECTION" for any Base Rent Period means a period of one
month, three months, six months, nine months or twelve months as designated
by Chiron at least ten Business Days prior to the commencement of such Base
Rent Period by a notice given to BNPLC in the form of EXHIBIT H attached to
the Lease. (For purposes of the Lease a LIBOR Period Election for any Base
Rent Period shall also be considered the LIBOR Period Election in effect on
(1) the Base Rent Commencement Date or Base Rent Date upon which such Base
Rent Period begins and (2) subsequent Base Rent Dates, if any, which occur
before the date upon which such Base Rent Period ends.) Any Libor Period
Election so designated by Chiron shall remain in effect for the entire Base
Rent Period specified in Chiron's notice to BNPLC (provided such Base Rent
Period commences at least ten Business Days after BNPLC's receipt of the
notice) and for all subsequent Base Rent Periods until a new designation
becomes effective in accordance with the provisions set forth in this
definition. Notwithstanding the foregoing, however: (1) Chiron shall not be
entitled to designate a LIBOR Period Election that would cause a Base Rent
Period to extend beyond the end of the scheduled Term; (2) changes in the
LIBOR Period Election shall become effective only upon the commencement of a
new Base Rent Period; (3) for any Base Rent Period which will end on or after
the first Business Day in October, 1999, the only LIBOR Period Election
permitted shall be one month if for any reason whatsoever Chiron shall not,
before such period begins, have deposited all Restricted Funds required by
Paragraph 4 of the Purchase Agreement or otherwise entered into agreements
with BNPLC which will excuse Chiron's obligation to deposit Restricted Funds
as contemplated by that Paragraph; and (4) if Chiron fails to make a LIBOR
Period Election consistent with the foregoing requirements for any Base Rent
Period, or if an Event of Default shall have occurred and be continuing on
the third Business Day preceding the commencement of any Base Rent Period,
the LIBOR Period Election for such Base Rent Period shall be deemed to be one
month.
"LIEN" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including any agreement to give any of the foregoing, any
conditional sale or other title retention agreement, any lease in the nature
thereof, any agreement to sell receivables with recourse, and the filing of or
agreement to give any financing statement under the Uniform Commercial Code of
any jurisdiction). Customary bankers' rights of set-off arising by operation of
law or by contract (however styled, if the contract grants rights no greater
than those arising by operation of law) in connection with working capital
facilities, lines of credit, term loans and letter of credit facilities and
other contractual arrangements entered into with banks in the ordinary course of
business are not "Liens" for the purposes of the Lease.
"LIENS REMOVABLE BY BNPLC" means, and is limited to, Liens encumbering the
Property that are asserted (1) other than as contemplated by the Lease or the
Purchase Documents or the Ground Lease, by BNPLC itself, (2) by third parties
lawfully claiming through or under BNPLC (which for purposes of the Lease shall
include any judgment liens established against the Property because of a
judgment rendered against BNPLC and shall also include any liens established
against the Property to secure past due Excluded Taxes), or (3) by third parties
claiming under a deed or other instrument duly executed by BNPLC; provided,
however, Liens Removable by BNPLC shall not include (A) any Permitted
Encumbrances or Development Contracts (regardless of whether claimed through or
under BNPLC), (B) the Lease, the Ground Lease, the Purchase Documents or any
other document executed by BNPLC contemporaneously with the execution of the
Lease, (C) Liens which are neither lawfully claimed through or under BNPLC (as
described above) nor claimed under a deed or other instrument duly executed by
BNPLC, (D) Liens claimed by Chiron or claimed through or under a conveyance made
by Chiron after Chiron's conveyance of the leasehold estate to BNPLC under the
Ground Lease, (E) Liens arising because of BNPLC's compliance with Applicable
Law, the Ground Lease, Permitted Encumbrances, the Development Contracts or any
written request made by Chiron, (F) Liens securing the payment of property taxes
or other amounts assessed against the Property by any governmental authority,
other than to secure the payment of past due
List of Defined Terms - Page 17
Exhibit K - Page 17
<PAGE>
Excluded Taxes or to secure damages caused by (and attributed by any applicable
principles of comparative fault to) BNPLC's own Established Misconduct, or (G)
Liens resulting from or arising in connection with any breach by Chiron of the
Lease, the Purchase Documents or the Ground Lease.
"LIST OF DEFINED TERMS" means this List of Defined Terms, which is attached
to and made a part of the Lease, the Purchase Agreement and the Ground Lease.
"LOSSES" means any and all losses, liabilities, damages (whether actual,
consequential, punitive or otherwise denominated), demands, claims, actions,
judgments, causes of action, assessments, fines, penalties, costs, and
out-of-pocket expenses (including Attorneys' Fees and the fees of outside
accountants and environmental consultants), of any and every kind or character,
foreseeable and unforeseeable, liquidated and contingent, proximate and remote.
"MATERIAL ENVIRONMENTAL COMMUNICATION" means a communication between Chiron
or its agents and a regulatory agency or third party, which causes, or
potentially could cause (whether by implementation of or response to said
communication), a material change in the scope, duration, or nature of the
Remedial Work.
"MAXIMUM CONSTRUCTION ALLOWANCE" means an amount equal to $195,000,000,
less the Initial Funding Advance.
"OUTSTANDING CONSTRUCTION ALLOWANCE" shall have the meaning assigned to it
in subparagraph 6.(a)(i) of the Lease.
"PARCEL 7A" shall have the meaning assigned to it in subparagraph 4(a) of
the Ground Lease.
"PARTICIPANT" means any Person other than BNPLC's Parent that agrees in
writing with BNPLC or another Participant to participate in all or some of
the risks and rewards to BNPLC of the Lease, the Purchase Documents and the
Ground Lease. As of the Effective Date, all Participants are listed in
SCHEDULE 1 attached to the Lease, but BNPLC may agree after the Effective
Date to share in risks and rewards of the Lease, the Purchase Documents and
the Ground Lease with other Persons approved as Participants in advance by
Chiron (which approval shall not be unreasonably withheld for any proposed
Participant that is a commercial bank operating in the United States of
America having capital and surplus in excess of $500,000,000 or for any
Affiliate of such a bank; provided, that any Participation Agreement between
such proposed Participant and BNPLC will be in substantially the same form as
the Existing Participation Agreements).
"PARTICIPATION AGREEMENTS" means Participation Agreements between BNPLC and
one or more third parties, pursuant to which the third party or parties become
Participants by agreeing to participate in all or some of the risks and rewards
to BNPLC of the Lease, the Purchase Documents and the Ground Lease, as such
Participation Agreements may be extended, supplemented, amended, restated or
otherwise modified from time to time in accordance with their terms.
"PERMITTED ENCUMBRANCES" means (i) the encumbrances and other matters
affecting the Property that are set forth in EXHIBIT B attached to the Lease,
(ii) any easement agreement or other document affecting title to the
List of Defined Terms - Page 18
Exhibit K - Page 18
<PAGE>
Property executed by BNPLC at the request of or with the consent of Chiron, and
(iii) any liens from time to time imposed to secure only ad valorem taxes on the
Property which, at the time in question, are not delinquent.
"PERMITTED HAZARDOUS SUBSTANCE USE" means the use, generation, storage and
offsite disposal of Permitted Hazardous Substances in strict accordance with
applicable Environmental Laws and with due care given the nature of the
Hazardous Substances involved; provided, the scope and nature of such use,
generation, storage and disposal shall not include the use of underground
storage tanks for any purpose other than the storage of water for fire control,
nor shall such scope and nature:
(1) exceed that reasonably required for the construction of
Construction Projects permitted by the Lease or for the operation of the
Property for the purposes expressly permitted under subparagraph
3.(a) of the Lease; or
(2) include any disposal, discharge or other release of Hazardous
Substances from the Property in any manner that might allow such substances
to reach surface water or groundwater, except (i) through a lawful and
properly authorized discharge (A) to a publicly owned treatment works or
(B) with rainwater or storm water runoff in accordance with Applicable Laws
and any permits obtained by Chiron that govern such runoff; or (ii) any
such disposal, discharge or other release of Hazardous Substances for which
no permits are required and which are not otherwise regulated under
applicable Environmental Laws.
Further, notwithstanding anything to the contrary herein contained, Permitted
Hazardous Substance Use shall not include any use of the Property in a manner
that requires a RCRA treatment, storage or disposal permit, including a
landfill, incinerator or other waste disposal facility.
"PERMITTED HAZARDOUS SUBSTANCES" means Hazardous Substances used and
reasonably required for Construction Projects expressly permitted by the
Lease or for the use of the Property by Chiron and its permitted subtenants
and assigns for the purposes expressly permitted by subparagraph 3.(a) of
the Lease, in either case in strict compliance with all Environmental Laws
and with due care given the nature of the Hazardous Substances involved.
Without limiting the generality of the foregoing, Permitted Hazardous
Substances shall include usual and customary office, laboratory and
janitorial products.
"PERMITTED TRANSFER" means any one or more of the following: (1) the
creation or conveyance of rights and interests in favor of the Participants
listed in SCHEDULE 1 attached to the Lease pursuant to the terms and
conditions of the Existing Participation Agreements; (2) any subsequent
assignment or conveyance by BNPLC of any lien or security interest against
the Property (in contrast to a conveyance of BNPLC's leasehold estate under
the Ground Lease) or of any interest in Rent, payments required by or under
the Purchase Documents, payments required by or under the Ground Lease or
payments to be generated from the Property after the Term, to any present or
future Participant or to any Affiliate of BNPLC, provided that such
subsequent assignment or conveyance is made expressly subject to the rights
of Chiron under the Ground Lease, the Lease and the Purchase Documents; (3)
any agreement to exercise or refrain from exercising rights or remedies under
the Lease or the Purchase Documents made by BNPLC with any present or future
Participant or Affiliate of BNPLC; (4) any assignment or conveyance by BNPLC
requested by Chiron or required by any Permitted Encumbrance, by Development
Contracts, by the Purchase Documents or by Applicable Laws; or (5) any
assignment or conveyance by BNPLC when an Event of Default shall have
occurred and be continuing or after the Designated Sale Date.
List of Defined Terms - Page 19
Exhibit K - Page 19
<PAGE>
"PERSON" means an individual, a corporation, a partnership, an
unincorporated organization, an association, a joint stock company, a joint
venture, a trust, an estate, a government or agency or political subdivision
thereof or other entity, whether acting in an individual, fiduciary or other
capacity.
"PERSONAL PROPERTY" shall have the meaning assigned to it on page
2 of the Lease.
"PLAN" means at any time an employee pension benefit plan which is covered
under Title IV of ERISA or subject to the minimum funding standards under
Section 412 of the Internal Revenue Code and is either (i) maintained by Chiron
or any Subsidiary for employees of Chiron or any Subsidiary or (ii) maintained
pursuant to a collective bargaining agreement or any other arrangement under
which more than one employer makes contributions and to which Chiron or any
Subsidiary is then making or accruing an obligation to make contributions or has
within the preceding five plan years made contributions.
"POTENTIAL LIEN CLAIMANTS" means general contractors or other parties who
have filed a statutory Preliminary Notice to preserve their right to a
mechanic's or materialman's lien against the Property in connection with any
Construction Project.
"PRIME RATE" means the prime interest rate or equivalent charged by BNPLC's
Parent in the United States of America as announced or published by BNPLC's
Parent from time to time, which need not be the lowest interest rate charged by
BNPLC's Parent. If for any reason BNPLC's Parent does not announce or publish a
prime rate or equivalent, the prime rate or equivalent announced or published by
either Citibank, N.A. or any New York branch or office of Credit Commercial de
France as selected by BNPLC shall be used to compute the rate describe in the
preceding sentence. The prime rate or equivalent announced or published by such
bank need not be the lowest rate charged by it. The Prime Rate may change from
time to time after the Effective Date without notice to Chiron as of the
effective time of each change in rates described in this definition.
"PROPERTY" means the Personal Property and the Real Property, collectively.
"PURCHASE AGREEMENT" means the Purchase Agreement dated June 28, 1996
between BNPLC and Chiron pursuant to which Chiron has agreed to purchase or to
arrange for the purchase by a third party of BNPLC's interest in the Property,
as such Purchase Agreement may be extended, supplemented, amended, restated or
otherwise modified from time to time in accordance with its terms.
"PURCHASE DOCUMENTS" means collectively (1) the Purchase Agreement, (2)
from and after they are executed, Pledge Documents (as defined in Paragraph 4 of
the Purchase Agreement) and (3) the Memorandum of Purchase Agreement executed by
BNPLC and Chiron as of the Effective Date and recorded to provide notice of the
Purchase Agreement.
"QUALIFIED PAYMENTS" means all payments received by BNPLC from time to time
during the Term from any party (1) under any property insurance policy as a
result of damage to the Property, (2) as compensation for any restriction placed
upon the use or development of the Property or for the condemnation of the
Property or any portion thereof, (3) because of any judgment, decree or award
for injury or damage to the Property or (4) under any title insurance policy or
otherwise as a result of any title defect or claimed title defect with respect
to the Property;
List of Defined Terms - Page 20
Exhibit K - Page 20
<PAGE>
provided, however, that (x) in determining the amount of "Qualified Payments",
there shall be deducted all expenses and costs of every kind, type and nature
(including taxes, Breakage Costs and Attorneys' Fees) incurred by BNPLC with
respect to the collection or application of such payments, (y) "Qualified
Payments" shall not include any payment to BNPLC by a Participant or an
Affiliate of BNPLC that is made to compensate BNPLC for the Participant's or
Affiliate's share of any Losses BNPLC may incur as a result of any of the events
described in the preceding clauses (1) through (4) and (z) "Qualified Payments"
shall not include any payments received by BNPLC that BNPLC has paid to Chiron
for the restoration or repair of the Property or that BNPLC is holding as
Escrowed Proceeds. For purposes of computing the total Qualified Payments (and
other amounts dependent upon Qualified Payments, such as Stipulated Loss Value
and the Outstanding Construction Allowance) paid to or received by BNPLC as of
any date, payments described in the preceding clauses (1) through (4) will be
considered as Escrowed Proceeds, not Qualified Payments, until they are actually
applied as Qualified Payments by BNPLC as provided in subparagraph
11.(c) of the Lease.
"QUALIFIED SECURITIES" means unencumbered marketable securities that have
an aggregate value of no less than Stipulated Loss Value and that when pledged
to secure Chiron's PA Obligations as provided in Paragraph 4 of the Purchase
Agreement have a maturity of three years or less and that evidence obligations
of the United States of America or another governmental or corporate obligor
meeting any criteria specified for such obligor in the Pledge Documents (as
defined in Paragraph 4 of the Purchase Agreement).
"QUALIFIED RIGHT TO STOCK SALE PROCEEDS" means an unencumbered assignable
contractual right of Chiron, established by agreements in form and substance
satisfactory to each of BNPLC and the Participants in its sole and absolute
discretion, to receive from Guarantor no less than $205,000,0000 in cash
proceeds from the issuance or sale of Chiron's stock to Guarantor. It is
understood that although agreements may exist between Chiron and Guarantor as of
the Effective Date which would obligate Guarantor to purchase Chiron's stock for
more than $205,000,000, such agreements have not been reviewed or approved by
BNPLC or Participants, and therefore prior to any such approval after the
Effective Date, such existing agreements cannot establish rights which would
qualify under this definition.
"REAL PROPERTY" shall have the meaning assigned to it on page 1 of the
Lease.
"REMEDIAL WORK" means any investigation, monitoring, clean-up, containment,
remediation, removal, payment of response costs, or restoration work and the
preparation and implementation of any closure, remedial or other required plans
that any governmental agency or political subdivision requires or approves (or
could reasonably be expected to require if it was aware of all relevant
circumstances concerning the Property), whether by judicial order or otherwise,
because of the presence of or suspected presence of Hazardous Substances in, on,
under or about the Property or because of any Hazardous Substance Activity.
Without limiting the generality of the foregoing, Remedial Work also means any
obligations imposed upon or undertaken by Chiron pursuant to the Approved Plans
or any recommendations or proposals made therein.
"RENT" means the Base Rent and all Additional Rent.
"RESIDUAL RISK PERCENTAGE" means the fifteen percent (15%).
"RESPONSIBLE FINANCIAL OFFICER" means the chief financial officer, the
controller, the treasurer or the assistant treasurer of Chiron.
List of Defined Terms - Page 21
Exhibit K - Page 21
<PAGE>
"RESTRICTED FUNDS" shall have the meaning assigned to it in Paragraph 4 of
the Purchase Agreement.
"SCOPE CHANGE" means a change to a Construction Project that, if
implemented, will make the quality, function or capacity of the Improvements
affected by such Construction Project "materially different" (as defined
below in this paragraph) than as described or inferred by plans and other
items submitted to BNPLC by Chiron as described in subparagraph 6.(b)(i) of
the Lease. Notwithstanding the foregoing, "Scope Change" shall not include
refinement, correction and detailing of plans or other items submitted to
BNPLC by Chiron. As used in this definition, a "material difference" means a
difference that (a) could (after completion of the applicable Construction
Project and the funding of any Construction Advances required in connection
therewith) significantly reduce any excess of the market value of the
Property over Stipulated Loss Value or significantly increase any excess of
Stipulated Loss Value over the market value of the Property, or (b) will
change the general character of the Improvements from that needed to
accommodate the uses permitted by subparagraph 3.(a).
"SPREAD" means (1) on any date before construction of the initial
Construction Project is complete, .25% (twenty-five basis points), and (2) on
any date after construction of the initial Construction Project is complete,
.20% (twenty basis points); provided, however, after any Demand Deadline, the
"Spread" on any date will depend upon the rating by Standard and Poor's
Corporation or the rating by Moody's Investor Service, Inc. (whichever rating is
higher) of Chiron's senior, unsubordinated, unsecured debt on that date, such
computation to be as follows:
RATING SPREAD
----------------------- -----------------------------
AA- or Aa3 or higher .20% (20 basis points)
A+ or A1 .25% (25 basis points)
A or A2 .275% (27.5 basis points)
A- or A3 .30% (30 basis points)
BBB+ or Baa1 .35% (35 basis points)
BBB or Baa2 .375% (37.5 basis points)
lower than BBB and Baa2, or not rated .50% (50 basis points)
For purposes of this definition, the initial Construction Project shall not be
deemed complete until Chiron shall have (1) caused the initial Construction
Project to have been completed in a good and workmanlike manner, substantially
in accordance with Applicable Laws, and otherwise in compliance with the
provisions of (x) the Lease, (y) the Permitted Encumbrances and (z) the
Development Contracts, and (2) obtained with respect to then existing
Improvements any final certificates of occupancy required for the use and
occupancy thereof, a certificate of compliance from the City of Emeryville and a
certificate of completion from the Redevelopment Agency as contemplated by the
Development Contracts.
"STIPULATED LOSS VALUE" as of any date means the amount equal to the sum of
the Initial Funding Advance, plus the sum of all Construction Advances and
Carrying Costs added to the Outstanding Construction Allowance on or prior to
such date, minus all funds received by BNPLC and applied as Qualified Payments
on or prior to such date. Under no circumstances will any payment of Base Rent
or the Upfront Fee, Administrative Fees or Commitment Fees reduce Stipulated
Loss Value.
List of Defined Terms - Page 22
Exhibit K - Page 22
<PAGE>
"SUBSIDIARY" means any corporation of which Chiron and/or its other
Subsidiaries own, directly or indirectly, such number of outstanding shares as
have more than 50% of the ordinary voting power for the election of directors.
"SUPPLEMENTAL PAYMENT" shall have the meaning assigned to it in
subparagraph 1(a)(ii) of the Purchase Agreement.
"TERM" shall have the meaning assigned to it in Paragraph 1 of the Lease.
"TRANSACTION EXPENSES" means the costs paid from the Initial Funding
Advance in connection with the preparation and negotiation of the Lease, the
Purchase Documents, the Ground Lease and related documents. To the extent that
BNPLC does not itself use the entire Initial Funding Advance to acquire the
Property or to pay expenses incurred by BNPLC in connection with the preparation
and negotiation of such documents, the remainder thereof will be advanced to
Chiron, with the understanding that Chiron shall use any such amount advanced
for one or more of the following purposes: (1) the payment or reimbursement of
expenses incurred by Chiron in connection with the preparation and negotiation
of the Lease, the Purchase Documents, the Ground Lease and related documents;
(2) the payment or reimbursement of expenses incurred by Chiron in connection
with the initial Construction Project, including the planning, design,
engineering and permitting of thereof; (3) the maintenance of the Property; (4)
the payment of the Upfront Fee and the first Administrative Fee; or (5) the
payment of Rents next due.
"UPFRONT FEE" shall have the meaning assigned to it in subparagraph
4.(e) of the Lease.
"UNFUNDED BENEFIT LIABILITIES" means, with respect to any Plan, the amount
(if any) by which the present value of all benefit liabilities (within the
meaning of Section 4001(a)(16) of ERISA) under the Plan exceeds the market value
of all Plan assets allocable to such benefit liabilities, as determined on the
most recent valuation date of the Plan and in accordance with the provisions of
ERISA for calculating the potential liability of Chiron or any ERISA Affiliate
of Chiron under Title IV of ERISA.
"VOTING STOCK" of any Person means any shares of stock of such Person whose
holders are entitled under ordinary circumstances to vote for the election of
directors of such Person (irrespective of whether at the time stock of any other
class or classes shall have or might have voting power by reason of the
happening of any contingency).
List of Defined Terms - Page 23
Exhibit K - Page 23
<PAGE>
Exhibit 10.91
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
$195,000,000
LEASE AGREEMENT
BETWEEN
BNP LEASING CORPORATION,
("BNPLC")
AND
CHIRON CORPORATION,
("CHIRON")
JUNE 28, 1996
(BUILDINGS #4 AND #7A/CHIRON'S MASTER CAMPUS PLAN, EMERYVILLE, CALIFORNIA)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PURSUANT TO AND AS MORE PARTICULARLY PROVIDED IN PARAGRAPH 25 OF THIS LEASE,
THIS LEASE AND THE PURCHASE AGREEMENT REFERENCED HEREIN ARE TO CONSTITUTE, FOR
INCOME TAX PURPOSES ONLY, A FINANCING ARRANGEMENT OR CONDITIONAL SALE. AS
PROVIDED IN PARAGRAPH 25 OF THIS LEASE, BNPLC AND CHIRON EXPECT THAT CHIRON (AND
NOT BNPLC) SHALL BE TREATED AS THE TRUE OWNER OF THE PROPERTY FOR INCOME TAX
PURPOSES, THEREBY
<PAGE>
ENTITLING CHIRON (AND NOT BNPLC) TO TAKE DEPRECIATION
DEDUCTIONS AND OTHER TAX BENEFITS AVAILABLE TO THE OWNER.
<PAGE>
TABLE OF CONTENTS
PAGE
1. TERM.................................................................... 2
2. NO LEASE TERMINATION......................................................3
(a) STATUS OF LEASE......................................................3
(b) WAIVER BY CHIRON.....................................................3
3. USE AND CONDITION OF THE PROPERTY.........................................3
(a) USE..................................................................3
(b) CONDITION OF THE PROPERTY............................................4
(c) CONSIDERATION FOR AND SCOPE OF WAIVER................................4
4. RENT......................................................................4
(a) BASE RENT GENERALLY..................................................4
(b) CALCULATION OF BASE RENT.............................................5
(c) ADDITIONAL RENT......................................................6
(d) NO DEMAND OR SETOFF..................................................6
(e) UPFRONT FEE..........................................................6
(f) ADMINISTRATIVE FEES..................................................6
(g) COMMITMENT FEES......................................................6
(h) DEFAULT INTEREST AND ORDER OF APPLICATION............................6
5. PAYMENT OF EXECUTORY COSTS AND LOSSES RELATED TO THE PROPERTY.............6
(a) "NET" LEASE GENERALLY................................................6
(b) IMPOSITIONS..........................................................7
(c) OTHER FEES AND EXPENSES; GENERAL INDEMNIFICATION; INCREASED COSTS; AND
CAPITAL ADEQUACY CHARGES.............................................7
(d) WITHHOLDING TAXES....................................................8
6. CONSTRUCTION..............................................................9
(a) ADVANCES; OUTSTANDING CONSTRUCTION ALLOWANCE.........................9
(b) CONSTRUCTION PROJECTS...............................................10
(i) PRECONSTRUCTION APPROVALS.................................10
(ii) SCOPE CHANGES.............................................11
(iii) FAILURE BY BNPLC TO RESPOND TO A REQUEST FOR APPROVAL.....11
(iv) RESPONSIBILITY FOR CONSTRUCTION...........................12
(v) VALUE ADDED...............................................12
(vi) ESTOPPEL LETTERS REQUIRED.................................13
(vii) ADVANCES NOT A WAIVER.....................................13
(c) CONDITIONS TO CONSTRUCTION ADVANCES.................................13
(i) PRIOR NOTICE..............................................13
(ii) AMOUNT OF THE ADVANCES....................................13
<PAGE>
(iii) OTHER RESTRICTIONS ON THE AMOUNT OF ADVANCES..............13
(iv) INSURANCE.................................................14
a) TITLE INSURANCE......................................14
b) BUILDER'S RISK INSURANCE.............................14
(v) PROGRESS OF CONSTRUCTION..................................14
(vi) EVIDENCE OF COSTS AND EXPENSES TO BE REIMBURSED...........14
(vii) NO SALE OF BNPLC'S INTEREST...............................14
(viii) NO EVENT OF DEFAULT.......................................14
(ix) CERTIFICATE OF NO DEFAULT AND OTHER MATTERS...............14
(x) PAYMENTS BY PARTICIPANTS..................................15
(xi) EXECUTION OF PARTICIPATION AGREEMENTS WITH
PARTICIPANTS..............................................16
(d) BREAKAGE COSTS FOR CONSTRUCTION ADVANCES REQUESTED BUT NOT
TAKEN...............................................................16
(e) COMPLETION NOTICE...................................................16
7. OTHER OBLIGATIONS OF AND LIMITED REPRESENTATIONS BY BNPLC................16
(a) KEEPING PROPRIETARY INFORMATION CONFIDENTIAL........................16
(b) COOPERATION OF BNPLC TO FACILITATE CONSTRUCTION AND DEVELOPMENT.....17
(c) ACTIONS PERMITTED BY CHIRON WITHOUT BNPLC'S CONSENT.................18
(d) COOPERATION OF BNPLC TO FACILITATE FINANCING OF OTHER
IMPROVEMENTS........................................................19
(e) COOPERATION OF BNPLC TO FACILITATE EQUIPMENT LEASES AND PERSONAL
PROPERTY FINANCING..................................................19
(f) LIMITED REPRESENTATIONS BY BNPLC....................................20
(g) RESPONDING TO REQUESTS FOR INFORMATION..............................20
(h) OTHER LIMITED REPRESENTATIONS BY BNPLC..............................21
8. ADJUSTMENTS TO THE PROPERTY..............................................21
(a) OWNERSHIP OF THE IMPROVEMENTS AND PERSONALTY ACQUIRED WITH FUNDS
PROVIDED BY BNPLC...................................................21
9. ENVIRONMENTAL............................................................22
(a) GENERAL ENVIRONMENTAL COVENANTS BY CHIRON...........................22
(b) LONG TERM RISK MANAGEMENT PLAN......................................23
(c) WARRANTY REGARDING COMPLETION OF REMEDIAL WORK......................23
(d) RIGHT OF BNPLC TO DO REMEDIAL WORK NOT PERFORMED BY CHIRON..........23
(e) ENVIRONMENTAL INSPECTIONS AND REVIEWS...............................23
(f) COMMUNICATIONS REGARDING ENVIRONMENTAL MATTERS......................24
10. INSURANCE REQUIRED AND CONDEMNATION......................................25
(a) LIABILITY INSURANCE.................................................25
(b) PROPERTY INSURANCE..................................................25
(c) FAILURE TO OBTAIN INSURANCE.........................................26
(d) CONDEMNATION........................................................26
11. APPLICATION OF INSURANCE AND CONDEMNATION PROCEEDS.......................27
12. ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS OF CHIRON CONCERNING
THE PROPERTY.............................................................29
(a) COMPLIANCE WITH COVENANTS AND LAWS..................................29
(b) CONDITION OF PROPERTY...............................................29
(c) OPERATION OF PROPERTY...............................................29
(ii)
<PAGE>
(d) DEBTS FOR CONSTRUCTION, MAINTENANCE, OPERATION OR DEVELOPMENT.......30
(e) REPAIR, MAINTENANCE, ALTERATIONS AND ADDITIONS......................30
(f) BOOKS AND RECORDS CONCERNING THE PROPERTY...........................31
13. ASSIGNMENT AND SUBLETTING BY CHIRON......................................31
(a) BNPLC'S CONSENT REQUIRED............................................31
(b) STANDARD FOR BNPLC'S CONSENT TO ASSIGNMENTS AND CERTAIN OTHER
MATTERS.............................................................31
(c) CONSENT NOT A WAIVER................................................31
14. ASSIGNMENT BY BNPLC......................................................32
(a) BNPLC'S ASSIGNMENT GENERALLY........................................32
(b) RESTRICTIONS ON TRANSFERS...........................................32
15. BNPLC'S RIGHT OF ACCESS..................................................32
16. OTHER REPRESENTATIONS, WARRANTIES AND COVENANTS OF CHIRON................33
(a) FINANCIAL STATEMENTS; REQUIRED NOTICES; CERTIFICATES AS TO
DEFAULT.............................................................33
(b) PAYMENT OF TAXES....................................................34
(c) NEGATIVE COVENANTS..................................................35
(i) MERGER AND CONSOLIDATION..................................35
(ii) CHANGE IN NATURE OF BUSINESS..............................35
(iii) SALES, ETC. OF ASSETS.....................................35
(iv) MULTIEMPLOYER ERISA PLANS.................................36
(v) PROHIBITED ERISA TRANSACTION..............................36
(d) OWNERSHIP OF THE LESSOR UNDER THE GROUND LEASE......................36
(e) FURTHER ASSURANCES..................................................37
(f) NO DISCRIMINATION...................................................37
17. EVENTS OF DEFAULT........................................................37
(a) DEFINITION OF EVENTS OF DEFAULT.....................................37
(b) ALTERNATIVE CURE OF CERTAIN DEFAULTS................................40
(c) REMEDIES............................................................40
(d) COLLECTIONS UNDER THE PURCHASE AGREEMENT............................42
(e) ENFORCEABILITY......................................................42
(f) REMEDIES CUMULATIVE.................................................42
18. DEFAULT BY BNPLC.........................................................42
19. QUIET ENJOYMENT..........................................................42
20. SURRENDER UPON TERMINATION...............................................43
21. HOLDING OVER BY CHIRON...................................................43
22. PURCHASE DOCUMENTS AND GROUND LEASE......................................43
23. WAIVER OF JURY TRIAL.....................................................43
24. MISCELLANEOUS............................................................44
(iii)
<PAGE>
(a) NOTICES.............................................................44
(b) SEVERABILITY........................................................46
(c) NO MERGER...........................................................46
(d) NO IMPLIED WAIVER...................................................46
(e) NO IMPLIED REPRESENTATIONS BY BNPLC.................................46
(f) ENTIRE AGREEMENT....................................................46
(g) BINDING EFFECT......................................................47
(h) TIME IS OF THE ESSENCE..............................................47
(i) GOVERNING LAW.......................................................47
(j) PARAGRAPH HEADINGS..................................................47
(k) OTHER TERMS AND REFERENCES..........................................47
(l) NOT A PARTNERSHIP, ETC..............................................47
25. INCOME TAX REPORTING.....................................................47
26. PROPRIETARY INFORMATION, CONFIDENTIALITY AND SECURITY....................49
EXHIBITS AND SCHEDULES
EXHIBIT A......................................................Legal Description
EXHIBIT B.............................................Permitted Encumbrance List
EXHIBIT C........................Description of the initial Construction Project
EXHIBIT D...........................................Contractor's Estoppel Letter
EXHIBIT E............................................Architect's Estoppel Letter
EXHIBIT F.....................................................Draw Request Forms
EXHIBIT G........................................Covenant Compliance Certificate
EXHIBIT H.............................................Libor Period Election Form
EXHIBIT I.....................................Landlord's Lien Subordination Form
EXHIBIT J......................Notice of Request Requiring an Expedited Response
SCHEDULE 1..........................................List of Current Participants
SCHEDULE 2.........................................List of Development Contracts
LIST OF DEFINED TERMS.........................................Shared Definitions
(iv)
<PAGE>
LEASE AGREEMENT
This LEASE AGREEMENT (this "LEASE"), by and between BNP LEASING
CORPORATION, a Delaware corporation ("BNPLC"), and CHIRON CORPORATION, a
Delaware corporation ("CHIRON"), is dated June 28, 1996, but intended to be
effective as of the Effective Date. ("EFFECTIVE DATE" and other capitalized
terms used and not otherwise defined in this Lease are intended to have the
meanings assigned to them in the LIST OF DEFINED TERMS attached to and made a
part of this Lease.)
RECITALS
Pursuant to the Ground Lease, which as of the Effective Date covers the
Land described in EXHIBIT A, BNPLC is acquiring a leasehold estate in the Land
and any appurtenances thereto from Chiron contemporaneously with the execution
of this Lease.
In anticipation of BNPLC's acquisition of the leasehold estate under the
Ground Lease and other property described below, BNPLC and Chiron have reached
agreement as to the terms and conditions upon which BNPLC is willing to sublease
the Land to Chiron and to lease to Chiron certain improvements to be constructed
on the Land as hereinafter provided, and by this Lease BNPLC and Chiron desire
to evidence such agreement.
GRANTING CLAUSES
In consideration of the rent to be paid and the covenants and agreements to
be performed by Chiron, as hereinafter set forth, BNPLC does hereby LEASE,
DEMISE and LET unto Chiron for the term hereinafter set forth the Land, together
with:
(1) BNPLC's interest in any and all Improvements;
(2) all easements and other rights appurtenant to BNPLC's leasehold
estate in the Land under the Ground Lease or to the Improvements, whether
now owned or hereafter acquired by BNPLC;
(3) all right, title and interest of BNPLC, now owned or hereafter
acquired, in and to (A) any land lying within the right-of-way of any
street, open or proposed, adjoining the Land, (B) any sidewalks and alleys
adjacent to the Land and (C) any strips and gores between the Land and
abutting land.
BNPLC's leasehold estate under the Ground Lease in the Land covered thereby from
time to time and all property described in clauses (1) through (3) above are
hereinafter referred to collectively as the "REAL PROPERTY".
<PAGE>
To the extent, but only to the extent, that assignable rights or interests
in, to or under the following have been or will be acquired by BNPLC under the
Ground Lease or acquired by BNPLC pursuant to Paragraph 8 below, BNPLC also
hereby grants and assigns to Chiron for the term of this Lease the right to use
and enjoy (and, in the case of contract rights, to enforce) such rights or
interests of BNPLC:
(a) any goods, equipment, furnishings, furniture and other tangible
personal property of whatever nature that are located on the Real Property
and all renewals or replacements of or substitutions for any of the
foregoing;
(b) the Permitted Encumbrances; and
(c) any general intangibles, permits, licenses, franchises,
certificates, and other rights and privileges related to the Real Property.
Such rights and interests of BNPLC, whether now existing or hereafter arising,
are hereinafter collectively called the "PERSONAL PROPERTY". The Real Property
and the Personal Property are hereinafter sometimes collectively called the
"PROPERTY."
Provided, however, the leasehold estate conveyed hereby and Chiron's
rights hereunder are expressly made subject and subordinate to the terms and
conditions of this Lease and the Ground Lease, to the matters listed in
EXHIBIT B and all other Permitted Encumbrances and to any other claims or
encumbrances not constituting Liens Removable by BNPLC.
GENERAL TERMS AND CONDITIONS
The Property is leased by BNPLC to Chiron and is accepted and is to be used
and possessed by Chiron upon and subject to the following terms and conditions:
1. TERM. The term of this Lease (the "TERM") shall commence on and
include the Effective Date, and end on the first Business Day of the fifty-
second calendar month after the calendar month which includes the Base Rent
Commencement Date, unless sooner terminated as expressly herein provided. If
the Designated Sale Date occurs before the end of the scheduled Term, Chiron may
terminate this Lease on or after the Designated Sale Date; provided, however, as
a condition to any such termination by Chiron, Chiron must have done the
following prior to the termination:
(a) purchased or caused an Applicable Purchaser to purchase the
Property pursuant to the Purchase Agreement and satisfied all of Chiron's other
obligations under the Purchase Agreement;
(b) paid to BNPLC all Base Rent, Commitment Fees and other Rent
accrued on the Designated Sale Date; and
(c) paid any Breakage Costs caused by BNPLC's sale of the Property
pursuant to the Purchase Agreement.
-2-
<PAGE>
2. NO LEASE TERMINATION.
(a) STATUS OF LEASE. Except as expressly provided herein, this Lease
shall not terminate, nor shall Chiron have any right to terminate this Lease,
nor shall Chiron be entitled to any abatement of the Rent, nor shall the
obligations of Chiron under this Lease be excused, for any reason whatsoever,
including any of the following: (i) any damage to or the destruction of all or
any part of the Property from whatever cause, (ii) the taking of the Property or
any portion thereof by eminent domain or otherwise for any reason, (iii) the
prohibition, limitation or restriction of Chiron's use of all or any portion of
the Property or any interference with such use by governmental action or
otherwise, (iv) any eviction of Chiron or of anyone claiming through or under
Chiron (provided, that if Chiron is wrongfully evicted by BNPLC or by any third
party lawfully exercising its rights under a Lien Removable by BNPLC, then
Chiron will have the remedies described in Paragraph 18 below), (v) any default
on the part of BNPLC under this Lease or under any other agreement to which
BNPLC and Chiron are parties, (vi) the inadequacy in any way whatsoever of the
design, construction, assembly or installation of any improvements, fixtures or
tangible personal property included in the Property, it being understood that
BNPLC has not made, does not make and will not make any representation express
or implied as to the adequacy thereof, (vii) any latent or other defect in the
Property or any change in the condition thereof or the existence with respect to
the Property of any violations of Applicable Laws or (viii) any other cause
whether similar or dissimilar to the foregoing. It is the intention of the
parties hereto that the obligations of Chiron hereunder shall be separate and
independent of the covenants and agreements of BNPLC, that the Base Rent and all
other sums payable by Chiron hereunder shall continue to be payable in all
events and that the obligations of Chiron hereunder shall continue unaffected,
unless the requirement to pay or perform the same shall have been terminated or
limited pursuant to an express provision of this Lease.
(b) WAIVER BY CHIRON. Without limiting the foregoing, Chiron waives
to the extent permitted by Applicable Laws, except as otherwise expressly
provided herein, all rights to which Chiron may now or hereafter be entitled by
law (including any such rights arising because of any implied "warranty of
suitability" or other warranty under Applicable Laws) (i) to quit, terminate or
surrender this Lease or the Property or any part thereof or (ii) to any
abatement, suspension, deferment or reduction of the Rent.
However, nothing in this Paragraph 2 shall be construed as a waiver by
Chiron of any right Chiron may have at law or in equity to (i) recover monetary
damages for any default under this Lease by BNPLC that BNPLC fails to cure
within the period provided in Paragraph 18, (ii) injunctive relief in case of
the violation, or attempted or threatened violation, by BNPLC of any of the
express covenants, agreements, conditions or provisions of this Lease which are
binding upon BNPLC (including the confidentiality provisions set forth in
subparagraph 7.(a) below), or (iii) a decree compelling performance by BNPLC of
any of the express covenants, agreements, conditions or provisions of this Lease
which are binding upon BNPLC.
3. USE AND CONDITION OF THE PROPERTY.
(a) USE. Subject to the Permitted Encumbrances, the Development
Contracts and the terms hereof, Chiron may use and occupy the Property during
the Term, but only for the following purposes and other lawful purposes
incidental thereto:
(i) scientific research, development and small scale
manufacturing related to businesses in which Chiron is engaged (including
pharmaceutical/biotechnology businesses and the businesses of designing,
manufacturing and selling instrumentation and medical and diagnostic
devices),
-3-
<PAGE>
which may involve among other things the construction and use of
laboratories, pilot plant facilities, vivaria and a central utilities plant
(including the "CUP," as defined in EXHIBIT C);
(ii) support functions for such research, development and
manufacturing uses, including parking, food services, library, processing,
distribution, warehousing and similar uses; and
(iii) administrative and office space.
(b) CONDITION OF THE PROPERTY. Chiron accepts the Property in its
present state, AS IS, and without any representation or warranty, express or
implied, as to the condition of such property or as to the use which may be made
thereof. Chiron also accepts the Property without any covenant, representation
or warranty, express or implied, by BNPLC or its Affiliates regarding the title
thereto or the rights of any parties in possession of any part thereof, except
as set forth in Paragraph 19. BNPLC shall not be responsible for any latent or
other defect or change of condition in the Land, Improvements, fixtures and
personal property forming a part of the Property or for any violations with
respect thereto of Applicable Laws. Nor shall BNPLC be required to furnish to
Chiron any facilities or service of any kind, such as, but not limited to,
water, steam, heat, gas, hot water, electricity, light or power.
(c) CONSIDERATION FOR AND SCOPE OF WAIVER. The provisions of
subparagraph 3.(b) above have been negotiated by BNPLC and Chiron after due
consideration for the Rent payable hereunder and are intended to be a complete
exclusion and negation of any representations or warranties of BNPLC or its
Affiliates, express or implied, with respect to the Property that may arise
pursuant to any law now or hereafter in effect or otherwise, except as expressly
set forth herein. However, such exclusion of representations and warranties by
BNPLC and its Affiliates is not intended to impair any representations or
warranties made by other parties, including any architects, engineers or
contractors engaged to work on Construction Projects, the benefit of which is to
pass to Chiron during the Term because of the definition of Personal Property
and Property above.
4. RENT.
(a) BASE RENT GENERALLY. On the Base Rent Commencement Date and on
each Base Rent Date through the end of the Term, Chiron shall pay BNPLC rent
("BASE RENT"). Each payment of Base Rent must be received by BNPLC no later
that 9:00 a.m. (Pacific time) on the date it becomes due; if received after 9:00
a.m. (Pacific time) it will be considered for purposes of this Lease as received
on the next following Business Day. Any Base Rent due on the Base Rent
Commencement Date shall represent rent due for the first Base Rent Period
beginning upon such date. Each subsequent payment of Base Rent shall represent
rent allocable to the period ending on the date on which the payment is due and
beginning on the preceding Base Rent Date. BNPLC shall notify Chiron of the
amount of each payment of Base Rent (calculated as provided in
subparagraph 4.(b)) at least three days before the date upon which it first
becomes due. However, any failure by BNPLC to so notify Chiron shall not
constitute a waiver of BNPLC's right to payment, but absent such notice Chiron
shall not be in default for any underpayment resulting therefrom if Chiron, in
good faith, reasonably estimates the payment required, makes a timely payment of
the amount so estimated and corrects any underpayment within three Business Days
after being notified by BNPLC of the underpayment.
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(b) CALCULATION OF BASE RENT. Payments of Base Rent shall be
calculated and become due as follows:
(i) The Base Rent payable on the Base Rent Commencement Date shall
equal the difference (if any) between (a) total Carrying Costs that would
have been added to the Outstanding Construction Allowance on such date if
the Construction Allowance available hereunder were not limited to the
Maximum Construction Allowance, and (b) the Carrying Costs actually added
on such date to the Outstanding Construction Allowance.
(ii) For all Base Rent Periods subject to a LIBOR Period Election of
one month or three months, all Base Rent shall be due on the Base Rent Date
upon which the Base Rent Period ends. For each such Base Rent Period, the
Base Rent shall equal:
a) Stipulated Loss Value on the first day of such Base Rent
Period (taking into account all Carrying Costs added to the
Outstanding Construction Allowance on or prior to such first day),
times
b) the sum of (1) the Effective Rate with respect to such Base
Rent Period, plus (2) the Spread on the date which is ten Business
Days before such Base Rent first becomes due, times
c) the number of days in such Base Rent Period, divided by
d) three hundred sixty.
(iii) For Base Rent Periods subject to a LIBOR Period Election of
greater than three months, Base Rent shall be payable in more than one
installment, with an installment becoming due on (1) each Base Rent Date
that occurs during the Base Rent Period (other than the Base Rent Date upon
which the Base Rent Period begins) and (2) the Base Rent Date upon which
the Base Rent Period ends. The amount of each installment shall equal:
a) Stipulated Loss Value on the first day of such Base Rent
Period (taking into account all Carrying Costs added to the
Outstanding Construction Allowance on or prior to such first day),
times
b) the sum of (1) the Effective Rate with respect to such Base
Rent Period, plus (2) the Spread on the date which is ten Business
Days before such installment first becomes due, times
c) the number of days in the period from and including the
preceding Base Rent Date to but not including the Base Rent Date upon
which the installment is due, divided by
d) three hundred sixty.
Notwithstanding the foregoing, if Chiron or any Applicable Purchaser purchases
BNPLC's interest in the Property pursuant to the Purchase Agreement, any accrued
unpaid Base Rent and all outstanding Additional Rent shall be due on the date of
purchase in addition to the purchase price and other sums due BNPLC under the
Purchase Agreement.
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(c) ADDITIONAL RENT. All amounts which Chiron is required to pay to
or on behalf of BNPLC pursuant to this Lease, together with every charge,
premium, interest and cost set forth herein which may be added for nonpayment or
late payment thereof, shall constitute rent (all such amounts, other than Base
Rent, are herein called "ADDITIONAL RENT", and together Base Rent and Additional
Rent are herein sometimes called "RENT").
(d) NO DEMAND OR SETOFF. Chiron shall pay all Rent without notice or
demand and without abatement, counterclaim, deduction, setoff or defense, except
as expressly provided herein.
(e) UPFRONT FEE. Upon execution and delivery of this Lease by BNPLC,
Chiron shall pay BNPLC an upfront fee (the "UPFRONT FEE") as provided in the
letter dated April 10, 1996 from BNPLC to Chiron (less the deposit already paid
by Chiron pursuant to that letter which will be applied against the Upfront
Fee). The Upfront Fee shall represent Additional Rent for the first
Construction Period.
(f) ADMINISTRATIVE FEES. Upon execution and delivery of this Lease
by BNPLC, and again on each anniversary of the date hereof prior to the
Designated Sale Date, Chiron shall pay BNPLC an administrative fee (an
"ADMINISTRATIVE FEE") as provided in the letter dated April 10, 1996 from BNPLC
to Chiron. Each payment of an Administrative Fee shall represent Additional
Rent for the first Construction Period or Base Rent Period during which it first
becomes due.
(g) COMMITMENT FEES. For each Construction Period Chiron shall pay
BNPLC a fee (a "COMMITMENT FEE") equal to (1) six basis points (6/100 of 1%),
times (2) the difference at the end of the first day of such Construction Period
between (A) the Maximum Construction Allowance and (B) the sum (computed without
deduction for any Qualified Payments) of all Construction Advances made by or on
behalf of BNPLC and all Carrying Costs added to and made a part of the
Construction Allowance, times (3) the number of days in such Construction
Period, divided by (4) three hundred sixty. Chiron shall pay Commitment Fees in
arrears on the first Business Day of January, April, July and October of each
calendar year, beginning with October 1, 1996 and continuing regularly
throughout the Term so long as Commitment Fees have accrued and remain unpaid
because of a difference described in the preceding clause (2) at the end of the
first day of any Construction Period. However, if any Commitment Fees shall
have accrued and remain unpaid on the Designated Sale Date, such accrued unpaid
Commitment Fees shall be due on the Designated Sale Date.
(h) DEFAULT INTEREST AND ORDER OF APPLICATION. All Rent shall bear
interest, if not paid when first due, at the Default Rate in effect from time to
time from the date due until paid; provided, that nothing herein contained will
be construed as permitting the charging or collection of interest at a rate
exceeding the maximum rate permitted under Applicable Laws. BNPLC shall be
entitled to apply any amounts paid by or on behalf of Chiron against any Rent
then past due in the order the same became due or in such other order as BNPLC
may elect.
5. PAYMENT OF EXECUTORY COSTS AND LOSSES RELATED TO THE PROPERTY.
(a) "NET" LEASE GENERALLY. It is the intention of BNPLC and Chiron
that the Base Rent, the Upfront Fee, Administrative Fees, Commitment Fees and
other payments herein specified shall be absolutely net to BNPLC and that Chiron
shall pay all costs, expenses and obligations of every kind relating to the
Property or this Lease which may arise or become due, including: (i) any taxes
payable by virtue of BNPLC's receipt of amounts paid to or on behalf of BNPLC in
accordance with this Paragraph 5; (ii) any amount for which BNPLC is or becomes
liable with respect to the Ground Lease, the Permitted Encumbrances or the
Development Contracts; and
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(iii) any costs incurred by BNPLC (including Attorneys' Fees) because of BNPLC's
acquisition or ownership of any interest in the Property or because of this
Lease or the transactions contemplated herein.
However, the preceding sentence shall not be construed to make Chiron
liable for (1) damages, costs, expenses or obligations suffered by BNPLC because
of (and attributed by any applicable principles of comparative fault to) BNPLC's
own Established Misconduct, (2) Excluded Taxes, (3) withholding taxes permitted
by subparagraph 5.(d) or (4) general overhead or internal administrative
expenses of BNPLC or any other Interested Party, except to the extent allowed by
subparagraph 5.(c)(ii) because of changes described in that subparagraph after
the Effective Date.
(b) IMPOSITIONS. Chiron shall pay or cause to be paid prior to
delinquency all ad valorem taxes assessed against the Property and other
Impositions. If requested by BNPLC from time to time, Chiron shall furnish
BNPLC with receipts showing payment of all Impositions at least ten days prior
to the applicable default date therefor.
Notwithstanding the foregoing, Chiron may in good faith, by appropriate
proceedings, contest the validity, applicability or amount of any asserted
Imposition, and pending such contest Chiron shall not be deemed in default
hereunder if (1) Chiron diligently prosecutes such contest to completion in a
manner reasonably satisfactory to BNPLC, and (2) Chiron promptly causes to be
paid any amount adjudged by a court of competent jurisdiction to be due, with
all costs, penalties and interest thereon, promptly after such judgment becomes
final; provided, however, that in any event each such contest shall be concluded
and the contested Impositions must be paid by Chiron prior to the date (i) any
criminal action is overtly threatened or instituted against BNPLC or its
directors, officers or employees because of the nonpayment thereof or (ii) any
writ or order is issued under which any property owned or leased by BNPLC
(including the Property) may be seized or sold or any other action is taken or
overtly threatened against BNPLC or against any property owned or leased by
BNPLC because of the nonpayment thereof.
(c) OTHER FEES AND EXPENSES; GENERAL INDEMNIFICATION; INCREASED
COSTS; AND CAPITAL ADEQUACY CHARGES.
(i) Except for any costs paid by BNPLC with the proceeds of the
Initial Funding Advance as part of the Transaction Expenses, Chiron shall
pay (and indemnify BNPLC and other Interested Parties and defend and hold
them harmless from and against) all Losses imposed on or asserted against
or incurred by BNPLC or other Interested Parties at any time and from time
to time by reason of, in connection with or arising out of (A) their
ownership or alleged ownership of any interest in the Property or the
Rents, (B) the use and operation of the Property, (C) the negotiation or
administration of this Lease, the Purchase Documents, the Ground Lease or
the Existing Participation Agreements, (D) the making of Funding Advances,
(E) any Construction Project, (F) the breach by Chiron of this Lease or any
other document executed by Chiron in connection herewith, or (G) any bodily
or personal injury or death or property damage occurring in or upon or in
the vicinity of the Property through any cause whatsoever, whether such
Losses are incurred at the time of execution of this Lease or at any time
during the Term. Costs and expenses included in such Losses will include
all appraisal fees, filing and recording fees, inspection fees, survey
fees, taxes, brokerage fees and commissions, abstract fees, title policy
fees, Uniform Commercial Code search fees, escrow fees, Attorneys' Fees and
environmental consulting fees incurred by BNPLC with respect to the
Property. Such costs and expenses will also include Attorneys' Fees or
other costs incurred to evaluate lien releases and other information
submitted by Chiron with requests for Construction Advances. Such costs
and expenses will not, however, include, and Chiron shall not be required
to pay (i) Losses incurred or suffered by Participants in connection with
their negotiation or execution of
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Participation Agreements with BNPLC or in connection with any due diligence
they may undertake before entering into such Participation Agreements, (ii)
an allocation of general overhead or internal administrative expenses of
BNPLC or any other Interested Party, except to the extent allowed by
subparagraph 5.(c)(ii) because of a Banking Rules Change after the
Effective Date, (iii) Excluded Taxes, or (iv) Losses incurred or suffered
by any Interested Party that are proximately caused by (and attributed by
any applicable principles of comparative fault to) the Established
Misconduct of that Interested Party.
(ii) If, after the Effective Date, there shall be any increase in
the cost to BNPLC's Parent or any Participant agreeing to make or making,
funding or maintaining advances to BNPLC in connection with the Property
because of any Banking Rules Change, then Chiron shall from time to time,
pay to BNPLC for the account of BNPLC's Parent or such Participant, as the
case may be, additional amounts sufficient to compensate BNPLC's Parent or
the Participant for such increased cost. A certificate as to the amount of
such increased cost, submitted to BNPLC and Chiron by BNPLC's Parent or the
Participant, shall be conclusive and binding upon Chiron, absent clear and
demonstrable error.
(iii) BNPLC's Parent or any Participant may demand additional
payments ("CAPITAL ADEQUACY CHARGES") if BNPLC's Parent or the Participant
determines that any Banking Rules Change affects the amount of capital to
be maintained by it and that the amount of such capital is increased by or
based upon the existence of advances made or to be made to BNPLC to permit
BNPLC to maintain BNPLC's investment in the Property or to make
Construction Advances. To the extent that BNPLC's Parent or the
Participant demands Capital Adequacy Charges as compensation for the
additional capital requirements reasonably allocable to such investment or
advances, Chiron shall pay to BNPLC for the account of BNPLC's Parent or
the Participant, as the case may be, the amount so demanded.
(iv) Any amount to be paid by Chiron under this
subparagraph 5.(c) shall be due within ten days after a demand for such
payment is made upon Chiron. Chiron's indemnities and obligations under
this subparagraph 5.(c) shall survive the termination or expiration of this
Lease with respect to any circumstance or event existing or occurring prior
to such termination or expiration. FURTHER, THE INDEMNITIES SET OUT IN
THIS SUBPARAGRAPH 5.(c) SHALL APPLY EVEN IF THE SUBJECT OF THE
INDEMNIFICATION IS CAUSED BY OR ARISES OUT OF THE NEGLIGENCE OF BNPLC OR
ANOTHER INTERESTED PARTY AND EVEN IF BNPLC OR ANOTHER INTERESTED PARTY IS
STRICTLY LIABLE FOR THE LOSSES AGAINST WHICH THE INDEMNITIES ARE PROVIDED;
however, such indemnities shall not protect any Interested Party (including
BNPLC) against Losses proximately caused by (and attributed by any
applicable principles of comparative fault to) the Established Misconduct
of that Interested Party.
(d) WITHHOLDING TAXES. Notwithstanding anything else to the contrary
in this Paragraph 5, but subject to the provisions of this subparagraph 5.(d),
to the extent required by law Chiron may deduct United States of America and
California withholding taxes imposed as a way of collecting or in lieu of
Excluded Taxes on payments of Base Rent, the Upfront Fee, Administrative Fees,
Commitment Fees, any interest payable pursuant to subparagraph 4.(h) or any
additional compensation claimed by BNPLC pursuant to subparagraph 5.(c)(iii)
(collectively, "INCOME PAYMENTS") from Income Payments, without obligation to
gross up, indemnify or otherwise increase payments in consequence thereof. Such
withholding, without obligation to gross up, indemnify or otherwise increase
payments in consequence thereof, will be permitted if, but only if:
(i) in the case of withholding for Excluded Taxes imposed by the
United States of America, the Person entitled to receive Income Payments
(whether BNPLC, as the original landlord named herein, or
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an assignee of the original landlord's rights hereunder, a "PAYEE") is not
exempt from withholding by reason of having been organized under the laws
of the United States of America or any State thereof, and such Person shall
not have provided Chiron with three counterparts of each of the forms
prescribed by the Internal Revenue Service (Form 1001 or 4224, or successor
forms, as the case may be) claiming for Payee an exemption from federal
withholding on all Income Payments;
(ii) in the case of withholding for Excluded Taxes imposed by the
State of California, the Payee is not exempt from withholding by reason of
having been qualified to do business in California, and such Person shall
not have provided Chiron with three counterparts of the forms (if any)
prescribed by the California taxing authorities claiming for Payee an
exemption from California withholding on all Income Payments;
(iii) at least thirty days prior to any withholding from or
reduction of Income Payments, Chiron shall have notified the Payee that
Chiron believes the withholding is required and permitted by this
subparagraph; and
(iv) the withholding taxes on the Income Payments would have been
assessed even if the applicable taxing authorities had characterized the
transactions evidenced by this Lease and the Purchase Agreement as a mere
financing arrangement.
Any Payee exempt from withholding for Excluded Taxes imposed by the United
States of America by reason of having been organized under the laws of the
United States of America or any State thereof shall provide to Chiron statements
conforming to the requirements of Treasury Regulation 1.1441-5(b) or any
successor thereto (which statements may be made on a Form W-9). If Chiron shall
ever be required to pay Excluded Taxes that BNPLC has failed to pay when due
because of Chiron's failure to withhold from payments made under this Lease,
BNPLC shall reimburse Chiron for such Excluded Taxes and for any penalties or
interest thereon charged to Chiron. Nothing in this subparagraph 5.(d) shall
excuse Chiron from its obligation under subparagraph 5.(c)(ii) to compensate
BNPLC for increased costs attributable to any change in law relating to
withholding taxes after the Effective Date.
6. CONSTRUCTION.
(a) ADVANCES; OUTSTANDING CONSTRUCTION ALLOWANCE.
(i) Subject to the conditions set forth below, BNPLC shall make
advances ("CONSTRUCTION ADVANCES") on Advance Dates from time to time as
requested by Chiron to reimburse Chiron for the cost of Construction
Projects incurred on behalf of BNPLC and for Administrative Fees and
Commitment Fees. As used herein, references to the "OUTSTANDING
CONSTRUCTION ALLOWANCE" mean the difference on the date in question (but
not less than zero) of (A) the total Construction Advances made by BNPLC on
or prior to the date in question, plus (B) all Carrying Costs added on or
prior to the date in question, less (C) any funds received and applied as
Qualified Payments on or prior to the date in question; provided, that
BNPLC will not be under any obligation to readvance any portion of the
Construction Allowance repaid by Qualified Payments. Notwithstanding the
foregoing, if for any reason Stipulated Loss Value (and thus the
Outstanding Construction Allowance included as a component thereof) must be
determined under this Lease as of any date between Advance Dates, the
Outstanding Construction Allowance determined on such date shall equal the
Outstanding Construction Allowance on the immediately preceding Advance
Date computed in accordance with the preceding sentence, plus Carrying
Costs (if any) accruing on and after such preceding Advance Date to but not
including the date in question.
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(ii) Charges accruing at rate equal to the sum of the Effective Rate
and the Spread (herein collectively called "CARRYING COSTS") for each
Construction Period will be added to (and thereafter be included in) the
Outstanding Construction Allowance on the last day of each such
Construction Period (i.e., on the Advance Date upon which such Construction
Period ends). The amount of Carrying Costs for each such Construction
Period shall equal:
a) Stipulated Loss Value on the first day of such Construction
Period (taking into account any Carrying Costs added to the
Outstanding Construction Allowance on or prior to such first day),
times
b) the sum of (1) the Effective Rate with respect to such
Construction Period, plus (2) the Spread on the date which is ten
Business Days before the last day of such Construction Period, times
c) the number of days in such Construction Period, divided by
d) three hundred sixty;
provided, however, that because the Construction Allowance available under
this Lease is limited to the Maximum Construction Allowance, Carrying Costs
added to the Outstanding Construction Allowance on the Base Rent
Commencement Date shall not exceed the amount that can be added without
causing the Outstanding Construction Allowance to exceed the Maximum
Construction Allowance.
(b) CONSTRUCTION PROJECTS.
(i) PRECONSTRUCTION APPROVALS. Prior to the execution of this Lease,
Chiron submitted and obtained BNPLC's approval of plans or renderings for,
and descriptions of, the initial Construction Project which Chiron expects
to construct with the Construction Allowance. Chiron shall submit and
obtain BNPLC's written approval of plans or renderings for any subsequent
Construction Project prior to commencement of the subsequent Construction
Project. BNPLC may disapprove of such plans or other items if, but only
if, BNPLC believes in good faith that the Construction Project proposed by
Chiron will (1) fail to satisfy the requirements set forth in
subparagraph 6.(b)(v), (2) change the general character of the Property
from that needed to accommodate the uses permitted by subparagraph 3.(a) or
(3) cause Chiron or the Property to violate some other express provision of
this Lease; but no approval given by BNPLC in connection with any
Construction Project, prior to or after the Effective Date, shall
constitute a waiver of subparagraph 6.(b)(v) or of any other provision of
this Lease. Any items hereafter submitted by Chiron to satisfy this
subparagraph shall be sufficiently detailed to allow BNPLC to make a
reasonable determination of whether the applicable Construction Project
will satisfy subparagraph 6.(b)(v), but need not include all detailed
construction specifications and drawings of the work to be included in the
Construction Project. All Construction Projects commenced by Chiron,
including the initial Construction Project which is described in EXHIBIT C,
and all construction contracts and other agreements executed or adopted by
Chiron in connection therewith, must be not materially inconsistent with
the plans or other items heretofore or hereafter submitted to and approved
by BNPLC as described above in this subparagraph, except to the extent
otherwise provided by any Scope Changes approved as described below.
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(ii) SCOPE CHANGES. Before making a Scope Change to any Construction
Project, Chiron shall provide to BNPLC a reasonably detailed written
description of the Scope Change, a revised construction budget (only if
such Scope Change will result in an increase in a the anticipated cost of
the applicable Project, such that Construction Advances required for such
project could exceed any limit to which Chiron had previously agreed
pursuant to subparagraph 6.(b)(v)) and a copy of any changes to the
drawings, plans and specifications for the Improvements required in
connection therewith, all of which must be approved in writing by BNPLC (or
by any construction representative appointed by BNPLC from time to time)
before the Scope Change is implemented. BNPLC may disapprove of any Scope
Change if, but only if, BNPLC believes in good faith that the Construction
Project proposed by Chiron, as modified by the Scope Change, will (1) fail
to satisfy the requirements set forth in subparagraph 6.(b)(v), (2) change
the general character of the Property from that needed to accommodate the
uses permitted by subparagraph 3.(a) or (3) cause Chiron or the Property to
violate some other express provision of this Lease; but BNPLC's approval
shall not constitute a waiver of subparagraph 6.(b)(v) or of any other
provision of this Lease.
(iii) FAILURE BY BNPLC TO RESPOND TO A REQUEST FOR APPROVAL. If
Chiron submits any request for BNPLC's approval of a Construction Project
or a Scope Change pursuant to the preceding subparagraphs more than six
months before any Demand Deadline then in effect under the Guaranty or more
than six months prior to the scheduled end of the Term, yet BNPLC fails to
respond to such request within ten days after BNPLC's receipt of the
request, then Chiron may proceed as if BNPLC had approved the applicable
Construction Project or Scope Change; provided, however:
a) Chiron may not proceed if any Event of Default has occurred
and is continuing.
b) Chiron must notify BNPLC that Chiron will proceed with the
Construction Project or Scope Change, notwithstanding BNPLC's failure
to respond, and in the notice Chiron must certify that in Chiron's
good faith judgement BNPLC cannot, in accordance with the criteria
specified in subparagraph 6.(b)(i) or subparagraph 6.(b)(ii), as the
case may be, decline to give its approval.
c) If Chiron does proceed without BNPLC's express approval,
BNPLC may at any time within six months prior to the Demand Deadline
or within six months prior to the scheduled end of the Term obtain an
appraisal of the Property in form and scope reasonably satisfactory to
BNPLC from an independent appraiser satisfactory to BNPLC, and if the
appraisal indicates that the Construction Project for which Chiron
requested the approval will not satisfy the requirements of
subparagraph 6.(b)(v) (taking into account BNPLC's estimate of
additional Construction Advances, if any, that will be required to
complete such Construction Project and of additional Carrying Costs,
if any, that will accrue before such completion), then (1) BNPLC may
decline to make further Construction Advances for such Construction
Project, and (2) Chiron must upon demand pay to BNPLC as a Qualified
Payment any amount needed to reduce the sum of (A) Stipulated Loss
Value, plus (B) Carrying Costs (if any) projected by BNPLC to accrue
prior to completion of the applicable Construction Project, to no more
than two hundred fifty percent (250%) of the market value of the
Property indicated by such appraisal.
(iv) RESPONSIBILITY FOR CONSTRUCTION. Chiron shall have sole
responsibility for contracting for and administering all Construction
Projects, it being understood that although title to all Improvements will
pass directly to BNPLC (as more particularly provided in
subparagraph 8.(a)), BNPLC's obligation with respect to Construction
Projects shall be limited to the making of advances under and subject to
the conditions set forth in this Paragraph 6. No contractor or other third
party shall be entitled to require
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BNPLC to make advances as a third party beneficiary of this Lease or
otherwise. Notwithstanding delays beyond Chiron's control, and even if the
Construction Allowance is not sufficient to pay for completion of any
Construction Project, Chiron warrants that on the Designated Sale Date it
shall have (1) caused the initial Construction Project and any subsequent
Construction Projects which are commenced prior to such date to have been
completed in a good and workmanlike manner, substantially in accordance
with Applicable Laws, and otherwise in compliance with the provisions of
(x) this Lease, (y) the Permitted Encumbrances and (z) the Development
Contracts, and (2) obtained with respect to then existing Improvements any
final certificates of occupancy required for the use and occupancy thereof,
a certificate of compliance from the City of Emeryville and a certificate
of completion from the Redevelopment Agency as contemplated by the
Development Contracts. Such warranty shall not, however, survive any sale
by BNPLC pursuant to the Purchase Agreement at which Chiron or an
Applicable Purchaser pays to BNPLC a net purchase price that (when taken
together with any Supplemental Payment made by Chiron pursuant to
Paragraph 1(a)(ii) of the Purchase Agreement, in the case of a purchase by
an Applicable Purchaser) equals or exceeds Stipulated Loss Value. Further,
except for building foundations, driveways, parking lots, sidewalks and
other improvements which would not suffer damage by being submerged under
flood waters, all Improvements constructed by Chiron must be above the
elevation that the U.S. Army Corp of Engineers or any other governmental
authority estimates as the highest elevation that 100 year flood waters
could be expected to reach in the vicinity of the Real Property.
(v) VALUE ADDED. Each Construction Project, upon completion and
taken as a whole, must enhance the value of the Property such that the
market value of BNPLC's interest in the Property shall be no less than
forty percent (40%) of Stipulated Loss Value when the Construction Project
is complete; HOWEVER:
(1) this subparagraph 6.(b)(v) will not preclude Chiron from
obtaining Construction Advances for soft costs (such as architectural
fees, consultant fees, Attorneys' Fees, design costs, permitting costs
and other amounts paid to any governmental authority), demolition
costs, environmental remediation costs or other costs that do not,
individually, add value to the Property but that are incurred in
connection with a Construction Project which will in the aggregate
satisfy this subparagraph 6.(b)(v);
(2) to address any concerns BNPLC may express about Chiron's
ability to satisfy this subparagraph 6.(b)(v) for a Construction
Project, Chiron may by a notice to BNPLC stipulate a maximum amount of
Construction Advances that BNPLC will be required to make for such
Construction Project, in which case BNPLC shall not be required to
make Construction Advances for such project in excess of the amount so
stipulated; and
(3) if BNPLC invokes this subparagraph 6.(b)(v) as justification
for disapproving of a Construction Project (or Scope Change), then
Chiron may satisfy this subparagraph 6.(b)(v) by (A) stipulating a
maximum amount of Construction Advances that BNPLC will be required to
make for the applicable Construction Project as provided in the
preceding clause, and (B) establishing (by an appraisal in form and
scope reasonably satisfactory to BNPLC from an independent appraiser
satisfactory to BNPLC) that the value of the Property will be no less
than forty percent (40%) of Stipulated Loss Value upon completion of
the Construction Project and after BNPLC provides Construction
Advances equal to the maximum so stipulated.
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(vi) ESTOPPEL LETTERS REQUIRED. Upon the execution of each general
construction contract for the initial Construction Project and any material
subsequent Construction Projects, Chiron shall cause the contractor
thereunder to execute and deliver to BNPLC an estoppel letter substantially
in the form of EXHIBIT D attached hereto. Chiron shall also cause the
architect and engineer under any material architectural or engineering
contract for a Construction Project to execute and deliver to BNPLC an
estoppel letter substantially in the form of EXHIBIT E attached hereto.
(vii) ADVANCES NOT A WAIVER. No funding of Construction Advances
and no failure of BNPLC to object to any Construction Project proposed or
constructed by Chiron shall constitute a waiver by BNPLC of the
requirements contained in this subparagraph 6.(b).
(c) CONDITIONS TO CONSTRUCTION ADVANCES. BNPLC's obligation to make
Construction Advances from time to time under this Paragraph 6 shall be subject
to the following terms and conditions, all of which are intended for the sole
benefit of BNPLC:
(i) PRIOR NOTICE. Chiron must make a request in substantially the
form attached to this Lease as EXHIBIT F for any Construction Advance at
least five Business Days prior to the Advance Date upon which the advance
is to be paid. BNPLC shall consider in good faith any changes to the
Construction Advance request forms attached hereto that Chiron may
reasonably request for a particular Construction Project, provided the
requested changes do not impair BNPLC's rights or create or increase any
liability BNPLC may have in connection with the applicable Construction
Project.
(ii) AMOUNT OF THE ADVANCES. No Construction Advance shall exceed the
lesser of:
a) the Maximum Construction Allowance, less the then
Outstanding Construction Allowance (computed after adding any Carrying
Costs accrued for the month ending on the Advance Date upon which such
Construction Advance is to be made); or
b) (1) the actual costs and expenses previously incurred or
paid by Chiron (in addition to expenses already included in
Transaction Expenses) for the preparation, negotiation and execution
of this Lease, the Purchase Documents, the Ground Lease or
Participation Agreements, for Construction Projects (including soft
costs), or as Administrative Fees or Commitment Fees, less (2) the sum
of all prior Construction Advances made under this Paragraph 6 to
Chiron as reimbursement for such costs and expenses; or
(iii) OTHER RESTRICTIONS ON THE AMOUNT OF ADVANCES. No
Construction Advance shall be required that would cause the cost of
completing any Construction Project previously commenced, as estimated by
BNPLC in good faith, to exceed the difference computed by subtracting
(1) the Carrying Costs then projected by BNPLC to be added to the
Construction Allowance, from (2) the Construction Allowance remaining to be
advanced. Nor shall any Construction Advance (other than the final
Construction Advance) be requested for an amount less than $500,000.
