<PAGE> 1
Submitted pursuant to Rule 901 (D) of Regulation S-T
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended June 30, 1996 Commission File Number 0-19373
BIOMATRIX, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-3058261
- ------------------------------- ---------------------------------
(State of other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
65 Railroad Avenue, Ridgefield, N.J. 07657
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(201)945-9550
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
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.
(1) Yes X No
----- -----
The number of shares outstanding of the issuer's common stock as of the latest
practicable date:
Class June 30, 1996
------------------------------- -------------
Common stock, $0.0001 par value 10,437,197
<PAGE> 2
BIOMATRIX, INC.
TABLE OF CONTENTS
PAGE NO.
--------
PART I. FINANCIAL INFORMATION
ITEM 1 - Unaudited Financial Statements
Consolidated Balance Sheets as of
June 30, 1996 and December 31, 1995 3
Consolidated Statements of Operations for the
Three 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 7-9
PART II. OTHER INFORMATION
ITEM 4
Submission of matters to a vote of security holders. 10
ITEM 6
Exhibits and Reports on Form 8-K 11
Signatures 12
2
<PAGE> 3
BIOMATRIX, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ............................... $ 4,996,092 $ 8,888,869
Held-to-maturity investments ............................ 9,743,595 1,598,397
Accounts receivable, less allowance for doubtful accounts
of $25,500 in 1996 and 1995 ........................... 1,029,203 1,035,699
Inventory, at lower of cost (average) or market ......... 558,638 660,607
Prepaid expenses and other current assets ............... 537,580 431,802
----------- -----------
Total current assets ............................. 16,865,108 12,615,374
Property, plant and equipment, net ....................... 4,694,061 4,635,656
Other assets ............................................. 118,447 130,546
----------- -----------
Total assets ..................................... $21,677,616 $17,381,576
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of notes payable ........................ $ 658,957 $ 792,615
Accounts payable ........................................ 629,607 435,329
Accrued expenses and deferred income .................... 1,363,320 1,309,298
----------- -----------
Total current liabilities ........................ 2,651,884 2,537,242
Notes payable less current maturities .................... 703,234 728,525
----------- -----------
Total liabilities ................................ 3,355,118 3,265,767
----------- -----------
Commitments and contingent liabilities
Shareholders' equity:
Common stock, $.0001 par value: 20,000,000
shares authorized; 10,440,011 and 10,125,949
issued and 10,437,197 and 10,123,135 outstanding
in 1996 and 1995, respectively ........................ 1,044 1,013
Preferred stock, 3,000 shares authorized; none issued ... - -
Note receivable - related party ......................... (2,450,000) -
Additional paid-in capital .............................. 56,036,717 53,286,223
Accumulated deficit ..................................... (34,379,172) (38,334,485)
Equity adjustment from foreign currency translation ..... (874,131) (824,982)
Treasury stock, 2,814 shares of common stock at cost .... (11,960) (11,960)
----------- -----------
Total shareholders' equity ....................... 18,322,498 14,115,809
----------- -----------
Total liabilities and shareholders' equity ....... $21,677,616 $17,381,576
=========== ===========
</TABLE>
The accompanying notes are an integral
part of the consolidated financial statements
3
<PAGE> 4
BIOMATRIX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------- --------------------------
1996 1995 1996 1995
----------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Revenues:
Net sales ...................... $ 1,064,578 $ 1,006,158 $ 2,161,478 $ 1,672,187
Income from licenses, royalties,
research contracts and grants... 7,478,162 486,431 8,120,109 917,198
----------- ----------- ----------- -----------
Total revenues ............... 8,542,740 1,492,589 10,281,587 2,589,385
----------- ----------- ----------- -----------
Cost and expenses:
Cost of sales .................... 641,513 522,320 1,355,361 1,041,528
Research and development
expenses ....................... 1,535,809 1,404,110 2,902,653 2,751,575
Selling, general and
administrative expenses ........ 1,357,460 1,409,052 2,363,334 2,716,330
----------- ----------- ----------- -----------
Total costs and expenses ..... 3,534,782 3,335,482 6,621,348 6,509,433
----------- ----------- ----------- -----------
Profit (loss) from operations ....... 5,007,958 (1,842,893) 3,660,239 (3,920,048)
Interest expense .................... (37,920) (15,225) (66,375) (30,216)
Interest and miscellaneous income ... 234,078 102,906 361,449 230,606
----------- ----------- ----------- -----------
Net profit (loss) ................... $ 5,204,116 ($1,755,212) $ 3,955,313 ($3,719,658)
=========== =========== =========== ===========
Net profit (loss) per share:
Net profit (loss) per common
share.......................... $ .50 ($ 0.18) $ 0.39 ($ 0.39)
=========== =========== =========== ===========
Weighted average common shares
outstanding ................... 10,378,868 9,736,302 10,270,152 9,625,219
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral
part of the consolidated financial statements
4
<PAGE> 5
BIOMATRIX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
Six Months Ended
June 30,
-------------------------
1996 1995
------------ -----------
<S> <C> <C>
Cash flows from operating activities:
Net profit (loss) ............................................. $ 3,955,313 ($3,719,658)
Adjustments to reconcile net profit (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization ............................. 269,767 265,413
Amortization of deferred income ........................... - (455,948)
Stock option compensation ................................. - 24,750
Change in assets and liabilities:
Accounts receivable ....................................... 7,242 (288,067)
Inventory ................................................. 102,175 85,450
Prepaid expenses and other current assets ................. (105,046) (10,337)
Other assets .............................................. 12,248 (29,074)
Accounts payable, accrued expenses and
deferred income ........................................ 197,795 (409,501)
------------ -----------
Total adjustments .................................... 484,181 (817,314)
------------ -----------
Net cash provided by (used in) operating activities .. 4,439,494 (4,536,972)
------------ -----------
Cash flows from investing activities:
Redemption of held-to-maturity securities ................. 4,161,510 7,904,732
Purchases of held-to-maturity securities .................. (12,306,708) (4,318,783)
Capital expenditures ...................................... (326,606) (80,917)
------------ -----------
Net cash (used for) provided by
investing activities ................................ (8,471,804) 3,505,032
------------ -----------
Cash flows from financing activities:
Payments of note payable .................................. (159,344) (11,499)
Stock options exercised ................................... 300,524 29,990
Sale of common stock ...................................... - 2,000,000
------------ -----------
Net cash provided by financing activities ............ 141,180 2,018,491
------------ -----------
Effect of exchange rate changes on cash ................... (1,647) 2,258
------------ -----------
Net (decrease) increase in cash and cash equivalents .......... (3,892,777) 988,809
Cash and cash equivalents at beginning of period .............. 8,888,869 481,328
------------ -----------
Cash and cash equivalents at end of period .................... $ 4,996,092 $ 1,470,137
============ ===========
Supplemental cash flow data:
Interest paid ............................................. $ 37,920 $ 30,216
</TABLE>
The accompanying notes are an integral
part of the consolidated financial statements
5
<PAGE> 6
BIOMATRIX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The financial statements at June 30, 1996 and for the three and six months
ended June 30, 1996 and 1995 are unaudited but include all adjustments which
the Company considers necessary for a fair presentation of the financial
position at such date and the operating results and cash flows for those
periods. These condensed financial statements should be read in conjunction
with the Company's audited financial statements for the year ended December 31,
1995, which were included as part of the Company's Form 10-K, filed with the
Securities and Exchange Commission. Results for the interim periods are not
necessarily indicative of results for the entire year.
NOTE 2 - CONTINGENCY
In August 1990, the Company received a notice from the Pennsylvania
Department of Environmental Resources ("DER") that it is one of approximately
1,000 potentially responsible parties ("PRPs") that may have clean-up
responsibility at the Industrial Solvents and Chemical Company site in York
Haven, Pennsylvania (the "Site"). During the late 1980's, the Company, through
a licensed waste disposal transport company, shipped industrial solvents to the
Site, which was operating as a recycling facility. The DER is in the process
of reviewing hazardous waste found at the Site as well as the DER's own records
in order to identify additional PRPs and to quantify PRPs' volumetric
contributions. The Company has joined a steering committee that consists of
many PRPs. Although neither the total clean-up cost nor the portion of the
total clean-up cost assigned to each PRP has been determined, the Company
estimated, based upon the advice of an environmental consultant, that its
liability at December 31, 1992 was approximately $417,000, which amount was
provided for in the financial statements at that date. On February 2, 1994,
the same consultant provided the Company with an updated report on the site.
Based upon this analysis, the Company revised its expected liability to
$780,000. Further, the same consultant has reported to the Company that there
is less than a 10% chance that its liability might exceed $1,070,033. During
the second quarter of 1995 the Company paid its first assessment for clean-up
costs of $79,390. Therefore the reserve at December 31, 1995, represented
$700,610. There have been no significant changes in the projected total
clean-up costs nor the PRPs' assigned portion of the total costs during the
first six months of 1996, therefore, the Company's reserve of $700,610 has
remained unchanged at June 30, 1996.
NOTE 3 - INVENTORIES
Inventories at June 30, 1996 and December 31, 1995 consisted of :
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
-------- ------------
<S> <C> <C>
Finished Goods ................. $201,832 $120,057
Work-in-Process ................ 235,361 427,193
Raw Materials .................. 121,445 113,357
-------- --------
$558,638 $660,607
======== ========
</TABLE>
NOTE 4 - NOTE RECEIVABLE - RELATED PARTY
The note receivable - related party relates to the acquisition of common
stock of the Company by an officer of the Company on April 2, 1996 at fair
market value on such date. The note is recourse and payable with interest on
April 2, 2000.
6
<PAGE> 7
BIOMATRIX, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
Biomatrix, Inc., which includes Biomatrix Svenska AB, a wholly owned
subsidiary, and Biomatrix Medical Canada Inc., a majority owned subsidiary,
(the "Company"), is principally engaged in the research, development and
commercial application of proprietary viscoelastic biological polymers, called
hylans, for use in therapeutic medical applications and skin care. For the
past two years, a significant source of revenue for the Company has been from
corporate license and distribution agreements which have included certain
one-time payments. Until the Company extends sales of its products to major
markets, payments from corporate agreements are expected to continue to be an
important source of revenues.
The Company's business is subject to significant risks. Forward-looking
comments included herein are subject to and should be read in conjunction with
the "Risk Factors" section of the Company's 1995 Annual Report on Form 10-K,
including the risks and uncertainties associated with the regulatory approval
process, with obtaining and enforcing patents important to the Company's
business and other risks detailed in the Company's reports filed under the
Securities Exchange Act. As a significant amount of Biomatrix' future revenues
may be based on payments from corporate license and distribution agreements,
the Company's total revenues and profit or losses are expected to fluctuate
from quarter-to-quarter. Some of these fluctuations may be significant and, as
a result, quarter-to-quarter comparisons may not be meaningful. As of June 30,
1996, the Company's accumulated deficit was $34,379,172.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 1996 AND 1995
REVENUES. Total revenues for the three months ended June 30, 1996 were
$8,542,740, an increase of $7,050,151, from the same period in 1995. Revenues
from licenses, royalties, research contracts and grants were $7,478,162 in the
second quarter of 1996 which represented an increase of $6,991,731 from the
same period of 1995. This favorable change was primarily attributed to a
non-refundable $5 million payment related to an agreement with Collagen Corp.
for marketing rights to Hylaform(R), the Company's product for
viscoaugmentation of to correct facial wrinkles and depressed scars, in Europe,
Japan, Australia, Canada and other select countries. Additionally, the Company
received a payment related to an agreement under which the Company reacquired
the marketing rights in certain countries in Europe for Synvisc(R), the
Company's product for the treatment of osteoarthritis.
Product sales were $1,064,578 in the second quarter of 1996, an increase
of $58,420, or 5.8%, from the same period of 1995. Increases in Synvisc sales
volumes in Canada and sales to the Company's distribution partner in Sweden
were the primary causes of this favorable change, offset partially by a
reduction in skin care intermediates sales.
COST AND EXPENSES. Total cost and expenses for the second quarter of
1996 were $3,534,782, an increase of $199,300, or 6.0%, from the same period in
1995. Cost of sales was $641,513, an increase of $119,193 in the second
quarter of 1996. Cost of sales as a percentage of sales was 60.3% in the
second quarter of 1996 versus 51.9% in the same quarter of 1995. This increase
in cost as a percentage of sales is primarily attributable to the Company's
entering into a corporate partner distribution arrangement in Canada, under
which the Company now receives a percentage of its corporate partner's sales of
Synvisc. The Company expects that cost of sales will decline as a percentage
of sales as production volumes increase, as the Company becomes more efficient
in manufacturing its products and as the Company expands the sale of its
medical products globally. Research and development expenses in the second
quarter were $1,535,809, an increase of $131,699, or 9.4% from the same period
of 1995. Such increase was primarily attributable to an increase in clinical
research activities. These increases were partially offset by a reduction of
$51,592 in selling, general and administrative expenses due primarily to
changes made in the Canadian subsidiary whereby the Company, in accordance with
its distribution agreement in Canada, was reimbursed for certain expenses by
its corporate partner.
INTEREST AND MISCELLANEOUS INCOME. Interest expense was $37,920 for the
second quarter of 1996, an increase of $22,695 from the same period of 1995,
due to a construction and equipment loan from the Quebec government. Interest
and miscellaneous income was $234,078 for the second quarter of 1996, an
increase of $131,172 from the same period in 1995, due principally to interest
income on higher average cash balances.
7
<PAGE> 8
BIOMATRIX, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1996, AND 1995
REVENUES. Total revenues for the six months ended June 30, 1996 and 1995
were $10,281,587 and $2,589,385, respectively, which represented an increase of
$7,692,202 in the 1996 period. Revenues from research contracts, licenses,
royalties and grants, which accounted for 79.0% of total revenues in the six
months ended June 30, 1996, were $8,120,109 and $917,198 for the six months
ended June 30, 1996 and 1995, respectively, representing an increase of
$7,202,911 from the first half of 1995. This increase was due principally to a
non-refundable $5 million payment received in the first half of 1996 related to
an agreement with Collagen Corp. for the marketing rights to Hylaform in
Europe, Japan, Australia, Canada and other select countries and a payment
related to an agreement under which the Company reacquired the marketing rights
for Synvisc in certain countries in Europe.
Product sales accounted for 21.0% of total revenues and were $2,161,478 in
the first half of 1996, representing an increase of $489,291 or 29.3%, over the
same period in 1995. This increase was due principally to increased sales of
Synvisc which resulted from increased sales volumes in Canada and new product
sales to the Company's distribution partner in Sweden, and increased skin care
intermediates product sales.
COST AND EXPENSES. Total cost and expenses were $6,621,348 for the six
months ended June 30, 1996, which represented an increase of $111,915, or 1.7%,
from the corresponding period of 1995. Cost of sales was $1,355,361 for the
six months ended June 30, 1996, representing and increase of $313,833 over the
same period of 1995, due to the higher sales volume. Cost of sales as a
percentage of sales was 62.7% in the six months ended June 30, 1996 versus
62.3% for the same period of 1995. The Company expects that cost of sales will
decline as a percentage of sales as production volumes increase, as the Company
becomes more efficient in manufacturing its products and as the Company expands
the sales of its medical products globally. Research and development expenses
were $2,902,653 in the first half of 1996, an increase of $151,078, of 5.5%,
due principally to higher clinical research activities. Selling, general and
administrative expenses were $2,363,334 in the first half of 1996, a decrease
of $352,996, or 13.0%, due primarily to changes made in the Canadian subsidiary
whereby the Company, in accordance with its distribution agreement in Canada,
was reimbursed for certain expenses by its corporate partner.
INTEREST AND MISCELLANEOUS INCOME. Interest expense was $66,375 for the
first half of 1996, which represented an increase of $36,159 from the same
period of 1995 due to a construction and equipment loan from the Quebec
government. Interest and miscellaneous income increased from $230,606 to
$361,449 during the six months ended June 30, 1996 compared to the same period
of 1995, due primarily to interest income on higher average cash balances.
LIQUIDITY AND CAPITAL RESOURCES
The Company's capital needs have been financed in the past from several
sources, including private and public sales of its equity securities, loans
from shareholders and the Canadian government, medical and skin care
intermediates product revenues, royalties, license fees, research and
development contract revenues and grants. Through June 30, 1996, the Company
had raised an aggregate of approximately $50 million from the sale of equity
securities and an aggregate of approximately $17 million from corporate
partners and distribution agreements. The Company expects that a significant
portion of its product revenues for the next several years will be dependent
upon sales of Synvisc and other medical products. Any significant delay in
regulatory approvals or commercialization of the Company's medical products in
major markets would have a material adverse effect on the Company.
The Company had cash and cash equivalents of $4,996,092 and
held-to-maturity securities, invested in U.S. government securities, of
$9,743,595 at June 30, 1996. Overall, the Company's cash and held-to-maturity
securities position increased by $4,252,421 in the six months ended June 30,
1996. The increase in liquid assets was due principally to the net operating
profit and funds from the exercise of stock options.
8
<PAGE> 9
BIOMATRIX, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
As of June 30, 1996, the Company had provided a reserve of $700,610 for a
contingent liability related to an environmental matter. This reserve is
included in accrued expenses. See Note 2 of Notes to the Consolidated
Financial Statements.
In connection with the Company's acquisition in 1991 of the manufacturing
facility in Canada, the Company's majority-owned Canadian subsidiary obtained
a five-year loan of approximately $600,000. The anticipated outstanding
balance of approximately $500,000 was renewed in June 1996 for an additional
five-year term.
In April 1996, the Company entered into a lease for a facility in New
Jersey in which the Company intends to locate its U.S. manufacturing operation.
The Company is paying a daily rental fee through September 30, 1996, pending
an evaluation of environmental issues associated with this facility. Upon a
favorable evaluation, the Company would be obligated, for a period of
approximately 10 years, to lease this facility at an annual cost ranging from
approximately $300,000 to $500,000 over the term of the lease. Additionally,
within the first three years of the lease, the Company has an option to acquire
this facility at a specified price. Should the Company not execute its option
within this three year period, the landlord has the right to require the
purchase by the Company of this facility for the specified price. The Company
plans to modify this facility to accommodate manufacturing capability for the
U.S. and major foreign markets. In conjunction with this facility, the Company
plans to expend funds or obtain financing to provide modifications to the
facility required for manufacturing and the acquisition of capital equipment
required in the manufacturing process. The Company plans to relocate its
research and development facilities and its administrative offices to this new
facility upon the expiration of its current lease obligation in 1999.
In July 1996, the Company received $1 million from Pharmacia & Upjohn
("Pharmacia") which represented the final payment and termination of
Pharmacia's license to the Company's ophthalmic viscosurgical products.
The Company's present cash and held-to-maturity securities together with
revenues generated from ongoing business operations are expected to be
sufficient to enable the Company to conduct its present business activities
through 1997. The Company is pursuing arrangements with existing and potential
corporate partners, which could add additional capital in the form of equity,
up-front payments and anticipated future distribution payments to support
ongoing operations. There can be no assurance that any such arrangements will
be consummated in a timely manner or on terms favorable to the Company.
9
<PAGE> 10
BIOMATRIX, INC. AND SUBSIDIARIES
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
On May 30, 1996, at the Company's Annual Meeting of Shareholders, the
Company's stockholders met to consider and vote upon the following three
proposals:
(1) A proposal to elect two Class 2 directors to hold office for a
three-year term and until their respective successors have been
duly qualified and elected.
(2) A proposal to ratify the amendment to the Company's 1994 Stock
Option Plan increasing the number of shares authorized for issuance
under the Plan.
(3) A proposal to ratify the appointment of Coopers & Lybrand L.L.P.
as the independent public accountants for the Company for the
fiscal year ending December 31, 1996.
Results with respect to the voting on each of the above proposals were as
follows:
Proposal 1: Janet L. Denlinger, Ph.D.
For - 6,566,568 Withhold Authority - 354,756
Julius A. Vida, Ph.D.
For - 6,566,568 Withhold Authority - 354,756
Proposal 2: 6,010,083 Votes For
902,276 Votes Against
8,965 Abstentions
Broker Non-Votes
Proposal 3: 6,913,639 Votes For
2,330 Votes Against
5,355 Abstentions
Broker Non-Votes
10
<PAGE> 11
BIOMATRIX, INC. AND SUBSIDIARIES
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. EXHIBITS
*10.1 Restated distribution agreement between Biomatrix, Inc. and Syntex
Pharmaceuticals International Limited dated April 9, 1996.
*10.2 First Amendment to Stock Purchase Agreement, dated April 17, 1996,
between Biomatrix, Inc. and Syntex Pharmaceuticals International
Limited.
*10.3 Agreement of Lease, dated April 18, 1996, between Ridgefield
Associates and Biomatrix, Inc.
*10.4 International Distribution Agreement, dated June 14, 1996, between
Biomatrix, Inc. and Collagen Corporation.
*10.5 United States Distribution Agreement, dated June 14, 1996 between
Biomatrix, Inc. and Collagen Corporation.
10.6 Employment Agreement, dated April 2, 1996, between Biomatrix, Inc.
and Rory B. Riggs.
**10.7 Restricted Stock Purchase Agreement, dated April 2, 1996, between
Biomatrix, Inc. and Rory B. Riggs.
**10.8 Secured Promissory Note, dated April 2, 1996, by Rory B. Riggs and
Biomatrix, Inc.
**10.9 Stock Pledge Agreement, dated April 2, 1996, between Rory B. Riggs
and Biomatrix, Inc.
10.10 Amendment dated March 31, 1996 to the Consulting Agreement, dated
June 1, 1993, between Biomatrix, Inc. and Julius A. Vida.
27.1 Financial Data Schedule
B. REPORT ON FORM 8-K
None
*Confidential treatment requested. Confidential portions have been
omitted and filed separately with the Commission.
**Filed as an Exhibit to the Schedule 13D of Rory B. Riggs filed
with the Commission on June 24, 1996 and incorporated herein by
reference thereto.
11
<PAGE> 12
BIOMATRIX, INC.
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.
DATE: August 12, 1996 BIOMATRIX, INC.