(iv) INSURANCE. Chiron shall have obtained and provided certificates
(or, in the case of clause a) below, title policies or binders) reasonably
satisfactory to BNPLC evidencing insurance covering the Property as follows
(in addition to the liability insurance required under
subparagraph 10.(a)):
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a) TITLE INSURANCE. An owner's title insurance policy (or
binder committing the applicable title insurer to issue an owner's
title insurance policy, without the payment of further premiums) in
the amount of $140,000,000, in form and substance reasonably
satisfactory to BNPLC, written by one or more title insurance
companies reasonably satisfactory to BNPLC and insuring BNPLC's
leasehold estate under the Ground Lease and its fee interest in
Improvements to be constructed on the Land; and
b) BUILDER'S RISK INSURANCE. Builder's Completed Value
Risk and such other hazard insurance as is reasonably required to
protect BNPLC's and Chiron's interests in the Improvements under
construction against risks of physical loss, such insurance to be
maintained by Chiron at all times until completion of the initial
Construction Project or any subsequent Construction Projects in
accordance with the standards and requirements for such insurance that
Chiron would observe with respect to the construction of any
substantial improvements on land owned by it or its Affiliates.
(v) PROGRESS OF CONSTRUCTION. Each Construction Project which has
commenced but not yet been completed shall be progressing in a good and
workmanlike manner and substantially in accordance with Applicable Laws,
with Permitted Encumbrances, with Development Contracts and with the
requirements of this Lease, and Chiron shall have corrected or be
diligently pursuing the correction of any significant defect in the
construction thereof of which Chiron has received notice.
(vi) EVIDENCE OF COSTS AND EXPENSES TO BE REIMBURSED. To the extent
contemplated by the Construction Advance request forms attached as
EXHIBIT F, or otherwise reasonably required by BNPLC at the time a
Construction Advance is to be made, Chiron shall have submitted invoices,
requests for payment from contractors and other evidence that all costs and
expenses for which Chiron requests reimbursement constitute actual costs
and expenses incurred by Chiron for a Construction Project.
(vii) NO SALE OF BNPLC'S INTEREST. No sale of BNPLC's interest in
the Property shall have occurred pursuant to the Purchase Agreement.
(viii) NO EVENT OF DEFAULT. No Event of Default shall have
occurred and be continuing under this Lease.
(ix) CERTIFICATE OF NO DEFAULT AND OTHER MATTERS. Chiron shall have
provided to BNPLC, with the notice requesting the Construction Advance
described in clause (i) above, a current certificate of an officer of
Chiron in the form included in EXHIBIT F and shall have provided a copy of
such certificate to the Participants. Without limiting the foregoing,
BNPLC may decline to advance any amount when Chiron is unable to truthfully
certify, as contemplated in EXHIBIT F, that no liens are being asserted
against any part of or interest in the Property that in the aggregate
secure or allegedly secure more than $3,000,000 of claims by Potential Lien
Claimants, regardless of whether any such liens have caused an Event of
Default to occur hereunder or are being contested by Chiron as permitted by
subparagraph 12.(d). (As used in this subparagraph a lien will be
considered as "being asserted" if a claim of lien relating thereto shall
have been recorded and not discharged by payment or settlement.)
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(x) PAYMENTS BY PARTICIPANTS. None of the Participants or their
successors under their Participation Agreements with BNPLC shall have
failed to advance to BNPLC their pro rata shares of the Construction
Advance being requested. However, any such failure shall excuse BNPLC's
obligation to provide the Construction Advance requested only to the extent
of the funds that the applicable Participant or Participants should have
advanced (but did not advance) to BNPLC, and in the event of any such
failure:
a) BNPLC will immediately notify Chiron if any Participant
refuses or fails to advance its pro rata share of any Construction
Advance, but BNPLC will not in any event be liable to Chiron for
BNPLC's failure to do so.
b) BNPLC will, to the extent possible, postpone reductions of
Construction Advances because of the failure by any one or more
Participants ("NONFUNDING PARTICIPANTS") to make required advances
under their Participation Agreements with BNPLC (a "PARTICIPANT
DEFAULT") by adjusting (and readjusting from time to time, as
required) the funding "Percentages" of other Participants, and by
requesting the other Participants to make advances to BNPLC on the
basis of such adjusted Percentages, in each case as provided in the
Participation Agreements between the Participants and BNPLC; however,
so long as a Participant Default continues, no Construction Advance
shall be required that would cause the Outstanding Construction
Allowance to exceed (a) the Maximum Construction Allowance available
under this Lease, less (b) all amounts that should have been, but
because of a continuing Participant Default have not been, advanced by
any one or more of the Participants to BNPLC under their Participation
Agreements with BNPLC with respect to Construction Advances.
c) Further, after a Participant Default, and so long as no Event
of Default has occurred and is continuing, BNPLC shall do the
following as reasonably requested by Chiron, provided that nothing in
this provision shall require BNPLC to take any action that would
violate Applicable Laws, that would constitute a breach of BNPLC's
obligations under the Participation Agreements with the Participants,
or that would require BNPLC to waive any rights or remedies it has
under this Lease, the Purchase Agreement or BNPLC's other agreements
with Chiron concerning the Property:
(1) BNPLC shall promptly make a written demand upon the
Nonfunding Participants for the cure of the Participant Default.
(2) BNPLC shall, to the extent BNPLC has the right to do so
under BNPLC's Participation Agreements with the Participants,
decline to allow the Nonfunding Participants to exercise voting,
consent or notification rights under the Participation
Agreements.
(3) BNPLC shall not unreasonably withhold its approval for
the substitution of any new participant proposed by Chiron for
Nonfunding Participants, if (A) the proposed substitution does
not require BNPLC to waive rights against the Nonfunding
Participants, (B) the new participant will agree (by executing a
Participation Agreement that is consistent with and substantially
similar to the Participation Agreements that BNPLC has entered
into with the Participants and that is otherwise in form
reasonably satisfactory to BNPLC and Chiron) to provide funds to
replace the payments that would
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otherwise be required of the Nonfunding Participants with respect
to future Construction Advances, (C) the new participant (or
Chiron) provides the funds (if any) needed to terminate the
Nonfunding Participants' rights to receive payments of "Net Cash
Flow" (as defined in the Participation Agreements between with
BNPLC and the Participants) that BNPLC will be required to pay
the new participant under the terms of the substitution
reasonably proposed by Chiron, (D) the new participant (or
Chiron) provides and agrees in writing to provide funds needed to
reimburse BNPLC for any and all Losses incurred by BNPLC in
connection with or because of the substitution of the new
participant for the Nonfunding Participants, including the cost
of preparing, negotiating and executing a new Participation
Agreement between BNPLC and the new participant and including any
cost of defending and paying any claim asserted by Nonfunding
Participants because of the substitution (but not including any
liability of BNPLC to the Nonfunding Participants for damages
caused by BNPLC's bad faith or gross negligence in the
performance of BNPLC's obligations to the Nonfunding
Participants), (E) the obligations of BNPLC to the new
participant per dollar of the new participant's "investment" (it
being understood that such investment will be computed in a
manner consistent with the examples set forth in Exhibit A of the
Participation Agreements between BNPLC and the Participants, but
net of reimbursements to BNPLC under clause (D) preceding) shall
not exceed the obligations per dollar of investment by the
Nonfunding Participants that BNPLC would have had to the
Nonfunding Participants if there had been no Participant Default,
and (F) the new participant shall be a reputable financial
institution having a net worth of no less than seven and one half
percent (7.5%) of total assets and total assets of no less than
$10,000,000,000.00 (all according to then recent audited
financial statements).
(xi) EXECUTION OF PARTICIPATION AGREEMENTS WITH PARTICIPANTS. All of
the Persons listed in SCHEDULE 1 shall have entered into Participation
Agreements with BNPLC which shall cause them to qualify as Participants
hereunder. Any such Participation Agreement executed after this Lease is
executed shall be subject to Chiron's prior approval, and BNPLC shall
promptly furnish Chiron with a copy of any such agreement.
(d) BREAKAGE COSTS FOR CONSTRUCTION ADVANCES REQUESTED BUT NOT TAKEN.
If Chiron requests but thereafter declines to accept any Construction Advance,
or if Chiron requests a Construction Advance that it is not permitted to take
because of its failure to satisfy any of the conditions specified in
subparagraph 6.(c), Chiron shall pay upon demand any resulting Breakage Costs.
(e) COMPLETION NOTICE. Chiron shall provide a Completion Notice to
BNPLC promptly after construction of the initial Construction Project is
substantially complete.
7. OTHER OBLIGATIONS OF AND LIMITED REPRESENTATIONS BY BNPLC.
(a) KEEPING PROPRIETARY INFORMATION CONFIDENTIAL. BNPLC agrees to
use reasonable precautions to keep confidential any "proprietary information"
(as defined in Paragraph 26) that BNPLC may receive from Chiron or otherwise
discover with respect to Chiron or Chiron's business pursuant to this Lease or
any investigation by BNPLC hereunder, except for disclosures: (i) specifically
and previously authorized in writing by Chiron; (ii) to any assignee of BNPLC as
to any interest in the Property so long as such assignee has agreed in writing
to use its reasonable efforts to keep such information confidential in
accordance with the terms of this subparagraph; (iii) to legal counsel,
accountants, auditors, environmental consultants and other professional
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advisors to BNPLC so long as BNPLC shall inform such persons in writing (if
practicable) of the confidential nature of such information and shall direct
them to treat such information confidentially; (iv) to regulatory officials
having jurisdiction over BNPLC or BNPLC's Parent (provided that the disclosing
party shall request confidential treatment of the disclosed information, if
practicable); (v) as required by legal process (provided that the disclosing
party shall request confidential treatment of the disclosed information, if
practicable); (vi) of information which has previously become publicly available
through the actions or inactions of a person other than BNPLC not, to BNPLC's
knowledge, in breach of an obligation of confidentiality to Chiron; and (vii) to
any Participant so long as the Participant has not repudiated the
confidentiality provision concerning Chiron's proprietary information set forth
in the Participation Agreement between BNPLC and such Participant.
(b) COOPERATION OF BNPLC TO FACILITATE CONSTRUCTION AND DEVELOPMENT.
During the Term BNPLC shall take any action reasonably requested by Chiron to
facilitate the construction permitted by this Lease or the development
contemplated in the Development Contracts; provided, however, that:
(i) This subparagraph 7.(b) shall not impose upon BNPLC the obligation
to take any action that can be taken by Chiron, Chiron's Affiliates or
anyone else other than BNPLC as the lessee under the Ground Lease or as the
owner of the Improvements or any other interests in the Property.
(ii) BNPLC shall not be required by this subparagraph 7.(b) to make
any payment to another Person unless BNPLC shall first have received funds
from Chiron, in excess of any other amounts due from Chiron hereunder,
sufficient to make the payment.
(iii) BNPLC shall have no obligations whatsoever under this
subparagraph at any time when an Event of Default shall have occurred and
be continuing.
(iv) Chiron must request any action to be taken by BNPLC pursuant to
this subparagraph, and such request must be specific and in writing, if
required by BNPLC at the time the request is made.
(v) No action may be required of BNPLC pursuant to this
subparagraph 7.(b) that could constitute a violation of any Applicable Laws
or compromise or constitute a waiver of BNPLC's rights under other
provisions of this Lease or under the Ground Lease or the Purchase
Documents or that for any other reason is reasonably objectionable to
BNPLC.
The actions BNPLC shall take pursuant to this subparagraph 7.(b) if
reasonably requested by Chiron will include, subject to the conditions listed in
the proviso above, joining in or consenting to any (I) grant of easements,
licenses, rights of way, and other rights in the nature of easements encumbering
the Real Property, (II) release or termination of easements, licenses, rights of
way or other rights in the nature of easements which are for the benefit of the
Real Property or any portion thereof, (III) dedication or transfer of portions
of the Land not improved with a building, for road, highway or other public
purposes, (IV) agreements (other than with Affiliates of Chiron) for the use and
maintenance of common areas, for reciprocal rights of parking, for ingress and
egress and for amendments to any Permitted Encumbrances or Development Contracts
(including amendments to the Development Contracts that Chiron may reasonably
request to facilitate construction or development on land owned by it or its
Affiliates other than the Land), (V) instruments necessary or desirable for the
exercise or enforcement of rights under the Permitted Encumbrances, the
Development Contracts or any contract, permit, license, franchise or other right
included within the term "Property", (VI) permit applications or other documents
reasonably required to accommodate the construction or alteration of
Improvements otherwise permitted by this Lease, (VII) confirmations of Chiron's
rights under any particular provisions of this Lease which Chiron may wish to
provide to a third party,
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or (IX) execution or filing of a tract or parcel map subdividing the Real
Property into lots or parcels or reconfiguring existing parcels. However, the
determination of whether any such action is reasonably requested or reasonably
objectionable to BNPLC may depend in whole or in part upon the extent to which
the requested action shall result in a lien to secure payment or performance
obligations against BNPLC's interest in the Property, shall cause a decrease in
the value of the Property to less than forty percent (40%) of Stipulated Loss
Value after any Qualified Payments that may result from such action are taken
into account, or shall impose upon BNPLC any present or future obligations
greater than the obligations BNPLC is willing to accept in reliance on the
indemnifications provided by Chiron hereunder.
Upon request by Chiron, BNPLC shall also provide a statement in writing
certifying that this Lease is unmodified and in full effect (or, if there have
been modifications, that this Lease is in full effect as modified, and setting
forth such modifications) and the dates to which the Base Rent and other amounts
payable by Chiron hereunder have been paid and stating whether BNPLC is aware of
any default by Chiron that may exist hereunder; it being intended that any such
statement by BNPLC may be relied upon by anyone with whom Chiron may intend to
enter into an agreement for construction of the Improvements or other
significant agreements concerning the Property.
Any Losses incurred by BNPLC because of any action taken pursuant to this
subparagraph 7.(b) shall be covered by the indemnification set forth in
subparagraph 5.(c). Further, for purposes of such indemnification, any action
taken by BNPLC will be deemed to have been made at the request of Chiron if made
pursuant to any request of counsel to or any officer of Chiron (or with their
knowledge, and without their objection) in connection with the execution or
administration of this Lease or the Ground Lease.
To avoid construction delays or for other reasonable cause, Chiron may ask
BNPLC for an expedited response to any request for action made by Chiron
pursuant to this subparagraph 7.(b) by delivering such request with a notice
substantially in the form attached hereto as EXHIBIT J. BNPLC shall endeavor in
good faith to respond promptly to any such notice after the receipt of any such
notice by any officer of BNPLC.
(c) ACTIONS PERMITTED BY CHIRON WITHOUT BNPLC'S CONSENT. No refusal
by BNPLC to execute or join in the execution of any agreement, application or
other document requested by Chiron pursuant to the preceding subparagraph 7.(b)
shall preclude Chiron from itself executing such agreement, application or other
document; provided, that in doing so Chiron is not purporting to act for BNPLC
and does not thereby create or expand any obligations or restrictions that
encumber BNPLC's interest in the Property. Further, subject to the other terms
and conditions of this Lease and to the terms and conditions of the Ground
Lease, Chiron shall be entitled to do any of the following in Chiron's own name
and to the exclusion of BNPLC during the Term without any notice to or consent
of BNPLC so long as no Event of Default has occurred and is outstanding and so
long as Chiron is not purporting to act for BNPLC and does not thereby create or
expand any obligations or restrictions that encumber BNPLC's interest in the
Property:
(i) to perform obligations arising under and to exercise and enforce
the rights of Chiron or the owner of the Real Property under the
Development Contracts and Permitted Encumbrances;
(ii) to perform obligations arising under and to exercise and enforce
the rights of Chiron or the owner of the Real Property with respect to any
other contracts or documents (such as plans and specifications) included
within the Personal Property; and
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(iii) to recover and retain any monetary damages or other benefit
inuring to Chiron or the owner of the Real Property through the enforcement
of any rights, contracts or other documents included within the Personal
Property (including the Development Contracts and Permitted Encumbrances);
provided, that to the extent any such monetary damages may become payable
as compensation for an adverse impact on value of the Property, the rights
of BNPLC and Chiron hereunder with respect to the collection and
application of such monetary damages shall be the same as for condemnation
proceeds payable because of a taking of all or any part of the Property.
(d) COOPERATION OF BNPLC TO FACILITATE FINANCING OF OTHER
IMPROVEMENTS. To provide for the construction financing or refinancing of any
substantial improvements contemplated in the Development Contracts other than
the Improvements ("OTHER CONSTRUCTION") on land owned by Chiron or its
Affiliates other than the Land ("OTHER LAND"), Chiron or its Affiliates may from
time to time obtain financing from, or enter into leasing arrangements with,
other Persons who are not Affiliates of Chiron ("OTHER LENDERS"). Such
financing or leasing arrangements may provide rights in favor of an Other Lender
to cause a foreclosure, or an action comparable to foreclosure under leasing
arrangements, at or through which the Other Lender or another Person may acquire
Other Land. (Any Other Lender or other Person acquiring Other Land at or
through such a foreclosure or comparable action, and each of its successors and
assigns with respect to Other Land so acquired, is referred to below as a
"FORECLOSURE PURCHASER".) So long as no Event of Default shall have occurred
and be continuing, BNPLC shall consider in good faith any request by Chiron that
BNPLC execute an estoppel letter or triparty agreement reasonably requested by
an Other Lender to clarify the respective rights of BNPLC, as set forth in the
Ground Lease and herein, and of the Other Lender, as set forth in loan or
leasing documents which will govern the Other Lender's obligation to provide
funds for Other Construction. Subject only to the next sentence, however, BNPLC
does not agree to execute any estoppel letter or triparty agreement that could
constitute a violation of any Applicable Laws or compromise or constitute a
waiver of BNPLC's rights under other provisions of this Lease or under the
Ground Lease or the Purchase Documents or that for any other reason is
objectionable to BNPLC in its sole and absolute discretion. During the Term
when no Event of Default has occurred and is continuing, BNPLC shall not refuse
to agree, pursuant to an agreement with an Other Lender that will survive the
termination or expiration of this Lease, to excuse a Foreclosure Purchaser from
obligations:
(i) to give consents or approvals described in the first sentence of
subparagraph 8(b) of the Ground Lease or to join in modifications described
in that sentence in any case where the effect of the consents, approvals or
modifications would be to materially and adversely affect the value of
Other Land acquired by the Foreclosure Purchaser or the value of
improvements on such Other Land; or
(ii) imposed by subparagraph 8(c) of the Ground Lease to compensate
BNPLC for Losses caused by a breach or termination of any Development
Contract other than a breach or termination committed or affirmatively
authorized by the Foreclosure Purchaser.
Any agreement by BNPLC to so excuse a Foreclosure Purchaser shall provide that
nothing therein contained shall in any way excuse Chiron or Chiron's Affiliates
(even if Chiron or any of its Affiliates might constitute a Foreclosure
Purchaser) from the obligations imposed by subparagraphs 8(b) or 8(c) of the
Ground Lease.
(e) COOPERATION OF BNPLC TO FACILITATE EQUIPMENT LEASES AND PERSONAL
PROPERTY FINANCING. So long as no Event of Default has occurred and is
continuing, BNPLC shall from time to time as requested by Chiron deliver a
Landlord's Lien Subordination in substantially the form attached as EXHIBIT I to
any vendor or other Person that will provide financing to Chiron for, or that
will lease to Chiron, equipment or other tangible personal property for use on
the Property; provided, however, that Chiron shall not request and BNPLC shall
not
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be required to provide any Landlord's Lien Subordination covering equipment or
other property included within the "Property" as described in
subparagraph 8.(a). Although equipment or other tangible personal property may
be "bolted down" or otherwise firmly affixed to Improvements, it shall not by
reason thereof become part of the Improvements if it can be removed without
causing structural or other material damage to the Improvements and without
rendering HVAC or other major building systems inoperative and if it does not
otherwise constitute "Property" as provided subparagraph 8.(a).
(f) LIMITED REPRESENTATIONS BY BNPLC. BNPLC is not expected or
required to represent or warrant that this Lease or the Purchase Documents will
qualify for any particular accounting treatment under GAAP. However, to permit
Chiron to determine for itself the appropriate accounting for this Lease and the
Purchase Documents, BNPLC does represent to Chiron the following as of the
Effective Date:
(i) BNPLC is one hundred percent (100%) owned, directly or indirectly,
by BNPLC's Parent, Banque Nationale de Paris.
(ii) BNPLC leases properties of substantial value to more than seven
tenants.
(iii) All parties to whom BNPLC has any material obligations known to
BNPLC are (and are expected to be) Affiliates of Banque Nationale de Paris,
Participants or participants with BNPLC in other leasing deals or loans
made by BNPLC, or other tenants or borrowers in such other leasing deals or
loans.
(iv) BNPLC has substantial assets in addition to the Property, assets
which BNPLC believes to have a value far in excess of the value of the
Property.
(v) BNPLC expects to obtain from Banque Nationale de Paris or other
Affiliates of BNPLC Funding Advances of $75,000,000 (including a share of
Carrying Costs and other amounts to be capitalized as part of the
Outstanding Construction Allowance, and assuming that Chiron uses the
Maximum Construction Allowance under this Lease), and to the extent that
Banque Nationale de Paris or such other Affiliates themselves borrow or
accept bank deposits to obtain the funds needed to provide such Funding
Advances, the obligation to repay such funds shall not be limited, by
agreement or corporate structure, to payments collected from Chiron or
otherwise recovered from the Property.
BNPLC does not presently anticipate any change after the Effective Date in any
of the facts listed above in this subparagraph.
(g) RESPONDING TO REQUESTS FOR INFORMATION. Chiron shall have the
right to ask BNPLC questions from time to time concerning BNPLC's financial
condition, concerning changes in facts covered by the representations in the
preceding subparagraph and concerning BNPLC's ability to perform under this
Lease or the Purchase Agreement, to which questions BNPLC shall promptly
respond. (Such response, however, may be limited to a statement that BNPLC will
not provide requested information.) BNPLC shall notify Chiron if, at any time
during the Term, BNPLC ceases to be 100% owned, directly or indirectly, by
Banque Nationale de Paris.
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(h) OTHER LIMITED REPRESENTATIONS BY BNPLC. BNPLC represents that:
(i) NO DEFAULT OR VIOLATION. The execution, delivery and performance
by BNPLC of this Lease, the Purchase Agreement and the Ground Lease do not
and will not constitute a breach or default under any material contract or
agreement to which BNPLC is a party or by which BNPLC is bound and do not,
to the knowledge of BNPLC, violate or contravene any law, order, decree,
rule or regulation to which BNPLC is subject. (As used in this
subparagraph 7.(h), "BNPLC'S KNOWLEDGE" means the present actual knowledge
of Lloyd Cox, the current officer of BNPLC having responsibility for the
negotiation of this Lease, with due investigation and after consultation
with BNPLC's Parent's representative, Katherine Wolfe.)
(ii) NO SUITS. There are no judicial or administrative actions,
suits, proceedings or investigations pending or, to BNPLC's knowledge,
threatened that are reasonably likely to affect BNPLC's interest in the
Property or the validity, enforceability or priority of this Lease, the
Purchase Agreement or the Ground Lease, and BNPLC is not in default with
respect to any order, writ, injunction, decree or demand of any court or
other governmental or regulatory authority that could materially and
adversely affect the business or assets of BNPLC or its interest in the
Property.
(iii) ENFORCEABILITY. The execution, delivery and performance of this
Lease, the Purchase Agreement and the Ground Lease by BNPLC are duly
authorized, are not in contravention of or conflict with any term or
provision of BNPLC's articles of incorporation or bylaws and do not, to
BNPLC's knowledge, require the consent or approval of any governmental body
or other regulatory authority that has not heretofore been obtained or
conflict with any Applicable Laws. This Lease, the Purchase Agreement and
the Ground Lease are valid, binding and legally enforceable obligations of
BNPLC except as such enforcement is affected by bankruptcy, insolvency and
similar laws affecting the rights of creditors, generally, and equitable
principles of general application; provided, BNPLC makes no representation
or warranty that conditions imposed by any state or local Applicable Laws
to the purchase, ownership, lease or operation of the Property have been
satisfied.
(iv) ORGANIZATION. BNPLC is duly incorporated and legally existing
under the laws of Delaware and is duly qualified to do business in the
State of California. BNPLC has or will obtain on a timely basis, at
Chiron's expense pursuant to the other provisions of this Lease, all
requisite power and all governmental certificates of authority, licenses,
permits, qualifications and other documentation necessary to own and lease
the Property and to perform its obligations under this Lease.
(v) NOT A FOREIGN PERSON. BNPLC is not a "foreign person" within the
meaning of Sections 1445 and 7701 of the Code (i.e., BNPLC is not a
non-resident alien, foreign corporation, foreign partnership, foreign trust
or foreign estate as those terms are defined in the Code and regulations
promulgated thereunder).
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8. ADJUSTMENTS TO THE PROPERTY.
(a) OWNERSHIP OF THE IMPROVEMENTS AND PERSONALTY ACQUIRED WITH FUNDS
PROVIDED BY BNPLC. Subject in each case to Chiron's rights under the other
provisions of this Lease, all Improvements and all furnishings, furniture,
chattels, general intangibles, permits, licenses, franchises, certificates and
other personal property of whatever nature shall have been acquired on behalf of
BNPLC by Chiron, shall be owned by BNPLC and shall constitute "Property" covered
by this Lease, to the extent heretofore or hereafter acquired, in whole or in
part, with any portion of the Initial Funding Advance provided to Chiron or with
any Construction Advances or other funds for which Chiron has received or
hereafter receives reimbursement from the Initial Funding Advance or
Construction Advances, as shall all renewals or replacements of or substitutions
for the Improvements or any such other Property. Chiron shall not authorize or
permit the transfer of title to the Improvements or to any other such Property
to pass through Chiron or Chiron's Affiliates before it is transferred to BNPLC
from contractors, suppliers, vendors or other third Persons. Nothing herein
shall constitute authorization of Chiron by BNPLC to bind BNPLC to any
construction contract or other agreement with a third Person, but any
construction contract or other agreement executed by Chiron for the acquisition
or construction of Improvements or other components of the Property may provide
for the transfer of title as required by the preceding sentence. Upon request
of BNPLC, Chiron shall deliver to BNPLC an inventory describing all significant
items of Personal Property (and, in the case of tangible personal property,
showing the make, model, serial number and location thereof) other than
Improvements, with a certification by Chiron that such inventory is true and
complete and that all items specified in the inventory are covered by this Lease
free and clear of any Lien other than the Permitted Encumbrances or Liens
Removable by BNPLC.
(b) CHANGES IN THE LAND COVERED BY THE GROUND LEASE. Upon any amendment
of the definition of the "Land" covered by the Ground Lease, the "Land" as
defined in and covered by this Lease will also be so amended. Chiron shall not,
prior to any addition of Parcel 7A to the Land as contemplated in subparagraph
4(a) of the Ground Lease, use any Construction Advances for construction of any
improvements on Parcel 7A. If for any reason Parcel 7A is not added to the Land
before the Designated Sale Date, Chiron warrants that on the Designated Sale
Date it shall have caused the completion of the central utilities plant (or
substitute facilities which will serve the Improvements no less adequately) on
the Land that is included as part of the Property (rather than on Parcel 7A) in
a manner that causes the Improvements taken as whole to satisfy
subparagraph 6.(b)(v).
9. ENVIRONMENTAL.
(a) GENERAL ENVIRONMENTAL COVENANTS BY CHIRON. Without limiting
Chiron's obligations under the Ground Lease with respect to Hazardous Substances
and Environmental Losses, Chiron covenants that:
(i) Chiron shall promptly perform and diligently and
continuously pursue the Remedial Work.
(ii) Chiron shall retain an Environmental Consultant or
Industrial Hygienist, as appropriate, to evaluate any significant new
information generated during Chiron's implementation of the Remedial Work
and to discuss with Chiron whether such new information indicates the need
for any additional measures that Chiron should take to protect the health
and safety of persons (including, without limitation, employees,
contractors and subcontractors and their employees) or to protect the
environment. Chiron shall implement any such additional measures to the
extent required by Environmental Laws or otherwise reasonably required and
to the extent not inconsistent with the other provisions of this Lease.
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(iii) Chiron shall not conduct or permit others to conduct
Hazardous Substance Activities on the Property, except Permitted Hazardous
Substance Use and the Remedial Work.
(iv) Chiron shall not discharge or permit the discharge of
anything (including Permitted Hazardous Substances) that would require any
permit under applicable Environmental Laws, other than (1) storm water
runoff, (2) fume hood emissions, (3) waste water discharges through a
publicly owned treatment works, (4) discharges that are a necessary part of
the Remedial Work, and (5) other similar discharges consistent with the
definition herein of Permitted Hazardous Substance Use which do not
significantly increase the risk of Environmental Losses to BNPLC, in each
case in strict compliance with Environmental Laws.
(b) LONG TERM RISK MANAGEMENT PLAN. Working with an Environmental
Consultant or Industrial Hygienist, as appropriate, Chiron will develop a long-
term risk management plan for the Property, including capping of the Land, any
procedures to be followed by future workers engaged in subsurface excavation
activities, procedures for removal of floating hydrocarbon product to the extent
feasible, and a groundwater monitoring program; shall obtain approval of RCWQBCB
and ACDEH of such plan; and shall comply diligently with the requirements of
such approved plan.
(c) WARRANTY REGARDING COMPLETION OF REMEDIAL WORK. Without
limiting the foregoing, Chiron warrants that, before any Designated Sale Date
upon which, for any reason, Chiron or an Affiliate of Chiron or any Applicable
Purchaser shall not purchase BNPLC's interest in the Property pursuant to the
Purchase Agreement for a net price to BNPLC (when taken together with any
additional payments made by Chiron pursuant to Paragraph 1(a)(ii) of the
Purchase Agreement, in the case of a purchase by an Applicable Purchaser) equal
to Stipulated Loss Value, Chiron shall have completed all Remedial Work to the
satisfaction of BNPLC or shall have obtained a no further action letter from the
RWQCB, a Remedial Action Certification Form (certifying that no further
removal/remedial action is necessary) from DTSC, a certificate of completion for
a lead agency pursuant to Section 25264(b) of the California Health & Safety
Code, or similar certificate of closure certifying that no further action at the
Property is required, from all governmental authorities asserting jurisdiction
over the Property, which letters or certificates shall be delivered promptly to
BNPLC.
(d) RIGHT OF BNPLC TO DO REMEDIAL WORK NOT PERFORMED BY CHIRON. If
Chiron's failure to cure any breach of the covenants set forth in subparagraph
9.(a) continues beyond the Environmental Cure Period (as defined below), or if
Chiron breaches the warranty set forth in subparagraph 9.(c), BNPLC may, in
addition to any other remedies available to it, after notifying Chiron of the
remediation efforts BNPLC believes are needed, conduct all or any part of the
Remedial Work. To the extent that the removal of Hazardous Substances (or other
action taken by BNPLC pursuant to the preceding sentence) is required or
believed by BNPLC in good faith to be required by Applicable Law or by any
demand, regulation or guideline of any governmental authority (whether or not
having the force of law), the cost of such removal (or other action) shall be a
demand obligation owing by Chiron to BNPLC. As used in this subparagraph,
"ENVIRONMENTAL CURE PERIOD" means the period ending on the earlier of: (1) three
hundred and sixty days after Chiron is notified of the breach which must be
cured within such period, or such longer period as is reasonably required for
any cure that Chiron pursues with diligence pursuant to and in accordance with
all Approved Plans, and (2) the date any writ or order is issued for the levy or
sale of any property owned by BNPLC (including the Property) or any criminal
action is overtly threatened or instituted against BNPLC or any of its
directors, officers or employees because of the breach which must be cured
within such period.
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(e) ENVIRONMENTAL INSPECTIONS AND REVIEWS. BNPLC reserves the right
to retain an Environmental Consultant or Industrial Hygienist to review any
report prepared by Chiron or to conduct BNPLC's own investigation to confirm
whether Chiron is complying with the requirements of this Paragraph 9. Chiron
grants to BNPLC and to BNPLC's agents, employees, consultants and contractors
the right during reasonable business hours and after reasonable notice to enter
upon the Property to inspect the Property and to perform such tests as BNPLC
deems necessary or appropriate to review or investigate Hazardous Substances in,
on, under or about the Property or any discharge or suspected discharge of
Hazardous Substances into groundwater or surface water from the Property.
Chiron shall promptly reimburse BNPLC for the fees of its Environmental
Consultants and Industrial Hygienists and the costs of any such inspections and
tests; provided, however, BNPLC's right to reimbursement for the fees of any
consultant engaged as provided in this subparagraph or for the costs of any
inspections or test undertaken as provided in this subparagraph shall be limited
to the following circumstances: (1) an Event of Default shall have occurred; (2)
BNPLC shall have retained the consultant to establish the condition of the
Property just prior to any conveyance thereof pursuant to the Purchase Agreement
or just prior to the expiration of this Lease; (3) BNPLC shall have retained the
consultant to satisfy any regulatory requirements applicable to BNPLC or its
Affiliates; or (4) BNPLC shall have retained the consultant because BNPLC has
been notified of a violation of Environmental Laws concerning the Property or
BNPLC otherwise reasonably believes that Chiron has not complied with the
requirements of this Paragraph 9.
(f) COMMUNICATIONS REGARDING ENVIRONMENTAL MATTERS.
(i) Chiron shall immediately advise BNPLC and Participants of
(1) any discovery of any event or circumstance which would render any of
the representations of Chiron in the Ground Lease concerning environmental
matters materially inaccurate or misleading if made at the time of such
discovery and assuming that Chiron was aware of all relevant facts, (2) any
material change in the Remedial Work required or undertaken by Chiron or
its Affiliates in response to any (A) discovery of any Hazardous Substances
on, under or about the Property other than Permitted Hazardous Substances
and the Hazardous Substances identified in the existing Approved Plans or
(B) any claim for damages resulting from Hazardous Substance Activities,
(3) Chiron's discovery of any occurrence or condition on any real property
adjoining or in the vicinity of the Property which is not disclosed in the
existing Approved Plans and which would or could reasonably be expected to
cause the Property or any part thereof to be subject to any ownership,
occupancy, transferability or use restrictions under Environmental Laws, or
(4) any investigation or inquiry of any failure or alleged failure by
Chiron to comply with Environmental Laws affecting the Property by any
governmental authority responsible for enforcing Environmental Laws. In
such event, Chiron shall deliver to BNPLC within thirty days after BNPLC's
request (or such longer period as may be reasonably required), a
preliminary written environmental plan setting forth a general description
of the action that Chiron proposes to take with respect thereto, if any, to
bring the Property into compliance with Environmental Laws or to correct
any breach by Chiron of this Paragraph 9, including any proposed Remedial
Work, the estimated cost and time of completion, the name of the contractor
and a copy of the construction contract, if any, and such additional data,
instruments, documents, agreements or other materials or information as
BNPLC may reasonably request.
(ii) Chiron shall provide BNPLC and Participants with copies of
all material written communications with federal, state and local
governments, or agencies relating to the matters listed in the preceding
clause (i). Chiron shall also provide BNPLC and Participants with copies
of any correspondence from third Persons which threaten litigation over any
significant failure or alleged significant failure of Chiron to maintain or
operate the Property in accordance with Environmental Laws.
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(iii) Prior to Chiron's submission of a Material
Environmental Communication to any governmental or regulatory agency or
third party, Chiron shall, to extent practicable, deliver to BNPLC and
Participants a draft of the proposed submission (together with the proposed
date of submission), and in good faith assess and consider any comments of
BNPLC regarding the same. Promptly after BNPLC's request, Chiron shall
meet with BNPLC to discuss the submission, shall provide any additional
information reasonably requested by BNPLC and shall provide a written
explanation to BNPLC addressing the issues raised by comments (if any) of
BNPLC regarding the submission, including a reasoned analysis supporting
any decision by Chiron not to modify the submission in accordance with
comments of BNPLC.
10. INSURANCE REQUIRED AND CONDEMNATION.
(a) LIABILITY INSURANCE. Throughout the Term Chiron shall maintain
commercial general liability insurance against claims for bodily and personal
injury, death and property damage occurring in or upon or resulting from any
occurrence in or upon the Property, in standard form and with an insurance
company or companies reasonably acceptable to BNPLC (and so long as the Guaranty
specifies a Demand Deadline, then after the Demand Deadline BNPLC may reasonably
require that such insurance be provided through insurance or reinsurance
companies rated by the A.M. Best Company of Oldwick, New Jersey as having a
policyholder's rating of A- or better and a reported financial information
rating of VI or better), such insurance to afford immediate protection, to the
limit of not less than $20,000,000 combined single limit for bodily and personal
injury, death and property damage in respect of any one accident or occurrence,
with not more than $5,000,000 self-insured retention. Such commercial general
liability insurance shall include blanket contractual liability coverage which
insures contractual liability under the indemnifications set forth in this
Lease, but such coverage or the amount thereof shall in no way limit such
indemnifications. The policy evidencing such insurance shall name as additional
insureds BNPLC and all Participants of which Chiron has been notified (including
all of the Participants listed in SCHEDULE 1). Chiron shall maintain with
respect to each policy or agreement evidencing such commercial general liability
insurance such endorsements as may be reasonably required by BNPLC and shall at
all times deliver and maintain with BNPLC written confirmation (in form
reasonably satisfactory to BNPLC) with respect to such insurance from the
applicable insurer or its authorized agent, which confirmation must provide that
insurance coverage will not be canceled or reduced without at least thirty days
notice to BNPLC. Not less than thirty days prior to the expiration date of each
policy of insurance required of Chiron pursuant to this subparagraph, Chiron
shall deliver to BNPLC a certificate evidencing a paid renewal policy or
policies.
(b) PROPERTY INSURANCE. Throughout the Term Chiron will keep all
Improvements (including all alterations, additions and changes made to the
Improvements) which are located within the Property insured under an "all-risk"
property insurance policy (not excluding from coverage perils normally included
within the definitions of extended coverage, vandalism, malicious mischief and,
if the Property is in a flood zone, flood) in the amount no less than eighty
percent (80%) of the replacement value (exclusive of land, foundation, footings,
excavations and grading) with endorsements for contingent liability from
operation of building laws, increased cost of construction and demolition costs
which may be necessary to comply with building laws. Subject to the reasonable
approval of BNPLC, Chiron will be responsible for determining the amount of
property insurance to be maintained from time to time, but Chiron must maintain
such coverage on an agreed value basis to eliminate the effects of coinsurance.
Such insurance must be issued by an insurance company or companies reasonably
acceptable to BNPLC, and so long as the Guaranty specifies a Demand Deadline,
then after the Demand Deadline BNPLC may reasonably require that the insurance
or reinsurance companies providing such insurance be rated by the A.M. Best
Company of Oldwick, New Jersey as having (1) a policyholder's rating of A- or
better, (2) a reported financial information rating of no less than VI, and (3)
in the case of each such company, a reported financial
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information rating which indicates an adjusted policyholders' surplus equal to
or greater than the underwriting exposure that such company has under the
insurance or reinsurance it is providing for the Property. Any deductible
applicable to such insurance shall not exceed $5,000,000. Such insurance shall
cover not only the value of Chiron's interest in the Improvements, but also the
interest of BNPLC, and such insurance shall include provisions that BNPLC must
be notified at least thirty days prior to any cancellation or reduction of
insurance coverage. The policies under which Chiron maintains such insurance
may be "blanket" policies covering not only the Property but other properties
occupied or owned by Chiron; however, all policies must provide that proceeds
paid thereunder with respect to the Property will be payable to BNPLC and Chiron
as their interests may appear, it being understood between BNPLC and Chiron that
such proceeds shall be paid to BNPLC as Escrowed Proceeds and will be applied in
accordance with Paragraph 11 of this Lease. In the event any of the Property is
destroyed or damaged by fire, explosion, windstorm, hail or by any other
casualty against which insurance shall have been required hereunder, (i) BNPLC
may, but shall not be obligated to, make proof of loss if not made promptly by
Chiron after notice from BNPLC, (ii) each insurance company concerned is hereby
authorized and directed to make payment for such loss directly to BNPLC for
application as required by Paragraph 11, and (iii) BNPLC may settle, adjust or
compromise any and all claims for loss, damage or destruction under any policy
or policies of insurance (provided, that so long as no Event of Default shall
have occurred and be continuing, BNPLC must obtain Chiron's consent to any such
settlement, which consent will not be unreasonably withheld). If any casualty
shall result in damage to or loss or destruction of the Property, Chiron shall
give immediate notice thereof to BNPLC and Paragraph 11 shall apply.
Notwithstanding the foregoing, however, if any insurance claim for damage
to the Property is for less than $5,000,000 and no Event of Default shall have
occurred and be continuing, Chiron shall have the right to settle, adjust or
compromise the claim as Chiron deems appropriate; and Chiron may directly
receive and hold the proceeds of such claim so long as no Event of Default shall
have occurred and be continuing and so long as Chiron applies such proceeds as
required by subparagraph 11.(b).
(c) FAILURE TO OBTAIN INSURANCE. If Chiron fails to obtain any
insurance or to provide confirmation of any such insurance as required by this
Lease, BNPLC shall be entitled (but not required) to obtain the insurance that
Chiron has failed to obtain or for which Chiron has not provided the required
confirmation and, without limiting BNPLC's other remedies under the
circumstances, BNPLC may require Chiron to reimburse BNPLC for the cost of such
insurance and to pay interest thereon computed at the Default Rate from the date
such cost was paid by BNPLC until the date of reimbursement by Chiron.
(d) CONDEMNATION. Immediately upon obtaining knowledge of the
institution of any proceedings for the condemnation of the Property or any
portion thereof, or any other similar governmental or quasi-governmental
proceedings arising out of injury or damage to the Property or any portion
thereof, each party shall notify the other (provided, however, BNPLC shall have
no liability for its failure to provide such notice) of the pendency of such
proceedings. Chiron shall, at its expense, diligently prosecute any such
proceedings and shall consult with BNPLC, its attorneys and experts and
cooperate with them as reasonably requested in the carrying on or defense of any
such proceedings. All proceeds of condemnation awards or proceeds of sale in
lieu of condemnation with respect to the Property and all judgments, decrees and
awards for injury or damage to the Property shall be paid to BNPLC as Escrowed
Proceeds for application as provided in Paragraph 11. BNPLC is hereby
authorized, in the name of Chiron, at any time when an Event of Default shall
have occurred and be continuing, or otherwise with Chiron's prior consent (which
consent will not be unreasonably withheld), to execute and deliver valid
acquittances for, and to appeal from, any such judgment, decree or award
concerning condemnation of any of the Property. BNPLC shall not be in any event
or circumstances liable or responsible for failure to collect, or to exercise
diligence in the collection of, any such proceeds, judgments, decrees or awards.
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Notwithstanding the foregoing provisions of this subparagraph, if
condemnation proceeds totaling not more than $5,000,000 are to be recovered as a
result of a taking of less than all or substantially all of the Property, Chiron
may directly receive and hold such proceeds so long as no Event of Default shall
have occurred and be continuing and so long as Chiron applies such proceeds as
required by subparagraph 11.(b).
11. APPLICATION OF INSURANCE AND CONDEMNATION PROCEEDS.
(a) Subject to BNPLC's rights under this Paragraph 11, and so long as
no Event of Default shall have occurred and be continuing, Chiron shall be
entitled to use all property insurance and condemnation proceeds payable with
respect to the Property during the Term for the restoration and repair of the
Property or any remaining portion thereof. Except as provided in the last
sentence of subparagraph 10.(b) and the last sentence of subparagraph 10.(d),
all insurance and condemnation proceeds received with respect to the Property
(including proceeds payable under any insurance policy covering the Property
which is maintained by Chiron) shall be paid to BNPLC and then applied as
follows:
(i) First, such proceeds shall be used to reimburse BNPLC for
any costs and expenses, including Attorneys' Fees, incurred in connection with
the collection of such proceeds.
(ii) Second, the remainder of such proceeds (the "REMAINING
PROCEEDS") shall be held by BNPLC as Escrowed Proceeds and used to reimburse
Chiron for the actual cost of the repair, restoration or replacement of the
Property. However, any Remaining Proceeds not needed for such purpose shall be
applied by BNPLC as Qualified Payments, as provided in subparagraph 11.(c),
after Chiron notifies BNPLC that they are not needed for repairs, restoration or
replacement.
(b) Any Remaining Proceeds held by BNPLC as Escrowed Proceeds shall
be deposited by BNPLC in an interest bearing account as provided in the
definition of Escrowed Proceeds in the attached LIST OF DEFINED TERMS and shall
be paid to Chiron or to third parties as Chiron may direct as the applicable
repair, restoration or replacement progresses and upon compliance by Chiron with
such terms, conditions and requirements as may be reasonably imposed by BNPLC,
but in no event shall BNPLC be required to pay any Escrowed Proceeds to Chiron
in excess of the actual cost to Chiron of the applicable repair, restoration or
replacement, as evidenced by invoices or other documentation reasonably
satisfactory to BNPLC, it being understood that BNPLC may retain and apply any
such excess as a Qualified Payment. In any event, Chiron will not be entitled
to any abatement or reduction of the Base Rent or any other amount due hereunder
except to the extent that such excess Remaining Proceeds result in Qualified
Payments which reduce Stipulated Loss Value (and thus payments computed on the
basis of Stipulated Loss Value) as provided in the definitions set out in the
attached LIST OF DEFINED TERMS. Further, notwithstanding the inadequacy of the
Remaining Proceeds held by BNPLC as Escrowed Proceeds, if any, or anything
herein to the contrary, Chiron must, after any taking of less than all or
substantially all of the Property by condemnation and after any damage to the
Property by fire or other casualty, either:
(1) promptly restore or improve the Property or the remainder
thereof to a value no less than forty percent (40%) of Stipulated Loss
Value (computed after the application of any Remaining Proceeds as a
Qualified Payment) and to a reasonably safe and sightly condition; or
(2) promptly restore the Property to a reasonably safe and
sightly condition and pay to BNPLC for application as a Qualified Payment
the amount (if any), as determined by BNPLC, needed to reduce Stipulated
Loss Value (computed after the application of such amount and any available
Remaining
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Proceeds as Qualified Payments) to no more than two hundred fifty percent
(250%) of the then-current market value of the Property or remainder
thereof.
(c) If an Event of Default shall have occurred and be continuing,
then notwithstanding the foregoing, BNPLC shall be entitled to receive and
collect all insurance or condemnation proceeds payable with respect to the
Property, and:
(i) BNPLC shall apply the Remaining Proceeds received by BNPLC
as a Qualified Payment (or as reimbursement for Breakage Costs incurred in
connection with such Qualified Payment) within ten Business Days after
BNPLC receives a notice from Chiron unconditionally directing BNPLC to so
apply the same; and
(ii) in the absence of such a notice from Chiron to BNPLC, BNPLC
shall be entitled to either, at the discretion of BNPLC, (A) hold all
Remaining Proceeds as Escrowed Proceeds until paid to Chiron as
reimbursement for the actual and reasonable cost of repairing, restoring or
replacing the Property when Chiron has completed such repair, restoration
or replacement, or (B) apply such proceeds as Qualified Payments when and
to the extent deemed appropriate by BNPLC.
When no Event of Default shall have occurred and be continuing, BNPLC shall
apply any Remaining Proceeds paid to it or other amounts which are to be applied
as a Qualified Payment (or as reimbursement for Breakage Costs incurred in
connection with a Qualified Payment) within five Business Days after BNPLC
receives a notice from Chiron unconditionally directing BNPLC to so apply the
same. In any event, BNPLC may deduct Breakage Costs incurred in connection with
a Qualified Payment from the Remaining Proceeds or other amounts available to
BNPLC for application as the Qualified Payment, and Chiron will reimburse BNPLC
upon request for any such Breakage Costs that BNPLC incurs but does not deduct.
(d) In the event of any taking of all or substantially all of the
Property, BNPLC shall be entitled to apply all Remaining Proceeds as a Qualified
Payment, notwithstanding the foregoing. In addition, if Stipulated Loss Value
immediately prior to any taking of all or substantially all of the Property by
condemnation exceeds the sum of the Remaining Proceeds resulting from such
condemnation, then BNPLC shall be entitled to recover the excess from Chiron
upon demand as an additional Qualified Payment, whereupon this Lease shall
terminate. Any taking of so much of the Property as, in BNPLC's good faith
judgment, makes it impracticable to restore or improve the remainder thereof as
required by part (1) of subparagraph 11.(b) shall be considered a taking of
substantially all the Property for purposes of this Paragraph 11.
(e) Without limiting Chiron's obligations to make repairs under other
provisions of this Lease, BNPLC and Chiron each waive any right of recovery
against the other, and the other's agents, officers or employees, for any damage
to the Property or to the personal property situated from time to time in or on
the Property resulting from fire or other casualty covered by a valid and
collectible insurance policy; provided, however, that the waiver set forth in
this subparagraph 11.(e) shall be effective insofar, BUT ONLY INSOFAR, as
compensation for such damage or loss is actually recovered by the waiving party
(net of costs of collection) under the policy notwithstanding the waivers set
out in this subparagraph. Chiron shall cause the insurance policies required of
Chiron by this Lease to be properly endorsed, if necessary, to prevent any loss
of coverage because of the waivers set forth in this subparagraph. If such
endorsements are not available at commercially reasonable rates, the waivers set
forth in this subparagraph shall be ineffective to the extent that such waivers
would cause required insurance with respect to the Property to be impaired.
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12. ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS OF CHIRON
CONCERNING THE PROPERTY. Chiron represents, warrants and covenants as follows:
(a) COMPLIANCE WITH COVENANTS AND LAWS. The use of the Property
permitted by this Lease complies, or will comply after Chiron obtains available
permits as the tenant under this Lease, in all material respects with all
Applicable Laws. Chiron has obtained or will promptly obtain all utility,
building, health and operating permits as may be required by any governmental
authority or municipality having jurisdiction over the Property for the use of
the Property for the purposes permitted by the Lease.
(b) CONDITION OF PROPERTY. When the initial Construction Project has
been completed in accordance with the requirements of this Lease, adequate
provision will have been made for the Property to be served by electric, gas,
storm and sanitary sewers, sanitary water supply, telephone and other utilities.
All streets, alleys and easements necessary to serve the Property have been
completed and are serviceable or will be so when the initial Construction
Project is complete. The Property will be, when the initial Construction
Project is complete, in a condition satisfactory for its use and occupancy.
Chiron is not aware of any latent or patent material defects or deficiencies in
the Property that, either individually or in the aggregate, could materially and
adversely affect the use or occupancy of the Property as permitted by this Lease
or could reasonably be anticipated to endanger life or limb.
(c) OPERATION OF PROPERTY. Chiron shall operate the Property in a
good and workmanlike manner and in a manner that causes it to comply in all
material respects with Applicable Laws. (For purposes of this Lease, "material"
noncompliance with Applicable Law will include any noncompliance, the correction
of which has been requested by a governmental authority, or because of which a
threat of action against the Property or BNPLC has been asserted by a
governmental authority.) Chiron shall not use or occupy or allow the use or
occupancy of the Property in any manner which violates any Applicable Law in any
material respect or which constitutes a public or private nuisance or which
makes void, voidable or cancelable any insurance then in force with respect
thereto. To the extent that any of the following could, individually or in the
aggregate, reduce the value of the Property and leave the Property with a value
of less than forty percent (40%) of Stipulated Loss Value, Chiron shall not: (i)
initiate or permit any zoning reclassification of the Property; (ii) seek any
variance under existing zoning ordinances applicable to the Property; (iii) use
or permit the use of the Property in a manner that would result in such use
becoming a nonconforming use under applicable zoning ordinances or similar laws,
rules or regulations; (iv) execute or file any subdivision plat affecting the
Property; or (v) consent to the annexation of the Property to any municipality.
If a change in the zoning or other Applicable Laws affecting the permitted use
or development of the Property shall occur that BNPLC determines will reduce the
then-current market value of the Property, and if after such reduction the then-
current market value of the Property shall be less than forty percent (40%) of
Stipulated Loss Value in the reasonable judgment of BNPLC, then Chiron shall
before the Designated Sale Date pay BNPLC an amount equal to such excess for
application as a Qualified Payment. Chiron shall not cause or permit any
drilling or exploration for, or extraction, removal or production of, minerals
from the surface or subsurface of the Property. If Chiron receives a notice or
claim from any federal, state or other governmental authority that the Property
is not in compliance with any Applicable Law in any material respect, or that
any action may be taken against BNPLC because the Property does not comply with
any Applicable Law, Chiron shall promptly furnish a copy of such notice or claim
to BNPLC.
Notwithstanding the foregoing, Chiron may in good faith, by appropriate
proceedings, contest the validity and applicability of any Applicable Law with
respect to the Property, and pending such contest Chiron shall not be deemed in
default hereunder because of a violation of such Applicable Law, if Chiron
diligently prosecutes such
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contest to completion in a manner reasonably satisfactory to BNPLC, and if
Chiron promptly causes the Property to comply with any such Applicable Law upon
a final determination by a court of competent jurisdiction that the same is
valid and applicable to the Property; provided, that in any event such contest
shall be concluded and the violation of such Applicable Law must be corrected by
Chiron and any claims asserted against BNPLC or the Property because of such
violation must be paid by Chiron, all prior to the date that (i) any criminal
action is overtly threatened or instituted against BNPLC or any of its
directors, officers or employees because of such violation or (ii) any action is
taken or overtly threatened by any governmental authority against BNPLC or any
property owned by BNPLC (including the Property) because of such violation.
(d) DEBTS FOR CONSTRUCTION, MAINTENANCE, OPERATION OR DEVELOPMENT.
Chiron shall cause all debts and liabilities incurred in the construction,
maintenance, operation or development of the Property, including all debts and
liabilities for labor, material and equipment and all debts and charges for
utilities servicing the Property, to be promptly paid; provided, nothing in this
subparagraph will be construed to make Chiron liable for Liens Removable by
BNPLC or Excluded Taxes.
Notwithstanding the foregoing, Chiron may in good faith, by appropriate
proceedings, contest the validity, applicability or amount of any asserted
mechanic's or materialmen's lien and pending such contest Chiron shall not be
deemed in default under this subparagraph (or subparagraphs 12(b) or (c) of the
Ground Lease) because of the contested lien if (1) within thirty days after
being asked to do so by BNPLC, Chiron bonds over to BNPLC's reasonable
satisfaction any contested liens against the Property alleged to secure an
amount in excess of $5,000,000 (individually or in the aggregate), (2) Chiron
diligently prosecutes such contest to completion in a manner reasonably
satisfactory to BNPLC, and (3) Chiron promptly causes to be paid any amount
adjudged by a court of competent jurisdiction to be due, with all costs and
interest thereon, promptly after such judgment becomes final; provided, however,
that in any event each such contest shall be concluded and the lien, interest
and costs must be paid by Chiron prior to the date (i) any criminal action is
overtly threatened or instituted against BNPLC or its directors, officers or
employees because of the nonpayment thereof, (ii) any writ or order is issued
under which the Property or any other property in which BNPLC has an interest
may be seized or sold or any other action is taken or overtly threatened against
BNPLC or any property in which BNPLC has an interest because of the nonpayment
thereof, or (iii) any Designated Sale Date upon which, for any reason, Chiron or
an Affiliate of Chiron or any Applicable Purchaser shall not purchase BNPLC's
interest in the Property pursuant to the Purchase Agreement for a net price to
BNPLC (when taken together with any additional payments made by Chiron pursuant
to Paragraph 1(a)(ii) of the Purchase Agreement, in the case of a purchase by an
Applicable Purchaser) equal to Stipulated Loss Value.
(e) REPAIR, MAINTENANCE, ALTERATIONS AND ADDITIONS. Chiron shall
keep the Property in good order, operating condition and appearance, causing all
necessary repairs, renewals and replacements to be promptly made, and will not
allow any of the Property to be materially misused, abused or wasted. To the
extent that any of the following could, individually or in the aggregate, reduce
the value of the Property and leave the Property with a value of less than forty
percent (40%) of Stipulated Loss Value, Chiron shall not: (i) fail to promptly
replace any worn-out fixtures or material items of tangible Personal Property
covered by this Lease with fixtures or other tangible Personal Property
comparable to the replaced fixtures or Personal Property when new, (ii) remove
from the Property any fixtures or tangible Personal Property of significant
value covered by this Lease except such as are replaced by Chiron by articles of
equal suitability and value, free and clear of any Lien other than Permitted
Encumbrances or Liens Removable by BNPLC, or (iii) make any significant
alterations to any Improvements after they are completed. Without limiting the
foregoing, Chiron will notify BNPLC before making any alterations to the
Improvements which could materially and adversely reduce the market value of or
which change the general character of the Property or which impair in any
significant manner the useful life or utility of any Improvements.
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Nothing in this subparagraph is intended to limit Chiron's rights and
obligations under other provisions of this Lease with respect to the
construction of the initial or any subsequent Construction Project permitted by
other provisions of this Lease.
(f) BOOKS AND RECORDS CONCERNING THE PROPERTY. Chiron shall keep
books and records that are accurate and complete in all material respects for
the Property and will permit all such books and records (including all
contracts, statements, invoices, bills and claims for labor, materials and
services supplied for the construction and operation of any Improvements) to be
inspected and copied by BNPLC, any of the Participants and the duly accredited
representatives of BNPLC or any Participant at all times during reasonable
business hours.
13. ASSIGNMENT AND SUBLETTING BY CHIRON.
(a) BNPLC'S CONSENT REQUIRED. Without the prior consent of BNPLC,
Chiron shall not assign, transfer, mortgage, pledge or hypothecate this Lease or
any interest of Chiron hereunder and shall not sublet all or any part of the
Property, by operation of law or otherwise; provided, that, so long as no Event
of Default has occurred and is continuing, Chiron shall be entitled without the
consent of BNPLC to sublet all or any portion of the Property if:
(i) any sublease by Chiron is made expressly subject and
subordinate to the terms hereof;
(ii) no sublease has a term longer than the remainder of the then
effective term of this Lease;
(iii) the use permitted by such sublease is expressly limited
to uses consistent with subparagraph 3.(a) or other uses approved in
advance by BNPLC as uses that will not present any extraordinary risk of
uninsured environmental or other liability; and
(iv) no more than twenty-five percent (25%) of the space in any
completed Improvements shall be subleased without BNPLC's prior consent to
any Person that is neither (A) an Affiliate of Chiron nor (B) the operator
of a business in the subleased space that is related to the operation of
Chiron's own business.
(b) STANDARD FOR BNPLC'S CONSENT TO ASSIGNMENTS AND CERTAIN OTHER
MATTERS. Consents and approvals of BNPLC which are required by this
Paragraph 13 will not be unreasonably withheld, but Chiron acknowledges that
BNPLC's withholding of such consent or approval shall be reasonable if BNPLC
determines in good faith that (1) giving the approval may increase BNPLC's risk
of liability for any existing or future environmental problem, (2) giving the
approval is likely to substantially increase BNPLC's administrative burden of
complying with or monitoring Chiron's compliance with the requirements of this
Lease, or (3) any transaction for which Chiron has requested the consent or
approval would negate Chiron's representations in this Lease or the Ground Lease
regarding ERISA or cause this Lease, the Purchase Documents or the Ground Lease
(or any exercise of BNPLC's rights hereunder or thereunder) to constitute a
violation of any provision of ERISA.
(c) CONSENT NOT A WAIVER. No consent by BNPLC to a sale, assignment,
transfer, mortgage, pledge or hypothecation of this Lease or Chiron's interest
hereunder, and no assignment or subletting of the Property or any part thereof
in accordance with this Lease or otherwise with BNPLC's consent, shall release
Chiron from liability hereunder; and any such consent shall apply only to the
specific transaction thereby authorized and
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shall not relieve Chiron from any requirement of obtaining the prior consent of
BNPLC to any further sale, assignment, transfer, mortgage, pledge or
hypothecation of this Lease or any interest of Chiron hereunder.
14. ASSIGNMENT BY BNPLC.
(a) BNPLC'S ASSIGNMENT GENERALLY. Subject to subparagraph 14.(b)
below, BNPLC shall have the right to transfer, assign and convey the Property
and any and all of its rights under this Lease, the Purchase Documents and the
Ground Lease. In the event BNPLC sells or otherwise transfers the Property and
assigns its rights under this Lease, the Purchase Documents and the Ground
Lease, and if BNPLC's successor in interest to all such rights assumes in
writing for the benefit of Chiron, as its interests may appear, BNPLC's
liability for the obligations imposed upon BNPLC by this Lease, the Purchase
Documents and the Ground Lease on and subject to the express terms and
conditions set out herein and therein, then BNPLC shall thereby be released from
any obligations arising after such assumption under this Lease (other than any
liability for a breach of the landlord's obligation to provide Construction
Advances) or under the Purchase Documents or the Ground Lease, and Chiron agrees
to look solely to each successor in interest of BNPLC for performance of such
obligations.
(b) RESTRICTIONS ON TRANSFERS. Except by a Permitted Transfer, BNPLC
shall not assign, transfer, mortgage, pledge, encumber or hypothecate this
Lease, the Purchase Documents or the Ground Lease or any interest of BNPLC in
and to the Property during the Term without the prior consent of Chiron; and in
connection with any transfer that constitutes a Permitted Transfer only because
it is a transfer to an Affiliate of BNPLC, the price for the transfer shall not
exceed (and in any report or declaration required in connection therewith by
local or state taxing authorities BNPLC shall not report such price to be in
excess of) Stipulated Loss Value.
15. BNPLC'S RIGHT OF ACCESS.
(a) Subject to the provisions of subparagraph 7.(a) and Paragraph 26,
BNPLC and BNPLC's representatives may enter the Property, after three Business
Days advance notice to Chiron (except in the event of an emergency, when no
advance notice will be required), for the purpose of performing any work BNPLC
is authorized to undertake by the next subparagraph or for the purpose
confirming whether Chiron has complied with the requirements of this Lease at
any time BNPLC may reasonably question such compliance. So long as Chiron
remains in possession of the Property, BNPLC or BNPLC's representative will,
before making any such inspection or performing any such work on the Property,
if then requested to do so by Chiron to maintain security: (i) sign in at
Chiron's security or information desk if Chiron has such a desk on the premises,
(ii) wear a visitor's badge or other reasonable identification provided by
Chiron when BNPLC or BNPLC's representative first arrives at the Property, (iii)
permit an employee of Chiron to observe such inspection or work, and (iv) comply
with other similar reasonable nondiscriminatory security, health or safety
requirements of Chiron, as Chiron may establish from time to time in accordance
with good industry practices, provided that such other requirements do not,
individually or in the aggregate, substantially interfere with or delay
inspections or work of BNPLC authorized by this Lease.
(b) If Chiron fails to perform any act or to take any action which
hereunder Chiron is required to perform or take, or to pay any money which
hereunder Chiron is required to pay, and if such failure or action constitutes
an Event of Default or causes BNPLC or any director, officer, employee or
Affiliate of BNPLC to be overtly threatened with criminal prosecution or renders
BNPLC's interest in the Property or any part thereof at risk of forfeiture by
forced sale or otherwise, then in addition to any other remedies specified
herein or otherwise available, BNPLC may, perform or cause to be performed such
act or take such action or pay such money. Any expenses so incurred by BNPLC,
and any money so paid by BNPLC, shall be a demand obligation owing by
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Chiron to BNPLC. Further, BNPLC, upon making such payment, shall be subrogated
to all of the rights of the person, corporation or body politic receiving such
payment. But nothing herein shall imply any duty upon the part of BNPLC to do
any work which under any provision of this Lease Chiron may be required to
perform, and the performance thereof by BNPLC shall not constitute a waiver of
Chiron's default. BNPLC may during the progress of any such work permitted by
BNPLC hereunder on or in the Property keep and store upon the Property all
necessary materials, tools, and equipment. BNPLC shall not in any event be
liable for inconvenience, annoyance, disturbance, loss of business, or other
damage to Chiron or the subtenants of Chiron by reason of making such repairs or
the performance of any such work on or in the Property, or on account of
bringing materials, supplies and equipment into or through the Property during
the course of such work (except for liability in connection with death or injury
or damage to the property of third parties caused by [and attributed by any
applicable principles of comparative fault to] the Established Misconduct of
BNPLC), and the obligations of Chiron under this Lease shall not thereby be
excused in any manner.
16. OTHER REPRESENTATIONS, WARRANTIES AND COVENANTS OF CHIRON. Chiron
represents, warrants and covenants as follows:
(a) FINANCIAL STATEMENTS; REQUIRED NOTICES; CERTIFICATES AS TO
DEFAULT. Chiron shall deliver to BNPLC and to each Participant of which Chiron
has been notified:
(i) as soon as available and in any event within 45 days after the
end of each of the first three fiscal quarters of each fiscal year of
Chiron, the unaudited consolidated balance sheet of Chiron and its
Subsidiaries as of the end of such quarter and consolidated unaudited
statements of income, stockholders' equity and cash flow of Chiron and its
Subsidiaries for the period commencing at the end of the previous fiscal
year and ending with the end of such quarter, setting forth in comparative
form figures for the corresponding period in the preceding fiscal year, in
the case of such statements of income, stockholders' equity and cash flow,
and figures for the preceding fiscal year in the case of such balance
sheet, all in reasonable detail, in accordance with GAAP, and certified in
a manner acceptable to BNPLC by a Responsible Financial Officer of Chiron
(subject to normal year-end adjustments); provided, that so long as Chiron
is a company subject to the periodic reporting requirements of Section 12
of the Securities Exchange Act of 1934, as amended, Chiron shall be deemed
to have satisfied its obligations under this clause (i) if Chiron delivers
to BNPLC the same quarterly reports, certified by a Responsible Financial
Officer of Chiron (subject to year-end adjustments), that Chiron delivers
to its shareholders;
(ii) as soon as available and in any event within ninety days after
the end of each fiscal year of Chiron, the consolidated balance sheet of
Chiron and its Subsidiaries as of the end of such fiscal year and
consolidated statements of income, stockholders' equity and cash flow of
Chiron and its Subsidiaries for the period commencing at the end of the
previous fiscal year and ending with the end of such fiscal year, setting
forth in comparative form figures for the preceding fiscal year, all in
reasonable detail, in accordance with GAAP, and certified in a manner
acceptable to BNPLC by independent public accountants of recognized
national standing reasonably acceptable to BNPLC; provided, that so long as
Chiron is a company subject to the periodic reporting requirements of
Section 12 of the Securities Exchange Act of 1934, as amended, Chiron shall
be deemed to have satisfied its obligations under this clause (ii) if
Chiron delivers to BNPLC the same annual report and report and opinion of
accountants that Chiron delivers to its shareholders;
(iii) together with the financial statements furnished in
accordance with subparagraph 16.(a)(i) and 16.(a)(ii), a certificate of a
Responsible Financial Officer of Chiron in the form of certificate attached
hereto as EXHIBIT G (a) representing and warranting that no Event of
Default or material Default by Chiron has
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occurred and is continuing (or, if an Event of Default or material Default
by Chiron has occurred, stating the nature thereof and the action which
Chiron proposes to take with respect thereto), and (b) stating that the
representations and warranties by Chiron contained herein are true and
correct on and as of the date of such certificate as though made on and as
of such date;
(iv) as soon as possible and in any event within five days after the
occurrence of each Event of Default or material Default known to a
Responsible Financial Officer of Chiron, a statement of Chiron setting
forth details of such Event of Default or material Default and the action
which Chiron has taken and proposes to take with respect thereto;
(v) promptly after the sending or filing thereof, copies of all such
financial statements, proxy statements, notices and reports which Chiron or
any Subsidiary sends to its public stockholders, and copies of all reports
and registration statements (without exhibits) which Chiron or any
Subsidiary files with the Securities and Exchange Commission (or any
governmental body or agency succeeding to the functions of the Securities
and Exchange Commission) or any national securities exchange;
(vi) as soon as practicable and in any event within thirty days after
a Responsible Financial Officer of Chiron knows or has reason to know that
any ERISA Termination Event with respect to any Plan has occurred, a
statement of a Responsible Financial Officer of Chiron describing such
ERISA Termination Event and the action, if any, which Chiron proposes to
take with respect thereto;
(vii) upon request by BNPLC, a statement in writing certifying
that this Lease is unmodified and in full effect (or, if there have been
modifications, that this Lease is in full effect as modified, and setting
forth such modifications) and the dates to which the Base Rent and
Commitment Fees have been paid and either stating that no default exists
hereunder or specifying each such default; it being intended that any such
statement by Chiron may be relied upon by any prospective purchaser or
mortgagee of the Property or any prospective Participant; and
(viii) such other information respecting the condition or
operations, financial or otherwise, of Chiron, of its Subsidiaries or of
the Property as BNPLC or BNPLC's Parent or any Participant through BNPLC
may from time to time reasonably request.
BNPLC is hereby authorized to deliver a copy of any information or certificate
delivered to it pursuant to this subparagraph 16.(a) to any Participant and to
any regulatory body having jurisdiction over BNPLC, BNPLC's Parent or any
Participant that requires or requests it.
(b) PAYMENT OF TAXES GENERALLY. Chiron shall comply and cause its
Subsidiaries to comply with all applicable tax laws and pay before the same
become delinquent all taxes imposed upon any of them or upon any of their
properties where the failure to so comply or so pay would have a material
adverse effect on the financial condition or operations of Chiron and its
Subsidiaries taken as a whole.
Notwithstanding the foregoing, Chiron or any applicable Subsidiary may in
good faith by appropriate proceedings contest the validity, applicability or
amount of any such taxes and pending such contest Chiron shall not be deemed in
default under this subparagraph if (1) Chiron provides security to BNPLC's
satisfaction for the payment of any lien asserted against the Property and
alleged to secure the contested tax, (2) Chiron or the Subsidiary diligently
prosecutes such contest to completion in an appropriate manner, and (3) Chiron
or the Subsidiary promptly causes to be paid any tax adjudged by a court of
competent jurisdiction to be due, with all
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costs, penalties, and interest thereon, promptly after such judgment becomes
final; provided, however, that in any event such contest shall be concluded and
the tax, penalties, interest and costs must be paid by Chiron or its
Subsidiaries prior to the date any writ or order is issued under which any
property of Chiron or its Subsidiaries that is material to the business of
Chiron and its Subsidiaries taken as a whole may be seized or sold because of
the nonpayment thereof.
(c) NEGATIVE COVENANTS. Chiron shall not, without the prior consent
of BNPLC in each case, do any of the following:
(i) MERGER AND CONSOLIDATION. Merge into or consolidate with or into
a corporation, or permit any Subsidiary to do so, except that subject to
the other provisions of this Lease:
a) any Subsidiary may merge or consolidate with any other
Subsidiary, and any Subsidiary may merge into Chiron; and
b) Chiron or any of its Subsidiaries may merge or consolidate with
any other corporation, provided that:
(1) either (a) Chiron shall continue after or as the surviving
corporation or (b) the successor corporation to Chiron shall be a
solvent corporation organized under the laws of any State of the
United States of America; such corporation shall expressly assume
in writing all of the obligations of Chiron under this Lease, the
Purchase Documents and the Ground Lease; and such assumption
shall not violate any other term, condition or provision of this
Lease or the Purchase Documents; and
(2) after giving effect to such merger or consolidation, the
financial condition of Chiron or its successor corporation shall
be equal to or better than Chiron's financial condition
immediately prior to the merger or consolidation and no Default
or Event of Default shall have occurred and be continuing
hereunder.
(ii) CHANGE IN NATURE OF BUSINESS. Make, or permit any Subsidiary to
do anything that would result in, a material change in the nature of the
business Chiron and its Subsidiaries, taken as whole, as carried on at the
Effective Date.
(iii) SALES, ETC. OF ASSETS. Sell, lease, transfer or otherwise
dispose of, or permit any Subsidiary to sell, lease, transfer or otherwise
dispose of, substantially all of its assets (in a single transaction or
series of related transactions), except that, subject to the other
provisions of this Lease:
a) any Subsidiary may sell, lease, transfer or otherwise
dispose of any of its assets to Chiron or to another Subsidiary;
b) any Subsidiary may sell or otherwise dispose of all or
substantially all of its assets if after giving effect to the sale or
other disposition, the financial condition of Chiron shall be equal to
or better than Chiron's financial condition immediately prior to the
sale or other disposition and no Default or Event of Default shall
have occurred and be continuing hereunder; and
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c) Chiron may sell or dispose of its interest in the Property
with all or substantially all of its assets to any other corporation,
provided that:
(1) the acquiring corporation shall be a solvent corporation
organized under the laws of any State of the United States of
America; such acquiring corporation shall expressly assume in
writing all of the obligations of Chiron under this Lease, the
Purchase Documents and the Ground Lease; and such assumption
shall not violate any other term, condition or provision of this
Lease, the Purchase Documents or the Ground Lease; and
(2) after giving effect to such sale or disposition the
financial condition of the acquiring corporation shall be equal
to or better than Chiron's financial condition immediately prior
to the sale or disposition, and no Default or Event of Default
shall have occurred and be continuing;
PROVIDED, HOWEVER, that no such sale shall release Chiron from any of
its obligations and liabilities under this Lease, the Purchase
Documents or the Ground Lease unless such sale is followed by the
complete liquidation of Chiron and substantially all the assets of
Chiron are distributed in such liquidation as soon as reasonably
possible (but not more than fifteen days) following such sale.
(iv) MULTIEMPLOYER ERISA PLANS. Incur or permit any Subsidiary
to incur any obligation to contribute to any "multiemployer plan" as
defined in Section 4001 of ERISA.
(v) PROHIBITED ERISA TRANSACTION. Enter into any transaction
which would cause this Lease, the Purchase Documents or any other document
executed in connection herewith (or any exercise of BNPLC's rights
hereunder or thereunder) to constitute a non-exempt prohibited transaction
under ERISA.
Chiron or any successor corporation, after a merger described in clause (i) b)
above; Chiron, after any sale by a Subsidiary described in clause (ii) b) above;
and any acquiring corporation, after a sale described in clause (ii) c) above,
shall be considered for purposes of this subparagraph 16.(c) to have a financial
condition equal to or better than Chiron's financial condition immediately
before the merger or sale if, but only if, (1) the senior, unsecured debt of
Chiron or such successor or acquiring corporation (as the case may be) is rated
by Standard and Poor's Corporation or by Moody's Investor Service, Inc., and (2)
the ratings given such debt during the ninety days after the merger or sale is
no lower than the corresponding ratings of Chiron's debt immediately prior to
the merger or sale.
(d) OWNERSHIP OF THE LESSOR UNDER THE GROUND LEASE. So long as
Chiron shall have any rights under this Lease or the Purchase Agreement, Chiron
shall not permit any Person to acquire rights of the landlord under the Ground
Lease other than Chiron itself or a corporation that is a Subsidiary of Chiron.
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(e) FURTHER ASSURANCES. Chiron shall, on request of BNPLC, (i)
promptly correct any error or omission which may be discovered in the contents
of this Lease or in any other instrument executed in connection herewith or in
the execution or acknowledgment thereof; (ii) execute, acknowledge, deliver and
record or file such further instruments and do such further acts as may be
necessary, desirable or proper to carry out more effectively the purposes of
this Lease and to subject to this Lease any property intended by the terms
hereof to be covered hereby, including any renewals, additions, substitutions,
replacements or appurtenances to the Property; (iii) execute, acknowledge,
deliver, procure and record or file any document or instrument deemed advisable
by BNPLC to protect its rights in and to the Property against the rights or
interests of third persons; and (iv) provide such certificates, documents,
reports, information, affidavits and other instruments and do such further acts
as may be necessary, desirable or proper in the reasonable determination of
BNPLC to enable BNPLC, BNPLC's Parent and the Participants to comply with the
requirements or requests of any agency or authority having jurisdiction over
them.
(f) NO DISCRIMINATION. As required by one of the Development
Contracts, Chiron agrees for itself and its successors and permitted assigns
that:
There shall be no discrimination against or segregation of any person or
group of persons on account of race, color, creed, religion, sex, marital
status, national origin or ancestry, in the leasing, subleasing,
transferring, use, occupancy, tenure or enjoyment of the premises herein
leased, nor shall Chiron itself, or any person claiming under or through
Chiron, establish or permit any such practice or practices of
discrimination or segregation with reference to the selection, location,
number, use or occupancy of tenants, lessees, subtenants, sublessees or
vendees in the premises herein leased.
17. EVENTS OF DEFAULT.
(a) DEFINITION OF EVENTS OF DEFAULT. Each of the following
events shall be deemed to be an "EVENT OF DEFAULT" by Chiron under this Lease:
(i) Chiron shall fail to pay when first due any Base Rent,
Commitment Fees or Administrative Fees and such failure shall continue for
three Business Days after Chiron is notified thereof.
(ii) Chiron shall fail to pay when first due any Rent other than
Base Rent, Commitment Fees or Administrative Fees, or Chiron shall fail to
pay when first due any amount required by the Ground Lease, and in either
case such failure shall continue for thirty Business Days after Chiron is
notified thereof.
(iii) Chiron shall fail to comply with any term, provision
or covenant of this Lease or the Ground Lease, other than as described
in the other clauses of this subparagraph 17.(a), and shall not cure
such failure prior to the earlier of (A) thirty days after notice thereof
is sent to Chiron, or (B) the date any writ or order is issued for the levy
or sale of any property owned by BNPLC (including the Property) because of
such failure or any criminal action is overtly threatened or instituted
against BNPLC or any of its directors, officers or employees because of
such failure; provided, however, that so long as no such writ or order is
issued and no such criminal action is overtly threatened or instituted, the
period within which such failure may be cured by Chiron shall be extended
for a further period (not to exceed an additional one
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hundred twenty days) as shall be necessary for the curing thereof with
diligence, if (but only if) (x) such failure is susceptible of cure but
cannot with reasonable diligence be cured within such thirty day period,
(y) Chiron shall promptly have commenced to cure such failure and shall
thereafter continuously prosecute the curing thereof with reasonable
diligence and (z) the extension of the period for cure will not, in the
case of such a failure that occurs or commences more than thirty-five days
prior to any Demand Deadline, cause the period for cure to extend beyond
five days prior to the Demand Deadline.
(iv) Chiron shall fail to comply with any term, provision or
condition of the Purchase Documents and, if the Purchase Documents
expressly provide a time within which Chiron may cure such failure, Chiron
shall not cure the failure within such time.
(v) Chiron shall abandon the Property.
(vi) Chiron or any of its Subsidiaries shall fail to pay any
principal of or premium or interest on any Debt which is outstanding in a
principal amount of at least $10,000,000 in the aggregate of Chiron or the
applicable Subsidiary (as the case may be), when the same becomes due and
payable (whether by scheduled maturity, required prepayment, acceleration,
demand or otherwise), and such failure shall continue after the applicable
grace period, if any, specified in the agreement or instrument relating to
such Debt; or any other event shall occur or condition shall exist under
any agreement or instrument relating to any such Debt and shall continue
after the applicable grace period, if any, specified in such agreement or
instrument, if the effect of such event or condition is to accelerate, or
to permit the acceleration by the creditor of the maturity of such Debt; or
any such Debt shall be declared by the creditor to be due and payable, or
required to be prepaid (other than by a regularly scheduled required
prepayment), redeemed, purchased or defeased, or an offer to prepay,
redeem, purchase or defease such Debt shall be required to be made, in each
case prior to the stated maturity thereof.
(vii) Chiron or any of Chiron's Subsidiaries shall generally
not pay its debts as such debts become due, or shall admit in writing its
inability to pay its debts generally, or shall make a general assignment
for the benefit of creditors; or any proceeding shall be instituted by or
against Chiron or any of Chiron's Subsidiaries seeking to adjudicate it a
bankrupt or insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of it or its
debts under any law relating to bankruptcy, insolvency or reorganization or
relief of debtors, or seeking the entry of an order for relief or the
appointment of a receiver, trustee, custodian or other similar official for
it or for any substantial part of its property and, in the case of any such
proceeding instituted against it (but not instituted by it), either such
proceeding shall remain undismissed or unstayed for a period of sixty
consecutive days, or any of the actions sought in such proceeding
(including the entry of an order for relief against, or the appointment of
a receiver, trustee, custodian or other similar official for, it or for any
substantial part of its property) shall occur; or Chiron or any of Chiron's
Subsidiaries shall take any corporate action to authorize any of the
actions set forth above in this clause 17.(a)(vii).
(viii) At any time before a Demand Deadline under the
Guaranty: Guarantor shall generally not pay its debts as such debts become
due, or shall admit in writing its inability to pay its debts generally, or
shall make a general assignment for the benefit of creditors; or any
proceeding shall be instituted by or against Guarantor seeking to
adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief, or composition
of it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an order for
relief or the appointment of a receiver, trustee, custodian or other
similar official for it or for any
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substantial part of its property and, in the case of any such proceeding
instituted against it (but not instituted by it), either such proceeding shall
remain undismissed or unstayed for a period of sixty consecutive days, or any of
the actions sought in such proceeding (including the entry of an order for
relief against, or the appointment of a receiver, trustee, custodian or other
similar official for, it or for any substantial part of its property) shall
occur; or Guarantor shall take any corporate action to authorize any of the
actions set forth above in this clause 17.(a)(viii).
(ix) Any order, judgment or decree is entered in any proceedings
against Chiron or any of Chiron's Subsidiaries decreeing its dissolution
and such order, judgment or decree remains unstayed and in effect for more
than sixty days.
(x) At any time before a Demand Deadline under the Guaranty, any
order, judgment or decree is entered in any proceedings against Guarantor
decreeing its dissolution and such order, judgment or decree remains
unstayed and in effect for more than sixty days.
(xi) Any order, judgment or decree is entered in any proceedings
against Chiron or any of Chiron's Subsidiaries decreeing a divestiture of
any of assets that represent a substantial part, or the divestiture of the
stock of any of Chiron's Subsidiaries whose assets represent a substantial
part, of the total assets of Chiron and its Subsidiaries (determined on a
consolidated basis in accordance with GAAP) or which requires the
divestiture of assets, or stock of any of Chiron's Subsidiaries, which
shall have contributed a substantial part of the net income of Chiron and
its Subsidiaries (determined on a consolidated basis in accordance with
GAAP) for any of the three fiscal years then most recently ended, and such
order, judgment or decree remains unstayed and in effect for more than
sixty days.
(xii) At any time before a Demand Deadline under the Guaranty, any
order, judgment or decree is entered in any proceedings against Guarantor
decreeing a divestiture of any of its assets that represent a substantial
part, or the divestiture of the stock of any of its Subsidiaries whose
assets represent a substantial part, of the total assets of Guarantor and
its Subsidiaries (determined on a consolidated basis in accordance with
GAAP) or which requires the divestiture of assets, or stock of any of
Guarantor's Subsidiaries, which shall have contributed a substantial part
of the net income of Guarantor and its Subsidiaries (determined on a
consolidated basis in accordance with GAAP) for any of the three fiscal
years then most recently ended, and such order, judgment or decree remains
unstayed and in effect for more than sixty days.
(xiii) A final judgment or order for the payment of money in
an amount (not covered by insurance) which exceeds $10,000,000 shall be
rendered against Chiron or any of Chiron's Subsidiaries and either (i)
enforcement proceedings shall have been commenced by any creditor upon such
judgment, or (ii) within thirty days after the entry thereof, such judgment
or order is not discharged or execution thereof stayed pending appeal, or
within thirty days after the expiration of any such stay, such judgment is
not discharged.
(xiv) Any ERISA Termination Event that BNPLC determines in good
faith would constitute grounds for a termination of any Plan or for the
appointment by the appropriate United States district court of a trustee to
administer any Plan shall have occurred and be continuing thirty days after
notice to such effect shall have been given to Chiron by BNPLC, or any Plan
shall be terminated, or a trustee shall be appointed by an appropriate
United States district court to administer any Plan, or the Pension Benefit
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Guaranty Corporation shall institute proceedings to terminate any Plan or
to appoint a trustee to administer any Plan.
(xv) Chiron shall enter into any transaction which would
cause this Lease, the Purchase Documents or any other document executed in
connection herewith (or any exercise of BNPLC's rights hereunder or
thereunder) to constitute a non-exempt prohibited transaction under ERISA.
(xvi) Guarantor shall breach or repudiate its guarantee of
the payment obligations of Chiron under this Lease, the Purchase Agreement
or the Ground Lease.
(xvii) Any merger or consolidation or sale of assets shall
occur that is prohibited by subparagraph 16.(c) and that is not approved in
advance by BNPLC.
(b) ALTERNATIVE CURE OF CERTAIN DEFAULTS. Notwithstanding
the foregoing, any Default that could become an Event of Default under
subparagraph 17.(a)(iii) may be cured during the Term by Chiron's delivery to
BNPLC no later than fifteen days before the expiration of the period for cure
specified in that subparagraph of a notice irrevocably exercising Chiron's
option under the Purchase Agreement to purchase BNPLC's interest in the Property
and designating as the Designated Sale Date any Business Day which is at least
five days before the expiration of the period for cure specified in
subparagraph 17.(a)(iii); provided, however, Chiron must, as a condition to the
effectiveness of its cure, on the date so designated as the Designated Sale Date
satisfy all obligations of Chiron under the Purchase Agreement in accordance
with its terms and tender to BNPLC all Rent and all other amounts then due or
accrued and unpaid hereunder (including reimbursement for any Breakage Costs or
other Losses incurred by BNPLC in connection with the applicable Default
hereunder, regardless of whether BNPLC shall have been reimbursed for such costs
in whole or in part by any Participants) and Chiron must also on the Designated
Sale Date furnish written confirmation that all indemnities set forth herein and
in the Ground Lease (including the general indemnity set forth in
subparagraph 5.(c)) shall survive the payment of such amounts by Chiron to BNPLC
and the conveyance of BNPLC's interest in the Property to Chiron.
(c) REMEDIES. At any time after the expiration of one hundred twenty
days after an Event of Default, BNPLC shall be entitled at BNPLC's option and
without limiting BNPLC in the exercise of any other right or remedy BNPLC may
have, and without any further demand or notice except as expressly described in
this subparagraph 17.(c), to exercise the following remedies:
(i) By notice to Chiron, BNPLC may terminate Chiron's right to
possession of the Property. A notice given in connection with unlawful
detainer proceedings specifying a time within which to cure a default shall
terminate Chiron's right to possession if Chiron fails to cure the default
within the time specified in the notice.
(ii) Upon termination of Chiron's right to possession and without
further demand or notice, BNPLC may re-enter the Property and take
possession of all improvements, additions, alterations, equipment and
fixtures thereon and remove any persons in possession thereof. Any
property in the Property may be removed and stored in a warehouse or
elsewhere at the expense and risk of and for the account of Chiron.
(iii) Upon termination of Chiron's right to possession, this
Lease shall terminate and BNPLC may recover from Chiron:
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a) The worth at the time of award of the unpaid Rent which
had been earned at the time of termination;
b) The worth at the time of award of the amount by which
the unpaid Rent which would have been earned after termination until
the time of award exceeds the amount of such rental loss that Chiron
proves could have been reasonably avoided;
c) The worth at the time of award of the amount by which
the unpaid Rent for the balance of the scheduled Term after the time
of award exceeds the amount of such rental loss that Chiron proves
could be reasonably avoided; and
d) Any other amount necessary to compensate BNPLC for all
the detriment proximately caused by Chiron's failure to perform
Chiron's obligations under this Lease or which in the ordinary course
of things would be likely to result therefrom, including the costs and
expenses (including Attorneys' Fees, advertising costs and brokers'
commissions) of recovering possession of the Property, removing
persons or property therefrom, placing the Property in good order,
condition, and repair, preparing and altering the Property for
reletting, all other costs and expenses of reletting, and any loss
incurred by BNPLC as a result of Chiron's failure to perform Chiron's
obligations under the Purchase Documents.
The "worth at the time of award" of the amounts referred to in
subparagraph 17.(c)(iii)a) and subparagraph 17.(c)(iii)b) shall be
computed by allowing interest at ten percent (10%) per annum or such
other rate as may be the maximum interest rate then permitted to be
charged under California law at the time of computation. The "worth
at the time of award" of the amount referred to in
subparagraph 17.(c)(iii)c) shall be computed by discounting such
amount at the discount rate of the Federal Reserve Bank of San
Francisco at the time of award plus one percent (1%).
e) Such other amounts in addition to or in lieu of the
foregoing as may be permitted from time to time by applicable
California law.
BNPLC shall have the remedy described in California Civil Code Section
1951.4 (lessor may continue lease in force even after lessee's breach and
abandonment and recover rent as it becomes due, if lessee has right to sublet or
assign, subject only to reasonable limitations). Accordingly, even though
Chiron has breached this Lease and abandoned the Property, this Lease shall
continue in effect for so long as BNPLC does not terminate Chiron's right to
possession, and BNPLC may enforce all of BNPLC's rights and remedies under this
Lease, including the right to recover the Rent as it becomes due under this
Lease. Chiron's right to possession shall not be deemed to have been terminated
by BNPLC except pursuant to subparagraph 17.(c)(i) hereof. The following shall
not constitute a termination of Chiron's right to possession:
a) Acts of maintenance or preservation or efforts to relet
the Property;
b) The appointment of a receiver upon the initiative of
BNPLC to protect BNPLC's interest under this Lease; or
c) Reasonable withholding of consent to an assignment or
subletting, or terminating a subletting or assignment by Chiron.
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(d) COLLECTIONS UNDER THE PURCHASE AGREEMENT. For the limited
purpose of computing the amounts for which Chiron may become liable as provided
in subparagraphs 17.(c)(iii)a), 17.(c)(iii)b) and 17.(c)(iii)c), the Base Rent
component of the "Rent" described in those subparagraphs will be determined as
if Stipulated Loss Value had been reduced by any payments (net of costs of
collection) actually received by BNPLC, before BNPLC is granted an award
described in subparagraph 17.(c)(iii), from Chiron or an Affiliate of Chiron
pursuant to Paragraph 1(a)(i) of the Purchase Agreement or as a Supplemental
Payment (as defined in the Purchase Agreement) from Chiron pursuant to
Paragraph 1(a)(ii) of the Purchase Agreement. Further, in no event shall
amounts for which Chiron may become liable as provided in
subparagraphs 17.(c)(iii)b) and 17.(c)(iii)c) that are attributable to unpaid
Base Rent (or other unpaid Income Payments, as defined in subparagraph 5.(d))
exceed the Break Even Price computed at the time BNPLC is granted an award
described in subparagraph 17.(c)(iii).
(e) ENFORCEABILITY. This Paragraph 17 shall be enforceable to
the maximum extent not prohibited by Applicable Law, and the unenforceability of
any provision in this Paragraph shall not render any other provision
unenforceable.
(f) REMEDIES CUMULATIVE. No right or remedy herein conferred
upon or reserved to BNPLC is intended to be exclusive of any other right or
remedy, and each and every right and remedy shall be cumulative and in addition
to any other right or remedy given hereunder or now or hereafter existing under
Applicable Law or in equity. In addition to other remedies provided in this
Lease, BNPLC shall be entitled, to the extent permitted by Applicable Law or in
equity, to injunctive relief in case of the violation, or attempted or
threatened violation, of any of the covenants, agreements, conditions or
provisions of this Lease, or to a decree compelling performance of any of the
other covenants, agreements, conditions or provisions of this Lease to be
performed by Chiron, or to any other remedy allowed to BNPLC at law or in
equity. Nothing contained in this Lease shall limit or prejudice the right of
BNPLC to prove for and obtain in proceedings for bankruptcy or insolvency of
Chiron by reason of the termination of this Lease, an amount equal to the
maximum allowed by any statute or rule of law in effect at the time when, and
governing the proceedings in which, the damages are to be proved, whether or not
the amount be greater, equal to, or less than the amount of the loss or damages
referred to above. Without limiting the generality of the foregoing, nothing
contained herein shall modify, limit or impair any of the rights and remedies of
BNPLC under the Purchase Documents or the Ground Lease.
18. DEFAULT BY BNPLC. If BNPLC should default in the performance of
any of its obligations under this Lease, BNPLC shall have the time reasonably
required, but in no event less than thirty days, to cure such default after
receipt of notice from Chiron specifying such default and specifying what action
Chiron believes is necessary to cure the default. If Chiron prevails in any
litigation brought against BNPLC because of BNPLC's failure to cure a default
within the time required by the preceding sentence, then Chiron shall be
entitled to an award against BNPLC for the monetary damages proximately caused
to Chiron by such default.
19. QUIET ENJOYMENT. Provided Chiron pays the Base Rent and all
Additional Rent payable hereunder as and when due and payable and keeps and
fulfills all of the terms, covenants, agreements and conditions to be performed
by Chiron hereunder, BNPLC shall not during the Term disturb Chiron's peaceable
and quiet enjoyment of the Property; however, such enjoyment shall be subject to
the terms, provisions, covenants, agreements and conditions of this Lease, to
the Ground Lease, to Permitted Encumbrances, to Development Contracts and to any
other claims not constituting Liens Removable by BNPLC. If any Lien Removable
by BNPLC is claimed against the Property, including any judgment lien resulting
from a judgment rendered against BNPLC, BNPLC will remove the Lien Removable by
BNPLC. However, BNPLC shall not be responsible for any Lien that is expressly
excluded from the definition of Liens Removable by BNPLC in the attached LIST OF
DEFINED TERMS. Any breach by BNPLC of this Paragraph shall render BNPLC liable
to Chiron for any monetary damages proximately caused thereby, but
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as more specifically provided in Paragraph 2 above, no such breach shall entitle
Chiron to terminate this Lease or excuse Chiron from its obligation to pay Base
Rent and other amounts hereunder.
20. SURRENDER UPON TERMINATION. Unless Chiron or an Applicable
Purchaser purchases BNPLC's entire interest in the Property pursuant to the
terms of the Purchase Agreement, Chiron shall, upon the termination of Chiron's
right to occupancy, surrender to BNPLC the Property, including any buildings,
alterations, improvements, replacements or additions constructed by Chiron, with
all fixtures and furnishings included in the Property, but not including movable
furniture and movable personal property not covered by this Lease, free of all
Hazardous Substances (including Permitted Hazardous Substances) and tenancies
and, to the extent required by BNPLC, with all Improvements in substantially the
same condition as of the date the same were initially completed, excepting only
(i) ordinary wear and tear that occurs between the maintenance, repairs and
replacements required by other provisions of this Lease, and (ii) alterations
and additions which are expressly permitted by the terms of this Lease and which
have been completed by Chiron in a good and workmanlike manner in accordance
with all Applicable Laws. Any movable furniture or movable personal property
belonging to Chiron or any party claiming under Chiron, if not removed at the
time of such termination and if BNPLC shall so elect, shall be deemed abandoned
and become the property of BNPLC without any payment or offset therefor. If
BNPLC shall not so elect, BNPLC may remove such property from the Property and
store it at Chiron's risk and expense. Chiron shall bear the expense of
repairing any damage to the Property caused by such removal by BNPLC or Chiron.
21. HOLDING OVER BY CHIRON. Should Chiron not purchase BNPLC's
right, title and interest in the Property as provided in the Purchase Agreement,
but nonetheless continue to hold the Property after the termination of this
Lease without BNPLC's consent, whether such termination occurs by lapse of time
or otherwise, such holding over shall constitute and be construed as a tenancy
from day to day only, at a daily Base Rent equal to: (i) Stipulated Loss Value
on the day in question, times (ii) (A) the Prime Rate in effect for such day so
long as the holdover period does not extend beyond ninety days and (B) for each
such day beginning with the ninety-first day after the holdover commences, two
percent (2%) above the Prime Rate; divided by (iii) three hundred and sixty;
subject, however, to all of the terms, provisions, covenants and agreements on
the part of Chiron hereunder. No payments of money by Chiron to BNPLC after the
termination of this Lease shall reinstate, continue or extend the Term of this
Lease and no extension of this Lease after the termination thereof shall be
valid unless and until the same shall be reduced to writing and signed by both
BNPLC and Chiron.
22. PURCHASE DOCUMENTS AND GROUND LEASE. Chiron acknowledges and
agrees that nothing contained in this Lease shall limit, modify or otherwise
affect any of Chiron's obligations under the Purchase Documents or Ground Lease,
which obligations are intended to be separate, independent and in addition to,
and not in lieu of, the obligations set forth herein. In the event of any
inconsistency between the terms and provisions of the Purchase Documents and the
terms and provisions of this Lease, the terms and provisions of the Purchase
Documents shall control. In the event of any inconsistency between the terms
and provisions of the Ground Lease and the terms and provisions of this Lease,
the terms and provisions of this Lease shall control; provided, nothing in this
Lease shall be construed to limit or impair the indemnities provided by Chiron
in the Ground Lease, including the indemnity therein provided against
Environmental Losses.
23. WAIVER OF JURY TRIAL. BNPLC AND CHIRON EACH HEREBY WAIVES ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS LEASE OR ANY OTHER DOCUMENT OR DEALINGS BETWEEN THEM
RELATING TO THIS LEASE OR THE PROPERTY. The scope of this waiver is intended to
be all-encompassing of any and all disputes that may be filed in any court and
that relate to the subject matter of this transaction, including contract
claims, tort claims, breach of duty claims, and all other common law and
statutory claims. Chiron and BNPLC each
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acknowledge that this waiver is a material inducement to enter into a business
relationship, that each has already relied on the waiver in entering into this
Lease and the other documents referred to herein, and that each will continue to
rely on the waiver in their related future dealings. Chiron and BNPLC each
further warrants and represents that it has reviewed this waiver with its legal
counsel, and that it knowingly and voluntarily waives its jury trial rights
following consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING
THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL
APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO
THIS LEASE OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS LEASE OR THE
PROPERTY. In the event of litigation, this Lease may be filed as a written
consent to a trial by the court.
24. MISCELLANEOUS.
(a) NOTICES. Each provision of this Lease, or of any Applicable
Laws with reference to the sending, mailing or delivery of any notice or demand
hereunder or with reference to the making of any payment required hereunder,
shall be deemed to be complied with when and if the following steps are taken:
(i) All Rent required to be paid by Chiron to BNPLC hereunder
shall be paid to BNPLC in immediately available funds by wire transfer to:
Federal Reserve Bank of San Francisco
ACCOUNT: Banque Nationale de Paris
ABA #: 121027234
REFERENCE: Chiron-Emeryville Facility.
or at such other place and in such other manner as BNPLC may designate in a
noticeto Chiron. Time is of the essence as to all payments and other
obligations of Chiron under this Lease.
(ii) All advances paid to Chiron by BNPLC hereunder or in
connection herewith shall be paid to Chiron in immediately available funds
by wire transfer to:
Bank of America, NTSA
San Francisco, California
ACCOUNT NAME: Chiron Corp
ACCOUNT NUMBER: 14725-00611
ABA #: 121000358
REFERENCE: Chiron-Emeryville Facility.
or at such other place and in such other manner as Chiron may designate in
a notice signed by Chiron's Treasurer or Chief Financial Officer to BNPLC.
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(iii) All notices, demands, approvals, consents and other
communications to be made hereunder to or by the parties hereto must, to be
effective for purpose of this Lease, be in writing. Notices, demands and
other communications required or permitted hereunder are to be sent to the
addresses set forth below (or in the case of communications to
Participants, at the addresses set forth in SCHEDULE 1) and shall be given
by any of the following means: (A) personal service; (B) electronic
communication, whether by telex, telegram or telecopying (if confirmed in
writing sent by United States first class mail, return receipt requested);
or (C) registered or certified first class mail, return receipt requested.
Such addresses may be changed by notice to the other parties given in the
same manner as provided above. Any notice or other communication sent
pursuant to clause (A) or (C) hereof shall be deemed received (whether or
not actually received) upon first attempted delivery at the proper notice
address on any Business Day between 9:00 A.M. and 5:00 P.M., and any notice
or other communication sent pursuant to clause (B) hereof shall be deemed
received upon dispatch by electronic means.
ADDRESS OF BNPLC:
BNP Leasing Corporation
717 North Harwood Street
Suite 2630
Dallas, Texas 75201
Attention: Lloyd G. Cox
Telecopy: (214) 969-0060
WITH A COPY TO:
Banque Nationale de Paris, San Francisco
180 Montgomery Street
San Francisco, California 94104
Attention: Katherine Wolfe
Telecopy: (415) 296-8954
AND WITH A COPY TO:
Clint Shouse
Thompson & Knight, P.C.
1700 Pacific Avenue
Suite 3300
Dallas, Texas 75201
Telecopy: (214) 969-1550
ADDRESS OF CHIRON:
Chiron Corporation
Attn: Corporate Secretary
4560 Horton Street
Emeryville, CA 94608-2916
Telecopy: (510) 654-5360
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WITH A COPY TO:
Chiron Corporation
Attn: Treasurer
4560 Horton Street
Emeryville, CA 94608-2916
Telecopy: (510) 601-3343
AND WITH A COPY TO:
Brobeck, Phleger & Harrison
550 West "C" Street, Suite 1300
San Diego, CA 92101
Attention: Todd J. Anson, Esq.
Telecopy: (619) 234-3848
(b) SEVERABILITY. If any term or provision of this Lease or the
application thereof shall to any extent be held by a court of competent
jurisdiction to be invalid and unenforceable, the remainder of this Lease, or
the application of such term or provision other than to the extent to which it
is invalid or unenforceable, shall not be affected thereby.
(c) NO MERGER. There shall be no merger of this Lease or of the
leasehold estate created hereby created with any other interest in the Property
by reason of the fact that the same person may acquire or hold, directly or
indirectly, this Lease or the leasehold estate created hereby and any other
interest in the Property, unless all Persons with an interest in the Property
that would be adversely affected by any such merger specifically agree in
writing that such a merger shall occur.
(d) NO IMPLIED WAIVER. The failure of BNPLC or Chiron to insist at
any time upon the strict performance of any covenant or agreement or to exercise
any option, right, power or remedy contained in this Lease shall not be
construed as a waiver or a relinquishment thereof for the future. The waiver of
or redress for any breach of this Lease shall not prevent a similar subsequent
act from constituting a violation. Any express waiver shall affect only the
term or condition specified in such waiver and only for the time and in the
manner specifically stated therein. A receipt by BNPLC of any Base Rent or
other payment hereunder with knowledge of the breach of any covenant or
agreement contained in this Lease shall not be deemed a waiver of such breach,
and no waiver of any provision of this Lease shall be deemed to have been made
unless expressed in writing and signed by the waiving party.
(e) NO IMPLIED REPRESENTATIONS BY BNPLC. BNPLC AND BNPLC'S AGENTS
HAVE MADE NO REPRESENTATIONS OR PROMISES WITH RESPECT TO THE PROPERTY EXCEPT AS
EXPRESSLY SET FORTH HEREIN AND IN THE PURCHASE DOCUMENTS AND THE GROUND LEASE,
AND NO RIGHTS, EASEMENTS OR LICENSES ARE ACQUIRED BY CHIRON BY IMPLICATION OR
OTHERWISE EXCEPT AS EXPRESSLY SET FORTH IN THIS LEASE, THE PURCHASE DOCUMENTS
AND THE GROUND LEASE.
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(f) ENTIRE AGREEMENT. This Lease, the Purchase Documents, the Ground
Lease and the other documents dated June 28, 1996 which are being executed by
Chiron and executed or accepted by BNPLC contemporaneously with the execution of
this Lease supersede any prior negotiations and agreements between BNPLC and
Chiron concerning the Property, and no amendment or modification of this Lease
shall be binding or valid unless expressed in a writing executed by both parties
hereto. Chiron ratifies and confirms the Purchase Agreement and the Ground
Lease as a separate and independent continuing obligations of Chiron.
(g) BINDING EFFECT. All of the covenants, agreements, terms and
conditions to be observed and performed by the parties hereto shall be
applicable to and binding upon their respective successors and, to the extent
assignment is permitted hereunder, their respective assigns.
(h) TIME IS OF THE ESSENCE. Time is of the essence as to all
obligations of Chiron and BNPLC and all notices required of Chiron and BNPLC
under this Lease.
(i) GOVERNING LAW. This Lease shall be governed by and construed in
accordance with the laws of the State of California without regard to conflict
or choice of laws.
(j) PARAGRAPH HEADINGS. The paragraph headings contained in this
Lease are for convenience only and shall in no way enlarge or limit the scope or
meaning of the various and several paragraphs hereof.
(k) OTHER TERMS AND REFERENCES. Words of any gender used in this
Lease shall be held and construed to include any other gender, and words in the
singular number shall be held to include the plural and vice versa, unless the
context otherwise requires. References herein to Paragraphs, subparagraphs or
other subdivisions shall refer to the corresponding Paragraphs, subparagraphs or
subdivisions of this Lease, unless specific reference is made to another
document or instrument. References herein to any Schedule or Exhibit shall
refer to the corresponding Schedule or Exhibit attached hereto, which shall be
made a part hereof by such reference. All capitalized terms used in this Lease
which refer to other documents shall be deemed to refer to such other documents
as they may be renewed, extended, supplemented, amended or otherwise modified
from time to time, provided such documents are not renewed, extended or modified
in breach of any provision contained herein or therein or, in the case of any
other document to which BNPLC is a party or of which BNPLC is an intended
beneficiary, without the consent of BNPLC. All accounting terms used but not
specifically defined herein shall be construed in accordance with GAAP. The
words "this Lease", "herein", "hereof", "hereby", "hereunder" and words of
similar import when used in this Lease refer to this Lease as a whole and not to
any particular subdivision unless expressly so limited. The phrases "this
Paragraph" and "this subparagraph" and similar phrases used herein refer only to
the Paragraphs or subparagraphs in which the phrase occurs. As used herein the
word "or" is not exclusive. As used herein the words "include", "including" and
similar terms shall be construed as if followed by "without limitation to".
(l) NOT A PARTNERSHIP, ETC. NOTHING IN THIS LEASE IS INTENDED TO BE OR
TO CREATE ANY PARTNERSHIP, JOINT VENTURE, OR OTHER JOINT ENTERPRISE BETWEEN
BNPLC AND CHIRON. NEITHER THE EXECUTION OF THIS LEASE NOR THE ADMINISTRATION OF
THIS LEASE OR OTHER DOCUMENTS REFERENCED HEREIN BY BNPLC, NOR ANY OTHER RIGHT,
DUTY OR OBLIGATION OF BNPLC UNDER OR PURSUANT TO THIS LEASE OR SUCH DOCUMENTS IS
INTENDED TO BE OR TO CREATE ANY FIDUCIARY OBLIGATIONS OF BNPLC TO CHIRON.
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25. INCOME TAX REPORTING. BNPLC and Chiron intend this Lease and the
Purchase Agreement to have a form for income taxes which is different than the
form of this Lease and the Purchase Agreement for other purposes, and thus the
parties acknowledge and agree as follows:
(a) FOR PURPOSES OF DETERMINING THEIR RESPECTIVE FEDERAL, STATE AND
LOCAL INCOME TAX OBLIGATIONS, BNPLC and Chiron believe and intend that this
Lease and the Purchase Agreement constitute a financing arrangement or
conditional sale. Both BNPLC and Chiron agree to report this Lease and the
Purchase Agreement as a financing arrangement or conditional sale on their
respective income tax returns (the "REQUIRED REPORTING"), unless such
Required Reporting is challenged in writing by the Internal Revenue Service
or another governmental authority with jurisdiction (a "TAX CHALLENGE").
Consistent with the foregoing, BNPLC and Chiron expect that Chiron (and not
BNPLC) shall be treated as the true owner of the Property for income tax
purposes, thereby entitling Chiron (and not BNPLC) to take depreciation
deductions and other tax benefits available to the owner. Chiron shall
also report all interest earned on Escrowed Proceeds or any collateral
pledged pursuant to the Purchase Documents as Chiron's income for federal,
state and local income tax purposes. REFERENCES IN THIS LEASE OR IN THE
PURCHASE AGREEMENT TO A "LEASE" OF THE "PROPERTY" ARE NOT INTENDED FOR
INCOME TAX PURPOSES TO REFLECT THE INTENT OF BNPLC OR CHIRON AS TO THE FORM
OF THE TRANSACTIONS COVERED BY, OR THE PROPER CHARACTERIZATION OF, THIS
LEASE AND THE PURCHASE AGREEMENT.
(b) FOR ALL OTHER PURPOSES, INCLUDING THE DETERMINATION OF THE
APPROPRIATE FINANCIAL ACCOUNTING FOR THIS LEASE AND THE DETERMINATION OF
THEIR RESPECTIVE RIGHTS AND REMEDIES UNDER STATE LAW, BNPLC and Chiron
believe and intend that (i) this Lease constitutes a true Lease, not a mere
financing arrangement, enforceable in accordance with its express terms
(and neither this Paragraph 25 nor the provisions referencing this
Paragraph on the title page of this Lease nor the corresponding provisions
in the Purchase Agreement are intended to affect the enforcement of any
other provisions of this Lease or the Purchase Agreement) and (ii) the
Purchase Agreement shall constitute a separate and independent contract,
enforceable in accordance with the express terms and conditions set forth
therein. In this regard, Chiron acknowledges that Chiron asked BNPLC to
participate in the transactions evidenced by this Lease and the Purchase
Agreement as a landlord and owner of the Property, not as a lender.
Although other transactions might have been used to accomplish similar
results, Chiron expects to receive certain material accounting and other
advantages through the use of a lease transaction. Accordingly, and
notwithstanding the Required Reporting for income tax purposes, Chiron
cannot equitably deny that this Lease and the Purchase Agreement should be
construed and enforced in accordance with their respective terms, rather
than as a mortgage or other security device, in any action brought by BNPLC
to enforce this Lease or the Purchase Agreement.
In the event of a Tax Challenge, BNPLC and Chiron shall each provide to the
other copies of all notices from the Internal Revenue Service or any other
governmental authority presenting the Tax Challenge. Further, before changing
from the Required Reporting because of a Tax Challenge, BNPLC and Chiron shall
each consider in good faith any reasonable suggestions received from the other
party to this Lease about an appropriate response to the Tax Challenge;
provided, however, that the suggestions are set forth in a notice delivered no
later than thirty days after the suggesting party is first notified of the Tax
Challenge; and, provided further, that when presented with a Tax Challenge,
BNPLC shall have the right to change from the Required Reporting rather than
participate in any litigation or other legal proceeding against the Internal
Revenue Service or another governmental authority. In any event, Chiron shall
indemnify BNPLC and defend and hold BNPLC harmless from and against all Losses
imposed on or asserted against or incurred by BNPLC by reason of, in connection
with or arising out of any such challenge
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or any resulting recharacterization of this Lease or the Purchase Agreement
required by the Internal Revenue Service or another governmental authority,
including any additional taxes that may become due upon any sale under the
Purchase Agreement, to the extent (if any) that such Losses are not offset by
tax savings to BNPLC resulting from additional depreciation deductions or other
tax benefits of the recharacterization.
26. PROPRIETARY INFORMATION, CONFIDENTIALITY AND SECURITY. Chiron shall
have no obligation to provide proprietary information (as defined in the next
sentence) to BNPLC, except and to the extent that (1) BNPLC reasonably
determines that BNPLC cannot accomplish the purposes of BNPLC's inspection of
the Property pursuant to the various provisions hereof without evaluating such
information, and (2) before conducting any inspections of the Property permitted
hereunder BNPLC shall, if requested by Chiron, confirm and ratify the
confidentiality agreements covering such proprietary information set forth in
subparagraph 7.(a). For purposes of this Lease "PROPRIETARY INFORMATION"
includes Chiron's intellectual property, trade secrets and other confidential
information of value to Chiron about, among other things, Chiron's manufacturing
processes, products, marketing and corporate strategies, but in no event will
"proprietary information" include any disclosure of substances and materials
(and their chemical composition) which are or previously have been present in,
on or under the Property at the time of any inspections by BNPLC, nor will
"proprietary information" include any additional disclosures reasonably required
to permit BNPLC to determine whether the presence of such substances and
materials has constituted a violation of Environmental Laws or this Lease. In
addition, under no circumstances shall Chiron have any obligation to disclose to
BNPLC or any other party any proprietary information of Chiron (including,
without limitation, any pending applications for patents or trademarks, any
research and design and any trade secrets) except if and to the limited extent
reasonably necessary to comply with the express provisions of this Lease.
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]
-49-
<PAGE>
IN WITNESS WHEREOF, this Lease is hereby executed in multiple originals as
of the Effective Date.
"BNPLC"
BNP LEASING CORPORATION
By: /s/ Lloyd G. Cox
----------------------------------
Lloyd G. Cox, Vice President
"Chiron"
CHIRON CORPORATION
By: /s/ James Kent
----------------------------------
Name: James Kent
----------------------------
Title: Treasurer
---------------------------
-50-
<PAGE>
EXHIBIT A
PROPERTY DESCRIPTION
REAL PROPERTY IN CITY OF EMERYVILLE, COUNTY OF ALAMEDA, STATE OF CALIFORNIA
DESCRIBED AS FOLLOWS:
PARCEL ONE:
BEING A PORTION OF BLOCKS 9, 10 AND 11, AS SHOWN ON THE UNFILED MAP ENTITLED
"MAP OF MONUMENT LOCATION EMERYVILLE INDUSTRIAL TRACT", DATED JANUARY 5, 1921,
BY PUNNETT AND PAREZ ENGINEERS, BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
BEGINNING AT THE INTERSECTION OF THE NORTHERLY LINE OF 53RD STREET (FORMERLY
SANTA FE AVENUE), AS SHOWN ON SAID MAP, AND THE WESTERLY LINE OF HOLLIS STREET;
THENCE ALONG SAID WESTERLY LINE, NORTH 17 DEG. 32' 00" WEST, 443.61 FEET; THENCE
NORTH 27 DEG. 46' 45" WEST, 381.28 FEET TO THE BEGINNING POINT OF A NON-TANGENT
CURVE CONCAVE SOUTHEASTERLY, HAVING A RADIUS OF 274.38 FEET (A RADIAL LINE
THROUGH SAID POINT BEARS NORTH 31 DEG. 43' 39" WEST); THENCE LEAVING SAID
WESTERLY LINE ALONG SAID CURVE, THROUGH A CENTRAL ANGLE OF 72 DEG. 44' 21", AN
ARC DISTANCE OF 348.34 FEET; THENCE SOUTH 17 DEG. 32' 00" EAST, 567.48 FEET TO A
POINT LYING ON SAID NORTHERLY LINE OF 53RD STREET; THENCE ALONG SAID NORTHERLY
LINE, NORTH 72 DEG. 28' 00" EAST, 274.53 FEET TO THE POINT OF BEGINNING.
ASSESSOR'S PARCEL NO. 049-1041-028
PARCEL TWO:
THAT PARCEL OF LAND SITUATE IN THE CITY OF EMERYVILLE, COUNTY OF ALAMEDA, STATE
OF CALIFORNIA, AND BEING ALL OF PARCEL 2 OF PARCEL MAP NO. 5719, FILED DECEMBER
28, 1989, IN BOOK 187 OF PARCEL MAPS, AT PAGES 97 - 98, IN RECORDS OF SAID
COUNTY.
EXCEPTING THEREFROM:
ALL MINERALS AND MINERAL RIGHTS, INTERESTS, AND ROYALTIES, INCLUDING, WITHOUT
LIMITING THE GENERALITY THEREOF, OIL, GAS AND OTHER HYDROCARBON SUBSTANCES, AS
WELL AS METALLIC OR OTHER SOLID MINERALS, MORE THAN FIVE HUNDRED (500) FEET
BELOW THE SURFACE OF SAID PROPERTY; HOWEVER, GRANTOR OR ITS SUCCESSORS AND
ASSIGNS, SHALL NOT HAVE THE RIGHT FOR ANY PURPOSE WHATSOEVER TO ENTER UPON, INTO
OR THROUGH THE SURFACE OF SAID PROPERTY IN CONNECTION THEREWITH.
ASSESSOR'S PARCEL NO. 049-1041-060
<PAGE>
EXHIBIT B
PERMITTED ENCUMBRANCES
This conveyance is subject to the following matters, but only to the
extent the same are still valid and in full force and effect:
1. County and city taxes for the Fiscal Year 1996 - 1997, a lien not yet due
or payable.
(AFFECTS PARCELS ONE AND TWO)
2. The Lien of Supplemental Taxes arising as the result of an event or
occurrence on or after the date of the policy assessed pursuant to the
provisions of Chapter 3.5, Revenue and Taxation Code, Sections 75 et seq.
No supplemental taxes now due and payable.
(AFFECTS PARCELS ONE AND TWO)
3. Assessments for BAY ST./SHELLMOUND ST. EXTENSION A.D. under Act 1915
Assessment No. 204, Series NOT SHOWN
Issued JANUARY 7, 1994, for original principal of $9,421.00 payable in 25
annual installments. Said bond payable to the CITY OF EMERYVILLE. No
installments now due and payable.
(AFFECTS PARCEL TWO)
4. Agreement on the terms, provisions, covenants and conditions contained
therein,
For : Development
Dated : September 14, 1995
Executed By : The City of Emeryville, a municipal corporation
And Between : Chiron Corporation, a Delaware corporation
Recorded : January 16, 1996, Series No. 96-009969, Official
Records of Alameda County, California
(AFFECTS PARCELS ONE AND TWO)
5. Non-exclusive easement for the purposes stated herein and incidental
purposes created in that certain instrument entitled "Grant of Easement and
Easement Agreement"
Dated : March 20, 1996
Recorded : March 21, 1996, Series No. 96-070723, Official Records
of Alameda County, California
Granted to : BGR Associates III, a California limited partnership
Purposes : Construction, installation, operation, use,
maintenance, repair, replacement and removal of
utilities, including, without limitation, gas,
electricity, water, storm and sanitary sewer,
telephone, cable television, and fiber-optic, data and
other cabling under the Easement Area referred to
hereafter, and, for ingress and egress to and from the
Easement Area for such purposes.
Easement Area : The westerly 10 feet of Parcel Two
and the terms, provisions, covenants and conditions contained in such Grant
of Easement and Easement Agreement.
<PAGE>
(AFFECTS PARCEL TWO)
Exhibit B - Page 2
<PAGE>
EXHIBIT C
DESCRIPTION OF THE INITIAL CONSTRUCTION PROJECT
The "INITIAL CONSTRUCTION PROJECT" will consist of the construction of a
facility (the "FACILITY") which is described as "SEQUENCE 1 (BUILDING 4)" and
the "INITIAL PROJECT" in the Preliminary Development Plan as approved by
Resolution of City Council of Emeryville on August 15, 1995, by Resolution No.
95-006 (the "PDP"). The Facility is to be constructed substantially in
accordance with the PDP and the other Development Contracts described in the
Lease. The Facility will contain a building with approximately 265,000 gross
square feet, plus required parking and will include the construction or
improvement of the private street located in the City of Emeryville known as
Holden Street. The Facility will be constructed on the property referred to as
Parcels 10 and 15 in Exhibit A to Attachment 5 of the Participation Agreement
(the "PARTICIPATION AGREEMENT") dated as of August 8, 1995, by and between the
Emeryville Redevelopment Agency and Chiron Corporation, approved by Resolution
of City Council of Emeryville on August 8, 1995, by Resolution No. 95-143 and by
Resolution of the Emeryville Redevelopment Agency on August 8, 1995, by
Resolution No. RD 56-95. According to the Development Contracts, the building
is to be used for research facilities/laboratories, development laboratories,
administrative and support services, and small-scale manufacturing. The
Facility is the first building to be constructed as part of Chiron Corporation's
"LIFE SCIENCE CENTER" described in the Development Contracts.
If the Lease is amended to include PARCEL 7A (as defined in the Ground
Lease executed by and between Chiron Corporation and BNP Leasing Corporation and
dated of even date with the Lease) within the definition of the "LAND", then the
"INITIAL CONSTRUCTION PROJECT" shall also include the construction of the
initial phase of the Central Utility Plant (the "CUP") described in the PDP and
the other Development Contracts as Building 7A which is to be constructed on the
northern part of the property referred to as Parcel 7 in Exhibit A to Attachment
5 of the Participation Agreement. The initial phase of the CUP is to be
constructed and operated substantially in accordance with the PDP and the other
Development Contracts and is to contain approximately 9,000 gross square feet.
(Subsequent phases of the CUP, which are not part of the initial Construction
Project, may increase the size of the CUP to approximately 38,000 gross square
feet.) The CUP is part of the "MINIMUM PROJECT" as described in the Development
Contracts.
<PAGE>
EXHIBIT D
ESTOPPEL FROM CONTRACTORS
_________, 199__
BNP Leasing Corporation
c/o Banque Nationale de Paris
180 Montgomery Street
San Francisco, California 94104
Attention: Ms. Katherine Wolfe
Re: Assignment of Construction Contract
Ladies and Gentlemen:
The undersigned hereby confirms, warrants and represents to BNP LEASING
CORPORATION, a Delaware corporation ("BNPLC"), and covenants with BNPLC as
follows:
1. The undersigned has entered into that certain [Construction Contract]
(the "CONSTRUCTION CONTRACT") by and between the undersigned and Chiron
Corporation ("CHIRON") dated _______, 199__ for the construction of the
improvements to be constructed as part of Chiron's Emeryville campus leased by
Chiron (the "IMPROVEMENTS") on the land described in the Lease described below
(the "LAND" and, together with the Improvements and any other improvements now
on or constructed in the future on the Land, the "PROJECT").
2. The undersigned has been advised that BNPLC owns a leasehold estate in
the Land under a long term Ground Lease dated June 28, 1996 (the "GROUND
LEASE"), a copy of which has been provided to the undersigned.
3. The undersigned has also received a copy of the Lease Agreement dated
June 28, 1996 (the "LEASE"), pursuant to which BNPLC is leasing the Project to
Chiron, and has agreed, subject to the terms and conditions of the Lease, to
provide a construction allowance for the construction of the Improvements. The
Lease also requires Chiron to fulfill its obligations under the Construction
Contract and related documents and to indemnify BNPLC against any liability
arising thereunder, all as more particularly provided in the Lease, reference to
which is hereby made for all purposes.
4. A complete and correct copy of the Construction Contract is attached
to this letter. The Construction Contract is in full force and effect and has
not been modified or amended, except as provided in any written modifications or
amendments which are also attached to this letter.
5. The undersigned has not sent or received any notice of default or any
other notice for the purpose of terminating the Construction Contract, nor does
the undesigned have knowledge of any existing circumstance or event which, but
for the elapse of time or otherwise, would constitute a default by the
undersigned or by Chiron under the Construction Contract.
The undersigned acknowledges and agrees that:
<PAGE>
a) Title to all Improvements shall, when constructed on the Land, pass
directly to BNPLC, not to Chiron, as provided in the Ground Lease. BNPLC shall
not, however, be held liable for, and the undersigned shall not assert, any
claims, demands or liabilities against BNPLC or against the Project arising
under or in any way relating to the Construction Contract; provided, this
paragraph will not prohibit the undersigned from asserting any claims or making
demands under the Construction Contract if BNPLC elects in writing, pursuant to
Paragraph b) below, to assume the Construction Contract in the event Chiron's
right to possession of the Land is terminated, in which event BNPLC shall be
liable thereunder for (but only for) any acts or omissions on the part of BNPLC
occurring after the date on which BNPLC notifies the undersigned of BNPLC's
election to assume the Construction Contract.
b) Upon any termination of Chiron's right to possession of the Project
under the Lease, including any eviction of Chiron resulting from an Event of
Default (as defined in the Lease), BNPLC may, by notice to the undersigned and
without the necessity of the execution of any other document, assume Chiron's
rights and obligations under the Construction Contract, cure any defaults by
Chiron thereunder and enforce the Construction Contract and all rights of Chiron
thereunder. Within ten days of receiving notice from BNPLC that Chiron's right
to possession has been terminated, the undersigned shall send to BNPLC a written
estoppel letter stating: (i) that the undersigned has not performed any act or
executed any other instrument which invalidates or modifies the Construction
Contract in whole or in part (or, if so, the nature of such modification); (ii)
that the Construction Contract is valid and subsisting and in full force and
effect; (iii) that there are no defaults or events of default then existing
under the Construction Contract and no event has occurred which with the passage
of time or the giving of notice, or both, would constitute such a default or
event of default (or, if there is a default, the nature of such default in
detail); (iv) that the construction contemplated by the Construction Contract is
proceeding in a satisfactory manner in all material respects (or if not, a
detailed description of all significant problems with the progress of
construction); (v) a reasonably detailed report of the then critical dates
estimated by the undersigned for work and deliveries required to complete the
construction project; (vi) the total amount received by the undersigned for
construction through the date of the letter; (vii) the estimated total cost of
completing the undersigned's work as of the date of the letter, together with a
current draw schedule; and (viii) any other information BNPLC may request to
allow it to decide whether to assume the Construction Contract. BNPLC shall
have thirty days from receipt of such written certificate containing all such
requested information to decide whether to assume the Construction Contract. If
BNPLC fails to assume the Construction Contract within such time, the
undersigned agrees that BNPLC shall not be liable for (and the undersigned shall
not assert or bring any action against BNPLC or, except for any statutory lien
rights not waived, against the Land or improvements thereon for) any damages or
other amounts resulting from the breach or termination of the Construction
Contract or under any other theory of liability of any kind or nature, but
rather the undersigned shall look solely to Chiron and any statutory lien rights
not waived for the recovery of any such damages or other amounts.
c) If BNPLC notifies the undersigned that BNPLC shall not assume the
Construction Contract pursuant to the preceding paragraph following the
termination of Chiron's right to possession of the Project under the Lease, the
undersigned shall immediately discontinue the work under the Construction
Contract and remove its personnel from the Project, and BNPLC shall be entitled
to take exclusive possession of the Project and all or any part of the equipment
and materials delivered or en route to the Project. The undersigned shall also,
upon request by BNPLC, deliver and assign to BNPLC all plans and specifications
and other contract documents previously delivered to the undersigned (except
that the undersigned may keep an original set of the Construction Contract and
other contract documents executed by Chiron), all other material relating to the
work which belongs to BNPLC or Chiron, and all
Exhibit D - Page 2
<PAGE>
papers and documents relating to governmental permits, orders placed, bills and
invoices, lien releases and financial management under the Construction
Contract. Notwithstanding the undersigned's receipt of any notice from BNPLC
that BNPLC declines to assume the Construction Contract, the undersigned shall
for a period not to exceed fifteen days after receipt of such notice take such
steps, at BNPLC's expense, as are reasonably necessary to preserve and protect
work completed and in progress and to protect materials, equipment and supplies
at the site or in transit.
d) No action taken by BNPLC or the undersigned with respect to the
Construction Contract shall prejudice any other rights or remedies of BNPLC or
the undersigned provided by law, by the Lease, by the Construction Contract or
otherwise against Chiron.
e) The undersigned agrees promptly to notify BNPLC of any material
default or claimed material default by Chiron under the Construction Contract of
which the undersigned is aware, describing with particularity the default and
the action the undersigned believes is necessary to cure the same. The
undersigned will send any such notice to BNPLC prominently marked "URGENT -
NOTICE OF CHIRON'S DEFAULT UNDER CONSTRUCTION AGREEMENT WITH CHIRON CORPORATION
- - EMERYVILLE CALIFORNIA" at the address specified for notice below (or at such
other addresses as BNPLC shall designate in notice sent to the undersigned), by
certified or registered mail, return receipt requested. Following receipt of
such notice, the undersigned will permit BNPLC or its designee to cure any such
default within the time period reasonably required for such cure, but in no
event less than thirty days. If it is necessary or helpful to take possession
of all or any portion of the Project to cure a default by Chiron under the
Construction Contract, the time permitted by the undersigned for cure by BNPLC
will include the time necessary to terminate Chiron's right to possession of the
Project and evict Chiron, provided that BNPLC commences the steps required to
exercise such right within sixty days after it is entitled to do so under the
terms of the Lease and applicable law. If the undersigned incurs additional
costs due to the extension of the aforementioned cure period, the undersigned
shall be entitled to an equitable adjustment to the price of the Construction
Contract for such additional costs.
f) Any notice or communication required or permitted hereunder shall be
given in writing, sent by (a) personal delivery or (b) expedited delivery
service with proof of delivery or (c) United States mail, postage prepaid,
registered or certified mail or (d) telegram, telex or telecopy, addressed as
follows:
To the undersigned: ______________________
______________________
______________________
______________________
To BNPLC: BNP Leasing Corporation
c/o Banque Nationale de Paris
180 Montgomery Street
San Francisco, California 94104
Attention: Ms. Katherine Wolfe
Exhibit D - Page 3
<PAGE>
g) The undersigned acknowledges that it has all requisite authority to
execute this letter. The undersigned further acknowledges that BNPLC has
requested this letter, and is relying on the truth and accuracy of the
representations made herein, in connection with BNPLC's decision to advance
funds for construction under the Lease with Chiron.
Very truly yours,
------------------------------
By:
---------------------------
Name:
-------------------------
Title:
------------------------
Chiron joins in the execution of this letter solely for the purpose of
evidencing its consent hereto, including its consent to the provisions that
would allow, but not require, BNPLC to assume the Construction Contract in the
event Chiron is evicted from the Project.
CHIRON CORPORATION
By:
---------------------------
Name:
-------------------------
Title:
------------------------
Exhibit D - Page 4
<PAGE>
EXHIBIT E
ESTOPPEL FROM ARCHITECTS/ENGINEERS
_________, 199__
BNP Leasing Corporation
c/o Banque Nationale de Paris
180 Montgomery Street
San Francisco, California 94104
Attention: Ms. Katherine Wolfe
Re: Assignment of [Architect's/Engineer's] Agreement
Ladies and Gentlemen:
The undersigned hereby confirms, warrants and represents to BNP LEASING
CORPORATION, a Delaware corporation ("BNPLC"), and covenants with BNPLC as
follows:
1. The undersigned has entered into that certain [Architects/Engineers
Agreement] (the "AGREEMENT") by and between the undersigned and Chiron
Corporation ("CHIRON") dated _______________, 199__ for the [design] of the
improvements to be constructed as part of Chiron's Emeryville campus by Chiron
(the "IMPROVEMENTS") on the land described in the Lease described below (the
"LAND" and, together with the Improvements and any other improvements now on or
constructed in the future on the Land, the "PROJECT").
2. The undersigned has been advised that BNPLC owns a leasehold estate
under a long term ground lease of the Land.
3. The undersigned has also received a copy of the Lease Agreement dated
June 28, 1996 (the "LEASE"), pursuant to which BNPLC is leasing the Project to
Chiron, and has agreed, subject to the terms and conditions of the Lease, to
provide a construction allowance for Chiron's construction of the Improvements.
The Lease also requires Chiron to fulfill all obligations of Chiron under the
Agreement and related documents and to indemnify BNPLC against any liability
arising thereunder, all as more particularly provided in the Lease, reference to
which is hereby made for all purposes.
4. A complete and correct copy of the Agreement is attached to this
letter. The Agreement is in full force and effect and has not been modified or
amended. The Agreement is in full force and effect and has not been modified or
amended, except as provided in any written modifications or amendments which are
also attached to this letter.
5. The undersigned has not sent or received any notice of default or any
other notice for the purpose of terminating the Agreement, nor does the
undersigned have knowledge of any existing circumstance or event which, but for
the elapse of time or otherwise, would constitute a default by the undersigned
or by Chiron under the Agreement.
<PAGE>
The undersigned acknowledges and agrees that:
a) BNPLC shall not be held liable for, and the undersigned shall not
assert, any claims, demands or liabilities against BNPLC or against the Project
arising under or in any way relating to the Agreement; provided, this
paragraph will not prohibit the undersigned from asserting any claims or making
demands under the Agreement if BNPLC elects in writing, pursuant to Paragraph b)
below, to assume the Agreement in the event Chiron's right to possession of the
Land is terminated, in which event BNPLC shall be liable thereunder for (but
only for) any acts or omissions on the part of BNPLC occurring after the date on
which BNPLC notifies the undersigned of BNPLC's election to assume the
Agreement.
b) Upon any termination of Chiron's right to possession of the Project
under the Lease, including any eviction of Chiron resulting from an Event of
Default (as defined in the Lease), BNPLC may, by notice to the undersigned and
without the necessity of the execution of any other document, assume Chiron's
rights and obligations under the Agreement, cure any defaults by Chiron
thereunder and enforce the Agreement and all rights of Chiron thereunder.
Within ten days of receiving notice from BNPLC that Chiron's right to possession
has been terminated, the undersigned shall send to BNPLC a written estoppel
letter stating: (i) that the undersigned has not performed any act or executed
any other instrument which invalidates or modifies the Agreement in whole or in
part (or, if so, the nature of such modification); (ii) that the Agreement is
valid and subsisting and in full force and effect; (iii) that there are no
defaults or events of default then existing under the Agreement and no event has
occurred which with the passage of time or the giving of notice, or both, would
constitute such a default or event of default (or, if there is a default, the
nature of such default in detail); (iv) that the work contemplated by the
Agreement is proceeding in a satisfactory manner in all material respects (or if
not, a detailed description of all significant problems with the progress of
work); (v) a reasonably detailed report of the then critical dates estimated by
the undersigned for work and deliveries required to complete the construction
project; (vi) the total amount received by the undersigned for work through the
date of the letter; (vii) the estimated total cost of completing such work as of
the date of the letter, together with a current draw schedule; and (viii) any
other information BNPLC may request to allow it to decide whether to assume the
Agreement. BNPLC shall have thirty days from receipt of such written
certificate containing all such requested information to decide whether to
assume the Agreement. If BNPLC fails to assume the Agreement within such time,
the undersigned agrees that BNPLC shall not be liable for (and the undersigned
shall not assert or bring any action against BNPLC or against the Land or
improvements thereon for) any damages or other amounts resulting from the breach
or termination of the Agreement or under any other theory of liability of any
kind or nature, but rather the undersigned shall look solely to Chiron for the
recovery of any such damages or other amounts.
c) If BNPLC notifies the undersigned that BNPLC shall not assume the
Agreement pursuant to the preceding paragraph following the termination of
Chiron's right to possession of the Project under the Lease, the undersigned
shall immediately discontinue the work under the Agreement and remove its
personnel from the Project, and BNPLC shall be entitled to take exclusive
possession of the Project and all or any part of the equipment and materials
delivered or en route to the Project. The undersigned shall also, upon request
by BNPLC, deliver and assign to BNPLC all plans and specifications and other
contract documents previously delivered to the undersigned (except that the
undersigned may keep an original set of the Agreement and other contract
documents executed by Chiron), all other material relating to the work which
belongs to BNPLC or Chiron, and all papers and documents
Exhibit E - Page 2
<PAGE>
relating to governmental permits, orders placed, bills and invoices, lien
releases and financial management under the Agreement. Notwithstanding the
undersigned's receipt of any notice from BNPLC that BNPLC declines to assume the
Agreement, the undersigned shall for a period not to exceed fifteen days after
receipt of such notice take such steps as are reasonably necessary to preserve
and protect work completed and in progress and to protect materials, equipment
and supplies at the site or in transit.
d) No action taken by BNPLC or the undersigned with respect to the
Agreement shall prejudice any other rights or remedies of BNPLC or the
undersigned provided by law, by the Lease, by the Agreement or otherwise against
Chiron.
e) The undersigned agrees promptly to notify BNPLC of any material
default or claimed material default by Chiron under the Agreement of which the
undersigned is aware, describing with particularity the default and the action
the undersigned believes is necessary to cure the same. The undersigned will
send any such notice to BNPLC prominently marked "URGENT - NOTICE OF CHIRON'S
DEFAULT UNDER AGREEMENT WITH CHIRON CORPORATION - EMERYVILLE CALIFORNIA" at the
address specified for notice below (or at such other addresses as BNPLC shall
designate in notice sent to the undersigned), by certified or registered mail,
return receipt requested. Following receipt of such notice, the undersigned
will permit BNPLC or its designee to cure any such default within the time
period reasonably required for such cure, but in no event less than thirty days.
If it is necessary or helpful to take possession of all or any portion of the
Project to cure a default by Chiron under the Agreement, the time permitted by
the undersigned for cure by BNPLC will include the time necessary to terminate
Chiron's right to possession of the Project and evict Chiron, provided that
BNPLC commences the steps required to exercise such right within sixty days
after it is entitled to do so under the terms of the Lease and applicable law.
f) Any notice or communication required or permitted hereunder shall be
given in writing, sent by (a) personal delivery or (b) expedited delivery
service with proof of delivery or (c) United States mail, postage prepaid,
registered or certified mail or (d) telegram, telex or telecopy, addressed as
follows:
To the undersigned: ______________________
______________________
______________________
______________________
To BNPLC: BNP Leasing Corporation
c/o Banque Nationale de Paris
180 Montgomery Street
San Francisco, California 94104
Attention: Ms. Katherine Wolfe
g) The undersigned acknowledges that it has all requisite authority to
execute this letter. The undersigned further acknowledges that BNPLC has
requested this letter, and is relying on the truth and accuracy of the
representations made herein, in connection with BNPLC's decision to advance
funds for construction under the Lease with Chiron.
Exhibit E - Page 3
<PAGE>
Very truly yours,
------------------------------
By:
---------------------------
Name:
-------------------------
Title:
------------------------
Chiron joins in the execution of this letter solely for the purpose of
evidencing its consent hereto, including its consent to the provisions that
would allow, but not require, BNPLC to assume the Agreement in the event Chiron
is evicted from the Project.
CHIRON CORPORATION
By:
---------------------------
Name:
-------------------------
Title:
------------------------
Exhibit E - Page 4
<PAGE>
EXHIBIT F
DRAW REQUEST FORMS
________, 199__
BNP Leasing Corporation
c/o Banque Nationale de Paris
180 Montgomery Street
San Francisco, California 94104
Attention: Ms. Katherine Wolfe
Re: Construction Advance Request No. __________ by Chiron Corporation
Ladies and Gentlemen:
Reference is made to the Lease Agreement between BNP Leasing Corporation
(herein "BNPLC") and Chiron Corporation (herein "CHIRON") dated June 28, 1996
(herein the "LEASE"). Capitalized terms defined in the Lease and used but not
defined in this letter are intended to have the meanings assigned to them in
the Lease.
Chiron hereby makes request for a Construction Advance in the amount of
$________________ (herein the "CURRENT ADVANCE"). Included herewith are:
1. An Application and Certificate for Payment based on AIA Form G702
(herein the "CONTRACTOR'S APPLICATION") from Chiron's general
contractor or construction manager, attached to which is a schedule of
values listing all subcontractors, suppliers and other parties to whom
the general contractor or construction manager has or will make
payments from the draw requested in the Contractor's Application. The
Contractor's Application evidences an obligation incurred by (and
previously paid by) Chiron for construction of Improvements and for
which Chiron is entitled to reimbursement from the Current Advance.
2. A list of any costs paid by Chiron, other than to the general
contractor or construction manager, for which Chiron is entitled to
reimbursement from the proceeds of the Current Advance (herein the
"OTHER COSTS LIST").
<PAGE>
[NOTE: DRAW REQUESTS NEED INCLUDE THE PARAGRAPHS MARKED BELOW WITH AN ASTERISK,
AND THE INVOICES OR OTHER ITEMS DESCRIBED IN SUCH PARAGRAPHS, ONLY IF AND TO THE
EXTENT THAT BNPLC MAY REQUEST IT AFTER THE LEASE IS EXECUTED]
*3. Invoices and requests for payments from the subcontractors and others
entitled to payment from the general contractor or construction
manager for construction and related work covered by the Contractor's
Application; excluding, however, invoices or requests from some or all
subcontractors and others that, according to the Contractor's
Application, are to be paid less than $200,000 from the draw requested
in Contractor's Application. Such invoices and requests for payments
are consistent with the detail shown in the schedule of values
attached to the Contractor's Application.
*4. Invoices or other evidence of the costs (if any) included in the Other
Costs List.
*5. A list of any "checks on hold" (i.e., payments withheld from
subcontractors or suppliers by Chiron's general contractor or
construction manager because of some defect or deficiency in the
payee's request for payment or in the work or materials provided by
the payee) in excess of $100,000.
6. An up-to-date list of the names and addresses of any contractors or
subcontractors that have ACTUALLY filed a claim of lien against the
Property, together with, to the extent not already provided with a
prior request for a Construction Advance, a copy of the claim of lien
filed.
7. A certification of an officer of Chiron as required by
Paragraph 6.(c)(ix) of the Lease.
We hereby confirm that BNPLC will not be responsible for the application of
any funds advanced to Chiron or to any other party at our request.
Sincerely,
CHIRON CORPORATION
By:
---------------------------
Name:
-------------------------
Title:
------------------------
cc: BNP Leasing Corporation
717 North Harwood Street
Suite 2630
Dallas, Texas 75201
Attention: Lloyd G. Cox
Clint Shouse
Thompson & Knight,
a Professional Corporation
1700 Pacific Avenue
Exhibit F - Page 2
<PAGE>
Suite 3300
Dallas, Texas 75201
Exhibit F - Page 3
<PAGE>
CONSTRUCTION ADVANCE CERTIFICATE
Pursuant to subparagraph 6.(c)(ix) of the Lease dated June 28, 1996 (the
"LEASE") between Chiron Corporation ("CHIRON") and BNP Leasing Corporation
("BNPLC"), Chiron does hereby represent, warrant and certify to BNPLC in
connection with Chiron's request for Construction Advance No. __________ that:
a) no Event of Default has occurred and is continuing,
b) the representations and warranties of Chiron contained in the Lease
are true and correct in all material respects on and as of the date hereof as
though made on and as of the date hereof, subject only to the following
exceptions:
[LIST EXCEPTIONS HERE, OR IF THERE ARE NO EXCEPTIONS, INSERT "NONE"]
c) each Construction Project which has commenced but not yet been
completed is progressing without any significant continuing interruption in a
good and workmanlike manner and substantially in accordance with the
requirements of the Lease and all Applicable Laws and Chiron has corrected or is
diligently pursuing the correction of any significant defect in such
construction,
d) all costs and expenses for which Chiron is requesting reimbursement by
the Construction Advance referenced above constitute actual costs and expenses
incurred by Chiron for a Construction Project, and
e) liens (if any) now being asserted against the Property by Potential
Lien Claimants do not in the aggregate secure or allegedly secure more than
$3,000,000 of claims. (As used in this certificate a lien will be considered as
"being asserted" if a claim of lien relating thereto shall have been recorded
and not discharged by payment or settlement.)