By: /s/ Endre A. Balazs
---------------------------------------
Endre A. Balazs
Chief Executive Officer
By: /s/ Brian J. Hayden
---------------------------------------
Brian J. Hayden
Chief Financial & Accounting Officer
12
<PAGE> 1
10.1 Restated
RESTATED DISTRIBUTION AGREEMENT
By and Between
BIOMATRIX, INC.
and
SYNTEX PHARMACEUTICALS INTERNATIONAL LIMITED
Dated as of April 9th, 1996
<PAGE> 2
INDEX
<TABLE>
<CAPTION>
SECTION PAGE
- ------- ----
<S> <C> <C>
1. Definitions 1
2. Appointment of Exclusive Distributor; 5
Initial Payment; No Additional Payments;
Best Efforts of Syntex
3. Term and Termination 6
4. Payments 10
5. Withholding 10
6. Competing Products 10
7. Improvements 11
8. Trademarks, Agreement Product Marking; 11
Promotional Information
9. Supply of Product 15
10. Indemnification 31
11. Representations of Biomatrix 34
12. Representations of Syntex 35
13. Insurance 36
14. Infringement 36
15. Regulatory Activities; Clinical Trials 37
16. Consolidation of Documents 39
17. Other Distribution Agreements 39
18. Further Assurances 39
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
SECTION PAGE
- ------- ----
<S> <C> <C>
19. Assignment 39
20. Governing Law; Arbitration; Injunctive Relief 40
21. Severability 41
22. Force Majeure 41
23. Interest 41
24. No Partnership or Agency 41
25. Notices 41
26. EU Regulations 42
27. Survival 42
28. Miscellaneous 42
</TABLE>
Exhibits
Exhibit A - Agreement Product Quality Control Procedures
Exhibit B - Agreement Product Specifications
Exhibit C - Patents and Trademarks
Exhibit D - Price and Quantities of Physicians' Samples
Exhibit E - Sales Forecasts
Exhibit F - Documents
<PAGE> 4
RESTATED DISTRIBUTION AGREEMENT
THIS RESTATED DISTRIBUTION AGREEMENT (this "Agreement") is made as of
the 9th day of April 1996 by and between BIOMATRIX, INC., a
corporation duly organized and existing under the laws of the State of
Delaware, having its principal office at 65 Railroad Avenue, Ridgefield, New
Jersey 07657, U.S.A. ("Biomatrix") and SYNTEX PHARMACEUTICALS INTERNATIONAL
LIMITED, a Bermudan corporation with its registered office at The Corner House,
20 Parliament Street, Hamilton, HM 12, Bermuda ("Syntex").
WHEREAS, Biomatrix and Syntex have entered into a Distribution
Agreement dated 9 November 1993 (the "First Distribution Agreement"), and a
Second Distribution Agreement dated as of 23 June 1994 (the "Second
Distribution Agreement", and, collectively with the First Distribution
Agreement, the "Prior Agreements"); and
WHEREAS, Biomatrix and Syntex desire to amend and restate the Prior
Agreements in their entirety in accordance with the terms hereof.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants of the parties hereto, Syntex and Biomatrix hereby agree to amend and
restate the Prior Agreements in their entirety as set forth below, so that from
and after the date hereof the Prior Agreements shall be superseded in their
entirety by this Agreement:
1. DEFINITIONS AND RULES OF INTERPRETATION. In this Agreement,
unless the context otherwise requires, references to sections and exhibits are
to be construed as references to the sections and exhibits of this Agreement;
and references to (or to any specified provision of) this Agreement or any
other document shall be construed as references to this Agreement, that
provision or that document as in force from time to time and as amended,
varied, substituted, supplemented, restated or novated in accordance with the
terms thereof. In addition, in this Agreement, the following words and
expressions shall have the following meanings:
1.1. "Affiliate" shall mean, with respect to any party, any Person
which, directly or indirectly, is controlled by, controls or is under common
control with such party. For purposes of this definition, the term "control"
(including with correlative meanings, the terms
<PAGE> 5
-2-
"controlled by" and "under common control with") shall mean, with respect to
any Person, the direct or indirect ownership of more than fifty percent (50%)
of the voting or income interest in such Person or the possession otherwise,
directly or indirectly, of the power to direct the management or policies of
such Person.
1.2. "Agreement Product" shall mean hylan gel-fluid 20 (hylan G-F 20)
for the intra-articular treatment of osteoarthritis by viscosupplementation, as
described in the Agreement Product Specifications, to be supplied by Biomatrix
in pre-filled 2.0ml syringes packaged ready for sale and use, together with any
Improvements. Agreement Product shall also include the syringe and any other
delivery device associated with the Agreement Product and supplied by Biomatrix
to Syntex therewith.
1.3. "Agreement Product Quality Control Procedures" shall mean the
procedures set forth in Exhibit A for determining conformance with the
Agreement Product Specifications, as such procedures shall be modified in
accordance with Product License Approvals.
1.4. "Agreement Product Specifications" shall mean the
specifications for the Agreement Product set forth in Exhibit B, as such
specifications shall be modified in accordance with Product License Approvals.
1.5. "Agreement Year" shall mean, (a) for South Africa, the twelve
(12) month period commencing on the first day of the nearest month preceding or
succeeding (as the case may be) the first to occur of (i) the date of first
commercial sale of the Agreement Product in the respective country, or (ii)
three (3) months after Product License Approval in the respective country, and
each separate successive twelve (12) month period thereafter during the Initial
Term or any renewal term of this Agreement; and (b) in Sweden, the twelve (12)
month period commencing on June 1, 1995, and each separate successive twelve
(12) month period thereafter during the Initial Term or any renewal term of
this Agreement.
1.6. "Contract Quarter" shall mean that term as defined in Section
9.2(c).
1.7. "Dollars" and "$" shall mean the lawful currency of the United
States of America.
1.8. "Effective Date" shall mean April 9, 1996.
<PAGE> 6
-3-
1.9. "Formula Price" shall mean that term as defined in Section
9.2(a).
1.10. "Good Manufacturing Practice" shall mean all generally
accepted good manufacturing practices in effect in the country in which the
Agreement Product is manufactured and in each country in the Territory in which
the Agreement Product is being sold by Syntex in accordance with this
Agreement, including without limitation good manufacturing practices set forth
in Volume IV of the Rules Governing Medicinal Products in the European
Community.
1.11. "hylans" means hyaluronan *
without any other chemical change in the molecule.
1.12. "Improvements" shall mean extensions of the label claims for
the Agreement Product, in addition to line extensions, new dosage and
presentation forms and packaging improvements for the Agreement Product. For
the avoidance of doubt, any product that comes within the definition of Next
Generation Product shall not constitute an Improvement hereunder.
1.13. "Initial Term" shall mean that term as defined in Section 3.2.
1.14. "Minimum Price" shall mean, with respect to each country in the
Territory, * that for each calendar year (or partial
calendar year, in the case of the period immediately following the
* commencing with the first Agreement Year (or partial Agreement
Year) after the second anniversary of the Effective Date
*
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 7
-4-
* .
1.15. "Net Revenues" shall mean the total gross invoice price from the
sale of all units of the Agreement Product by Syntax or any of its Affiliates to
non-Affiliated wholesalers, hospitals and other third party purchasers
*
For the avoidance of doubt, Syntex shall be entitled at all times, in its
discretion, to
*
used to calculate "Net revenues".
1.16. "Next Generation Product" shall mean any product (other than the
Agreement Product) *
1.17. "Non-Compete Territory" shall mean
*
. For the purpose of this Agreement,
*
1.18. "Patents" shall mean Letters Patent or similar statutory rights
relating to any
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 8
-5-
Agreement Product (including any continuation-in-part, continuation or division
thereof or substitute thereof), and patent applications which are pending as of
the Effective Date, in each case as set forth in Exhibit C attached hereto,
together with any supplementary or complementary protection certificates
therefor if and when such are granted.
1.19. "Person" shall mean an individual, a corporation, a
partnership, a trust, an unincorporated organization or a government or any
agency or political subdivision thereof.
1.20. "Product License Approvals" shall mean with respect to each
country in the Territory, those regulatory approvals required for the
promotion, marketing and sale of the Agreement Product in such country;
provided, however, that, except as specifically provided to the contrary
herein, Product License Approval shall not include any approvals with regard to
pricing.
1.21. "South Africa" shall mean the Republic of South Africa.
1.22. "Territory" shall mean Sweden and South Africa; provided that,
subject to the provisions of Section 3.3(b), upon termination of this Agreement
with respect to any country in accordance with the terms of this Agreement,
such country shall, upon the effectiveness of such termination, cease to be
part of the Territory.
1.23. "Trademarks" shall mean (i) the trademark "SYNVISC" that is
owned by Biomatrix and used by Syntex and its designated Affiliates in
connection with the promotion, marketing and sale of the Agreement Product in
the Territory under this Agreement, as further described in Exhibit C hereto,
and (ii) any other trademarks, in addition to "SYNVISC", as may be agreed upon
in writing from time to time by the parties hereto for use by Syntex and its
Affiliates in connection with the promotion, marketing and sale of the
Agreement Product under this Agreement.
2. APPOINTMENT OF EXCLUSIVE DISTRIBUTOR; INITIAL PAYMENT; NO
ADDITIONAL PAYMENTS; BEST EFFORTS OF SYNTEX.
2.1. Appointment. Subject to the terms and conditions hereinafter
set forth, Biomatrix hereby appoints Syntex as its exclusive distributor for
the promotion, marketing, sale and distribution within the Territory of the
Agreement Product supplied by Biomatrix to Syntex pursuant to this Agreement.
Except as specifically provided to the contrary herein, the foregoing
appointment shall not be construed (a) to effect any sale of proprietary
Biomatrix
<PAGE> 9
-6-
technology, (b) to grant any license relating to Biomatrix's proprietary
methods of formulating, fabricating and manufacturing the Agreement Product, or
(c) to grant Syntex any rights in or to any Biomatrix proprietary technology by
implication, estoppel or otherwise. During the term of this Agreement Syntex
shall neither seek customers for the Agreement Product outside the Territory
nor establish any branch or maintain any distribution facilities (other than
the central distribution facility referred to in Section 9.13 below) outside
the Territory for the promotion, marketing, sale or distribution of the
Agreement Product, except that Syntex shall be permitted to distribute the
Agreement Product from Sweden and in Swedish packaging to Denmark and Iceland
on a "patient-name" basis pursuant to a physician's request and in accordance
with all applicable laws and regulations, but only until such time as Biomatrix
has entered into an agreement or agreements relating to the distribution of the
Agreement Product in Denmark and Iceland.
2.2. Initial Payments. Biomatrix acknowledges receipt from Syntex of
*
2.3. Payments. Biomatrix and Syntex acknowledge and agree that
*
, and (ii) all payments previously paid by Syntex to Biomatrix
pursuant to either or both of the Prior Agreements shall be non-refundable.
2.4. Best Efforts of Syntex. Syntex hereby accepts the appointment
as exclusive distributor for the promotion, marketing, sale and distribution
within the Territory of the Agreement Product and hereby agrees to use its best
efforts at all times during the term hereof to promote, market, sell and
distribute the Agreement Product in the Territory. Syntex's "best efforts" in
this Section 2.4 shall mean
*
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 10
-7-
3. TERM AND TERMINATION.
3.1. Effective Date. This Agreement shall take effect as of the
Effective Date.
3.2. Term. Unless this Agreement is sooner terminated in
accordance with the provisions of this Agreement, with respect to each country
in the Territory the term (the "Initial Term") of the appointment hereunder
shall be
*
if as of the date of expiration of such Initial Term Syntex is not in breach of
any of its obligations under this Agreement such that Biomatrix would be
entitled to terminate this Agreement with respect to such country, including
without limitation (i) Syntex's minimum purchase obligations under Section 9.12
below and (ii) Syntex's best efforts obligations under Section 2.4 above.
Thereafter, this Agreement shall be
*
3.3. Inventory.
(a) Upon termination of this Agreement for any reason other than
(i) termination pursuant to Section 3.5 hereof resulting from a breach by
Syntex of its obligations under this Agreement and (ii) termination resulting
from Syntex's failure to renew the Agreement following the expiration of the
Initial Term,
*
Notwithstanding the preceding sentence, upon
termination of this Agreement for any reason, Biomatrix shall have the right
(but not, except as specifically provided above, the obligation) to repurchase
all or part of the inventory of the Agreement
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 11
-8-
Product held by Syntex or its Affiliates.
(b) The price for inventory to be repurchased by Biomatrix
pursuant to Section 3.3 (a) above shall be * With respect
to any quantities not repurchased by Biomatrix, Syntex and its Affiliates shall
have the right to sell such inventory of the Agreement Product, in their usual
and customary manner, in the ordinary course of business, for a period of *
following termination of this Agreement and notwithstanding such termination
the terms and conditions of this Agreement shall apply to such sales.
3.4. Insolvency. This Agreement may be immediately terminated by
either party, upon giving written notice to the other party, in the event that
the other party is declared insolvent or bankrupt by a court of competent
jurisdiction or shall be the subject of any reorganization (other than a
corporate reorganization effected in the ordinary course of business and not
arising out of any insolvency) or winding up, receivership or dissolution,
bankruptcy or liquidation proceeding, or any proceeding similar to one or more
of the above, in which case termination shall be effective upon such written
notice.
3.5. Breach. This Agreement may be terminated by either party if
the other party shall breach any of its payment obligations hereunder or shall
commit a material breach of any of its warranties, covenants, conditions,
obligations or agreements contained herein, provided that in the case of a
payment breach such breach shall continue for a period of thirty (30) days
after written notice thereof and in the case of any other breach such breach
shall continue for a period of sixty (60) days after written notice thereof and
provided further that such termination shall be immediately effective upon
further written notice to that effect to the breaching party after its failure
to cure such breach within such applicable notice period.
3.6. Certain Rights Upon Termination. Upon termination of this
Agreement, for any reason whatsoever:
(a) Biomatrix shall have the unrestricted right to review, access,
use and permit others to review, access and use, either directly or by
cross-reference or incorporation or otherwise, all information, data,
investigations, preclinical and clinical protocols (including without
limitation, information relating to laboratory, animal and human studies), and
related regulatory approvals pertaining to the Agreement Product (the
"Information") which are
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 12
-9-
possessed or controlled by Syntex or any of its Affiliates, or to which Syntex
or any of its Affiliates has a right to review, access or use (to the extent
that Syntex is not prevented by law or contract from doing so, provided that
Syntex shall endeavour in good faith to avoid being bound by any contract which
would limit Biomatrix's rights under this Section 3.6(a)) for the purpose of
manufacturing, developing, marketing, promoting, licensing, selling and/or
otherwise advancing any Biomatrix product (whether as manufacturer, inventor,
developer, promoter, distributor or otherwise); except that Confidential
Information (as defined in Section 10.4) relating to a Syntex product other
than the Agreement Product shall be subject to the provisions of Section 10.4
and Biomatrix shall not use or permit others to use any such Information to the
extent that it relates to a Syntex product other than the Agreement Product
without the prior written consent of Syntex, such consent not to be
unreasonably withheld. Syntex unconditionally agrees promptly to take any
action and to execute and deliver to Biomatrix any documents or instruments
reasonably requested by Biomatrix to permit Biomatrix to make full use of such
unrestricted right. Further, Biomatrix shall have exclusive ownership rights
to the Trademarks and to all other product specific logos, slogans and other
intangibles relating to the Agreement Product (including all registrations
relating thereto) possessed or controlled by Syntex or any of its Affiliates,
and Syntex unconditionally agrees, subject to the provisions of Section 3.3(b),
(i) immediately to cease using the Trademarks and any such logos, slogans, and
marketing rights of Biomatrix or any colorable imitations thereof and (ii)
immediately to execute and deliver to Biomatrix any documents or instruments
reasonably requested by Biomatrix to give full effect to the provisions of this
Section 3.6. In addition, Syntex unconditionally agrees, subject to the
provisions of Section 3.3(b), that it shall, upon the request of Biomatrix,
immediately inform all relevant regulatory authorities that Syntex is no longer
a distributor of the Agreement Product and shall take all action and execute
and deliver all documents and instruments necessary in order to transfer all
registrations and regulatory approvals for the Agreement Product in favour of
Biomatrix or any Person nominated by Biomatrix. For the avoidance of doubt,
Syntex's unconditional obligations under this Section 3.6(a) shall not
otherwise adversely affect its rights or remedies against Biomatrix arising out
of a breach by Biomatrix of its obligations under this Agreement, including
without limitation a wrongful termination of this Agreement by Biomatrix.
(b) Biomatrix hereby acknowledges that Syntex shall not be
responsible for any use by Biomatrix or any other Person whose use has been
permitted by Biomatrix of any Information provided to Biomatrix by Syntex
pursuant to Section 3.6(a).
(c) Except to the extent that any Information falls within the
categories described in clause (a) or (b) of Section 10.4, Syntex shall not use
or permit others to use any Information to the extent that it relates to the
Agreement Product without the prior written consent of
<PAGE> 13
-10-
Biomatrix, such consent not to be unreasonably withheld.
3.7. Effect of Termination.
(a) Upon termination of this Agreement for any reason, Syntex
shall immediately discontinue making any representations regarding its status
as a distributor for Biomatrix and shall immediately cease conducting any
activities with respect to the marketing, promotion, sale or distribution of
the Agreement Product; provided, however, that Syntex shall be permitted to
sell inventory not repurchased by Biomatrix in accordance with Section 3.3
hereof.
(b) Termination of this Agreement shall not affect obligations of
either party that may have accrued prior to the effective date of termination.
Termination of this Agreement shall be in addition to, and shall not be
exclusive of or prejudicial to, any other grounds for termination or rights or
remedies at law or in equity which either party may have on account of any
default of the other party.
3.8. Waiver. Each of Biomatrix and Syntex hereby waives, to the
extent it is able to do so under the law of every country in the Territory and
other applicable law, any statutory rights it may have or acquire in respect of
the termination of the relationship established hereby pursuant to the terms
hereof, and agrees that the rights available to it hereunder in the event of
such termination are adequate and reflect the agreement of the parties.
Neither Syntex nor Biomatrix shall have any right to claim any indemnity for
goodwill or lost profits or any damages arising from the rightful termination
of this Agreement in accordance with the terms hereof.
3.9.
*
4. PAYMENTS. All payments hereunder shall be made in Dollars.
Payments to Biomatrix shall be wired to an account designated by Biomatrix at
Bank of New York or another financial institution designated by Biomatrix upon
the date when due and the costs of any such remittance shall be borne by
Syntex. Payments (if any) to Syntex shall be wired to a bank
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 14
-11-
account designated by Syntex upon the date when due and the costs of any such
remittance shall be borne by Biomatrix.
5. WITHHOLDING. All payments to be made by Syntex under this
Agreement shall be made in full, free and clear of and without any deduction of
or withholding for or on account of any taxes levied in any country of the
Territory or elsewhere. If Syntex shall be required by law to make any
deduction or withholding from any payment to Biomatrix then:
(a) Syntex shall ensure that such deduction or withholding does
not exceed the minimum legal liability therefor and shall forthwith pay to
Biomatrix such additional amount as will result in the receipt by Biomatrix of
the full amount which would otherwise have been received hereunder had no such
deduction or withholding been made and shall remit the amount of such tax to
the appropriate taxation authority;
(b) not later than * after each deduction or withholding
of any taxes, Syntex shall forward to Biomatrix such documentary evidence as
may be required by Biomatrix in respect of the deduction, withholding or
payment; and
(c) if and whenever Biomatrix determines in its discretion that it
has finally obtained a credit for any deduction or withholding as aforesaid
against its own liability for tax by setting the whole or part thereof against
payments made by it under deduction of tax, Biomatrix shall notify Syntex, and
shall simultaneously pay to Syntex, an amount such that Biomatrix retains,
taking into account the original payment from Syntex and the tax credit, such
amount as it should originally have received from Syntex but for the
withholding or other deduction.
6. COMPETING PRODUCTS. In recognition of the rights granted by
Biomatrix to Syntex and the other obligations of Biomatrix hereunder, Syntex
agrees that Syntex shall not (alone or with others) and it shall ensure that
its Affiliates shall not (alone or with others)
*
manufacture, sell, market, distribute or promote a Competing
Product in the Territory. "Competing Product" shall mean
*
. Syntex acknowledges and agrees that, in the event of a breach or
threatened breach by Syntex of its obligations under this Section 6, Biomatrix
will have no adequate remedy at law, and accordingly, shall be entitled to
injunctive or other appropriate equitable remedies against such breach or
threatened breach in addition to any other
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 15
-12-
remedies which Biomatrix may have.
7. IMPROVEMENTS. Biomatrix shall promptly communicate to Syntex any
Improvements to the Agreement Product that Biomatrix or any of its Affiliates
may acquire, discover, invent, originate, make or conceive. Such communication
shall include any relevant technical and clinical information relating thereto
(in reasonable detail) which is available to Biomatrix.
8. TRADEMARKS; AGREEMENT PRODUCT MARKING; PROMOTIONAL INFORMATION.
8.1. Trademarks. Subject to the provisions of Section 3.6 hereof
and except as otherwise provided in Section 9.1 hereof, Syntex and its
Affiliates shall have the exclusive right to use the Trademark in the Territory
during the term of this Agreement. Syntex warrants that, except as otherwise
provided in Section 2.1 above, it shall not use any of the Trademarks at any
time outside the Territory or use any of the Trademarks for any products other
than the Agreement Product within the Territory.
8.2. Registered User and Recorded Licensee. To the extent
necessary under the laws of any country in the Territory to enable Syntex to
exercise its exclusive rights hereunder, Biomatrix shall enter into appropriate
registered user agreements with Syntex or its designated Affiliates in the
Territory, for the duration of this Agreement, such that Syntex and its
Affiliates have the exclusive use of the Trademarks as provided in this
Agreement. In addition, to the extent required by the laws or regulations of
any country in the Territory, Biomatrix shall submit applications to the
appropriate authorities to have Syntex or its designated Affiliates recorded on
the relevant registries as the exclusive licensee of the Trademarks for the
Territory, provided that (i) Syntex shall bear all of Biomatrix's direct
out-of- pocket expenses in connection therewith and (ii) Syntex shall, at its
own cost and expense, prepare or cause to be prepared the necessary
documentation relating thereto, such documentation to be in form and substance
satisfactory to Biomatrix, and shall cooperate to the fullest extent necessary
in connection with such applications and registrations.
8.3. Termination of Registered User Status. Upon termination of
this Agreement, the right of Syntex and its Affiliates to use the Trademarks in
the Territory will revert to Biomatrix, and Syntex unconditionally agrees
promptly to take all necessary action and execute and deliver to Biomatrix all
necessary documents and instruments to remove Syntex as a registered user
and/or a recorded licensee of the Trademarks. For the avoidance of doubt,
Syntex's unconditional obligations under this Section 8.3 shall not otherwise
adversely affect its rights or remedies arising out of a breach by Biomatrix of
its obligations under this Agreement,
<PAGE> 16
-13-
including without limitation a wrongful termination of this Agreement by
Biomatrix.
8.4. Registration of Trademarks. Biomatrix shall, at its cost and
expense, file in the Territory and use its best efforts to obtain and
thereafter maintain the registration of the Trademarks in the Territory.
*
Biomatrix shall keep Syntex advised of
the status of such trademark rights. If any Trademark cannot be used in any
country in the Territory, for whatever reason, the parties shall attempt in
good faith to agree on a new trademark to which the provisions of this
Agreement shall apply.
8.5. Notice. Each party hereto agrees promptly to notify the other
in writing of any infringements or imitations of the Trademarks by third
parties which may come to its attention.
8.6. Labelling and Promotional Materials. All labelling, packaging
and promotional material for the Agreement Product sold by Syntex and its
Affiliates hereunder shall have a typical Syntex label design developed by
Syntex. Syntex shall provide Biomatrix with labelling masters, instructions
and specifications, including product information accompanying the Agreement
Product and printed information on containers. All such labelling, packaging
and promotional material shall be consistent with the relevant Product License
Approvals and shall also be reviewed by Biomatrix prior to its use and the
substance thereof shall be reasonably acceptable to it, Biomatrix's acceptance
of or objection to such material to be communicated to Syntex within *
of Biomatrix's receipt thereof; provided that no such communication by
Biomatrix within such * period shall be deemed to be Biomatrix's
acceptance of such material. Biomatrix shall make no changes to such labelling
except as otherwise agreed to in writing by Syntex.
8.7. Legend. Subject to applicable laws and regulations in the
Territory, all relevant packaging and promotional material for the Agreement
Product used or sold by Syntex shall contain (i) all applicable markings needed
to keep the Trademarks enforceable throughout the Territory as specified in
writing by Biomatrix to Syntex and (ii) a legend which shall be displayed in a
reasonably conspicuous manner on all packaging of such Agreement Product
indicating that such product has been developed by Biomatrix, Inc., 65 Railroad
Avenue, Ridgefield, New Jersey 07657, United States of America and manufactured
by Biomatrix Medical Canada Inc., 275 Labrosse Avenue, Pointe-Claire, Quebec,
Canada H9R 1A3, or such other Affiliate of Biomatrix, Inc. which manufactures
the Agreement Product.
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 17
-14-
8.8. Promotional Support.
(a) Biomatrix shall provide Syntex with promotional support by
* Biomatrix and Syntex shall each provide to one another on an
ongoing basis and without charge (to the extent not prevented by law or
contract from doing so) all medical information relating to the Agreement
Product (including summary data from studies, clinical trials and the like as
well as information regarding adverse events associated with the use of the
Agreement Product), the proceedings of all symposia on the Agreement Product
and all promotional information that is available to Syntex or Biomatrix or any
of their Affiliates anywhere in the world relating to the Agreement Product.
In addition, Biomatrix and Syntex shall each provide the other with access to
(to the extent that the disclosing party is not prevented by law or contract
from doing so) such primary data and information in its possession as the other
may reasonably request regarding the results of the studies contained in such
summary data referred to above.
(b) Subject to applicable laws and regulations in the Territory,
Syntex shall ensure that all trade literature, publications and promotional
materials relating to the Agreement Product produced by or on behalf of Syntex
or any of its Affiliates shall specify the concept of viscosupplementation and
that such concept has been conceived and introduced by Biomatrix. Biomatrix
hereby represents and warrants to Syntex that the concept of
viscosupplementation was conceived and introduced by scientists who are
principals of Biomatrix.
8.9. Adverse Events.
Each party hereto shall keep the other informed of all reports of
serious adverse events which come to its attention with regard to the use of
the Agreement Product ("AEs"), regardless of the origin of such report. In
addition, each party hereto shall inform the other, on a quarterly basis, of
all reports of AEs which are not serious. The term "reports" shall include,
without limitation, publications in journals or in other media and any other
communications coming to the attention of such party as a result of (i) a
clinical trial of the Agreement Product conducted by or on behalf of Syntex or
Biomatrix or any of their Affiliates and/or (ii) the marketing of the Agreement
Product anywhere in the world and/or (iii) the marketing of other hylan
products anywhere in the world. Reports of serious AEs received by either
party shall be forwarded to the other party without delay, and in the case of
serious AEs arising out of the activities referred to in (i) or (ii) of this
Section 8.9 not later than * after such report was received.
Each party shall have the right to request,
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 18
-15-
to the extent that such request is reasonable in the circumstances, professional
evaluation and further information, if available, on any AEs reported. All such
reports and further information shall be transmitted and receipt confirmed by
telefax as follows:
In the case of Biomatrix, to:
Biomatrix, Inc.
65 Railroad Avenue
Ridgefield, N.J. 07657 U.S.A.
Attention: Head of Clinical and Regulatory Department
Telephone: (201) 945 9550
Telefax: (201) 945 0363
In the case of Syntex to:
Roche A.B.
Lilehomsstranden 5
P.O. Box 47327
10074 Stockholm
Sweden
Attention: Head of Registration Department
Telephone: (8) 726 1200
Telefax: (8) 744 0681
and to:
Roche Products (Proprietary) Limited
P.O. Box 4589
Johannesburg 2000
South Africa
Attention: Head of Registration Department
Telephone: (11) 974 5335
Telefax: (11) 392 2338
with a copy to:
F. Hoffman-La Roche Ltd.
Grenzacherstr. 124
4070 Basel
Switzerland
Attention: Head of Pharma Drug Safety (PDS)
Telefax: (4161) 688 9391
Each party may change, by written notice to the other party, the address to
which such reports and other information should be sent.
<PAGE> 19
-16-
8.10. Recalls of the Agreement Product.
(a) If either party in good faith determines that a recall of the
Agreement Product in any country in the Territory is warranted, such party
shall immediately notify the other party in writing and shall advise such other
party of the reasons underlying its determination that a recall is warranted.
The parties shall consult with each other as to any action to be taken in
regard to such a recall, but in any event if after consultations either party
in good faith still believes that such a recall should be undertaken, the
parties shall cooperate in carrying out such recall.
(b) Except as otherwise provided in (c) below, in the event of a
recall of the Agreement Product, Biomatrix shall correct any deficiency
relating to its manufacturing, packaging, testing, labelling, storing or
handling of the Agreement Product, if applicable, and shall at its cost replace
the Agreement Product recalled.
(c)
*
9. SUPPLY OF PRODUCT.
9.1 General. Biomatrix agrees to sell the Agreement Product to
Syntex, on the terms and subject to the conditions set forth herein, on an
exclusive basis for resale by Syntex and its designated Affiliates within the
Territory, and Syntex shall obtain the Agreement Product for resale in the
Territory only from Biomatrix. The term "exclusive" shall mean that, to the
extent permitted by applicable law (including without limitation EU competition
law), Biomatrix shall not sell the Agreement Product itself or supply or
license the manufacture of the Agreement Product to any third party for resale
within the Territory.
9.2 Price and Quantity.
(a) The "Formula Price" per unit of the Agreement Product shall be
determined for each country as follows:
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 20
-17-
Agreement Year Formula Price
*
provided that (i) when the Net Revenues, *
from the sale of all units of the Agreement Product by Syntex or any of its
Affiliates to non-affiliated third party purchasers in Sweden exceed
* in any Agreement Year for such country, or
(ii) when the Net Revenues, *
from the sale of all units of the Agreement Product by Syntex or any of its
Affiliates to non-affiliated third party purchasers in South Africa exceed
*in any Agreement Year in such country, then in calculating the Formula Price
the relevant percentage of Net Revenues in respect of that portion of the sales
of the Agreement Product over and above the
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 21
-18-
relevant threshold set forth above for such country for such Agreement Year
shall be * .
(b) With respect to each country in the Territory the price to be
paid by Syntex to Biomatrix for each unit of the Agreement Product shall be the
greater of (i) the Minimum Price in such country or (ii) the Formula Price in
such country.
(c) Not less than * prior to the first Contract Quarter (as
hereinafter defined) and not less than * prior to each
Contract Quarter thereafter the parties shall calculate and agree on an
estimated Formula Price per unit for the Agreement Product in each country in
the Territory; provided that the estimated Formula Price for any country shall
not under any circumstances be less than the Minimum Price for such country.
Such estimated Formula Price shall be the price payable by Syntex to Biomatrix
for the Agreement Product during such Contract Quarter (subject to the
adjustments contemplated by Section 9.2(d) below). Such estimated prices shall
be based on the parties' best estimates of Syntex's prices for the Agreement
Product to non-Affiliated third parties in such country. If the parties cannot
agree upon an estimated Formula Price per unit to be charged by Biomatrix to
Syntex for the first Contract Quarter, then the estimated Formula Price to be
charged by Biomatrix to Syntex shall be * . If with
respect to any country the parties cannot agree upon an estimated Formula Price
per unit to be charged by Biomatrix to Syntex during any Contract Quarter other
than the first Contract Quarter, then the estimated Formula Price to be charged
by Biomatrix to Syntex shall be * .
"Contract Quarter" shall mean the three (3) month period commencing with
Syntex's first commercial sale of the Agreement Product in any country in the
Territory and ending on the last day of the third complete calendar month
thereafter and each three (3) month period thereafter throughout the term of
this Agreement.
(d) Within * after the close of each Contract Quarter the
actual Formula Price for the Agreement Product in each country of the Territory
shall be calculated in accordance with Section 9.2(a) above and an adjustment
resulting from
*
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 22
-19-
*
(e) Except as otherwise provided in Section 9.2(d) above, all
payments by Syntex to Biomatrix hereunder shall be made within * of the
invoice date relating thereto. Net Revenues shall be converted to Dollars
using the average monthly rates of exchange for the relevant period as
published in The Wall Street Journal (or, if The Wall Street Journal shall no
longer publish such exchange rates, as determined by a method that is mutually
agreed upon in writing by the parties).
(f) Within * following the end of each Contract Quarter,
Syntex shall submit to Biomatrix written reports detailing Syntex's and its
Affiliates' sales of the Agreement Product during the immediately preceding
Contract Quarter, which reports shall contain the Net Revenues of the Agreement
Product in the Territory from sales to non-Affiliated thirty party purchasers
during the applicable quarter (including a country by country breakdown), and
the aggregate number of units of the Agreement Product sold in each country
during the applicable quarter.
(g) *
(h) Syntex shall not be obligated to pay for any shipment (or
partial shipment) of the Agreement Product which does not conform to the
Agreement Product Specifications as determined by using the Agreement Product
Quality Control Procedures pursuant to Section 9.16(a) below. If Syntex
notifies Biomatrix that the Agreement Product does not conform to the Agreement
Product Specifications, then payment for such shipment shall be delayed until
resolution of the discrepancy by consultation between the parties or, if
necessary, an independent determination by a laboratory as to the conformity of
such shipment to the Agreement Product Specifications in accordance with
Section 9.16(a) below. Any units of the Agreement Product that are determined
by such laboratory not to conform to the Agreement Product Specifications shall
be returned to Biomatrix in accordance with Section 9.16(a) and Biomatrix shall
bear the costs and expenses incurred with respect to such units of the
Agreement Product as a result of such laboratory testing. If any units of the
Agreement Product are determined by such laboratory to conform to the Agreement
Product Specifications, then Syntex shall immediately (i) make full payment to
Biomatrix for such Agreement Product, together with interest on such amount
calculated in accordance with Section 23 hereof from the original payment date
until the date upon which Biomatrix actually receives payment and (ii) pay all
costs and expenses incurred
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 23
-20-
with respect to such units of the Agreement Product as a result of such
laboratory testing.
(i) Biomatrix and its Affiliates shall sell to Syntex such
quantities of the Agreement Product as Syntex may, pursuant to the provisions
hereof, order from time to time (provided that Biomatrix and its Affiliates
shall have no obligation to supply Syntex with quantities of the Agreement
Product in excess of * in the then current
estimates by Syntex for the relevant quarter under Section 9.12(a) hereof) and
Biomatrix shall use its best efforts to supply the Agreement Product in line
with Syntex's requirements. *
Except for delays resulting from a force majeure pursuant to Section 22 hereof,
the purchase price for any shipment of the Agreement Product shall be
* if such shipment is delivered to Syntex * late and by
*
(j) (A) If Biomatrix is unable to supply the Agreement
Product ordered by Syntex in a timely manner, or if the Agreement Product
consistently fails to comply with the Agreement Product Specifications or if
the regulatory authorities in the Territory prevent importation of the
Agreement Product in the Territory because Biomatrix has failed to manufacture
the Agreement Product in accordance with applicable regulations, then Biomatrix
shall use all commercially reasonable efforts to remedy the problem or secure
an alternative source of supply within a reasonable time (which in any event
shall not be longer than * after receipt of written
notice thereof from Syntex). If Biomatrix is unable to remedy the problem or
secure an alternative source of supply within such *
period, then Biomatrix shall consult with Syntex and the parties shall work
together at Biomatrix's premises to remedy the problem. If the parties are
unable to remedy the problem after a period of * ,
commencing with the date upon which such consultations began, then either party
may at its option terminate this Agreement with respect to each country
affected thereby.
(B)
*
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 24
-21-
*
(C) The parties hereto agree that * , they shall
discuss the Minimum Price then in effect and whether, in view of then current
sales volumes, forecasts, product promotion and marketing and manufacturing
efficiencies, any adjustment in the Minimum Price (either upward or downward)
should be made, provided that no such change shall be made unless it is agreed
to in writing by each of the parties hereto.
9.3. Facility Visits. Prior to Biomatrix commencing supply of the
Agreement Product to Syntex * , Syntex or its
representatives shall have the right, at Syntex's expense and on reasonable
notice to Biomatrix, during regular business hours, to visit the facilities
where the Agreement Product is manufactured, packaged, quality control tested
and stored for the purposes of inspecting and auditing such facilities and the
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 25
-22-
documentation systems, operations and equipment that are used in the
manufacture, packaging, quality assurance, inventory control, handling or
storage of the Agreement Product (and Biomatrix shall procure such access on
behalf of Syntex). Such audits shall be scheduled, whenever practicable,
during the manufacture of the Agreement Product by Biomatrix or its Affiliate
and such audits may include the observation of the manufacturing process by
Syntex or its representatives. In connection with such inspections and audits,
Syntex shall have access to the Master Files or equivalent documentation
standards relating to Biomatrix's activities concerning the Agreement Product.
Should Syntex, in the course of its inspections and audits, discover that
Biomatrix's methods and procedures for producing the Agreement Product are not
in compliance with the Agreement Product Specifications or Product License
Approvals for the Agreement Product in the Territory or Good Manufacturing
Practices, then Syntex shall notify Biomatrix to that effect and Biomatrix
shall either (i) promptly correct, at Biomatrix's expense, such deficiencies or
(ii) promptly provide Syntex with evidence indicating that the methods and
procedures for producing the Agreement Product are in compliance with the
Agreement Product Specifications, the Product License Approvals and Good
Manufacturing Practices.
9.4. Regulatory Authorities. Biomatrix agrees that the regulatory
authorities of the countries where the Agreement Product is marketed by Syntex
or its designated Affiliates, or where applications have been made for Product
License Approvals (hereinafter the "Regulatory Authorities") shall be able to
inspect, during regular business hours, the facilities, documentation systems,
operations and equipment as set forth in Section 9.3 above, as the same relate
to the Agreement Product that is to be shipped to such countries. Biomatrix
shall notify Syntex in advance, whenever feasible, of inspections by any
Regulatory Authority. * Biomatrix shall provide to Syntex
a written summary of the inspection as it pertains to the Agreement Product,
together with a copy of the actual report (if any) relating thereto as provided
to Biomatrix by such Regulatory Authority. Biomatrix shall notify Syntex of
any Good Manufacturing Practice deficiencies affecting or relating to the
Agreement Product discovered during the course of any such inspections by the
Regulatory Authorities * of such deficiency being brought to Biomatrix's
attention. Biomatrix shall promptly comply, at its own expense, with requests
and requirements of the Regulatory Authorities relating to the Agreement
Product, such that the Agreement Product supplied hereunder will be
manufactured in compliance therewith.
9.5. Shipment Samples. * prior to the
expected date of the first commercial sale of any Agreement Product in the
Territory, Biomatrix and Syntex shall agree
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 26
-23-
upon a procedure for pre-shipment sampling (including without limitation the
methods of analysis for such sampling, Biomatrix's monitoring rights relating
thereto and the quantities of such pre-shipment samples to be sent to Syntex),
which procedure shall be at Syntex's cost, except that Biomatrix shall bear its
own costs in connection with exercising its monitoring rights. Unless
otherwise agreed in writing by Syntex, Biomatrix shall, prior to shipment of
the Agreement Product to Syntex hereunder, submit to Syntex or its nominee
samples of each batch of the Agreement Product in accordance with such agreed
upon procedures. Such samples shall be subject to the acceptance procedure
described in 9.16 hereof and pursuant thereto Syntex or its nominee shall
notify Biomatrix whether or not to proceed with delivery of such batch *
of its receipt of the samples relating thereto.
9.6. Certificates of Analysis, etc. Biomatrix shall furnish to
Syntex, with each shipment of the pre-shipment samples, a signed copy of the
certificate of analysis, together with a compliance statement and such
non-confidential manufacturing data as agreed by Biomatrix and Syntex, relating
to such shipment demonstrating that the pre-shipment samples and the Agreement
Product represented thereby conform in all respects to the applicable process
controls specified in the relevant product licenses and to the Agreement
Product Specifications, as determined in accordance with the Agreement Product
Quality Control Procedures.
9.7. [intentionally omitted].
9.8. Retention of Records. Biomatrix shall maintain and retain its
shipment records and reserve samples for each shipment of the Agreement Product
for * after the expiration date for the Agreement Product or
for a period of * after shipment to Syntex of the
Agreement Product represented by such shipment records or such other periods as
may be required by Good Manufacturing Practices, whichever is longer, and
Syntex shall have the right, at its own expense, to inspect such shipment
records at the facilities where such Agreement Product was manufactured during
regular business hours and upon reasonable notice to Biomatrix.
9.9. Waste Treatment. Syntex shall not be held responsible for the
treatment, management and/or disposal of waste and waste- related products
derived in any manner from the manufacture of the Agreement Product by
Biomatrix. Under no circumstances shall Syntex be considered a generator of
solid or hazardous waste with respect to the Agreement Product and Syntex shall
not be responsible for the management of such solid and hazardous
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 27
-24-
wastes. Furthermore, Biomatrix agrees that Syntex shall not be responsible for
the health and safety of Biomatrix's employees, agents and contractors in the
manufacture of the Agreement Product.
9.10. Compliance with Laws. Biomatrix warrants that it and its
Affiliates shall manufacture the Agreement Product in accordance with Good
Manufacturing Practices and shall comply in all material respects, with all
applicable laws, regulations, rules, ordinances, injunctions, orders and
decrees and shall maintain in effect all required governmental permits,
licenses and orders (including without limitation its Master File or the
equivalent thereof) and approvals regarding the Agreement Product and the use
of its facilities (or the facilities of its Affiliates) to manufacture the
Agreement Product.
9.11. Manufacturing Facilities. Biomatrix warrants that to the best
of its knowledge the facilities used for the manufacture and storage of the
Agreement Product have not at any time prior to the Effective Date and, unless
otherwise agreed in writing by Syntex, shall not at any time during the term of
this Agreement be used for the storage and/or manufacture of penicillin or
penicillin derivatives, cephalosporin or cephalosporin derivatives, cytotoxic
or antineoplastic compounds, or any other drug which, according to Good
Manufacturing Practice, it would be inappropriate to manufacture or store in
the aforesaid facilities. Biomatrix shall promptly inform Syntex of any
facility change which has an impact upon the manufacture, labelling, packaging,
quality control testing and/or storage of the Agreement Product.
9.12. Product Requirements; Sales Forecasts; Minimum Quantity
Levels.
(a)
*
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 28
-25-
(b) Exhibit E sets forth a forecast of sales of units of the
Agreement Product in each country within the Territory for each of the *
with respect to such country. * after the expiration of the *
for such country and * after the expiration of each Agreement Year
thereafter the parties shall agree upon a forecast of sales of units of the
Agreement Product in such country for the *
beginning with the Agreement Year following such expired Agreement Year.
Each such forecast described above is referred to herein as a "Sales Forecast".
If the parties cannot agree upon any such Sales Forecast, such Sales Forecast
shall be calculated by taking the *
in the case of calculations for the * in the case
of calculations for the * in the case of
calculations for the * in the case of calculations
for the * in the case of calculations for the
* .
(c) Syntex shall be required to purchase minimum quantities of the
Agreement Product in each Agreement Year for sale in each country in the
Territory, commencing * applicable to such
country, equal to *. If Syntex fails to purchase
the Minimum Quantity for sale in any country * applicable to such
country, * applicable to such country, then Biomatrix may at its
option upon
*
In the case of a failure to purchase the Minimum
Quantity in the third Agreement Year in any country, such prior written notice
shall be given by Biomatrix *
. Notwithstanding the foregoing, Syntex's minimum purchase obligation under
this Section 9.12(c) shall be subject to: (A) events of force majeure pursuant
to Section 22 hereof, (B) a failure by Biomatrix to supply Syntex with
sufficient quantities of the Agreement Product conforming to the warranties set
forth in this Agreement to enable Syntex to meet its minimum purchase
obligations and (C) patent and trademark infringements by Biomatrix which
prevent Syntex from meeting its minimum purchase obligations.
(d)(i) In addition to the requirements in Section 9.12(c) to purchase the
Minimum
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 29
-26-
Quantities described therein, Syntex shall be obligated to make the minimum
purchases described in this Section 9.12(d) (the "Minimum Purchase
Requirements"). If during any Agreement Year following the *
for any of the countries set forth below Syntex fails to purchase at least
* of the number of units of the Agreement Product set forth
opposite such country in the applicable column,
*
Country Minimum Units
A B C D
*
For the Minimum Purchase Requirements applicable to Sweden, Column D
shall apply at all times after Syntex has purchased at least* of Agreement
Product in Sweden in any calendar year, Column C shall apply at all times after
Syntex has purchased at least * but less than *
in Sweden in any calendar year, Column B shall apply at all times after Syntex
has purchased at least * but less than * in Sweden in any
calendar year and column A shall apply at all other times.
For the Minimum Purchase Requirements applicable to South Africa,
Column D shall apply at all times after Syntex has purchased at least *
of Agreement Product in South Africa in any calendar year, Column C shall
apply at all times after Syntex has purchased at least
* but less than * in South Africa in any calendar year, Column
B shall apply at all times after Syntex has purchased at least * but
less than * in South Africa in any calendar year, and column A
shall apply at all other times.
(ii) Notwithstanding the foregoing, the provisions of
Section 9.12(d)(i) shall be
*
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 30
-27-
*
(iii) If in any of the countries in the Territory the
initial Product Licence Approval is obtained on the basis of a label claim
permitting hospital use only and/or a single course of treatment only or if a
third party launches a Competing Product (as defined in Section 6 hereof) which
has a material adverse effect upon the market for the Agreement Product in such
country, then the parties hereto shall negotiate in good faith to adjust the
quantities set forth in Section 9.12(d)(i) for such country.
(e) Syntex shall maintain books of account with respect to its
sale of the Agreement Product in each country within the Territory. Biomatrix
shall have the right to have an independent public accountant selected and
retained by Biomatrix and reasonably acceptable to Syntex to inspect and
examine such books of Syntex during regular business hours and not more than
twice per calendar year for the purpose of verifying the statements of the
aggregate Net Revenues of the Agreement Product and determining the correctness
of the Formula Prices. The cost of each such audit shall be borne by Biomatrix
unless a material error is discovered in the course of such audit, in which
case the cost shall be borne by Syntex. For purposes of this 9.12(e), a
material error shall be defined as an understatement of five percent (5%) or
more of such aggregate Net Revenues. Any additional payments required as a
result of such inspection and examination shall be immediately paid to
Biomatrix and shall bear interest from the date such amount would otherwise
have been paid until the date of actual payment at the rate per annum set forth
in Section 23 hereof. Such independent accounting firm shall conduct such
inspections and examinations under conditions of confidentiality.
9.13. Shipment and Delivery; Packaging.
(a) Biomatrix shall arrange for shipment to Syntex of the
Agreement Product ordered by Syntex via common carrier. All shipments of
Agreement Product shall, unless otherwise instructed by Syntex, be delivered to
Syntex's central distribution facilities at Antwerp, Belgium or to such other
central distribution facility notified to Biomatrix by Syntex in writing from
time to time. All freight costs, insurance costs, customs charges and duties
arising in connection with any such shipment * .
(b) Syntex shall submit a purchase order setting forth the
quantities, delivery date, country for sale and shipping instructions with
respect to each shipment of the Agreement
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 31
-28-
Product, such purchase orders to be received by Biomatrix at least
* prior to the stipulated delivery date. If at any
time Syntex desires to sell any units of the Agreement Product in a country in
the Territory other than the country specified in the purchase order relating
thereto, it shall immediately notify Biomatrix in writing thereof and Biomatrix
shall issue a new invoice with respect to such units of the Agreement Product
(containing appropriately revised terms including, without limitation, the
purchase price) and Biomatrix and Syntex shall (at Syntex's cost) cooperate
with each other to implement all necessary labelling and other changes so that
such units of the Agreement Product can be sold in such other country; provided
that at all times Syntex shall continue to bear the risk of loss of, or damage
to, all such units of the Agreement Product.
9.14. Title. Legal title to all quantities of the Agreement Product
sold hereunder shall remain in Biomatrix until the agreed price therefor has
been paid in full, and upon such payment the title to such Agreement Product
shall, without further action, be transferred to and vested in Syntex.