Capitalized terms used herein which are defined in the Lease but not in this
Certificate shall have the meanings assigned to them in the Lease.
In witness whereof, this Certificate is executed by an officer of Chiron
Corporation as of ______________, 19___.
CHIRON CORPORATION
By:
---------------------------
Name:
-------------------------
Title:
------------------------
Exhibit F - Page 4
<PAGE>
LIST OF LIENS FOR WHICH A CLAIM OF LIEN HAS ACTUALLY BEEN FILED
(Construction Advance Request No. ________)
Liens for which a claim of lien has actually been filed are as follows [state
"NONE" if there are none]:
1.
2.
3.
Exhibit F - Page 5
<PAGE>
OTHER COSTS LIST
(Construction Advance Request No. ________)
Costs paid - other than to Chiron's general contractor or construction manager -
by Chiron and for which Chiron is entitled to reimbursement from the Current
Advance being requested are as follows
[state "NONE" if there are none]:
1.
2.
3.
Exhibit F - Page 6
<PAGE>
EXHIBIT G
COVENANT COMPLIANCE CERTIFICATE
BNP Leasing Corporation
c/o Banque Nationale de Paris
180 Montgomery Street
San Francisco, California 94104
Attention: Ms. Katherine Wolfe
Gentlemen:
I, the undersigned, the _____________________________ of CHIRON
CORPORATION, do hereby certify, represent and warrant that:
1. This Certificate is furnished pursuant to subparagraph 16.(a)(iii) of
that certain Lease Agreement dated June 28, 1996 (the "LEASE" the terms defined
therein being used herein as therein defined) between Chiron Corporation
("CHIRON"), and you.
3. No Event of Default or material Default by Chiron under the Lease
Agreement has occurred and is continuing.
4. The representations and warranties of Chiron in the Lease and in the
Ground Lease are true and correct as of the date hereof as though made on and as
of the date hereof.
Executed this _____ day of ______________, 19___.
CHIRON CORPORATION
Name:
-------------------------
Title:
------------------------
<PAGE>
EXHIBIT H
NOTICE OF LIBOR PERIOD ELECTION
BNP Leasing Corporation
c/o Banque Nationale de Paris, San Francisco
180 Montgomery Street
San Francisco, California 94104
Attention: Katherine Wolfe
Re: Lease Agreement dated June 28, 1996, between Chiron Corporation, as
tenant, and BNP Leasing Corporation, as landlord
Gentlemen:
Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Lease referenced above. This letter constitutes notice
to you that the LIBOR Period Election under the Lease shall be:
________________ month(s),
beginning with the first Base Rent Period that commences on or after:
______________, ____.
NOTE: YOU SHALL BE ENTITLED TO DISREGARD THIS NOTICE IF THE NUMBER OF MONTHS
SPECIFIED ABOVE IS NOT A PERMITTED NUMBER UNDER THE DEFINITION OF "LIBOR PERIOD
ELECTION" IN THE LIST OF DEFINED TERMS ATTACHED TO THE LEASE, OR IF THE DATE
SPECIFIED ABOVE CONCERNING THE COMMENCEMENT OF THE LIBOR PERIOD ELECTION IS LESS
THAN TEN BUSINESS DAYS AFTER YOUR RECEIPT OF THIS NOTICE. HOWEVER, WE ASK THAT
YOU NOTIFY US IMMEDIATELY IF FOR ANY REASON YOU BELIEVE THIS NOTICE IS
DEFECTIVE.
Executed this _____ day of ______________, 19___.
CHIRON CORPORATION
Name:
-------------------------
Title:
------------------------
[cc all Participants]
<PAGE>
EXHIBIT I
LANDLORD'S LIEN SUBORDINATION
This Landlord's Lien Subordination is executed as of the _____ day of
______________, 19__ by BNP LEASING CORPORATION, a Delaware corporation
("Landlord"), CHIRON CORPORATION, a Delaware corporation ("Tenant"), and
_________________ ("Lender").
WHEREAS, Landlord and Tenant have entered into a Lease Agreement dated as
of May 15, 1996 (hereinafter called the "Lease") for the land described in ANNEX
1 attached hereto and improvements constructed or to be constructed thereon.
WHEREAS, Lender has made or expects to make a loan of $______________ to
Tenant which will be secured by a security interest in the personal property
described in ANNEX 2 attached hereto (hereinafter called the "Collateral"), or
alternatively Lender has leased or expects to lease the Collateral to Tenant.
WHEREAS, Lender requires in connection with the loan or lease described in
the preceding paragraph that Landlord subordinate any landlord's lien, security
interest or other right Landlord may have in the Collateral, including any such
lien or security interest granted to Landlord pursuant to the Lease or by
statute, and Landlord is willing to do so subject to and upon the terms and
conditions hereof.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements hereinafter set forth, the receipt and sufficiency of which are
hereby acknowledged, Landlord, Tenant and Lender agree as follows:
I. Subject to the terms and conditions hereof, Landlord subordinates
any lien, security interest or other interest Landlord may have in and to
the Collateral, whether contractual, statutory or constitutional, to any
security or other interest obtained by Lender in connection with the loan
or lease of the Collateral described above or any extension of or amendment
thereto. Tenant or Lender may record this agreement.
1. Landlord shall have no responsibility to maintain or preserve any
of the Collateral in the premises covered by the Lease or otherwise.
2. Landlord shall place this waiver in its files as a reminder that
any default notice sent to Tenant under the Lease should also be sent to
Lender; but Landlord shall have no liability to Lender whatsoever for
failing to notify Lender of Tenant's default under the Lease or of the
occurrence of any casualty, condemnation or other event affecting the
Collateral. It shall be solely the responsibility of Tenant to notify
Lender of such events.
3. If Lender so elects, Lender may at any time after a default in
the obligations of Tenant to Lender enter the premises covered by the Lease
and remove any Collateral therein after giving Landlord at least five (5)
days advance notice of entry. But if Lender fails to enter the premises
and remove the Collateral before the expiration of thirty (30) days after
receipt of notice that Tenant has vacated the leased premises and/or that
the Lease has terminated or expired, all Collateral in the leased premises
shall, at the option of Landlord, be considered abandoned and Lender shall
be deemed to have relinquished any rights in such Collateral. It is
understood and agreed, however, that Landlord shall not be obligated to
give Lender such notice. Any removal of Collateral from the leased
premises by Lender must be accomplished in a good and workmanlike manner so
as not to damage the improvements or other property covered by the Lease.
Lender agrees to indemnify and
<PAGE>
hold Landlord harmless from any loss, costs (including reasonable
attorneys' fees) or liability incurred because of any entry by Lender into
the leased premises or because of Lender's removal of the Collateral from
the leased premises.
4. Notwithstanding that any part of Collateral may be bolted to or
otherwise firmly affixed to real property improvements covered by the
Lease, and notwithstanding that Lender may file one or more financing
statements as "fixture filings" to perfect Lender's interest in the
Collateral against others claiming through or under Tenant, the Collateral
shall constitute personal property. If, however, the Collateral is so
firmly affixed to real property improvements covered by the Lease that the
removal of the Collateral will result in significant damage to the real
property improvements, Landlord may require, as a condition to any entry or
removal of the Collateral pursuant to the preceding paragraph or otherwise,
that Lender provide security (in the form of a letter of credit or cash
deposit) reasonably acceptable to Landlord for Lender's obligation to
indemnify Landlord for loss, cost or liability resulting from Lender's
removal of the Collateral as provided in the preceding paragraph.
5. Any notice or document required or permitted to be delivered
under this agreement must be in writing and will be deemed to be delivered
- whether actually received or not - upon first attempted delivery if
postmarked by the U. S. Postal Service, postage prepaid, registered or
certified mail, return receipt requested, or sent by courier or Express
Mail where evidence of delivery is retained, addressed to the parties at
their respective addresses as set out opposite their signatures below, or
at such other address as they specify by written notice delivered in
accordance with this Paragraph.
6. Nothing herein contained shall be construed as a guaranty by
Landlord or to otherwise make Landlord responsible for any debts or
obligations of Tenant to Lender with respect to the Collateral or
otherwise.
7. To facilitate execution, this agreement may be executed in as
many identical counterparts as may be required. It shall not be necessary
that the signature of, or on behalf of, each party, or that the signature
of all persons required to bind any party, appear on each counterpart. All
counterparts, taken together, shall collectively constitute a single
instrument. It shall not be necessary in making proof of this agreement to
produce or account for more than a single counterpart containing the
respective signatures of, or on behalf of, each of the parties hereto. Any
signature page to any counterpart may be detached from such counterpart
without impairing the legal effect of the signatures thereon and thereafter
attached to another counterpart identical thereto except having attached to
it additional signature pages.
8. This agreement can only be modified in writing, signed by the
party against whom the modification is to be enforced.
Exhibit I - Page 2
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Landlord's Lien
Subordination to be executed as of the day and year first above written.
LANDLORD: NOTICE ADDRESS FOR LANDLORD:
BNP LEASING CORPORATION
BNP Leasing Corporation
c/o Banque Nationale de Paris
180 Montgomery Street
San Francisco, California 94104
By: Attention:______________________
-------------------------
Name: (Phone:_________________________)
---------------------
Title:
--------------------
Exhibit I - Page 3
<PAGE>
TENANT: NOTICE ADDRESS FOR TENANT:
CHIRON CORPORATION
Chiron Corporation
Attn: Corporate Secretary
4560 Horton Street
By: Emeryville, CA 94608-2916
-------------------------
Name: Attention:______________________
--------------------
Title: (Phone:_________________________)
-------------------
Exhibit I - Page 4
<PAGE>
LENDER: NOTICE ADDRESS FOR LENDER:
___________________________________
___________________________________
___________________________________
By: ___________________________________
-------------------------
Name: Attention:_________________________
---------------------
Title: (Phone:____________________________)
--------------------
Exhibit I - Page 5
<PAGE>
ANNEX 1
[DRAFTING NOTE: TO THE EXTENT THAT THE "LAND" COVERED BY THE GROUND LEASE
CHANGES FROM TIME TO TIME AS PROVIDED THEREIN OR BECAUSE OF ADJUSTMENTS FOR
WHICH CHIRON REQUESTS BNPLC'S CONSENT OR APPROVAL AS PROVIDED IN THE LEASE, SO
TOO WILL THE DESCRIPTION OF THE LAND BELOW CHANGE. ANY SUCH CHANGES WILL BE
INCORPORATED INTO THE DESCRIPTION BELOW AND THIS "DRAFTING NOTE" WILL BE DELETED
BEFORE ANY AGREEMENT TO WHICH THIS DESCRIPTION IS ATTACHED IS ACTUALLY EXECUTED
AND DELIVERED.]
REAL PROPERTY IN CITY OF EMERYVILLE, COUNTY OF ALAMEDA, STATE OF CALIFORNIA
DESCRIBED AS FOLLOWS:
PARCEL ONE:
BEING A PORTION OF BLOCKS 9, 10 AND 11, AS SHOWN ON THE UNFILED MAP ENTITLED
"MAP OF MONUMENT LOCATION EMERYVILLE INDUSTRIAL TRACT", DATED JANUARY 5, 1921,
BY PUNNETT AND PAREZ ENGINEERS, BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
BEGINNING AT THE INTERSECTION OF THE NORTHERLY LINE OF 53RD STREET (FORMERLY
SANTA FE AVENUE), AS SHOWN ON SAID MAP, AND THE WESTERLY LINE OF HOLLIS STREET;
THENCE ALONG SAID WESTERLY LINE, NORTH 17DEG. 32' 00" WEST, 443.61 FEET; THENCE
NORTH 27DEG. 46' 45" WEST, 381.28 FEET TO THE BEGINNING POINT OF A NON-TANGENT
CURVE CONCAVE SOUTHEASTERLY, HAVING A RADIUS OF 274.38 FEET (A RADIAL LINE
THROUGH SAID POINT BEARS NORTH 31DEG. 43' 39" WEST); THENCE LEAVING SAID
WESTERLY LINE ALONG SAID CURVE, THROUGH A CENTRAL ANGLE OF 72DEG. 44' 21", AN
ARC DISTANCE OF 348.34 FEET; THENCE SOUTH 17DEG. 32' 00" EAST, 567.48 FEET TO A
POINT LYING ON SAID NORTHERLY LINE OF 53RD STREET; THENCE ALONG SAID NORTHERLY
LINE, NORTH 72DEG. 28' 00" EAST, 274.53 FEET TO THE POINT OF BEGINNING.
ASSESSOR'S PARCEL NO. 049-1041-028
PARCEL TWO:
THAT PARCEL OF LAND SITUATE IN THE CITY OF EMERYVILLE, COUNTY OF ALAMEDA, STATE
OF CALIFORNIA, AND BEING ALL OF PARCEL 2 OF PARCEL MAP NO. 5719, FILED DECEMBER
28, 1989, IN BOOK 187 OF PARCEL MAPS, AT PAGES 97 - 98, IN RECORDS OF SAID
COUNTY.
EXCEPTING THEREFROM:
ALL MINERALS AND MINERAL RIGHTS, INTERESTS, AND ROYALTIES, INCLUDING, WITHOUT
LIMITING THE GENERALITY THEREOF, OIL, GAS AND OTHER HYDROCARBON SUBSTANCES, AS
WELL AS METALLIC OR OTHER SOLID MINERALS, MORE THAN FIVE HUNDRED (500) FEET
BELOW THE SURFACE OF SAID PROPERTY; HOWEVER, GRANTOR OR ITS SUCCESSORS AND
ASSIGNS, SHALL NOT HAVE THE RIGHT FOR ANY PURPOSE WHATSOEVER TO ENTER UPON, INTO
OR THROUGH THE SURFACE OF SAID PROPERTY IN CONNECTION THEREWITH.
Exhibit I - Page 6
<PAGE>
ASSESSOR'S PARCEL NO. 049-1041-060
Exhibit I - Page 7
<PAGE>
ANNEX 2
[DRAFTING NOTE: THIS ANNEX 2 SHOULD BE COMPLETED WITH A DESCRIPTION OF THE
LENDER'S COLLATERAL. THE DESCRIPTION SHOULD BE AS SPECIFIC AS POSSIBLE. THE
DESCRIPTION SHOULD NOT BE SO BROAD AS TO COVER "PROPERTY" OF BNPLC; IT SHOULD
COVER ONLY PROPERTY OWNED BY OR LEASED BY LENDER TO CHIRON. THUS, A DESCRIPTION
SUCH AS "ALL PERSONAL PROPERTY AND FIXTURES" IN THE LEASED PREMISES WILL
GENERALLY NOT BE ACCEPTABLE.]
Exhibit I - Page 8
<PAGE>
EXHIBIT J
NOTICE OF REQUEST REQUIRING AN EXPEDITED RESPONSE
BNP Leasing Corporation
c/o Banque Nationale de Paris, San Francisco
180 Montgomery Street
San Francisco, California 94104
Attention: Katherine Wolfe
Re: Lease Agreement dated June 28, 1996, between Chiron Corporation, as
tenant, and BNP Leasing Corporation, as landlord
Gentlemen:
Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Lease referenced above. Chiron asks for an EXPEDITED
RESPONSE to the following request, which is a request made by Chiron pursuant to
subparagraph 7.(b) of the Lease:
[INSERT HERE A DESCRIPTION OF THE ACTION REQUESTED - E.G., "PLEASE EXECUTE
THE ENCLOSED APPLICATION FOR BUILDING PERMIT REQUIRED BY THE CITY OF
EMERYVILLE IN CONNECTION WITH CONSTRUCTION OF CERTAIN IMPROVEMENTS WHICH
ARE PART OF THE INITIAL CONSTRUCTION PROJECT."]
PLEASE NOTE: SUBPARAGRAPH 7.(B) OF THE LEASE OBLIGATES BNPLC NOT TO
UNREASONABLY REFUSE TO COMPLY WITH THE FOREGOING REQUEST, SUBJECT TO TERMS AND
CONDITIONS SET FORTH IN THAT SUBPARAGRAPH. CHIRON HEREBY CERTIFIES TO BNPLC
THAT AFTER CAREFUL CONSIDERATION CHIRON BELIEVES THAT ALL SUCH TERMS AND
CONDITIONS ARE SATISFIED IN THE CASE OF THE FOREGOING REQUEST, AND CHIRON HEREBY
RATIFIES AND CONFIRMS ITS OBLIGATION TO INDEMNIFY BNPLC AGAINST ANY LOSSES BNPLC
MAY INCUR OR SUFFER BECAUSE OF ITS COMPLIANCE WITH SUCH REQUEST AS PROVIDED IN
SUBPARAGRAPH 5.(C) OF THE LEASE.
As you consider the foregoing request, please understand that Chiron must ask
for an expedited request for the following reasons:
[INSERT HERE A BRIEF DESCRIPTION OF THE NEED FOR AN EXPEDITED RESPONSE -
E.G., "TO AVOID CRITICAL PATH DELAYS IN THE CONSTRUCTION CONTEMPLATED BY
THE LEASE, CHIRON MUST SUBMIT THE ENCLOSED APPLICATION FOR BUILDING PERMIT
TO THE CITY OF EMERYVILLE WITHIN 15 DAYS, AND UNFORTUNATELY THE CITY HAS
ONLY RECENTLY INDICATED THAT CHIRON WILL NEED THE SIGNATURE OF BNPLC ON THE
APPLICATION."]
For the reasons stated above, Chiron respectfully requests that BNPLC respond to
this notice as soon as possible. Although Chiron would appreciate a sooner
response, Chiron believes that it would be unreasonable for BNPLC not to respond
to this notice on or before:
<PAGE>
[INSERT HERE A REASONABLE DEADLINE FOR THE RESPONSE - BUT IN NO EVENT PRIOR
TO 10 BUSINESS DAYS AFTER THE DATE OF THIS NOTICE - TAKING INTO ACCOUNT THE
MATERIALS THAT BNPLC WILL HAVE TO REVIEW TO EVALUATE CHIRON'S REQUEST AND
THE PARTICULAR REASONS FOR CHIRON'S NEED FOR AN EXPEDITED RESPONSE]
Executed this _____ day of ______________, 19___.
CHIRON CORPORATION
Name:
-------------------------
Title:
------------------------
cc: BNP Leasing Corporation
717 North Harwood Street
Suite 2630
Dallas, Texas 75201
Attention: Lloyd G. Cox
Clint Shouse
Thompson & Knight,
a Professional Corporation
1700 Pacific Avenue
Suite 3300
Dallas, Texas 75201
Exhibit J - Page 2
<PAGE>
SCHEDULE 1
LIST OF EXISTING PARTICIPANTS
A. PARTICIPANT: UNION BANK OF SWITZERLAND, NEW YORK BRANCH
COUNTRY UNDER WHOSE LAWS PARTICIPANT EXISTS: Switzerland
1. ADDRESS FOR NOTICES:
Union Bank of Switzerland, New York Branch
299 Park Ave.
New York, New York 10171
Attention: Chris Glockler
Telephone: (212) 821-3853
Facsimile: (212) 821-3878
2. OPERATIONS CONTACT:
Union Bank of Switzerland, New York Branch
299 Park Ave.
New York, New York 10171
Attention: Mike Petersen
Telephone: (212) 821-3230
Facsimile: (212) 821-3891
B. PARTICIPANT: CREDIT SUISSE
COUNTRY UNDER WHOSE LAWS PARTICIPANT EXISTS: Switzerland
1. ADDRESS FOR NOTICES:
Credit Suisse
50 California Street
San Francisco, Ca. 94111
ATTENTION: Thomas Clausen
Tel No.: (415) 391-9590
Fax No.: (415) 362-1175
WITH A COPY TO:
Greenwich Funding Corporation
c/o Credit Suisse
12 East 49th
New York, NY 10017
ATTENTION: Carin Okita
Tel No.: (213) 238-5366
Fax No.: (213) 238-5332
Schedule 1 - Page 1
<PAGE>
2. OPERATIONS CONTACT:
Greenwich Funding Corporation
c/o Credit Suisse
12 East 49th
New York, NY 10017
ATTENTION: Carin Okita
Tel No.: (213) 238-5366
Fax No.: (213) 238-5332
Schedule 1 - Page 2
<PAGE>
SCHEDULE 2
LIST OF DEVELOPMENT CONTRACTS
1. Environmental Impact Report (State Clearinghouse No. 94063005) as certified
with findings and a statement of overriding considerations by Resolutions
of City Council of Emeryville on August 8, 1995, by Resolution Nos. 95-140
and 95-141, together Mitigation Monitoring and Reporting Program as adopted
by Resolution of City Council of Emeryville on August 8, 1995, by
Resolution No. 95-141 and by Resolution of the Emeryville Redevelopment
Agency on August 8, 1995, by Resolution No. RD 55-95.
2. Emeryville General Plan Amendments as approved by Resolution of City
Council of Emeryville on August 8, 1995, by Resolution No. 95-142.
3. Preliminary Development Plan and Emeryville Zoning Ordinance Amendments as
approved by Resolution of City Council of Emeryville on August 15, 1995, by
Resolution No. 95-006, and as amended June 7, 1996 by a resolution of the
City Council.
4. Tentative Map as approved by Resolution of City Council of Emeryville on
August 15, 1995, by Resolution No. 95-144.
5. Development Agreement, dated as of September 14, 1995, by and between the
City of Emeryville and Chiron Corporation, recorded on January 16, 1996, as
Series No. 96-009969, in the Official Records of Alameda County,
California, approved by Ordinance of City Council of Emeryville on August
15, 1995, by Ordinance No. 95-007.
6. Participation Agreement dated as of August 8, 1995, by and between the
Emeryville Redevelopment Agency and Chiron Corporation, approved by
Resolution of City Council of Emeryville on August 8, 1995, by Resolution
No. 95-143 and by Resolution of the Emeryville Redevelopment Agency on
August 8, 1995, by Resolution No. RD 56-95.
Schedule 2 - Page 1
<PAGE>
LIST OF DEFINED TERMS
FOR AGREEMENTS BETWEEN
BNP LEASING CORPORATION
AND
CHIRON CORPORATION
DATED JUNE 28, 1996
<PAGE>
TABLE OF CONTENTS
PAGE
DEFINED TERM NUMBER
ACTIVE NEGLIGENCE....................................................... 1
ADDITIONAL RENT......................................................... 1
ADMINISTRATIVE FEE...................................................... 1
ADVANCE DATE............................................................ 1
AFFILIATE............................................................... 1
APPLICABLE LAWS......................................................... 1
APPLICABLE PURCHASER.................................................... 1
APPROVED PLANS.......................................................... 1
ATTORNEYS' FEES......................................................... 2
BANKING RULES CHANGE.................................................... 2
BASE RENT............................................................... 2
BASE RENT COMMENCEMENT DATE............................................. 2
BASE RENT DATE.......................................................... 3
BASE RENT PERIOD........................................................ 3
BNPLC................................................................... 4
BNPLC'S PARENT.......................................................... 4
BREAKAGE COSTS.......................................................... 4
BREAK EVEN PRICE........................................................ 4
BUSINESS DAY............................................................ 5
CAPITAL ADEQUACY CHARGES................................................ 5
CARRYING COSTS.......................................................... 5
CHIRON.................................................................. 5
CHIRON'S PA OBLIGATIONS................................................. 5
CODE.................................................................... 5
COMMITMENT FEE.......................................................... 5
COMPLETION NOTICE....................................................... 5
CONSTRUCTION ADVANCES................................................... 5
CONSTRUCTION ALLOWANCE.................................................. 5
CONSTRUCTION PERIOD..................................................... 5
CONSTRUCTION PROJECTS................................................... 6
DEBT.................................................................... 6
DEFAULT................................................................. 6
DEFAULT RATE............................................................ 6
DEMAND DEADLINE......................................................... 6
DEPOSIT TAKER........................................................... 7
DESIGNATED SALE DATE.................................................... 7
DEVELOPMENT CONTRACTS................................................... 8
EFFECTIVE DATE.......................................................... 8
EFFECTIVE RATE.......................................................... 8
ENVIRONMENTAL CONSULTANT................................................ 8
ENVIRONMENTAL CUTOFF DATE............................................... 8
ENVIRONMENTAL LAWS...................................................... 8
ENVIRONMENTAL LOSSES.................................................... 9
ENVIRONMENTAL REPORTS................................................... 9
ERISA................................................................... 11
ERISA AFFILIATE......................................................... 11
ERISA TERMINATION EVENT................................................. 11
-i-
<PAGE>
ESCROWED PROCEEDS....................................................... 11
ESTABLISHED MISCONDUCT.................................................. 11
EUROCURRENCY LIABILITIES................................................ 12
EURODOLLAR RATE RESERVE PERCENTAGE...................................... 12
EVENT OF DEFAULT........................................................ 12
EXCLUDED TAXES.......................................................... 12
EXISTING PARTICIPATION AGREEMENTS....................................... 12
FAIR MARKET VALUE....................................................... 12
FED FUNDS RATE.......................................................... 13
FUNDING ADVANCES........................................................ 13
GAAP.................................................................... 13
GROUND LEASE............................................................ 13
GUARANTY................................................................ 14
GUARANTOR............................................................... 14
HAZARDOUS SUBSTANCE..................................................... 14
HAZARDOUS SUBSTANCE ACTIVITY............................................ 14
HAZWOPER REGULATIONS.................................................... 14
IMPOSITIONS............................................................. 14
IMPROVEMENTS............................................................ 15
INDUSTRIAL HYGIENIST.................................................... 15
INITIAL FUNDING ADVANCE................................................. 15
INTERESTED PARTY........................................................ 15
LAND.................................................................... 15
LEASE................................................................... 15
LIBOR................................................................... 15
LIBOR PERIOD ELECTION................................................... 16
LIEN.................................................................... 16
LIENS REMOVABLE BY BNPLC................................................ 16
LIST OF DEFINED TERMS................................................... 17
LOSSES.................................................................. 17
MATERIAL ENVIRONMENTAL COMMUNICATION.................................... 17
MAXIMUM CONSTRUCTION ALLOWANCE.......................................... 17
OUTSTANDING CONSTRUCTION ALLOWANCE...................................... 17
PARCEL 7A............................................................... 17
PARTICIPANT............................................................. 17
PARTICIPATION AGREEMENTS................................................ 17
PERMITTED ENCUMBRANCES.................................................. 18
PERMITTED HAZARDOUS SUBSTANCE USE....................................... 18
PERMITTED HAZARDOUS SUBSTANCES.......................................... 18
PERMITTED TRANSFER...................................................... 18
PERSON.................................................................. 19
PERSONAL PROPERTY....................................................... 19
PLAN.................................................................... 19
POTENTIAL LIEN CLAIMANTS................................................ 19
PRIME RATE.............................................................. 19
PROPERTY................................................................ 19
PURCHASE AGREEMENT...................................................... 19
-ii-
<PAGE>
PURCHASE DOCUMENTS...................................................... 19
QUALIFIED PAYMENTS...................................................... 19
QUALIFIED SECURITIES.................................................... 20
QUALIFIED RIGHT TO STOCK SALE PROCEEDS.................................. 20
REAL PROPERTY........................................................... 20
REMEDIAL WORK........................................................... 20
RENT.................................................................... 20
RESIDUAL RISK PERCENTAGE................................................ 20
RESPONSIBLE FINANCIAL OFFICER........................................... 20
RESTRICTED FUNDS........................................................ 21
SCOPE CHANGE............................................................ 21
SPREAD.................................................................. 21
STIPULATED LOSS VALUE................................................... 21
SUBSIDIARY.............................................................. 21
SUPPLEMENTAL PAYMENT.................................................... 22
TERM.................................................................... 22
TRANSACTION EXPENSES.................................................... 22
UPFRONT FEE............................................................. 22
UNFUNDED BENEFIT LIABILITIES............................................ 22
VOTING STOCK............................................................ 22
-iii-
<PAGE>
LIST OF DEFINED TERMS
As used in the documents to which this List of Defined Terms is attached:
"ACTIVE NEGLIGENCE" of any Person (including BNPLC) means, and is limited
to, the negligent conduct on the Property (and not mere omissions) by such
Person or by others acting and authorized to act on such Person's behalf in a
manner that proximately causes actual bodily injury or property damage for which
Chiron does not carry (and is not obligated by the Lease to carry) insurance.
"ACTIVE NEGLIGENCE" shall not include (1) any negligent failure of BNPLC to act
when the duty to act would not have been imposed but for BNPLC's status as owner
of the Property or as a party to the transactions described in the Lease, (2)
any negligent failure of any other Interested Party to act when the duty to act
would not have been imposed but for such party's contractual or other
relationship to BNPLC or participation or facilitation in any manner, directly
or indirectly, of the transactions described in the Lease, or (3) the exercise
in a lawful manner by BNPLC (or any party lawfully claiming through or under
BNPLC) of any right or remedy provided in or under the Lease, the Purchase
Documents or the Ground Lease.
"ADDITIONAL RENT" shall have the meaning assigned to it in
subparagraph 4.(c) of the Lease.
"ADMINISTRATIVE FEE" shall have the meaning assigned to it in
subparagraph 4.(f) of the Lease.
"ADVANCE DATE" means, regardless of whether any Construction Advance shall
actually be made thereon, the first Business Day of every calendar month,
beginning with August 1, 1996 and continuing regularly thereafter to and
including the Base Rent Commencement Date.
"AFFILIATE" of any Person means any other Person controlling, controlled by
or under common control with such Person. For purposes of this definition, the
term "control" when used with respect to any Person means the power to direct
the management of policies of such Person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise, and the
terms "controlling" and "controlled" have meanings correlative to the foregoing.
"APPLICABLE LAWS" means any or all of the following, to the extent
applicable to Chiron or the Property or the Lease, the Purchase Documents or the
Ground Lease: restrictive covenants; zoning ordinances and building codes; flood
disaster laws; health, safety and environmental laws and regulations; the
Americans with Disabilities Act and other laws pertaining to disabled persons;
and other laws, statutes, ordinances, rules, permits, regulations, orders,
determinations and court decisions.
"APPLICABLE PURCHASER" means any third party designated by Chiron to
purchase BNPLC's interest in the Property and in any Escrowed Proceeds as
provided in the Purchase Agreement.
"APPROVED PLANS" means: (i) that certain "Removal Action Workplan for the
Ramp Area on the Former PG&E/City of Emeryville Redevelopment Agency Property,"
prepared by Erler & Kalinowski, Inc., dated June 21, 1996, which DTSC has
approved for public comment (subject to revision) pursuant to the letter dated
June 21, 1996, from Barbara J. Cook, DTSC, to Ric Notini, Chiron, re "Chiron
Corporation Site, Former Pacific Gas & Electric Property, Emeryville, California
- - Draft Removal Action Workplan"; (ii) that certain "Final Risk Management Plan
for Construction of the Chiron Life Sciences Center Project Properties North of
53rd Street Emeryville, California," prepared by Erler & Kalinowski, Inc., dated
May 21, 1996, with which the RWQCB concurred pursuant to that letter dated
May 22, 1996, from Stephen I. Morse, RWQCB, to Ric Notini, Chiron, re
"Properties North of 53rd Street, Chiron Life Sciences Center Project,
Emeryville, Alameda County"; (iii) the Voluntary Cleanup Agreement, IN THE
MATTER OF CHIRON CORPORATION, Docket No. HSA-95/96-059, dated April 1, 1996;
(iv) that certain "Classification of Soil to be Excavated During Chiron
Corporation's Campus Expansion
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Property North of 53rd Street, Chiron Corporation, Emeryville, California,"
prepared by Erler & Kalinowski, Inc., dated September 22, 1995, with which the
Department of Toxic Substances Control ("DTSC") concurred pursuant to that
letter dated April 9, 1996, from Ronald Pilorin, DTSC, to Vera H. Nelson, Erler
& Kalinowski, Inc., re "Request for Concurrence for Excavated Soils Generated
from Chiron Corporation's (Chiron) Campus Expansion Properties Located North of
53rd Street in Emeryville, California - Waste Evaluation Unit File #F155 (WEU
File #F155)"; (v) that certain "Final Health and Environmental Risk Assessment
Property North of 53rd Street, Chiron Corporation, Emeryville, California,
Volumes I and II," prepared by Erler & Kalinowski, Inc., dated March 10, 1995,
as approved by the RWQCB pursuant to that letter dated March 20, 1995, from
Steven R. Ritchie and Stephen I. Morse, RWQCB, to Ric Notini, Chiron, re
"Approval of Health and Environmental Risk Assessment Properties North of 53rd
Street Chiron Master Plan Development Emeryville, Alameda County," and with
which the Alameda County Health Care Services Agency, Department of
Environmental Health ("ACDEH") concurred pursuant to that letter dated March 15,
1995, from Susan L. Hugo and Ravi Arulanantham, ACDEH, to Ric Notini, Chiron re
"Approval of Health and Environmental Risk Assessment Properties North of 53rd
Street Chiron Master Plan Development Emeryville, California"; (vi) a long-term
risk management plan that is consistent with the RWQCB's Non-Attainment Area
policy and the State Water Quality Control Board's Containment Zone policy and
is approved by the RWQCB and the ACDEH; and (vii) any other proposal, plan,
workplan, risk assessment, or report approved or required by any regulatory
agency with jurisdiction over the Property and which has not been determined to
be inadequate by any other governmental authority asserting jurisdiction over
the Property.
"ATTORNEYS' FEES" means the reasonable fees and expenses of counsel to the
parties incurring the same, which may include fairly allocated costs of in-house
counsel, printing, photostating, duplicating and other expenses, air freight
charges, and fees billed for law clerks, paralegals, librarians and others not
admitted to the bar but performing services under the supervision of an
attorney. Such terms shall also include all such reasonable fees and expenses
incurred with respect to appeals, arbitrations and bankruptcy proceedings, and
whether or not any manner of proceeding is brought with respect to the matter
for which such fees and expenses were incurred.
"BANKING RULES CHANGE" means either: (1) the introduction of or any change
after the Effective Date (other than any change by way of imposition or increase
of reserve requirements included in the Eurodollar Rate Reserve Percentage) in
any law or regulation applicable to BNPLC, BNPLC's Parent or any Participant, or
in the generally accepted interpretation by the institutional lending community
of any such law or regulation, or in the interpretation of any such law or
regulation asserted by any regulator, court or other governmental authority or
(2) the compliance by BNPLC, BNPLC's Parent or any Participant with any new
guideline or new request after the Effective Date from any central bank or other
governmental authority (whether or not having the force of law).
"BASE RENT" means the rent payable by Chiron pursuant to subparagraph 4.(a)
of the Lease.
"BASE RENT COMMENCEMENT DATE" means the earlier of (1) the first Business
Day of March, 1999, (2) the first Business Day of the first calendar month to
follow by ten days or more BNPLC's receipt of the Completion Notice, or (3) the
first Business Day of the first calendar month upon which the then Outstanding
Construction Allowance (including any Construction Advance and Carrying Costs
added to the Outstanding Construction Advance on that Business Day) shall equal
or exceed the Maximum Construction Allowance available under the Lease. For
example, if on the first Business Day of December, 1998 construction of the
initial Construction Project is continuing, the Outstanding Construction
Allowance is $190,000,000 (before adding any Carrying Costs for the preceding
month) and the Maximum Construction Allowance is $190,035,118.68 (assuming the
Initial Funding Advance is $4,964,881.32), and if Carrying Costs of $1,000,000
would be added to the Outstanding Construction Allowance on such day if the
Construction Allowance were not limited to the Maximum Construction Allowance,
List of Defined Terms - Page 2
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then such day shall be the Base Rent Commencement Date and on such day
$35,118.68 will be added to the Outstanding Construction Allowance as Carrying
Cost and $964,881.32 will be payable as Base Rent pursuant to
subparagraph 4.(b)(i) of the Lease.
"BASE RENT DATE" means a date upon which Base Rent must be paid under the
Lease, all of which dates shall be the first Business Day of a calendar month.
The FIRST Base Rent Date shall be determined as follows:
a) If a LIBOR Period Election of one month is in effect on the
Base Rent Commencement Date, then the first Business Day of the FIRST
calendar month following the Base Rent Commencement Date shall be the
first Base Rent Date.
b) If the LIBOR Period Election in effect on the Base Rent
Commencement Date is three months or longer, then the first Business
Day of the THIRD calendar month following the Base Rent Commencement
Date shall be the first Base Rent Date.
Each SUCCESSIVE BASE RENT DATE AFTER THE FIRST BASE RENT DATE shall be the first
Business Day of the first or third calendar month following the calendar month
which includes the preceding Base Rent Date, determined as follows:
a. If a LIBOR Period Election of one month is in effect on a Base Rent
Date, then the first Business Day of the FIRST calendar month following
such Base Rent Date shall be the next following Base Rent Date.
b. If a LIBOR Period Election of three months or longer is in effect on a
Base Rent Date, then the first Business Day of the THIRD calendar month
following such Base Rent Date shall be the next following Base Rent Date.
Thus, for example, if the Base Rent Commencement Date falls on June 2, 1997 and
a LIBOR Period Election of six months commences on the Base Rent Commencement
Date, then the first Base Rent Date shall be the first Business Day of
September, 1997, and the second Base Rent Date shall be the first Business Day
of December, 1997.
"BASE RENT PERIOD" means a period for which Base Rent must be paid under
the Lease, each of which periods shall correspond to the LIBOR Period Election
for such period. The first Base Rent Period shall begin on and include the Base
Rent Commencement Date, and each successive Base Rent Period shall begin on and
include the Base Rent Date upon which the preceding Base Rent Period ends. Each
Base Rent Period, including the first Base Rent Period, shall end on but not
include the first, second, third or fourth Base Rent Date after the Base Rent
Date upon which such period began, determined as follows:
c. If the LIBOR Period Election for a Base Rent Period is one month or
three months, then such Base Rent Period shall end on the FIRST Base Rent
Date after the Base Rent Date upon which such period began.
d. If the LIBOR Period Election for a Base Rent Period is six months,
then such Base Rent Period shall end on the SECOND Base Rent Date after the
Base Rent Date upon which such period began.
List of Defined Terms - Page 3
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If the LIBOR Period Election for a Base Rent Period is nine months,
then such Base Rent Period shall end on the THIRD Base Rent Date after the
Base Rent Date upon which such period began.
If the LIBOR Period Election for a Base Rent Period is twelve months,
then such Base Rent Period shall end on the FOURTH Base Rent Date after the
Base Rent Date upon which such period began.
The determination of Base Rent Periods can be illustrated by two examples:
1) If Chiron makes a LIBOR Period Election of three months for
a hypothetical Base Rent Period beginning on the first Business Day in
January, 2000, then such Base Rent Period will end on but not the
include the first Base Rent Date after it begins; that is, such Base
Rent Period will end on the first Business Day in April, 2000, the
third calendar month after January, 2000.
2) If, however, Chiron makes a LIBOR Period Election of six
months for the hypothetical Base Rent Period beginning the first
Business Day in January, 2000, then such Base Rent Period will end on
but not include the second Base Rent Date after it begins; that is,
the first Business Day in July, 2000.
"BNPLC" means BNP Leasing Corporation, a Delaware corporation.
"BNPLC'S PARENT" means BNPLC's Affiliate, Banque Nationale de Paris, a bank
organized and existing under the laws of France and any successors of such bank.
"BREAKAGE COSTS" means any and all costs, losses or expenses incurred or
sustained by BNPLC's Parent or any Participant, for which BNPLC's Parent or the
Participant shall request reimbursement from BNPLC, because of the resulting
liquidation or redeployment of deposits or other funds:
(1) used to make or maintain Funding Advances upon application of a
Qualified Payment or upon any sale of the Property pursuant to the Purchase
Agreement, if such application or sale occurs on any day other than the
last day of a Construction Period or Base Rent Period; or
(2) reserved to provide a Construction Advance that Chiron requests,
but thereafter declines to take for any reason, or that Chiron requests but
is not permitted to take because of its failure to satisfy any of the
conditions specified in Paragraph 6.(c) of the Lease.
Breakage Costs will include, for example, losses attributable to any decline in
LIBOR as of the effective date of any application described in the clause (1)
preceding, as compared to LIBOR used to determine the Effective Rate then in
effect. Each determination by BNPLC's Parent or the applicable Participant of
Breakage Costs shall, in the absence of clear and demonstrable error, be
conclusive and binding upon Chiron.
"BREAK EVEN PRICE" means an amount equal to Stipulated Loss Value
outstanding on the Designated Sale Date, plus all costs and expenses (including
appraisal costs, withholding taxes (if any) and reasonable Attorneys' Fees, as
defined in the Lease) incurred in connection with any sale of the Property by
BNPLC under the Purchase Agreement or in connection with collecting sales
proceeds due thereunder.
List of Defined Terms - Page 4
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"BUSINESS DAY" means any day that is (1) not a Saturday, Sunday or day on
which commercial banks are generally closed or required to be closed in New York
City, New York or San Francisco, California, and (2) a day on which dealings in
deposits of dollars are transacted in the London interbank market; provided that
if such dealings are suspended indefinitely for any reason, "Business Day" shall
mean any day described in clause (1).
"CAPITAL ADEQUACY CHARGES" means any additional amounts BNPLC's Parent or
any Participant requests BNPLC to pay as compensation for an increase in
required capital as provided in subparagraph 5.(c)(iii) of the Lease.
"CARRYING COSTS" means the charges (accruing at a rate equal to the sum of
the Effective Rate and the Spread) added to and made a part of the Outstanding
Construction Allowance from time to time on and before the Base Rent
Commencement Date pursuant to and as more particularly described in subparagraph
6.(a)(ii) of the Lease.
"CHIRON" means Chiron Corporation, a Delaware corporation.
"CHIRON'S PA OBLIGATIONS" means the obligations of Chiron under the
Purchase Agreement, including Chiron's obligations for payments required by or
in respect of subparagraph 1(a) of the Purchase Agreement and for any damages
suffered by BNPLC because of any breach of that subparagraph.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMITMENT FEE" shall have the meaning assigned to it in subparagraph
4.(g) of the Lease.
"COMPLETION NOTICE" means the notice required by subparagraph 6.(e) of the
Lease from Chiron to BNPLC, advising BNPLC when construction of the initial
Construction Project is substantially complete.
"CONSTRUCTION ADVANCES" means actual advances of funds made by or on behalf
of BNPLC to Chiron pursuant to subparagraph 6.(a) of the Lease for (1) the
payment or reimbursement to Chiron of Commitment Fees and Administrative Fees,
and (2) costs, fees and expenses incurred to construct Construction Projects,
including without limitation hard and soft costs, fees and costs paid in
connection with obtaining project approvals including application and processing
fees, fees and other payments made pursuant to the Development Contracts and all
costs incurred in connection with onsite and offsite Improvements.
"CONSTRUCTION ALLOWANCE" means the allowance, consisting of all
Construction Advances and Carrying Costs, which is to be provided for
Construction Projects as more particularly described in Paragraph 6 of the
Lease.
"CONSTRUCTION PERIOD" means each successive period of approximately one (1)
month, except that the first Construction Period shall be a shorter period
beginning on and including the Effective Date and ending on but not including
the first Advance Date. Each successive Construction Period after the first
Construction Period shall begin on and include the day on which the preceding
Construction Period ends and shall end on but not include the next following
Advance Date, until the last Construction Period, which shall end on but not
include the earlier of the Base Rent Commencement Date or the Designated Sale
Date.
List of Defined Terms - Page 5
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"CONSTRUCTION PROJECTS" include (1) the "initial Construction Project"
which means the construction of the improvements described in EXHIBIT C to the
Lease and contemplated by any plans, renderings and budgets referenced in such
Exhibit, consistent with the uses permitted by the Lease, and (2) "subsequent
Construction Projects" which means any other project to be undertaken by Chiron
during the Term and in accordance with the Lease for the construction of new
buildings or other substantial Improvements or for the alteration of then
existing Improvements. Subject to the requirements of Paragraph 6.(b) of the
Lease, a Construction Project may involve demolition of then existing
Improvements which are no longer needed or which must be removed to accommodate
new Improvements. All construction work planned or done contemporaneously shall
constitute a single Construction Project for purposes of the Lease,
notwithstanding that such work may be done in stages or performed by more than
one general contractor. However, it is understood that any number of distinct
Construction Projects may be undertaken by Chiron during the Term of (and in
accordance with the provisions of) the Lease, and that Construction Projects
(including the initial Construction Project) may include offsite and other
public improvements required as conditions of governmental approvals for the
Construction Projects, environmental remediation and other work, dedications,
fees or contributions required by any governmental authority in connection with
the Construction Projects.
Notwithstanding the foregoing, although refinishing, reconfiguring and
refitting space or other interior nonstructural alterations within any completed
building will be subject to subparagraph 12.(e) of the Lease, it will not for
purposes of the Lease constitute a Construction Project if done in manner that
is not likely to have any material adverse affect on the value of the Property
taken as a whole, unless Chiron expects to receive Construction Advances for the
cost thereof.
"DEBT" of any Person means: (i) indebtedness of such Person for borrowed
money; (ii) obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments; (iii) obligations of such Person to pay the deferred
purchase price of property or services; (iv) obligations of such Person as
lessee under leases which shall have been or should be, in accordance with GAAP,
recorded as capital leases; (v) obligations of such Person, contingent or
otherwise, under any lease of real property or related documents (including a
separate purchase agreement) which provide that such Person must purchase or
cause another to purchase any interest in the leased property and thereby
guarantee a minimum residual value of the leased property to the lessor; (vi)
obligations under direct or indirect guaranties in respect of, and obligations
(contingent or otherwise) to purchase or otherwise acquire, or otherwise to
assure a another Person against loss in respect of, indebtedness or obligations
of others of the kinds referred to in the preceding clauses (i) through (v);
(vii) liabilities of another Person secured by a Lien on, or payable out of the
proceeds of production from, property of such Person even though such obligation
shall not be assumed by such Person (but in the case of such liabilities not
assumed by such Person, the liabilities shall constitute Debt of such Person
only to the extent of the value of such Person's property encumbered by the Lien
securing such liabilities); and (viii) Unfunded Benefit Liabilities.
"DEFAULT" means any event which, with the passage of time or the giving of
notice or both, would (if not cured within any applicable cure period)
constitute an Event of Default.
"DEFAULT RATE" means a floating per annum rate equal to two percent (2%)
above the Prime Rate. However, in no event will the "Default Rate" exceed the
maximum interest rate permitted by law.
List of Defined Terms - Page 6
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"DEMAND DEADLINE" means any date specified in the Guaranty as the date
after which no new demand for payment may be made upon the Guarantor pursuant to
the Guaranty. As of the Effective Date, the Demand Deadline is December 31,
1999.
"DEPOSIT TAKER" means any of Banque Nationale de Paris or its Affiliates
authorized to take deposits and any of the Participants or their Affiliates
authorized to take deposits; provided, an Affiliate of any Participant shall not
qualify as a Deposit Taker unless such Participant has guaranteed the return of
any Restricted Funds (and interest thereon) which BNPLC may have on deposit with
such Affiliate from time to time pursuant to a written guaranty in form and
substance approved by Chiron; and, provided further, that any Deposit Taker
other than an Affiliate of BNPLC must agree unconditionally (pursuant to an
agreement acceptable to Chiron) to remit all interest earned on Restricted Funds
deposited with it to BNPLC at least once each calendar quarter, so that BNPLC
may itself remit all such interest to Chiron as provided in Paragraph 4 of the
Purchase Agreement.
"DESIGNATED SALE DATE" means the earlier of:
(1) any Business Day designated as such in a notice given by BNPLC to
Chiron after:
(A) an Event of Default or a breach by Chiron of any of the
Purchase Documents (and the expiration of any applicable cure or
notice periods which may be expressly provided in the Purchase
Documents), including any breach by Chiron of Paragraph 4 of the
Purchase Agreement, which concerns Chiron's obligation to deposit
Restricted Funds if certain conditions specified in that Paragraph are
not satisfied; or
(B) any failure of Chiron for any reason whatsoever (other than
because of a refusal by BNPLC to fund requested Construction Advances
in breach of the Lease or when, but for the condition specified in
subparagraph 6.(c)(x) of the Lease, such refusal would constitute a
breach of the Lease), on the date which is 120 days before any Demand
Deadline under the Guaranty, to have (1) caused the initial
Construction Project and any subsequent Construction Projects which
are commenced prior to such date to have been completed in a good and
workmanlike manner, substantially in accordance with Applicable Laws,
and otherwise in compliance with the provisions of (x) the Lease, (y)
the Permitted Encumbrances and (z) the Development Contracts, and (2)
satisfied the conditions required to obtain with respect to then
existing Improvements any final certificates of occupancy required for
the use and occupancy thereof, a certificate of compliance from the
City of Emeryville and a certificate of completion from the
Redevelopment Agency as contemplated by the Development Contracts;
(2) any Business Day designated as such in an irrevocable,
unconditional notice given by Chiron to BNPLC; provided, the Business Day
so designated by Chiron must be no earlier than thirty days after the date
of such notice, unless the notice is given as contemplated in
subparagraph 17.(b) of the Lease when an Event of Default has occurred and
is continuing, in which case the Business Date so designated must be
consistent with the requirements for an effective cure as specified in
subparagraph 17.(b) of the Lease; or
(3) the first Business Day of the fifty-second calendar month after
the calendar month which includes the Base Rent Commencement Date.
List of Defined Terms - Page 7
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If BNP sends a notice to Chiron pursuant to the preceding clause (1) properly
designating a Designated Sale Date, and Chiron sends a notice to BNP pursuant to
the preceding clause (2) properly designating a different Designated Sale Date,
the earlier of the two dates so designated shall be the "Designated Sale Date"
hereunder regardless of which notice was first sent.
"DEVELOPMENT CONTRACTS" means the contracts, ordinances and other documents
described in SCHEDULE 2 attached to the Lease, as the same may be modified from
time to time in accordance with the Ground Lease and the Lease (including
modifications authorized pursuant to subparagraphs 7.(b) and 7.(c) of the
Lease), and any applications, permits or certificates concerning or affecting
the use or development of the Property that may be submitted, issued or executed
from time to time as contemplated in such contracts, ordinance and other
documents or that BNPLC may hereafter execute, approve or consent to at the
request of Chiron.
"EFFECTIVE DATE" means July 1, 1996.
"EFFECTIVE RATE" means for each Construction Period and for each Base Rent
Period, the per annum rate determined by dividing (A) LIBOR for such
Construction Period or Base Rent Period, as the case may be, by (B) 100% minus
the Eurodollar Rate Reserve Percentage for such Construction Period or Base Rent
Period. If LIBOR or the Eurodollar Rate Reserve Percentage changes from
Construction Period to Construction Period or from Base Rent Period to Base Rent
Period, then the Effective Rate shall be automatically increased or decreased as
of the date of such change, as the case may be, without prior notice to Chiron.
If for any reason BNPLC determines that it is impossible or unreasonably
difficult to determine the Effective Rate with respect to a given Construction
Period or Base Rent Period in accordance with the foregoing, then the "EFFECTIVE
RATE" for that Construction Period or Base Rent Period shall equal any published
index or per annum interest rate determined in good faith by BNPLC's Parent to
be comparable to LIBOR at the beginning of the first day of that period. A
comparable interest rate might be, for example, the then existing yield on short
term United States Treasury obligations (as compiled by and published in the
then most recently published United States Federal Reserve Statistical Release
H.15(519) or its successor publication), plus or minus a fixed adjustment based
on BNPLC's Parent's comparison of past eurodollar market rates to past yields on
such Treasury obligations. Any determination by BNPLC of the Effective Rate
under this definition shall, in the absence of clear and demonstrable error, be
conclusive and binding upon Chiron.
"ENVIRONMENTAL CONSULTANT" means a qualified individual employed by a
qualified firm. Individuals shall be deemed qualified if they (i) possess at
least five years of experience in performing environmental, engineering and
consulting services; (ii) have performed or supervised at least five projects
involving remediation of soil contaminated with hazardous substances, including
at least one project similar to the Remedial Work; (iii) have all licenses
required under applicable law for the Remedial Work; and (iv) have at least a
bachelor's degree in the physical sciences or a related field from an accredited
college or university. A firm shall be deemed qualified if it is: (i) a
nationally recognized, reputable environmental and/or engineering firm in the
business of providing professional environmental engineering and consulting
services; (ii) has experience and expertise in projects involving the Remedial
Work; (iii) maintains policies of insurance which are approved by BNPLC in its
reasonable discretion. Erler & Kalinowski, Inc., shall be deemed to be an
Environmental Consultant.
"ENVIRONMENTAL CUTOFF DATE" means the later of the dates upon which (i) the
Lease terminates, (ii) Chiron surrenders possession of the Property or (iii)
Chiron ceases to have any leasehold or other interest in the Property under the
Lease or otherwise.
List of Defined Terms - Page 8
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"ENVIRONMENTAL LAWS" means any and all existing and future Applicable Laws
pertaining to safety, health or the environment, or to Hazardous Substances or
Hazardous Substance Activities, including the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended by the Superfund
Amendments and Reauthorization Act of 1986 (as amended, "CERCLA"), and the
Resource Conservation and Recovery Act of 1976, as amended by the Used Oil
Recycling Act of 1980, the Solid Waste Disposal Act Amendments of 1980, and the
Hazardous and Solid Waste Amendments of 1984 (as amended, "RCRA").
"ENVIRONMENTAL LOSSES" means Losses suffered or incurred by any Interested
Party relating to or arising out of, based on or as a result of: (i) any
Hazardous Substance Activity that occurs or is alleged to have occurred on or
prior to the Environmental Cutoff Date; (ii) any violation on or prior to the
Environmental Cutoff Date of Environmental Laws relating to the Property or to
the ownership, use, occupancy or operation thereof; (iii) any investigation,
inquiry, order, hearing, action, or other proceeding by or before any
governmental or quasi-governmental agency or authority in connection with any
Hazardous Substance Activity that occurs or is alleged to have occurred in whole
or in part on or prior to the Environmental Cutoff Date; or (iv) any claim,
demand, cause of action or investigation, or any action or other proceeding,
whether meritorious or not, brought or asserted against any Interested Party
which relates to, arises from, is based on, or results from any of the matters
described in clauses (i), (ii) or (iii) of this definition, or any allegation of
any such matters. For purposes of determining whether Losses constitute
"Environmental Losses," any actual or alleged Hazardous Substance Activity or
violation of Environmental Laws relating to the Property will be presumed to
have occurred prior to the Environmental Cutoff Date unless Chiron establishes
by clear and convincing evidence to the contrary that the relevant Hazardous
Substance Activity or violation of Environmental Laws did not occur or commence
prior to the Environmental Cutoff Date. Even if after the Environmental Cutoff
Date Losses are incurred by or asserted against a particular Interested Party
that would not have been incurred or asserted, but for any matter described in
clauses (i), (ii) or (iii) of this definition, or an allegation of any such
matter, then such Losses will constitute Environmental Losses.
"ENVIRONMENTAL REPORTS" means collectively:
(i) the letter dated June 21, 1996, from Barbara J. Cook, DTSC, to Ric
Notini, Chiron, re "Chiron Corporation Site, Former Pacific Gas & Electric
Property, Emeryville, California - Draft Removal Action Workplan";
(ii) that certain "Removal Action Workplan for the Ramp Area on the
Former PG&E/City of Emeryville Redevelopment Agency Property," prepared by
Erler & Kalinowski, Inc., dated June 21, 1996;
(iii) the letter dated June 18, 1996, from Karen M. Toth, DTSC,
to Ric Notini, Chiron, re "Chiron Corporation Site, Former Pacific Gas
& Electric Property, Emeryville, California - Removal Action Workplan
Comments";
(iv) the letter dated May 22, 1996, from Stephen I. Morse, RWQCB, to
Ric Notini, Chiron, re "Properties North of 53rd Street, Chiron Life
Sciences Center Project, Emeryville, Alameda County";
List of Defined Terms - Page 9
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(v) that certain "Final Risk Management Plan for Construction of the
Chiron Life Sciences Center Project Properties North of 53rd Street,
Emeryville, California," prepared by Erler & Kalinowski, Inc., dated
May 21, 1996;
(vi) that certain "Site Safety and Health Plan for the Chiron Life
Sciences Center, Emeryville, California, Phase 1 - Soil Excavation
Activities", prepared by James T. Dufour, dated May 15, 1996;
(vii) the memorandum dated May 2, 1996, from Vera Nelson and Steve
Tarantino, Erler & Kalinowski, Inc., to Ric Notini, Chiron, re "Estimated
Incremental Costs for Anticipated Environmental Response Activities Phase I
Development of Former PG&E Property and Chapman Property Chiron Corporation
Emeryville, California (EKI 930028.99)";
(viii) the letter dated April 9, 1996, from Ronald Pilorin, DTSC, to
Vera H. Nelson, Erler & Kalinowski, Inc., re "Request for Concurrence for
Excavated Soils Generated from Chiron Corporation's (Chiron) campus
Expansion Properties Located North of 53rd Street in Emeryville, California
- Waste Evaluation Unit File #F155 (WEU File #F155)";
(ix) that Voluntary Cleanup Agreement, IN THE MATTER OF CHIRON
CORPORATION, Docket No. HSA-95/96-059, dated April 1, 1996;
(x) the letter dated September 22, 1995 from Barbara Cook, DTSC, to
Ric Notini, Chiron, re "Chiron Corporation Site, Former Pacific Gas &
Electric Property, Emeryville, California - Voluntary Cleanup Agreement";
(xi) "Classification of Soil to be Excavated During Chiron
Corporation's Campus Expansion Property North of 53rd Street, Chiron
Corporation, Emeryville, California," prepared by Erler & Kalinowski, Inc.,
dated September 22, 1995;
(xii) that certain Memorandum to Jerry Hoekwater, Steve Johnson, and
Ric Notini of Chiron Corporation, from Michelle King and Vera Nelson of
Erler & Kalinowski, Inc., re "Summary of Soil and Groundwater Sampling
Analytical Results for the Designated Construction Areas North of 53rd
Street, Chiron Corporation, Emeryville, California," dated March 29, 1996;
(xiii) the letter dated March 20, 1995, from Steven R. Ritchie and
Stephen I. Morse, RWQCB, to Ric Notini, Chiron re "Approval of Health and
Environmental Risk Assessment Properties North of 53rd Street Chiron Master
Plan Development Emeryville, Alameda County";
(xiv) the letter dated March 15, 1995, from Susan L. Hugo and Ravi
Arulanantham, ACDEH, to Ric Notini, Chiron, re "Approval of Health and
Environmental Risk Assessment Properties North of 53rd Street Chiron Master
Plan Development Emeryville, California";
(xv) "Final Health and Environmental Risk Assessment Property North of
53rd Street, Chiron Corporation, Emeryville, California, Volumes I and II,"
prepared by Erler & Kalinowski, Inc., dated March 10, 1995;
List of Defined Terms - Page 10
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(xvi) "Preliminary Site Investigation Report Chapman Property, Chiron
Corporation, Emeryville, California," prepared by Erler and Kalinowski,
Inc., dated January 26, 1994;
(xvii) the letter dated January 10, 1995 from Ric Notini, Chiron, the
Chemical Emergency Planning and Response Commission;
(xviii) the letter dated October 21, 1993, from Brian P. Oliva, ACDEH,
to Harrold B. Chapman, re "Underground Storage Tanks at Chiron Corporation,
4560 Horton Street, Emeryville, CA 94608"; and
(xix) "Preliminary Site Investigation Report, Chiron Site, Chiron
Corporation, Emeryville, California, Volumes I and II" prepared by Erler &
Kalinowski, Inc., dated September 8, 1993.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, together with all rules and regulations promulgated
with respect thereto.
"ERISA AFFILIATE" means any Person who for purposes of Title IV of ERISA is
a member of Chiron's controlled group, or under common control with Chiron,
within the meaning of Section 414 of the Internal Revenue Code, and the
regulations promulgated and rulings issued thereunder.
"ERISA TERMINATION EVENT" means (i) the occurrence with respect to any Plan
of a reportable event described in Section 4043(c) of ERISA for which any
penalty or notice thereof has not been waived pursuant to regulations, rulings,
or notices issued by the Pension Benefit Guaranty Corporation pursuant to a
waiver by such corporation under Section 4043(a) of ERISA, or (ii) the filing of
a notice of intent to terminate any Plan or the treatment of any Plan amendment
as a termination under Section 4041 of ERISA (other than in connection with a
standard termination of a fully funded Plan pursuant to Section 4041 of ERISA),
or (iii) the institution of proceedings to terminate any Plan by the Pension
Benefit Guaranty Corporation under Section 4042 of ERISA, or (iv) any other
event or condition which would constitute grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any Plan.
"ESCROWED PROCEEDS" means any proceeds that are received by BNPLC from time
to time during the Term (and any interest earned thereon), which BNPLC is
holding for the purposes specified in the next sentence, from any party (1)
under any property insurance policy as a result of damage to the Property, (2)
as compensation for any restriction placed upon the use or development of the
Property or for the condemnation of the Property or any portion thereof, (3)
because of any judgment, decree or award for injury or damage to the Property or
(4) under any title insurance policy or otherwise as a result of any title
defect or claimed title defect with respect to the Property; provided, however,
in determining the amount of "Escrowed Proceeds" there shall be deducted all
expenses and costs of every type, kind and nature (including Attorneys' Fees)
incurred by BNPLC to collect such proceeds; and provided, further, "Escrowed
Proceeds" shall not include any payment to BNPLC by a Participant or an
Affiliate of BNPLC that is made to compensate BNPLC for the Participant's or
Affiliate's share of any Losses BNPLC may incur as a result of any of the events
described in the preceding clauses (1) through (4). "Escrowed Proceeds" shall
include only such proceeds as are held by BNPLC (A) pursuant to Paragraph 11 of
the Lease for the payment to Chiron for the restoration or repair of the
Property or (B) for application as a Qualified Payment or as reimbursement of
Breakage Costs or other costs incurred in connection with a Qualified Payment.
"Escrowed Proceeds" shall not include any proceeds that have been applied as a
Qualified Payment or to pay any Breakage Costs or other costs incurred in
connection with a Qualified Payment. Until Escrowed Proceeds are paid to Chiron
List of Defined Terms - Page 11
<PAGE>
pursuant to Paragraph 11 of the Lease or applied as a Qualified Payment or as
reimbursement for costs incurred in connection with a Qualified Payment, BNPLC
shall keep the same deposited in an interest bearing account, and all interest
earned on such account shall be added to and made a part of Escrowed Proceeds.
"ESTABLISHED MISCONDUCT" of a Person means, and is limited to: (1) if the
Person is bound by the Lease or the Purchase Documents or the Ground Lease, a
breach by such Person of the express provisions of the Lease or the Purchase
Documents or the Ground Lease that continues beyond any period for cure provided
therein, and (2) conduct of such Person or its Affiliates that has been
determined to constitute wilful misconduct or Active Negligence in or as a
necessary element of a final judgment rendered against such Person by a court
with jurisdiction to make such determination. Established Misconduct of one
Interested Party shall not be attributed to a second Interested Party unless the
second Interested Party is an Affiliate of the first. Negligence which does not
constitute Active Negligence shall not in any event constitute Established
Misconduct. For purposes of this definition, "conduct of a Person" will include
the conduct of an employee of that Person, but only to the extent that the
employee is acting within the scope of his employment by that Person, as
determined in or as a necessary element of a final judgment rendered against
such Person by a court with jurisdiction to make such determination. For
purposes of this definition, "conduct of a Person" will also include the conduct
of an agent of that Person (such as an independent environmental consultant
engaged by that Person), but only to the extent that the agent is, as determined
in or as a necessary element of a final judgment rendered against such Person by
a court with jurisdiction to make such determination, (x) acting within the
scope of the authority granted to him by such Person, (y) not acting with the
consent or approval of or under the direction of Chiron or Chiron's Affiliates,
employees or agents, and (z) not acting in good faith to mitigate Losses that
such Person may suffer because of a breach by Chiron of the Lease or the Ground
Lease.
"EUROCURRENCY LIABILITIES" shall have the meaning assigned to it in
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
"EURODOLLAR RATE RESERVE PERCENTAGE" means, for purposes of determining the
Effective Rate for any Construction Period or Base Rent Period, the reserve
percentage applicable two Business Days before the first day of such period
under regulations issued from time to time by the Board of Governors of the
Federal Reserve System (or any successor) for determining the maximum reserve
requirement (including any emergency, supplemental or other marginal reserve
requirement) for BNPLC's Parent with respect to liabilities or deposits
consisting of or including Eurocurrency Liabilities (or with respect to any
other category or liabilities by reference to which LIBOR is determined) having
a term comparable to such period.
"EVENT OF DEFAULT" shall have the meaning assigned to it in
subparagraph 17.(a) of the Lease.
"EXCLUDED TAXES" means (1) all federal, state and local income taxes upon
Base Rent, the Upfront Fee, Administrative Fees, Commitment Fees, any interest
paid to BNPLC pursuant to subparagraph 4.(h) of the Lease and any additional
compensation claimed by BNPLC pursuant to subparagraph 5.(c)(iii) of the Lease;
(2) all federal, state and local income taxes upon any amounts paid as
reimbursement for or to satisfy Losses incurred by BNPLC to the extent such
taxes are offset by a corresponding reduction of BNPLC's income taxes because of
BNPLC's deduction of the reimbursed Losses from BNPLC's taxable income or
because of any tax credits attributable thereto; (3) taxes imposed by any
governmental authority outside the United States of America; and (4) any
transfer or change of ownership taxes assessed because of BNPLC's transfer or
conveyance to any third party of BNPLC's rights or interests in the Lease, the
Purchase Documents, the Ground Lease or the Property, but excluding any such
taxes assessed because of any Permitted Transfer. For purposes of this
definition, income taxes shall include any income
List of Defined Terms - Page 12
<PAGE>
taxes (whether or not so designated) imposed under the Code or California Bank
and Corporation Tax Law as well as Texas corporate franchise taxes.
"EXISTING PARTICIPATION AGREEMENTS" means the Participation Agreements
dated June 28, 1996 between BNPLC and the Participants listed in SCHEDULE 1
attached to the Lease, as such Participation Agreements may be extended,
supplemented, amended, restated or otherwise modified from time to time in
accordance with their terms.
"FAIR MARKET VALUE" means the fair market value of the Property on or about
the Designated Sale Date (calculated under the assumptions, whether or not then
accurate, that Chiron has fulfilled and can be expected to continue to fulfill
its obligations under the Ground Lease; that Chiron has maintained the Property
in compliance with all Applicable Laws [including Environmental Laws]; that
Chiron has completed all Construction Projects, the construction of which was
commenced prior to the Designated Sale Date; that all such Construction Projects
are self-sufficient in the sense that any easements or offsite facilities needed
under the Development Contracts or otherwise for the use of the Improvements
will be available at no additional cost to the owner of the Improvements; that
Chiron has repaired and restored the Property after any damage following fire or
other casualty; that Chiron has restored the remainder of the Property after any
partial taking by eminent domain; that Chiron has completed any contests of and
paid any taxes due [other than Excluded Taxes] or other amounts secured by or
allegedly secured by a lien against the Property, including any assessment
liens, but not including Liens Removable by BNPLC; that no conditions or
circumstances on or about the Property [such as the presence of an endangered
species] is discovered that will impede development of the Property; that
development of the Property will not be hindered or delayed because of the
limited availability of utilities or water; that any purchaser paying fair
market value for the Property will receive copies of all of Chiron's books and
records which are necessary or useful to a future owner's or occupant's use of
the Property in the manner permitted by the Lease, including books and records
evidencing the testing and validation of the Property for the uses permitted by
the Lease; that without undue cost or delay any such purchaser can obtain any
necessary permits or licenses needed to use the Property for the purposes
permitted by the Lease; and that Chiron has cured any title defects affecting
the Property other than Liens Removable by BNPLC, all in accordance with the
standards and requirements of the Lease [as though the Lease were continuing in
force] and the Ground Lease) as determined by an independent MAI appraiser
selected by BNPLC, which appraiser must have five years or more experience
appraising similar properties in northern California.
"FED FUNDS RATE" means, for any period, a fluctuating interest rate
(expressed as a per annum rate and rounded upwards, if necessary, to the next
1/16 of 1%) equal for each day during such period to the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rates are not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by BNPLC's Parent from three Federal funds brokers of
recognized standing selected by BNPLC's Parent. All determinations of the Fed
Funds Rate by BNPLC's Parent shall, in the absence of clear and demonstrable
error, be binding and conclusive upon Chiron.
"FUNDING ADVANCES" means (1) the Initial Funding Advance and (2) all future
advances (which, together with Initial Funding Advance, are expected to total
but in no event exceed $195,000,000) made by BNPLC's Parent or any Participant
to or on behalf of BNPLC to allow BNPLC to provide the Construction Allowance
under the Lease.
List of Defined Terms - Page 13
<PAGE>
"GAAP" means generally accepted accounting principles in the United States
of America as in effect from time to time, applied on a basis consistent with
those used in the preparation of the financial statements referred to in
subparagraph 16.(a) of the Lease (except for changes concurred in by Chiron's
independent public accountants).
"GROUND LEASE" means the separate Ground Lease dated June 28, 1996 executed
by Chiron, as lessor, and BNPLC, as lessee, pursuant to which Chiron is leasing
the Land to BNPLC for a term of approximately 341/2 years, as such Ground Lease
may be extended, supplemented, amended, restated or otherwise modified from time
to time in accordance with its terms.
"GUARANTY" means the Guaranty dated June 28, 1996 given by Guarantor to
BNPLC, guarantying the obligations of Chiron under the Lease, the Purchase
Agreement and the Ground Lease, as such Guaranty may be extended, supplemented,
amended, restated or otherwise modified from time to time with the consent of
BNPLC.
"GUARANTOR" means Ciba-Geigy, Ltd., the largest shareholder of Chiron as of
the Effective Date, and any successor of Ciba-Geigy through merger.
"HAZARDOUS SUBSTANCE" means (i) any chemical, compound, material, mixture
or substance that is now or hereafter defined or listed in, regulated under, or
otherwise classified pursuant to, any Environmental Laws as a "hazardous
substance," "hazardous material," "hazardous waste," "extremely hazardous waste
or substance," "infectious waste," "toxic substance," "toxic pollutant," or any
other formulation intended to define, list or classify substances by reason of
deleterious properties, including ignitability, corrosiveness, reactivity,
carcinogenicity, toxicity or reproductive toxicity; (ii) petroleum, any fraction
of petroleum, natural gas, natural gas liquids, liquified natural gas, synthetic
gas usable for fuel (or mixtures of natural gas and such synthetic gas), and ash
produced by a resource recovery facility utilizing a municipal solid waste
stream, and drilling fluids, produced waters and other wastes associated with
the exploration, development or production of crude oil, natural gas or
geothermal resources; (iii) asbestos and any asbestos containing material; (iv)
"waste" as defined in section 13050(d) of the California Water Code; and (v) any
other material that, because of its quantity, concentration or physical or
chemical characteristics, poses a significant present or potential hazard to
human health or safety or to the environment if released into the workplace or
the environment.