9.15. Risk of Loss. Biomatrix shall bear all risk of loss of, or
damage to, all units of the Agreement Product to the extent the same is in its
possession or the possession of its Affiliates, nominees or agents. Syntex
shall bear all risk of loss of, or damage to, all units of the Agreement
Product after delivery to a common carrier for shipment to Syntex in accordance
with Section 9.13.
9.16. Acceptance.
(a) Should Syntex notify Biomatrix within * of the receipt
of any shipment of the Agreement Product, that the Agreement Product does not
conform to the Agreement Product Specifications therefor, Biomatrix and Syntex
agree to consult with each other in order to resolve the discrepancy between
each other's determinations. If such consultation does not resolve the
discrepancy, the parties agree to nominate an independent reputable laboratory,
acceptable to both parties (the "Laboratory"), that shall carry out the tests
on representative samples taken from such shipment using the Agreement Product
Quality Control Procedures, and the results of such tests shall be binding on
the parties for the purposes hereof. The costs of such tests shall be borne in
accordance with Section 9.2(h). Upon request by Syntex, Biomatrix shall
promptly send a new shipment of the Agreement Product to Syntex (of similar
quantity as the batch of the Agreement Product being analysed
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 32
-29-
pursuant to this Section 9.16(a), and at the selling price and on such other
terms and conditions as set forth herein) so as to enable Syntex to continue to
supply the Agreement Product to its customers; provided that if the Biomatrix
test results are upheld by the Laboratory, Syntex shall be obligated to accept
the shipment of the Agreement Product which was the subject of such tests at
the selling price and on such other terms and conditions as set forth herein.
Any non-conforming shipment shall be returned, at Biomatrix's expense, by
Syntex to Biomatrix in accordance with Biomatrix's instructions, accompanied by
a reasonable detailed statement of the claimed defect or non-conformity and
proof of date of purchase.
(b) Prior to the initial commercial sale of the Agreement Product
all initial master copies of batch documentation and test methods for the
Agreement Product, to the extent they are not included in the Agreement Product
Quality Control Procedures, shall be agreed upon in writing by Biomatrix and
Syntex in accordance with Product License Approvals in order to establish a
baseline for future changes by Biomatrix. Biomatrix shall not make any changes
to any facilities, manufacturing processes, batch documentation or test methods
which impact upon the Agreement Product without written notification to Syntex
reasonably in advance of such changes. Biomatrix shall demonstrate to Syntex
that the changes are being made in accordance with all applicable laws and
regulations. Syntex shall acknowledge any such changes in writing and shall
fully cooperate with Biomatrix and use all commercially reasonable efforts in
order to obtain or assist in obtaining (as the case may be) the approval and
agreement (if needed) of all relevant regulatory authorities in the Territory
for all such changes. Subject to the notification and consultation described
above, Biomatrix shall determine the strategy, implementation and regulatory
process (with the full cooperation of Syntex) relating to such changes.
9.17. Purchase Orders. The provisions of this Agreement shall
prevail over any inconsistent statement or provisions contained in any document
related to this Agreement passing between the parties hereto including, but not
limited to, any purchase order, acknowledgement, confirmation or notice.
9.18 Limited Warranty; Limitation on Liability.
Biomatrix represents and warrants that the Agreement Product supplied
to Syntex hereunder shall:
(a) conform to the Agreement Product Specifications;
(b) with respect to any particular country in the Territory, have a
minimum shelf life at
<PAGE> 33
-30-
the time of shipment by Biomatrix of * of the approved shelf life
as indicated in the Product License Approval for such country; provided
that such approved shelf life is at least * and subject
to the Agreement Product being kept at all times within the temperature
range specified by Biomatrix in the Agreement Product label; and
(c) be manufactured, labelled, packaged, tested and stored (while
in the possession or control of Biomatrix) in accordance with
then-current Good Manufacturing Practices, all applicable Product
License Approvals therefor and all applicable laws and regulations in
the Territory relating to the manufacture, labelling, packaging,
testing, and storage of the Agreement Product.
THE FOREGOING WARRANTY IS THE SOLE AND EXCLUSIVE WARRANTY GIVEN BY
BIOMATRIX WITH RESPECT TO THE AGREEMENT PRODUCT, AND BIOMATRIX GIVES AND MAKES
NO REPRESENTATIONS OR WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, OTHER THAN
THE FOREGOING. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, NO IMPLIED
WARRANTY OF MERCHANTABILITY, NO IMPLIED WARRANTY OF FITNESS FOR ANY PARTICULAR
PURPOSE, AND NO IMPLIED WARRANTY ARISING BY USAGE OF TRADE, COURSE OF DEALING
OR COURSE OF PERFORMANCE IS GIVEN OR MADE BY BIOMATRIX OR SHALL ARISE BY OR IN
CONNECTION WITH ANY SALE OR PROVISION OF THE AGREEMENT PRODUCT BY BIOMATRIX, OR
SYNTEX'S USE OR SALE OF THE AGREEMENT PRODUCT, OR BIOMATRIX'S AND/OR SYNTEX'S
CONDUCT IN RELATION THERETO OR TO EACH OTHER. NO REPRESENTATIVE OF BIOMATRIX
IS AUTHORIZED TO GIVE OR MAKE ANY OTHER REPRESENTATION OR WARRANTY OR TO MODIFY
THE FOREGOING WARRANTY IN ANY WAY.
The limited warranty set forth in this Section 9.18 does not apply to
any non-conformity of the Agreement Product resulting from (a) repair or
alteration by any party other than Biomatrix, (b) misuse, negligence, abuse,
accident, mishandling or storage in an improper environment by any party other
than Biomatrix, or (c) use, handling, storage or maintenance other than in
accordance with instructions and recommendations provided by Biomatrix.
Biomatrix's obligation with respect to units of the Agreement Product
which do not meet the warranty contained herein is limited exclusively to
replacement, or, at Biomatrix's
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 34
-31-
option, to a refund of the actual landed cost to Syntex of such units of the
Agreement Product, provided that such units of the Agreement Product are
returned to Biomatrix in the manner set forth in this Section 9.18, and only
if, upon examination by Biomatrix, such units of the Agreement Product are
determined to have been defective under the terms of this Agreement. In the
event of a dispute regarding a possible defect in the Agreement Product, the
parties shall resolve such dispute in accordance with the procedures set forth
in Section 9.16(a).
All such units of the Agreement Product shall be returned to Biomatrix
at the address set forth in Section 25 of this Agreement, accompanied or
preceded by a reasonably detailed statement of the claimed defect or
non-conformity and proof of date of purchase, and packed and shipped according
to instructions provided by Biomatrix. The shipping costs of any such returned
units of the Agreement Product shall be borne by Biomatrix, unless such units
are determined not to be defective under the terms of this Agreement, in which
case such shipping costs shall be borne by Syntex.
BIOMATRIX'S LIABILITY, AND THE EXCLUSIVE REMEDY, IN CONNECTION WITH
THE SALE OR USE OF THE AGREEMENT PRODUCT (WHETHER BASED ON CONTRACT,
NEGLIGENCE, BREACH OF WARRANTY, STRICT LIABILITY OR ANY OTHER LEGAL THEORY),
SHALL BE STRICTLY LIMITED TO BIOMATRIX'S OBLIGATIONS AS SPECIFICALLY AND
EXPRESSLY PROVIDED IN THIS SECTION 9.18 AND IN SECTION 10 BELOW. EXCEPT AS
SPECIFICALLY PROVIDED IN THIS SECTION 9.18 AND IN SECTION 10 BELOW, BIOMATRIX
SHALL HAVE NO LIABILITY, OBLIGATION OR RESPONSIBILITY OF ANY KIND, IN ANY WAY
OR TO ANY EXTENT, FOR ANY DAMAGES, LOSSES, COSTS, EXPENSES OR LIABILITIES FOR
ANY REPRESENTATION OR WARRANTY OF ANY KIND WITH RESPECT TO THE AGREEMENT
PRODUCT OR THE PERFORMANCE THEREOF, OR ARISING IN ANY WAY IN CONNECTION WITH
THE PURCHASE OR USE OR INABILITY TO USE THE AGREEMENT PRODUCT, EVEN IF
BIOMATRIX HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. IN NO EVENT
WHATSOEVER SHALL BIOMATRIX HAVE ANY LIABILITY, OBLIGATION OR RESPONSIBILITY FOR
ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL OR EXEMPLARY DAMAGES ARISING
IN ANY WAY IN CONNECTION WITH THE AGREEMENT PRODUCT OR ITS SALE OR USE.
<PAGE> 35
-32-
9.19. Next Generation Products. During the term hereof,
*
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 36
-33-
*
10. INDEMNIFICATION
10.1. Indemnification from Biomatrix. Subject to the provisions of
Section 10.3, Biomatrix shall defend, indemnify and hold Syntex and its
Affiliates and their respective directors, officers, agents and employees
harmless from and against any and all liabilities, claims, damages and expenses
(including without limitation actual court costs and reasonable attorneys' fees
regardless of outcome) resulting from:
*
provided, however, that upon Syntex being advised of any assertions of any
third party claims or suits or upon the bringing or filing of such claims or
suits by any third party against Syntex, Syntex will promptly notify Biomatrix
thereof and, at Biomatrix's cost, permit Biomatrix's attorneys to handle and
control the defence of such claims or suits and will co-operate with Biomatrix
in the defence thereof. The parties agree that there shall be no settlements,
whether agreed to in court or out of court, without the prior written consent
of the indemnifying party.
10.2. Indemnification from Syntex. Subject to the provisions of
Section 10.3, Syntex shall defend, indemnify and hold Biomatrix and its
Affiliates and their respective directors, officers, agents and employees
harmless from and against any and all liabilities, claims, damages
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 37
-34-
and expenses (including without limitation actual court costs and reasonable
attorneys' fees regardless of outcome) resulting from:
(a) any failure by Syntex to act in accordance with applicable
laws and regulations in the Territory in connection with the Agreement Product;
and/or
(b) any negligence or wilful misconduct on the part of Syntex or
its Affiliates in connection with the Agreement Product;
provided, however, that upon Biomatrix being advised of any assertions of any
third party claims or suits or upon the bringing or filing of such claims or
suits by any third party against Biomatrix, Biomatrix will promptly notify
Syntex thereof and, at Syntex's cost, permit Syntex's attorneys to handle and
control the defence of such claims or suits and will co-operate with Syntex in
the defence thereof. The parties agree that there shall be no settlements,
whether agreed to in court or out of court, without the prior written consent
of the indemnifying party.
10.3. LIMITATION ON LIABILITY. NOTWITHSTANDING ANY PROVISION TO THE
CONTRARY IN SECTIONS 10.1 AND 10.2 ABOVE, OR ANY OTHER PROVISION OF THIS
AGREEMENT, IN NO EVENT (INCLUDING THE FAULT, NEGLIGENCE OR STRICT LIABILITY OF
EITHER PARTY) SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR INDIRECT,
INCIDENTAL, CONSEQUENTIAL, SPECIAL OR EXEMPLARY DAMAGES OTHER THAN TO THE
EXTENT NECESSARY TO REIMBURSE SUCH OTHER PARTY FOR DAMAGES ACTUALLY PAID TO A
NON-AFFILIATED THIRD PARTY, PROVIDED THAT SUCH DAMAGES ARE OTHERWISE COVERED BY
THE PROVISIONS OF SECTION 10.1 OR SECTION 10.2, AS THE CASE MAY BE.
10.4. Confidential Information. All information acquired by either
party (the "Recipient") from the other party or any of its Affiliates (the
"Discloser") during the term of this Agreement or prior to the Effective Date,
relating directly or indirectly to the present or potential business,
operations, corporate, technical or financial situation of the Discloser, or to
manufacturing know-how, patents, data, test results, techniques, processes,
procedures, raw materials, dealer, supplier and customer lists, pre-clinical
and clinical protocols or any improvements thereof of the Discloser
("Confidential Information") is confidential, and shall be held in trust by the
Recipient for the exclusive benefit of the Discloser. Unless otherwise agreed
to in writing by the Discloser, the Recipient shall not at any time, either
during or subsequent to the term of this Agreement, use for itself (other than
in accordance with the terms of this
<PAGE> 38
-35-
Agreement) or any other Person, or disclose or divulge to any Person, other
than to those of its employees and advisors and Affiliates who require the same
for the purposes hereof and who are bound by the same obligations of
confidentiality, non-disclosure and non-use as set forth herein, any
Confidential Information or any other confidential or proprietary information
of the Discloser of which the Recipient may acquire knowledge; provided,
however, that the confidentiality, non-disclosure and non-use provisions
contained in this Section 10.4 shall not apply to any information or data to
the extent that the Recipient:
(a) shall demonstrate by written evidence that such information or
data is known generally to persons in the trade through no act or
omission of the Recipient or any of its Affiliates;
(b) is required by any government authority to disclose such
information or data, including without limitation for the purposes of
obtaining and maintaining any Product License Approvals under this
Agreement; or
(c) shall demonstrate by its written records was disclosed to or
created by it or its Affiliates on a non-confidential basis from a
source other than the Discloser or its Affiliates and that such
disclosure or creation did not constitute a breach of any applicable
confidentiality obligations.
Confidential Information shall be immediately returned to the Discloser upon
termination of this Agreement, along with any copies, reproductions, digests,
abstracts or the like of all or any part thereof in the Recipient's possession
or under the Recipient's control, and upon such return any computer entries or
the like relating thereto shall, to the extent legally permissible, be
destroyed; provided, however, that the legal department of Syntex shall be
entitled to retain in its files a reasonably detailed schedule of all such
returned and/or destroyed Confidential Information. Such return (and
destruction) will not affect the Recipient's obligations hereunder which shall
survive indefinitely. Notwithstanding anything herein to the contrary, the
provisions of this Section 10.4 shall be subject to Biomatrix's rights under
Section 3.6.
10.5. Prior Confidentiality Agreement. Notwithstanding the written
Confidentiality Agreement between the parties dated 3 December 1992, all
information disclosed by Biomatrix to Syntex and/or its Affiliates at any time
relating to the subject matter hereof shall be governed by this Agreement.
10.6. Public Announcement. Except as shall be necessary for
governmental notification
<PAGE> 39
-36-
purposes or to comply with applicable laws and regulations, and except as
otherwise agreed to by the parties hereto in writing, the parties agree to keep
the existence of this Agreement, and the transactions contemplated hereby,
strictly confidential. Neither party shall issue any initial public
announcement regarding this Agreement, the First Amendment to Stock Purchase
Agreement dated the date hereof between Biomatrix and Syntex or the
relationship of the parties under such agreements unless and until Biomatrix
and Syntex shall mutually agree in writing upon the text of such announcement.
Any subsequent public announcements regarding this Agreement or the
transactions contemplated herein shall also be agreed upon in writing between
the parties prior to any release thereof.
11. REPRESENTATIONS OF BIOMATRIX. Biomatrix represents, warrants and
covenants as follows:
11.1. It is a corporation duly organized and validly existing under
the laws of the State of Delaware with the full power to conduct its affairs as
currently conducted and contemplated hereunder. All necessary action has been
taken to enable it to execute and deliver this Agreement and perform its
obligations hereunder.
11.2. This Agreement is a valid and binding obligation of Biomatrix
enforceable in accordance with its terms. Biomatrix has the unencumbered right
to enter into this Agreement and to fulfil its duties hereunder. It is not and
will not become a party to any agreement in conflict herewith. Accordingly,
Biomatrix has the right to appoint Syntex as the exclusive distributor of the
Agreement Product in the Territory in accordance with the terms of this
Agreement and such appointment will not constitute a breach of any pre-existing
contractual or other arrangements between Biomatrix and any Affiliated or
non-Affiliated third party, nor shall it infringe the rights of any Affiliated
or non-Affiliated third party.
11.3 No approval, consent, order, authorization or license by,
giving notice to or taking any other action with respect to, any governmental
or regulatory authority is required in connection with the execution and
delivery of this Agreement by Biomatrix and the performance by Biomatrix of its
obligations hereunder.
12. REPRESENTATIONS OF SYNTEX. Syntex represents, warrants and
covenants as follows:
12.1. It is a corporation duly organized and validly existing under
the laws of Bermuda with full power to conduct its affairs as currently
conducted and contemplated hereunder. All necessary action has been taken to
enable it to execute and deliver this Agreement and perform
<PAGE> 40
-37-
its obligations hereunder.
12.2. This Agreement is Syntex's valid and binding obligation
enforceable in accordance with its terms. Syntex has the unencumbered right to
enter into this Agreement and to fulfil its obligations hereunder. It is not
and will not become a party to any agreement in conflict herewith. Accordingly,
Syntex has the right to act as the exclusive distributor of the Agreement
Product in the Territory in accordance with the terms of this Agreement and the
performance of its obligations hereunder will not constitute a breach of any
pre-existing contractual or other arrangements between Syntex and any Affiliated
or non-Affiliated third party, nor shall it infringe the rights of any
Affiliated or non-Affiliated third party.
12.3. No approval, consent, order, authorization or license by,
giving notice to or taking any other action with respect to any governmental or
regulatory authority is required in connection with the execution and delivery
of this Agreement by Syntex and the performance by Syntex of its obligations
hereunder.
12.4. It is a wholly owned subsidiary of Roche Holding Ltd.,
Switzerland (the "Ultimate Parent Company"). Syntex hereby acknowledges that
Biomatrix is relying upon the representation contained in this Section 12.4 in
lieu of a guarantee by the Ultimate Parent Company, and undertakes to promptly
notify Biomatrix in writing if Syntex shall cease to be a wholly-owned
subsidiary of the Ultimate Parent Company, and in such circumstances further
undertakes to discuss with Biomatrix in good faith the giving of appropriate
assurances, guarantees and/or additional representations.
13. INSURANCE.
(a) Biomatrix shall obtain and maintain no less than
* of product liability insurance covering third party
claims arising out of the manufacture and sale of the Agreement Product
pursuant hereto. Such policy shall name Syntex as an additional insured and
shall be primary with respect to other insurance or self-insurance carried by
or available to Syntex. Such insurance shall be issued with carriers
reasonably acceptable to Syntex and in any event carrying a rating of "A" or
better by Best's or a similar rating service. A certificate of insurance
evidencing such policy shall be provided to Syntex within * of
execution of this Agreement by Biomatrix. A * notice of
cancellation or material change shall be required, with provision that any such
notice of cancellation or material change
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 41
-38-
shall be notified in writing to Syntex in accordance with Section 25 below.
(b) Syntex shall maintain, at its own expense, a comprehensive
program of risk retention and excess insurance which adequately covers its
obligations hereunder.
14. INFRINGEMENT. Each of Syntex and Biomatrix will promptly notify
the other party in writing of any infringement of a Patent or Trademark or
unauthorized disclosure or use of any Confidential Information, of which it
becomes aware in the Territory. Biomatrix shall have the exclusive right to
take all legal action in the Territory it deems necessary or advisable to
eliminate or minimize the consequences of such infringement of a Patent or
Trademark in the Territory. For the purpose of taking any such legal action,
Biomatrix shall have the right to use the name of Syntex as plaintiff, either
solely or jointly in accordance with the applicable rules of procedure. Syntex
shall promptly furnish Biomatrix with whatever written authority may be
required in order to enable Biomatrix to use Syntex's name in connection with
any such legal action, and shall otherwise cooperate fully and promptly with
Biomatrix in connection with any such action, provided that Biomatrix shall
promptly reimburse Syntex's direct out-of-pocket expenses incurred in
connection therewith. All proceeds realized upon any judgment or settlement
regarding such action (net of all direct out-of-pocket expenses relating
thereto) shall be shared *
Notwithstanding the foregoing, if Biomatrix (i) notifies
Syntex in writing that it does not intend to exercise its rights to take legal
action in the Territory to eliminate or minimize the consequences of an
infringement of a Patent or Trademark in the Territory or (ii) fails to
commence such action * following either party's notification to
the other party of such infringement, then Syntex shall be entitled, at its own
cost and expense, to take such legal action, and Biomatrix shall cooperate with
Syntex in connection therewith to the same extent and upon the same terms as
Syntex is required to cooperate with Biomatrix when Biomatrix exercises its
rights under this Section 14; provided, however, that Biomatrix shall be
entitled to an amount equal to * of the amount (net of Syntex's
direct out-of- pocket expenses in prosecuting such action) of any judgement
award or settlement payable to Syntex.
15. REGULATORY ACTIVITIES; CLINICAL TRIALS.
15.1. General. Subject to Biomatrix's approval rights as set forth
in Section 15.2(g), Syntex shall use its best efforts (as defined below) to
obtain and maintain at its
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 42
-39-
expense all regulatory approvals required for the marketing and sale by Syntex
of the Agreement Product in each country in the Territory, including all
Product License Approvals and pricing and reimbursement approvals where
applicable. "Best efforts" in this context shall mean
*
15.2. Product Approvals.
(a) All regulatory approvals required for the marketing and sale
of the Agreement Product in the Territory shall be held in the name of Syntex
or its designated Affiliate or, in the case of South Africa, its nominee. All
Product License Approvals held by Syntex or its designated Affiliate or nominee
shall be maintained by Syntex at its cost throughout the term of this
Agreement.
(b) For all phases of registration for Product License Approvals,
and pricing approval where applicable, Biomatrix shall provide such
information, including the results of ongoing pharmacological and preclinical
studies, technical support and assistance to Syntex as may be necessary to
obtain and maintain Product License Approvals for the Agreement Product.
(c) Except to the extent necessary to give effect to the
provisions of Section 3.3(b), Product License Approvals and pricing approvals
relating to the Agreement Product in all countries in the Territory in the name
of Syntex or any of its Affiliates or nominees shall be transferred to
Biomatrix immediately upon termination of the Agreement.
(d) If the government in any country in the Territory cancels the
Product License Approval for the Agreement Product, neither party will have any
liability whatsoever to the other party as a result of such cancellation.
(e) Syntex shall, at its cost, use its best efforts to obtain all
necessary pricing and reimbursement approvals required in the Territory with
respect to the Agreement Product, and to obtain and maintain at all times the
optimum price for the Agreement Product in all countries in the Territory.
"Best efforts" in this context shall have the meaning assigned to it in Section
15.1.
(f) During the term of this Agreement, each party shall
immediately notify the other in writing in the event that such party becomes
aware of any failure of the Agreement
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 43
-40-
Product to comply with any of the requirements therefor specified in the
Product License Approval.
(g) Each party shall keep the other advised of regulatory
interactions, activities and correspondence and the registration status of the
Agreement Product on a regular basis. Except as specifically provided to the
contrary in Sections 15.1 and 15.2 (inclusive), Syntex shall not make any
direct contact with any regulatory authorities with respect to the Agreement
Product without the prior written consent of Biomatrix, such consent not to be
unreasonably withheld or delayed. In addition, Biomatrix shall be entitled
generally to oversee the strategy and content of all applications for Product
License Approvals and the content of all such applications shall be subject to
Biomatrix's prior written approval, such approval or disapproval to be given by
Biomatrix within * of its receipt thereof, such approval not
to be unreasonably withheld.
(h) Syntex shall, at its cost and with the cooperation of
Biomatrix, use its best efforts to obtain and maintain all necessary Product
License Approvals for Improvements in all countries in the Territory where
Product License Approvals are held by Syntex or a Syntex designated Affiliate
or nominee. "Best efforts" in this context shall have the meaning assigned to
it in Section 15.1.