"HAZARDOUS SUBSTANCE ACTIVITY" means any actual, proposed or threatened
use, storage, holding, release (including any spilling, leaking, leaching,
pumping, pouring, emitting, emptying, dumping, disposing into the environment,
and the continuing migration into or through soil, surface water, groundwater or
any body of water), discharge, deposit, placement, generation, processing,
construction, treatment, abatement, removal, disposal, disposition, handling or
transportation of any Hazardous Substance from, under, in, into or on the
Property, including the movement or migration of any Hazardous Substance from
surrounding property, surface water, groundwater or any body of water under, in,
into or onto the Property and any resulting residual Hazardous Substance
contamination in, on or under the Property. "HAZARDOUS SUBSTANCE ACTIVITY" also
means any existence of Hazardous Substances on the Property that would cause the
Property or the owner or operator thereof to be in violation of, or that would
subject the Property to any remedial obligations under, any Environmental Laws,
including CERCLA and RCRA, assuming disclosure to the applicable governmental
authorities of all relevant facts, conditions and circumstances pertaining to
the Property.
List of Defined Terms - Page 14
<PAGE>
"HAZWOPER REGULATIONS" means the requirements set forth in Section 5192 of
title 8 of the California Code of Regulations and Section 1910.120 of title 29
of the Code of Federal Regulations, and any other applicable standards for
protecting the health and safety of workers conducting operations at hazardous
waste sites.
"IMPOSITIONS" means all sales, excise, ad valorem, gross receipts,
business, transfer, stamp, occupancy, rental and other taxes, levies, fees,
charges, surcharges, assessments or penalties which arise out of or are
attributable to the Lease or which are imposed upon BNPLC or the Property
because of the ownership, leasing, occupancy, sale or operation of the Property,
or any part thereof or interest therein, or relating to or required to be paid
by the Ground Lease or any of the Permitted Encumbrances or the Development
Contracts, excluding only Excluded Taxes. "IMPOSITIONS" shall include real
estate taxes imposed because of a change of use or ownership of the Property on
or prior to the date of any sale by BNPLC pursuant to the Purchase Agreement.
"IMPROVEMENTS" shall have the meaning assigned to it in the Ground Lease,
and will include not only existing improvements to the Land as of the Effective
Date, if any, but also any new improvements or changes to existing improvements
made by Chiron. Accordingly, any and all new improvements made to the Property
by Chiron using the Construction Allowance as contemplated in the Lease shall
constitute Improvements as that term is used in the documents to which these
definitions are attached.
"INDUSTRIAL HYGIENIST" means an industrial hygienist certified by the
American Board of Industrial Hygiene who is experienced with required and
appropriate health and safety standards and good industrial hygiene practice
related to operations at hazardous waste sites.
"INITIAL FUNDING ADVANCE" means the advance of $4,964,881.32 made by
BNPLC's Parent (directly or through one or more of its Affiliates) and/or
Participants to or on behalf of BNPLC on or prior to the Effective Date to cover
the cost of BNPLC's acquisition of the Property and certain Transaction
Expenses.
"INTERESTED PARTY" means each of (1) BNPLC, its Affiliates and its
successors and assigns as to the Property or any part thereof or any interest
therein, (2) BNPLC's Parent, and (3) the Participants and their permitted
successors and assigns under their respective Participation Agreements with
BNPLC; provided, however, none of the following shall constitute an Interested
Party: (a) any Person to whom BNPLC may transfer an interest in the Property by
a conveyance that is not a Permitted Transfer and others that cannot lawfully
claim an interest in the Property except through or under such a transfer by
BNPLC, (b) Chiron or any Person that cannot lawfully claim an interest in the
Property except through or under a conveyance from Chiron after Chiron's
conveyance of the leasehold estate to BNPLC under the Ground Lease, or (c) any
Applicable Purchaser under the Purchase Agreement and any Person that cannot
lawfully claim an interest in the Property except through or under a conveyance
from such Applicable Purchaser.
"LAND" means the land covered by the Ground Lease from time to time. Upon
the Effective Date, the Land shall be as described in EXHIBIT A attached to the
Ground Lease, the Lease and the Purchase Agreement. However, upon any amendment
to the Ground Lease which modifies the land covered thereby, including any such
amendment executed by BNPLC and Chiron pursuant to Paragraph 4 of the Ground
Lease, the land covered by the Lease and Purchase Agreement shall automatically
be so modified.
List of Defined Terms - Page 15
<PAGE>
"LEASE" means the Lease Agreement dated June 28, 1996 between BNPLC, as
landlord, and Chiron, as tenant, pursuant to which Chiron has agreed to lease
BNPLC's interest in the Property, as such Lease Agreement may be extended,
supplemented, amended, restated or otherwise modified from time to time in
accordance with its terms.
"LIBOR" means, for purposes of determining the Effective Rate for each
Construction Period or Base Rent Period, the rate determined by BNPLC's Parent
to be the average rate of interest per annum (rounded upwards, if necessary, to
the next 1/16 of 1%) of the rates at which deposits of dollars are offered or
available to BNPLC's Parent in the London interbank market at approximately
11:00 a.m. (London time) on the second Business Day preceding the first day of
such period. BNPLC shall instruct BNPLC's Parent to consider deposits, for
purposes of making the determination described in the preceding sentence, that
are offered: (i) for delivery on the first day of such Construction Period or
Base Rent Period, as the case may be, (ii) in an amount equal or comparable to
the total (projected on the applicable date of determination by BNPLC's Parent)
Stipulated Loss Value on the first day of such period, and (iii) for a time
equal or comparable to the length of such period. If BNPLC's Parent so chooses,
it may determine LIBOR for any period by reference to the rate reported by the
British Banker's Association on Page 3750 of the Telerate Service at
approximately 11:00 a.m. (London time) on the second Business Day preceding the
first day of such period. If for any reason BNPLC's Parent determines that it
is impossible or unreasonably difficult to determine LIBOR with respect to a
given Construction Period or Base Rent Period in accordance with the foregoing,
or if BNPLC's Parent shall determine that it is unlawful (or any central bank or
governmental authority shall assert that it is unlawful) for BNPLC, BNPLC's
Parent or any Participant to provide or maintain Funding Advances during any
Construction Period or Base Rent Period for which Carrying Costs or Base Rent is
computed by reference to LIBOR, then "LIBOR" for that period shall equal the
rate which is fifty basis points (50/100 of 1%) above the Fed Funds Rate for
that period. All determinations of LIBOR by BNPLC's Parent shall, in the
absence of clear and demonstrable error, be binding and conclusive upon Chiron.
"LIBOR PERIOD ELECTION" for any Base Rent Period means a period of one
month, three months, six months, nine months or twelve months as designated by
Chiron at least ten Business Days prior to the commencement of such Base Rent
Period by a notice given to BNPLC in the form of EXHIBIT H attached to the
Lease. (For purposes of the Lease a LIBOR Period Election for any Base Rent
Period shall also be considered the LIBOR Period Election in effect on (1) the
Base Rent Commencement Date or Base Rent Date upon which such Base Rent Period
begins and (2) subsequent Base Rent Dates, if any, which occur before the date
upon which such Base Rent Period ends.) Any Libor Period Election so designated
by Chiron shall remain in effect for the entire Base Rent Period specified in
Chiron's notice to BNPLC (provided such Base Rent Period commences at least ten
Business Days after BNPLC's receipt of the notice) and for all subsequent Base
Rent Periods until a new designation becomes effective in accordance with the
provisions set forth in this definition. Notwithstanding the foregoing,
however: (1) Chiron shall not be entitled to designate a LIBOR Period Election
that would cause a Base Rent Period to extend beyond the end of the scheduled
Term; (2) changes in the LIBOR Period Election shall become effective only upon
the commencement of a new Base Rent Period; (3) for any Base Rent Period which
will end on or after the first Business Day in October, 1999, the only LIBOR
Period Election permitted shall be one month if for any reason whatsoever Chiron
shall not, before such period begins, have deposited all Restricted Funds
required by Paragraph 4 of the Purchase Agreement or otherwise entered into
agreements with BNPLC which will excuse Chiron's obligation to deposit
Restricted Funds as contemplated by that Paragraph; and (4) if Chiron fails to
make a LIBOR Period Election consistent with the foregoing requirements for any
Base Rent Period, or if an Event of Default shall have occurred and be
continuing on the third Business Day preceding the commencement of any Base Rent
Period, the LIBOR Period Election for such Base Rent Period shall be deemed to
be one month.
List of Defined Terms - Page 16
<PAGE>
"LIEN" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including any agreement to give any of the foregoing, any
conditional sale or other title retention agreement, any lease in the nature
thereof, any agreement to sell receivables with recourse, and the filing of or
agreement to give any financing statement under the Uniform Commercial Code of
any jurisdiction). Customary bankers' rights of set-off arising by operation of
law or by contract (however styled, if the contract grants rights no greater
than those arising by operation of law) in connection with working capital
facilities, lines of credit, term loans and letter of credit facilities and
other contractual arrangements entered into with banks in the ordinary course of
business are not "Liens" for the purposes of the Lease.
"LIENS REMOVABLE BY BNPLC" means, and is limited to, Liens encumbering the
Property that are asserted (1) other than as contemplated by the Lease or the
Purchase Documents or the Ground Lease, by BNPLC itself, (2) by third parties
lawfully claiming through or under BNPLC (which for purposes of the Lease shall
include any judgment liens established against the Property because of a
judgment rendered against BNPLC and shall also include any liens established
against the Property to secure past due Excluded Taxes), or (3) by third parties
claiming under a deed or other instrument duly executed by BNPLC; provided,
however, Liens Removable by BNPLC shall not include (A) any Permitted
Encumbrances or Development Contracts (regardless of whether claimed through or
under BNPLC), (B) the Lease, the Ground Lease, the Purchase Documents or any
other document executed by BNPLC contemporaneously with the execution of the
Lease, (C) Liens which are neither lawfully claimed through or under BNPLC (as
described above) nor claimed under a deed or other instrument duly executed by
BNPLC, (D) Liens claimed by Chiron or claimed through or under a conveyance made
by Chiron after Chiron's conveyance of the leasehold estate to BNPLC under the
Ground Lease, (E) Liens arising because of BNPLC's compliance with Applicable
Law, the Ground Lease, Permitted Encumbrances, the Development Contracts or any
written request made by Chiron, (F) Liens securing the payment of property taxes
or other amounts assessed against the Property by any governmental authority,
other than to secure the payment of past due Excluded Taxes or to secure damages
caused by (and attributed by any applicable principles of comparative fault to)
BNPLC's own Established Misconduct, or (G) Liens resulting from or arising in
connection with any breach by Chiron of the Lease, the Purchase Documents or the
Ground Lease.
"LIST OF DEFINED TERMS" means this List of Defined Terms, which is attached
to and made a part of the Lease, the Purchase Agreement and the Ground Lease.
"LOSSES" means any and all losses, liabilities, damages (whether actual,
consequential, punitive or otherwise denominated), demands, claims, actions,
judgments, causes of action, assessments, fines, penalties, costs, and
out-of-pocket expenses (including Attorneys' Fees and the fees of outside
accountants and environmental consultants), of any and every kind or character,
foreseeable and unforeseeable, liquidated and contingent, proximate and remote.
"MATERIAL ENVIRONMENTAL COMMUNICATION" means a communication between Chiron
or its agents and a regulatory agency or third party, which causes, or
potentially could cause (whether by implementation of or response to said
communication), a material change in the scope, duration, or nature of the
Remedial Work.
"MAXIMUM CONSTRUCTION ALLOWANCE" means an amount equal to $195,000,000,
less the Initial Funding Advance.
"OUTSTANDING CONSTRUCTION ALLOWANCE" shall have the meaning assigned to it
in subparagraph 6.(a)(i) of the Lease.
List of Defined Terms - Page 17
<PAGE>
"PARCEL 7A" shall have the meaning assigned to it in subparagraph 4(a) of
the Ground Lease.
"PARTICIPANT" means any Person other than BNPLC's Parent that agrees in
writing with BNPLC or another Participant to participate in all or some of the
risks and rewards to BNPLC of the Lease, the Purchase Documents and the Ground
Lease. As of the Effective Date, all Participants are listed in SCHEDULE 1
attached to the Lease, but BNPLC may agree after the Effective Date to share in
risks and rewards of the Lease, the Purchase Documents and the Ground Lease with
other Persons approved as Participants in advance by Chiron (which approval
shall not be unreasonably withheld for any proposed Participant that is a
commercial bank operating in the United States of America having capital and
surplus in excess of $500,000,000 or for any Affiliate of such a bank; provided,
that any Participation Agreement between such proposed Participant and BNPLC
will be in substantially the same form as the Existing Participation
Agreements).
"PARTICIPATION AGREEMENTS" means Participation Agreements between BNPLC and
one or more third parties, pursuant to which the third party or parties become
Participants by agreeing to participate in all or some of the risks and rewards
to BNPLC of the Lease, the Purchase Documents and the Ground Lease, as such
Participation Agreements may be extended, supplemented, amended, restated or
otherwise modified from time to time in accordance with their terms.
"PERMITTED ENCUMBRANCES" means (i) the encumbrances and other matters
affecting the Property that are set forth in EXHIBIT B attached to the Lease,
(ii) any easement agreement or other document affecting title to the Property
executed by BNPLC at the request of or with the consent of Chiron, and (iii) any
liens from time to time imposed to secure only ad valorem taxes on the Property
which, at the time in question, are not delinquent.
"PERMITTED HAZARDOUS SUBSTANCE USE" means the use, generation, storage and
offsite disposal of Permitted Hazardous Substances in strict accordance with
applicable Environmental Laws and with due care given the nature of the
Hazardous Substances involved; provided, the scope and nature of such use,
generation, storage and disposal shall not include the use of underground
storage tanks for any purpose other than the storage of water for fire control,
nor shall such scope and nature:
(1) exceed that reasonably required for the construction of
Construction Projects permitted by the Lease or for the operation of the
Property for the purposes expressly permitted under subparagraph 3.(a) of
the Lease; or
(2) include any disposal, discharge or other release of Hazardous
Substances from the Property in any manner that might allow such substances
to reach surface water or groundwater, except (i) through a lawful and
properly authorized discharge (A) to a publicly owned treatment works or
(B) with rainwater or storm water runoff in accordance with Applicable Laws
and any permits obtained by Chiron that govern such runoff; or (ii) any
such disposal, discharge or other release of Hazardous Substances for which
no permits are required and which are not otherwise regulated under
applicable Environmental Laws.
Further, notwithstanding anything to the contrary herein contained, Permitted
Hazardous Substance Use shall not include any use of the Property in a manner
that requires a RCRA treatment, storage or disposal permit, including a
landfill, incinerator or other waste disposal facility.
"PERMITTED HAZARDOUS SUBSTANCES" means Hazardous Substances used and
reasonably required for Construction Projects expressly permitted by the Lease
or for the use of the Property by Chiron
List of Defined Terms - Page 18
<PAGE>
and its permitted subtenants and assigns for the purposes expressly permitted by
subparagraph 3.(a) of the Lease, in either case in strict compliance with all
Environmental Laws and with due care given the nature of the Hazardous
Substances involved. Without limiting the generality of the foregoing,
Permitted Hazardous Substances shall include usual and customary office,
laboratory and janitorial products.
"PERMITTED TRANSFER" means any one or more of the following: (1) the
creation or conveyance of rights and interests in favor of the Participants
listed in SCHEDULE 1 attached to the Lease pursuant to the terms and conditions
of the Existing Participation Agreements; (2) any subsequent assignment or
conveyance by BNPLC of any lien or security interest against the Property (in
contrast to a conveyance of BNPLC's leasehold estate under the Ground Lease) or
of any interest in Rent, payments required by or under the Purchase Documents,
payments required by or under the Ground Lease or payments to be generated from
the Property after the Term, to any present or future Participant or to any
Affiliate of BNPLC, provided that such subsequent assignment or conveyance is
made expressly subject to the rights of Chiron under the Ground Lease, the Lease
and the Purchase Documents; (3) any agreement to exercise or refrain from
exercising rights or remedies under the Lease or the Purchase Documents made by
BNPLC with any present or future Participant or Affiliate of BNPLC; (4) any
assignment or conveyance by BNPLC requested by Chiron or required by any
Permitted Encumbrance, by Development Contracts, by the Purchase Documents or by
Applicable Laws; or (5) any assignment or conveyance by BNPLC when an Event of
Default shall have occurred and be continuing or after the Designated Sale Date.
"PERSON" means an individual, a corporation, a partnership, an
unincorporated organization, an association, a joint stock company, a joint
venture, a trust, an estate, a government or agency or political subdivision
thereof or other entity, whether acting in an individual, fiduciary or other
capacity.
"PERSONAL PROPERTY" shall have the meaning assigned to it on page 2 of the
Lease.
"PLAN" means at any time an employee pension benefit plan which is covered
under Title IV of ERISA or subject to the minimum funding standards under
Section 412 of the Internal Revenue Code and is either (i) maintained by Chiron
or any Subsidiary for employees of Chiron or any Subsidiary or (ii) maintained
pursuant to a collective bargaining agreement or any other arrangement under
which more than one employer makes contributions and to which Chiron or any
Subsidiary is then making or accruing an obligation to make contributions or has
within the preceding five plan years made contributions.
"POTENTIAL LIEN CLAIMANTS" means general contractors or other parties who
have filed a statutory Preliminary Notice to preserve their right to a
mechanic's or materialman's lien against the Property in connection with any
Construction Project.
"PRIME RATE" means the prime interest rate or equivalent charged by BNPLC's
Parent in the United States of America as announced or published by BNPLC's
Parent from time to time, which need not be the lowest interest rate charged by
BNPLC's Parent. If for any reason BNPLC's Parent does not announce or publish a
prime rate or equivalent, the prime rate or equivalent announced or published by
either Citibank, N.A. or any New York branch or office of Credit Commercial de
France as selected by BNPLC shall be used to compute the rate describe in the
preceding sentence. The prime rate or equivalent announced or published by such
bank need not be the lowest rate charged by it. The Prime Rate may change from
time to time after the Effective Date without notice to Chiron as of the
effective time of each change in rates described in this definition.
"PROPERTY" means the Personal Property and the Real Property, collectively.
List of Defined Terms - Page 19
<PAGE>
"PURCHASE AGREEMENT" means the Purchase Agreement dated June 28, 1996
between BNPLC and Chiron pursuant to which Chiron has agreed to purchase or to
arrange for the purchase by a third party of BNPLC's interest in the Property,
as such Purchase Agreement may be extended, supplemented, amended, restated or
otherwise modified from time to time in accordance with its terms.
"PURCHASE DOCUMENTS" means collectively (1) the Purchase Agreement, (2)
from and after they are executed, Pledge Documents (as defined in Paragraph 4 of
the Purchase Agreement) and (3) the Memorandum of Purchase Agreement executed by
BNPLC and Chiron as of the Effective Date and recorded to provide notice of the
Purchase Agreement.
"QUALIFIED PAYMENTS" means all payments received by BNPLC from time to time
during the Term from any party (1) under any property insurance policy as a
result of damage to the Property, (2) as compensation for any restriction placed
upon the use or development of the Property or for the condemnation of the
Property or any portion thereof, (3) because of any judgment, decree or award
for injury or damage to the Property or (4) under any title insurance policy or
otherwise as a result of any title defect or claimed title defect with respect
to the Property; provided, however, that (x) in determining the amount of
"Qualified Payments", there shall be deducted all expenses and costs of every
kind, type and nature (including taxes, Breakage Costs and Attorneys' Fees)
incurred by BNPLC with respect to the collection or application of such
payments, (y) "Qualified Payments" shall not include any payment to BNPLC by a
Participant or an Affiliate of BNPLC that is made to compensate BNPLC for the
Participant's or Affiliate's share of any Losses BNPLC may incur as a result of
any of the events described in the preceding clauses (1) through (4) and (z)
"Qualified Payments" shall not include any payments received by BNPLC that BNPLC
has paid to Chiron for the restoration or repair of the Property or that BNPLC
is holding as Escrowed Proceeds. For purposes of computing the total Qualified
Payments (and other amounts dependent upon Qualified Payments, such as
Stipulated Loss Value and the Outstanding Construction Allowance) paid to or
received by BNPLC as of any date, payments described in the preceding clauses
(1) through (4) will be considered as Escrowed Proceeds, not Qualified Payments,
until they are actually applied as Qualified Payments by BNPLC as provided in
subparagraph 11.(c) of the Lease.
"QUALIFIED SECURITIES" means unencumbered marketable securities that have
an aggregate value of no less than Stipulated Loss Value and that when pledged
to secure Chiron's PA Obligations as provided in Paragraph 4 of the Purchase
Agreement have a maturity of three years or less and that evidence obligations
of the United States of America or another governmental or corporate obligor
meeting any criteria specified for such obligor in the Pledge Documents (as
defined in Paragraph 4 of the Purchase Agreement).
"QUALIFIED RIGHT TO STOCK SALE PROCEEDS" means an unencumbered assignable
contractual right of Chiron, established by agreements in form and substance
satisfactory to each of BNPLC and the Participants in its sole and absolute
discretion, to receive from Guarantor no less than $205,000,0000 in cash
proceeds from the issuance or sale of Chiron's stock to Guarantor. It is
understood that although agreements may exist between Chiron and Guarantor as of
the Effective Date which would obligate Guarantor to purchase Chiron's stock for
more than $205,000,000, such agreements have not been reviewed or approved by
BNPLC or Participants, and therefore prior to any such approval after the
Effective Date, such existing agreements cannot establish rights which would
qualify under this definition.
"REAL PROPERTY" shall have the meaning assigned to it on page 1 of the
Lease.
List of Defined Terms - Page 20
<PAGE>
"REMEDIAL WORK" means any investigation, monitoring, clean-up, containment,
remediation, removal, payment of response costs, or restoration work and the
preparation and implementation of any closure, remedial or other required plans
that any governmental agency or political subdivision requires or approves (or
could reasonably be expected to require if it was aware of all relevant
circumstances concerning the Property), whether by judicial order or otherwise,
because of the presence of or suspected presence of Hazardous Substances in, on,
under or about the Property or because of any Hazardous Substance Activity.
Without limiting the generality of the foregoing, Remedial Work also means any
obligations imposed upon or undertaken by Chiron pursuant to the Approved Plans
or any recommendations or proposals made therein.
"RENT" means the Base Rent and all Additional Rent.
"RESIDUAL RISK PERCENTAGE" means the fifteen percent (15%).
"RESPONSIBLE FINANCIAL OFFICER" means the chief financial officer, the
controller, the treasurer or the assistant treasurer of Chiron.
"RESTRICTED FUNDS" shall have the meaning assigned to it in Paragraph 4 of
the Purchase Agreement.
"SCOPE CHANGE" means a change to a Construction Project that, if
implemented, will make the quality, function or capacity of the Improvements
affected by such Construction Project "materially different" (as defined below
in this paragraph) than as described or inferred by plans and other items
submitted to BNPLC by Chiron as described in subparagraph 6.(b)(i) of the Lease.
Notwithstanding the foregoing, "Scope Change" shall not include refinement,
correction and detailing of plans or other items submitted to BNPLC by Chiron.
As used in this definition, a "material difference" means a difference that (a)
could (after completion of the applicable Construction Project and the funding
of any Construction Advances required in connection therewith) significantly
reduce any excess of the market value of the Property over Stipulated Loss Value
or significantly increase any excess of Stipulated Loss Value over the market
value of the Property, or (b) will change the general character of the
Improvements from that needed to accommodate the uses permitted by
subparagraph 3.(a).
"SPREAD" means (1) on any date before construction of the initial
Construction Project is complete, .25% (twenty-five basis points), and (2) on
any date after construction of the initial Construction Project is complete,
.20% (twenty basis points); provided, however, after any Demand Deadline, the
"Spread" on any date will depend upon the rating by Standard and Poor's
Corporation or the rating by Moody's Investor Service, Inc. (whichever rating is
higher) of Chiron's senior, unsubordinated, unsecured debt on that date, such
computation to be as follows:
Rating Spread
-------------------------- -----------------------
AA- or Aa3 or higher .20% (20 basis points)
A+ or A1 .25% (25 basis points)
A or A2 .275% (27.5 basis points)
A- or A3 .30% (30 basis points)
BBB+ or Baa1 .35% (35 basis points)
BBB or Baa2 .375% (37.5 basis points)
lower than BBB and Baa2, or not rated .50% (50 basis points)
For purposes of this definition, the initial Construction Project shall not be
deemed complete until Chiron shall have (1) caused the initial Construction
Project to have been completed in a good and workmanlike manner, substantially
List of Defined Terms - Page 21
<PAGE>
in accordance with Applicable Laws, and otherwise in compliance with the
provisions of (x) the Lease, (y) the Permitted Encumbrances and (z) the
Development Contracts, and (2) obtained with respect to then existing
Improvements any final certificates of occupancy required for the use and
occupancy thereof, a certificate of compliance from the City of Emeryville and a
certificate of completion from the Redevelopment Agency as contemplated by the
Development Contracts.
"STIPULATED LOSS VALUE" as of any date means the amount equal to the sum of
the Initial Funding Advance, plus the sum of all Construction Advances and
Carrying Costs added to the Outstanding Construction Allowance on or prior to
such date, minus all funds received by BNPLC and applied as Qualified Payments
on or prior to such date. Under no circumstances will any payment of Base Rent
or the Upfront Fee, Administrative Fees or Commitment Fees reduce Stipulated
Loss Value.
"SUBSIDIARY" means any corporation of which Chiron and/or its other
Subsidiaries own, directly or indirectly, such number of outstanding shares as
have more than 50% of the ordinary voting power for the election of directors.
"SUPPLEMENTAL PAYMENT" shall have the meaning assigned to it in
subparagraph 1(a)(ii) of the Purchase Agreement.
"TERM" shall have the meaning assigned to it in Paragraph 1 of the Lease.
"TRANSACTION EXPENSES" means the costs paid from the Initial Funding
Advance in connection with the preparation and negotiation of the Lease, the
Purchase Documents, the Ground Lease and related documents. To the extent that
BNPLC does not itself use the entire Initial Funding Advance to acquire the
Property or to pay expenses incurred by BNPLC in connection with the preparation
and negotiation of such documents, the remainder thereof will be advanced to
Chiron, with the understanding that Chiron shall use any such amount advanced
for one or more of the following purposes: (1) the payment or reimbursement of
expenses incurred by Chiron in connection with the preparation and negotiation
of the Lease, the Purchase Documents, the Ground Lease and related documents;
(2) the payment or reimbursement of expenses incurred by Chiron in connection
with the initial Construction Project, including the planning, design,
engineering and permitting of thereof; (3) the maintenance of the Property; (4)
the payment of the Upfront Fee and the first Administrative Fee; or (5) the
payment of Rents next due.
"UPFRONT FEE" shall have the meaning assigned to it in subparagraph 4.(e)
of the Lease.
"UNFUNDED BENEFIT LIABILITIES" means, with respect to any Plan, the amount
(if any) by which the present value of all benefit liabilities (within the
meaning of Section 4001(a)(16) of ERISA) under the Plan exceeds the market value
of all Plan assets allocable to such benefit liabilities, as determined on the
most recent valuation date of the Plan and in accordance with the provisions of
ERISA for calculating the potential liability of Chiron or any ERISA Affiliate
of Chiron under Title IV of ERISA.
"VOTING STOCK" of any Person means any shares of stock of such Person whose
holders are entitled under ordinary circumstances to vote for the election of
directors of such Person (irrespective of whether at the time stock of any other
class or classes shall have or might have voting power by reason of the
happening of any contingency).
List of Defined Terms - Page 22
<PAGE>
Exhibit 10.92
GROUND LEASE
BETWEEN
BNP LEASING CORPORATION,
("BNPLC")
AND
CHIRON CORPORATION,
("CHIRON")
JUNE 28, 1996
<PAGE>
TABLE OF CONTENTS
Page
----
1. ADDITIONAL DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . 2
(a) CONTINGENT PURCHASE OPTION. . . . . . . . . . . . . . . . . . . . . 2
(b) DESIGNATED TRANSFEREE . . . . . . . . . . . . . . . . . . . . . . . 2
(c) FAIR RENTAL VALUE . . . . . . . . . . . . . . . . . . . . . . . . . 3
(d) FOCB NOTICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(e) GL TERMINATION OR TRANSFER OPTION . . . . . . . . . . . . . . . . . 3
(f) GL TERMINATION OR TRANSFER NOTICE . . . . . . . . . . . . . . . . . 3
(g) GROUND LEASE DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . 3
(h) GROUND LEASE RENT . . . . . . . . . . . . . . . . . . . . . . . . . 3
(i) GROUND LEASE TERM . . . . . . . . . . . . . . . . . . . . . . . . . 3
(j) IMPROVEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(k) LEASEHOLD MORTGAGE. . . . . . . . . . . . . . . . . . . . . . . . . 3
(l) LEASEHOLD MORTGAGEE . . . . . . . . . . . . . . . . . . . . . . . . 3
(m) QUALIFYING TERMINATION DATE . . . . . . . . . . . . . . . . . . . . 3
(n) RENT COMMENCEMENT DATE. . . . . . . . . . . . . . . . . . . . . . . 4
(o) TERMINATION FEE . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(p) OTHER TERMS AND REFERENCES. . . . . . . . . . . . . . . . . . . . . 5
2. GROUND LEASE TERM AND EARLY TERMINATION. . . . . . . . . . . . . . . . . 5
3. GROUND LEASE RENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4. ADJUSTMENTS TO THE LEASED PROPERTY . . . . . . . . . . . . . . . . . . . 7
5. RECEIPT AND APPLICATION OF INSURANCE AND CONDEMNATION PROCEEDS . . . . . 8
6. NO LEASE TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . 8
7. THE PURCHASE DOCUMENTS AND THE LEASE . . . . . . . . . . . . . . . . . . 8
8. USE OF LEASED PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . 9
(a) PERMITTED USES AND CONSTRUCTION OF IMPROVEMENTS . . . . . . . . . . 9
(b) COOPERATION BY CHIRON AND ITS AFFILIATES. . . . . . . . . . . . . . 9
(c) PERFORMANCE AND PRESERVATION OF THE DEVELOPMENT CONTRACTS FOR THE
BENEFIT OF BNPLC . . . . . . . . . . . . . . . . . . . . . . . . . 9
(d) TITLE TO IMPROVEMENTS . . . . . . . . . . . . . . . . . . . . . . . 10
(e) EXISTING OPTIONS IN FAVOR OF CHIRON . . . . . . . . . . . . . . . . 10
9. ASSIGNMENT AND SUBLETTING; PASS THROUGH OF BNPLC'S LIABILITY INSURANCE
AND INDEMNITY RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . 11
10. ESTOPPEL CERTIFICATE . . . . . . . . . . . . . . . . . . . . . . . . . . 11
<PAGE>
11. LEASEHOLD MORTGAGES. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
12. OTHER REPRESENTATIONS, WARRANTIES AND COVENANTS OF CHIRON. . . . . . . . 13
(a) CURRENT STATUS OF TITLE . . . . . . . . . . . . . . . . . . . . . . 13
(b) DEFENSE OF ADVERSE TITLE CLAIMS . . . . . . . . . . . . . . . . . . 13
(c) PROHIBITION AGAINST CONSENSUAL LIENS ON THE LEASED PROPERTY . . . . 14
(d) COMPLIANCE WITH PERMITTED ENCUMBRANCES. . . . . . . . . . . . . . . 15
(e) MODIFICATION OF PERMITTED ENCUMBRANCES AND DEVELOPMENT CONTRACTS. . 15
(f) NO DEFAULT OR VIOLATION . . . . . . . . . . . . . . . . . . . . . . 15
(g) NO SUITS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(h) ENFORCEABILITY. . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(i) FINANCIAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . 15
(j) ORGANIZATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(k) NOT A FOREIGN PERSON. . . . . . . . . . . . . . . . . . . . . . . . 16
(l) ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(m) ENVIRONMENTAL REPRESENTATIONS . . . . . . . . . . . . . . . . . . . 16
(n) CONDITION OF PROPERTY . . . . . . . . . . . . . . . . . . . . . . . 16
(o) OMISSIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(p) INSURANCE AND CASUALTY. . . . . . . . . . . . . . . . . . . . . . . 17
(q) CONDEMNATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(r) FURTHER ASSURANCES. . . . . . . . . . . . . . . . . . . . . . . . . 17
13. ENVIRONMENTAL INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . 17
(a) INDEMNITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(b) ASSUMPTION OF DEFENSE . . . . . . . . . . . . . . . . . . . . . . . 18
(c) NOTICE OF ENVIRONMENTAL LOSSES. . . . . . . . . . . . . . . . . . . 18
(d) RIGHTS CUMULATIVE . . . . . . . . . . . . . . . . . . . . . . . . . 19
(e) SURVIVAL OF THE INDEMNITY . . . . . . . . . . . . . . . . . . . . . 19
14. EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(a) DEFINITION OF GROUND LEASE DEFAULT. . . . . . . . . . . . . . . . . 19
(b) REMEDY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
15. QUIET ENJOYMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
16. OPTION TO PURCHASE . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
17. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(a) NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(b) SEVERABILITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(c) NO MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(d) ENTIRE AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . 22
(e) BINDING EFFECT. . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(f) GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(g) PARAGRAPH HEADINGS. . . . . . . . . . . . . . . . . . . . . . . . . 22
(h) MEMORANDUM OF LEASE . . . . . . . . . . . . . . . . . . . . . . . . 22
(i) NO DISCRIMINATION . . . . . . . . . . . . . . . . . . . . . . . . . 22
(j) NOT A PARTNERSHIP, ETC. . . . . . . . . . . . . . . . . . . . . . . 23
(ii)
<PAGE>
18. WAIVER OF A JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . 23
EXHIBITS AND SCHEDULES
EXHIBIT A. . . . . . . . . . . . . . . . . . . . . . . . . . .Legal Description
EXHIBIT B. . . . . . . . . . . . . . . . . . . . . . Permitted Encumbrance List
EXHIBIT C. . . . . . . . . . . . . . . . . . Determination of Fair Rental Value
EXHIBIT D. . . . . . . . . . . . . . . . . .Proposed Amendment to Add Parcel 7A
EXHIBIT E. . . . . . . . . . . . . . . .Proposed Amendment to Adjust Boundaries
EXHIBIT F. . . . . . . . . . . . . . . . . . . . . . Contingent Purchase Option
EXHIBIT G. . . . . . . . . . . . . . . . . . . . . . .Right of Chiron to Convey
LIST OF DEFINED TERMS. . . . . . . . . . . . . . . . . . . . Shared Definitions
(iii)
<PAGE>
GROUND LEASE
This GROUND LEASE (this "GROUND LEASE"), by and between BNP LEASING
CORPORATION, a Delaware corporation ("BNPLC"), and CHIRON CORPORATION, a
delaware corporation ("CHIRON"), is dated June 28, 1996, but intended to be
effective as of the effective date. ("EFFECTIVE DATE" and other capitalized
terms used and not otherwise defined in this GROUND LEASE are intended to have
the meanings assigned to them in the LIST OF DEFINED TERMS attached to and made
a part of this GROUND LEASE.)
RECITALS
Chiron and BNPLC have reached agreement as to the terms and conditions upon
which Chiron is willing to lease the Land, which as of the Effective Date is as
described in Exhibit A, and any existing improvements thereon to BNPLC for a
term of approximately 34 1/2 years, and by this Ground Lease Chiron and BNPLC
desire to evidence such agreement.
Pursuant to a Lease Agreement dated June 28, 1996 (the "LEASE") between
BNPLC, as landlord, and Chiron, as tenant, BNPLC is subleasing the land to
Chiron for a term scheduled to end on the Rent Commencement Date (as defined
below) under this Ground Lease.
Pursuant to a Purchase Agreement dated June 28, 1996 (the "PURCHASE
AGREEMENT") between BNPLC and Chiron, Chiron is agreeing to purchase BNPLC's
interest under this Ground Lease or arrange for a purchase of such interest, on
and subject to the terms and conditions set forth therein.
GRANTING CLAUSES
NOW, THEREFORE, in consideration of the rent to be paid and the covenants
and agreements to be performed by BNPLC, as hereinafter set forth, Chiron does
hereby LEASE, DEMISE and LET unto BNPLC for the term hereinafter set forth the
Land, together with:
(1) all easements and rights-of-way now owned or hereafter acquired
by Chiron for use in connection with the Land or any improvements
constructed thereon or as a means of access thereto; and
(2) all right, title and interest of Chiron, now owned or hereafter
acquired, in and to (A) any land lying within the right-of-way of any
street, open or proposed, adjoining the Land, (B) any and all sidewalks and
alleys adjacent to the Land and (C) any strips and gores between the Land
and abutting land.
The Land and all of the property described in items (1) and (2) above are
hereinafter referred to collectively as the "REAL PROPERTY".
to the extent, but only to the extent, that assignable rights or interests
in, to or under the following have been or will be acquired by Chiron as the
owner of any interest in the Real Property, Chiron also hereby grants and
assigns to BNPLC for the term of this Ground Lease the right to use and enjoy
(and, in the case of contract rights, to enforce) such rights or interests of
Chiron:
(a) the Permitted Encumbrances; and
<PAGE>
(b) any general intangibles, permits, licenses, franchises,
certificates, and other rights and privileges related to the Real Property
that BNPLC (rather than Chiron) would have acquired if BNPLC had itself
acquired the fee estate in the Real Property (excluding, however, any
rights and privileges of Chiron under this Ground Lease, any rights or
privileges of Chiron under the Lease or Purchase Agreement, and [without
limiting Chiron's obligations under subparagraphs 8.(b), 8.(c) or 12.(e) or
BNPLC's rights as a "Mortgagee" under any Development Contracts] any rights
and privileges of Chiron under the Development Contracts).
such rights and interests of Chiron, whether now existing or hereafter arising,
are hereinafter collectively called the "PERSONAL PROPERTY". The Real Property
and the Personal Property are hereinafter sometimes collectively called the
"LEASED PROPERTY."
Provided, however, the leasehold estate conveyed hereby and BNPLC's rights
hereunder are expressly made subject and subordinate to the Permitted
Encumbrances, including those listed on EXHIBIT B. FURTHER, SO LONG AS THE
LEASE AND PURCHASE AGREEMENT REMAIN IN FORCE, THE RIGHTS AND OBLIGATIONS OF
CHIRON AND BNPLC HEREUNDER SHALL BE SUBJECT TO ANY CONTRARY PROVISIONS THEREIN.
GENERAL TERMS AND CONDITIONS
The Leased Property is leased by Chiron to BNPLC and is accepted and is to
be used and possessed by BNPLC upon and subject to the following terms,
provisions, covenants, agreements and conditions:
1. ADDITIONAL DEFINITIONS. As used herein, the terms "Ground Lease,"
"Chiron," "BNPLC," "Real Property," "Personal Property" and "Leased Property"
shall have the meanings indicated above and the terms listed immediately below
shall have the following meanings:
(a) CONTINGENT PURCHASE OPTION. "CONTINGENT PURCHASE OPTION" means
the option granted BNPLC by Chiron as provided in EXHIBIT F attached to this
Ground Lease.
(b) DESIGNATED TRANSFEREE. "DESIGNATED TRANSFEREE" means any Person
designated by Chiron in a GL Termination or Transfer Notice as the Person to
whom BNPLC's interest in the Leased Property shall be transferred pursuant to
Paragraph 2; provided, that to qualify as a Designated Transferee hereunder,
such Person must, if requested by BNPLC, certify that: (1) such Person is not
"insolvent" (that is, the sum of such Person's absolute and contingent
liabilities, including the obligations of such Person to pay BNPLC a Termination
Fee, must not exceed the fair market value of such Person's assets); (2) such
Person is not subject to outstanding liens, suits, garnishments or court actions
which could render such Person insolvent or bankrupt; (3) such Person's capital
is adequate for the businesses in which such Person is engaged and intends to be
engaged; (4) such Person has not incurred (by any agreement to pay the
Termination Fee required hereby or otherwise), nor does such Person intend or
expect to incur, debts which will be beyond its ability to pay as such debts
mature; and (4) there has not been filed by or, to such Person's knowledge,
against such Person a petition in bankruptcy or a petition or answer seeking an
assignment for the benefit of creditors, the appointment of a receiver, trustee,
custodian or liquidator with respect to such Person or any significant portion
of such Person's property, reorganization, arrangement, rearrangement,
composition, extension, liquidation or dissolution or similar relief under the
federal Bankruptcy Code or any state law.
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(c) FAIR RENTAL VALUE. "FAIR RENTAL VALUE" means (and all appraisers
and other persons involved in the determination of the Fair Rental Value will be
so advised) the annual rent, as determined in accordance with EXHIBIT C, that
would be agreed upon between a willing tenant, under no compulsion to lease, and
a willing landlord, under no compulsion to lease, for UNIMPROVED land comparable
in size and location to the Land, exclusive of any Improvements but assuming
that there is no higher and better use for such land than as a site for
improvements of comparable size and utility to the Improvements, at the time a
determination is required under this Ground Lease and taking into consideration
the condition of the Land, the encumbrances affecting the title to the Land and
all applicable zoning, land use approvals and other governmental permits
relating to the Land at the time of such determination.
(d) FOCB NOTICE. "FOCB NOTICE" shall have the meaning assigned to it
in Paragraph 2 below.
(e) GL TERMINATION OR TRANSFER OPTION. "GL TERMINATION OR TRANSFER
OPTION" shall have the meaning assigned to it in Paragraph 2 below.
(f) GL TERMINATION OR TRANSFER NOTICE. "GL TERMINATION OR TRANSFER
NOTICE" shall have the meaning assigned to it in Paragraph 2 below.
(g) GROUND LEASE DEFAULT. "GROUND LEASE DEFAULT" shall have the
meaning assigned to it in subparagraph 14.(a) below.
(h) GROUND LEASE RENT. "GROUND LEASE RENT" means the rent payable by
BNPLC pursuant to Paragraph 3 below.
(i) GROUND LEASE TERM. "GROUND LEASE TERM" shall have the meaning
assigned to it in Paragraph 2 below.
(j) IMPROVEMENTS. "IMPROVEMENTS" means anything constructed on the
Land from time to time which is deemed to be a "work of improvement" as said
term is presently defined in California Civil Code Section 3106, including all
buildings, landscaping, sidewalks and paving for driveways and parking lots.
There are no significant Improvements on the Land as of the Effective Date, but
any and all new improvements to the Land made with the Construction Allowance
contemplated in the Lease shall constitute Improvements as that term is used
herein.
(k) LEASEHOLD MORTGAGE. "LEASEHOLD MORTGAGE" means any mortgage,
deed of trust (with or without a private power of sale), security agreement or
assignment executed by BNPLC to secure an obligation to repay borrowed money or
other voluntary obligations, which covers BNPLC's leasehold estate hereunder or
any part thereof or any rents or other charges to be paid to BNPLC pursuant to
any sublease.
(l) LEASEHOLD MORTGAGEE. "LEASEHOLD MORTGAGEE" means any lender or
other beneficiary of a Leasehold Mortgage that shall have notified Chiron of the
existence such Leasehold Mortgage and of its address to which notices should be
delivered.
(m) QUALIFYING TERMINATION DATE. "QUALIFYING TERMINATION DATE" means
any Business Day which is no sooner than thirty days after BNPLC's receipt of
the notice sent by Chiron pursuant to subparagraph 2.(a)
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specifying such date and which is no later than one hundred twenty days after
BNPLC's receipt of such notice; provided, however, that if Chiron provides such
a notice to prevent the expiration of the GL Termination or Transfer Option in
response to a FOCB Notice from BNPLC, then "Qualifying Termination Date" for
purposes of such notice will mean any Business Day within forty-five days after
the date upon which the FOCB Notice is sent in accordance with the notice
provisions of this Ground Lease.
(n) RENT COMMENCEMENT DATE. "RENT COMMENCEMENT DATE" means the
earlier of (1) the first Business Day of the first calendar month which is more
than thirty days after the Designated Sale Date and which is after the date upon
which Chiron and all subtenants or assignees of Chiron under the Lease have
relinquished possession of the Land and any part of the Improvements, or (2) the
first Business Day in July, 2003.
(o) TERMINATION FEE. "TERMINATION FEE" means an amount equal to:
(1) Stipulated Loss Value under the Lease, including any Construction
Advances and Carrying Costs which are added to Stipulated Loss Value on or
before the date Stipulated Loss Value is computed for purposes of this
definition; plus
(2) any amounts which at the time of the payment of the Termination
Fee hereunder are due or have accrued and remain unpaid under the Lease,
including any accrued Base Rent, Commitment Fees and Breakage Costs; less
(3) any Escrowed Proceeds received by BNPLC under the Lease which
BNPLC will be entitled to keep and retain (as the owner of such proceeds
and not just as landlord under the Lease) after Chiron's exercise of the GL
Termination or Transfer Option; and less
(4) any Restricted Funds, or other funds actually received by BNPLC
from a liquidation of collateral pledged to BNPLC by Chiron as provided in
Paragraph 4 of the Purchase Agreement, that BNPLC will be entitled to keep
and retain (as the owner of such funds and not just as security for
Chiron's PA Obligations) after Chiron's exercise of the GL Termination or
Transfer Option.
So long as the Lease remains in effect, Stipulated Loss Value will be
computed for purposes of this definition on the date when the Termination Fee is
paid hereunder. After the Lease has expired or been terminated, Stipulated Loss
Value will be computed for purposes of this definition as of the date upon which
the Lease expired or terminated.
Also, for purposes of this definition, BNPLC will not be considered as
entitled to keep and retain Escrowed Proceeds, Restricted Funds or any other
funds to which Chiron may have a claim or in which Chiron may have an interest
unless contemporaneously with the payment of a Termination Fee to BNPLC, (x)
Chiron shall in writing unconditionally transfer the applicable Escrowed
Proceeds, Restricted Funds or other funds to BNPLC, warranting that title
thereto is free from any Liens other than those that may be lawfully claimed by,
through or under BNPLC, and (y) Chiron can demonstrate to BNPLC's reasonable
satisfaction that such a transfer by Chiron will not constitute a preference or
a voidable transfer under Applicable Law, such that BNPLC could be required to
return any funds so transferred to it by Chiron, in connection with any transfer
of BNPLC's interest in the Leased Property to a Designated Transferee as
provided in Paragraph 2. For purposes of demonstrating that such a transfer by
Chiron does not constitute a preference or voidable transfer, Chiron may
present, and BNPLC will evaluate in good faith, evidence (stipulated to be
accurate by Chiron) that: (A) Chiron is not insolvent and will not be rendered
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insolvent by the transfer, and/or (B) after giving effect to the transfer of the
funds by Chiron the Termination Fee will equal the value of BNPLC's interest in
the Leased Property which will be transferred to a Designated Transferee because
of Chiron's exercise of the GL Termination or Transfer Option.
Notwithstanding the foregoing, so long as the Purchase Agreement remains in
effect and no bankruptcy or insolvency proceeding are pending by or against
BNPLC, as debtor, the "TERMINATION FEE" as used herein shall be no less than the
full Break Even Price and any other amounts (including interest on past due
amounts) that would be due on the date upon which the Termination Fee becomes
payable hereunder if, pursuant to the Purchase Agreement, Chiron was purchasing
BNPLC's interest in the Leased Property.
(p) OTHER TERMS AND REFERENCES. Words of any gender used in this
Ground Lease shall be held and construed to include any other gender, and words
in the singular number shall be held to include the plural and vice versa,
unless the context otherwise requires. References herein to Paragraphs,
subparagraphs or other subdivisions shall refer to the corresponding Paragraphs,
subparagraphs or subdivisions of this Ground Lease, unless specific reference is
made to another document or instrument. References herein to any Schedule or
Exhibit shall refer to the corresponding Schedule or Exhibit attached hereto,
which shall be made a part hereof by such reference. All capitalized terms used
in this Ground Lease which refer to other documents shall be deemed to refer to
such other documents as they may be renewed, extended, supplemented, amended or
otherwise modified from time to time, provided such documents are not renewed,
extended or modified in breach of any provision contained herein or therein or,
in the case of any other document to which BNPLC is a party or of which BNPLC is
an intended beneficiary, without the consent of BNPLC. All accounting terms not
specifically defined herein shall be construed in accordance with generally
accepted accounting principles. The words "THIS GROUND LEASE", "HEREIN",
"HEREOF", "HEREBY", "HEREUNDER" and words of similar import refer to this Ground
Lease as a whole and not to any particular subdivision unless expressly so
limited. The phrases "THIS PARAGRAPH" and "THIS SUBPARAGRAPH" and similar
phrases used herein refer only to the Paragraphs or subparagraphs hereof in
which the phrase occurs. As used herein the word "OR" is not exclusive. As
used herein the words "INCLUDE", "INCLUDING" and similar terms shall be
construed as if followed by "without limitation to". Other capitalized terms
are defined in the provisions that follow.
2. GROUND LEASE TERM AND EARLY TERMINATION. The term of this Ground
Lease (herein called the "GROUND LEASE TERM") shall commence on and include the
Effective Date and end on December 31, 2030. However, subject to the prior
approval of any Leasehold Mortgagee, BNPLC shall have the right to terminate
this Ground Lease by giving a notice to Chiron stating that BNPLC unequivocally
elects to terminate effective as of a date specified in such notice, which may
be any date more than thirty days after the notice and after the expiration or
termination of the Lease pursuant to its terms. Further, Chiron shall have an
option (the "GL TERMINATION OR TRANSFER OPTION") to terminate this Ground Lease
or cause a transfer of BNPLC's rights and interests in and to the Leased
Property and any Improvements on and subject to the following terms and
conditions:
(a) To exercise the GL Termination or Transfer Option, Chiron must
provide BNPLC with an unconditional notice thereof (the "GL TERMINATION OR
TRANSFER NOTICE") which specifies a Qualifying Termination Date as the effective
date of the termination or transfer and which sets forth Chiron's calculation of
the Termination Fee. Any notice specifying or purporting to establish an
effective date of termination which is not a Qualifying Termination Date shall
not be effective as a GL Termination or Transfer Notice hereunder.
(b) If (but only if) so stated in an effective GL Termination or
Transfer Notice, the exercise by Chiron of the GL Termination or Transfer Option
shall result not in a termination of the leasehold estate created
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and conveyed by this Ground Lease, but rather in a transfer to any Designated
Transferee designated by Chiron in the GL Termination or Transfer Notice of any
and all rights, title and interests of BNPLC in and to the Leased Property and
the Improvements existing at the time of the transfer, whether such rights,
title and interests exist by reason of this Ground Lease or otherwise. Any such
transfer shall occur automatically, subject only to the payment to BNPLC of a
Termination Fee (as provided in the next subparagraph) and any other amounts
then due to BNPLC under this Ground Lease; provided, however, BNPLC's right to
be indemnified as provided in Paragraphs 8.(c) and 13 below or pursuant to the
terms and conditions set forth in the Lease, and BNPLC's right to receive and
collect any Rent (under and as defined in the Lease) which has accrued and
remains unpaid at the time of the transfer, shall survive and be excluded from
the transfer. This subparagraph shall be self-operative in that no instrument
executed by BNPLC shall be required to accomplish the transfer contemplated by
this subparagraph; however, if requested by Chiron to confirm the transfer,
BNPLC shall promptly execute Sale Closing Documents (as defined in and in
substantially the same form as attached to the Purchase Agreement) in favor of
the Designated Transferee promptly after BNPLC's receipt of the Termination Fee
and any other amounts then due to BNPLC under this Ground Lease.
(c) After giving any GL Termination or Transfer Notice, Chiron must
on or before the effective date of any termination specified therein, pay to
BNPLC in good funds a Termination Fee. After giving any GL Termination or
Transfer Notice, Chiron must on or before the effective date of any transfer to
a Designated Transferee specified therein, cause the Designated Transferee to
pay in good funds a Termination Fee to BNPLC. Chiron's payment of the
Termination Fee shall be a condition precedent to the effectiveness of any early
termination of this Ground Lease by Chiron. The Designated Transferee's payment
of the Termination Fee shall be a condition precedent to the effectiveness of
any transfer described in the preceding subparagraph. Time is of the essence as
to the payment of the Termination Fee to BNPLC.
(d) Before any termination or transfer pursuant to this Paragraph
becomes effective, Chiron must have obtained an agreement of its permitted
subtenants, successors and assigns under the Lease or the Purchase Documents, if
any, that the termination or transfer, as the case may be, shall excuse BNPLC
from any further obligations under the Lease or Purchase Documents.
(e) At any time after the earlier of the Rent Commencement Date or
any Designated Sale Date under the Purchase Agreement, BNPLC may provide a
notice to Chiron (a "FOCB NOTICE") explaining that the GL Termination or
Transfer Option will expire, unless (1) Chiron provides a GL Termination or
Transfer Notice within thirty days after the FOCB Notice is sent in accordance
with the notice provisions hereof, (2) the GL Termination or Transfer Notice
specifies an effective date of termination or transfer no later than forty-five
days after the FOCB Notice is sent in accordance with the notice provisions
hereof, and (3) the Termination Fee required in connection with the termination
or transfer contemplated in the GL Termination or Transfer Notice is paid to
BNPLC no later than forty-five days after the FOCB Notice is sent in accordance
with the notice provisions hereof. Unless Chiron does in fact satisfy the
conditions specified in clauses (1), (2) and (3) of the preceding sentence after
a FOCB Notice is sent to Chiron by BNPLC in accordance with the notice
provisions hereof, the GL Termination or Transfer Option will expire. Time is
of the essence as to the satisfaction of the conditions specified in this
subparagraph to prevent an expiration of the GL Termination or Transfer Option;
however, if during any period specified above in this subparagraph Chiron is
delayed in providing any GL Termination or Transfer Notice or taking any other
action necessary to satisfy the conditions required to prevent the expiration of
the GL Termination or Transfer Option because of any automatic stay or similar
restraint imposed in any bankruptcy or insolvency proceedings wherein BNPLC is
the debtor, then such period will be extended by a time equal to such delay.
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(f) Notwithstanding the foregoing, if Chiron loses its right to
acquire BNPLC's interest in the Leased Property under the Purchase Agreement
before the effective date of any termination of this Ground Lease, and if Chiron
would not have lost such right but for Chiron's failure to cure a breach by
Chiron of the Purchase Agreement within any applicable grace period provided
therein, then Chiron shall no longer have any right whatsoever under this
Paragraph 2 to terminate this Ground Lease or to cause any transfer of BNPLC's
rights or interests in or to the Leased Property or any Improvements, and any
prior GL Termination or Transfer Notice given by Chiron shall become ineffective
for purposes of this Ground Lease.
3. GROUND LEASE RENT. BNPLC has on the effective date paid to Chiron the
sum of Ten and no/100 dollars ($10.00) as prepaid rent hereunder for the period
beginning on the effective date and ending on the Rent Commencement Date. The
receipt and sufficiency of such prepaid rent is hereby acknowledged by Chiron.
On each anniversary of the Rent Commencement Date, BNPLC shall make to a payment
to Chiron of rent for the then preceding year (herein called "GROUND LEASE
RENT"), in currency that at the time of payment is legal tender for public and
private debts in the United States of America. Each such payment of Ground
Lease Rent shall equal the Fair Rental Value, determined as provided in
EXHIBIT C.
4. ADJUSTMENTS TO THE LEASED PROPERTY.
(a) ADDITION OF PARCEL 7A TO THE LAND. Chiron presently has an
option to purchase land which is adjacent to the Land, including the land
described as "PARCEL 7A" (herein so called) in the form of Ground Lease
Amendment No. ___ attached to this Ground Lease as EXHIBIT D (the "PROPOSED
AMENDMENT TO ADD PARCEL 7A"). Chiron shall exercise such option and in
connection therewith shall use its best efforts to acquire the fee interest in
Parcel 7A within eighteen months after the Effective Date, free from Liens other
than Permitted Encumbrances and any easements which will not adversely the
construction on Parcel 7A contemplated in the Lease as part of the initial
Construction Project. Promptly after it acquires Parcel 7A and gives any
notices and obtains any approvals required by the Development Contracts, Chiron
shall execute and deliver the Proposed Amendment to Add Parcel 7A to BNPLC and
shall provide BNPLC with an endorsement to the title insurance policy or binder
which insures BNPLC's leasehold estate under this Ground Lease, thereby adding
Parcel 7A to the land described in Schedule A of the title insurance policy or
binder. However, BNPLC may decline to execute or accept the Proposed Amendment
to Add Parcel 7A if BNPLC reasonably believes at the time that taking a
leasehold estate in Parcel 7A could significantly increase BNPLC's risk of
incurring Environmental Losses or other Losses that it would not otherwise have
as the lessee under this Ground Lease, including any increased risk of Losses
created by any encumbrance (other than a Permitted Encumbrance or another
encumbrance listed in ANNEX 2 attached to EXHIBIT D) that may "run with the
land" or constitute an equitable servitude upon Parcel 7A. Notwithstanding the
foregoing, unless BNPLC becomes aware of information that is not disclosed in or
is inconsistent with the Environmental Reports, BNPLC shall not decline to
execute or accept the Proposed Amendment to Add Parcel 7A solely because of any
increased risk of Environmental Losses.
(b) ADJUSTMENT TO THE BOUNDARIES OF THE LAND. Chiron presently
expects to have a new Parcel Map filed of record pursuant to California
Government Code Section 66463.1. The new Parcel Map will result in an
adjustment, as shown on the Parcel Map records of Alameda County, California, to
the boundaries of the Land, and it will also cause the parcels comprising the
Land to be reconfigured substantially as shown in ANNEX 1 [or in the map
referenced in ANNEX 1] attached to the form of Ground Lease Amendment No. ___
which is attached to this Ground Lease as EXHIBIT E (the "PROPOSED AMENDMENT TO
ADJUST BOUNDARIES"). So long as the Lease remains in effect and no Event of
Default has occurred and is continuing, neither BNPLC nor any Leasehold
Mortgagee shall unreasonably withhold any consent or approval requested by
Chiron to satisfy requirements imposed by the City of
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Emeryville or other governmental entities pursuant to the Subdivision Map Act,
local subdivision ordinances or the Development Contracts in connection with the
filing of the new Parcel Map or any lot line adjustments consistent therewith.
Contemporaneously with the recording of the new Parcel Map, Chiron shall execute
and deliver to BNPLC the Proposed Amendment to Adjust Boundaries, together with
the parking easement described therein, and together with an endorsement to the
title insurance policy or binder which insures BNPLC's leasehold estate under
this Ground Lease, thereby causing the land described in Schedule A of the title
insurance policy or binder to be consistent with the definition of the "Land"
hereunder after such amendment is executed, and also causing the parking
easement to be insured subject only to exceptions reasonably satisfactory to
BNPLC. In any event, Chiron shall not record the new Parcel Map before Chiron
and BNPLC enter into the Proposed Amendment to Adjust Boundaries.
5. RECEIPT AND APPLICATION OF INSURANCE AND CONDEMNATION PROCEEDS. All
insurance and condemnation proceeds payable with respect to any damage to or
taking of the Leased Property shall be payable to and become the property of
BNPLC; provided, however, Chiron shall be entitled to receive condemnation
proceeds awarded for the value of Chiron's remainder interest in the Land
exclusive of the Improvements. BNPLC is authorized to take all action necessary
on behalf of both BNPLC and Chiron (as lessor under this Ground Lease) to
collect insurance and condemnation proceeds.
6. NO LEASE TERMINATION. Except as expressly provided herein, this
Ground Lease shall not terminate, nor shall Chiron have any right to terminate
this Ground Lease nor shall the obligations of Chiron under this Ground Lease be
excused, for any reason whatsoever, including without limitation any of the
following: (i) any damage to or the destruction of all or any part of the Leased
Property from whatever cause, (ii) the taking of the Leased Property or any
portion thereof by eminent domain or otherwise for any reason, (iii) any default
on the part of BNPLC under this Ground Lease or under any other agreement to
which Chiron and BNPLC are parties, or (iv) any other cause whether similar or
dissimilar to the foregoing, any existing or future law to the contrary
notwithstanding. It is the intention of the parties hereto that the obligations
of Chiron hereunder shall be separate and independent of the covenants and
agreements of BNPLC. However, nothing in this Paragraph shall be construed as a
waiver by Chiron of any right Chiron may have at law or in equity to recover
monetary damages for any default under this Ground Lease by BNPLC.
7. THE PURCHASE DOCUMENTS AND THE LEASE. Nothing contained in this
Ground Lease shall limit, modify or otherwise affect any of Chiron's or BNPLC's
respective rights and obligations under the Purchase Documents or the Lease,
which rights and obligations are intended to be separate, independent and in
addition to, and not in lieu of, the obligations established by this Ground
Lease. In the event of any inconsistency between the terms and provisions of
the Purchase Documents or the Lease and the terms and provisions of this Ground
Lease, the terms and provisions of the Purchase Documents or the Lease (as the
case may be) shall control.
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8. USE OF LEASED PROPERTY.
(a) PERMITTED USES AND CONSTRUCTION OF IMPROVEMENTS. Subject to
the Permitted Encumbrances and the terms hereof, BNPLC may use and occupy the
Leased Property for any purpose permitted by Applicable Laws and may construct
any Improvements on the Land which are permitted by Applicable Laws. To afford
Chiron an opportunity to file a notice of nonresponsibility pursuant to
California Civil Code Section 3094, BNPLC shall, before commencing the
construction any major Improvements upon the Land after the Rent Commencement
Date, endeavor to notify Chiron that BNPLC intends to commence such
construction; provided, however, BNPLC shall have no liability for its failure
to provide such a notice.
(b) COOPERATION BY CHIRON AND ITS AFFILIATES.
(i) After (but only after) the Rent Commencement Date, if a use of the
Leased Property by BNPLC or any new Improvements or any removal or
modification of Improvements proposed by BNPLC would violate any Permitted
Encumbrance, Development Contract or Applicable Law unless Chiron or any of
its Affiliates, as an owner of adjacent property or otherwise, gave its
consent or approval thereto or agreed to join in a modification of a
Permitted Encumbrance or Development Contract, then Chiron shall give and
cause its Affiliates to give such consent or approval or join in such
modification, subject only to (A) any BGR Restrictions (as defined in
subparagraph 8.(e)) then remaining in force, and (B) the condition that
Chiron and its Affiliates may decline to give or join in consents,
approvals or modifications requested by BNPLC to permit construction that
will cause the interior square footage of the Improvements to exceed
520,000 square feet.
(ii) To the extent, if any, that any Permitted Encumbrance,
Development Contract or Applicable Law requires the consent or approval of
Chiron or any of its Affiliates or of the City of Emeryville, California or
any other Person to an assignment of this Ground Lease or a transfer of any
interest in the Leased Property by BNPLC or its successors or assigns,
Chiron will without charge give and cause its Affiliates to give such
consent or approval and will at its own expense cooperate in any way
reasonably requested by BNPLC to assist BNPLC to obtain such consent or
approval from the City or any other Person; provided, however, the
assignment or transfer is not then prohibited by this Ground Lease or the
Lease; and, provided further, the consent or approval sought by BNPLC for
the assignment or transfer is not inseparable from other consents or
approvals that, if granted, would cause Chiron to violate any BGR
Restrictions then remaining in force.
(iii) Chiron's obligations under this subparagraph 8.(b) shall be
binding upon any successor or assign of Chiron or its Affiliates with
respect to the Land and other properties encumbered by the Permitted
Encumbrances or subject to the Development Contracts, and such obligations
shall survive any sale of Chiron's interest in the Leased Property to BNPLC
because of BNPLC's exercise of the Contingent Purchase Option.
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(c) PERFORMANCE AND PRESERVATION OF THE DEVELOPMENT CONTRACTS FOR THE
BENEFIT OF BNPLC. Not only during the term of the Lease, but thereafter
throughout the term of this Ground Lease, Chiron shall comply with and perform
the obligations imposed by the Development Contracts upon Chiron or upon any
owner of the Land and shall do whatever is required (subject to any BGR
Restrictions then remaining in force) to preserve the rights and benefits
conferred or intended to be conferred by the Development Contracts, as necessary
to facilitate the construction of Improvements on the Land contemplated in the
Lease and to facilitate the use of such Improvements after the Rent Commencement
Date by BNPLC and its successors, assigns and subtenants under this Ground
Lease. Further, Chiron hereby agrees for itself and its Affiliates, as the
owner of the Land and any other land now owned or hereafter acquired by Chiron
or its Affiliates, which is described in the Development Contracts, to assume
liability for and to indemnify BNPLC and other Interested Parties and to defend
and hold them harmless from and against all Losses (including Losses caused by
any decline in the value of the Leased Property or of the Improvements) that
they would not have incurred or suffered but for:
(1) any breach by Chiron of its obligations under the preceding
sentence,
(2) any termination of any Development Contract, to which Chiron
agreed, or which resulted from a breach thereof by Chiron or its
Affiliates, or
(3) any restrictions imposed by or asserted under any Development
Contract upon any transfer after (but only after) the Rent
Commencement Date by BNPLC or other Interested Parties of any
interests they may then have in the Leased Property or in any
Improvements.
THE INDEMNITY SET OUT IN THIS SUBPARAGRAPH 8.(c) SHALL APPLY EVEN IF THE SUBJECT
OF THE INDEMNIFICATION IS CAUSED BY OR ARISES OUT OF THE NEGLIGENCE OF BNPLC OR
ANOTHER INTERESTED PARTY AND EVEN IF BNPLC OR ANOTHER INTERESTED PARTY IS
STRICTLY LIABLE FOR THE LOSSES AGAINST WHICH THE INDEMNITY IS PROVIDED; however,
such indemnity shall not protect an Interested Party against Losses proximately
caused by (and attributed by any applicable principles of comparative fault to)
the Established Misconduct of that Interested Party. Chiron's obligations under
this subparagraph 8.(c) shall be binding upon any successor or assign of Chiron
or its Affiliates with respect to the Land and other properties subject to the
Development Contracts, and such obligations shall survive any sale of Chiron's
interest in the Leased Property to BNPLC because of BNPLC's exercise of the
Contingent Purchase Option.
(d) TITLE TO IMPROVEMENTS. Any and all Improvements of whatever
nature at any time constructed, placed or maintained upon any part of the Land
shall be and remain the property of BNPLC and BNPLC's sublessee's, assignees,
licensees and concessionaires, as their interests may appear; provided, any such
Improvements which remain on the Land when this Ground Lease expires or is
terminated shall become and thereupon be the property of Chiron, free and clear
of any Liens Removable by BNPLC. It is the intention of Chiron and BNPLC that
severance of fee title to the Land and the Improvements shall not change the
character of the Improvements as real property. BNPLC may at any time after
Chiron ceases to have possession of the Leased Property as tenant under the
Lease and prior to the expiration or termination of this Ground Lease remove all
or any Improvements from the Land without the consent of Chiron and without any
obligation to Chiron or its Affiliates to provide compensation or to construct
other Improvements on or about the Land.
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(e) EXISTING OPTIONS IN FAVOR OF CHIRON. Chiron has entered into an
Option Agreement with BGR Associates, BGR Associates II and BGR Associates III
dated as of March 15, 1995 (the "BGR OPTION CONTRACT"), which provides Chiron
with an option to acquire property that it now leases, but does not own (the
"BGR PROPERTY"). Anticipating that the BGR Property would be subject to the
Development Contracts, the other parties to the BGR Contract imposed upon Chiron
in Paragraph 11 thereof certain restrictions (the "BGR RESTRICTIONS"), which are
intended to preserve the development rights associated with the BGR Property.
The BGR Restrictions (to the extent not previously waived) could limit actions
that would otherwise be required of Chiron by subparagraphs 8.(b) and 8.(c)
above. To minimize any such limitation, Chiron shall cooperate as BNPLC may
reasonably request from time to time after the Rent Commencement Date to obtain
waivers of the BGR Restrictions. However, Chiron shall have no obligation to
BNPLC to purchase the BGR Property pursuant to the BGR Contract or otherwise,
except to the extent (if any) that Chiron must purchase to (1) satisfy any
independent obligation undertaken by it in the Development Contracts, and (2)
avoid a breach of that independent obligation in violation of
subparagraph 8.(c). If Chiron or an Affiliate of Chiron does acquire any
interest in the BGR Property, then for purposes of this Ground Lease, the BGR
Restrictions benefitting that interest shall be deemed as no longer in force.
9. ASSIGNMENT AND SUBLETTING; PASS THROUGH OF BNPLC'S LIABILITY INSURANCE
AND INDEMNITY RIGHTS. BNPLC may sublet or assign this Lease without the
consent of Chiron or any of its Affiliates, subject only to limitations set
forth in the Lease for the benefit of Chiron so long as those limitations remain
in force.
To the extent that BNPLC may from time to time after the Rent Commencement
Date require any subtenant to agree to maintain liability insurance against
claims of third parties and agree to make BNPLC an additional or named insured
under such insurance, BNPLC shall also require the subtenant to agree to make
Chiron an additional or named insured. However, BNPLC shall have no liability
to Chiron for a breach by the subtenant of any such agreements, and to the
extent that BNPLC's rights as an additional or named insured are subject to
exceptions or limitations concerning BNPLC's own acts or omissions or the acts
or omissions of anyone other than the subtenant, so too may Chiron's rights as
an additional or named insured be subject to exceptions or limitations
concerning Chiron's own acts or omissions or the acts or omissions of anyone
other than the subtenant.
To the extent that BNPLC may itself from time to time after the Rent
Commencement Date maintain liability insurance against claims of third parties
which may arise because of any occurrence on or alleged to have occurred on or
about the Leased Property, BNPLC shall cause Chiron to be an additional or named
insured under such insurance, provided Chiron pays or reimburses BNPLC for any
additional insurance premium required to have Chiron made an insured.
To the extent that BNPLC may from time to time after the Rent Commencement
Date require any subtenant to agree to indemnify BNPLC against Environmental
Losses or other Losses concerning the Leased Property, BNPLC shall also require
the subtenant to agree to indemnify Chiron. However, BNPLC shall have no
liability to Chiron for a breach by the subtenant of any such agreement, and to
the extent that BNPLC's rights as an indemnitee of the subtenant are subject to
exceptions or limitations concerning BNPLC's own acts or omissions or the acts
or omissions of anyone other than the subtenant, so too may Chiron's rights as
an indemnitee be subject to exceptions or limitations concerning Chiron's own
acts or omissions or the acts or omissions of anyone other than the subtenant.