15.3. Clinical Trials; Publication of Results.
(a) Syntex shall complete on a timely basis the *
and shall also conduct, in cooperation with Biomatrix, *
Biomatrix shall have the right to review and approve all protocols for all
clinical trials, and all amendments to such protocols. Syntex shall continue,
under the supervision of Biomatrix, to report to and to notify all regulatory
authorities and ethical committees as may be required in connection with such
clinical trial activities. Biomatrix will provide reasonable technical support
to Syntex free of charge for all clinical trials conducted in accordance with
this Section 15.3.
*
(b) Syntex shall provide the completed data resulting from
* to Biomatrix for analysis, and Biomatrix shall prepare the
final reports relating to such clinical trial data supplied by Syntex.
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 44
-41-
(c) Syntex shall provide the completed data resulting from the
* to Biomatrix for analysis, and in cooperation with the
principal investigator Biomatrix will analyze the data and prepare the final
reports. Syntex shall not publish the results of such trials without the
written consent of Biomatrix, such consent not to be unreasonably withheld. If
Biomatrix has consented to publication, Biomatrix and the principal
investigator shall jointly prepare the manuscript and select the journal for
publication. The authors of such paper shall be exclusively the clinical
investigators conducting the trial.
(d) Biomatrix and its Affiliates shall be free to use the results
of any or all such clinical trials in the promotion, marketing and product
licensing of the Agreement Product outside the Territory.
16. CONSOLIDATION OF DOCUMENTS. As soon as practicable after the
Effective Date, Syntex shall consolidate all "Documents" (as defined below in
this Section 16) and limit its subsequent use of the Documents to purposes
connected with the distribution of the Agreement Product in Sweden and South
Africa. Syntex shall promptly return to Biomatrix all of the Documents listed
on Exhibit F hereto. "Documents" shall mean all originals, copies, digests and
summaries of all written or otherwise recorded documents, writings, materials,
items or information of any kind, concerning any matters relating to the
Agreement Product that have resulted from the shared or joint efforts of
Biomatrix and Syntex, except for original copies of any documents relating to
Syntex's legal obligations ensuing from clinical trial activities, copies of
which shall be provided by Syntex to Biomatrix upon its request.
17. OTHER DISTRIBUTION AGREEMENTS. Biomatrix may at any time
discuss, negotiate and execute binding agreements with parties other than
Syntex relating to the promotion, marketing, sale and distribution of the
Agreement Product in any country outside of the Territory.
18. FURTHER ASSURANCES. The parties hereto agree to execute such
further or other documents and assurances as are necessary from time to time in
order to give effect to the provisions of this Agreement.
19. ASSIGNMENT. The rights and obligations of the parties hereto
shall inure to the benefit of and shall be binding upon the authorized
successors and permitted assigns of each party. Neither party may assign its
rights or obligations under this Agreement or may designate another person to
perform all or part of its obligations under this Agreement, or to
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 45
-42-
have all or part of its rights and benefits under this Agreement without the
prior written consent of the other party, except to a successor of the
business, by merger or otherwise, to which this Agreement relates. It is
acknowledged and understood that each of the parties hereto may from time to
time perform some or all of its obligations hereunder through one or more of
its Affiliates. In that regard, each of the parties agrees (i) not to permit a
person that is not an Affiliate to perform any of its obligations hereunder,
(ii) to notify the other party in writing prior to the participation of the
Affiliate in this Agreement, describing the Affiliate and its expected
involvement hereunder, (iii) to ensure that its Affiliates comply with all of
the provisions hereof, (iv) that the other party hereto will not be in a direct
contractual relationship with such Affiliate and (v) that the party involving
such Affiliate shall be responsible to the other party hereto, both as primary
obligor and as guarantor, for the performance of all of its obligations
hereunder, and for the conduct of its Affiliates.
20. GOVERNING LAW; ARBITRATION; INJUNCTIVE RELIEF.
20.1. This Agreement shall be governed by and construed in
accordance with the internal and substantive laws of the State of New York,
United States of America, excluding the United Nations Convention on Contracts
for the International Sales of Goods. In the event of any dispute touching or
concerning this Agreement, the parties hereby agree to submit such dispute to
their respective presidents by notice delivered in accordance with the
provisions of Section 25 hereof, and if within thirty (30) days, or such other
period as is agreed upon in writing by the parties hereto, following such
reference the dispute remains unresolved, to submit the dispute for arbitration
in New York City under the Rules of the American Arbitration Association in
effect on the date of this Agreement (the "Rules") by arbitrators appointed in
accordance with said Rules. Any decision of such arbitrators shall be final
and binding upon the parties. In any arbitration pursuant to this Section the
award shall be rendered by a majority of three (3) arbitrators, one (1) of whom
shall be appointed by each party and the third of whom shall be appointed by
mutual agreement of the two (2) party-appointed arbitrators. In the event of
failure of a party to appoint an arbitrator within thirty (30) days after
commencement of the arbitration proceeding or in the event of failure of the
two (2) party-appointed arbitrators to agree upon the appointment of the third
arbitrator within sixty (60) days after commencement of the arbitration
proceeding, such arbitrator shall be appointed by the American Arbitration
Association in accordance with the Rules. The arbitrators shall apply the
governing law set forth in this Section. Judgment upon an award rendered by
the arbitrators may be entered in any court having jurisdiction thereof.
20.2. Each of the parties hereto acknowledges and agrees that damages will
not be an
<PAGE> 46
-43-
adequate remedy for any material breach or violation of this Agreement if such
material breach or violation would cause immediate and irreparable harm (an
"Irreparable Breach"). Accordingly, notwithstanding the provisions of Section
20.1 hereof to the contrary, in the event of a threatened or ongoing
Irreparable Breach, each party hereto shall be entitled to seek, in any state
or federal court in the State of New York, equitable relief of a kind
appropriate in light of the nature of the ongoing threatened Irreparable
Breach, which relief may include, without limitation, specific performance or
injunctive relief. Such remedies shall not be the parties' exclusive
remedies, but shall be in addition to all other remedies provided in this
Agreement.
21. SEVERABILITY. In the event that any provision of this Agreement
shall be held by a court of competent jurisdiction or by any governmental body
to be invalid or unenforceable, such provision shall be deemed severable and
the remaining parts and provisions of this Agreement shall remain in full force
and effect.
22. FORCE MAJEURE. Each of the parties shall be excused from the
performance of its obligations hereunder in the event such performance is
prevented by force majeure, and such excuse shall continue as long as the
condition constituting such force majeure continues. For the purpose of this
Agreement, force majeure is defined as contingencies beyond the reasonable
control of either party, including, without limitation, acts of God, judicial
or regulatory action, war, civil commotion, destruction of production
facilities or materials by fire, earthquake or storm and labor disturbances
(whether or not any such labor disturbance is within the power of the affected
party to settle).
23. INTEREST. Any overdue amounts payable by either party hereunder
shall bear interest compounded monthly at the prime lending rate for Dollars
published from time to time in The Wall Street Journal plus *
, or, if lower, the highest rate permissible by applicable law, from the due
date until the date of payment.
24. NO PARTNERSHIP OR AGENCY. This Agreement and the relations
hereby established by and between Biomatrix and Syntex do not constitute a
partnership, joint venture, agency or contract of employment between them.
25. NOTICES. All communications in connection with this Agreement
shall be in writing and sent by postage prepaid first class mail, courier, or
telefax, and if relating to default, late payment or termination, by certified
mail, return receipt requested, telefax or
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 47
-44-
courier, addressed to each party at the address above, in the case of
Biomatrix, Attn: Chief Executive Officer and President, with a copy to
Biomatrix Europe, 21 Boulevard Saint Germain 75005 Paris, France Attn: John
Feilders, and with a copy to: Justin P. Morreale, Esq., Bingham, Dana & Gould,
150 Federal Street, Boston, Massachusetts 02110, U.S.A., and in the case of
Syntex, Attn: Head of Business Development and Strategic Marketing, F.
Hoffman-La Roche Ltd., 4070 Basel, Switzerland, or to such other address as the
addressee shall last have designated by notice to the communicating party. The
date of giving any notice shall be the date of its actual receipt.
26. EU REGULATIONS. It is the intention of the parties hereto that
this Agreement shall at all times qualify for the exemption from the provisions
of Article 85(1) of the Treaty of Rome dated 25 March, 1957, as amended, which
either (a) is available under EEC Regulation Number 1983/83, or (b) may
subsequently be available under any successor regulation or regulations
thereto. In the event that any provision of this Agreement is deemed to
violate the conditions for qualifying for the exemption, set out in whichever
of those regulations may be in effect at the relevant time, or if any such
regulation is amended after the date of this Agreement so as to cause this
Agreement to fail to qualify for the exemption, the parties hereto agree that
they will, as soon as it is practicable to do so, enter into good faith
negotiations to amend this Agreement as necessary in order to re-qualify for
the exemption. If those negotiations are not successfully concluded within a
reasonable time (not to exceed ninety (90) days, or such other period as is
agreed upon in writing by the parties hereto, after the relevant regulation is
amended), either party may terminate this Agreement upon written notice to the
other party.
27. SURVIVAL. The provisions of Sections 2.2, 2.3, 3.3, 3.6, 8.3,
10.1, 10.2, 10.3, and 10.4 of this Agreement shall survive the termination or
expiration of this Agreement (as the case may be) and shall remain in full
force and effect. The provisions of this Agreement that do not survive
termination or expiration hereof (as the case may be) shall, nonetheless, be
controlling on, and shall be used in construing and interpreting the rights and
obligations of the parties hereto with regard to any dispute, controversy or
claim which may arise under, out of, or in connection with this Agreement.
28. MISCELLANEOUS. This Agreement, together with the Stock Purchase
Agreement dated 23 June 1994 between Biomatrix and Syntex, as amended by the
First Amendment to Stock Purchase Agreement dated the date hereof between
Biomatrix and Syntex, and the trademark consent agreement dated 16 June 1987
and amended as of 4 November 1993 between Biomatrix and Syntex Corporation,
sets forth the entire agreement between the parties with respect to the
transactions and arrangements contemplated hereby and supersedes all prior oral
or written
<PAGE> 48
-45-
arrangements, including without limitation the Prior Agreements and the Heads
of Agreement dated 27 November 1995 among Biomatrix, Syntex and F. Hoffman La
Roche Ltd. For the avoidance of doubt, the rights and obligations of the
parties with respect to the promotion, marketing, sale and distribution of the
Agreement Product in the "Territory" (as such term is defined in each of the
Prior Agreements) under each of the Prior Agreements have been superseded in
all respects by the terms of this Agreement. This Agreement may be modified or
amended only by a written instrument executed and delivered by both parties.
None of the provisions of this Agreement shall be deemed to have been waived by
any act or acquiescence on the part of either party except by an instrument in
writing signed and delivered by the party executing the waiver. This Agreement
may be executed in several identical counterparts, each of which shall be an
original, but all of which constitute one instrument, and in making proof of
this Agreement it shall not be necessary to produce or account for more than
one such counterpart.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
SYNTEX PHARMACEUTICALS
INTERNATIONAL LIMITED
By: /s/ John Brough
----------------------------------------
Name: John Brough
Title: President
BIOMATRIX, INC.
By: /s/ Endre A. Balazs
----------------------------------------
Name: Endre A. Balazs
Title: Chief Executive Officer
<PAGE> 49
EXHIBITS
Exhibit A - Agreement Product Quality Control Procedures
Exhibit B - Agreement Product Specifications
Exhibit C - Patents and Trademarks
Exhibit D - Price and Quantities of Physicians' Samples
Exhibit E - Sales Forecasts
Exhibit F - Documents
<PAGE> 50
EXHIBIT A
*
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 51
*
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 52
*
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 53
*
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 54
*
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 55
*
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 56
*
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 57
*
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 58
*
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 59
*
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 60
*
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 61
*
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 62
*
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 63
*
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 64
*
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 65
*
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 66
*
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 67
*
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 68
*
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 69
*
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 70
*
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 71
*
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 72
*
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 73
*
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 74
*
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 75
*
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 76
EXHIBIT B
*
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 77
EXHIBIT C
Patents
*
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 78
EXHIBIT C
Trademarks
*
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 79
EXHIBIT D
PRICE AND QUANTITY OF PHYSICIANS' SAMPLES
Price of Synvisc(R) samples to Syntex: *
Quantities (syringes/units)
*
* The price and amount of any additional samples to be mutually agreed in
writing by both parties.
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 80
EXHIBIT E
SYNTEX SALES FORECAST
12 MONTHS PERIOD
(Units/Syringes)
<TABLE>
<CAPTION>
Years from launch I II III
- -- ---
<S> <C> <C> <C>
south AFRICA * * *
Sweden * * *
</TABLE>
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 81
EXHIBIT F
Documents
1. Synvisc(R) file as submitted to UK regulatory authorities.
2. Synvisc(R) File as submitted to FDA in May 1994.
3. File prepared for submission to regulatory authorities in France.
4. Documents prepared for submission for viral committee in France.
5. Documents prepared for submission for clinical trial registration in
France
<PAGE> 1
FIRST AMENDMENT
TO STOCK PURCHASE AGREEMENT
This FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT (this "Amendment") is
entered into this 17th day of April , 1996 by and between Biomatrix,
Inc., a corporation duly organized and existing under the laws of the State of
Delaware, having its principal office at 65 Railroad Avenue, Ridgefield, New
Jersey 07657 U.S.A. ("Biomatrix") and Syntex Pharmaceuticals International
Limited, a Bermudan corporation with its registered office at The Corner House,
20 Parliament Street, Hamilton HM 12, Bermuda ("Syntex").
WHEREAS, Biomatrix and Syntex are parties to a Distribution Agreement
dated 9 November 1993 (the "First Distribution Agreement") and a Second
Distribution Agreement dated 23 June 1994 (the "Second Distribution
Agreement");
WHEREAS, in connection with the Second Distribution Agreement,
Biomatrix and Syntex entered into a Stock Purchase Agreement dated 23 June 1994
(the "Stock Purchase Agreement"), pursuant to which Syntex purchased 355,000
shares of the common stock of Biomatrix;
WHEREAS, concurrently with this Amendment, Biomatrix and Syntex are
amending and restating the First Distribution Agreement and the Second
Distribution Agreement in their entirety pursuant to a Restated Distribution
Agreement (the "Restated Distribution Agreement"); and
WHEREAS, in connection with the Restated Distribution Agreement,
Biomatrix and Syntex desire to amend the Stock Purchase Agreement in accordance
with the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein, the parties hereby agree as follows:
1. INTERPRETATION.
The Stock Purchase Agreement shall continue in full force and effect
save as amended by this Amendment and, without prejudice to any provision
contained herein or therein, references herein and therein to such Agreement
shall, in the absence of an express indication to the contrary, be construed
(from the date hereof) as a reference to such Agreement as amended hereby.
<PAGE> 2
-2-
2. AMENDMENTS.
(a) Section 7 of the Stock Purchase Agreement shall be deleted in
its entirety and replaced by the following:
"7. LOCK-UP OBLIGATIONS.
(a) For purposes of this Section 7, the term "sell" shall
include the terms sell, pledge, hypothecate, encumber, assign, dispose and
transfer.
(b) Subject at all times to any restrictions imposed by
applicable law:
(i) Syntex agrees that, notwithstanding any rule
or regulation of the SEC allowing it to sell, without registration, any or all
of the Shares (including without limitation Regulation S of the Securities Act)
it shall not under any circumstances sell any of the Shares during the period
from the Closing Date through * ; and
(ii) Syntex shall have the right to sell any or
all of the Shares at any time from and after *."
(b) Section 10 of the Stock Purchase Agreement shall be deleted in
its entirety and replaced by the following:
"10. [intentionally omitted]."
3. REPRESENTATIONS.
(a) Each party hereto represents and warrants to the other that it
has been duly authorised by all necessary corporate action required of it to
enter into and deliver this Amendment.
(b) Each party hereto represents and warrants to the other that it
has obtained all consents required by any governmental authority of competent
jurisdiction for the execution of this Amendment and the consummation of the
transactions contemplated herein.
(c) Biomatrix represents and warrants to Syntex that this
Amendment constitutes the valid and binding obligations of Biomatrix
enforceable in accordance with its terms, and Syntex represents and warrants
* Confidential portions have been omitted and filed separately with the
Commission
<PAGE> 3
-3-
to Biomatrix that this Amendment constitutes the valid and binding obligations
of Syntex enforceable in accordance with its terms.
4. COSTS AND EXPENSES.
Each party hereto shall bear its own costs and expenses arising in
connection with the execution and delivery of this Amendment.
5. COUNTERPARTS.
This Amendment may be executed in several counterparts, each of which,
when so executed, shall be deemed an original but all of which shall constitute
one instrument, and in making proof of this Amendment it shall not be necessary
to produce or account for more than one such counterpart.
6. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with
the internal and substantive laws of the State of New York, United States of
America.
IN WITNESS WHEREOF this Amendment has been entered into on the day and
year first herein written.
SYNTEX PHARMACEUTICALS
INTERNATIONAL LIMITED
By: /s/ John Brough
- ------------------------------
Name: John Brough
Title: President
BIOMATRIX, INC.
By: /s/ Endre A. Balasz
- ------------------------------
Name: Endre A. Balazs
Title: Chief Executive Officer/
Chief Scientific Officer
<PAGE> 1
AGREEMENT OF LEASE
between
RIDGEFIELD ASSOCIATES
Landlord
and
BIOMATRIX, INC.
Tenant
1125 Pleasant View Terrace
Ridgefield, New Jersey
Dated as of April 18, 1996
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C> <C>
Article 1 - Premises and Term of Lease . . . . . . . . 1
Article 2 - Possession and Condition
of Property . . . . . . . . . . . . . . . . 6
Article 3 - Rent . . . . . . . . . . . . . . . . . . . . 9
Article 4 - Impositions and Utilities . . . . . . . . . 11
Article 5 - Deposits for Impositions . . . . . . . . . 15
Article 6 - Late Charges . . . . . . . . . . . . . . . 16
Article 7 - Insurance . . . . . . . . . . . . . . . . . 17
Article 8 - Damage or Destruction and Use of
Casualty Insurance Proceeds . . . . . . . . 22
Article 9 - Condemnation . . . . . . . . . . . . . . . 28
Article 10 - Assignment, Subletting,
Mortgages, Etc. . . . . . . . . . . . . . . 31
Article 11 - Repairs and Maintenance . . . . . . . . . . 34
Article 12 - Changes, Alterations and Additions . . . . 35
Article 13 - Governmental Requirements and
Insurance Requirements . . . . . . . . . . 39
Article 14 - Equipment . . . . . . . . . . . . . . . . . 40
Article 15 - Discharge of Liens; Bonds . . . . . . . . . 40
Article 16 - No Representations by Landlord . . . . . . 42
Article 17 - Landlord Not Liable
for Injury or Damage, Etc. . . . . . . . . 43
Article 18 - Indemnification of Landlord . . . . . . . . 43
Article 19 - Right of Access . . . . . . . . . . . . . . 45
Article 20 - Self-Help . . . . . . . . . . . . . . . . . 46
Article 21 - No Abatement of Rental . . . . . . . . . . 47
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C> <C>
Article 22 - Permitted Use; No Unlawful
Occupancy . . . . . . . . . . . . . . . . . 48
Article 23 - Events of Default, Conditional
Limitations, Remedies, Etc. . . . . . . . . 48
Article 24 - Notices . . . . . . . . . . . . . . . . . . 56
Article 25 - Subordination . . . . . . . . . . . . . . . 57
Article 26 - Certificates by Tenant . . . . . . . . . . 58
Article 27 - Consents and Approvals . . . . . . . . . . 58
Article 28 - Surrender at End of Term . . . . . . . . . 59
Article 29 - Quiet Enjoyment . . . . . . . . . . . . . . 60
Article 30 - Arbitration . . . . . . . . . . . . . . . . 60
Article 31 - Invalidity of Certain Provisions . . . . . 61
Article 32 - Renewal Option . . . . . . . . . . . . . . 61
Article 33 - Waiver of Trial by Jury . . . . . . . . . . 64
Article 34 - Broker . . . . . . . . . . . . . . . . . . 64
Article 35 - Security . . . . . . . . . . . . . . . . . 65
Article 36 - Option to Purchase . . . . . . . . . . . . 66
Article 37 - Landlord's Right(s) to Require
Purchase of the Property by Tenant . . . . 71
Article 38 - Environmental Compliance . . . . . . . . . 74
Article 39 - Miscellaneous . . . . . . . . . . . . . . . 77
Exhibit A - Description of Land . . . . . . . . . . . . A-1
Exhibit B - Definition of Acceptable Letter . . . . . . B-1
Exhibit C - Description of Portion A and Portion B . . C-1
Exhibit D - Warranty for Roofing Work . . . . . . . . . D-1
Exhibit E - Definition of Permitted Uses . . . . . . . E-1
Exhibit F - Non-Disturbance Agreement . . . . . . . . . F-1
</TABLE>
ii
<PAGE> 4
THIS INDENTURE OF LEASE made as of the 18th day of April,
1996, between RIDGEFIELD ASSOCIATES ("Landlord"), a partnership, having an
office c/o A & E Stores, Inc., 1000 Huyler Street, Teterboro, New Jersey, and
BIOMATRIX, INC. ("Tenant"), a Delaware corporation, having its principal office
and place of business at 65 Railroad Avenue, Ridgefield, New Jersey 07657.
W I T N E S S E T H :
ARTICLE 1
PREMISES AND TERM OF LEASE
Section 1.01. Landlord, for and in consideration of the
rentals to be paid and all of the terms, covenants and agreements hereinafter
set forth, to be kept, observed and performed by Tenant, does hereby demise and
lease to Tenant and Tenant does hereby hire and take from Landlord, subject to
the terms, covenants, conditions and reservations hereof, and the Exhibits
annexed hereto and made a part hereof:
the entire building (the "Building") located in the Borough of
Ridgefield, County of Bergen and State of New Jersey, commonly known
as and by the street number 1125 Pleasant View Terrace; the Building
being situate on the parcel of land (the "Land") more particularly
bounded and described in Exhibit A annexed hereto and made a part
hereof (the Building and the Land being herein sometimes collectively
referred to as the "Property");
TOGETHER WITH all easements, appurtenances and other rights and privileges now
or hereafter belonging or appertaining to the Property; and
SUBJECT TO: (i) the estates, interests, mortgages, easements,
encroachments, liens, encumbrances and other matters and conditions of title,
now or hereafter affecting the Property; (ii) any state of facts an accurate
survey or physical inspection of the Property might show; (iii) all zoning
regulations, restrictions, rules and ordinances, and other laws and regulations
now in effect or hereafter adopted by any government authority having
jurisdiction; and (iv) the rights and reservations in favor of Landlord as set
forth in this Lease (collectively, the "Encumbrances").
TO HAVE AND TO HOLD the Property unto Tenant, its successors and
permitted assigns, for a term of approximately nine (9) years and ten (10)
months (the "Term") (or until such Term shall sooner cease and expire as
hereinafter provided)
<PAGE> 5
commencing on the date (the "Commencement Date") an Acceptable Letter (as
hereinafter defined in Exhibit B annexed hereto and made a part hereof) is
received by Landlord, Tenant and/or their respective counsel from the New
Jersey Department of Environmental Protection (the "DEP"), and expiring on
February 28, 2006 (the "Expiration Date"), both dates inclusive.
As used herein, the term "Lease Year" shall mean the twelve (12)
month period commencing on the Commencement Date and each successive twelve
(12) month period thereafter throughout the Term; provided, however, that if
the Commencement Date shall be other than the first day of a calendar month,
then the first Lease Year shall consist of: (i) the fractional part of the
month in which the Commencement Date shall have occurred; plus (ii) the period
comprising the twelve (12) full calendar months next succeeding. The second
Lease Year and every subsequent Lease Year of the Term shall cover the same
corresponding twelve (12) full calendar months of the first Lease Year last
mentioned.
Section 1.02. Landlord and Tenant agree to cooperate in
obtaining an Acceptable Letter from the DEP. Tenant agrees to make
application to the DEP for a Memorandum of Agreement, at its sole cost and
expense, within five (5) business days after the receipt of Landlord's approval
hereafter described, and to diligently pursue such application; provided that,
any materials to be so submitted to the DEP for a Memorandum of Agreement shall
be submitted to Landlord within five (5) business days after the execution and
delivery of the Lease and shall be subject to the prior approval of Landlord,
which approval shall not be unreasonably withheld or delayed. Tenant shall
bear the full cost and expense of making application to the DEP (including,
without limitation, legal fees, application fees and the cost of all
engineering and environmental reports, audits and analyses), except that
Landlord shall bear the cost of any legal counsel it retains to review
submissions to be made by Tenant to the DEP.
(a) Tenant hereby acknowledges and agrees that from and after
April 18, 1996 until the earlier to occur of (i) the Commencement Date, or (ii)
termination of this Lease pursuant to this Section 1.02, Tenant shall pay to
Landlord the sum of $1100.00 per day (the "Daily Fee"), which Daily Fee shall
automatically be deducted by, and paid and remitted to, Landlord from the
security of $65,025.00 being held by Landlord pursuant to Article 35.
(b) If an Acceptable Letter is not obtained by Landlord,
Tenant and/or their respective counsel on or before September 30, 1996, time
being of the essence, or if, on an earlier date, Landlord, Tenant and/or their
respective counsel receives a letter or letter(s) (the "Further Action
Letter(s)") from the DEP stating either that additional testing, sampling,
2
<PAGE> 6
investigation or remediation is required or that engineering controls other
than those specified on Exhibit B will be required, then Landlord shall retain
any amounts due it pursuant to subsection (a) above and shall return to Tenant
the balance, if any, of the monies being so held, whereupon this Lease shall
automatically terminate and be void and of no force or effect, and the parties
hereto shall have no further liability hereunder.
(c) (i) Notwithstanding the provisions of subsection (b)
above, if the cost of the additional testing, sampling, investigation or
remediation required by the DEP in its Further Action Letter(s), singly or in
the aggregate, ("Additional DEP Cost"), exclusive of PCB Costs (as hereinafter
defined), shall be less than or equal to $30,000, and the additional testing,
sampling, investigation or remediation shall not extend beyond September 30,
1996, as determined by Landlord and Tenant in their reasonable discretion prior
to the undertaking of such work; then, the payments of the Daily Fee shall
continue as set forth in subsection (a) above until such time as the additional
testing, sampling, investigation or remediation is completed and an Acceptable
Letter is received by Landlord, Tenant and/or their respective counsel, at
which time the Commencement Date shall be deemed to occur, and the Lease shall
be in full force and effect and the Additional DEP Cost shall be borne equally
by Landlord and Tenant. If (A) the aggregate Additional DEP Cost is determined
before the contracts(s) therefor are executed to extend Thirty Thousand
($30,000) Dollars, as determined by Landlord and Tenant in their reasonable
discretion subject, however, to Landlord or Tenant bearing the excess cost
pursuant to subsection (c)(ii) below); or (B) DEP shall issue a final
determination which is not an Acceptable Letter; or (C) Landlord and Tenant
shall determine, in their reasonable discretion, before the contract(s) are
executed, that the additional testing, sampling, investigation or remediation
required by DEP in its Further Action Letter(s) shall exceed beyond September
30, 1996; then Landlord and Tenant shall have the right, upon notice to the
other, to terminate this Lease, in which event, except for: (A) Landlord's
obligation to pay for Landlord's share of the Additional DEP Cost provided for
in this subsection (c)(i); (B) Tenant's obligation to pay the Daily Fee and
Tenant's share of the Additional DEP Cost provided for in this subsection
(c)(i) and Tenant's obligation not to create, suffer or permit to be created
any lien, encumbrance or charge upon the Property; (C) Landlord's obligation to
return to Tenant the remaining balance, if any, of the security deposited with
Landlord by Tenant pursuant to this Lease after deducting the payments provided
for in this subsection (c)(i) and subsection (a) above; and (D) Tenant's
obligation, hereby confirmed, to promptly restore the Property to its condition
prior to the commencement of the additional testing, sampling, investigation or
remediation to the extent reasonably practicable under the circumstances; which
3
<PAGE> 7
obligations shall survive the termination of this Lease, neither party shall
have any further obligation to the other under this Lease. Any additional
testing, sampling, investigation or remediation to be performed pursuant to
this subsection (c) (i) shall be contracted for and performed under the
supervision of Tenant; however, Landlord shall be kept apprised of all
additional testing, sampling, investigation or remediation contracted for by
Tenant and Tenant shall secure Landlord's approval of any such contracts and
contractors which approval shall not be unreasonably withheld or delayed.
Notwithstanding the provisions of this subsection (c)(i), if the contractor
retained by Tenant pursuant to this subsection (c)(i) defaults under the
contract or encounters physical conditions at the Property other than hazardous
substances or hazardous waste (as such terms are referred to in Article 38)
which were not reasonably foreseeable prior to the undertaking of such work,
then Landlord and Tenant shall equally bear the additional costs, if any, in
excess of $30,000 incurred as a result of the foregoing and shall jointly
prosecute a cause of action, if any, against the contractor.
(ii) Notwithstanding the provisions of subsection
(b) above, if the aggregate Additional DEP Cost shall exceed $30,000, exclusive
of PCB Costs, and if Tenant agrees within three (3) business days, or Landlord
agrees within six (6) business days, following receipt of the Further Action
Letter(s) to bear that portion of the Additional DEP Cost which is in excess of
$30,000, then, the payments of the Daily Fee shall continue as set forth in
subsection (a) above until such time as the additional testing, sampling,
investigation or remediation is completed and an Acceptable Letter is received
by Landlord, Tenant and/or their respective counsel, at which time the
Commencement Date shall be deemed to occur, and the Lease shall be in full
force and effect and the first $30,000 of Additional DEP Cost shall be borne
equally by Landlord and Tenant. If (A) Landlord agrees to bear the excess cost
and the additional testing, sampling, investigation or remediation shall extend
beyond September 30, 1996; or (B) DEP shall issue a final determination which
is not an Acceptable Letter; and (C) Tenant's obligation, hereby confirmed, to
promptly restore the Property to its condition prior to the commencement of the
additional testing, sampling, investigation or remediation to the extent
reasonably practicable under the circumstances; then Landlord and Tenant shall
have the right, upon notice to the other, to terminate this Lease, in which
event, except for: (1) Landlord's and Tenant's obligation to pay for one-half
of the first $30,000 of Additional DEP Cost; (2)the obligation of the party
agreeing to bear the excess cost to pay all excess sums due and not to create,
suffer or permit to be created any lien, encumbrance or charge upon the
Property;(3) Landlord's obligation to return to Tenant the remaining balance,
if any, of the security deposited
4
<PAGE> 8
with Landlord by Tenant pursuant to this Lease after deducting the payments set
forth in this subsection (c)(ii) and subsection (a) above; and (4) Tenant's
obligation, hereby confirmed, to promptly restore the Property to its condition
prior to the commencement of the additional testing, sampling, investigation or
remediation to the extent reasonably practicable under the circumstances if
Tenant was the party which agreed to bear the excess cost; which obligations
shall survive the termination of this Lease, neither party shall have any
further obligation to the other under this Lease. Any additional testing,
sampling, investigation or remediation to be performed pursuant to this
subsection (c)(ii) shall be contracted for and performed under the supervision
of the party agreeing to bear that portion of the Additional DEP Cost which is
in excess of $30,000 (the "Contracting Party"); however, the other party shall
be kept apprised of all additional testing, sampling, investigation or
remediation and, to the extent that Tenant is the Contracting Party, Tenant
shall secure Landlord's approval to any such contracts and contractors which
approval shall not be unreasonably withheld or delayed.
(iii) Notwithstanding the foregoing provisions of
subsection (c)(i)and (c)(ii), if and to the extent that: (A) the Additional
DEP Cost relates to work required by the DEP with respect to polychlorinated
biphenyls ("PCB's") (disclosed in the Reports as hereinafter defined), then and
in that event, irrespective of the cost thereof, Tenant shall pay the first
$10,000 of such cost and any additional costs over $10,000 shall be borne
equally by Landlord and Tenant except that if the Additional DEP Cost relates
to work required by the DEP with respect to PCB's not disclosed in the Reports,
the provisions of subsection (c)(i) and (c)(ii) shall govern; and (B)
additional testing, sampling, investigation or remediation with respect to
PCB's is done at the behest of Tenant and is not required by DEP, then and in
that event, the costs thereof shall solely be borne by Tenant, irrespective of
the extent of such costs (the foregoing being the "PCB Costs").
(d) Landlord and Tenant shall give immediate notice to
the other, via facsimile, of any letter, correspondence, notice or other matter
received by it from the DEP.
(e) Landlord shall have no obligation to deliver
possession of that part of the Property to be delivered to Tenant pursuant to
Section 2.01 unless and until Tenant: (i) pays to Landlord, in the manner
hereinabove provided, any amounts due to Landlord under this Section 1.02,
including, without limitation, all amounts in respect of the Daily Fee and any
sums payable by Tenant for Additional DEP Cost under sub-section (c) above; and
(ii) in order to restore the security to be held under Article 35
5
<PAGE> 9
to the sum of $65,025.00, delivers to Landlord, a sum equal to the difference
between $65,025.00 and the monies then being held by Landlord as security under
Article 35 (the "Security Replenishment"), which amount Tenant covenants and
agrees to deliver to Landlord within seven (7) business days following the
Commencement Date. Notwithstanding the foregoing, Landlord hereby grants
Tenant and its representatives (non- exclusive) access to the Property solely
to perform any additional testing, sampling, investigation or remediation to be
performed pursuant to subsection (c) above.
(f) Notwithstanding anything otherwise contained in this
Lease to the contrary, in no event shall Tenant conduct any environmental
testing with respect to the Property at any time after the execution and
delivery of this Lease unless: (i) required to do so by Governmental
Requirements (as hereinafter defined); or (ii) Tenant reasonably believes that
such environmental testing is necessary or appropriate in order to protect
human health, safety or the environment. Section 1.03. Landlord shall, within
twelve (12) business days after the mutual execution and delivery of this
Lease, (a) remove the pile of debris located on the north side of the Property
along the fence line, and (b) clean the two (2) trench drains in the Building
located near the compactor in the east bay and inside the roll-up door near the
east side of the Building on the Property and remove all debris therefrom.
ARTICLE 2
POSSESSION AND
CONDITION OF PROPERTY
Section 2.01. Provided Tenant complies with its obligations
under Section 1.02(e), Landlord shall deliver possession of the Property to
Tenant, less Portion A and Portion B (each as hereinafter defined) to be
retained by Landlord pursuant to Section 2.03, one (1) business day following
notice to Landlord and/or its counsel of the occurrence of the Commencement
Date. Subject to the provisions of Section 2.03: If for any reason
whatsoever, Landlord shall fail to so deliver possession of the Property, less
Portion A and Portion B, on such date, Landlord shall not be subject to any
liability for damages or otherwise for failure to give such possession on such
date and the validity of this Lease (and each of the terms and provisions
thereof) shall not be impaired thereby, nor shall the same be construed in any
wise to extend the term of this Lease, but: (a) the rent payable hereunder
solely in respect of that portion of the Property not so timely delivered shall
be abated until Landlord shall deliver possession of such portion of the
Property to Tenant; (b) for each day that such portion of the Property is
6
<PAGE> 10
not so timely delivered, Tenant shall be entitled to a credit in the amount of
Base Rent (as hereinafter defined) otherwise accruing for such day(s), on a
prorated basis, against the Base Rent first due and owing under this Lease; and
(c) if such portion of the Property is not so delivered to Tenant within sixty
(60) days following the Commencement Date, Tenant shall have the option, to be
exercised within five (5) business days after the expiration of such sixty
(60)-day period, to terminate this Lease, whereupon Landlord shall refund to
Tenant such monies previously paid by Tenant on account of Base Rent and
security hereunder, and the parties shall then have no further rights and
obligations hereunder. Notwithstanding anything hereinabove contained, solely
the provisions of Section 2.03 shall apply and control in respect of the
delivery of possession of Portion A and Portion B.
Section 2.02. Tenant acknowledges and represents to Landlord
that it has thoroughly inspected and examined, or caused to be thoroughly
inspected and examined, the Property and that it is fully familiar with the
physical condition and state of repair thereof, and the condition of title
thereto, and Tenant does hereby agree to accept same in its existing condition
and state of repair, subject to any and all defects therein, latent or
otherwise, "AS IS", and subject to any and all violations noted of record
thereon by any governmental authority, and Landlord shall have no obligation to
do any work or make any installation, repair or alteration of any kind to or in
respect thereof. Further, the taking of possession of the Property or any
portion or portions thereof by Tenant shall be conclusive evidence that same
are in satisfactory condition at the time such possession is so taken. Tenant
hereby expressly acknowledges, represents, warrants and agrees that, except as
otherwise expressly set forth in this Lease, no representations, statements, or
warranties of any kind, express or implied, as to merchantability, fitness for
a particular purpose or use, or otherwise, have been made by or on behalf of
Landlord and/or Broker (as hereinafter defined) or their representatives in
respect of the Property, the status of title, the physical condition or state
of repair thereof, the income, profit potential or expenses of operation
thereof, the zoning or other laws, regulations, rules and/or orders applicable
thereto or any construction work or alterations intended to be made thereto,
Impositions (as hereinafter defined), the use that may be made of the Property
or any part thereof, or any other matter or thing affecting or relating to the
Property, and that Tenant has relied on no such representations, statements or
warranties, but solely on his own examination and inspection of the Property
and other investigations pertaining to the alteration or use thereof, and that
Landlord shall not in any event whatsoever be liable for any latent or patent
defects in the Property, or any claimed misrepresentations or breach of
warranties. Tenant hereby further acknowledges and agrees that
7
<PAGE> 11
none of Landlord, its agents or representatives or Broker have any duty to make
any disclosures to Tenant about the Property or any matter or thing related
thereto.
Section 2.03.
(a) Notwithstanding anything otherwise contained in this
Lease, including, without limitation, Section 2.01, Landlord hereby retains the
right to possess and utilize, and have access to, that portion of the Property
which is designated as: (i) Portion A of the Property ("Portion A"), as shown
on Exhibit C annexed hereto and made a part hereof, through and including
December 31, 1996; and (ii) Portion B of the Property ("Portion B"), as shown
on Exhibit B, through and including June 30, 1997. Landlord shall use Portion
A and Portion B for the storage of racks, equipment, clothing, shoes, handbags
and accessories, and uses incidental thereto; the responsibility of insuring
such personal property shall be that of Landlord. Landlord agrees not to
interfere with Tenant's access to the Property (less Portion A and Portion B);
provided, that, Tenant acknowledges that the use by Landlord of Portion A and
Portion B shall not be deemed an interference with Tenant's access.
(b) From and after the Commencement Date and for each
month that Landlord possesses and utilizes Portion A or Portion B, Tenant shall
be entitled to a credit of $300.00 per month against the monthly installment of
Base Rent then due and owing.
(c) Landlord agrees to deliver Portion A and Portion B to
Tenant vacant, broom clean and in the condition thereof existing on the
Commencement Date, subject to normal wear and tear, except to the extent damage
thereto is caused by Tenant.
(d) Landlord shall not be subject to liability for
damages or otherwise for failure to deliver possession of Portion A or Portion
B on the dates provided for above and the validity of this Lease (or any of the
provisions thereof) shall not be impaired thereby; the sole remedy of Tenant
shall be to remove those items of Landlord's personal property then remaining
in Portion A or Portion B, whichever was not timely vacated, to a reputable and
insured public warehouse, and if Landlord fails to pay the bill rendered by
such public warehouse within ten (10) business days after same has been
delivered to Landlord, Tenant may offset the amount thereof against the next
installment of Base Rent then due and owing.
(e) Landlord shall indemnify and defend Tenant from and
hold it harmless against any loss, cost, damage and expense (including
reasonable attorneys' fees) arising from claims of third parties by reason of
Landlord's use of Portion A and
8
<PAGE> 12
Portion B from and after the Commencement Date and during the respective
period(s) described above.
Section 2.04. Without in any way modifying or limiting the
provisions of Section 2.02, Landlord hereby assigns to Tenant, without any
recourse, representation or warranty whatsoever, the warranty for roofing work
performed on the Building made by Hagerman Roofing, dated March 8, 1989, a copy
of which is annexed hereto and made a part hereof as Exhibit D.
ARTICLE 3
RENT
Section 3.01. Throughout the Term, Tenant shall pay to
Landlord, or to such other person(s) as Landlord shall from time to time
designate in writing, rent at an annual rental rate (herein sometimes called
the "Base Rent") of: (i) THREE HUNDRED ONE THOUSAND SEVEN HUNDRED FIFTY AND
00/100 ($301,750.00) DOLLARS per annum commencing on the Commencement Date and
continuing through and including August 31, 1996, in equal monthly installments
of TWENTY-FIVE THOUSAND ONE HUNDRED FORTY-FIVE AND 83/100 ($25,145.83) DOLLARS;
(ii) THREE HUNDRED FORTY- FOUR THOUSAND TWO HUNDRED FIFTY AND 00/100
($344,250.00) DOLLARS per annum commencing on September 1, 1996 and continuing
through and including December 31, 1996, in equal monthly installments of
TWENTY-EIGHT THOUSAND SIX HUNDRED EIGHTY SEVEN AND 50/100 ($28,687.50) DOLLARS;
(iii) THREE HUNDRED SIXTY-FOUR THOUSAND FIVE HUNDRED AND 00/100 ($364,500.00)
DOLLARS per annum commencing on January 1, 1997 and continuing through and
including February 28, 1997, in equal monthly installments of THIRTY THOUSAND
THREE HUNDRED SEVENTY-FIVE AND 00/100 ($30,375.00) DOLLARS; (iv) FOUR HUNDRED
THIRTEEN THOUSAND ONE HUNDRED AND 00/100 ($413,100.00) DOLLARS per annum
commencing on March 1, 1997 and continuing through and including February 28,
1999, in equal monthly installments of THIRTY-FOUR THOUSAND FOUR HUNDRED
TWENTY-FIVE AND 00/100 ($34,425.00) DOLLARS; (v) FOUR HUNDRED THIRTY-ONE
THOUSAND FOUR HUNDRED SIXTY AND 00/100 ($431,460.00) DOLLARS per annum
commencing on March 1, 1999 and continuing through and including February 28,
2001, in equal monthly installments of THIRTY-FIVE THOUSAND NINE HUNDRED FIFTY-
FIVE AND 00/100 ($35,955.00) DOLLARS; and (vi) FIVE HUNDRED THOUSAND THREE
HUNDRED TEN AND 00/100 ($500,310.00) DOLLARS per annum commencing on March 1,
2001 and continuing through and including the Expiration Date, in equal monthly
installments of FORTY-ONE THOUSAND SIX HUNDRED NINETY-TWO AND 50/100
($41,692.50) DOLLARS; Tenant agrees to pay the Base Rent in lawful money of the
United States which shall be legal tender in payment of all debts and dues,
public and private, at the time of payment, in equal monthly installments
aforesaid, in advance, on the first
9
<PAGE> 13
day of each month during the term of this Lease, at the office of Landlord or
such other place as Landlord may designate in writing, without any setoff or
deduction whatsoever, except: (a) Tenant shall pay the first installment of
Base Rent within three (3) days after the execution hereof; (b) provided Tenant
is not then in default hereunder, Tenant shall be entitled to a credit of
$8,000.00 against the Base Rent first due and owing under this Lease; and (c)
as specifically provided for in Sections 2.01(b), 2.03, 8.07, 9.03 and 17.02.
If the Commencement Date is not the first day of a calendar
month, the first monthly installment of Base Rent shall be due on the
Commencement Date and shall be prorated to the end of the calendar month next
following in which said Commencement Date occurred, so that subsequent monthly
installments of Base Rent will be due on the first day of the second calendar
month following the month in which the Commencement Date occurred and on the
first day of each subsequent calendar month throughout the term of this Lease.
Section 3.02. All Impositions, charges, costs, expenses and
sums of any kind which Tenant has assumed or agreed to pay hereunder, together
with all interest and penalties that may accrue thereon in the event of
Tenant's failure to pay the same as herein provided or otherwise, all other
costs, expenses and damages which Landlord may suffer or incur, and any and all
other sums which may become due by reason of any default of Tenant or any
failure on Tenant's part to perform or comply with the agreements, terms,
covenants and conditions of this Lease on Tenant's part to be performed or
complied with, and each and every item thereof, shall be and be deemed to be
"Additional Rent" hereunder and, in the event of the non-payment thereof,
Landlord (in addition to and not in limitation of its other rights and remedies
hereunder) shall have all of the rights and remedies in respect thereof as are
herein or by law provided in the case of the nonpayment of Base Rent.
Section 3.03. If Tenant shall be in arrears in the payment of
Base Rent or Additional Rent (herein sometimes collectively referred to as
"Rental"), Tenant waives its rights, if any, to designate the items in arrears
against which any payments made by Tenant are to be credited and Landlord may
apply any of such payments to any such items in arrears as Landlord, in its
sole discretion, shall determine, irrespective of any designation or request by
Tenant as to the items against which any such payments shall be credited.
Section 3.04. No payment by Tenant nor receipt by Landlord of
a lesser amount than may be required to be paid hereunder shall be deemed to be
other than on account of any such payment, nor shall any endorsement or
statement on any check or
10
<PAGE> 14
any letter accompanying any check tendered as payment be deemed an accord and
satisfaction and Landlord may accept such check or payment without prejudice to
Landlord's right to recover the balance of such payment due or pursue any other
right or remedy in this Lease provided in respect thereof or otherwise.
Section 3.05. It is the intention of Landlord and Tenant
that: (a) Rental be absolutely net to Landlord without any abatement,
diminution, reduction, deduction, counterclaim, setoff, or offset whatsoever,
except as specifically provided for in Sections 2.01(b), 2.03, 3.01(b), 8.07,
9.03 and 17.02, so that each Lease Year of the Term shall yield, net to
Landlord, all Rental; and (b) Tenant pay all costs, expenses and charges of
every kind relating to the Property or the maintenance, management and
operation thereof that may arise or become due or payable during or after (but
attributable to a period falling within) the Term. Tenant covenants to pay the
Rental as above and/or hereinafter provided.
ARTICLE 4
IMPOSITIONS AND UTILITIES
Section 4.01.