10. ESTOPPEL CERTIFICATE. Chiron shall from time to time, within ten days
after receipt of request by BNPLC, deliver a statement in writing certifying:
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(a) that this Ground Lease is unmodified and in full force and effect
(or if modified that this Ground Lease as so modified is in full force and
effect);
(b) that to the knowledge of Chiron BNPLC has not previously assigned
or hypothecated its rights or interests under this Ground Lease, except as is
described in such statement with as much specificity as Chiron is able to
provide;
(c) the term of this Ground Lease and the Ground Lease Rent then in
effect and any additional charges;
(d) that BNPLC is not in default under any provision of this Ground
Lease (or if in default, the nature thereof in detail) and a statement as to any
outstanding obligations on the part of Chiron or BNPLC; and
(e) such other matters as are requested by BNPLC.
Chiron's failure to deliver such statement within such time shall be conclusive
upon BNPLC (i) that this Ground Lease is in full force and effect, without
modification except as may be represented by BNPLC, (ii) that there are no
uncured defaults in BNPLC's performance hereunder.
11. LEASEHOLD MORTGAGES.
(a) By Leasehold Mortgage BNPLC may encumber BNPLC's leasehold estate
in the Leased Property created by this Ground Lease, as well as BNPLC's rights
and interests in buildings, fixtures, equipment and improvements situated
thereon and rents, issues, profits, revenues and other income to be derived by
BNPLC therefrom. However, so long as the Lease remains in effect, any Leasehold
Mortgage will be permitted hereunder only if it constitutes a Permitted Transfer
under the Lease, and even if a Permitted Transfer under the Lease, any Leasehold
Mortgage granted by BNPLC prior to the Rent Commencement Date when no Event of
Default under the Lease has occurred and is continuing must have Chiron's prior
consent, which consent shall not be unreasonably withheld.
(b) Any Leasehold Mortgagee or other party, including any corporation
formed by a Leasehold Mortgagee, may become the legal owner of the leasehold
estate created by this Ground Lease, and of the improvements, equipment,
fixtures and other property assigned as additional security pursuant to a
Leasehold Mortgage, by foreclosure of a Leasehold Mortgage or as a result of the
assignment or conveyance in lieu of foreclosure. Further, any such Leasehold
Mortgagee or other party may itself, after becoming the legal owner and holder
of the leasehold estate created by this Ground Lease, or of any improvements,
equipment, fixtures and other property assigned as additional security pursuant
to a Leasehold Mortgage, convey or pledge the same without the consent of
Chiron.
(c) Chiron shall serve notice of any default by BNPLC hereunder upon
any Leasehold Mortgagee. No notice of a default by BNPLC shall be deemed
effective until it is so served. Any Leasehold Mortgagee shall have the right
to correct or cure any such default within the same period of time after receipt
of such notice as is given to BNPLC under this Ground Lease to correct or cure
defaults, plus an additional period of thirty days thereafter. Chiron will
accept performance by any Leasehold Mortgagee of any covenant, condition or
agreement on BNPLC's part to be performed hereunder with the same force and
effect as though performed by BNPLC.
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(d) If this Ground Lease should terminate by reason of a
disaffirmance or rejection of this Ground Lease by BNPLC or any receiver,
liquidator or trustee for the property of BNPLC, or by any governmental
authority which had taken possession of the business or property of BNPLC by
reason of the insolvency or alleged insolvency of BNPLC, then:
(i) Chiron shall give notice thereof to each Leasehold
Mortgagee; and upon request of any Leasehold Mortgagee made within sixty
days after Chiron has given such notice, Chiron shall enter into a new
ground lease of the Leased Property with such Leasehold Mortgagee for the
remainder of the Ground Lease Term, at the same Ground Lease Rent and on
the same terms and conditions as contained in this Ground Lease.
(ii) In connection with any such new ground lease, Chiron shall
also convey to the Leasehold Mortgagee by quitclaim deed any interest of
Chiron in and to the Improvements included in the Leased Property.
(iii) The estate of the Leasehold Mortgagee, as lessee under
the new lease, shall have priority equal to the estate of BNPLC hereunder.
That is, there shall be no charge, lien or burden upon the Leased Property
prior to or superior to the estate granted by such new lease which was not
prior to or superior to the estate of BNPLC under this Ground Lease as of
the date immediately preceding the termination of this Ground Lease. To
the extent, however, that the Lease and or the Purchase Agreement are in
effect at the time of execution of such new ground lease, such new ground
lease shall be made expressly subject to the Lease and the Purchase
Agreement.
(iv) Notwithstanding the foregoing, if Chiron shall receive
requests to enter into a new ground lease from more than one Leasehold
Mortgagee, Chiron shall be required to enter into only one new ground
lease, and the new ground lease shall be to the requesting Leasehold
Mortgagee who holds the highest priority lien or interest in BNPLC's
leasehold estate in the Land. If the liens or security interests of two or
more such requesting Leasehold Mortgagees which shared the highest priority
just prior to the termination of this Ground Lease, the new ground lease
shall name all such Leasehold Mortgagees as co-tenants thereunder.
(e) If BNPLC has agreed with any Leasehold Mortgagee that such
Leasehold Mortgagee's consent will be required to any modification or early
termination of this Ground Lease by BNPLC, and if Chiron has been notified of
such agreement, such consent will be required.
(f) No Leasehold Mortgagee will assume any liability under this
Ground Lease either by virtue of its Leasehold Mortgage or by any subsequent
receipt or collection of rents or profits generated from the Leased Property,
unless and until the Leasehold Mortgagee acquires BNPLC's leasehold estate in
the Leased Property at foreclosure or by deed in lieu of foreclosure.
(g) Although the foregoing provisions concerning Leasehold Mortgages
and Leasehold Mortgagees will be self operative, Chiron agrees to include, in
addition to the items specified in Paragraph 10, confirmation of the foregoing
in any statement provided to a Leasehold Mortgagee or prospective Leasehold
Mortgagee pursuant to Paragraph 10.
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12. OTHER REPRESENTATIONS, WARRANTIES AND COVENANTS OF CHIRON. Chiron
represents, warrants and covenants as follows:
(a) CURRENT STATUS OF TITLE. Chiron holds good and marketable title
to the Land, free and clear of all liens and encumbrances, other than the
Permitted Encumbrances and Development Contracts.
(b) DEFENSE OF ADVERSE TITLE CLAIMS. If any encumbrance or title
defect whatsoever affecting the Leased Property or Improvements constructed
prior to the Rent Commencement Date (collectively, the "IMPROVED PROPERTY") is
claimed or discovered (including Liens against any part of or interest in the
Improved Property, whether or not expressly subordinate to this Ground Lease,
but excluding Permitted Encumbrances, Development Contracts and any Liens
Removable by BNPLC) or if any legal proceedings are instituted with respect to
title to the Improved Property, Chiron shall give prompt notice thereof to BNPLC
and at Chiron's own cost and expense will promptly remove any such encumbrance
and cure any such defect and will take all necessary and proper steps for the
defense of any such legal proceedings, including the employment of counsel, the
prosecution or defense of litigation and the release or discharge of all adverse
claims. If Chiron fails to promptly remove any encumbrance or cure any title
defect, BNPLC (whether or not named as a party to legal proceedings with respect
thereto) shall be entitled to take such additional steps as in its judgment may
be necessary or proper to remove such encumbrance or cure such defect or for the
defense of any such attack or legal proceedings or the protection of BNPLC's
leasehold or other interest in the Property, including the employment of
counsel, the prosecution or defense of litigation, the compromise or discharge
of any adverse claims made with respect to the Property, the removal of prior
liens or security interests, and all expenses (including Attorneys' Fees) so
incurred of every kind and character shall be a demand obligation owing by
Chiron.
For purposes of this subparagraph 12.(b), Chiron shall be deemed to be
acting promptly to remove any encumbrance or to cure any title defect, other
than a Lien which Chiron or any of its Affiliates has granted or authorized, so
long as Chiron is in good faith by appropriate proceedings contesting the
validity and applicability of the encumbrance or defect, and pending such
contest Chiron shall not be deemed in default under this subparagraph because of
the encumbrance or defect, provided that Chiron must satisfy the following
conditions and requirements:
(1) Chiron must diligently prosecute the contest to completion in a
manner reasonably satisfactory to BNPLC.
(2) Chiron must immediately remove the encumbrance or cure the defect
upon a final determination by a court of competent jurisdiction that it is
valid and applicable to the Property.
(3) Chiron must in any event conclude the contest and remove the
encumbrance or cure the defect and pay any claims asserted against BNPLC or
the Improved Property because of such encumbrance or defect, all prior to
(i) the date any criminal charges may be brought against BNPLC or any of
its directors, officers or employees because of such encumbrance or defect
or (ii) the date any action is taken or threatened against BNPLC or any
property owned by BNPLC (including BNPLC's leasehold estate under this
Ground Lease) by any governmental authority or any other Person who has or
claims rights superior to BNPLC because of the encumbrance or defect.
Also, with respect to a contest of any encumbrance or defect discovered or
claimed before the Designated Sale Date, Chiron must conclude the contest
and remove the encumbrance or cure the defect and pay any claims asserted
against BNPLC or the Improved Property because of such encumbrance or
defect, all prior to the Designated Sale Date, unless on the
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Designated Sale Date Chiron or an Affiliate of Chiron or any Applicable
Purchaser purchases the Property pursuant to the Purchase Agreement for a net
price to BNPLC (when taken together with any additional payments made by Chiron
pursuant to Paragraph 1(a)(ii) of the Purchase Agreement, in the case of a
purchase by an Applicable Purchaser) equal to Stipulated Loss Value.
(c) PROHIBITION AGAINST CONSENSUAL LIENS ON THE LEASED PROPERTY.
Chiron shall not, without the prior consent of BNPLC, create, place or
authorize, or through any act or failure to act, acquiesce in the placing of,
any deed of trust, mortgage or other Lien, whether statutory, constitutional or
contractual against or covering the Improved Property or any part thereof (other
than Permitted Encumbrances and Liens Removable by BNPLC), regardless of whether
the same are expressly or otherwise subordinate to this Lease or BNPLC's
interest in the Improved Property.
(d) COMPLIANCE WITH PERMITTED ENCUMBRANCES. Chiron shall comply with
and will cause to be performed all of the covenants, agreements and obligations
imposed upon the owner of the Improved Property by the Permitted Encumbrances.
(e) MODIFICATION OF PERMITTED ENCUMBRANCES AND DEVELOPMENT CONTRACTS.
Chiron shall not enter into, initiate, approve or consent to any modification of
any Permitted Encumbrance or Development Contract that would create or expand or
purport to create or expand obligations or restrictions which would encumber the
Leased Property or any improvements constructed thereon without the prior
consent of BNPLC. Whether BNPLC must give any such consent requested by Chiron
during the term of the Lease shall be governed by subparagraph 7.(b) of the
Lease.
(f) NO DEFAULT OR VIOLATION. The execution, delivery and performance
by Chiron of this Ground Lease do not and will not constitute a breach or
default under any other material agreement or contract to which Chiron is a
party or by which Chiron is bound or which affects the Leased Property, and do
not violate or contravene any law, order, decree, rule or regulation to which
Chiron is subject, and such execution, delivery and performance by Chiron will
not result in the creation or imposition of (or the obligation to create or
impose) any lien, charge or encumbrance on, or security interest in, Chiron's
property pursuant to the provisions of any of the foregoing.
(g) NO SUITS. There are no judicial or administrative actions,
suits, proceedings or investigations pending or, to Chiron's knowledge,
threatened that will adversely affect the Leased Property or the validity,
enforceability or priority of this Ground Lease, and Chiron is not in default
with respect to any order, writ, injunction, decree or demand of any court or
other governmental or regulatory authority that could materially and adversely
affect the use, occupancy or operation of the Leased Property. No condemnation
or other like proceedings are pending or, to Chiron's knowledge, threatened
against the Leased Property.
(h) ENFORCEABILITY. The execution, delivery and performance by
Chiron of this Ground Lease, the Lease and the Purchase Agreement are duly
authorized and do not require the consent or approval of any governmental body
or other regulatory authority that has not heretofore been obtained and are not
in contravention of or conflict with any applicable laws or any term or
provision of Chiron's articles of incorporation or bylaws. This Ground Lease,
the Lease and the Purchase Agreement are valid, binding and legally enforceable
obligations of Chiron, each in accordance with its terms, except as such
enforcement is affected by bankruptcy, insolvency and similar laws affecting the
rights of creditors, generally, and equitable principles of general application.
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(i) FINANCIAL MATTERS. Chiron is not "insolvent" on the date hereof
(that is, the sum of Chiron's absolute and contingent liabilities, including the
obligations of Chiron under this Ground Lease, does not exceed the fair market
value of Chiron's assets) and has no outstanding liens, suits, garnishments or
court actions which could render Chiron insolvent or bankrupt. Chiron's capital
is adequate for the businesses in which Chiron is engaged and intends to be
engaged. Chiron has not incurred (whether hereby or otherwise), nor does Chiron
intend to incur or believe that it will incur, debts which will be beyond its
ability to pay as such debts mature. There has not been filed by or, to
Chiron's knowledge, against Chiron a petition in bankruptcy or a petition or
answer seeking an assignment for the benefit of creditors, the appointment of a
receiver, trustee, custodian or liquidator with respect to Chiron or any
significant portion of Chiron's property, reorganization, arrangement,
rearrangement, composition, extension, liquidation or dissolution or similar
relief under the federal Bankruptcy Code or any state law. The financial
statements and all financial data heretofore delivered to BNPLC relating to
Chiron are true, correct and complete in all material respects.
(j) ORGANIZATION. Chiron is duly incorporated and legally existing
under the laws of the State of California and is duly qualified to do business
in the State of California. Chiron has all requisite power and has procured or
will procure on a timely basis all governmental certificates of authority,
licenses, permits, qualifications and other documentation required to fulfill
its obligations under this Ground Lease or under the Purchase Documents or the
Lease. Chiron has the corporate power and adequate authority, rights and
franchises to own Chiron's property and to carry on Chiron's business as now
conducted and is duly qualified and in good standing in each state in which the
character of Chiron's business makes such qualification necessary (including the
State of California) or, if it is not so qualified in a state other than
California, such failure does not have a material adverse effect on the
properties, assets, operations or businesses of Chiron and its Subsidiaries,
taken as a whole.
(k) NOT A FOREIGN PERSON. Chiron is not a "foreign person" within the
meaning of Sections 1445 and 7701 of the Code (i.e. Chiron is not a non-resident
alien, foreign corporation, foreign partnership, foreign trust or foreign estate
as those terms are defined in the Code and regulations promulgated thereunder).
(l) ERISA. Chiron is not and will not become an "employee benefit
plan" (as defined in Section 3(3) of ERISA) which is subject to Title I of
ERISA. The assets of Chiron do not and will not in the future constitute "plan
assets" of one or more such plans within the meaning of 29 C.F.R. Section
2510.3-101. Chiron is not and will not become a "governmental plan" within the
meaning of Section 3(32) of ERISA. Transactions by or with Chiron are not
subject to state statutes regulating investments of and fiduciary obligations
with respect to governmental plans. No ERISA Termination Event has occurred
with respect to any Plan and Chiron and all Subsidiaries are in compliance with
ERISA. Neither Chiron nor any Subsidiary is required to contribute to, or has
any other absolute or contingent liability in respect of, any "multiemployer
plan" as defined in Section 4001 of ERISA. As of the Effective Date no
"accumulated funding deficiency" (as defined in Section 412(a) of the Code)
exists with respect to any Plan, whether or not waived by the Secretary of the
Treasury or his delegate, and the current value of the benefits of each Plan, if
any, equals or is less than the current value of such Plan's assets available
for the payment of such benefits.
(m) ENVIRONMENTAL REPRESENTATIONS. To the knowledge of Chiron,
except as otherwise disclosed in the Environmental Report: (i) no Hazardous
Substances Activity has occurred prior to the Effective Date; (ii) no owner or
operator of the Leased Property has reported or been required to report any
release of any Hazardous Substances on or from the Leased Property pursuant to
any Environmental Law; and (iii) no owner or operator of the Leased Property has
received from any federal, state or local governmental authority any warning,
citation, notice of violation or other communication regarding a suspected or
known release or discharge of
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Hazardous Substances on or from the Leased Property or regarding a suspected or
known violation of Environmental Laws concerning the Leased Property. Further,
Chiron represents that to its knowledge, the Environmental Report taken as a
whole is not misleading or inaccurate in any material respect. (As used in this
subparagraph, "THE KNOWLEDGE OF CHIRON" means the present actual knowledge (with
due investigation) of Ed Bailey and Rick Notini, both current employees of
Chiron.)
(n) CONDITION OF PROPERTY. The Land as described in EXHIBIT A is the
same as the land shown on the plat included as part of the survey prepared by
Vincent J. D'Alo, L.S. 4210, of Aliquot (Job No. 94022.0) as Assessor's Parcel
No. 49-1041-28 and Assessor's Parcel No. 49-1041-60, which survey was delivered
to BNPLC at the request of Chiron. Chiron is not aware of any latent or patent
material defects or deficiencies in the Leased Property that, either
individually or in the aggregate, could materially and adversely affect the use
or occupancy of the Leased Property as permitted by the Lease or could
reasonably be anticipated to endanger life or limb. No part of the Real
Property is within a flood plain as designated by any governmental authority.
(o) OMISSIONS. None of Chiron's representations or warranties
contained in this Ground Lease or in any other document, certificate or written
statement furnished to BNPLC by or on behalf of Chiron contains any untrue
statement of a material fact or omits a material fact necessary in order to make
the statements contained herein or therein (when taken in their entireties) not
misleading.
(p) INSURANCE AND CASUALTY. In the event any of the Leased Property
is destroyed or damaged by fire, explosion, windstorm, hail or by any other
casualty against which insurance shall have been required hereunder, (i) BNPLC
may make proof of loss, (ii) each insurance company concerned is hereby
authorized and directed to make payment for such loss directly to BNPLC for
application as required by Paragraph 5, and (iii) BNPLC's consent must be
obtained for any settlement, adjustment or compromise of any claims for loss,
damage or destruction under any policy or policies of insurance.
(q) CONDEMNATION. All proceeds of condemnation awards or proceeds of
sale in lieu of condemnation with respect to the Leased Property and all
judgments, decrees and awards for injury or damage to the Leased Property shall
be paid to BNPLC and applied as provided in Paragraph 5 above. BNPLC is hereby
authorized, in the name of Chiron, to execute and deliver valid acquittances
for, and to appeal from, any such judgment, decree or award concerning
condemnation of any of the Leased Property. BNPLC shall not be, in any event or
circumstances, liable or responsible for failure to collect, or to exercise
diligence in the collection of, any such proceeds, judgments, decrees or awards.
(r) FURTHER ASSURANCES. Chiron shall, on request of BNPLC, (i)
promptly correct any defect, error or omission which may be discovered in the
contents of this Ground Lease or in any other instrument executed in connection
herewith or in the execution or acknowledgment thereof; (ii) execute,
acknowledge, deliver and record or file such further instruments and do such
further acts as may be necessary, desirable or proper to carry out more
effectively the purposes of this Ground Lease and to subject to this Ground
Lease any property intended by the terms hereof to be covered hereby including
specifically, but without limitation, any renewals, additions, substitutions,
replacements or appurtenances to the Leased Property; (iii) execute,
acknowledge, deliver, procure and record or file any document or instrument
deemed advisable by BNPLC to protect its rights in and to the Leased Property
against the rights or interests of third persons; and (iv) provide such
certificates, documents, reports, information, affidavits and other instruments
and do such further acts as may be necessary, desirable or proper in the
reasonable determination of BNPLC to enable BNPLC or any Leasehold Mortgagee to
comply with the requirements or requests of any agency or authority having
jurisdiction over them.
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13. ENVIRONMENTAL INDEMNIFICATION.
(a) INDEMNITY. Chiron hereby agrees to assume liability for and to
indemnify BNPLC and other Interested Parties and defend and hold them harmless
from and against all Environmental Losses, subject only to the provisions of
subparagraph 13.(c) below. THE INDEMNITY SET OUT IN THIS SUBPARAGRAPH SHALL
APPLY EVEN IF THE SUBJECT OF THE INDEMNIFICATION IS CAUSED BY OR ARISES OUT OF
THE NEGLIGENCE OF BNPLC OR ANOTHER INTERESTED PARTY AND EVEN IF BNPLC OR ANOTHER
INTERESTED PARTY IS STRICTLY LIABLE FOR THE ENVIRONMENTAL LOSSES AGAINST WHICH
THE INDEMNITY IS PROVIDED; however, such indemnity shall not protect an
Interested Party against Environmental Losses proximately caused by (and
attributed by any applicable principles of comparative fault to) the Established
Misconduct of (1) that Interested Party or (2) any subtenant, contractor or
other Person who, at the time of such Established Misconduct, had entered upon
the Land with authority expressly granted by that Interested Party or its
Affiliates or by anyone lawfully claiming an interest in the Land through or
under that Interested Party or its Affiliates (excluding, however, Chiron and
its Affiliates and any subtenant, contractor or other Person who had entered
upon the Land with the consent or approval of Chiron or its Affiliates).
(b) ASSUMPTION OF DEFENSE.
(i) If an Interested Party notifies Chiron of any claim, demand,
action, administrative or legal proceeding, investigation or allegation as
to which the indemnity provided for in this Paragraph 13 applies, Chiron
shall assume on behalf of the Interested Party and conduct with due
diligence and in good faith the investigation and defense thereof and the
response thereto with counsel reasonably satisfactory to the Interested
Party; provided, that the Interested Party shall have the right to be
represented by advisory counsel of its own selection and at its own
expense; and provided further, that if any such claim, demand, action,
proceeding, investigation or allegation involves both Chiron and the
Interested Party and the Interested Party shall have been advised in
writing by reputable counsel that there may be legal defenses available to
it which are inconsistent with those available to Chiron, then the
Interested Party shall have the right to select separate counsel to
participate in the investigation and defense of and response to such claim,
demand, action, proceeding, investigation or allegation on its own behalf,
and Chiron shall pay or reimburse the Interested Party for all Attorney's
Fees incurred by the Interested Party because of the selection of such
separate counsel.
(ii) If any claim, demand, action, proceeding, investigation or
allegation arises as to which the indemnity provided for in this
Paragraph 13 applies, and Chiron fails to assume promptly (and in any event
within twenty days after being notified of the claim, demand, action,
proceeding, investigation or allegation) the defense of the Interested
Party, then the Interested Party may contest (or settle, with the prior
consent of Chiron, which consent shall not be unreasonably withheld) the
claim, demand, action, proceeding, investigation or allegation at Chiron's
expense using counsel selected by the Interested Party; provided, that
after any such failure by Chiron which continues for sixty days or more no
such contest need be made or continued by the Interested Party and
settlement or full payment of any claim may be made by the Interested Party
without Chiron's consent and without releasing Chiron from any obligations
to the Interested Party under this Paragraph 13 if, in the written opinion
of reputable counsel to the Interested Party, the settlement or payment in
full is clearly advisable.
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(c) NOTICE OF ENVIRONMENTAL LOSSES. If an Interested Party receives
a written notice of Environmental Losses that it believes are covered by this
Paragraph 13, then such Interested Party will be expected to promptly furnish a
copy of such notice to Chiron. Such Interested Party's failure to so provide a
copy of the notice to Chiron shall not excuse Chiron from its obligations under
this Paragraph 13; but if Chiron is unaware of the matters described in the
notice and such failure renders unavailable defenses that Chiron might otherwise
assert, or precludes actions that Chiron might otherwise take, to minimize its
obligations hereunder, then Chiron shall be excused from its obligation to
indemnify that particular Interested Party (and any of its Affiliates which may
also be Interested Parties) against Environmental Losses, if any, which would
not have been incurred but for such failure. For example, if BNPLC fails to
provide Chiron with a copy of a notice of an obligation covered by the indemnity
set out in subparagraph 13.(a) and Chiron is not otherwise already aware of such
obligation, and if as a result of such failure BNPLC becomes liable for
penalties and interest covered by the indemnity in excess of the penalties and
interest that would have accrued if Chiron had been promptly provided with a
copy of the notice, then Chiron will be excused from any obligation to BNPLC or
BNPLC's Parent to pay the excess.
(d) RIGHTS CUMULATIVE. The rights of each Interested Party under
this Paragraph 13 shall be in addition to any other rights and remedies of such
Interested Party against Chiron under the other provisions of this Ground Lease
or under any other document or instrument now or hereafter executed by Chiron,
or at law or in equity (including any right of reimbursement or contribution
pursuant to CERCLA).
(e) SURVIVAL OF THE INDEMNITY. Chiron's obligations under this
Paragraph 13 shall survive the termination or expiration of this Ground Lease.
All obligations of Chiron under this Paragraph 13 shall be payable upon demand,
and any amount due upon demand to any Interested Party by Chiron which is not
paid within thirty days after demand shall bear interest from the date of such
demand at a floating interest rate equal to the Default Rate, but in no event in
excess of the maximum rate permitted by law.
14. EVENTS OF DEFAULT.
(a) DEFINITION OF GROUND LEASE DEFAULT. Each of the following events
shall be deemed to be a "GROUND LEASE DEFAULT" by BNPLC under this Ground Lease:
(i) BNPLC shall fail to pay when due any installment of Ground Lease
Rent due hereunder and such failure shall continue for sixty days after
BNPLC receives notice thereof.
(ii) BNPLC shall fail to execute any Sale Closing Documents as
required by subparagraph 2.(b).
(iii) BNPLC shall fail to comply with any term, provision or
covenant of this Ground Lease (other than as described in the other clauses
of this subparagraph 14.(a)), and shall not cure such failure prior to the
earlier of (A) ninety days after notice thereof is sent to BNPLC, or (B)
the date any writ or order is issued for the levy or sale of any property
owned by Chiron or its Affiliates (including the Leased Property) because
of such failure or any criminal action is instituted against BNPLC or any
of its directors, officers or employees because of such failure; provided,
however, that so long as no such writ or order is issued and no such
criminal actions is instituted, if such failure is susceptible of cure but
cannot with reasonable diligence be cured within such ninety day period,
and if BNPLC shall promptly have commenced to cure the same and shall
thereafter prosecute the curing thereof with reasonable diligence, the
period within which such failure may be cured shall be extended for such
further period as shall be necessary for the curing thereof with reasonable
diligence.
-19-
<PAGE>
(b) REMEDY. Upon the occurrence of a Ground Lease Default which is
not cured within any applicable period expressly permitted by
subparagraph 14.(a), Chiron's sole and exclusive remedies shall be to sue BNPLC
for the collection of any amount due under this Ground Lease, to sue for the
specific enforcement of BNPLC's obligations hereunder, or to enjoin the
continuation of the Ground Lease Default; provided, however, no limitation of
Chiron's remedies contained herein will prevent Chiron from exercising the GL
Termination or Transfer Option on and subject to the terms and conditions set
forth in Paragraph 2 or from recovering any reasonable costs Chiron may incur to
mitigate its damages by curing a Ground Lease Default that BNPLC has failed to
cure itself (so long as the cure by Chiron is pursued in a lawful manner and the
costs Chiron seeks to recover do not exceed the actual damages to be mitigated).
Chiron may not terminate this Ground Lease or BNPLC's right to possession under
this Ground Lease, except as expressly provided in Paragraph 2. Any judgment
which Chiron may obtain against BNPLC for amounts due under this Ground Lease
may be collected only through resort of a judgement lien against BNPLC's
interest in the Leased Property and any Improvements. BNPLC shall have no
personal liability for the payment amounts due under this or for the performance
of any obligations of BNPLC under this Ground Lease.
15. QUIET ENJOYMENT. Neither Chiron nor any third party lawfully claiming
any right or interest in the Leased Property shall during the Ground Lease Term
disturb BNPLC's peaceable and quiet enjoyment of the Leased Property; however,
such enjoyment shall be subject to the terms, provisions, covenants, agreements
and conditions of this Ground Lease and the Permitted Encumbrances, to which
this Ground Lease is subject and subordinate as hereinabove set forth.
16. OPTION TO PURCHASE. Subject to the terms and conditions set forth in
EXHIBIT F, including the condition specified therein that Chiron shall have
breached the Purchase Agreement and failed to cure such breach within any time
for cure expressly provided in the Purchase Agreement, BNPLC (and any assignee
of BNPLC's entire interest in the Leased Property, but not any subtenant or
assignee of a lesser interest) shall have the option to purchase Chiron's
interest in the Leased Property.
17. MISCELLANEOUS.
(a) NOTICES. Each provision of this Ground Lease, or of any applicable
laws with reference to the sending, mailing or delivery of any notice or demand
hereunder, or with reference to the making of any payment required hereby, shall
be deemed to be complied with when and if the following steps are taken:
(i)All Ground Lease Rent required to be paid by BNPLC to Chiron
hereunder shall be paid to Chiron in accordance with any reasonable written
instruction provided from time to time by Chiron to BNPLC, which may
include payment by wire transfer.
-20-
<PAGE>
(ii)Any amounts required to be paid by Chiron to BNPLC hereunder shall
be paid to BNPLC in accordance with any reasonable written instruction
provided from time to time by BNPLC to Chiron, which may include payment by
wire transfer.
(iii)All notices, demands, approvals, consents and other
communications to be made hereunder to or by the parties hereto must, to be
effective for purpose of this Ground Lease, be in writing. Notices,
demands and other communications required or permitted hereunder are to be
sent to the addresses set forth below (or in the case of communications to
Participants, at the addresses set forth in SCHEDULE 1 of the Lease) and
shall be given by any of the following means: (A) personal service, with
proof of delivery or attempted delivery retained; (B) electronic
communication, whether by telex, telegram or telecopying (if confirmed in
writing sent by United States first class mail, return receipt requested);
or (C) registered or certified first class mail, return receipt requested.
Such addresses may be changed by notice to the other parties given in the
same manner as provided above. Any notice or other communication sent
pursuant to clause (A) or (C) hereof shall be deemed received (whether or
not actually received) upon first attempted delivery at the proper notice
address on any Business Day between 9:00 A.M. and 5:00 P.M., and any notice
or other communication sent pursuant to clause (B) hereof shall be deemed
received upon dispatch by electronic means.
ADDRESS OF BNPLC:
BNP Leasing Corporation
717 North Harwood Street
Suite 2630
Dallas, Texas 75201
Attention: Lloyd G. Cox
Telecopy: (214) 969-0060
WITH A COPY TO:
Banque Nationale de Paris, San Francisco
180 Montgomery Street
San Francisco, California 94104
Attention: Katherine Wolfe
Telecopy: (415) 296-8954
AND WITH A COPY TO:
Clint Shouse
Thompson & Knight, P.C.
1700 Pacific Avenue, Suite 3300
Dallas, Texas 75201
Telecopy: (214) 969-1550
-21-
<PAGE>
ADDRESS OF CHIRON:
Chiron Corporation
Attn: Corporate Secretary
4560 Horton Street
Emeryville, CA 94608-2916
Telecopy: (510) 654-5360
WITH A COPY TO:
Chiron Corporation
Attn: Treasurer
4560 Horton Street
Emeryville, CA 94608-2916
Telecopy: (510) 601-3343
AND WITH A COPY TO:
Brobeck, Phleger & Harrison
550 West "C" Street, Suite 1300
San Diego, CA 92101
Attention: Todd J. Anson, Esq.
Telecopy: (619) 234-3848
(b) SEVERABILITY. If any term or provision of this Ground Lease or the
application thereof shall to any extent be held by a court of competent
jurisdiction to be invalid and unenforceable, the remainder of this Ground
Lease, or the application of such term or provision other than to the extent to
which it is invalid or unenforceable, shall not be affected thereby.
(c) NO MERGER. There shall be no merger of this Ground Lease or of the
leasehold estate hereby created with the fee or any other estate in the Leased
Property or any part thereof by reason of the fact that the same person may
acquire or hold, directly or indirectly, this Ground Lease or the leasehold
estate hereby created or any interest in this Ground Lease or in such leasehold
estate as well as the fee or any other estate in the Leased Property or any
interest in such fee or other estate, unless all parties with an interest in the
Leased Property that would be adversely affected by any such merger specifically
agree in writing that such a merger shall occur.
(d) ENTIRE AGREEMENT. This Ground Lease, the agreements referred to
herein, and the instruments referred to therein supersede any prior negotiations
and agreements between the parties concerning the Leased Property and no
amendment or modification of this Ground Lease shall be binding or valid unless
expressed in a writing executed by both parties hereto.
(e) BINDING EFFECT. All of the covenants, agreements, terms and
conditions to be observed and performed by the parties hereto shall be
applicable to and binding upon their respective successors and assigns.
-22-
<PAGE>
(f) GOVERNING LAW. This Ground Lease shall be governed by and construed
in accordance with the laws of the State of California.
(g) PARAGRAPH HEADINGS. The paragraph headings contained in this Ground
Lease are for convenience only and shall in no way enlarge or limit the scope or
meaning of the various and several paragraphs hereof.
(h) MEMORANDUM OF LEASE. Chiron and BNPLC shall execute a memorandum of
this Ground Lease in recordable form which shall be filed in the real property
records of Alameda County, California.
(i) NO DISCRIMINATION. As required by one of the Development Contracts,
BNPLC agrees for itself and its successors and permitted assigns that:
There shall be no discrimination against or segregation of any person or
group of persons on account of race, color, creed, religion, sex, marital
status, national origin or ancestry, in the leasing, subleasing,
transferring, use, occupancy, tenure or enjoyment of the premises herein
leased, nor shall BNPLC itself, or any person claiming under or through
BNPLC, establish or permit any such practice or practices of
discrimination or segregation with reference to the selection, location,
number, use or occupancy of tenants, lessees, subtenants, sublessees or
vendees in the premises herein leased.
(j) NOT A PARTNERSHIP, ETC. NOTHING IN THIS GROUND LEASE IS INTENDED TO
BE OR TO CREATE ANY PARTNERSHIP, JOINT VENTURE, OR OTHER JOINT ENTERPRISE
BETWEEN BNPLC AND CHIRON. NEITHER THE EXECUTION OF THIS GROUND LEASE NOR THE
MANAGEMENT AND ADMINISTRATION OF THIS GROUND LEASE OR OTHER DOCUMENTS REFERENCED
HEREIN BY BNPLC, NOR ANY OTHER RIGHT, DUTY OR OBLIGATION OF BNPLC UNDER OR
PURSUANT TO THIS GROUND LEASE OR SUCH DOCUMENTS IS INTENDED TO BE OR TO CREATE
ANY FIDUCIARY OBLIGATIONS OF BNPLC TO CHIRON.
18. WAIVER OF A JURY TRIAL. CHIRON AND BNPLC EACH HEREBY WAIVES ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS GROUND LEASE OR ANY OTHER DOCUMENT OR DEALINGS BETWEEN THEM
RELATING TO THIS GROUND LEASE OR THE LEASED PROPERTY. The scope of this waiver
is intended to be all-encompassing of any and all disputes that may be filed in
any court and that relate to the subject matter of this transaction, including,
without limitation, contract claims, tort claims, breach of duty claims, and all
other common law and statutory claims. Chiron and BNPLC each acknowledge that
this waiver is a material inducement to enter into a business relationship, that
each has already relied on the waiver in entering into this Ground Lease and the
other documents referred to herein, and that each will continue to rely on the
waiver in their related future dealings. BNPLC and Chiron each further warrants
and represents that it has reviewed this waiver with its legal counsel, and that
it knowingly and voluntarily waives its jury trial rights following consultation
with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE
MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS GROUND
LEASE OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS GROUND LEASE OR
THE LEASED PROPERTY. In the event of litigation, this Ground Lease may be filed
as a written consent to a trial by the court.
-23-
<PAGE>
IN WITNESS WHEREOF, this Ground Lease is hereby executed in multiple
originals as of the effective date above set forth.
"Chiron"
CHIRON CORPORATION
By: /s/ Jim Kent
-------------------------
Name: Jim Kent
--------------------
Title: Treasurer
-------------------
"BNPLC"
BNP LEASING CORPORATION
By: /s/ Lloyd G. Cox
-------------------------
Name: Lloyd G. Cox
Title: Vice President
-24-
<PAGE>
EXHIBIT A
LEGAL DESCRIPTION
REAL PROPERTY IN CITY OF EMERYVILLE, COUNTY OF ALAMEDA, STATE OF CALIFORNIA
DESCRIBED AS FOLLOWS:
PARCEL ONE:
BEING A PORTION OF BLOCKS 9, 10 AND 11, AS SHOWN ON THE UNFILED MAP ENTITLED
"MAP OF MONUMENT LOCATION EMERYVILLE INDUSTRIAL TRACT", DATED JANUARY 5, 1921,
BY PUNNETT AND PAREZ ENGINEERS, BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
BEGINNING AT THE INTERSECTION OF THE NORTHERLY LINE OF 53RD STREET (FORMERLY
SANTA FE AVENUE), AS SHOWN ON SAID MAP, AND THE WESTERLY LINE OF HOLLIS STREET;
THENCE ALONG SAID WESTERLY LINE, NORTH 17 DEG. 32' 00" WEST, 443.61 FEET; THENCE
NORTH 27 DEG. 46' 45" WEST, 381.28 FEET TO THE BEGINNING POINT OF A NON-TANGENT
CURVE CONCAVE SOUTHEASTERLY, HAVING A RADIUS OF 274.38 FEET (A RADIAL LINE
THROUGH SAID POINT BEARS NORTH 31 DEG. 43' 39" WEST); THENCE LEAVING SAID
WESTERLY LINE ALONG SAID CURVE, THROUGH A CENTRAL ANGLE OF 72 DEG. 44' 21", AN
ARC DISTANCE OF 348.34 FEET; THENCE SOUTH 17 DEG. 32' 00" EAST, 567.48 FEET TO A
POINT LYING ON SAID NORTHERLY LINE OF 53RD STREET; THENCE ALONG SAID NORTHERLY
LINE, NORTH 72 DEG. 28' 00" EAST, 274.53 FEET TO THE POINT OF BEGINNING.
ASSESSOR'S PARCEL NO. 049-1041-028
PARCEL TWO:
THAT PARCEL OF LAND SITUATE IN THE CITY OF EMERYVILLE, COUNTY OF ALAMEDA, STATE
OF CALIFORNIA, AND BEING ALL OF PARCEL 2 OF PARCEL MAP NO. 5719, FILED DECEMBER
28, 1989, IN BOOK 187 OF PARCEL MAPS, AT PAGES 97 - 98, IN RECORDS OF SAID
COUNTY.
EXCEPTING THEREFROM:
ALL MINERALS AND MINERAL RIGHTS, INTERESTS, AND ROYALTIES, INCLUDING, WITHOUT
LIMITING THE GENERALITY THEREOF, OIL, GAS AND OTHER HYDROCARBON SUBSTANCES, AS
WELL AS METALLIC OR OTHER SOLID MINERALS, MORE THAN FIVE HUNDRED (500) FEET
BELOW THE SURFACE OF SAID PROPERTY; HOWEVER, GRANTOR OR ITS SUCCESSORS AND
ASSIGNS, SHALL NOT HAVE THE RIGHT FOR ANY PURPOSE WHATSOEVER TO ENTER UPON, INTO
OR THROUGH THE SURFACE OF SAID PROPERTY IN CONNECTION THEREWITH.
ASSESSOR'S PARCEL NO. 049-1041-060
<PAGE>
EXHIBIT B
PERMITTED ENCUMBRANCES
The leasehold and other interests in the Land hereby conveyed by Chiron are
conveyed subject to the following matters to the extent the same are still valid
and in force:
1. County and city taxes for the Fiscal Year 1996 - 1997, a lien not yet due
or payable.
(AFFECTS PARCELS ONE AND TWO)
2. The Lien of Supplemental Taxes arising as the result of an event or
occurrence on or after the date of the policy assessed pursuant to the
provisions of Chapter 3.5, Revenue and Taxation Code, Sections 75 et seq.
No supplemental taxes now due and payable.
(AFFECTS PARCELS ONE AND TWO)
3. Assessments for BAY ST./SHELLMOUND ST. EXTENSION A.D. under Act 1915
Assessment No. 204, Series NOT SHOWN
Issued JANUARY 7, 1994, for original principal of $9,421.00 payable in 25
annual installments. Said bond payable to the CITY OF EMERYVILLE. No
installments now due and payable.
(AFFECTS PARCEL TWO)
4. Agreement on the terms, provisions, covenants and conditions contained
therein,
For : Development
Dated : September 14, 1995
Executed By : The City of Emeryville, a municipal corporation
And Between : Chiron Corporation, a Delaware corporation
Recorded : January 16, 1996, Series No. 96-009969, Official
Records of Alameda County, California
(AFFECTS PARCELS ONE AND TWO)
5. Non-exclusive easement for the purposes stated herein and incidental
purposes created in that certain instrument entitled "Grant of Easement and
Easement Agreement"
Dated : March 20, 1996
Recorded : March 21, 1996, Series No. 96-070723, Official Records
of Alameda County, California
Granted to : BGR Associates III, a California limited partnership
Purposes : Construction, installation, operation, use,
maintenance, repair, replacement and removal of
utilities, including, without limitation, gas,
electricity, water, storm and sanitary sewer,
telephone, cable television, and fiber-optic, data and
other cabling under the Easement Area referred to
hereafter, and, for ingress and egress to and from the
Easement Area for such purposes.
Easement Area : The westerly 10 feet of Parcel Two
and the terms, provisions, covenants and conditions contained in such Grant
of Easement and Easement Agreement.
<PAGE>
(AFFECTS PARCEL TWO)
Exhibit B -2-
<PAGE>
EXHIBIT C
DETERMINATION OF FAIR RENTAL VALUE
Each annual payment of Ground Lease Rent will equal the Fair Rental Value,
computed as of the most recent Rental Determination Date when such payment
becomes due. As used in this Exhibit, "RENTAL DETERMINATION DATE" means the
Rent Commencement Date and each fifth anniversary thereof.
If Chiron and BNPLC have not agreed upon Fair Rental Value as of any Rental
Determination Date within one hundred eighty days after the such date, then Fair
Rental Value will be determined as follows:
(a) Chiron and BNPLC shall each appoint a real estate appraiser who
is familiar with rental values for properties in the vicinity of the Land
and who has not previously acted for either party. Each party will make
the appointment no later than ten days after receipt of notice from the
other party that the appraisal process described in this Exhibit has been
invoked. The agreement of the two appraisers as to Fair Rental Value will
be binding upon Chiron and BNPLC. If the two appraisers cannot agree upon
the Fair Rental Value within ten days following their appointment, they
shall within another ten days agree upon a third real estate appraiser.
Immediately thereafter, each of the first two appraisers will submit his
best estimate of the appropriate Fair Rental Value (together with a written
report supporting such estimate) to the third appraiser and the third
appraiser will choose between the two estimates. The estimate of Fair
Rental Value chosen by the third appraiser as the closest to the prevailing
annual fair rental value will be binding upon Chiron and BNPLC.
Notification in writing of this estimate shall be made to Chiron and BNPLC
within fifteen days following the selection of the third appraiser.
(b) If appraisers must be selected under the procedure set out above
and either BNPLC or Chiron fails to appoint an appraiser or fails to notify
the other party of such appointment within fifteen days after receipt of
notice that the prescribed time for appointing the appraisers has passed,
then the other party's appraiser will determine the Fair Rental Value. All
appraisers selected for the appraisal process set out in this Exhibit will
be disinterested, reputable, qualified real estate appraisers with the
designation of MAI or equivalent and with at least 5 years experience in
appraising properties comparable to the Land.
(c) If a third appraiser must be chosen under the procedure set out
above, he or she will be chosen on the basis of objectivity and competence,
not on the basis of his relationship with the other appraisers or the
parties to this Ground Lease, and the first two appraisers will be so
advised. Although the first two appraisers will be instructed to attempt
in good faith to agree upon the third appraiser, if for any reason they
cannot agree within the prescribed time, either Chiron and BNPLC may
require the first two appraisers to immediately submit its top choice for
the third appraiser to the then highest ranking officer of the San
Francisco Bar Association who will agree to help and who has no
attorney/client or other significant relationship to either Chiron or
BNPLC. Such officer will have complete discretion to select the most
objective and competent third appraiser from between the choice of each of
the first two appraisers, and will do so within twenty days after such
choices are submitted to him.
(d) Either Chiron or BNPLC may notify the appraiser selected by the
other party to demand the submission of an estimate of Fair Rental Value or
a choice of a third appraiser as required under the procedure described
above; and if the submission of such an estimate or choice is required but
the other party's appraiser fails to comply with the demand within fifteen
days after receipt of such notice, then the Fair Rental Value or choice of
the third appraiser, as the case may be, selected by the other appraiser
(i.e., the notifying party's appraiser) will be binding upon Chiron and
BNPLC.
<PAGE>
(e) Chiron and BNPLC shall each bear the expense of the appraiser
appointed by it, and the expense of the third appraiser and of any officer
of the San Francisco Bar Association who participates in the appraisal
process described above will be shared equally by Chiron and BNPLC.
Exhibit C -- Page 2
<PAGE>
EXHIBIT D
AMENDMENT TO GROUND LEASE NO. ___
This AMENDMENT TO GROUND LEASE NO. ___ (this "AGREEMENT") is made as of
________, 199__, by and between BNP LEASING CORPORATION, a Delaware corporation
("BNPLC"), and CHIRON CORPORATION, a California corporation ("CHIRON").
R E C I T A L S
(1) BNPLC and Chiron executed a Ground Lease dated June 28, 1996 (the
"ORIGINAL GROUND LEASE") which covered, among other things, the land in Alameda
County, California described in EXHIBIT A thereto. Capitalized terms used in
this Agreement and not otherwise defined herein shall have the meanings given to
them in the Original Ground Lease, unless amended herein.
(2) BNPLC and Chiron now desire to modify the Original Ground Lease as
provided below.
NOW, THEREFORE, in consideration of the above recitals and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. AMENDMENT. As of the effective date of this Agreement, the land described
in ANNEX 1 attached hereto ("PARCEL 7A") is added to and made a part of the Land
covered by the Original Ground Lease, subject to the encumbrances described in
ANNEX 2 attached hereto, all of which shall be Permitted Encumbrances for
purposes of the Ground Lease and the Lease and Purchase Agreement referenced
therein.
2. RATIFICATION; REFERENCES TO THE ORIGINAL GROUND LEASE. The Original Ground
Lease, as modified by this Agreement, [INSERT THIS CLAUSE IF APPLICABLE: and as
previously amended by the Ground Lease Amendment No. ___ dated __________,
199___ executed by BNPLC and Chiron,] is hereby ratified and confirmed in all
respects. From and after the date of this Agreement, all references to the
"Ground Lease" in the documents and agreements referred to in the Original
Ground Lease and any other agreements executed by Chiron and by or for the
benefit of BNPLC shall mean the Original Ground Lease, as so modified, unless
the context shall otherwise require.
3. ENTIRE AGREEMENT. This Agreement and the documents and agreements referred
to herein set forth the entire agreement between the parties concerning the
subject matter hereof and no amendment or modification of this Agreement shall
be binding or valid unless expressed in a writing executed by both parties
hereto.
4. SUCCESSORS AND ASSIGNS. All of the covenants, agreements, terms and
conditions to be observed and performed by the parties hereto shall be
applicable to and binding upon their respective heirs, personal representatives,
successors and their respective assigns.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
BNP LEASING CORPORATION,
a Delaware corporation
By:
-----------------------------------------
Lloyd G. Cox, Vice President
CHIRON CORPORATION,
a California corporation
By:
------------------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
Exhibit D -- Page 2
<PAGE>
ANNEX 1
Legal Description of Parcel 7A
THAT PORTION OF PARCEL B AS SHOWN ON THE MAP OF PARCEL MAP NO. 2108 RECORDED IN
BOOK 97 AT PAGE 40 OF PARCEL MAPS IN THE COUNTY RECORDER'S OFFICE OF ALAMEDA
COUNTY LOCATED IN THE CITY OF EMERYVILLE, COUNTY OF ALAMEDA, STATE OF
CALIFORNIA, MORE PARTICULARLY DESCRIBED AS FOLLOWS:
BEGINNING AT THE NORTHEAST CORNER OF SAID PARCEL B; THENCE ALONG THE NORTHERLY
AND WESTERLY LINES OF SAID PARCEL B THE FOLLOWING COURSES AND DISTANCES:
S 72 DEG. 28' 00" W 131.60 FEET
S 17 DEG. 32' 00" E 43.00 FEET
S 72 DEG. 28' 00" W 42.83 FEET
S 17 DEG. 32' 00" E 43.00 FEET
THENCE CONTINUING S 17DEG. 32' 00" E 16.80 FEET TO A POINT ON A LINE LOCATED
5.00 FEET NORTHERLY OF AND PARALLEL TO THE NORTHERLY LINE OF A BOILER; THENCE N
72DEG. 25' 00" E ALONG SAID PARALLEL LINE A DISTANCE OF 59.69 FEET TO A POINT
ON A LINE LOCATED 5.00 FEET EASTERLY OF AND PARALLEL TO THE EASTERLY LINE OF A
BOILER; THENCE S 17DEG. 35' 00" E ALONG SAID PARALLEL LINE A DISTANCE OF 13.25
FEET; THENCE N 72DEG. 28' 00" E PARALLEL TO THE NORTHERLY LINE OF SAID PARCEL
B, A DISTANCE OF 114.72 FEET TO THE EASTERLY LINE OF SAID PARCEL B; THENCE N
17DEG. 32' 00" W ALONG SAID EASTERLY LINE OF PARCEL B A DISTANCE OF 116.00 FEET
TO THE POINT OF BEGINNING.
[DRAFTING NOTE: TO THE EXTENT, IF ANY, THAT EASEMENTS WILL BE NEEDED TO PROVIDE
ACCESS TO THE CENTRAL UTILITY PLANT OVER LAND NOT OTHERWISE INCLUDED IN THE
"LAND" (LIKE EASEMENTS OVER SERVICE ROADS LEADING UP TO LOADING DOCKS), THIS
ANNEX SHOULD BE CHANGED BY ADDING A DESCRIPTION OF THOSE EASEMENTS (INCLUDING
REFERENCES TO ANY SEPARATE RECORDED INSTRUMENTS BY WHICH THE EASEMENTS WERE
GRANTED, IF NOT OVER LAND THAT CHIRON ITSELF OWNS IN FEE). ANY SUCH CHANGES
WILL BE INCORPORATED INTO THIS ANNEX AND THIS "DRAFTING NOTE" WILL BE DELETED
BEFORE THE AMENDMENT TO WHICH THIS DESCRIPTION IS ATTACHED IS ACTUALLY EXECUTED
AND DELIVERED.]
Exhibit D -- Page 3
<PAGE>
ANNEX 2
New Permitted Encumbrances Relating to Parcel 7A
(a) Assessments for BAY ST./SHELLMOUND ST. EXTENSION A.D. under Act 1915
Assessment No. 197, Series NOT SHOWN
Issued JANUARY 7, 1994, for original principal of $20,427.00 payable in 25
annual installments. Said bond payable to the CITY OF EMERYVILLE. No
installments now due and payable.
(b) Non-buildable area over the northwesterly 50 feet of the northeasterly
131.59 feet of said land, as set forth on Parcel Map 2108, filed June 17,
1977, in Map Book 97, Page 40, Alameda County, California.
(c) Easement for ingress, egress and public utility purposes over the
northwesterly portion of said land, as shown upon the Parcel Map 2108,
filed June 17, 1977, in Map Book 97, Page 40, Alameda County, California
and as conveyed to Emeryville Economic Development Fund, a non-profit
corporation, by deed recorded August 25, 1977, Reel 5019, Image 505,
Official Records.
Exhibit D -- Page 4
<PAGE>
EXHIBIT E
AMENDMENT TO GROUND LEASE NO. ___
This AMENDMENT TO GROUND LEASE NO. ___ (this "AGREEMENT") is made as of
________, 199__, by and between BNP LEASING CORPORATION, a Delaware corporation
("BNPLC"), and CHIRON CORPORATION, a California corporation ("CHIRON").
R E C I T A L S
(1) BNPLC and Chiron executed a Ground Lease dated June 28, 1996 (the
"ORIGINAL GROUND LEASE") which covered, among other things, the land in Alameda
County, California described in EXHIBIT A thereto. Capitalized terms used in
this Agreement and not otherwise defined herein shall have the meanings given to
them in the Original Ground Lease, unless amended herein.
(2) Contemporaneously with the execution of the Agreement, Chiron is
causing a new Parcel Map to be filed of record in the real property records of
Alameda County, California pursuant to pursuant to California Government Code
Section 66463.1. The new Parcel Map will result in an adjustment, as shown in
the Parcel Map records of such county, to the boundaries of the land described
in Exhibit A attached to the Original Ground Lease, and it will cause that land
to be subdivided into two platted lots. The two lots will be as shown in the
map attached hereto as [or referenced in] ANNEX 1.
(3) BNPLC and Chiron now desire to modify the Original Ground Lease as
provided below.
NOW, THEREFORE, in consideration of the above recitals and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. AMENDMENT. As of the effective date of this Agreement, the land shown as
Lot 2 in ANNEX 1 [or in the map referenced in ANNEX 1] attached hereto is
substituted for and in lieu of the description of Parcel One and Parcel Two set
forth in EXHIBIT A attached to the Original Ground Lease. The land shown as Lot
1 in ANNEX 1 [or in the map referenced in ANNEX 1], will no longer be part of
the Land described in and covered by the Ground Lease; provided, to ensure
adequate parking for the Leased Property after this Agreement becomes effective,
Chiron is granting an easement appurtenant to Lot 2 in the form attached hereto
as ANNEX 2. Such easement shall from and after the date hereof constitute part
of the Real Property under and as defined in the Original Ground Lease.
2. RATIFICATION; REFERENCES TO THE ORIGINAL GROUND LEASE. The Original Ground
Lease, as modified by this Agreement, [INSERT THIS CLAUSE IF APPLICABLE: and as
previously amended by the Ground Lease Amendment No. ___ dated __________,
199___ executed by BNPLC and Chiron,] is hereby ratified and confirmed in all
respects. From and after the date of this Agreement, all references to the
"Ground Lease" in the documents and agreements referred to in the Original
Ground Lease and any other agreements executed by Chiron and by or for the
benefit of BNPLC shall mean the Original Ground Lease, as so modified, unless
the context shall otherwise require.
3. ENTIRE AGREEMENT. This Agreement and the documents and agreements referred
to herein set forth the entire agreement between the parties concerning the
subject matter hereof and no amendment or modification of this Agreement shall
be binding or valid unless expressed in a writing executed by both parties
hereto.
4. SUCCESSORS AND ASSIGNS. All of the covenants, agreements, terms and
conditions to be observed and performed by the parties hereto shall be
applicable to and binding upon their respective heirs, personal representatives,
successors and their respective assigns.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
BNP LEASING CORPORATION,
a Delaware corporation
By:
-----------------------------------------
Lloyd G. Cox, Vice President
CHIRON CORPORATION,
a California corporation
By:
-----------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
Exhibit E -- Page 2
<PAGE>
ANNEX 1
Copy of [or Reference to] the New Parcel Map
Reference is here made to the Parcel Map No. 6772 prepared by KCA Engineering
dated June 1996, which is in draft form and which representatives of Chiron and
BNPLC have signed in multiple counterparts for identification.
Exhibit E -- Page 3
<PAGE>
ANNEX 2
PARKING AND ACCESS EASEMENT AGREEMENT
CHIRON CORPORATION, a California corporation ("GRANTOR"), for and in
consideration of the sum of $10.00 and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, hereby GRANTS,
SELLS and CONVEYS unto BNP LEASING CORPORATION, a Delaware corporation
("GRANTEE"), an easement (the "EASEMENT") upon, over, through and across that
certain tract of land described in ATTACHMENT NO. 1 attached hereto and made a
part hereof (the "EASEMENT TRACT") for the benefit of and as an easement
appurtenant to the land described in ATTACHMENT NO. 2 attached hereto and made a
part hereof (the "BNPLC TRACT").
PURPOSE
The Easement shall be for the parking of vehicles (including bicycles) and
pedestrian and vehicular ingress and egress upon, over, through and across the
Easement Tract by the owners and occupants of the BNPLC Tract and their
invitees. However, such parking and ingress and egress shall be limited to the
driveways, roadways, pathways, sidewalks, pedestrian skybridges. pedestrian
tunnels and parking areas from time to time established on the Easement Tract,
so long as the provisions below concerning minimum parking are satisfied and so
long as access to and from the BNPLC Tract continues to be available over and
across the following private road and service drive: (1) the private road
designated as Holden Street in the Preliminary Development Plan (the "PDP")
approved by Resolution of City Council of Emeryville on August 15, 1995
(Resolution No. 95-006.) ("HOLDEN STREET"), and (2) the service drive to west of
[proposed] building 7A (the "SERVICE DRIVE"), parallel to Holden street, which
according the PDP will provide access to the loading area for such building.
The Easement shall also be for the installation, maintenance, expansion,
replacement, removal of utility lines from time to time established on the
Easement Tract as shown on the Tentative Map approved by Resolution of City
Council of Emeryville on August 15, 1995 (Resolution No. 95-144), including any
such utility lines under Holden Street and the Service Drive.
MINIMUM PARKING
Grantor, as the owner of the Easement Tract, shall maintain in good
condition sufficient paved and accessible parking spaces on the Easement Tract
to not only meet the parking needs and requirements for the Easement Tract
itself, but also to provide the Minimum Parking (hereinafter defined) required
for the BNPLC Tract from time to time. For purposes of this Agreement, "MINIMUM
PARKING" shall mean, at the time in question, the minimum number of parking
spaces required for the then current use of buildings or other improvements
located on the BNPLC Tract by local parking ordinances or other laws, taking
into account any such parking spaces available on the BNPLC Tract itself. For
example, if parking ordinances or other laws required that 300 parking spaces be
provided for the use of improvements on the BNPLC Tract, but only 170 parking
spaces were then available on the BNPLC Tract, Grantor would have to maintain
130 parking spaces on the Easement Tract in addition to the parking that Grantor
would otherwise have to maintain or need on the Easement Tract.
Exhibit E -- Page 4
<PAGE>
DURATION
This Parking and Access Easement Agreement is being provided pursuant to a
Ground Lease dated June 28, 1996 (as the same may be or have been amended from
time to time, the "GROUND LEASE") by and between Grantor, as lessor, and
Grantee, as lessee, covering the BNPLC Tract. The term of the Ground Lease is
scheduled to expire on December 31, 2030 (the "SCHEDULED EXPIRATION DATE"). The
Easement and the privileges herein granted shall continue only so long as the
Ground Lease remains in force; provided, however, that the Easements and the
privileges herein granted shall continue in perpetuity if Grantee acquires fee
ownership to the BNPLC Tract at any time prior to the Scheduled Expiration Date,
which Grantee has the option to do on and subject to the terms and conditions
set forth in the contingent purchase option exhibit attached to the Ground
Lease. Grantor shall warrant and forever defend the Easement unto Grantee and
its successors and assigns against every person whomsoever claiming, or to
claim, the same or any part thereof. In no event shall the Easement terminate
as a result of abandonment or nonuse; it being expressly agreed and understood
that the Easement shall continue in effect as provided above, unless
relinquished by written instrument executed by Grantee (or any future owner
Grantee's interests in the BNPLC Tract, including any fee interest hereafter
acquired by Grantee prior to the Scheduled Expiration Date) and filed for record
in the appropriate real property records. If, however, the Ground Lease is
terminated in accordance with its express terms by Grantor before BNPLC acquires
the fee interest in the BNPLC Tract, thereby causing Grantee's leasehold
interest in the BNPLC Tract to revert to Grantor, then Grantor itself may
execute and record the written instrument described in the preceding sentence.
PARTIAL RELEASES
Grantor and its successors and assigns as to the Easement Tract may from
time to time request that the lessee under the Ground Lease execute an amendment
to this Agreement in recordable form, solely for the purpose of releasing from
the Easement and removing from the Easement Tract any land upon which there is
to be constructed improvements inconsistent with the Easement. BNPLC shall not
unreasonably refuse to execute any such amendment, so long as, immediately
following the execution of the amendment:
(A) parking on the Easement Tract will continue to be (1) sufficient
to satisfy the requirements set forth above under the heading "Minimum
Parking," (2) reasonably accessible to pedestrians walking between the
BNPLC Tract and such parking, and (3) within reasonable proximity to the
BNPLC Tract;
(B) the release does not include any part of Holden Street or the
Service Drive (or of any land over which comparable access is being
provided because of a prior partial release), unless comparable access will
continue to be provided through the Easement over other land; and
(C) utilities provided to the BNPLC Tract through any utility lines
constructed or to be constructed under or across the Easement Tract will
continue to be available and serviceable at a reasonable cost, without a
decrease in capacity.
BINDING EFFECT
Each of the easements, rights, obligations and covenants set forth herein
shall be binding upon Grantor and the successors and assigns of Grantor,
including all successors in interest of Grantor in and to all or any part of the
Easement Tract, and shall inure to the benefit of Grantee and its successors and
assigns, including all successors in interest of Grantee in and to all or any
part of the BNPLC Tract. All references in this document to Grantor or
Exhibit E -- Page 5
<PAGE>
Grantee shall be deemed to include all such successors any assigns. All
provisions of this document are intended to be covenants running with the land.
IN WITNESS WHEREOF, this Easement Agreement is dated the ____ day of
___________, ____.
GRANTOR:
CHIRON CORPORATION
By:
------------------------------------
Name:
-------------------------------
Title:
------------------------------
STATE OF CALIFORNIA Section
Section
COUNTY OF ______ Section
On ____________________ before me, the undersigned, a Notary Public in and
for said County and State, personally appeared
___________________________________________ , personally known to me (or proved
to me on the basis of satisfactory evidence) to be the person whose name is
subscribed to the within instrument and acknowledged to me that he executed the
same in his authorized capacity, and that by his signature on the instrument the
person, or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
Signature:
- ----------------------------------
- ----------------------------------
Name (typed or printed)
Notary Public in and for said County and State
My commission expires:
_________________
Exhibit E -- Page 6
<PAGE>
ATTACHMENT NO. 1
LEGAL DESCRIPTION - EASEMENT TRACT
REFERENCE PROPERTY ATTACHMENT
PARCEL NO. APN. NO. REFERENCE PAGE NO.
---------- -------- ------------------
1 49-1041-4 1-A
2 49-1041-40 1-A
2a 49-1041-39 1-A
3 49-1041-3-3 1-B
4 49-1041-2-1 1-B
5 49-1041-1 1-B
6 49-1041-48 1-B
7 49-1041-49 1-C
8 49-1041-50-1 1-D
9 49-1041-55 1-E
11 49-1041-29-1 1-F
12 49-1041-5 1-G
13 49-1041-51 1-D
14 49-1041-61 1-B
16 49-1041-27 1-B
17 49-1041-29-2 1-H
(portion of property)
Exhibit E -- Page 7
<PAGE>
ATTACHMENT NO. 1-A
CITY OF EMERYVILLE
PARCEL 1:
BEGINNING AT A POINT ON THE WESTERN LINE OF HORTON STREET, DISTANT SOUTH 17 DEG.
32' EAST, 325 FEET FROM THE NORTHERN EXTREMITY THEREOF, AS SAID HORTON STREET IS
DESCRIBED AS PARCEL 1 IN THE DEED FROM THE MEE ESTATE, A CORPORATION, TO THE
TOWN OF EMERYVILLE, DATED SEPTEMBER 7, 1920, RECORDED DECEMBER 14, 1920, IN BOOK
3008 OF DEEDS, PAGE 178, ALAMEDA COUNTY RECORDS; AND RUNNING THENCE ALONG SAID
LINE OF HORTON STREET, SOUTH 17DEG. 32' EAST, 125 FEET; THENCE SOUTH 72 DEG.
28' WEST, 172.83 FEET, MORE OR LESS, TO THE EASTERN LINE OF THE 1.167 ACRE TRACT
OF LAND SECONDLY DESCRIBED IN THE DEED BY THE MEE ESTATE TO SOUTHERN PACIFIC
RAILROAD COMPANY, DATED JULY 20, 1917, RECORDED JULY 30, 1917, IN BOOK 2593 OF
DEEDS, PAGE 110, ALAMEDA COUNTY RECORDS; THENCE ALONG THE LAST NAMED LINE
NORTHERLY 125 FEET, MORE OR LESS, TO A LINE DRAWN SOUTH 72 DEG. 28' WEST FROM
THE POINT OF BEGINNING; AND THENCE NORTH 72 DEG. 28' EAST, 165.286 FEET, MORE OR
LESS, TO THE POINT OF BEGINNING.
PARCEL 2:
AN EASEMENT, APPURTENANT TO PARCEL 1, ABOVE DESCRIBED, FOR THE ENCROACHMENT ON
THE PROPERTY ADJOINING ON THE NORTHWEST OF THE NORTH WALL OF THE EXISTING
STRUCTURE LOCATED ON SAID PARCEL 1, TO CONTINUE SO LONG AS SAID STRUCTURE IS
MAINTAINED IN ITS PRESENT CONDITION, AS GRANTED BY SHELL DEVELOPMENT COMPANY TO
HANLEY ALLEN AND EVA C. ALLEN, HIS WIFE, BY INSTRUMENT DATED MARCH 30, 1950.
RECORDED APRIL 17, 1950, IN BOOK 6081 OF OFFICIAL RECORDS OF ALAMEDA COUNTY,
PAGE 151.
PARCEL 3:
BEGINNING AT A POINT ON THE WESTERN LINE OF HORTON STREET, DISTANT THEREON SOUTH
17 DEG. 32' EAST, 225 FEET, MORE OR LESS, FROM THE NORTHERN EXTREMITY THEREOF,
AS SAID HORTON STREET IS DESCRIBED UNDER PARCEL 1 IN THAT CERTAIN DEED FROM THE
MEE ESTATE, A CORPORATION, TO THE TOWN OF EMERYVILLE, A MUNICIPAL CORPORATION,
DATED SEPTEMBER 7, 1920, RECORDED DECEMBER 14, 1920, IN BOOK 3008 OF DEED, AT
PAGE 178, ALAMEDA COUNTY RECORDS; RUNNING THENCE SOUTH 17 DEG. 32' EAST ALONG
SAID LINE OF HORTON STREET, 100 FEET; THENCE SOUTH 72 DEG. 28' WEST, 165.28
FEET TO THE EASTERN BOUNDARY LINE OF THAT CERTAIN 1.167 ACRE TRACT OF LAND
SECONDLY DESCRIBED IN THE DEED FROM THE MEE ESTATE, A CORPORATION, TO SOUTHERN
PACIFIC RAILROAD COMPANY, A CORPORATION, DATED JULY 20, 1917, RECORDED
JULY 30, 1917, IN BOOK 2593 OF DEEDS, AT PAGE 110, ALAMEDA COUNTY RECORDS;
THENCE NORTH 14 DEG. 39' 15" WEST ALONG THE LAST NAMED LINE, 100.13 FEET TO A
LINE DRAWN SOUTH 72 DEG. 28' WEST FROM THE POINT OF BEGINNING; THENCE NORTH
72 DEG. 28' EAST, 160.26 FEET TO THE POINT OF BEGINNING.
ASSESSOR'S PARCEL NOS.
049-1041-004 (AFFECTS PARCEL 1)
049-1041-039 (AFFECTS A PORTION OF PARCEL 3)
Exhibit E -- Page 1
<PAGE>
049-1041-040 (AFFECTS THE REMAINDER OF PARCEL 3)
ATTACHMENT NO. 1-B
CITY OF EMERYVILLE
PARCEL A
PARCEL ONE:
ALL OF THAT PORTION OF PARCEL C ACCORDING TO THAT CERTAIN PARCEL MAP NO. 2108
FILED FOR RECORD ON JUNE 17, 1977, IN BOOK 97, PAGE 40, ALAMEDA COUNTY RECORDS,
DESCRIBED AS FOLLOWS:
BEGINNING AT THE MOST NORTHERN CORNER OF HORTON STREET, SAID POINT OF BEGINNING
ALSO BEING DISTANT ALONG THE EASTERN LINE OF HORTON STREET 300 FEET NORTHERLY
THEREON FROM THE POINT OF INTERSECTION THEREOF WITH THE NORTHERN LINE OF SANTA
FE AVENUE; AND RUNNING THENCE SOUTH 72 DEG. 28' WEST ALONG THE NORTHERN LINE OF
HORTON STREET, 60 FEET; THENCE SOUTH 17 DEG. 32' EAST ALONG THE WESTERN LINE OF
HORTON STREET 25 FEET; THENCE AT RIGHT ANGLES SOUTH 72 DEG. 28' WEST 148.50
FEET TO THE EASTERN BOUNDARY LINE OF THAT CERTAIN PARCEL OF LAND DESCRIBED IN
THE DEED FROM THE MEE ESTATE, A CORPORATION, TO THE SOUTHERN PACIFIC RAILROAD
COMPANY, A CORPORATION, DATED OCTOBER 7, 1920, RECORDED OCTOBER 14, 1920, IN
BOOK 3003 OF DEEDS, PAGE 128, ALAMEDA COUNTY RECORDS; THENCE NORTH 14 DEG. 39'
15" WEST ALONG THE LAST NAMED LINE, 51.30 FEET TO THE POINT OF INTERSECTION
THEREOF WITH THE SOUTHEASTERN BOUNDARY LINE OF THAT CERTAIN PARCEL OF LAND
DESCRIBED IN THE DEED FROM THE MEE ESTATE, A CORPORATION, TO THE SOUTHERN
PACIFIC COMPANY, A CORPORATION, DATED OCTOBER 7, 1913, RECORDED NOVEMBER 1,
1913, IN BOOK 2193 OF DEEDS, PAGE 309, ALAMEDA COUNTY RECORDS; THENCE ALONG THE
LAST NAMED LINE ON THE ARC OF A CURVE TO THE RIGHT (SAID CURVE IS NOT TANGENT TO
THE LAST NAMED COURSE) HAVING A RADIUS OF 754.68 FEET; FROM SAID POINT THE
CENTER OF SAID CURVE BEARS SOUTH 83 DEG. 03' 20" EAST, AN ARC DISTANCE OF
341.60 FEET, AND THROUGH A CENTRAL ANGLE OF 25 DEG. 56' 05" TO THE POINT OF
INTERSECTION THEREOF WITH THE DIRECT EXTENSION NORTHERLY OF THE EASTERN LINE OF
HORTON STREET; FROM SAID POINT THE CENTER OF THE AFOREMENTIONED CURVE BEARS
SOUTH 57 DEG. 07' 15" EAST; THENCE ALONG THE AFOREMENTIONED EXTENSION OF HORTON
STREET, SOUTH 17 DEG. 32' EAST 295.14 FEET TO THE POINT OF BEGINNING.