(a) Tenant covenants and agrees to bear, pay and
discharge, as hereinafter provided and as Additional Rent hereunder, any and
all of the following items (collectively, "Impositions"):
(i) real estate and other taxes and general and
special assessments; (ii) personal property taxes, if any;
(iii) use, occupancy and/or rent taxes; (iv) water, water
meter and sewer rents, rates, and charges; (v) license and
permit fees; (vi) any fines, penalties, and other similar
governmental charges applicable to the foregoing, together
with any interest or costs with respect to the foregoing; and
(vii) any other governmental or quasi-governmental levies,
fees, rents, assessments, or taxes and charges, general and
special, ordinary and extraordinary, foreseen and unforeseen,
of any kind and nature whatsoever which Landlord may be
obligated to pay by virtue of its ownership and/or leasing of
the Property and/or Tenant's operation thereof;
which at any time during the Term are (A) assessed, charged, levied, confirmed
or imposed upon or against: (1) the Property,
11
<PAGE> 15
any estate or interest therein, or the use, rental or occupancy thereof; (2)
any document to which Tenant is a party creating or transferring any interest
or estate in the Property, the use, rental or occupancy thereof, including,
without limitation, this Lease; (3) the entity holding the tenant's interest
and estate in any of the foregoing; (4) the sidewalks or streets in front of or
adjoining the Property; (5) any vault, passageway or space in, over or under
such sidewalk or street adjacent or relating to the Property; (6) any other
appurtenances of the Property; (7) any personal property, equipment or other
facility used in the operation of the Property; and/or (8) the rental or income
derived therefrom (or any portion thereof) or any estate or interest therein;
or (B) otherwise imposed upon Tenant by the terms of this Lease. Subject to
the provisions of Article 5, each such Imposition, or installment thereof, to
be paid by Tenant hereunder shall be paid to Landlord not later than twenty
(20) days prior to the due date thereof, that is, the date on which any fine,
penalty, interest, or cost may be added thereto or imposed by law for the
nonpayment thereof; provided, however, that if by law any Imposition, at the
option of the taxpayer, may be paid in installments (whether or not interest
shall accrue on the unpaid balance of such Imposition), Tenant may exercise the
option to pay the same in such installments, in which event Tenant shall pay
Landlord only such installment payments as shall become due prior to the date
herein definitely fixed for the expiration of the Term, unless this Lease is
terminated by reason of Tenant's default in which event all such installment
payments, including those which otherwise would be payable by Tenant subsequent
to the termination of this Lease shall be paid by Tenant prior to such date.
All of Tenant's obligations hereunder shall survive the Term.
(b) It is the intention of the parties that the Base Rent
herein reserved is net and that Landlord shall receive same free of all
Impositions or other charges relating to the Property, and Tenant shall pay any
and all costs, charges, expenses and damages which shall or may be chargeable
during the Term against the Property and, except for the execution and delivery
of this Lease, would have been payable by Landlord. However, nothing herein
contained shall require Tenant to pay any municipal, state or federal corporate
income or franchise taxes, or any estate, inheritance, transfer or legacy
taxes, imposed upon Landlord, whether based upon the income or capital of
Landlord, or any municipal, state, or federal succession or gift taxes of
Landlord; provided, nevertheless, that if at any time during the Term the
present method of taxation or assessment shall be changed so that in lieu of or
in addition to the whole or any part of the taxes, assessments or other charges
now levied, assessed or imposed on real estate or the improvements thereon
constituting Impositions, there shall be levied, assessed or imposed wholly or
partially a franchise tax, capital levy or
12
<PAGE> 16
other tax on real estate as such, or on the use and occupancy thereof, or on
the rents or income derived therefrom, or if any such tax or charge, or any
part thereof, howsoever called, shall be measured by or based on the Property,
the Land or the rents or income derived therefrom, then all such taxes,
assessments, levies or charges or the part thereof so measured or based shall
be deemed to be included within the definition of the term "Impositions" for
the purpose of this Lease.
Section 4.02. Any Imposition which Tenant is required to
bear, pay or discharge under this Lease, relating to a fiscal period of a
taxing authority, a part of which period is included within the Term and a part
of which is included in a period of time prior to the Commencement Date or
after the expiration of this Lease shall be apportioned (whether or not such
Imposition shall be assessed, levied, confirmed, imposed upon or in respect of
or become a lien upon the Property, or shall become payable, during the Term)
between Landlord and Tenant as of the Commencement Date and/or the expiration
of this Lease, as the case may be, so that Tenant shall pay that portion of
such Imposition which is attributable to that part of such fiscal period
included in the Term and Landlord shall pay or cause to be discharged the
remainder thereof; provided, however, that if a termination of this Lease
results from any default by Tenant, Tenant shall not be entitled to any such
apportionment.
Section 4.03. Tenant, after prior notice to Landlord in each
instance, shall have the right, at its sole cost and expense and free of any
expense to Landlord, to contest the amount or validity, in whole or in part, of
any Imposition which Tenant is required to bear, pay or discharge under this
Lease by appropriate proceedings, instituted promptly and in good faith and
conducted diligently, after payment by Tenant of such Imposition or, if
non-payment of such Imposition is permitted by law during the period of such
contest, then prior to such payment, in which event, notwithstanding the
provisions of Section 4.01, payment of such Imposition may be postponed if, and
only so long as:
(a) neither the Property nor any part thereof, would, by
reason of such postponement or nonpayment, in the determination of any
mortgagee holding an interest in the Property (or any interest therein) or in
the reasonable judgment of Landlord, be in danger of being forfeited or lost;
or Landlord would not be subjected to any other liability, penalty or charge of
any kind;
(b) Tenant continues to prosecute such proceeding
diligently to final adjudication; and
13
<PAGE> 17
(c) in the case of any Imposition(s) which, singly or in
the aggregate, cover a period of eighteen (18) months or more, Tenant shall
have deposited with Landlord cash or other security reasonably approved by
Landlord, in the amount so contested and unpaid, together with all interest and
penalties in connection therewith, and all charges as determined by Landlord
that may or might be assessed against or become a charge on the Property or any
part thereof in such proceedings.
Upon the termination of such proceedings, it shall be the obligation of Tenant
to pay Landlord the amount of such Imposition or the part thereof as finally
determined in such proceedings, the payment of which may have been deferred
during the prosecution of such proceedings, together with all costs, fees
(including reasonable attorneys' fees and disbursements), interest, penalties
or other liabilities in connection therewith, and, if requested by Tenant,
Landlord shall disburse said moneys on deposit with it directly to the taxing
authority to whom such Imposition is payable.
Nothing contained in this Section 4.03, or elsewhere in this Article 4, shall
be deemed to limit Tenant's obligation to make deposits as provided for in
Article 5.
Section 4.04. Any certificate, advice or bill of non-payment
of any Imposition, issued by the appropriate official designated by law to make
or issue the same or to receive payment of such Imposition, shall be prima
facie evidence that such Imposition is due and unpaid at the time or date
stated therein.
Section 4.05. Tenant covenants and agrees to pay or cause to
be paid, as Additional Rent hereunder, as and when same shall become due and
payable, all charges for utilities, including, without limitation, air
conditioning, heat, water, sewerage, gas, steam, hot water, electricity, light,
telephone and communication services, and power furnished to the Property,
Tenant, or any other occupant of the Property.
ARTICLE 5
DEPOSITS FOR IMPOSITIONS
Section 5.01. Supplementing the provisions of Article 4,
Tenant agrees that, following an Event of Default by Tenant under Article 4,
Tenant shall, on fifteen (15) days prior notice from Landlord, to deposit with
Landlord, on the first day of every month during the remaining Term, an amount
equal to one-twelfth (1/12) of all Impositions for the then current fiscal tax
year(s) and reasonably anticipated increases therein, all as reasonably
estimated by Landlord. At least thirty (30) days prior to the due date of any
Imposition, Tenant also shall
14
<PAGE> 18
deposit with Landlord such additional amounts as may be necessary to provide
Landlord with sufficient funds to pay each such Imposition. Landlord shall
hold the moneys so deposited not as a trust fund and, provided Tenant is not in
default under this Lease, shall apply the same to the payment of the Imposition
for which deposited not later than the last day on which such Imposition may be
paid without penalty or interest. If at any time the amount of any Imposition
is increased, or Landlord, in its reasonable judgment, deems insufficient the
amounts deposited as aforesaid, the monthly deposits thereupon shall be
increased and Tenant shall deposit with Landlord, within twenty (20) days after
demand, such additional amount or amounts as Landlord may reasonably deem
sufficient so that the moneys then available for paying such Imposition, plus
the increased monthly deposits and such additional amount or amounts shall be
sufficient to pay such Imposition twenty (20) days before such Imposition
becomes due and payable. In determining whether Landlord has on hand
sufficient moneys to pay an Imposition at least twenty (20) days prior to the
due date thereof, deposits for each category of Imposition shall be treated
separately. Landlord shall not be obligated to apply moneys deposited for the
payment of an Imposition not yet due and payable to the payment of an
Imposition that is due and payable. If any interest is earned on said
deposits, such interest shall be accumulated and retained with such deposits.
If this Lease shall terminate by reason of an Event of Default, all deposits
then held by Landlord may be retained by Landlord and may be applied by
Landlord on account of any and all sums then or thereafter due from Tenant
under this Lease.
Section 5.02. Upon a sale, assignment or transfer by Landlord
of its interest in the Property, Landlord shall transfer the moneys deposited
with it pursuant to the provisions of Sections 5.01 and 7.03 to the party which
acquires Landlord's interest and becomes Landlord hereunder. Upon such sale or
transfer and notice thereof to Tenant, and provided that Landlord has, in fact,
transferred such deposits, Landlord (or any successor landlord) shall be
automatically released from all liability with respect to such deposits. The
provisions of this Section 5.02 shall apply to each successive transfer of such
deposits.
ARTICLE 6
LATE CHARGES
Section 6.01. If payment of any item of Rental shall become
overdue for ten (10) days beyond the date on which it is due and payable as in
this Lease provided, Tenant agrees to pay to Landlord: (a) as and for an agreed
upon late charge (and not as a penalty), an amount equal to $.04 for every
dollar thereof
15
<PAGE> 19
overdue, which shall immediately become due and payable to Landlord as
liquidated damages for the additional administrative, accounting and overhead
costs and expenses incurred by Landlord by reason of Tenant's failure to make
prompt payment; provided that for the first time in each Lease Year in which
such late charge would otherwise be due and payable, it will be due and payable
ten (10) days after notice thereof to Tenant (which provision in no way
obligates or requires Landlord to give any notices to Tenant in any future
occurrences during such Lease Year before such late charge will be due and
payable); and (b) an amount equal to the lower of: (i) four (4%) percent in
excess of the annual prime rate charged by Citibank, N.A. from time to time; or
(ii) the highest rate permitted by law, calculated on the amount not paid when
due, from the due date until the date of payment; and said amounts shall be
payable by Tenant without further notice or demand by Landlord. No failure by
Landlord to insist upon the strict performance by Tenant of Tenant's obligation
to pay all amounts payable to Landlord pursuant to this Article shall
constitute a waiver by Landlord of its right to enforce the provisions of this
Article 6 in any instance thereafter occurring. Nothing contained in this
Article 6 is intended in any way to extend any grace periods or notice periods
provided for elsewhere in this Lease, nor shall this Article 6 be construed to
be a limitation of or a substitution for any other rights, remedies and
privileges of Landlord under this Lease or otherwise. All amounts payable to
Landlord pursuant to this Article 6 shall be considered Additional Rent.
ARTICLE 7
INSURANCE
Section 7.01. (a) Throughout the Term, Tenant, at its
sole cost and expense, shall provide and maintain in force or cause to be
provided and maintained in force in respect of the Property, all of the
following:
(i) Building insurance on an "all risk" basis
covering the Building including, without limitation, fire
insurance and insurance against loss or damage by lightning,
windstorm, tornado, hail, explosion, riot, riot attending a
strike, civil commotion, aircraft, vehicle, smoke, vandalism,
malicious mischief and other hazards of whatsoever kind now or
hereafter covered by the usual "all risk" policy, and damage
by water. All such insurance shall be carried and maintained
in an amount sufficient to prevent Tenant from becoming a
coinsurer under the provisions of any applicable policies of
insurance, but in any event, in an amount not less than one
hundred (100%) percent of the full replacement
16
<PAGE> 20
value of the Building without deduction for depreciation
(including the cost of debris removal, but excluding the cost
of excavations, footings and foundations); replacement value
shall hereafter be determined from time to time at the request
of either party, but not less frequently than required by the
standard "agreed amount clause" endorsement (which endorsement
shall be attached to the policy), by the insurer or by an
insurance appraiser approved by the insurer, it being agreed
that no omission on the part of Landlord to request any such
determination shall relieve Tenant of its obligation to
determine such replacement value as aforesaid. Tenant agrees
that such insurance shall never be carried in an amount less
than $3,500,000.00.
(ii) Insurance against liability for bodily and
personal injury, death and property damage, it being agreed
that such insurance shall be at least in the limits set forth
below or in such higher limits as may from time to time be
reasonably required by Landlord in accordance with subsection
(a)(vi) of this Section 7.01. Such liability insurance
coverage shall be written on a Commercial General Public
Liability form (including, without limitation, motor vehicle
liability for all owned, non-owned and hired vehicles and
property damage coverage), and containing the so-called
"occurrence clause", covering specifically all occurrences in,
on or about the Property, including any elevators and
escalators therein, and all sidewalks adjoining the Property;
and such insurance policies shall contain an agreement by the
insurer to indemnify and hold Landlord (and Landlord's agents,
principals, shareholders, officers, agents, directors and
employees) harmless from and against all cost, expense and/or
liability arising out of or based upon any and all claims,
accidents, injuries and damages mentioned in Article 18 and
shall refer expressly to those contractual indemnity
provisions contained in Section 18.01 which pertain to the
liability coverage required to be carried hereunder. All
insurance against liability for bodily and personal injury,
death and property damage, shall be written for a combined
single limit of not less than $5,000,000 for any single
occurrence; and a minimum combined single limit of $1,000,000
shall be written for Water Damage Legal Liability and
Sprinkler Leakage Legal Liability.
(iii) Boiler and Machinery insurance (if boilers or
other pressure vessels exist or are installed) on a broad form
basis in an amount not less than one hundred
17
<PAGE> 21
(100%) percent of the actual replacement value thereof (including the
cost of debris removal), such replacement value to be determined in
connection with the replacement value determination required pursuant
to subsection (a)(i) of this Section 7.01).
(iv) Worker's Compensation, State of New Jersey
Temporary Disability Income insurance, and all other
statutory forms of insurance now or hereafter prescribed by
law and in limits not less than the statutorily required
amounts, covering all persons employed by Tenant in connection
with the operations of Tenant conducted at the Property or by
Tenant or others in connection with any construction thereon,
which may be provided by Tenant for all persons employed by
Tenant, or by Tenant's contractors for all persons employed by
such contractors.
(v) Rental insurance utilizing "all risk"
coverage in an amount necessary to provide full coverage for
not less than one year's Base Rent and Additional Rent.
(vi) Such other insurance and/or such higher
limits for the insurance coverages prescribed in this Section
7.01 as may from time to time be reasonably required by
Landlord against the aforementioned or such other insurable
hazards as at the time would be insured against by prudent
owners of buildings used for business operations of a size,
nature and character similar to the Property, including, but
not limited to, any excess liability coverage.
(b) Prior to the commencement of any Restoration or any
Capital Improvement (as such terms are hereinafter defined), and until
completion thereof, Tenant shall provide and maintain in force or cause to be
provided and maintained in force, in addition to the insurance coverages
described in subsection (a) of this Section 7.01:
(i) Contractor's Comprehensive and Motor Vehicle
Liability insurance naming Tenant as an insured and Landlord
as additional insured, for a combined single limit of not less
than $5,000,000 for bodily and personal injury and death, and
property damage, such insurance to include Operations Property
Liability, Contractor's Protective Liability on the operations
of all subcontractors, Completed Operations, Contractual
Liability (designating the indemnity provisions of all
construction agreements), and Motor Vehicle Liability for all
vehicles owned, leased or hired by Tenant and
18
<PAGE> 22
for all vehicles owned, leased or hired by contractors or
subcontractors, and, if the contractor is undertaking
foundation, excavation, or demolition work, an endorsement that
such operations are covered and that the "XCU Exclusions" have
been deleted; and
(ii) Builder's Risk Insurance (standard "all risk"
or equivalent coverage) written on a completed value (non-
reporting) basis, naming Tenant as an insured and Landlord as
additional insured.
(c) All insurance obtained or caused to be obtained by
Tenant, as required by this Section 7.01 (except for the coverage described in
subsection (a)(iv) of this Section), shall be carried in favor of Landlord and
Tenant, as their respective interests may appear, and, in respect of any
mortgagee of the Property, such insurance, (1) in the case of property
insurance or insurance covering any economic loss resulting from any risks
covered by any such property insurance, shall name each such mortgagee under a
standard New Jersey mortgagee endorsement, and (2) in the case of the insurance
described in subsections (a)(ii) of this Section 7.01, shall name each
mortgagee as an additional insured, as its interest may appear.
Section 7.02.
(a) The proceeds under all policies required by any
provision of this Lease insuring against damage or destruction of the Property
by fire or other casualty shall be payable to Landlord, and all policies shall
contain a provision to such effect. All insurance required by any provision of
this Lease shall be in such form and shall be issued by responsible insurance
companies licensed to do business in the State of New Jersey and with a rating
of not less than "A-XII", as rated by Best Insurance Guide, as are reasonably
acceptable to Landlord. All policies referred to in this Lease shall be
procured, or caused to be procured, for periods of not less than one (1) year.
Duplicate originals of all such policies and endorsements thereto, or
certificates thereof, and evidence that the premiums therefor have been paid in
full shall be delivered to all parties required hereby to be insured thereunder
prior to the Commencement Date, and such duplicate originals or renewal
policies, or certificates thereof, replacing any policies expiring during the
Term shall be delivered to said parties at least thirty (30) days before the
date of expiration of any policy, together with proof that the full premiums
therefor have been paid. Premiums on policies shall not be financed without
Landlord's consent in each instance and, in any event, in any manner whereby
the lender, on default or otherwise, shall have the right or privilege of
surrendering or cancelling the policies.
19
<PAGE> 23
(b) Tenant and Landlord shall cooperate in connection
with the collection of any insurance proceeds that may be due in the event of
loss and Tenant and Landlord shall execute and deliver such proofs of loss and
other instruments which may be required for the purpose of obtaining the
recovery of any such insurance proceeds.
(c) Tenant shall not carry (nor shall any subtenants of
Tenant carry) any additional or separate insurance (other than liability
insurance) concurrent in form or contributing in the event of loss with that
required by this Lease to be furnished by Tenant, or in excess of the amounts
required by this Lease, unless Landlord, Tenant and any mortgagee are included
therein as insureds with loss payable as provided in this Lease (and any such
policy that fails to have such inclusion shall, as between Landlord and Tenant,
be deemed to have same). Tenant shall promptly notify Landlord if such
additional or separate insurance is carried and shall cause originals or copies
of the same to be delivered as required in this Lease.
(d) Tenant shall not violate or permit to be violated any
of the conditions or provisions of any policies procured by it with respect to
the Property and Tenant shall timely perform and satisfy or cause to be
performed and satisfied the requirements and recommendations of the companies
writing such policies (collectively, "Insurance Requirements") so that at all
times companies of good standing shall be willing to write and/or continue such
insurance.
(e) Every policy of insurance required to be obtained by
Tenant hereunder shall provide that:
(1) no cancellation, material change or reduction
thereof shall be effective until at least thirty (30) days after
receipt of written notice thereof by all parties insured thereunder;
and
(2) all losses shall be payable notwithstanding
any act, omission or negligence of Tenant, its agents or employees
which might, absent such agreement, result in a forfeiture of all or
part of such insurance payment and notwithstanding (i) the occupation
or use of the Property for purposes more hazardous than permitted by
the terms of such policy, (ii) any lease termination proceeding or any
foreclosure or other action or proceeding taken pursuant to any
provision of any mortgage, or (iii) any change in title or ownership
of the Property or any part or parts thereof.
(f) Each property and casualty insurance policy and
every policy insuring an economic loss resulting from any risks covered by any
such property and casualty insurance (whether or
20
<PAGE> 24
not required to be carried hereunder), and each certificate or memorandum
thereof, shall contain a clause or endorsement, if obtainable (whether or not
additional premium shall be charged therefor) whereby the insurance company
waives all rights of subrogation against Landlord and Tenant, whether or not
insured parties thereunder, or consents to the release of liability among all
such parties. The parties hereby release each other from any and all liability
for loss or damage covered by such insurance under a policy containing such a
clause or endorsement to the extent of any proceeds paid thereunder.
Section 7.03. Following an Event of Default by Tenant under
this Article 7, Tenant agrees, on fifteen (15) days prior notice from Landlord,
to deposit with Landlord, on the first day of every month during the remaining
Term such amounts as Landlord from time to time may reasonably estimate as
necessary to pay premiums for insurance as herein covenanted to be furnished by
Tenant. At least thirty (30) days prior to the due date of any such premiums
Tenant also shall deposit with Landlord such additional amounts as may be
necessary to provide Landlord with sufficient funds to pay same. Landlord
shall hold the moneys so deposited without interest, not as a trust fund and
(provided Tenant is not in default under this Lease) shall apply the same to
the payment of the premiums for which deposited not later than the last day on
which such premiums may be paid. If at any time the amount of any premium is
increased, or Landlord, in its reasonable judgment, deems insufficient the
amounts deposited as aforesaid, the monthly deposits thereupon shall be
increased and Tenant shall deposit with Landlord, within twenty (20) days after
demand, such additional amount or amounts as Landlord may reasonably deem
sufficient so that the amount then available for paying such premium, plus the
increased monthly deposits and such additional amount or amounts shall be
sufficient to pay same twenty (20) days before such premiums becomes due and
payable. If any interest is earned on said deposits, such interest shall be
accumulated and retained with such deposits. If Tenant is in default under
this Lease or if this Lease shall terminate by reason of an Event of Default or
otherwise, all deposits then held by Landlord may be retained by Landlord and
may be applied by Landlord on account of any and all sums then or thereafter
due from Tenant under this Lease or as Landlord shall otherwise determine.
21
<PAGE> 25
ARTICLE 8
DAMAGE OR DESTRUCTION AND
USE OF CASUALTY INSURANCE PROCEEDS
Section 8.01.
(a) If all or any part of the Building shall be damaged
or destroyed in whole or in part by fire or other casualty of any kind or
nature, ordinary or extraordinary, foreseen or unforeseen, Tenant shall give
Landlord immediate notice thereof, and Tenant, at its sole cost and expense,
and whether or not the insurance proceeds, if any, shall be sufficient to pay
for the necessary repairs, restorations, replacements and rebuilding
(collectively, "Restoration"), shall promptly repair, restore, replace and
rebuild (collectively, "Restore"), or cause to be Restored, the damaged or
destroyed Building at least to the extent of the value, quality and condition
and as nearly as possible to the character thereof existing immediately prior
to such occurrence, or with such changes or alterations thereto as may be made
at Tenant's election in conformity with and subject to the terms and conditions
of Article 12 or as may be required by any governmental authorities; provided,
however, Tenant's obligation to Restore is subject to subsection (b) of this
Section 8.01.
(b) Notwithstanding the foregoing provisions of
subsection (a) of this Section 8.01, in the event that Tenant exercises the
option to purchase the Property, in the manner and as provided for in Article
36, or if Landlord exercises the Right to Sell (as hereinafter defined in
Article 37), then, provided that the Closing or the Sale Closing (each as
hereinafter defined) shall occur in accordance with Articles 36 or 37, as the
case may be, Tenant shall have no obligation to Restore. In such event, any
insurance proceeds received by Landlord in connection with damage and
destruction to the Building from insurance maintained or caused to be
maintained by Tenant (other than rental insurance proceeds), less the
reasonable expenses (including reasonable attorneys' fees and disbursements)
paid or incurred in collecting such proceeds and in performing necessary
repairs to secure the Property, together with the interest earned thereon
(Landlord hereby agreeing to maintain such proceeds in an interest-bearing
account), shall be a credit against the Purchase Price or the Sale Purchase
Price (each as hereinafter defined), as the case may be; provided that, if such
insurance proceeds are not received by Landlord prior to the Closing or the
Sale Closing, as the case may be, then, in lieu of such credit, Landlord shall
assign its interest in such insurance proceeds (less such expenses) to Tenant
at the Closing or the Sale Closing, as the case may be.