ASSESSOR'S PARCEL NO. 049-1041-001
PARCEL TWO:
Exhibit E -- Page 1
<PAGE>
ALL OF THAT PORTION OF PARCEL C ACCORDING TO THAT CERTAIN PARCEL MAP NO. 2108
FILED FOR RECORD ON JUNE 17, 1977, IN BOOK 97, PAGE 40, ALAMEDA COUNTY RECORDS,
DESCRIBED AS FOLLOWS:
BEGINNING AT A POINT ON THE WESTERN LINE OF HORTON STREET, DISTANT THEREON SOUTH
17 DEG. 32' EAST 25 FEET FROM THE NORTHERN EXTREMITY THEREOF, AS SAID HORTON
STREET IS DESCRIBED UNDER PARCEL 1 IN THAT CERTAIN DEED FROM THE MEE ESTATE, A
CORPORATION, TO THE TOWN OF EMERYVILLE, A MUNICIPAL CORPORATION, DATED
SEPTEMBER 7, 1920, RECORDED DECEMBER 14, 1920, IN BOOK 3008 OF DEEDS, PAGE 178,
ALAMEDA COUNTY RECORDS; RUNNING THENCE SOUTH 17 DEG. 32' EAST ALONG SAID LINE
OF HORTON STREET, 95.39 FEET; THENCE SOUTH 72 DEG. 28' WEST 154.99 FEET TO THE
EASTERN BOUNDARY LINE OF THAT CERTAIN 1.167 ACRE TRACT OF LAND SECONDLY
DESCRIBED IN THE DEED FROM THE MEE ESTATE, A CORPORATION, A GENERAL
PARTNERSHIP, TO EMERYVILLE ECONOMIC DEVELOPMENT FUND, A CALIF. CORP., DATED
FEBRUARY 9, 1979, TO THE SOUTHERN PACIFIC RAILWAY COMPANY, A CORPORATION, DATED
JULY 20, 1917, RECORDED JULY 30, 1917, IN BOOK 2593 OF DEEDS, PAGE 110, ALAMEDA
COUNTY RECORDS; THENCE NORTH 14 DEG. 39' 15" WEST ALONG THE LAST NAMED LINE,
61.92 FEET; THENCE NORTHERLY, TANGENT WITH THE LAST NAMED COURSE, ON THE ARC OF
A CURVE TO THE RIGHT WITH A RADIUS OF 336.89 FEET, A DISTANCE OF 33.73 FEET TO
A LINE DRAWN SOUTH 72 DEG. 28' EAST 148.50 FEET TO THE POINT OF BEGINNING.
ASSESSOR'S PARCEL NO. 049-1041-002-01
PARCEL THREE:
ALL OF THAT PORTION OF PARCEL C ACCORDING TO THAT CERTAIN PARCEL MAP NO. 2108
FILED FOR RECORD ON JUNE 17, 1977, IN BOOK 97, PAGE 40, ALAMEDA COUNTY RECORDS,
DESCRIBED AS FOLLOWS:
BEGINNING AT A POINT ON THE WESTERN LINE OF HORTON STREET, DISTANT THEREON SOUTH
17 DEG. 32' EAST 120.39 FEET FROM THE NORTHERN EXTREMITY THEREOF, AS SAID HORTON
STREET IS DESCRIBED UNDER PARCEL 1 IN THAT CERTAIN DEED FROM THE MEE ESTATE, A
CORPORATION, TO THE TOWN OF EMERYVILLE, DATED SEPTEMBER 7, 1920, RECORDED
DECEMBER 14, 1920, BOOK 3008 OF DEEDS, PAGE 178, ALAMEDA COUNTY RECORDS; RUNNING
THENCE ALONG SAID LINE OF HORTON STREET, SOUTH 17 DEG. 32' EAST 104.61 FEET TO
THE NORTHERN LINE OF THE PARCEL OF LAND DESCRIBED IN THE DEED TO SHELL
DEVELOPMENT COMPANY, DATED FEBRUARY 20, 1950, RECORDED FEBRUARY 23, 1950, IN
BOOK 6028 OF OFFICIAL RECORDS OF ALAMEDA COUNTY, PAGE 502, SERIES NO. AE/15564;
THENCE ALONG THE LAST NAMED LINE, SOUTH 72 DEG. 28' WEST 160.26 FEET TO THE
EASTERN BOUNDARY LINE OF THAT CERTAIN 1.167 ACRE TRACT OF LAND SECONDLY
DESCRIBED IN THE DEED FROM MEE ESTATE COMPANY TO SOUTHERN PACIFIC RAILROAD
COMPANY, DATED JULY 20, 1917, RECORDED JULY 30, 1917, IN BOOK 2593 OF DEEDS,
PAGE 110, ALAMEDA COUNTY RECORDS; THENCE ALONG THE LAST NAMED LINE, NORTH
14 DEG. 39' 15" WEST 104.74 FEET; THENCE LEAVING SAID EASTERN LINE, NORTH
72 DEG. 28' EAST 154.99 FEET TO THE POINT OF BEGINNING.
ASSESSOR'S PARCEL NO. 049-1041-003-03
PARCEL FOUR:
Exhibit E -- Page 2
<PAGE>
A NON-EXCLUSIVE APPURTENANT RIGHT OF WAY FOR INGRESS AND EGRESS FOR PEDESTRIANS,
MOTOR AND OTHER VEHICLES OF ALL KINDS AND TYPES AND FOR UTILITIES ON AND OVER
THE FOLLOWING DESCRIBED PARCEL:
ALL OF THAT PORTION OF PARCEL C ACCORDING TO THAT CERTAIN PARCEL MAP NO. 2108
FILED FOR RECORD ON JUNE 17, 1977, IN BOOK 97, PAGE 40, ALAMEDA COUNTY RECORDS,
DESCRIBED AS FOLLOWS:
THAT PORTION OF HORTON STREET, 60 FEET WIDE, LYING NORTHERLY OF THE NORTHWESTERN
LINE OF 53RD STREET, FORMERLY SANTA FE AVENUE, 60 FEET WIDE, DESCRIBED AS
FOLLOWS:
BEGINNING AT THE INTERSECTION OF THE NORTHWESTERN LINE OF 53RD STREET, 60 FEET
WIDE, WITH THE NORTHEASTERN LINE OF HORTON STREET, 60 FEET WIDE; RUNNING THENCE
ALONG SAID LAST NAMED LINE, NORTH 17 DEG. 32' WEST 300 FEET; THENCE SOUTH
72 DEG. 28' WEST 60 FEET TO THE SOUTHWESTERN LINE OF HORTON STREET; THENCE
ALONG SAID LAST NAMED LINE, SOUTH 17 DEG. 32' EAST 300 FEET TO THE INTERSECTION
WITH THE SAID NORTHWESTERN LINE OF 53RD STREET, PRODUCED SOUTHWESTERLY; THENCE
ALONG SAID LINE SO PRODUCED, NORTH 72 DEG. 28' EAST 60 FEET TO THE POINT OF
BEGINNING.
PARCEL FIVE:
PARCEL A, PARCEL MAP 2108, FILED JUNE 17, 1977, IN MAP BOOK 97, PAGE 40, ALAMEDA
COUNTY RECORDS.
ASSESSOR'S PARCEL NO. 049-1041-048
PARCEL SIX:
AN EASEMENT FOR ACCESS, INGRESS AND EGRESS PURPOSES OVER THE PARCEL OF LAND
DESCRIBED AS FOLLOWS:
BEGINNING AT THE MOST SOUTHERN CORNER OF PARCEL B, PARCEL MAP 2108, FILED JUNE
17, 1977, IN BOOK 97 OF PARCEL MAPS, PAGES 40 AND 41, ALAMEDA COUNTY RECORDS;
THENCE RUNNING ALONG THE SOUTHWESTERN LINE OF SAID PARCEL B, NORTH 17 DEG. 32'
WEST, 254.19 FEET TO A POINT DISTANT SOUTH 17 DEG. 32' WEST, 45 FEET, FROM THE
INTERSECTION OF THE SOUTHEASTERN BOUNDARY LINE OF PARCEL A, AS SHOWN ON THE
PARCEL MAP HEREINABOVE REFERRED TO; THENCE PARALLEL WITH SAID SOUTHEASTERLY
BOUNDARY LINE NORTH 72 DEG. 28' EAST, 143 FEET; THENCE NORTH 17 DEG. 32' WEST,
88 FEET, TO THE SOUTHEASTERN BOUNDARY LINE OF SAID PARCEL A; THENCE ALONG SAID
SOUTHEASTERN BOUNDARY LINE AND EXTENSION THEREOF SOUTH 72 DEG. 28' WEST, 42.83
FEET; THENCE SOUTH 17 DEG. 32' EAST, 43 FEET; THENCE SOUTH 72 DEG. 28' WEST,
160.17 FEET TO A POINT DISTANT SOUTH 72 DEG. 28' WEST, 60 FEET FROM THE
SOUTHWESTERN BOUNDARY LINE OF PARCEL MAP 2108, HEREINABOVE REFERRED TO; THENCE
PARALLEL WITH SAID SOUTHWESTERN LINE AND DISTANT 60 FEET THEREFROM SOUTH
17 DEG. 32' EAST, 299.19 FEET TO THE NORTHWESTERN LINE OF 53RD STREET; THENCE
ALONG SAID NORTHWESTERN LINE OF 53RD STREET, NORTH 72 DEG. 28' EAST, 60 FEET TO
THE POINT OF BEGINNING.
Exhibit E -- Page 3
<PAGE>
Exhibit E -- Page 4
<PAGE>
PARCEL B
BEING ALL OF PARCEL 1 OF PARCEL MAP NO. 5719 AS RECORDED DECEMBER 29, 1989, IN
BOOK 187 OF MAPS AT PAGE 97-98 IN RECORDS OF SAID COUNTY.
EXCEPTING THEREFROM ALL MINERALS AND MINERAL RIGHTS, INTEREST, AND ROYALTIES,
INCLUDING WITHOUT LIMITING THE GENERALITY THEREOF, OIL, GAS AND OTHER
HYDROCARBON SUBSTANCES, AS WELL AS METALLIC OR OTHER SOLID MINERALS, MORE THAN
FIVE HUNDRED (500) FEET BELOW THE SURFACE OF SAID PROPERTY; HOWEVER, GRANTOR OR
ITS SUCCESSORS AND ASSIGNS, SHALL NOT HAVE THE RIGHT FOR ANY PURPOSE WHATSOEVER
TO ENTER UPON, INTO OR THROUGH THE SURFACE OF SAID PROPERTY IN CONNECTION
THEREWITH, AS RESERVED IN THE DEED RECORDED DECEMBER 29, 1989,
SERIES NO. 89-348859, OFFICIAL RECORDS.
ASSESSOR'S PARCEL NO. 049-1041-061
PARCEL C
ALL OF THAT PORTION OF PARCEL C ACCORDING TO THAT CERTAIN PARCEL MAP NO. 2108
FILED FOR RECORD ON JUNE 17, 1977, IN BOOK 97, PAGE 40, ALAMEDA COUNTY RECORDS,
DESCRIBED AS FOLLOWS:
THAT PORTION OF HORTON STREET, 60 FEET WIDE, LYING NORTHERLY OF THE NORTHWESTERN
LINE OF 53RD STREET, FORMERLY SANTA FE AVENUE, 60 FEET WIDE, DESCRIBED AS
FOLLOWS:
BEGINNING AT THE INTERSECTION OF THE NORTHWESTERN LINE OF 53RD STREET, 60 FEET
WIDE, WITH THE NORTHEASTERN LINE OF HORTON STREET, 60 FEET WIDE; RUNNING THENCE
ALONG SAID LAST NAMED LINE, NORTH 17 DEG. 32' WEST 300 FEET; THENCE SOUTH
72 DEG. 28' WEST 60 FEET TO THE SOUTHWESTERN LINE OF HORTON STREET; THENCE
ALONG SAID LAST NAMED LINE, SOUTH 17 DEG. 32' EAST 300 FEET TO THE INTERSECTION
WITH THE SAID NORTHWESTERN LINE OF 53RD STREET, PRODUCED SOUTHWESTERLY; THENCE
ALONG SAID LINE SO PRODUCED, NORTH 72 DEG. 28' EAST 60 FEET TO THE POINT OF
BEGINNING.
ASSESSOR'S PARCEL NO. 049-1041-027
Exhibit E -- Page 5
<PAGE>
ATTACHMENT NO. 1-C
CITY OF EMERYVILLE
PARCEL "B," PARCEL MAP NO. 2108, FILED JUNE 17, 1977, IN MAP BOOK 97, PAGE 40,
ALAMEDA COUNTY RECORDS.
ASSESSOR'S PARCEL NO. 049-1041-049.
Exhibit E -- Page 1
<PAGE>
ATTACHMENT NO. 1-D
CITY OF EMERYVILLE
PARCEL ONE:
PARCEL A, PARCEL MAP 2232, FILED JUNE 7, 1978, IN BOOK 102 OF PARCEL MAPS, PAGE
49, ALAMEDA COUNTY RECORDS.
PARCEL TWO:
PARCEL B, PARCEL MAP 2232, FILED JUNE 7, 1978, IN BOOK 102 OF PARCEL MAPS, PAGE
49, ALAMEDA COUNTY RECORDS.
PARCEL THREE:
BEGINNING AT THE POINT OF INTERSECTION OF THE MOST WESTERLY LINE OF LAND
DESCRIBED AS PARCEL NO. 3 IN DEED DATED OCTOBER 7, 1920, FROM THE MEE ESTATE TO
SOUTHERN PACIFIC RAILROAD COMPANY, RECORDED OCTOBER 14, 1920, IN BOOK 3003 OF
DEEDS, PAGE 128, RECORDS OF ALAMEDA COUNTY, WITH THE SOUTHERLY LINE OF 53RD
STREET (FORMERLY SANTA FE AVENUE); THENCE NORTH 72 DEG. 28' 00" EAST ALONG SAID
SOUTHERLY LINE, 6.50 FEET TO A POINT IN A LINE PARALLEL WITH AND DISTANT 6.50
FEET EASTERLY, MEASURED AT RIGHT ANGLES, FROM SAID WESTERLY LINE; THENCE SOUTH
17 DEG. 32' 00" EAST ALONG SAID PARALLEL LINE, 200.00 FEET; THENCE SOUTH
72 DEG. 28' 00" WEST, 6.50 FEET TO A POINT IN SAID WESTERLY LINE; THENCE NORTH
17 DEG. 32' 00" WEST ALONG LAST SAID LINE, 200.00 FEET TO THE POINT OF
BEGINNING.
EXCEPTING THEREFROM, THAT PORTION THEREOF LYING BELOW A DEPTH OF 500 FEET,
MEASURED VERTICALLY, FROM THE CONTOUR OF THE SURFACE OF SAID PROPERTY; HOWEVER,
GRANTOR, OR ITS SUCCESSORS AND ASSIGNS, SHALL NOT HAVE THE RIGHT FOR ANY PURPOSE
WHATSOEVER TO ENTER UPON, INTO OR THROUGH THE SURFACE OF SAID PROPERTY, OR ANY
PART THEREOF LYING BETWEEN SAID SURFACE AND 500 FEET BELOW SAID SURFACE.
ASSESSOR'S PARCEL NOS.
049-1041-050-01 (AFFECTS PARCELS ONE AND THREE)
049-1041-051 (AFFECTS PARCEL TWO)
Exhibit E -- Page 1
<PAGE>
ATTACHMENT NO. 1-E
CITY OF EMERYVILLE
PARCEL 2 OF PARCEL MAP NO. 5022, FILED JANUARY 13, 1987, IN BOOK 165 OF PARCEL
MAPS, AT PAGES 67 - 68, ALAMEDA COUNTY RECORDS.
ASSESSOR'S PARCEL NO. 049-1041-055
Exhibit E -- Page 1
<PAGE>
ATTACHMENT NO. 1-F
CITY OF EMERYVILLE
BEING A PORTION OF BLOCKS 9, 10 AND 11, AS SHOWN ON THE UNFILED MAP ENTITLED
"MAP OF MONUMENT LOCATION EMERYVILLE INDUSTRIAL TRACT", DATED JANUARY 5, 1921,
BY PUNNETT AND PAREZ ENGINEERS, BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
BEGINNING AT THE INTERSECTION OF THE SOUTHERLY LINE OF SAID 53RD STREET AND THE
WESTERLY LINE OF SAID HOLLIS STREET; THENCE ALONG SAID SOUTHERLY LINE, SOUTH
72 DEG. 28' 00" WEST, 148.00 FEET; THENCE LEAVING SAID SOUTHERLY LINE, SOUTH
17 DEG. 32' 00" EAST, 200.00 FEET; THENCE NORTH 72 DEG. 28' 00" EAST, 148.00
FEET TO A POINT LYING ON SAID WESTERLY LINE; THENCE ALONG SAID WESTERLY LINE,
NORTH 17 DEG. 32' 00" WEST, 200.00 FEET TO THE POINT OF BEGINNING.,
ASSESSOR'S PARCEL NO. 049-1041-029-01
Exhibit E -- Page 1
<PAGE>
Attachment No. 1-G
CITY OF EMERYVILLE
PARCEL ONE:
BEGINNING AT A POINT ON THE WESTERN LINE OF HORTON STREET, DISTANT THEREON NORTH
17 DEG. 32' WEST, 598.02 FEET FROM THE INTERSECTION THEREOF WITH THE NORTHERN
LINE OF SHERWIN AVENUE, AS SAID STREET AND AVENUE ARE DESCRIBED UNDER PARCEL ONE
IN THE DEED FROM THE MEE ESTATE, A CORPORATION, TO THE TOWN OF EMERYVILLE, A
MUNICIPAL CORPORATION, DATED SEPTEMBER 7, 1920, RECORDED DECEMBER 14, 1920, BOOK
3008 OF DEEDS, PAGE 178, ALAMEDA COUNTY RECORDS, SAID POINT OF BEGINNING BEING
ALSO DISTANT NORTH 17 DEG. 32' WEST, 658.02 FEET FROM THE INTERSECTION OF SAID
WESTERN LINE OF HORTON STREET WITH THE NORTHERN BOUNDARY LINE OF PLOT 6,
ACCORDING TO KELLERSBERGER'S SURVEY OF THE RANCHOS OF VICENTE & DOMINGO PERALTA;
AND RUNNING THENCE NORTH 17 DEG. 32' WEST ALONG SAID LINE OF HORTON STREET,
605.68 FEET TO A POINT THEREON WHICH IS DISTANT SOUTH 17 DEG. 32' EAST, 450
FEET FROM THE NORTHERN EXTREMITY OF HORTON STREET, AS DESCRIBED UNDER PARCEL ONE
IN THE DEED HEREINABOVE REFERRED TO; RUNNING THENCE SOUTH 72 DEG. 28' WEST,
172.83 FEET, MORE OR LESS, TO THE EASTERN BOUNDARY LINE OF THAT CERTAIN 1.167
ACRE TRACT OF LAND SECONDLY DESCRIBED IN THE DEED FROM THE MEE ESTATE, A
CORPORATION, TO SOUTHERN PACIFIC RAILROAD COMPANY, A CORPORATION, DATED JULY 20,
1917, RECORDED JULY 30, 1917, IN BOOK 2593 OF DEEDS, PAGE 110, ALAMEDA COUNTY
RECORDS; THENCE SOUTH 14 DEG. 39' 15" EAST ALONG THE LAST NAMED BOUNDARY LINE,
606.45 FEET TO THE NORTHERN BOUNDARY LINE OF THAT CERTAIN PARCEL OF LAND
DESCRIBED IN THE DEED FROM THE MEE ESTATE, A CORPORATION, TO THE
SHERWIN-WILLIAMS CO. OF CALIFORNIA, A CORPORATION, DATED MARCH 8, 1919, RECORDED
APRIL 8, 1919, BOOK 2754 OF DEEDS, PAGE 89, ALAMEDA COUNTY RECORDS; THENCE NORTH
72 DEG. 28' EAST ALONG THE LAST NAMED BOUNDARY LINE, 203.292 FEET TO THE POINT
OF BEGINNING.
PARCEL TWO:
AN EASEMENT UPON THE PROPERTY DESCRIBED BELOW FOR THE PURPOSE OF ALLOWING AN
ENCROACHMENT ON SUCH PROPERTY OF THE DOCK AND SOUTH WALL OF THE EXISTING
BUILDING.
BEGINNING AT A POINT ON THE WESTERN LINE OF HORTON STREET, DISTANT THEREON NORTH
17 DEG. 32' WEST, 598.02 FEET FROM THE INTERSECTION THEREOF WITH THE NORTHERN
LINE OF SHERWIN AVENUE, AS SAID STREET AND AVENUE ARE DESCRIBED UNDER PARCEL ONE
IN THE DEED FROM THE MEE ESTATE, A CORPORATION, TO THE TOWN OF EMERYVILLE, A
MUNICIPAL CORPORATION, DATED SEPTEMBER 7, 1920, RECORDED DECEMBER 14, 1920, BOOK
308 OF DEEDS, PAGE 178, ALAMEDA COUNTY RECORDS, SAID POINT OF BEGINNING BEING
ALSO DISTANT NORTH 17 DEG. 32' WEST, 658.02 FEET FROM THE INTERSECTION OF SAID
WESTERN LINE OF HORTON STREET WITH THE NORTHERN BOUNDARY LINE OF PLOT 6,
ACCORDING TO KELLERSBERGER'S SURVEY OF THE RANCHOS OF VICENTE & DOMINGO PERALTA;
AND RUNNING THENCE SOUTH 17 DEG. 32' EAST, A DISTANCE OF 0.10 FEET; THENCE
SOUTH 72 DEG. 28' WEST, A DISTANCE OF 203.29 FEET; THENCE NORTH 14 DEG. 39'
15" WEST, A DISTANCE OF
Exhibit E -- Page 1
<PAGE>
0.10 FEET; AND THENCE NORTH 72 DEG. 28' EAST, A DISTANCE OF 203.29 FEET TO THE
POINT OF BEGINNING.
ASSESSOR'S PARCEL NO. 049-1041-005
Exhibit E -- Page 2
<PAGE>
Attachment No. 1-H
CITY OF EMERYVILLE
COMMENCING AT THE POINT OF INTERSECTION OF THE NORTHERLY LINE OF 45TH STREET AND
THE WESTERLY LINE OF HOLLIS STREET; RUNNING THENCE NORTH 17 DEG. 32' WEST ALONG
SAID WESTERLY LINE OF HOLLIS STREET, 1099 FEET TO THE SOUTHERLY LINE OF SANTA FE
AVENUE; THENCE SOUTH 72 DEG. 28' WEST ALONG SAID SOUTHERLY LINE OF SANTA FE
AVENUE, 274.532 FEET TO THE EASTERLY LINE OF LANDS OF SOUTHERN PACIFIC RAILROAD
COMPANY; THENCE ALONG SAID EASTERLY LINE OF LANDS OF SOUTHERN PACIFIC RAILROAD
COMPANY, SOUTH 17 DEG. 32' EAST, 1099 FEET TO THE NORTHERLY LINE OF 45TH
STREET; THENCE NORTH 72 DEG. 28' EAST, 274.532 FEET TO THE POINT OF BEGINNING.
BEING BLOCKS 10 AND 11, AS PER PROPERTY MAP OF EMERYVILLE INDUSTRIAL TRACT.
EXCEPTING THEREFROM, THAT PORTION THEREOF CONVEYED TO THE REDEVELOPMENT AGENCY
OF THE CITY OF EMERYVILLE, BY CORPORATION GRANT DEED RECORDED MARCH 13, 1992,
SERIES NO. 92-78100, OFFICIAL RECORDS.
ASSESSOR'S PARCEL NO. 049-1041-029-02
Exhibit E -- Page 1
<PAGE>
Attachment No. 2
[DRAFTING NOTE: TO THE EXTENT THAT THE "LAND" COVERED BY THE GROUND LEASE
CHANGES FROM TIME TO TIME AS PROVIDED THEREIN OR BECAUSE OF ADJUSTMENTS FOR
WHICH CHIRON REQUESTS BNPLC'S CONSENT OR APPROVAL AS PROVIDED IN THE LEASE, SO
TOO WILL THE DESCRIPTION OF THE LAND BELOW CHANGE. ANY SUCH CHANGES WILL BE
INCORPORATED INTO THE DESCRIPTION BELOW AND THIS "DRAFTING NOTE" WILL BE DELETED
BEFORE THE AGREEMENT TO WHICH THIS DESCRIPTION IS ATTACHED IS ACTUALLY EXECUTED
AND DELIVERED.]
LEGAL DESCRIPTION - THE BNPLC TRACT
The easements hereby granted will be appurtenant to the following, to the extent
of any right or interest that Grantee (or its successors and assigns) may now
have or hereafter acquire pursuant to the Ground Lease:
REAL PROPERTY IN CITY OF EMERYVILLE, COUNTY OF ALAMEDA, STATE OF CALIFORNIA
DESCRIBED AS FOLLOWS:
PARCEL ONE:
BEING A PORTION OF BLOCKS 9, 10 AND 11, AS SHOWN ON THE UNFILED MAP ENTITLED
"MAP OF MONUMENT LOCATION EMERYVILLE INDUSTRIAL TRACT", DATED JANUARY 5, 1921,
BY PUNNETT AND PAREZ ENGINEERS, BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
BEGINNING AT THE INTERSECTION OF THE NORTHERLY LINE OF 53RD STREET (FORMERLY
SANTA FE AVENUE), AS SHOWN ON SAID MAP, AND THE WESTERLY LINE OF HOLLIS STREET;
THENCE ALONG SAID WESTERLY LINE, NORTH 17 DEG. 32' 00" WEST, 443.61 FEET;
THENCE NORTH 27 DEG. 46' 45" WEST, 381.28 FEET TO THE BEGINNING POINT OF A
NON-TANGENT CURVE CONCAVE SOUTHEASTERLY, HAVING A RADIUS OF 274.38 FEET (A
RADIAL LINE THROUGH SAID POINT BEARS NORTH 31 DEG. 43' 39" WEST); THENCE
LEAVING SAID WESTERLY LINE ALONG SAID CURVE, THROUGH A CENTRAL ANGLE OF 72 DEG.
44' 21", AN ARC DISTANCE OF 348.34 FEET; THENCE SOUTH 17 DEG. 32' 00" EAST,
567.48 FEET TO A POINT LYING ON SAID NORTHERLY LINE OF 53RD STREET; THENCE ALONG
SAID NORTHERLY LINE, NORTH 72 DEG. 28' 00" EAST, 274.53 FEET TO THE POINT OF
BEGINNING.
ASSESSOR'S PARCEL NO. 049-1041-028
PARCEL TWO:
THAT PARCEL OF LAND SITUATE IN THE CITY OF EMERYVILLE, COUNTY OF ALAMEDA, STATE
OF CALIFORNIA, AND BEING ALL OF PARCEL 2 OF PARCEL MAP NO. 5719, FILED DECEMBER
28, 1989, IN BOOK 187 OF PARCEL MAPS, AT PAGES 97 - 98, IN RECORDS OF SAID
COUNTY.
PARCEL 7A:
THAT PORTION OF PARCEL B AS SHOWN ON THE MAP OF PARCEL MAP NO. 2108 RECORDED IN
BOOK 97 AT PAGE 40 OF PARCEL MAPS IN THE COUNTY RECORDER'S OFFICE OF ALAMEDA
Exhibit E -- Page 2
<PAGE>
COUNTY LOCATED IN THE CITY OF EMERYVILLE, COUNTY OF ALAMEDA, STATE OF
CALIFORNIA, MORE PARTICULARLY DESCRIBED AS FOLLOWS:
BEGINNING AT THE NORTHEAST CORNER OF SAID PARCEL B; THENCE ALONG THE NORTHERLY
AND WESTERLY LINES OF SAID PARCEL B THE FOLLOWING COURSES AND DISTANCES:
S 72 DEG. 28' 00" W 131.60 FEET
S 17 DEG. 32' 00" E 43.00 FEET
S 72 DEG. 28' 00" W 42.83 FEET
S 17 DEG. 32' 00" E 43.00 FEET
THENCE CONTINUING S 17 DEG. 32' 00" E 16.80 FEET TO A POINT ON A LINE LOCATED
5.00 FEET NORTHERLY OF AND PARALLEL TO THE NORTHERLY LINE OF A BOILER; THENCE N
72 DEG. 25' 00" E ALONG SAID PARALLEL LINE A DISTANCE OF 59.69 FEET TO A POINT
ON A LINE LOCATED 5.00 FEET EASTERLY OF AND PARALLEL TO THE EASTERLY LINE OF A
BOILER; THENCE S 17 DEG. 35' 00" E ALONG SAID PARALLEL LINE A DISTANCE OF 13.25
FEET; THENCE N 72 DEG. 28' 00" E PARALLEL TO THE NORTHERLY LINE OF SAID PARCEL
B, A DISTANCE OF 114.72 FEET TO THE EASTERLY LINE OF SAID PARCEL B; THENCE N
17 DEG. 32' 00" W ALONG SAID EASTERLY LINE OF PARCEL B A DISTANCE OF 116.00 FEET
TO THE POINT OF BEGINNING.
EXCEPTING THEREFROM:
ALL MINERALS AND MINERAL RIGHTS, INTERESTS, AND ROYALTIES, INCLUDING, WITHOUT
LIMITING THE GENERALITY THEREOF, OIL, GAS AND OTHER HYDROCARBON SUBSTANCES, AS
WELL AS METALLIC OR OTHER SOLID MINERALS, MORE THAN FIVE HUNDRED (500) FEET
BELOW THE SURFACE OF SAID PROPERTY; HOWEVER, GRANTOR OR ITS SUCCESSORS AND
ASSIGNS, SHALL NOT HAVE THE RIGHT FOR ANY PURPOSE WHATSOEVER TO ENTER UPON, INTO
OR THROUGH THE SURFACE OF SAID PROPERTY IN CONNECTION THEREWITH.
ASSESSOR'S PARCEL NO. 049-1041-060
Exhibit E -- Page 3
<PAGE>
Exhibit F
CONTINGENT PURCHASE OPTION
Subject to the terms of this Exhibit, BNPLC shall have an option (the
"OPTION") to buy Chiron's fee interest in the Leased Property at any time during
the term of this Ground Lease after (but only after) any breach by Chiron under
the Purchase Agreement, provided Chiron does not cure the breach within any time
permitted for cure by the express provisions of the Purchase Agreement, for a
purchase price (the "OPTION PRICE") to Chiron equal to fair market value.
For the purposes of this Exhibit, "fair market value" means (and all
appraisers and other persons involved in the determination of the Option Price
will be so advised) the price that would be agreed upon between a willing buyer,
under no compulsion to buy, and a willing seller, under no compulsion to sell,
for UNIMPROVED land comparable in size and location to the Land, exclusive of
any Improvements but assuming that there is no higher and better use for such
land than as a site for improvements of comparable size and utility to the
Improvements, at the time of BNPLC's exercise of the Option and taking into
consideration the condition of the Land, the encumbrances affecting the title to
the Land and all applicable zoning, land use approvals and other governmental
permits relating to the Land at the time of the exercise of the Option.
If BNPLC exercises the Option, which BNPLC may do by notifying Chiron that
BNPLC has elected to buy Chiron's interest in the Leased Property as provided
herein, then:
(a) To the extent, if any, required as a condition imposed by law to
the conveyance of the fee interest in the Leased Property to BNPLC, Chiron
shall promptly at its expense do whatever is necessary to obtain approvals
of a new Parcel Map or lot line adjustments (including any Parcel Map
designating Parcel 7A as a separate lot, if Parcel 7A has been added to the
Leased Property as contemplated in Paragraph 4.(a) in the body of this
Ground Lease).
(b) Upon BNPLC's tender of the Option Price to Chiron, Chiron will
convey good and marketable title to the fee estate in the Land and its
interest in all other Leased Property to BNPLC by general warranty deed and
assignment subject only to the Permitted Encumbrances and, to the extent
still in force, the Lease and the Purchase Agreement.
(c) BNPLC's obligation to close the purchase shall be subject to the
following terms and conditions, all of which are for the benefit of BNPLC:
(1) BNPLC shall have been furnished with evidence satisfactory to BNPLC
that Chiron can convey title as required by the preceding subparagraph; (2)
nothing shall have occurred or been discovered after BNPLC exercised the
Option that could significantly and adversely affect title to the Leased
Property or BNPLC's use thereof, (3) all of the representations of Chiron
in this Ground Lease shall continue to be true as if made effective on the
date of the closing and, with respect to any such representations which may
be limited to the knowledge of Chiron or any of Chiron's representatives,
would continue to be true on the date of the closing if all relevant facts
and circumstances were known to Chiron and such representatives, and (4)
BNPLC shall have been tendered the deed and other documents which are
described in this Exhibit as documents to be delivered to BNPLC at the
closing of BNPLC's purchase.
(d) Closing of the purchase will be scheduled on the first Business
Day following thirty days after the Option Price is established in
accordance with the terms and conditions of this Exhibit and after any
approvals described in subparagraph (a) above are obtained, and prior to
closing BNPLC's occupancy of the Leased Property shall continue to be
subject to the terms and conditions of this Ground Lease, including
Exhibit F -- Page 1
<PAGE>
the terms setting forth BNPLC's obligation to pay rent. Closing shall take
place at the offices of any title insurance company reasonably selected by
BNPLC to insure title under the title insurance policy described below.
(e) Any transfer taxes or notices or registrations required by law in
connection with the sale contemplated by this Exhibit will be the
responsibility of Chiron.
(f) Chiron will deliver a certificate of nonforeign status to BNPLC
at closing as needed to comply with the provisions of the Foreign Investors
Real Property Tax Act (FIRPTA) or any comparable federal, state or local
law in effect at the time.
(g) Chiron will also pay for and deliver to BNPLC at the closing an
owner's title insurance policy in the full amount of the Option Price,
issued by a title insurance company designated by BNPLC (or written
confirmation from the title company that it is then prepared to issue such
a policy), and subject only to standard printed exceptions which the title
insurance company refuses to delete or modify in a manner acceptable to
BNPLC and to Permitted Encumbrances.
(h) Chiron shall also deliver at the closing all other documents or
things reasonably required to be delivered to BNPLC or by the title
insurance company to evidence Chiron's ability to transfer the Leased
Property to BNPLC.
If Chiron and BNPLC do not otherwise agree upon the amount of the Option
Price within twenty days after BNPLC exercises the Option, the Option Price
shall be determined in accordance with the following procedure:
(1) Chiron and BNPLC shall each appoint a real estate appraiser
who is familiar with properties in the vicinity of the Land and who
has not previously acted for either party. Each party will make the
appointment no later than ten days after receipt of notice from the
other party that the appraisal process described in this Exhibit has
been invoked. The agreement of the two appraisers as to the Option
Price will be binding upon Chiron and BNPLC. If the two appraisers
cannot agree upon the Option Price within ten days following their
appointment, they shall within another ten days agree upon a third
real estate appraiser. Immediately thereafter, each of the first two
appraisers will submit his best estimate of the appropriate Option
Price (together with a written report supporting such estimate) to the
third appraiser and the third appraiser will choose between the two
estimates. The estimate of Option Price chosen by the third appraiser
as the closest to the prevailing monthly fair market value will be
binding upon Chiron and BNPLC. Notification in writing of the Option
Price shall be made to Chiron and BNPLC within fifteen days following
the selection of the third appraiser.
(2) If appraisers must be selected under the procedure set out
above and either BNPLC or Chiron fails to appoint an appraiser or
fails to notify the other party of such appointment within fifteen
days after receipt of notice that the prescribed time for appointing
the appraisers has passed, then the other party's appraiser will
determine the Option Price. All appraisers selected for the appraisal
process set out in this Exhibit will be disinterested, reputable,
qualified real estate appraisers with the designation of MAI or
equivalent and with at least 5 years experience in appraising
properties comparable to the Land.
Exhibit F -- Page 2
<PAGE>
(3) If a third appraiser must be chosen under the procedure set
out above, he will be chosen on the basis of objectivity and
competence, not on the basis of his relationship with the other
appraisers or the parties to this Ground Lease, and the first two
appraisers will be so advised. Although the first two appraisers will
be instructed to attempt in good faith to agree upon the third
appraiser, if for any reason they cannot agree within the prescribed
time, either Chiron and BNPLC may require the first two appraisers to
immediately submit its top choice for the third appraiser to the then
highest ranking officer of the San Francisco Bar Association who will
agree to help and who has no attorney/client or other significant
relationship to either Chiron or BNPLC. Such officer will have
complete discretion to select the most objective and competent third
appraiser from between the choice of each of the first two appraisers,
and will do so within ten days after such choices are submitted to
him.
(4) Either Chiron or BNPLC may notify the appraiser selected by
the other party to demand the submission of an estimate of Option
Price or a choice of a third appraiser as required under the procedure
described above; and if the submission of such an estimate or choice
is required but the other party's appraiser fails to comply with the
demand within fifteen days after receipt of such notice, then the
Option Price or choice of the third appraiser, as the case may be,
selected by the other appraiser (i.e., the notifying party's
appraiser) will be binding upon Chiron and BNPLC.
(5) Chiron and BNPLC shall each bear the expense of the
appraiser appointed by it, and the expense of the third appraiser and
of any officer of the San Francisco Bar Association who participates
in the appraisal process described above will be shared equally by
Chiron and BNPLC.
Exhibit F -- Page 3
<PAGE>
Exhibit G
RIGHT OF CHIRON TO CONVEY
To avoid risks associated with the continued ownership of the Land, Chiron
shall be entitled, but not obligated, to convey the fee interest in Land by
corporate grant deed, and to quitclaim any interest of Chiron in improvements on
the Land, to the tenant under this Lease (whether BNPLC or an assignee of BNPLC
hereunder, including any Landlord's Mortgagee that acquired BNPLC's interest in
the Leased Property through foreclosure) at any time after the Rent Commencement
Date; provided Chiron has satisfied any conditions imposed by law to the
conveyance (including any legal requirement that Chiron obtain approvals for any
Parcel Map designating Parcel 7A as a separate lot, if Parcel 7A has been added
to the Leased Property as contemplated in Paragraph 4.(a) in the body of this
Ground Lease). However, the tenant shall not by reason of any such conveyance
assume any contractual obligations to which Chiron may then be bound as the
owner of the Land or any other obligations to which Chiron may be bound in whole
or in part because of any accident or other occurrence prior to the conveyance.
Further, Chiron's obligations pursuant to the following provisions of this
Ground Lease shall survive any such conveyance:
1. Subparagraph 8.(b), which concerns the obligation of Chiron and its
Affiliates to cooperate with respect to approvals, consents or modifications
required in connection with Development Contracts and Permitted Encumbrances;
2. Subparagraph 8.(c), which among other things concerns performance under
Development Contracts;
3. Subparagraph 8.(e), which among other things concerns Chiron's compliance
with certain restrictions to which it has become subject before executing this
Ground Lease;
4. Subparagraph 12.(b), which concerns adverse title claims; or
5. Paragraph 13, which provides for an indemnity by Chiron for Environmental
Losses. (Although such indemnity will survive any conveyance by Chiron pursuant
to this Exhibit, nothing in this Exhibit is intended to expand the definition of
Environmental Losses by extending the Environmental Cutoff Date.)
<PAGE>
LIST OF DEFINED TERMS
FOR AGREEMENTS BETWEEN
BNP LEASING CORPORATION
AND
CHIRON CORPORATION
DATED JUNE 28, 1996
<PAGE>
TABLE OF CONTENTS
PAGE
DEFINED TERM NUMBER
- --------------------------------------------------------------------------------
ACTIVE NEGLIGENCE . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ADDITIONAL RENT . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ADMINISTRATIVE FEE. . . . . . . . . . . . . . . . . . . . . . . . . . 1
ADVANCE DATE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
AFFILIATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
APPLICABLE LAWS . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
APPLICABLE PURCHASER. . . . . . . . . . . . . . . . . . . . . . . . . 1
APPROVED PLANS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ATTORNEYS' FEES . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
BANKING RULES CHANGE. . . . . . . . . . . . . . . . . . . . . . . . . 2
BASE RENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
BASE RENT COMMENCEMENT DATE . . . . . . . . . . . . . . . . . . . . . 2
BASE RENT DATE. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
BASE RENT PERIOD. . . . . . . . . . . . . . . . . . . . . . . . . . . 3
BNPLC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
BNPLC'S PARENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
BREAKAGE COSTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
BREAK EVEN PRICE. . . . . . . . . . . . . . . . . . . . . . . . . . . 4
BUSINESS DAY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
CAPITAL ADEQUACY CHARGES. . . . . . . . . . . . . . . . . . . . . . . 5
CARRYING COSTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
CHIRON. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
CHIRON'S PA OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . 5
CODE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
COMMITMENT FEE. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
COMPLETION NOTICE . . . . . . . . . . . . . . . . . . . . . . . . . . 5
CONSTRUCTION ADVANCES . . . . . . . . . . . . . . . . . . . . . . . . 5
CONSTRUCTION ALLOWANCE. . . . . . . . . . . . . . . . . . . . . . . . 5
CONSTRUCTION PERIOD . . . . . . . . . . . . . . . . . . . . . . . . . 5
CONSTRUCTION PROJECTS . . . . . . . . . . . . . . . . . . . . . . . . 6
DEBT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
DEFAULT RATE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
DEMAND DEADLINE . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
DEPOSIT TAKER . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
DESIGNATED SALE DATE. . . . . . . . . . . . . . . . . . . . . . . . . 7
DEVELOPMENT CONTRACTS . . . . . . . . . . . . . . . . . . . . . . . . 8
EFFECTIVE DATE. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
EFFECTIVE RATE. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ENVIRONMENTAL CONSULTANT. . . . . . . . . . . . . . . . . . . . . . . 8
ENVIRONMENTAL CUTOFF DATE . . . . . . . . . . . . . . . . . . . . . . 8
ENVIRONMENTAL LAWS. . . . . . . . . . . . . . . . . . . . . . . . . . 8
ENVIRONMENTAL LOSSES. . . . . . . . . . . . . . . . . . . . . . . . . 9
ENVIRONMENTAL REPORTS . . . . . . . . . . . . . . . . . . . . . . . . 9
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ERISA AFFILIATE . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ERISA TERMINATION EVENT . . . . . . . . . . . . . . . . . . . . . . . 11
-i-
<PAGE>
PAGE
DEFINED TERM NUMBER
- --------------------------------------------------------------------------------
ESCROWED PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ESTABLISHED MISCONDUCT. . . . . . . . . . . . . . . . . . . . . . . . 11
EUROCURRENCY LIABILITIES. . . . . . . . . . . . . . . . . . . . . . . 12
EURODOLLAR RATE RESERVE PERCENTAGE. . . . . . . . . . . . . . . . . . 12
EVENT OF DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
EXCLUDED TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
EXISTING PARTICIPATION AGREEMENTS . . . . . . . . . . . . . . . . . . 12
FAIR MARKET VALUE . . . . . . . . . . . . . . . . . . . . . . . . . . 12
FED FUNDS RATE. . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
FUNDING ADVANCES. . . . . . . . . . . . . . . . . . . . . . . . . . . 13
GAAP. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
GROUND LEASE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
GUARANTY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
GUARANTOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
HAZARDOUS SUBSTANCE . . . . . . . . . . . . . . . . . . . . . . . . . 14
HAZARDOUS SUBSTANCE ACTIVITY. . . . . . . . . . . . . . . . . . . . . 14
HAZWOPER REGULATIONS. . . . . . . . . . . . . . . . . . . . . . . . . 14
IMPOSITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
IMPROVEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
INDUSTRIAL HYGIENIST. . . . . . . . . . . . . . . . . . . . . . . . . 15
INITIAL FUNDING ADVANCE . . . . . . . . . . . . . . . . . . . . . . . 15
INTERESTED PARTY. . . . . . . . . . . . . . . . . . . . . . . . . . . 15
LAND. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
LEASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
LIBOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
LIBOR PERIOD ELECTION . . . . . . . . . . . . . . . . . . . . . . . . 16
LIEN. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
LIENS REMOVABLE BY BNPLC. . . . . . . . . . . . . . . . . . . . . . . 16
LIST OF DEFINED TERMS . . . . . . . . . . . . . . . . . . . . . . . . 17
LOSSES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
MATERIAL ENVIRONMENTAL COMMUNICATION. . . . . . . . . . . . . . . . . 17
MAXIMUM CONSTRUCTION ALLOWANCE. . . . . . . . . . . . . . . . . . . . 17
OUTSTANDING CONSTRUCTION ALLOWANCE. . . . . . . . . . . . . . . . . . 17
PARCEL 7A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
PARTICIPANT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
PARTICIPATION AGREEMENTS. . . . . . . . . . . . . . . . . . . . . . . 17
PERMITTED ENCUMBRANCES. . . . . . . . . . . . . . . . . . . . . . . . 18
PERMITTED HAZARDOUS SUBSTANCE USE . . . . . . . . . . . . . . . . . . 18
PERMITTED HAZARDOUS SUBSTANCES. . . . . . . . . . . . . . . . . . . . 18
PERMITTED TRANSFER. . . . . . . . . . . . . . . . . . . . . . . . . . 18
PERSON. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
PERSONAL PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . . 19
PLAN. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
POTENTIAL LIEN CLAIMANTS. . . . . . . . . . . . . . . . . . . . . . . 19
PRIME RATE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
PROPERTY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
PURCHASE AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . 19
-ii-
<PAGE>
PAGE
DEFINED TERM NUMBER
- --------------------------------------------------------------------------------
PURCHASE DOCUMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . 19
QUALIFIED PAYMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . 19
QUALIFIED SECURITIES. . . . . . . . . . . . . . . . . . . . . . . . . 20
QUALIFIED RIGHT TO STOCK SALE PROCEEDS. . . . . . . . . . . . . . . . 20
REAL PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
REMEDIAL WORK . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
RENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
RESIDUAL RISK PERCENTAGE. . . . . . . . . . . . . . . . . . . . . . . 20
RESPONSIBLE FINANCIAL OFFICER . . . . . . . . . . . . . . . . . . . . 20
RESTRICTED FUNDS. . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SCOPE CHANGE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SPREAD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
STIPULATED LOSS VALUE . . . . . . . . . . . . . . . . . . . . . . . . 21
SUBSIDIARY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SUPPLEMENTAL PAYMENT. . . . . . . . . . . . . . . . . . . . . . . . . 22
TERM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
TRANSACTION EXPENSES. . . . . . . . . . . . . . . . . . . . . . . . . 22
UPFRONT FEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
UNFUNDED BENEFIT LIABILITIES. . . . . . . . . . . . . . . . . . . . . 22
VOTING STOCK. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
-iii-
<PAGE>
LIST OF DEFINED TERMS
As used in the documents to which this List of Defined Terms is attached:
"ACTIVE NEGLIGENCE" of any Person (including BNPLC) means, and is limited
to, the negligent conduct on the Property (and not mere omissions) by such
Person or by others acting and authorized to act on such Person's behalf in a
manner that proximately causes actual bodily injury or property damage for which
Chiron does not carry (and is not obligated by the Lease to carry) insurance.
"ACTIVE NEGLIGENCE" shall not include (1) any negligent failure of BNPLC to act
when the duty to act would not have been imposed but for BNPLC's status as owner
of the Property or as a party to the transactions described in the Lease, (2)
any negligent failure of any other Interested Party to act when the duty to act
would not have been imposed but for such party's contractual or other
relationship to BNPLC or participation or facilitation in any manner, directly
or indirectly, of the transactions described in the Lease, or (3) the exercise
in a lawful manner by BNPLC (or any party lawfully claiming through or under
BNPLC) of any right or remedy provided in or under the Lease, the Purchase
Documents or the Ground Lease.
"ADDITIONAL RENT" shall have the meaning assigned to it in
subparagraph 4.(c) of the Lease.
"ADMINISTRATIVE FEE" shall have the meaning assigned to it in
subparagraph 4.(f) of the Lease.
"ADVANCE DATE" means, regardless of whether any Construction Advance shall
actually be made thereon, the first Business Day of every calendar month,
beginning with August 1, 1996 and continuing regularly thereafter to and
including the Base Rent Commencement Date.
"AFFILIATE" of any Person means any other Person controlling, controlled by
or under common control with such Person. For purposes of this definition, the
term "control" when used with respect to any Person means the power to direct
the management of policies of such Person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise, and the
terms "controlling" and "controlled" have meanings correlative to the foregoing.
"APPLICABLE LAWS" means any or all of the following, to the extent
applicable to Chiron or the Property or the Lease, the Purchase Documents or the
Ground Lease: restrictive covenants; zoning ordinances and building codes; flood
disaster laws; health, safety and environmental laws and regulations; the
Americans with Disabilities Act and other laws pertaining to disabled persons;
and other laws, statutes, ordinances, rules, permits, regulations, orders,
determinations and court decisions.
"APPLICABLE PURCHASER" means any third party designated by Chiron to
purchase BNPLC's interest in the Property and in any Escrowed Proceeds as
provided in the Purchase Agreement.
"APPROVED PLANS" means: (i) that certain "Removal Action Workplan for the
Ramp Area on the Former PG&E/City of Emeryville Redevelopment Agency Property,"
prepared by Erler & Kalinowski, Inc., dated June 21, 1996, which DTSC has
approved for public comment (subject to revision) pursuant to the letter dated
June 21, 1996, from Barbara J. Cook, DTSC, to Ric Notini, Chiron, re "Chiron
Corporation Site, Former Pacific Gas & Electric Property, Emeryville, California
- - Draft Removal Action Workplan"; (ii) that certain "Final Risk Management Plan
for Construction of the Chiron Life Sciences Center Project Properties North of
53rd Street Emeryville, California," prepared by Erler & Kalinowski, Inc., dated
May 21, 1996, with which the RWQCB concurred pursuant to that letter dated
May 22, 1996, from Stephen I. Morse, RWQCB, to Ric Notini, Chiron, re
"Properties North of 53rd Street, Chiron Life Sciences Center Project,
Emeryville, Alameda County"; (iii) the
List of Defined Terms -- Page 1
<PAGE>
Voluntary Cleanup Agreement, IN THE MATTER OF CHIRON CORPORATION, Docket
No. HSA-95/96-059, dated April 1, 1996; (iv) that certain "Classification of
Soil to be Excavated During Chiron Corporation's Campus Expansion Property North
of 53rd Street, Chiron Corporation, Emeryville, California," prepared by Erler &
Kalinowski, Inc., dated September 22, 1995, with which the Department of Toxic
Substances Control ("DTSC") concurred pursuant to that letter dated April 9,
1996, from Ronald Pilorin, DTSC, to Vera H. Nelson, Erler & Kalinowski, Inc., re
"Request for Concurrence for Excavated Soils Generated from Chiron Corporation's
(Chiron) Campus Expansion Properties Located North of 53rd Street in Emeryville,
California - Waste Evaluation Unit File #F155 (WEU File #F155)"; (v) that
certain "Final Health and Environmental Risk Assessment Property North of 53rd
Street, Chiron Corporation, Emeryville, California, Volumes I and II," prepared
by Erler & Kalinowski, Inc., dated March 10, 1995, as approved by the RWQCB
pursuant to that letter dated March 20, 1995, from Steven R. Ritchie and Stephen
I. Morse, RWQCB, to Ric Notini, Chiron, re "Approval of Health and Environmental
Risk Assessment Properties North of 53rd Street Chiron Master Plan Development
Emeryville, Alameda County," and with which the Alameda County Health Care
Services Agency, Department of Environmental Health ("ACDEH") concurred pursuant
to that letter dated March 15, 1995, from Susan L. Hugo and Ravi Arulanantham,
ACDEH, to Ric Notini, Chiron re "Approval of Health and Environmental Risk
Assessment Properties North of 53rd Street Chiron Master Plan Development
Emeryville, California"; (vi) a long-term risk management plan that is
consistent with the RWQCB's Non-Attainment Area policy and the State Water
Quality Control Board's Containment Zone policy and is approved by the RWQCB and
the ACDEH; and (vii) any other proposal, plan, workplan, risk assessment, or
report approved or required by any regulatory agency with jurisdiction over the
Property and which has not been determined to be inadequate by any other
governmental authority asserting jurisdiction over the Property.
"ATTORNEYS' FEES" means the reasonable fees and expenses of counsel to the
parties incurring the same, which may include fairly allocated costs of in-house
counsel, printing, photostating, duplicating and other expenses, air freight
charges, and fees billed for law clerks, paralegals, librarians and others not
admitted to the bar but performing services under the supervision of an
attorney. Such terms shall also include all such reasonable fees and expenses
incurred with respect to appeals, arbitrations and bankruptcy proceedings, and
whether or not any manner of proceeding is brought with respect to the matter
for which such fees and expenses were incurred.
"BANKING RULES CHANGE" means either: (1) the introduction of or any change
after the Effective Date (other than any change by way of imposition or increase
of reserve requirements included in the Eurodollar Rate Reserve Percentage) in
any law or regulation applicable to BNPLC, BNPLC's Parent or any Participant, or
in the generally accepted interpretation by the institutional lending community
of any such law or regulation, or in the interpretation of any such law or
regulation asserted by any regulator, court or other governmental authority or
(2) the compliance by BNPLC, BNPLC's Parent or any Participant with any new
guideline or new request after the Effective Date from any central bank or other
governmental authority (whether or not having the force of law).
"BASE RENT" means the rent payable by Chiron pursuant to subparagraph 4.(a)
of the Lease.
"BASE RENT COMMENCEMENT DATE" means the earlier of (1) the first Business
Day of March, 1999, (2) the first Business Day of the first calendar month to
follow by ten days or more BNPLC's receipt of the Completion Notice, or (3) the
first Business Day of the first calendar month upon which the then Outstanding
Construction Allowance (including any Construction Advance and Carrying Costs
added to the Outstanding Construction Advance on that Business Day) shall equal
or exceed the Maximum Construction Allowance available under the Lease. For
example, if on the first Business Day of December, 1998 construction of the
initial Construction Project is continuing, the Outstanding Construction
Allowance is $190,000,000 (before adding any Carrying Costs for the preceding
month) and the Maximum Construction Allowance is $190,035,118.68 (assuming the
Initial Funding
List of Defined Terms -- 2
<PAGE>
Advance is $4,964,881.32), and if Carrying Costs of $1,000,000 would be added to
the Outstanding Construction Allowance on such day if the Construction Allowance
were not limited to the Maximum Construction Allowance, then such day shall be
the Base Rent Commencement Date and on such day $35,118.68 will be added to the
Outstanding Construction Allowance as Carrying Cost and $964,881.32 will be
payable as Base Rent pursuant to subparagraph 4.(b)(i) of the Lease.
"BASE RENT DATE" means a date upon which Base Rent must be paid under the
Lease, all of which dates shall be the first Business Day of a calendar month.
The FIRST Base Rent Date shall be determined as follows:
a) If a LIBOR Period Election of one month is in effect on the
Base Rent Commencement Date, then the first Business Day of the FIRST
calendar month following the Base Rent Commencement Date shall be the
first Base Rent Date.
b) If the LIBOR Period Election in effect on the Base Rent
Commencement Date is three months or longer, then the first Business
Day of the THIRD calendar month following the Base Rent Commencement
Date shall be the first Base Rent Date.
Each SUCCESSIVE BASE RENT DATE AFTER THE FIRST BASE RENT DATE shall be the first
Business Day of the first or third calendar month following the calendar month
which includes the preceding Base Rent Date, determined as follows:
(1) If a LIBOR Period Election of one month is in effect on a
Base Rent Date, then the first Business Day of the FIRST calendar
month following such Base Rent Date shall be the next following Base
Rent Date.
(2) If a LIBOR Period Election of three months or longer is in
effect on a Base Rent Date, then the first Business Day of the THIRD
calendar month following such Base Rent Date shall be the next
following Base Rent Date.
Thus, for example, if the Base Rent Commencement Date falls on June 2, 1997 and
a LIBOR Period Election of six months commences on the Base Rent Commencement
Date, then the first Base Rent Date shall be the first Business Day of
September, 1997, and the second Base Rent Date shall be the first Business Day
of December, 1997.
"BASE RENT PERIOD" means a period for which Base Rent must be paid under
the Lease, each of which periods shall correspond to the LIBOR Period Election
for such period. The first Base Rent Period shall begin on and include the Base
Rent Commencement Date, and each successive Base Rent Period shall begin on and
include the Base Rent Date upon which the preceding Base Rent Period ends. Each
Base Rent Period, including the first Base Rent Period, shall end on but not
include the first, second, third or fourth Base Rent Date after the Base Rent
Date upon which such period began, determined as follows:
(3) If the LIBOR Period Election for a Base Rent Period is one
month or three months, then such Base Rent Period shall end on the
FIRST Base Rent Date after the Base Rent Date upon which such period
began.
(4) If the LIBOR Period Election for a Base Rent Period is six
months, then such Base Rent Period shall end on the SECOND Base Rent
Date after the Base Rent Date upon which such period began.
List of Defined Terms -- 3
<PAGE>
(5) If the LIBOR Period Election for a Base Rent Period is nine
months, then such Base Rent Period shall end on the THIRD Base Rent
Date after the Base Rent Date upon which such period began.
(6) If the LIBOR Period Election for a Base Rent Period is
twelve months, then such Base Rent Period shall end on the FOURTH Base
Rent Date after the Base Rent Date upon which such period began.
The determination of Base Rent Periods can be illustrated by two examples:
1) If Chiron makes a LIBOR Period Election of three months for
a hypothetical Base Rent Period beginning on the first Business Day in
January, 2000, then such Base Rent Period will end on but not the
include the first Base Rent Date after it begins; that is, such Base
Rent Period will end on the first Business Day in April, 2000, the
third calendar month after January, 2000.
2) If, however, Chiron makes a LIBOR Period Election of six
months for the hypothetical Base Rent Period beginning the first
Business Day in January, 2000, then such Base Rent Period will end on
but not include the second Base Rent Date after it begins; that is,
the first Business Day in July, 2000.
"BNPLC" means BNP Leasing Corporation, a Delaware corporation.
"BNPLC'S PARENT" means BNPLC's Affiliate, Banque Nationale de Paris, a bank
organized and existing under the laws of France and any successors of such bank.
"BREAKAGE COSTS" means any and all costs, losses or expenses incurred or
sustained by BNPLC's Parent or any Participant, for which BNPLC's Parent or the
Participant shall request reimbursement from BNPLC, because of the resulting
liquidation or redeployment of deposits or other funds:
(1) used to make or maintain Funding Advances upon application of a
Qualified Payment or upon any sale of the Property pursuant to the Purchase
Agreement, if such application or sale occurs on any day other than the
last day of a Construction Period or Base Rent Period; or
(2) reserved to provide a Construction Advance that Chiron requests,
but thereafter declines to take for any reason, or that Chiron requests but
is not permitted to take because of its failure to satisfy any of the
conditions specified in Paragraph 6.(c) of the Lease.
Breakage Costs will include, for example, losses attributable to any decline in
LIBOR as of the effective date of any application described in the clause (1)
preceding, as compared to LIBOR used to determine the Effective Rate then in
effect. Each determination by BNPLC's Parent or the applicable Participant of
Breakage Costs shall, in the absence of clear and demonstrable error, be
conclusive and binding upon Chiron.
"BREAK EVEN PRICE" means an amount equal to Stipulated Loss Value
outstanding on the Designated Sale Date, plus all costs and expenses (including
appraisal costs, withholding taxes (if any) and reasonable Attorneys'
List of Defined Terms -- Page 4
<PAGE>
Fees, as defined in the Lease) incurred in connection with any sale of the
Property by BNPLC under the Purchase Agreement or in connection with collecting
sales proceeds due thereunder.
"BUSINESS DAY" means any day that is (1) not a Saturday, Sunday or day on
which commercial banks are generally closed or required to be closed in New York
City, New York or San Francisco, California, and (2) a day on which dealings in
deposits of dollars are transacted in the London interbank market; provided that
if such dealings are suspended indefinitely for any reason, "Business Day" shall
mean any day described in clause (1).
"CAPITAL ADEQUACY CHARGES" means any additional amounts BNPLC's Parent or
any Participant requests BNPLC to pay as compensation for an increase in
required capital as provided in subparagraph 5.(c)(iii) of the Lease.
"CARRYING COSTS" means the charges (accruing at a rate equal to the sum of
the Effective Rate and the Spread) added to and made a part of the Outstanding
Construction Allowance from time to time on and before the Base Rent
Commencement Date pursuant to and as more particularly described in subparagraph
6.(a)(ii) of the Lease.
"CHIRON" means Chiron Corporation, a Delaware corporation.
"CHIRON'S PA OBLIGATIONS" means the obligations of Chiron under the
Purchase Agreement, including Chiron's obligations for payments required by or
in respect of subparagraph 1(a) of the Purchase Agreement and for any damages
suffered by BNPLC because of any breach of that subparagraph.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMITMENT FEE" shall have the meaning assigned to it in
subparagraph 4.(g) of the Lease.
"COMPLETION NOTICE" means the notice required by subparagraph 6.(e) of the
Lease from Chiron to BNPLC, advising BNPLC when construction of the initial
Construction Project is substantially complete.
"CONSTRUCTION ADVANCES" means actual advances of funds made by or on behalf
of BNPLC to Chiron pursuant to subparagraph 6.(a) of the Lease for (1) the
payment or reimbursement to Chiron of Commitment Fees and Administrative Fees,
and (2) costs, fees and expenses incurred to construct Construction Projects,
including without limitation hard and soft costs, fees and costs paid in
connection with obtaining project approvals including application and processing
fees, fees and other payments made pursuant to the Development Contracts and all
costs incurred in connection with onsite and offsite Improvements.
"CONSTRUCTION ALLOWANCE" means the allowance, consisting of all
Construction Advances and Carrying Costs, which is to be provided for
Construction Projects as more particularly described in Paragraph 6 of the
Lease.
"CONSTRUCTION PERIOD" means each successive period of approximately one (1)
month, except that the first Construction Period shall be a shorter period
beginning on and including the Effective Date and ending on but not
List of Defined Terms -- Page 5
<PAGE>
including the first Advance Date. Each successive Construction Period after the
first Construction Period shall begin on and include the day on which the
preceding Construction Period ends and shall end on but not include the next
following Advance Date, until the last Construction Period, which shall end on
but not include the earlier of the Base Rent Commencement Date or the Designated
Sale Date.
"CONSTRUCTION PROJECTS" include (1) the "initial Construction Project"
which means the construction of the improvements described in EXHIBIT C to the
Lease and contemplated by any plans, renderings and budgets referenced in such
Exhibit, consistent with the uses permitted by the Lease, and (2) "subsequent
Construction Projects" which means any other project to be undertaken by Chiron
during the Term and in accordance with the Lease for the construction of new
buildings or other substantial Improvements or for the alteration of then
existing Improvements. Subject to the requirements of Paragraph 6.(b) of the
Lease, a Construction Project may involve demolition of then existing
Improvements which are no longer needed or which must be removed to accommodate
new Improvements. All construction work planned or done contemporaneously shall
constitute a single Construction Project for purposes of the Lease,
notwithstanding that such work may be done in stages or performed by more than
one general contractor. However, it is understood that any number of distinct
Construction Projects may be undertaken by Chiron during the Term of (and in
accordance with the provisions of) the Lease, and that Construction Projects
(including the initial Construction Project) may include offsite and other
public improvements required as conditions of governmental approvals for the
Construction Projects, environmental remediation and other work, dedications,
fees or contributions required by any governmental authority in connection with
the Construction Projects.
Notwithstanding the foregoing, although refinishing, reconfiguring and
refitting space or other interior nonstructural alterations within any completed
building will be subject to subparagraph 12.(e) of the Lease, it will not for
purposes of the Lease constitute a Construction Project if done in manner that
is not likely to have any material adverse affect on the value of the Property
taken as a whole, unless Chiron expects to receive Construction Advances for the
cost thereof.
"DEBT" of any Person means: (i) indebtedness of such Person for borrowed
money; (ii) obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments; (iii) obligations of such Person to pay the deferred
purchase price of property or services; (iv) obligations of such Person as
lessee under leases which shall have been or should be, in accordance with GAAP,
recorded as capital leases; (v) obligations of such Person, contingent or
otherwise, under any lease of real property or related documents (including a
separate purchase agreement) which provide that such Person must purchase or
cause another to purchase any interest in the leased property and thereby
guarantee a minimum residual value of the leased property to the lessor; (vi)
obligations under direct or indirect guaranties in respect of, and obligations
(contingent or otherwise) to purchase or otherwise acquire, or otherwise to
assure a another Person against loss in respect of, indebtedness or obligations
of others of the kinds referred to in the preceding clauses (i) through (v);
(vii) liabilities of another Person secured by a Lien on, or payable out of the
proceeds of production from, property of such Person even though such obligation
shall not be assumed by such Person (but in the case of such liabilities not
assumed by such Person, the liabilities shall constitute Debt of such Person
only to the extent of the value of such Person's property encumbered by the Lien
securing such liabilities); and (viii) Unfunded Benefit Liabilities.
"DEFAULT" means any event which, with the passage of time or the giving of
notice or both, would (if not cured within any applicable cure period)
constitute an Event of Default.
List of Defined Terms -- Page 6
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"DEFAULT RATE" means a floating per annum rate equal to two percent (2%)
above the Prime Rate. However, in no event will the "Default Rate" exceed the
maximum interest rate permitted by law.
"DEMAND DEADLINE" means any date specified in the Guaranty as the date
after which no new demand for payment may be made upon the Guarantor pursuant to
the Guaranty. As of the Effective Date, the Demand Deadline is December 31,
1999.
"DEPOSIT TAKER" means any of Banque Nationale de Paris or its Affiliates
authorized to take deposits and any of the Participants or their Affiliates
authorized to take deposits; provided, an Affiliate of any Participant shall not
qualify as a Deposit Taker unless such Participant has guaranteed the return of
any Restricted Funds (and interest thereon) which BNPLC may have on deposit with
such Affiliate from time to time pursuant to a written guaranty in form and
substance approved by Chiron; and, provided further, that any Deposit Taker
other than an Affiliate of BNPLC must agree unconditionally (pursuant to an
agreement acceptable to Chiron) to remit all interest earned on Restricted Funds
deposited with it to BNPLC at least once each calendar quarter, so that BNPLC
may itself remit all such interest to Chiron as provided in Paragraph 4 of the
Purchase Agreement.
"DESIGNATED SALE DATE" means the earlier of:
(1) any Business Day designated as such in a notice given by BNPLC to
Chiron after:
(A) an Event of Default or a breach by Chiron of any of the
Purchase Documents (and the expiration of any applicable cure or
notice periods which may be expressly provided in the Purchase
Documents), including any breach by Chiron of Paragraph 4 of the
Purchase Agreement, which concerns Chiron's obligation to deposit
Restricted Funds if certain conditions specified in that Paragraph are
not satisfied; or
(B) any failure of Chiron for any reason whatsoever (other than
because of a refusal by BNPLC to fund requested Construction Advances
in breach of the Lease or when, but for the condition specified in
subparagraph 6.(c)(x) of the Lease, such refusal would constitute a
breach of the Lease), on the date which is 120 days before any Demand
Deadline under the Guaranty, to have (1) caused the initial
Construction Project and any subsequent Construction Projects which
are commenced prior to such date to have been completed in a good and
workmanlike manner, substantially in accordance with Applicable Laws,
and otherwise in compliance with the provisions of (x) the Lease, (y)
the Permitted Encumbrances and (z) the Development Contracts, and (2)
satisfied the conditions required to obtain with respect to then
existing Improvements any final certificates of occupancy required for
the use and occupancy thereof, a certificate of compliance from the
City of Emeryville and a certificate of completion from the
Redevelopment Agency as contemplated by the Development Contracts;
(2) any Business Day designated as such in an irrevocable,
unconditional notice given by Chiron to BNPLC; provided, the Business Day
so designated by Chiron must be no earlier than thirty days after the date
of such notice, unless the notice is given as contemplated in
subparagraph 17.(b) of the Lease when an Event of Default has occurred and
is continuing, in which case the Business Date so designated must be
consistent with the requirements for an effective cure as specified in
subparagraph 17.(b) of the Lease; or
List of Defined Terms -- Page 7
<PAGE>
(3) the first Business Day of the fifty-second calendar month after
the calendar month which includes the Base Rent Commencement Date.
If BNP sends a notice to Chiron pursuant to the preceding clause (1) properly
designating a Designated Sale Date, and Chiron sends a notice to BNP pursuant to
the preceding clause (2) properly designating a different Designated Sale Date,
the earlier of the two dates so designated shall be the "Designated Sale Date"
hereunder regardless of which notice was first sent.
"DEVELOPMENT CONTRACTS" means the contracts, ordinances and other documents
described in SCHEDULE 2 attached to the Lease, as the same may be modified from
time to time in accordance with the Ground Lease and the Lease (including
modifications authorized pursuant to subparagraphs 7.(b) and 7.(c) of the
Lease), and any applications, permits or certificates concerning or affecting
the use or development of the Property that may be submitted, issued or executed
from time to time as contemplated in such contracts, ordinance and other
documents or that BNPLC may hereafter execute, approve or consent to at the
request of Chiron.
"EFFECTIVE DATE" means July 1, 1996.
"EFFECTIVE RATE" means for each Construction Period and for each Base Rent
Period, the per annum rate determined by dividing (A) LIBOR for such
Construction Period or Base Rent Period, as the case may be, by (B) 100% minus
the Eurodollar Rate Reserve Percentage for such Construction Period or Base Rent
Period. If LIBOR or the Eurodollar Rate Reserve Percentage changes from
Construction Period to Construction Period or from Base Rent Period to Base Rent
Period, then the Effective Rate shall be automatically increased or decreased as
of the date of such change, as the case may be, without prior notice to Chiron.
If for any reason BNPLC determines that it is impossible or unreasonably
difficult to determine the Effective Rate with respect to a given Construction
Period or Base Rent Period in accordance with the foregoing, then the "EFFECTIVE
RATE" for that Construction Period or Base Rent Period shall equal any published
index or per annum interest rate determined in good faith by BNPLC's Parent to
be comparable to LIBOR at the beginning of the first day of that period. A
comparable interest rate might be, for example, the then existing yield on short
term United States Treasury obligations (as compiled by and published in the
then most recently published United States Federal Reserve Statistical Release
H.15(519) or its successor publication), plus or minus a fixed adjustment based
on BNPLC's Parent's comparison of past eurodollar market rates to past yields on
such Treasury obligations. Any determination by BNPLC of the Effective Rate
under this definition shall, in the absence of clear and demonstrable error, be
conclusive and binding upon Chiron.
"ENVIRONMENTAL CONSULTANT" means a qualified individual employed by a
qualified firm. Individuals shall be deemed qualified if they (i) possess at
least five years of experience in performing environmental, engineering and
consulting services; (ii) have performed or supervised at least five projects
involving remediation of soil contaminated with hazardous substances, including
at least one project similar to the Remedial Work; (iii) have all licenses
required under applicable law for the Remedial Work; and (iv) have at least a
bachelor's degree in the physical sciences or a related field from an accredited
college or university. A firm shall be deemed qualified if it is: (i) a
nationally recognized, reputable environmental and/or engineering firm in the
business of providing professional environmental engineering and consulting
services; (ii) has experience and expertise in projects involving the Remedial
Work; (iii) maintains policies of insurance which are approved by BNPLC in its
reasonable discretion. Erler & Kalinowski, Inc., shall be deemed to be an
Environmental Consultant.