22
<PAGE> 26
Section 8.02.
(a) If Tenant shall have the obligation to Restore under
Section 8.01, subject to Tenant's compliance with the other provisions of this
Article and provided that no Event of Default by Tenant shall exist hereunder,
Landlord shall pay over to Tenant, in the manner provided in subsection (c) of
this Section 8.02, or to such other person(s) who may be entitled to receive
the same, any insurance proceeds which may be received by Landlord in
connection with damage and destruction to the Building from insurance
maintained or caused to be maintained by Tenant (other than rental insurance
proceeds), but in no event to any extent or in any sum exceeding the amount
actually received or collected by Landlord in connection with such damage or
destruction of the Building; provided, however, that before paying such
proceeds over to Tenant, Landlord shall first be entitled to reimburse itself
therefrom to the extent, if any, of the reasonable expenses (including
reasonable attorneys' fees and disbursements) paid or incurred by Landlord in
the collection of such proceeds.
(b) Prior to the commencement of any Restoration:
(i) Tenant shall furnish to Landlord for its prior
approval a complete set of working plans and specifications
for the Restoration, prepared by architects and engineers
licensed in New Jersey, selected by Tenant, subject to the
prior approval of Landlord ("Tenant's Architect(s)" and
"Tenant's Engineer(s)", respectively), not to be unreasonably
withheld or delayed;
(ii) the plans and specifications shall have been
approved by all governmental authorities (and interested
public utilities) having or claiming jurisdiction, and copies
of such approvals, and all permits, authorizations,
certificates and licenses required in connection with the
performance of the Restoration by all governmental authorities
(and interested public utilities) having or claiming
jurisdiction shall have been furnished to Landlord;
(iii) a list of all contractors, subcontractors,
engineers and architects proposed to be used by Tenant shall
have been submitted to, and approved by, Landlord, and copies
of the proposed contracts and other agreements with such
parties shall have been submitted to, and approved by,
Landlord; the foregoing approvals of Landlord in this clause
(iii) provided for shall not be unreasonably withheld or
delayed;
23
<PAGE> 27
(iv) Tenant shall furnish to Landlord certificates
evidencing the insurance coverage required pursuant to Section
7.01(b) of this Lease; and any increases in insurance premiums
relating to the Restoration or otherwise shall have been paid;
and
(v) a detailed cost estimate for the Restoration,
prepared by Tenant's Architect(s), Tenant's Engineer(s) or
approved general contractor, shall have been furnished to
Landlord, together with a cash deposit, letter of credit or
surety bond reasonably acceptable to Landlord in the amount
equal to 110% of the excess, if any, of the estimated cost of
Restoration over the net insurance proceeds available to
Tenant; if at any time Tenant's Architect(s) or Tenant's
Engineer(s) shall, at their or Tenant's initiative or at
Landlord's request that such cost estimate be reviewed,
determine that such detailed cost estimate for the Restoration
should be increased, then the cash deposit, letter of credit
or surety bond previously furnished to Landlord shall be
augmented by Tenant, on demand, delivering to Landlord
additional collateral reasonably requested by Landlord.
(c) The insurance proceeds shall be paid to Tenant in
installments as the Restoration progresses, upon application to be submitted by
Tenant to Landlord showing the cost of the Restoration incurred since the last
previous application. The amount of each installment of such proceeds to be
paid to Tenant shall be such proportion of the total proceeds received by
Landlord (less the expenses and charges permitted to be deducted therefrom, as
aforesaid) as the value of the labor and materials theretofore incorporated in
the Restoration bears to the total estimated cost of the Restoration, less (x)
all payments theretofore made to Tenant out of such proceeds, and (y) the
greater of (i) the actual retainage called for by the construction agreement(s)
for such Restoration, or (ii) ten (10%) percent of the amount so determined,
until completion of the Restoration. Upon completion of the Restoration by
Tenant, and upon application for payment submitted by Tenant to Landlord and
compliance with the conditions set forth in Section 8.03, the balance of any
and all proceeds held by Landlord shall be paid first to each of Tenant's
contractors in payment of the amounts due and remaining unpaid on account of
work performed in connection with the Restoration and any amounts retained
under such contracts, and the balance of the proceeds, if any, shall be paid to
Tenant.
(d) If any vendor's, mechanic's, laborer's, or
materialman's lien shall be filed against the Building or any part thereof,
Tenant shall promptly comply with its obligations under Article 15 hereof and
pending compliance therewith Landlord shall
24
<PAGE> 28
withhold from the disbursement of insurance proceeds an amount equal to 125% of
such lien.
(e) If the insurance proceeds shall be insufficient for
the purpose of paying for any Restoration, Tenant shall nevertheless be
required to make the Restoration and shall deposit with Landlord any additional
sums required to complete the same in the manner prescribed by this Article 8.
Until such deposit is made with Landlord, Landlord shall have no obligation to
make any disbursements of insurance proceeds as contemplated in this Article 8
or otherwise.
Section 8.03. The following shall be further conditions
precedent to each payment to be made to Tenant or otherwise as provided in
Section 8.02 hereof:
(a) there shall be delivered to Landlord, at the time of
each request for a disbursement of insurance proceeds:
(1) a certificate of Tenant's Architect(s) in
charge of such Restoration setting forth the following: (i) that the
sum then requested to be disbursed either has been paid and/or is then
justly due to contractors, subcontractors, materialmen, engineers,
architects or other persons (whose names and addresses shall be
stated) who have rendered or furnished services or materials for the
Restoration and giving a brief description of such services and
materials and stating in reasonable detail the progress of the
Restoration up to the date of said certificate; (ii) that so far as is
known to the Architect after due inquiry no part of such expenditures
has been or is being made the basis, in any previous or then pending
request, for the disbursement of insurance proceeds or has been made
out of the proceeds of insurance received by Tenant; (iii) that the
sum then requested to be disbursed, plus all sums previously
disbursed, does not exceed the value of the Restoration insofar as
actually accomplished up to the date of such certificate; (iv) that
except in the case of the final request for payment by Tenant, in the
opinion of the Tenant's Architect(s), the remainder of the amount then
held by Landlord will be sufficient to pay in full for the completion
of the Restoration, and estimating, in reasonable detail, the total
remaining costs of completion of such Restoration; and (v) in the case
of the final request for payment by Tenant, that the Restoration has
been completed in accordance with the plans and specifications
therefor and all Governmental Requirements (as hereinafter defined);
(2) the contractors' requisitions for payment
which, in addition to setting forth the amount then claimed to be due
for work, labor and materials performed and
25
<PAGE> 29
furnished, as approved by the Architect, shall certify that, except
for such amounts as shall then be due, there is no outstanding
indebtedness known, after due inquiry, which is then due and payable
for work, labor, services or materials in connection with the
Restoration; and
(3) in the case of the final request for payment,
lien waivers from all contractors and materialmen that have performed
work or furnished materials in connection with the Restoration.
(b) at the time of making any such payment to Tenant, no
Event of Default shall exist hereunder.
Section 8.04. Tenant agrees that Landlord shall have the
right to participate in the adjustment of property and casualty insurance
claims, and to approve the compromise and/or settlement of any property or
casualty insurance claims relating thereto, which approval shall not be
unreasonably withheld.
Section 8.05. With respect to any and all Restoration of the
Building, irrespective of the cost or estimated cost thereof, Tenant shall:
(a) perform such Restoration or cause the same to be
performed in accordance with all Governmental Requirements and Insurance
Requirements applicable thereto; and
(b) commence any such Restoration within ninety (90) days
after the occurrence causing the need therefor and diligently and continuously
prosecute same to completion; provided that, if Tenant is prevented from
commencing such Restoration within such ninety (90)- day period because of
strike, labor troubles or any cause whatsoever beyond Tenant's reasonable
control (which shall in no event include an absence or lack of funds to
Restore), including government preemption in connection with a National
Emergency or by reason of any rule, order or regulation of any department or
subdivision thereof of any government agency or by reason of the conditions of
supply and demand which have been or are affected by war or other emergency,
then, provided Tenant is not otherwise in default hereunder, until such time as
such reason is removed, Tenant's obligation to commence such Restoration shall
be excused.
Section 8.06. This Lease shall not terminate (except as
specifically provided in Section 8.01(b)), be forfeited or otherwise affected
in any manner, and there shall be no reduction or abatement of the Rental
payable hereunder, by reason of damage to or total, substantial or partial
destruction of the Building or any part thereof, or by reason of the
untenantability of the same or any part thereof, for or due to any reason or
cause
26
<PAGE> 30
whatsoever, and Tenant, notwithstanding any present or future law or statute,
waives any and all rights to quit or surrender the Property or any part thereof
by reason of any damage or destruction of the Property or otherwise. Tenant
agrees that its obligations hereunder, including, but not limited to, the
obligation to pay Rental, shall not be impaired or otherwise affected by reason
of any casualty, and shall continue as though the Building had not been damaged
or destroyed, without abatement, set-off, suspension, diminution or reduction
of any kind.
Section 8.07. Notwithstanding anything to the contrary
contained herein: (a) Tenant shall receive a credit against Rental payable
hereunder to the extent damage or destruction occurs and Landlord receives rent
insurance proceeds on account thereof (such credit to be equal to such net
insurance proceeds Landlord so receives); and (b) if this Lease shall terminate
for any reason prior to completion of the Restoration in accordance with the
provisions of this Article 8 or otherwise, then, subject to the provisions of
Section 8.01(b), the amount of any insurance proceeds allowed or retained for
Restoration of the Building which shall not have been previously applied to
that purpose shall become the property of and shall be paid over to Landlord.
ARTICLE 9
CONDEMNATION
Section 9.01.
(a) If at any time prior to or during the Term, the whole
or substantially all of the Property shall be taken for any public or
quasi-public purpose by any lawful power or authority by the exercise of the
right of condemnation or eminent domain or by agreement between Landlord and
those authorized to exercise such right, this Lease and the Term shall
terminate and expire on the date of taking (as hereinafter defined) and the
Rental payable by Tenant hereunder shall be apportioned and paid to the date of
taking.
(b) If the whole or any part of the Property shall be
taken or condemned as provided in this Article, the aggregate of all awards
and/or damages (collectively, the "award") made to Landlord and Tenant, and any
other persons claiming by, through or under any of them, in respect of such
taking (other than any separate awards made to permitted subtenants for loss of
trade fixtures and/or relocation expenses) shall be paid out and distributed to
Landlord, subject to the provisions of Section 9.03, and Tenant hereby waives,
releases and relinquishes any and all claims, awards or damages predicated on
the value of the
27
<PAGE> 31
unexpired Term of this Lease or otherwise and assigns same to Landlord.
(c) In case of any taking and whether or not this Lease
shall terminate by reason thereof, each of the parties agrees to execute any
and all documents that may be required in order to effect and facilitate the
collection of the award for the taking.
(d) Notwithstanding the foregoing, nothing contained
herein shall prohibit Tenant from maintaining a separate action for the value
of Tenant's trade fixtures, moveable office furniture and equipment, provided
such items were paid for solely by Tenant and that such action does not delay,
diminish or otherwise adversely affect Landlord's claim.
Section 9.02. For purposes of this Article 9, the following
terms shall have the following meanings:
(a) "substantially all of the Property" shall be deemed
to mean such portion of the Property as, when so taken, would, in the
reasonable judgment of Landlord, leave remaining a portion of the Property
which, due either to the area so taken or the location of the part so taken in
relation to the part remaining, would not, under economic conditions or under
zoning or other applicable laws or building regulations then existing or
prevailing, and after performance of all covenants, agreements, terms and
provisions herein to be performed by Tenant, accommodate a new or reconstructed
building of a character, type and size which could be used for the permitted
uses hereunder at the date of such taking. If Landlord and Tenant shall
disagree as to whether or not "substantially all of the Property" has been
taken, such dispute shall be resolved by arbitration in accordance with the
provisions of Article 30. In any event, a taking that affects 90% of the
Property shall be deemed to mean "substantially all of the Property".
(b) "date of taking" shall be deemed to be the date on
which the whole or substantially all of the Property, or a part thereof, as the
case may be, shall have vested in any lawful condemning authority, or the date
on which actual possession thereof is acquired, whichever shall be earlier.
Section 9.03.
(a) If less than substantially all of the Property shall
be so taken, this Lease and the Term shall continue (except that this Lease
shall terminate in respect of the portion of the Property taken) without
abatement or diminution of the Rental (except that Base Rent shall be
recalculated on the basis of the gross leasable area of the Building remaining
following the
28
<PAGE> 32
taking and the Restoration of such remaining portion) or of any of Tenant's
other obligations hereunder. Tenant, at its sole cost and expense, whether or
not the award, if any, shall be sufficient for the purpose, shall proceed
diligently to Restore any remaining part of the Building not so taken, so that
the same shall be complete, rentable, self-contained architectural unit, in
good condition and repair, and, to the extent practicable, of a size and
condition substantially similar to the size and character of the Building
existing immediately prior to such taking.
(b) In the event of any taking of less than substantially
all of the Property that results in Restoration of the Building being required
of Tenant hereunder, then the award in respect of such taking shall, subject to
the prior rights of any mortgagee of the Property, be paid to Landlord and
disbursed to Tenant for the purpose of Restoration in the manner set forth in
Article 8, provided, however, that any balance of the award remaining after
completion of Restoration shall be retained by Landlord.
(c) Restoration shall be performed in accordance with and
subject to the provisions of Articles 8 and 12.
(d) Each of the parties agrees to execute any and all
documents that may be required in order to effect and facilitate collection of
the award.
Section 9.04. Notwithstanding the foregoing provisions of
Sections 9.01 and 9.03, in the event that Tenant exercises the option to
purchase the Property, in the manner and as provided for in Article 36, or if
Landlord exercises the Right to Sell (as hereinafter defined in Article 37),
then, provided that the Closing or the Sale Closing (each as hereinafter
defined) shall occur in accordance with Articles 36 or 37, as the case may be,
Tenant shall have no obligation to Restore. In such event, any award received
by Landlord in connection with such taking, less the reasonable expenses
(including reasonable attorneys' fees and disbursements) paid or incurred in
collecting such award and in performing necessary repairs to secure the
Property, together with the interest earned thereon (Landlord hereby agreeing
to maintain such award in an interest-bearing account), shall be a credit
against the Purchase Price or the Sale Purchase Price (each as hereinafter
defined), as the case may be; provided that, if such award is not received by
Landlord prior to the Closing or the Sale Closing, as the case may be, then, in
lieu of such credit, Landlord shall assign its interest in such award (less
such expenses) to Tenant at the Closing or the Sale Closing, as the case may
be.
29
<PAGE> 33
Section 9.05. In case of any governmental action not
resulting in the taking or condemnation of any portion of the Property but
creating a right to compensation therefor, such as (without limitation) the
change of grade or widening of any street upon which the Property abuts, or if
less than the fee title to all or any portion of the Property shall be taken or
condemned, this Lease shall continue in full force and effect without reduction
or abatement of Rental and the entire award therefor shall belong to Landlord.
Subject to the provisions of Section 9.04, Tenant hereby waives any and all
claims, and assigns to Landlord and releases and relinquishes all of its
interest in and to any award, damages or other compensation of any kind
resulting from or predicated upon a change of grade or street widening or other
similar governmental action as contemplated by this Section 9.05.
Section 9.06. In addition to and notwithstanding anything to
the contrary contained herein, the amount of any award or payment allowed or
retained for Restoration of the Property which shall not have been previously
applied to that purpose shall become the property of and shall be paid over to
Landlord, if this Lease shall terminate for any reason prior to completion of
the Restoration in accordance with the provisions of this Article 9 (subject to
the provisions of Section 9.04).
ARTICLE 10
ASSIGNMENT, SUBLETTING, MORTGAGES, ETC.
Section 10.01. Tenant, for itself and its heirs, legal
representatives, successors and assigns, covenants and agrees that it shall not
assign, mortgage, pledge or otherwise encumber, transfer or dispose of this
Lease, Tenant's interest therein or the Property, in whole or in part, whether
by operation of law or otherwise, nor sublet the Property, in whole or in part,
nor suffer or permit the Property or any part thereof to be used or occupied by
others, without the prior written consent of Landlord in each instance. Any
sale, assignment, transfer or other disposition or pledge or other encumbrance
of the issued or outstanding capital stock of any corporation which is Tenant
under this Lease or which is a general partner of any partnership that is
Tenant under this Lease (other than a corporation whose stock is publicly
traded on a national stock exchange), or any issuance of additional stock in
any such corporation, if such sale, assignment, transfer or other disposition
or the issuance of such additional stock will result in a change of the
controlling stock ownership of such corporation as held by the shareholders
thereof on the date when such corporation became Tenant under this Lease (or a
general partner thereof) pursuant to the terms hereof, or any sale, assignment,
redemption, transfer or other disposition of any general partner's interest
30
<PAGE> 34
or any part thereof in a partnership which is Tenant under this Lease or any
admission of a new general partner to a partnership which is Tenant under this
Lease (or a general partner thereof), is herein collectively referred to as a
"Transfer" and shall be deemed to be an assignment of this Lease. For the
purposes hereof, a consolidation or merger of a corporation which is Tenant
under this Lease shall be deemed to be an assignment of this Lease by operation
of law. In any event, if this Lease be assigned or if a Transfer is made, or
if all or any part of the Property be sublet, except in compliance with this
Article, Landlord may collect the Rental from the then assignee, Transferee or
subtenant, and apply the net amount collected to the Rental reserved herein,
but no such assignment, Transfer, subletting or collection shall be deemed a
waiver of any agreement, term, covenant or condition hereof, or the acceptance
of the assignee, Transferee or subtenant as Tenant, or a release of Tenant from
the performance or further performance by Tenant of the agreements, terms,
covenants and conditions hereof, and Tenant shall continue to be liable
hereunder in accordance with the agreements, terms, covenants and conditions
hereof. Neither the consent by Landlord to, nor the delay or failure of
Landlord in any instance to insist upon or to enforce any of the obligations of
Tenant hereunder in respect of any assignment, mortgage, pledge, encumbrance,
Transfer, subletting or underletting, shall not in any way be construed to
relieve Tenant, or any succeeding Transferee, successor or assignee of this
Lease, or any person claiming any right, title or interest by, through or under
Tenant, or by, through or under any succeeding Transferee, successor or
assignee of this Lease, from its obligations under this Lease in respect of any
further assignment, mortgage, pledge, encumbrance, Transfer, subletting or
underletting in each and every subsequent instance. Without limiting any of
Tenant's obligations in respect of a permitted assignment or sublease, Tenant
(or any subsequent assignor or sublessor under a sublease) shall comply with
any and all laws, ordinances and regulations applicable to such assignment or
subletting (including, without limitation, all obligations to pay all taxes,
fees and charges arising therefrom or in connection therewith). No assignment,
subletting or Transfer, or the consent of Landlord thereto, shall release,
relieve, or discharge Tenant (or any subsequent assignee, subtenant or
Transferee)from the performance of any of Tenant's obligations hereunder then
or thereafter to be performed hereunder.
Section 10.02. Notwithstanding the foregoing, provided that
Tenant shall not have defaulted hereunder, Landlord shall not unreasonably
withhold or delay its consent to a proposed assignment of this Lease or
subletting of the Property, subject to all of the following conditions: (a)
Tenant shall notify Landlord, in writing, of such proposed assignment or
subletting not less than ninety (90) days prior to the date Tenant proposes
31
<PAGE> 35
to assign the Lease or sublet the Property, as the case may be; (b) the
assignee shall be reputable and shall have, in the judgment of Landlord,
sufficient financial worth to perform the obligations of Tenant under this
Lease (including, without limitation, those in Articles 36 and 37), as
evidenced by the submission to Landlord of financial and other information
regarding the proposed assignee or sublessee, including its business
experience, financial statements and such other information as Landlord may
reasonably request; (c) in the case of a proposed subletting: (i) no
subletting shall be for a term ending later than one (1) day prior to the
Expiration Date; (ii) the sublease shall be subject and subordinate to all of
the provisions of this Lease and all of the rights of Landlord hereunder; and
(iii) Tenant shall deliver to Landlord a duplicate original of such sublease,
duly executed and acknowledged by the sublessor and sublessee, at the time
Tenant requests Landlord's consent to the proposed subletting, which sublease
shall specifically provide that it is subject and subordinate to this Lease and
to all of the matters to which this Lease is or shall be subordinate; (d) in
the case of a proposed assignment: (i) the assignee shall assume and agree, in
writing, to perform all of the terms, conditions and agreements of this Lease
on the part of Tenant to be kept, performed and observed from and after the
effective date of the assignment, and shall agree, in writing, to become
jointly and severally liable with the assignor for the performance thereof;
(ii) a duplicate original of the assignment and assumption, in form reasonably
satisfactory to Landlord and duly executed by the assignor and assignee, shall
be delivered to Landlord at the time Tenant requests Landlord's consent to the
proposed assignment; and (iii) the assignor shall assign to the assignee all of
its right, title and interest in, and claim to, the security deposited
hereunder; and (e) the assignee or sublessee shall not be entitled, directly or
indirectly, to diplomatic or sovereign immunity, and shall be subject to
service of process in, and the jurisdiction of the courts of, the State of New
Jersey. No assignment of this Lease, nor the acceptance of rent by Landlord
from such assignee, shall, in any way, release, relieve or in any manner affect
the liability of Tenant under this Lease, it being the specifically
acknowledged and agreed by Tenant that Tenant assignor shall be and remain
liable under all of the terms, conditions and covenants hereof; in furtherance
of the foregoing, Tenant covenants and agrees that, in the event of any
permitted assignment of Tenant's interest under the Lease, the terms, covenants
and conditions of this Lease may be changed, altered or modified in any manner
whatsoever by Landlord and the assignee without the consent thereto of assignor
Tenant, and that no such change, alteration or modification shall release (any
remote or immediate) assignor Tenant from the performance by it of any of the
terms, covenants and conditions on Tenant's part to be performed under this
Lease; provided however that, except in the case of an assignment of
32
<PAGE> 36
this Lease pursuant to Section 10.03, no such change, alteration or
modification shall be binding on any assignor Tenant solely to the extent to
which such change, alteration or modification shall increase the obligations of
such assignor Tenant.
Section 10.03. Notwithstanding anything to the contrary set
forth herein and provided Tenant has not defaulted hereunder, Tenant may, on
not less than ten (10) business days' notice to Landlord, which notice shall
include an executed counterpart of the assignment or sublease (which, in the
case of an assignment, shall provide that the assignee assumes directly for the
benefit of Landlord all of Tenant's obligations thereafter arising under this
Lease and in the case of a sublease, provides that same is subject and
subordinate to this Lease in all respects), assign this Lease or sublet the
Property to an entity into which Tenant is merged or consolidated or to an
"affiliate" (as hereinafter defined) of Tenant. For purposes hereof: (a) an
"affiliate" of Tenant shall mean any entity which is directly controlled by or
is under common control with Tenant ("control" being interpreted as the
ownership of more than fifty (50%) percent of the interests in such entity and
possession of the power to direct the management and policies of such entity
and the distribution of its profits); and (b) an entity in which or with which
Tenant is merged or consolidated shall mean an entity subject to the
jurisdiction of the courts of the State of New