List of Defined Terms -- Page 8
<PAGE>
"ENVIRONMENTAL CUTOFF DATE" means the later of the dates upon which (i) the
Lease terminates, (ii) Chiron surrenders possession of the Property or (iii)
Chiron ceases to have any leasehold or other interest in the Property under the
Lease or otherwise.
"ENVIRONMENTAL LAWS" means any and all existing and future Applicable Laws
pertaining to safety, health or the environment, or to Hazardous Substances or
Hazardous Substance Activities, including the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended by the Superfund
Amendments and Reauthorization Act of 1986 (as amended, "CERCLA"), and the
Resource Conservation and Recovery Act of 1976, as amended by the Used Oil
Recycling Act of 1980, the Solid Waste Disposal Act Amendments of 1980, and the
Hazardous and Solid Waste Amendments of 1984 (as amended, "RCRA").
"ENVIRONMENTAL LOSSES" means Losses suffered or incurred by any Interested
Party relating to or arising out of, based on or as a result of: (i) any
Hazardous Substance Activity that occurs or is alleged to have occurred on or
prior to the Environmental Cutoff Date; (ii) any violation on or prior to the
Environmental Cutoff Date of Environmental Laws relating to the Property or to
the ownership, use, occupancy or operation thereof; (iii) any investigation,
inquiry, order, hearing, action, or other proceeding by or before any
governmental or quasi-governmental agency or authority in connection with any
Hazardous Substance Activity that occurs or is alleged to have occurred in whole
or in part on or prior to the Environmental Cutoff Date; or (iv) any claim,
demand, cause of action or investigation, or any action or other proceeding,
whether meritorious or not, brought or asserted against any Interested Party
which relates to, arises from, is based on, or results from any of the matters
described in clauses (i), (ii) or (iii) of this definition, or any allegation of
any such matters. For purposes of determining whether Losses constitute
"Environmental Losses," any actual or alleged Hazardous Substance Activity or
violation of Environmental Laws relating to the Property will be presumed to
have occurred prior to the Environmental Cutoff Date unless Chiron establishes
by clear and convincing evidence to the contrary that the relevant Hazardous
Substance Activity or violation of Environmental Laws did not occur or commence
prior to the Environmental Cutoff Date. Even if after the Environmental Cutoff
Date Losses are incurred by or asserted against a particular Interested Party
that would not have been incurred or asserted, but for any matter described in
clauses (i), (ii) or (iii) of this definition, or an allegation of any such
matter, then such Losses will constitute Environmental Losses.
"ENVIRONMENTAL REPORTS" means collectively:
(i) the letter dated June 21, 1996, from Barbara J. Cook, DTSC,
to Ric Notini, Chiron, re "Chiron Corporation Site, Former Pacific Gas
& Electric Property, Emeryville, California - Draft Removal Action
Workplan";
(ii) that certain "Removal Action Workplan for the Ramp Area on
the Former PG&E/City of Emeryville Redevelopment Agency Property,"
prepared by Erler & Kalinowski, Inc., dated June 21, 1996;
(iii) the letter dated June 18, 1996, from Karen M. Toth, DTSC,
to Ric Notini, Chiron, re "Chiron Corporation Site, Former Pacific Gas
& Electric Property, Emeryville, California - Removal Action Workplan
Comments";
List of Defined Terms -- Page 9
<PAGE>
(iv) the letter dated May 22, 1996, from Stephen I. Morse, RWQCB,
to Ric Notini, Chiron, re "Properties North of 53rd Street, Chiron
Life Sciences Center Project, Emeryville, Alameda County";
(v) that certain "Final Risk Management Plan for Construction of
the Chiron Life Sciences Center Project Properties North of 53rd
Street, Emeryville, California," prepared by Erler & Kalinowski, Inc.,
dated May 21, 1996;
(vi) that certain "Site Safety and Health Plan for the Chiron
Life Sciences Center, Emeryville, California, Phase 1 - Soil
Excavation Activities", prepared by James T. Dufour, dated May 15,
1996;
(vii) the memorandum dated May 2, 1996, from Vera Nelson and
Steve Tarantino, Erler & Kalinowski, Inc., to Ric Notini, Chiron, re
"Estimated Incremental Costs for Anticipated Environmental Response
Activities Phase I Development of Former PG&E Property and Chapman
Property Chiron Corporation Emeryville, California (EKI 930028.99)";
(viii) the letter dated April 9, 1996, from Ronald Pilorin, DTSC,
to Vera H. Nelson, Erler & Kalinowski, Inc., re "Request for
Concurrence for Excavated Soils Generated from Chiron Corporation's
(Chiron) campus Expansion Properties Located North of 53rd Street in
Emeryville, California - Waste Evaluation Unit File #F155 (WEU File
#F155)";
(ix) that Voluntary Cleanup Agreement, IN THE MATTER OF CHIRON
CORPORATION, Docket No. HSA-95/96-059, dated April 1, 1996;
(x) the letter dated September 22, 1995 from Barbara Cook, DTSC,
to Ric Notini, Chiron, re "Chiron Corporation Site, Former Pacific Gas
& Electric Property, Emeryville, California - Voluntary Cleanup
Agreement";
(xi) "Classification of Soil to be Excavated During Chiron
Corporation's Campus Expansion Property North of 53rd Street, Chiron
Corporation, Emeryville, California," prepared by Erler & Kalinowski,
Inc., dated September 22, 1995;
(xii) that certain Memorandum to Jerry Hoekwater, Steve Johnson,
and Ric Notini of Chiron Corporation, from Michelle King and Vera
Nelson of Erler & Kalinowski, Inc., re "Summary of Soil and
Groundwater Sampling Analytical Results for the Designated
Construction Areas North of 53rd Street, Chiron Corporation,
Emeryville, California," dated March 29, 1996;
(xiii) the letter dated March 20, 1995, from Steven R. Ritchie
and Stephen I. Morse, RWQCB, to Ric Notini, Chiron re "Approval of
Health and Environmental Risk Assessment Properties North of 53rd
Street Chiron Master Plan Development Emeryville, Alameda County";
(xiv) the letter dated March 15, 1995, from Susan L. Hugo and
Ravi Arulanantham, ACDEH, to Ric Notini, Chiron, re "Approval of
Health and Environmental Risk Assessment Properties North of 53rd
Street Chiron Master Plan Development Emeryville, California";
List of Defined Terms -- Page 10
<PAGE>
(xv) "Final Health and Environmental Risk Assessment Property
North of 53rd Street, Chiron Corporation, Emeryville, California,
Volumes I and II," prepared by Erler & Kalinowski, Inc., dated
March 10, 1995;
(xvi) "Preliminary Site Investigation Report Chapman Property,
Chiron Corporation, Emeryville, California," prepared by Erler and
Kalinowski, Inc., dated January 26, 1994;
(xvii) the letter dated January 10, 1995 from Ric Notini, Chiron,
the Chemical Emergency Planning and Response Commission;
(xviii) the letter dated October 21, 1993, from Brian P. Oliva,
ACDEH, to Harrold B. Chapman, re "Underground Storage Tanks at Chiron
Corporation, 4560 Horton Street, Emeryville, CA 94608"; and
(xix) "Preliminary Site Investigation Report, Chiron Site, Chiron
Corporation, Emeryville, California, Volumes I and II" prepared by
Erler & Kalinowski, Inc., dated September 8, 1993.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, together with all rules and regulations promulgated
with respect thereto.
"ERISA AFFILIATE" means any Person who for purposes of Title IV of ERISA is
a member of Chiron's controlled group, or under common control with Chiron,
within the meaning of Section 414 of the Internal Revenue Code, and the
regulations promulgated and rulings issued thereunder.
"ERISA TERMINATION EVENT" means (i) the occurrence with respect to any Plan
of a reportable event described in Section 4043(c) of ERISA for which any
penalty or notice thereof has not been waived pursuant to regulations, rulings,
or notices issued by the Pension Benefit Guaranty Corporation pursuant to a
waiver by such corporation under Section 4043(a) of ERISA, or (ii) the filing of
a notice of intent to terminate any Plan or the treatment of any Plan amendment
as a termination under Section 4041 of ERISA (other than in connection with a
standard termination of a fully funded Plan pursuant to Section 4041 of ERISA),
or (iii) the institution of proceedings to terminate any Plan by the Pension
Benefit Guaranty Corporation under Section 4042 of ERISA, or (iv) any other
event or condition which would constitute grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any Plan.
"ESCROWED PROCEEDS" means any proceeds that are received by BNPLC from time
to time during the Term (and any interest earned thereon), which BNPLC is
holding for the purposes specified in the next sentence, from any party (1)
under any property insurance policy as a result of damage to the Property, (2)
as compensation for any restriction placed upon the use or development of the
Property or for the condemnation of the Property or any portion thereof, (3)
because of any judgment, decree or award for injury or damage to the Property or
(4) under any title insurance policy or otherwise as a result of any title
defect or claimed title defect with respect to the Property; provided, however,
in determining the amount of "Escrowed Proceeds" there shall be deducted all
expenses and costs of every type, kind and nature (including Attorneys' Fees)
incurred by BNPLC to collect such proceeds; and provided, further, "Escrowed
Proceeds" shall not include any payment to BNPLC by a Participant or an
Affiliate of BNPLC that is made to compensate BNPLC for the Participant's or
Affiliate's share of any Losses BNPLC may incur as a result of any of the events
described in the preceding clauses (1) through (4). "Escrowed Proceeds" shall
include only such proceeds as are held by BNPLC (A) pursuant to Paragraph 11 of
the Lease for the payment to
List of Defined Terms -- Page 11
<PAGE>
Chiron for the restoration or repair of the Property or (B) for application as a
Qualified Payment or as reimbursement of Breakage Costs or other costs incurred
in connection with a Qualified Payment. "Escrowed Proceeds" shall not include
any proceeds that have been applied as a Qualified Payment or to pay any
Breakage Costs or other costs incurred in connection with a Qualified Payment.
Until Escrowed Proceeds are paid to Chiron pursuant to Paragraph 11 of the Lease
or applied as a Qualified Payment or as reimbursement for costs incurred in
connection with a Qualified Payment, BNPLC shall keep the same deposited in an
interest bearing account, and all interest earned on such account shall be added
to and made a part of Escrowed Proceeds.
"ESTABLISHED MISCONDUCT" of a Person means, and is limited to: (1) if the
Person is bound by the Lease or the Purchase Documents or the Ground Lease, a
breach by such Person of the express provisions of the Lease or the Purchase
Documents or the Ground Lease that continues beyond any period for cure provided
therein, and (2) conduct of such Person or its Affiliates that has been
determined to constitute wilful misconduct or Active Negligence in or as a
necessary element of a final judgment rendered against such Person by a court
with jurisdiction to make such determination. Established Misconduct of one
Interested Party shall not be attributed to a second Interested Party unless the
second Interested Party is an Affiliate of the first. Negligence which does not
constitute Active Negligence shall not in any event constitute Established
Misconduct. For purposes of this definition, "conduct of a Person" will include
the conduct of an employee of that Person, but only to the extent that the
employee is acting within the scope of his employment by that Person, as
determined in or as a necessary element of a final judgment rendered against
such Person by a court with jurisdiction to make such determination. For
purposes of this definition, "conduct of a Person" will also include the conduct
of an agent of that Person (such as an independent environmental consultant
engaged by that Person), but only to the extent that the agent is, as determined
in or as a necessary element of a final judgment rendered against such Person by
a court with jurisdiction to make such determination, (x) acting within the
scope of the authority granted to him by such Person, (y) not acting with the
consent or approval of or under the direction of Chiron or Chiron's Affiliates,
employees or agents, and (z) not acting in good faith to mitigate Losses that
such Person may suffer because of a breach by Chiron of the Lease or the Ground
Lease.
"EUROCURRENCY LIABILITIES" shall have the meaning assigned to it in
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
"EURODOLLAR RATE RESERVE PERCENTAGE" means, for purposes of determining the
Effective Rate for any Construction Period or Base Rent Period, the reserve
percentage applicable two Business Days before the first day of such period
under regulations issued from time to time by the Board of Governors of the
Federal Reserve System (or any successor) for determining the maximum reserve
requirement (including any emergency, supplemental or other marginal reserve
requirement) for BNPLC's Parent with respect to liabilities or deposits
consisting of or including Eurocurrency Liabilities (or with respect to any
other category or liabilities by reference to which LIBOR is determined) having
a term comparable to such period.
"EVENT OF DEFAULT" shall have the meaning assigned to it in
subparagraph 17.(a) of the Lease.
"EXCLUDED TAXES" means (1) all federal, state and local income taxes upon
Base Rent, the Upfront Fee, Administrative Fees, Commitment Fees, any interest
paid to BNPLC pursuant to subparagraph 4.(h) of the Lease and any additional
compensation claimed by BNPLC pursuant to subparagraph 5.(c)(iii) of the Lease;
(2) all federal, state and local income taxes upon any amounts paid as
reimbursement for or to satisfy Losses incurred by BNPLC to the extent such
taxes are offset
List of Defined Terms -- Page 12
<PAGE>
by a corresponding reduction of BNPLC's income taxes because of BNPLC's
deduction of the reimbursed Losses from BNPLC's taxable income or because of any
tax credits attributable thereto; (3) taxes imposed by any governmental
authority outside the United States of America; and (4) any transfer or change
of ownership taxes assessed because of BNPLC's transfer or conveyance to any
third party of BNPLC's rights or interests in the Lease, the Purchase Documents,
the Ground Lease or the Property, but excluding any such taxes assessed because
of any Permitted Transfer. For purposes of this definition, income taxes shall
include any income taxes (whether or not so designated) imposed under the Code
or California Bank and Corporation Tax Law as well as Texas corporate franchise
taxes.
"EXISTING PARTICIPATION AGREEMENTS" means the Participation Agreements
dated June 28, 1996 between BNPLC and the Participants listed in SCHEDULE 1
attached to the Lease, as such Participation Agreements may be extended,
supplemented, amended, restated or otherwise modified from time to time in
accordance with their terms.
"FAIR MARKET VALUE" means the fair market value of the Property on or about
the Designated Sale Date (calculated under the assumptions, whether or not then
accurate, that Chiron has fulfilled and can be expected to continue to fulfill
its obligations under the Ground Lease; that Chiron has maintained the Property
in compliance with all Applicable Laws [including Environmental Laws]; that
Chiron has completed all Construction Projects, the construction of which was
commenced prior to the Designated Sale Date; that all such Construction Projects
are self-sufficient in the sense that any easements or offsite facilities needed
under the Development Contracts or otherwise for the use of the Improvements
will be available at no additional cost to the owner of the Improvements; that
Chiron has repaired and restored the Property after any damage following fire or
other casualty; that Chiron has restored the remainder of the Property after any
partial taking by eminent domain; that Chiron has completed any contests of and
paid any taxes due [other than Excluded Taxes] or other amounts secured by or
allegedly secured by a lien against the Property, including any assessment
liens, but not including Liens Removable by BNPLC; that no conditions or
circumstances on or about the Property [such as the presence of an endangered
species] is discovered that will impede development of the Property; that
development of the Property will not be hindered or delayed because of the
limited availability of utilities or water; that any purchaser paying fair
market value for the Property will receive copies of all of Chiron's books and
records which are necessary or useful to a future owner's or occupant's use of
the Property in the manner permitted by the Lease, including books and records
evidencing the testing and validation of the Property for the uses permitted by
the Lease; that without undue cost or delay any such purchaser can obtain any
necessary permits or licenses needed to use the Property for the purposes
permitted by the Lease; and that Chiron has cured any title defects affecting
the Property other than Liens Removable by BNPLC, all in accordance with the
standards and requirements of the Lease [as though the Lease were continuing in
force] and the Ground Lease) as determined by an independent MAI appraiser
selected by BNPLC, which appraiser must have five years or more experience
appraising similar properties in northern California.
"FED FUNDS RATE" means, for any period, a fluctuating interest rate
(expressed as a per annum rate and rounded upwards, if necessary, to the next
1/16 of 1%) equal for each day during such period to the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rates are not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by BNPLC's Parent from three Federal funds brokers of
recognized standing selected by BNPLC's Parent. All determinations of the
List of Defined Terms -- Page 13
<PAGE>
Fed Funds Rate by BNPLC's Parent shall, in the absence of clear and demonstrable
error, be binding and conclusive upon Chiron.
"FUNDING ADVANCES" means (1) the Initial Funding Advance and (2) all future
advances (which, together with Initial Funding Advance, are expected to total
but in no event exceed $195,000,000) made by BNPLC's Parent or any Participant
to or on behalf of BNPLC to allow BNPLC to provide the Construction Allowance
under the Lease.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect from time to time, applied on a basis consistent with
those used in the preparation of the financial statements referred to in
subparagraph 16.(a) of the Lease (except for changes concurred in by Chiron's
independent public accountants).
"GROUND LEASE" means the separate Ground Lease dated June 28, 1996 executed
by Chiron, as lessor, and BNPLC, as lessee, pursuant to which Chiron is leasing
the Land to BNPLC for a term of approximately 341/2 years, as such Ground Lease
may be extended, supplemented, amended, restated or otherwise modified from time
to time in accordance with its terms.
"GUARANTY" means the Guaranty dated June 28, 1996 given by Guarantor to
BNPLC, guarantying the obligations of Chiron under the Lease, the Purchase
Agreement and the Ground Lease, as such Guaranty may be extended, supplemented,
amended, restated or otherwise modified from time to time with the consent of
BNPLC.
"GUARANTOR" means Ciba-Geigy, Ltd., the largest shareholder of Chiron as of
the Effective Date, and any successor of Ciba-Geigy through merger.
"HAZARDOUS SUBSTANCE" means (i) any chemical, compound, material, mixture
or substance that is now or hereafter defined or listed in, regulated under, or
otherwise classified pursuant to, any Environmental Laws as a "hazardous
substance," "hazardous material," "hazardous waste," "extremely hazardous waste
or substance," "infectious waste," "toxic substance," "toxic pollutant," or any
other formulation intended to define, list or classify substances by reason of
deleterious properties, including ignitability, corrosiveness, reactivity,
carcinogenicity, toxicity or reproductive toxicity; (ii) petroleum, any fraction
of petroleum, natural gas, natural gas liquids, liquified natural gas, synthetic
gas usable for fuel (or mixtures of natural gas and such synthetic gas), and ash
produced by a resource recovery facility utilizing a municipal solid waste
stream, and drilling fluids, produced waters and other wastes associated with
the exploration, development or production of crude oil, natural gas or
geothermal resources; (iii) asbestos and any asbestos containing material; (iv)
"waste" as defined in section 13050(d) of the California Water Code; and (v) any
other material that, because of its quantity, concentration or physical or
chemical characteristics, poses a significant present or potential hazard to
human health or safety or to the environment if released into the workplace or
the environment.
"HAZARDOUS SUBSTANCE ACTIVITY" means any actual, proposed or threatened
use, storage, holding, release (including any spilling, leaking, leaching,
pumping, pouring, emitting, emptying, dumping, disposing into the environment,
and the continuing migration into or through soil, surface water, groundwater or
any body of water), discharge, deposit, placement, generation, processing,
construction, treatment, abatement, removal, disposal, disposition, handling or
transportation of any Hazardous Substance from, under, in, into or on the
Property, including the movement or migration of any Hazardous Substance from
surrounding property, surface water, groundwater or any body of water under, in,
into or onto the Property and any resulting residual Hazardous
List of Defined Terms -- Page 14
<PAGE>
Substance contamination in, on or under the Property. "HAZARDOUS SUBSTANCE
ACTIVITY" also means any existence of Hazardous Substances on the Property that
would cause the Property or the owner or operator thereof to be in violation of,
or that would subject the Property to any remedial obligations under, any
Environmental Laws, including CERCLA and RCRA, assuming disclosure to the
applicable governmental authorities of all relevant facts, conditions and
circumstances pertaining to the Property.
"HAZWOPER REGULATIONS" means the requirements set forth in Section 5192 of
title 8 of the California Code of Regulations and Section 1910.120 of title 29
of the Code of Federal Regulations, and any other applicable standards for
protecting the health and safety of workers conducting operations at hazardous
waste sites.
"IMPOSITIONS" means all sales, excise, ad valorem, gross receipts,
business, transfer, stamp, occupancy, rental and other taxes, levies, fees,
charges, surcharges, assessments or penalties which arise out of or are
attributable to the Lease or which are imposed upon BNPLC or the Property
because of the ownership, leasing, occupancy, sale or operation of the Property,
or any part thereof or interest therein, or relating to or required to be paid
by the Ground Lease or any of the Permitted Encumbrances or the Development
Contracts, excluding only Excluded Taxes. "IMPOSITIONS" shall include real
estate taxes imposed because of a change of use or ownership of the Property on
or prior to the date of any sale by BNPLC pursuant to the Purchase Agreement.
"IMPROVEMENTS" shall have the meaning assigned to it in the Ground Lease,
and will include not only existing improvements to the Land as of the Effective
Date, if any, but also any new improvements or changes to existing improvements
made by Chiron. Accordingly, any and all new improvements made to the Property
by Chiron using the Construction Allowance as contemplated in the Lease shall
constitute Improvements as that term is used in the documents to which these
definitions are attached.
"INDUSTRIAL HYGIENIST" means an industrial hygienist certified by the
American Board of Industrial Hygiene who is experienced with required and
appropriate health and safety standards and good industrial hygiene practice
related to operations at hazardous waste sites.
"INITIAL FUNDING ADVANCE" means the advance of $4,964,881.32 made by
BNPLC's Parent (directly or through one or more of its Affiliates) and/or
Participants to or on behalf of BNPLC on or prior to the Effective Date to cover
the cost of BNPLC's acquisition of the Property and certain Transaction
Expenses.
"INTERESTED PARTY" means each of (1) BNPLC, its Affiliates and its
successors and assigns as to the Property or any part thereof or any interest
therein, (2) BNPLC's Parent, and (3) the Participants and their permitted
successors and assigns under their respective Participation Agreements with
BNPLC; provided, however, none of the following shall constitute an Interested
Party: (a) any Person to whom BNPLC may transfer an interest in the Property by
a conveyance that is not a Permitted Transfer and others that cannot lawfully
claim an interest in the Property except through or under such a transfer by
BNPLC, (b) Chiron or any Person that cannot lawfully claim an interest in the
Property except through or under a conveyance from Chiron after Chiron's
conveyance of the leasehold estate to BNPLC under the Ground Lease, or (c) any
Applicable Purchaser under the Purchase Agreement and any Person that cannot
lawfully claim an interest in the Property except through or under a conveyance
from such Applicable Purchaser.
"LAND" means the land covered by the Ground Lease from time to time. Upon
the Effective Date, the Land shall be as described in EXHIBIT A attached to the
Ground Lease, the Lease and the Purchase Agreement. However,
List of Defined Terms -- Page 15
<PAGE>
upon any amendment to the Ground Lease which modifies the land covered thereby,
including any such amendment executed by BNPLC and Chiron pursuant to Paragraph
4 of the Ground Lease, the land covered by the Lease and Purchase Agreement
shall automatically be so modified.
"LEASE" means the Lease Agreement dated June 28, 1996 between BNPLC, as
landlord, and Chiron, as tenant, pursuant to which Chiron has agreed to lease
BNPLC's interest in the Property, as such Lease Agreement may be extended,
supplemented, amended, restated or otherwise modified from time to time in
accordance with its terms.
"LIBOR" means, for purposes of determining the Effective Rate for each
Construction Period or Base Rent Period, the rate determined by BNPLC's Parent
to be the average rate of interest per annum (rounded upwards, if necessary, to
the next 1/16 of 1%) of the rates at which deposits of dollars are offered or
available to BNPLC's Parent in the London interbank market at approximately
11:00 a.m. (London time) on the second Business Day preceding the first day of
such period. BNPLC shall instruct BNPLC's Parent to consider deposits, for
purposes of making the determination described in the preceding sentence, that
are offered: (i) for delivery on the first day of such Construction Period or
Base Rent Period, as the case may be, (ii) in an amount equal or comparable to
the total (projected on the applicable date of determination by BNPLC's Parent)
Stipulated Loss Value on the first day of such period, and (iii) for a time
equal or comparable to the length of such period. If BNPLC's Parent so chooses,
it may determine LIBOR for any period by reference to the rate reported by the
British Banker's Association on Page 3750 of the Telerate Service at
approximately 11:00 a.m. (London time) on the second Business Day preceding the
first day of such period. If for any reason BNPLC's Parent determines that it
is impossible or unreasonably difficult to determine LIBOR with respect to a
given Construction Period or Base Rent Period in accordance with the foregoing,
or if BNPLC's Parent shall determine that it is unlawful (or any central bank or
governmental authority shall assert that it is unlawful) for BNPLC, BNPLC's
Parent or any Participant to provide or maintain Funding Advances during any
Construction Period or Base Rent Period for which Carrying Costs or Base Rent is
computed by reference to LIBOR, then "LIBOR" for that period shall equal the
rate which is fifty basis points (50/100 of 1%) above the Fed Funds Rate for
that period. All determinations of LIBOR by BNPLC's Parent shall, in the
absence of clear and demonstrable error, be binding and conclusive upon Chiron.
"LIBOR PERIOD ELECTION" for any Base Rent Period means a period of one
month, three months, six months, nine months or twelve months as designated by
Chiron at least ten Business Days prior to the commencement of such Base Rent
Period by a notice given to BNPLC in the form of EXHIBIT H attached to the
Lease. (For purposes of the Lease a LIBOR Period Election for any Base Rent
Period shall also be considered the LIBOR Period Election in effect on (1) the
Base Rent Commencement Date or Base Rent Date upon which such Base Rent Period
begins and (2) subsequent Base Rent Dates, if any, which occur before the date
upon which such Base Rent Period ends.) Any Libor Period Election so designated
by Chiron shall remain in effect for the entire Base Rent Period specified in
Chiron's notice to BNPLC (provided such Base Rent Period commences at least ten
Business Days after BNPLC's receipt of the notice) and for all subsequent Base
Rent Periods until a new designation becomes effective in accordance with the
provisions set forth in this definition. Notwithstanding the foregoing,
however: (1) Chiron shall not be entitled to designate a LIBOR Period Election
that would cause a Base Rent Period to extend beyond the end of the scheduled
Term; (2) changes in the LIBOR Period Election shall become effective only upon
the commencement of a new Base Rent Period; (3) for any Base Rent Period which
will end on or after the first Business Day in October, 1999, the only LIBOR
Period Election permitted shall be one month if for any reason whatsoever Chiron
shall not, before such period begins, have deposited all Restricted Funds
required by Paragraph 4 of the Purchase Agreement or otherwise entered into
agreements with BNPLC which will excuse Chiron's obligation to deposit
Restricted Funds as contemplated by that Paragraph; and (4) if Chiron fails to
make a LIBOR Period Election consistent with the foregoing requirements for any
Base Rent Period, or if an Event
List of Defined Terms -- Page 16
<PAGE>
of Default shall have occurred and be continuing on the third Business Day
preceding the commencement of any Base Rent Period, the LIBOR Period Election
for such Base Rent Period shall be deemed to be one month.
"LIEN" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including any agreement to give any of the foregoing, any
conditional sale or other title retention agreement, any lease in the nature
thereof, any agreement to sell receivables with recourse, and the filing of or
agreement to give any financing statement under the Uniform Commercial Code of
any jurisdiction). Customary bankers' rights of set-off arising by operation of
law or by contract (however styled, if the contract grants rights no greater
than those arising by operation of law) in connection with working capital
facilities, lines of credit, term loans and letter of credit facilities and
other contractual arrangements entered into with banks in the ordinary course of
business are not "Liens" for the purposes of the Lease.
"LIENS REMOVABLE BY BNPLC" means, and is limited to, Liens encumbering the
Property that are asserted (1) other than as contemplated by the Lease or the
Purchase Documents or the Ground Lease, by BNPLC itself, (2) by third parties
lawfully claiming through or under BNPLC (which for purposes of the Lease shall
include any judgment liens established against the Property because of a
judgment rendered against BNPLC and shall also include any liens established
against the Property to secure past due Excluded Taxes), or (3) by third parties
claiming under a deed or other instrument duly executed by BNPLC; provided,
however, Liens Removable by BNPLC shall not include (A) any Permitted
Encumbrances or Development Contracts (regardless of whether claimed through or
under BNPLC), (B) the Lease, the Ground Lease, the Purchase Documents or any
other document executed by BNPLC contemporaneously with the execution of the
Lease, (C) Liens which are neither lawfully claimed through or under BNPLC (as
described above) nor claimed under a deed or other instrument duly executed by
BNPLC, (D) Liens claimed by Chiron or claimed through or under a conveyance made
by Chiron after Chiron's conveyance of the leasehold estate to BNPLC under the
Ground Lease, (E) Liens arising because of BNPLC's compliance with Applicable
Law, the Ground Lease, Permitted Encumbrances, the Development Contracts or any
written request made by Chiron, (F) Liens securing the payment of property taxes
or other amounts assessed against the Property by any governmental authority,
other than to secure the payment of past due Excluded Taxes or to secure damages
caused by (and attributed by any applicable principles of comparative fault to)
BNPLC's own Established Misconduct, or (G) Liens resulting from or arising in
connection with any breach by Chiron of the Lease, the Purchase Documents or the
Ground Lease.
"LIST OF DEFINED TERMS" means this List of Defined Terms, which is attached
to and made a part of the Lease, the Purchase Agreement and the Ground Lease.
"LOSSES" means any and all losses, liabilities, damages (whether actual,
consequential, punitive or otherwise denominated), demands, claims, actions,
judgments, causes of action, assessments, fines, penalties, costs, and
out-of-pocket expenses (including Attorneys' Fees and the fees of outside
accountants and environmental consultants), of any and every kind or character,
foreseeable and unforeseeable, liquidated and contingent, proximate and remote.
"MATERIAL ENVIRONMENTAL COMMUNICATION" means a communication between Chiron
or its agents and a regulatory agency or third party, which causes, or
potentially could cause (whether by implementation of or response to said
communication), a material change in the scope, duration, or nature of the
Remedial Work.
"MAXIMUM CONSTRUCTION ALLOWANCE" means an amount equal to $195,000,000,
less the Initial Funding Advance.
List of Defined Terms -- Page 17
<PAGE>
"OUTSTANDING CONSTRUCTION ALLOWANCE" shall have the meaning assigned to it
in subparagraph 6.(a)(i) of the Lease.
"PARCEL 7A" shall have the meaning assigned to it in subparagraph 4(a) of
the Ground Lease.
"PARTICIPANT" means any Person other than BNPLC's Parent that agrees in
writing with BNPLC or another Participant to participate in all or some of the
risks and rewards to BNPLC of the Lease, the Purchase Documents and the Ground
Lease. As of the Effective Date, all Participants are listed in SCHEDULE 1
attached to the Lease, but BNPLC may agree after the Effective Date to share in
risks and rewards of the Lease, the Purchase Documents and the Ground Lease with
other Persons approved as Participants in advance by Chiron (which approval
shall not be unreasonably withheld for any proposed Participant that is a
commercial bank operating in the United States of America having capital and
surplus in excess of $500,000,000 or for any Affiliate of such a bank; provided,
that any Participation Agreement between such proposed Participant and BNPLC
will be in substantially the same form as the Existing Participation
Agreements).
"PARTICIPATION AGREEMENTS" means Participation Agreements between BNPLC and
one or more third parties, pursuant to which the third party or parties become
Participants by agreeing to participate in all or some of the risks and rewards
to BNPLC of the Lease, the Purchase Documents and the Ground Lease, as such
Participation Agreements may be extended, supplemented, amended, restated or
otherwise modified from time to time in accordance with their terms.
"PERMITTED ENCUMBRANCES" means (i) the encumbrances and other matters
affecting the Property that are set forth in EXHIBIT B attached to the Lease,
(ii) any easement agreement or other document affecting title to the Property
executed by BNPLC at the request of or with the consent of Chiron, and (iii) any
liens from time to time imposed to secure only ad valorem taxes on the Property
which, at the time in question, are not delinquent.
"PERMITTED HAZARDOUS SUBSTANCE USE" means the use, generation, storage and
offsite disposal of Permitted Hazardous Substances in strict accordance with
applicable Environmental Laws and with due care given the nature of the
Hazardous Substances involved; provided, the scope and nature of such use,
generation, storage and disposal shall not include the use of underground
storage tanks for any purpose other than the storage of water for fire control,
nor shall such scope and nature:
(1) exceed that reasonably required for the construction of
Construction Projects permitted by the Lease or for the operation of the
Property for the purposes expressly permitted under subparagraph 3.(a) of
the Lease; or
(2) include any disposal, discharge or other release of Hazardous
Substances from the Property in any manner that might allow such substances
to reach surface water or groundwater, except (i) through a lawful and
properly authorized discharge (A) to a publicly owned treatment works or
(B) with rainwater or storm water runoff in accordance with Applicable Laws
and any permits obtained by Chiron that govern such runoff; or (ii) any
such disposal, discharge or other release of Hazardous Substances for which
no permits are required and which are not otherwise regulated under
applicable Environmental Laws.
List of Defined Terms -- Page 18
<PAGE>
Further, notwithstanding anything to the contrary herein contained, Permitted
Hazardous Substance Use shall not include any use of the Property in a manner
that requires a RCRA treatment, storage or disposal permit, including a
landfill, incinerator or other waste disposal facility.
"PERMITTED HAZARDOUS SUBSTANCES" means Hazardous Substances used and
reasonably required for Construction Projects expressly permitted by the Lease
or for the use of the Property by Chiron and its permitted subtenants and
assigns for the purposes expressly permitted by subparagraph 3.(a) of the Lease,
in either case in strict compliance with all Environmental Laws and with due
care given the nature of the Hazardous Substances involved. Without limiting
the generality of the foregoing, Permitted Hazardous Substances shall include
usual and customary office, laboratory and janitorial products.
"PERMITTED TRANSFER" means any one or more of the following: (1) the
creation or conveyance of rights and interests in favor of the Participants
listed in SCHEDULE 1 attached to the Lease pursuant to the terms and conditions
of the Existing Participation Agreements; (2) any subsequent assignment or
conveyance by BNPLC of any lien or security interest against the Property (in
contrast to a conveyance of BNPLC's leasehold estate under the Ground Lease) or
of any interest in Rent, payments required by or under the Purchase Documents,
payments required by or under the Ground Lease or payments to be generated from
the Property after the Term, to any present or future Participant or to any
Affiliate of BNPLC, provided that such subsequent assignment or conveyance is
made expressly subject to the rights of Chiron under the Ground Lease, the Lease
and the Purchase Documents; (3) any agreement to exercise or refrain from
exercising rights or remedies under the Lease or the Purchase Documents made by
BNPLC with any present or future Participant or Affiliate of BNPLC; (4) any
assignment or conveyance by BNPLC requested by Chiron or required by any
Permitted Encumbrance, by Development Contracts, by the Purchase Documents or by
Applicable Laws; or (5) any assignment or conveyance by BNPLC when an Event of
Default shall have occurred and be continuing or after the Designated Sale Date.
"PERSON" means an individual, a corporation, a partnership, an
unincorporated organization, an association, a joint stock company, a joint
venture, a trust, an estate, a government or agency or political subdivision
thereof or other entity, whether acting in an individual, fiduciary or other
capacity.
"PERSONAL PROPERTY" shall have the meaning assigned to it on page 2 of the
Lease.
"PLAN" means at any time an employee pension benefit plan which is covered
under Title IV of ERISA or subject to the minimum funding standards under
Section 412 of the Internal Revenue Code and is either (i) maintained by Chiron
or any Subsidiary for employees of Chiron or any Subsidiary or (ii) maintained
pursuant to a collective bargaining agreement or any other arrangement under
which more than one employer makes contributions and to which Chiron or any
Subsidiary is then making or accruing an obligation to make contributions or has
within the preceding five plan years made contributions.
"POTENTIAL LIEN CLAIMANTS" means general contractors or other parties who
have filed a statutory Preliminary Notice to preserve their right to a
mechanic's or materialman's lien against the Property in connection with any
Construction Project.
"PRIME RATE" means the prime interest rate or equivalent charged by BNPLC's
Parent in the United States of America as announced or published by BNPLC's
Parent from time to time, which need not be the lowest interest
List of Defined Terms -- Page 19
<PAGE>
rate charged by BNPLC's Parent. If for any reason BNPLC's Parent does not
announce or publish a prime rate or equivalent, the prime rate or equivalent
announced or published by either Citibank, N.A. or any New York branch or office
of Credit Commercial de France as selected by BNPLC shall be used to compute the
rate describe in the preceding sentence. The prime rate or equivalent announced
or published by such bank need not be the lowest rate charged by it. The Prime
Rate may change from time to time after the Effective Date without notice to
Chiron as of the effective time of each change in rates described in this
definition.
"PROPERTY" means the Personal Property and the Real Property, collectively.
"PURCHASE AGREEMENT" means the Purchase Agreement dated June 28, 1996
between BNPLC and Chiron pursuant to which Chiron has agreed to purchase or to
arrange for the purchase by a third party of BNPLC's interest in the Property,
as such Purchase Agreement may be extended, supplemented, amended, restated or
otherwise modified from time to time in accordance with its terms.
"PURCHASE DOCUMENTS" means collectively (1) the Purchase Agreement, (2)
from and after they are executed, Pledge Documents (as defined in Paragraph 4 of
the Purchase Agreement) and (3) the Memorandum of Purchase Agreement executed by
BNPLC and Chiron as of the Effective Date and recorded to provide notice of the
Purchase Agreement.
"QUALIFIED PAYMENTS" means all payments received by BNPLC from time to time
during the Term from any party (1) under any property insurance policy as a
result of damage to the Property, (2) as compensation for any restriction placed
upon the use or development of the Property or for the condemnation of the
Property or any portion thereof, (3) because of any judgment, decree or award
for injury or damage to the Property or (4) under any title insurance policy or
otherwise as a result of any title defect or claimed title defect with respect
to the Property; provided, however, that (x) in determining the amount of
"Qualified Payments", there shall be deducted all expenses and costs of every
kind, type and nature (including taxes, Breakage Costs and Attorneys' Fees)
incurred by BNPLC with respect to the collection or application of such
payments, (y) "Qualified Payments" shall not include any payment to BNPLC by a
Participant or an Affiliate of BNPLC that is made to compensate BNPLC for the
Participant's or Affiliate's share of any Losses BNPLC may incur as a result of
any of the events described in the preceding clauses (1) through (4) and (z)
"Qualified Payments" shall not include any payments received by BNPLC that BNPLC
has paid to Chiron for the restoration or repair of the Property or that BNPLC
is holding as Escrowed Proceeds. For purposes of computing the total Qualified
Payments (and other amounts dependent upon Qualified Payments, such as
Stipulated Loss Value and the Outstanding Construction Allowance) paid to or
received by BNPLC as of any date, payments described in the preceding clauses
(1) through (4) will be considered as Escrowed Proceeds, not Qualified Payments,
until they are actually applied as Qualified Payments by BNPLC as provided in
subparagraph 11.(c) of the Lease.
"QUALIFIED SECURITIES" means unencumbered marketable securities that have
an aggregate value of no less than Stipulated Loss Value and that when pledged
to secure Chiron's PA Obligations as provided in Paragraph 4 of the Purchase
Agreement have a maturity of three years or less and that evidence obligations
of the United States of America or another governmental or corporate obligor
meeting any criteria specified for such obligor in the Pledge Documents (as
defined in Paragraph 4 of the Purchase Agreement).
"QUALIFIED RIGHT TO STOCK SALE PROCEEDS" means an unencumbered assignable
contractual right of Chiron, established by agreements in form and substance
satisfactory to each of BNPLC and the Participants in its sole and absolute
discretion, to receive from Guarantor no less than $205,000,0000 in cash
proceeds from the issuance or
List of Defined Terms -- Page 20
<PAGE>
sale of Chiron's stock to Guarantor. It is understood that although agreements
may exist between Chiron and Guarantor as of the Effective Date which would
obligate Guarantor to purchase Chiron's stock for more than $205,000,000, such
agreements have not been reviewed or approved by BNPLC or Participants, and
therefore prior to any such approval after the Effective Date, such existing
agreements cannot establish rights which would qualify under this definition.
"REAL PROPERTY" shall have the meaning assigned to it on page 1 of the
Lease.
"REMEDIAL WORK" means any investigation, monitoring, clean-up, containment,
remediation, removal, payment of response costs, or restoration work and the
preparation and implementation of any closure, remedial or other required plans
that any governmental agency or political subdivision requires or approves (or
could reasonably be expected to require if it was aware of all relevant
circumstances concerning the Property), whether by judicial order or otherwise,
because of the presence of or suspected presence of Hazardous Substances in, on,
under or about the Property or because of any Hazardous Substance Activity.
Without limiting the generality of the foregoing, Remedial Work also means any
obligations imposed upon or undertaken by Chiron pursuant to the Approved Plans
or any recommendations or proposals made therein.
"RENT" means the Base Rent and all Additional Rent.
"RESIDUAL RISK PERCENTAGE" means the fifteen percent (15%).
"RESPONSIBLE FINANCIAL OFFICER" means the chief financial officer, the
controller, the treasurer or the assistant treasurer of Chiron.
"RESTRICTED FUNDS" shall have the meaning assigned to it in Paragraph 4 of
the Purchase Agreement.
"SCOPE CHANGE" means a change to a Construction Project that, if
implemented, will make the quality, function or capacity of the Improvements
affected by such Construction Project "materially different" (as defined below
in this paragraph) than as described or inferred by plans and other items
submitted to BNPLC by Chiron as described in subparagraph 6.(b)(i) of the Lease.
Notwithstanding the foregoing, "Scope Change" shall not include refinement,
correction and detailing of plans or other items submitted to BNPLC by Chiron.
As used in this definition, a "material difference" means a difference that (a)
could (after completion of the applicable Construction Project and the funding
of any Construction Advances required in connection therewith) significantly
reduce any excess of the market value of the Property over Stipulated Loss Value
or significantly increase any excess of Stipulated Loss Value over the market
value of the Property, or (b) will change the general character of the
Improvements from that needed to accommodate the uses permitted by
subparagraph 3.(a).
List of Defined Terms -- Page 21
<PAGE>
"SPREAD" means (1) on any date before construction of the initial
Construction Project is complete, .25% (twenty-five basis points), and (2) on
any date after construction of the initial Construction Project is complete,
.20% (twenty basis points); provided, however, after any Demand Deadline, the
"Spread" on any date will depend upon the rating by Standard and Poor's
Corporation or the rating by Moody's Investor Service, Inc. (whichever rating is
higher) of Chiron's senior, unsubordinated, unsecured debt on that date, such
computation to be as follows:
Rating Spread
---------------------- -----------------------
AA- or Aa3 or higher .20% (20 basis points)
A+ or A1 .25% (25 basis points)
A or A2 .275% (27.5 basis points)
A- or A3 .30% (30 basis points)
BBB+ or Baa1 .35% (35 basis points)
BBB or Baa2 .375% (37.5 basis points)
lower than BBB and Baa2, or not rated .50% (50 basis points)
For purposes of this definition, the initial Construction Project shall not be
deemed complete until Chiron shall have (1) caused the initial Construction
Project to have been completed in a good and workmanlike manner, substantially
in accordance with Applicable Laws, and otherwise in compliance with the
provisions of (x) the Lease, (y) the Permitted Encumbrances and (z) the
Development Contracts, and (2) obtained with respect to then existing
Improvements any final certificates of occupancy required for the use and
occupancy thereof, a certificate of compliance from the City of Emeryville and a
certificate of completion from the Redevelopment Agency as contemplated by the
Development Contracts.
"STIPULATED LOSS VALUE" as of any date means the amount equal to the sum of
the Initial Funding Advance, plus the sum of all Construction Advances and
Carrying Costs added to the Outstanding Construction Allowance on or prior to
such date, minus all funds received by BNPLC and applied as Qualified Payments
on or prior to such date. Under no circumstances will any payment of Base Rent
or the Upfront Fee, Administrative Fees or Commitment Fees reduce Stipulated
Loss Value.
"SUBSIDIARY" means any corporation of which Chiron and/or its other
Subsidiaries own, directly or indirectly, such number of outstanding shares as
have more than 50% of the ordinary voting power for the election of directors.
"SUPPLEMENTAL PAYMENT" shall have the meaning assigned to it in
subparagraph 1(a)(ii) of the Purchase Agreement.
"TERM" shall have the meaning assigned to it in Paragraph 1 of the Lease.
"TRANSACTION EXPENSES" means the costs paid from the Initial Funding
Advance in connection with the preparation and negotiation of the Lease, the
Purchase Documents, the Ground Lease and related documents. To the extent that
BNPLC does not itself use the entire Initial Funding Advance to acquire the
Property or to pay expenses incurred by BNPLC in connection with the preparation
and negotiation of such documents, the remainder thereof will be advanced to
Chiron, with the understanding that Chiron shall use any such amount advanced
for one or more of the following purposes: (1) the payment or reimbursement of
expenses incurred by Chiron in connection with the preparation and negotiation
of the Lease, the Purchase Documents, the Ground Lease and related documents;
(2) the payment or reimbursement of expenses incurred by Chiron in connection
with the initial
List of Defined Terms -- Page 22
<PAGE>
Construction Project, including the planning, design, engineering and permitting
of thereof; (3) the maintenance of the Property; (4) the payment of the Upfront
Fee and the first Administrative Fee; or (5) the payment of Rents next due.
"UPFRONT FEE" shall have the meaning assigned to it in subparagraph 4.(e)
of the Lease.
"UNFUNDED BENEFIT LIABILITIES" means, with respect to any Plan, the amount
(if any) by which the present value of all benefit liabilities (within the
meaning of Section 4001(a)(16) of ERISA) under the Plan exceeds the market value
of all Plan assets allocable to such benefit liabilities, as determined on the
most recent valuation date of the Plan and in accordance with the provisions of
ERISA for calculating the potential liability of Chiron or any ERISA Affiliate
of Chiron under Title IV of ERISA.
"VOTING STOCK" of any Person means any shares of stock of such Person whose
holders are entitled under ordinary circumstances to vote for the election of
directors of such Person (irrespective of whether at the time stock of any other
class or classes shall have or might have voting power by reason of the
happening of any contingency).
List of Defined Terms -- Page 23
<PAGE>
Exhibit 10.93
REIMBURSEMENT AGREEMENT
dated as of July 12, 1996 between Ciba-Geigy Limited, a Swiss Corporation
("Ciba"), and CHIRON CORPORATION, a Delaware corporation ("Chiron")
WHEREAS Ciba, Ciba-Geigy Corporation, a New York corporation, Ciba Biotech
Partnership, Inc., a Delaware corporation, and Chiron have entered into the
Investment Agreement dated as of November 20, 1994 (as amended, supplemented and
in effect from time to time, (the "Investment Agreement");
WHEREAS Chiron has entered into the Revolving Credit Agreement dated as of
July 12, 1996 (as amended, supplemented and in effect from time to time the
"Credit Agreement") with Bank of America National Trust and Savings Association
(the "Bank") as contemplated by Section 5.12 (b) of the Investment Agreement;
WHEREAS Ciba has issued to the Bank its Guarantee dated July 12, 1996 (the
"Guarantee"), in respect of all of Chiron's obligations under the Credit
Agreement (collectively, the "Guaranteed Obligations"), in accordance with
Section 5.12 (a) of the Investment Agreement;
WHEREAS the Investment Agreement provides that Chiron shall enter into a
reimbursement agreement in respect of the Guarantee, as provided for in Section
5.12 (c) of the Investment Agreement.
NOW, THEREFORE, for good and valuable consideration, the sufficiency and
receipt of which are hereby acknowledged, the parties hereto and hereby agree as
follows:
SECTION 1. In the event that any amounts (including amounts paid as a tax
gross-up) are paid by Ciba to any holder of any Guaranteed Obligations in
respect of Ciba's Guarantee (a "Guarantee Payment"), Ciba shall have all rights
against Chiron arising as a result of such payment as it shall have under
applicable law, by way of right of subrogation or otherwise. Accordingly, and
in furtherance thereof, Chiron shall, on each date that Ciba makes any Guarantee
Payment, fully reimburse Ciba for such Guarantee Payment in immediately
available funds payable to such account as shall be specified by Ciba; PROVIDED
that, in the
<PAGE>
event that any Guaranteed Obligations that are payable and due on such date have
not been paid in full, such reimbursement shall be postponed until the date that
such Guaranteed Obligations shall have been paid in full; PROVIDED FURTHER that
interest on such postponed reimbursement amounts shall accrue pursuant to
Section 3 hereof from the date that Ciba makes the relevant Guarantee Payment,
notwithstanding the postponement of the date for such reimbursement pursuant to
the foregoing proviso.
SECTION 2. (a) Chiron agrees to pay all reasonable out-of-pocket costs and
expenses incurred by Ciba in connection with (i) the Guarantee and (ii) the
enforcement or protection of its rights in connection with this Agreement and
the Guarantee, including the fees, charges and disbursements of counsel for
Ciba.
(b) Chiron agrees to indemnify Ciba and each of its respective directors,
officers, employees and agents (each such person being called an "Indemnitee")
against, and to hold each Indemnitee harmless from, any and all losses, claims,
damages, liabilities and related expenses, including reasonable counsel fees,
charges and disbursements, incurred by or asserted against any Indemnitee
arising out of, in any way connected with, or as a result of (i) the execution
or delivery of the Credit Agreement, the Guarantee or this Agreement, the
performance by the parties thereto or their respective obligations thereunder or
the consummation of the transactions contemplated thereby and hereby (ii) the
use of the proceeds of the advances made under the Credit Agreement (the
"Advances") or (iii) any claim, litigation, investigation or proceeding relating
to any of the foregoing, whether or not any Indemnitee is a party thereto;
PROVIDED that such indemnity shall not, as to any Indemnitee, be available to
the extent that such losses, claims, damages, liabilities or related expenses
are determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence or wilful misconduct of such
Indemnitee; PROVIDED, FURTHER, that such indemnity shall not, as to any
Indemnitee, apply to losses, claims, damages, liabilities or related expenses
arising out of, in any way connected with, or as a result of execution or
delivery of the Investment Agreement, the performance by the parties thereto of
their respective obligations thereunder or the consummation of the transactions
contemplated thereby (other than losses, claims, damages, liabilities or related
expenses incurred by or asserted against Ciba in its capacity as the guarantor
under the Guarantee).
(c) The provisions of this Section 2 shall remain operative and in full
force and effect regardless of the expiration of the term of the Investment
Agreement or the Credit Agreement,
2
<PAGE>
the consummation of the transactions contemplated thereby, the repayment of any
of the Advances, the invalidity or unenforceability of any term or provision of
this Agreement, the Credit Agreement, the Investment Agreement or the Guarantee
or any investigation made by or on behalf of Ciba. All amounts due under this
Section 2 shall be payable on written demand therefor.
SECTION 3. If Chiron shall default in the payment of any reimbursement
under Section 1 hereof or any other amount becoming due under Section 2 hereof,
Chiron shall on demand from time to time pay interest on such defaulted amount
up to the date of actual payment (after as well as before judgment) at a rate
per annum equal to 2-1/2 % per annum in excess of the Bank's Prime Rate as
defined in, and calculated in accordance with, the Credit Agreement in effect
from time to time.
SECTION 4. Ciba reserves its right to require Chiron to, and promptly
after Ciba's request Chiron shall, fully collateralize Chiron's obligations
hereunder and agree to a negative pledge with respect to such collateral, all as
further described in Section 5.12 (c) of the Investment Agreement.
SECTION 5. If any reimbursement payment in respect of a Guarantee Payment
received by Ciba is, on the subsequent liquidation or insolvency of Chiron,
avoided under any laws relating to liquidation or insolvency, such payment will
not be considered as having discharged or diminished the liability of Chiron to
Ciba and this Agreement will continue to apply as if such payment had at all
times remained owing by Chiron.
SECTION 6. All payments by Chiron under this Agreement shall be made
without deduction for any taxes or other withholdings; PROVIDED, HOWEVER, that,
if Chiron shall be required by law to deduct any such amounts from any sum
payable hereunder, the sum payable shall be increased by the amount necessary so
that, after making all the required deductions, Ciba shall receive an amount
equal to the sum it would have received had no such deductions been made.
SECTION 7. Chiron hereby warrants, represents and covenants that it has
all corporate power, and has taken all necessary corporate or other steps, to
enable it to execute, deliver and perform this Agreement, and that this
Agreement constitutes a legal, valid and binding obligation of Chiron
enforceable in accordance with its terms.
3
<PAGE>
SECTION 8. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York. This Agreement shall be executed in two
or more counterparts, each of which shall constitute an original but all of
which when taken together shall constitute but one contract.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
CIBA-GEIGY LIMITED
by /s/ John Cheesmond
------------------------------
Name: John M.D. Cheesmond
Title: Head, Regional Finance & Control
by /s/ H. Gut
------------------------------
Name: Dr. Herbert Gut
Title: Senior Division Counsel
CHIRON CORPORATION
by /s/ J.E. Kent
------------------------------
Name: James Kent
Title: Treasurer
4
<PAGE>
Exhibit 10.94
REIMBURSEMENT AGREEMENT
dated as of June 28, 1996 between Ciba-Geigy Limited, a Swiss Corporation
("Ciba"), and CHIRON CORPORATION, a Delaware corporation ("Chiron")
WHEREAS Ciba, Ciba-Geigy Corporation, a New York corporation, Ciba Biotech
Partnership, Inc., a Delaware corporation, and Chiron have entered into the
Investment Agreement dated as of November 20, 1994 (as amended, supplemented and
in effect from time to time, (the "Investment Agreement");
WHEREAS Chiron has entered into the Ground Lease, Lease Agreement and
Purchase Agreement, all dated as of June 28, 1996 (as amended, supplemented and
in effect from time to time (the "Lease and Purchase Agreements") with BNP
Leasing Corporation, a Delaware corporation ("BNPLC") as contemplated by Section
5.12 (b) of the Investment Agreement;
WHEREAS Ciba has issued BNPLC its Guarantee dated June 28, 1996 ("the
Guarantee"), in respect of all of Chiron's obligations under the Lease and
Purchase Agreements (collectively, the "Guaranteed Obligations"), in accordance
with Section 5.12 (a) of the Investment Agreement;
WHEREAS the Investment Agreement provides that Chiron shall enter into a
reimbursement agreement in respect of the Guarantee, as provided for in Section
5.12 (c) of the Investment Agreement.
NOW, THEREFORE, for good and valuable consideration, the sufficiency and
receipt of which are hereby acknowledged, the parties hereto and hereby agree as
follows:
SECTION 1. In the event that any amounts (including amounts paid as a tax
gross-up) are paid by Ciba to any holder of any Guaranteed Obligations in
respect of Ciba's Guarantee (a "Guarantee Payment"), Ciba shall have all rights
against Chiron arising as a result of such payment as it shall have under
applicable law, by way of right of subrogation or otherwise. Accordingly, and
in furtherance thereof, Chiron shall, on each date that Ciba makes any Guarantee
Payment, fully reimburse Ciba for such Guarantee Payment in immediately
available funds payable to such account as shall be specified by Ciba; PROVIDED
that, in the
<PAGE>
event that any Guaranteed Obligations that are payable and due on such date have
not been paid in full, such reimbursement shall be postponed until the date that
such Guaranteed Obligations shall have been paid in full; PROVIDED FURTHER that
interest on such postponed reimbursement amounts shall accrue pursuant to
Section 3 hereof from the date that Ciba makes the relevant Guarantee Payment,
notwithstanding the postponement of the date for such reimbursement pursuant to
the foregoing proviso.
SECTION 2. (a) Chiron agrees to pay all reasonable out-of-pocket costs and
expenses incurred by Ciba in connection with (i) the Guarantee and (ii) the
enforcement or protection of its rights in connection with this Agreement and
the Guarantee, including the fees, charges and disbursements of counsel for
Ciba.
(b) Chiron agrees to indemnify Ciba and each of its respective directors,
officers, employees and agents (each such person being called an "Indemnitee")
against, and to hold each Indemnitee harmless from, any and all losses, claims,
damages, liabilities and related expenses, including reasonable counsel fees,
charges and disbursements, incurred by or asserted against any Indemnitee
arising out of, in any way connected with, or as a result of (i) the execution
or delivery of the Lease and Purchase Agreements, the Guarantee or this
Agreement, the performance by the parties thereto or their respective
obligations thereunder or the consummation of the transactions contemplated
thereby and hereby (ii) the use of the proceeds of the advances made under the
Lease and Purchase Agreements (the "Advances") or (iii) any claim, litigation,
investigation or proceeding relating to any of the foregoing, whether or not any
Indemnitee is a party thereto; PROVIDED that such indemnity shall not, as to any
Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the
gross negligence or wilful misconduct of such Indemnitee; PROVIDED, FURTHER,
that such indemnity shall not, as to any Indemnitee, apply to losses, claims,
damages, liabilities or related expenses arising out of, in any way connected
with, or as a result of the execution or delivery of the Investment Agreement,
the performance by the parties thereto of their respective obligations
thereunder or the consummation of the transactions contemplated thereby (other
than losses, claims, damages, liabilities or related expenses incurred by or
asserted against Ciba in its capacity as the guarantor under the Guarantee).
2
<PAGE>
(c) The provisions of this Section 2 shall remain operative and in full
force and effect regardless of the expiration of the term of the Investment
Agreement or the Lease and Purchase Agreements, the consummation of the
transactions contemplated thereby, the repayment of any of the Advances, the
invalidity or unenforceability of any term or provision of this Agreement, the
Lease and Purchase Agreements, the Investment Agreement or the Guarantee or any
investigation made by or on behalf of Ciba. All amounts due under this Section
2 shall be payable on written demand therefor.
SECTION 3. If Chiron shall default in the payment of any reimbursement
under Section 1 hereof or any other amount becoming due under Section 2 hereof,
Chiron shall on demand from time to time pay interest on such defaulted amount
up to the date of actual payment (after as well as before judgment) at a rate
per annum equal to 2-1/2 % per annum in excess of the Bank's Prime Rate (as
defined in, and calculated in accordance with, the Lease and Purchase
Agreements) in effect from time to time.
SECTION 4. Ciba reserves its right to require Chiron to, and promptly
after Ciba's request Chiron shall, fully collateralize Chiron's obligations
hereunder and agree to a negative pledge with respect to such collateral, all as
further described in Section 5.12 (c) of the Investment Agreement.
SECTION 5. If any reimbursement payment in respect of a Guarantee Payment
received by Ciba is, on the subsequent liquidation or insolvency of Chiron,
avoided under any laws relating to liquidation or insolvency, such payment will
not be considered as having discharged or diminished the liability of Chiron to
Ciba and this Agreement will continue to apply as if such payment had at all
times remained owing by Chiron.
SECTION 6. All payments by Chiron under this Agreement shall be made
without deduction for any taxes or other withholdings; PROVIDED, HOWEVER, that,
if Chiron shall be required by law to deduct any such amounts from any sum
payable hereunder, the sum payable shall be increased by the amount necessary so
that, after making all the required deductions, Ciba shall receive an amount
equal to the sum it would have received had no such deductions been made.
SECTION 7. Chiron hereby warrants, represents and covenants that it has
all corporate power, and has taken all necessary corporate or other steps, to
enable it to execute, deliver
3
<PAGE>
and perform this Agreement, and that this Agreement constitutes a legal, valid
and binding obligation of Chiron enforceable in accordance with its terms.
SECTION 8. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York. This Agreement shall be executed in two
or more counterparts, each of which shall constitute an original but all of
which when taken together shall constitute but one contract.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
CIBA-GEIGY LIMITED
by /s/ John Cheesmond
--------------------------------
Name: John Cheesmond
Title: Head of Regional Finance
and Control
by /s/ Peter Rupprecht
--------------------------------
Name: Peter Rupprecht
Title: Corporate Counsel
CHIRON CORPORATION
by /s/ J.E. Kent
--------------------------------
Name: James Kent
Title: Treasurer
4
<PAGE>
Exhibit 10.95
REIMBURSEMENT AGREEMENT dated as of
MAY 20, 1996 between Ciba-Geigy Limited,
a Swiss Corporation ("Ciba"), and CHIRON CORPORATION,
a Delaware corporation ("Chiron")
WHEREAS Ciba, Ciba-Geigy Corporation, a New York corporation, Ciba
Biotech Partnership, Inc., a Delaware corporation, and Chiron have entered into
the Investment Agreement dated as of November 20, 1994 (as amended, supplemented
and in effect from time to time, (the "Investment Agreement");
WHEREAS Chiron has entered into the Revolving Credit Agreement dated
as of March 23, 1996 (as amended, supplemented and in effect from time to time
(the "Credit Agreement") with Morgan Guaranty Trust, a company of New York (the
"Bank") as contemplated by Section 5.12(b) of the Investment Agreement;
WHEREAS Ciba has issued to the Bank its Guarantee dated MAY 20, 1996
(the "Guarantee"), in respect of all of Chiron's obligations under the Credit
Agreement and the note issued thereunder (collectively, the "Guaranteed
Obligations"), in accordance with Section 5.12(a) of the Investment Agreement;
WHEREAS the Investment Agreement provides that Chiron shall enter
into a reimbursement agreement in respect of the Guarantee, as provided for in
Section 5.12(c) of the Investment Agreement.
NOW, THEREFORE, for good and valuable consideration, the sufficiency
and receipt of which are hereby acknowledged, the parties hereto and hereby
agree as follows:
SECTION 1. In the event that any amounts (including amounts paid
as a tax gross-up) are paid by Ciba to any holder of any Guaranteed Obligations
in respect of Ciba's Guarantee (a "Guarantee Payment"), Ciba shall have all
rights against Chiron arising as a result of such payment as it shall have under
applicable law, by way of right of subrogation or otherwise. Accordingly, and
in furtherance thereof, Chiron shall, on each date that Ciba makes any Guarantee
Payment, fully reimburse Ciba for such Guarantee Payment in immediately
available funds payable to such account as shall be specified by Ciba; PROVIDED
that,
<PAGE>
2
in the event that any Guaranteed Obligations that are payable and due on such
date have not been paid in full, such reimbursement shall be postponed until the
date that such Guaranteed Obligations shall have been paid in full; PROVIDED
FURTHER that interest on such postponed reimbursement amounts shall accrue
pursuant to Section 3 hereof from the date that Ciba makes the relevant
Guarantee Payment, notwithstanding the postponement of the date for such
reimbursement pursuant to the foregoing proviso.
SECTION 2. (a) Chiron agrees to pay all reasonable out-of-pocket
costs and expenses incurred by Ciba in connection with (i) the Guarantee and
(ii) the enforcement or protection of its rights in connection with this
Agreement and the Guarantee, including the fees, charges and disbursements of
counsel for Ciba.
(b) Chiron agrees to indemnify Ciba and each of its respective
directors, officers, employees and agents (each such person being called an
"Indemnitee") against, and to hold each Indemnitee harmless from, any and all
losses, claims, damages, liabilities and related expenses, including
reasonable counsel fees, charges and disbursements, incurred by or asserted
against any Indemnitee arising out of, in any way connected with, or as a
result of (i) the execution or delivery of the Credit Agreement, the Guarantee
or this Agreement, the performance by the parties thereto or their respective
obligations thereunder or the consummation of the transactions contemplated
thereby and hereby (ii) the use of the proceeds of the advances made under
the Credit Agreement (the "Advances") or (iii) any claim, litigation,
investigation or proceeding relating to any of the foregoing, whether or not
any Indemnitee is a party thereto; PROVIDED that such indemnity shall not, as
to any Indemnitee, be available to the extent that such losses, claims,
damages, liabilities or related expenses are determined by a court of
competent jurisdiction by final and nonappealable judgment to have resulted
from the gross negligence or wilful misconduct of such Indemnitee; PROVIDED,
FURTHER, that such indemnity shall not, as to any Indemnitee, apply to
losses, claims, damages, liabilities or related expenses arising out of, in
any way connected with, or as a result of the execution or delivery of the
Investment Agreement, the performance by the parties thereto of their respective
obligations thereunder or the consummation of the transactions contemplated
thereby (other than losses, claims, damages, liabilities or related expenses
incurred by or asserted against Ciba in its capacity as the guarantor under
the Guarantee).
<PAGE>
3
(c) The provisions of this Section 2 shall remain operative and in
full force and effect regardless of the expiration of the term of the
Investment Agreement or the Credit Agreement, the consummation of the
transactions contemplated thereby, the repayment of any of the Advances, the
invalidity or unenforceability of any term or provision of this Agreement,
the Credit Agreement, the Investment Agreement or the Guarantee or any
investigation made by or on behalf of Ciba. All amounts due under this
Section 2 shall be payable on written demand therefor.
SECTION 3. If Chiron shall default in the payment of any
reimbursement under Section 1 hereof or any other amount becoming due under
Section 2 hereof, Chiron shall on demand from time to time pay interest on
such defaulted amount up to the date of actual payment (after as well as
before judgment) at a rate per annum equal to 2-1/2% per annum in excess of
the Bank's Prime Rate (as defined in, and calculated in accordance with, the
Credit Agreement) in effect from time to time.
SECTION 4. Ciba reserves its right to require Chiron to, and
promptly after Ciba's request Chiron shall, fully collateralize Chiron's
obligations hereunder and agree to a negative pledge with respect to such
collateral, all as further described in Section 5.12(c) of the Investment
Agreement.
SECTION 5. If any reimbursement payment in respect of a Guarantee
Payment received by Ciba is, on the subsequent liquidation or insolvency of
Chiron, avoided under any laws relating to liquidation or insolvency, such
payment will not be considered as having discharged or diminished the liability
of Chiron to Ciba and this Agreement will continue to apply as if such payment
had at all times remained owing by Chiron.
SECTION 6. All payments by Chiron under this Agreement shall be
made without deduction for any taxes or other withholdings; PROVIDED,
HOWEVER, that, if Chiron shall be required by law to deduct any such amounts
from any sum payable hereunder, the sum payable shall be increased by the
amount necessary so that, after making all the required deductions, Ciba
shall receive an amount equal to the sum it would have received had no such
deductions been made.
SECTION 7. Chiron hereby warrants, represents and covenants that
it has all corporate power, and has taken all necessary corporate or other
steps, to enable it to execute,
<PAGE>
4
deliver and perform this Agreement, and that this Agreement constitutes a legal,
valid and binding obligation of Chiron enforceable in accordance with its terms.
SECTION 8. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York. This Agreement shall be
executed in two or more counterparts, each of which shall constitute an original
but all of which when taken together shall constitute but one contract.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
CIBA-GEIGY LIMITED,
by /s/ Peter Rupprecht
--------------------------------
Name: Peter Rupprecht
Title: Corporate Counsel
by /s/ Peter Burgin
--------------------------------
Name: Peter Burgin
Title: Treasurer of International
Finance Companies
CHIRON CORPORATION,
by /s/ J.E. Kent
--------------------------------
Name: James Kent
Title: Treasurer
<PAGE>
EXHIBIT 11
CHIRON CORPORATION
STATEMENT OF COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
Six Months Ended June 30, Three Months Ended June 30,
------------------------- ---------------------------
1996 1995 1996 1995
-------------- -------------- -------------- -------------
<S> <C> <C> <C> <C>
EARNINGS PER SHARE
Net income (loss) available for
common shares and common stock
equivalent shares deemed to have a
dilutive effect $ 28,098,000 $ (384,949,000) $ 15,355,000 $ 830,000
-------------- -------------- -------------- -------------
-------------- -------------- -------------- -------------
Primary earnings (loss) per share $ 0.16 $ (2.40) $ 0.09 $ 0.01
-------------- -------------- -------------- -------------
-------------- -------------- -------------- -------------
Fully diluted earnings (loss) per share $ 0.16 $ (2.40) $ 0.09 $ 0.01
-------------- -------------- -------------- -------------
-------------- -------------- -------------- -------------
Shares used in primary earnings (loss)
per share computation:
Weighted average common shares
outstanding 168,557,000 160,346,000 169,265,000 160,599,000
Weighted average dilutive
incremental common shares
issuable from exercise of warrants 384,000 -- 314,000 36,000
Weighted average dilutive
incremental common shares
issuable under employee stock
option programs 9,143,000 -- 8,291,000 2,947,000
-------------- -------------- -------------- -------------
Total common shares and common
stock equivalent shares deemed to
have a dilutive effect 178,084,000 160,346,000 177,870,000 163,582,000
-------------- -------------- -------------- -------------
-------------- -------------- -------------- -------------
Shares used in fully dilutive earnings
(loss) per share computation:
Weighted average common shares
outstanding 168,557,000 160,346,000 169,265,000 160,599,000
Weighted average dilutive
incremental common shares
issuable from exercise of warrants 385,000 -- 315,000 116,000
Weighted average dilutive
incremental common shares
issuable under employee stock
option programs 9,146,000 -- 8,291,000 4,198,000
-------------- -------------- -------------- -------------
Total common shares and common
stock equivalent shares deemed to
have a dilutive effect 178,088,000 160,346,000 177,871,000 164,913,000
-------------- -------------- -------------- -------------
-------------- -------------- -------------- -------------
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CHIRON
CORPORATION'S UNAUDITED CONSOLIDATED BALANCE SHEET DATED JUNE 30, 1996 AND
CONSOLIDATED STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1996.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-29-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 54,345
<SECURITIES> 115,655<F1>
<RECEIVABLES> 323,008
<ALLOWANCES> 18,760
<INVENTORY> 181,454
<CURRENT-ASSETS> 681,954
<PP&E> 722,151
<DEPRECIATION> 174,616
<TOTAL-ASSETS> 1,540,201
<CURRENT-LIABILITIES> 367,000
<BONDS> 420,925<F2>
0
0
<COMMON> 424
<OTHER-SE> 721,822<F3>
<TOTAL-LIABILITY-AND-EQUITY> 1,540,201
<SALES> 489,347
<TOTAL-REVENUES> 621,486
<CGS> 209,112
<TOTAL-COSTS> 209,112
<OTHER-EXPENSES> 372,496<F4>
<LOSS-PROVISION> 921
<INTEREST-EXPENSE> 13,452<F5>
<INCOME-PRETAX> 40,820<F6>
<INCOME-TAX> 12,722
<INCOME-CONTINUING> 28,098
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 28,098
<EPS-PRIMARY> 0.16
<EPS-DILUTED> 0.16
<FN>
<F1>Consists of both short-term and noncurrent investments in marketable debt
securities.
<F2>Consists of convertible subordinated debentures, capital lease obligations and
notes payable.
<F3>Consists of additional paid-in capital, accumulated deficit, cumulative foreign
currency translation adjustment and unrealized gain from investments.
<F4>Consists of research and development; selling, general and administrative; and
other operating expenses.
<F5>Consists of interest expense and related costs of convertible debentures and
other interest expense.
<F6>Includes a $12.1 million gain from the sale of a partnership interest. The
gain was reflected in other income (expense), net.
</FN>
</TABLE>
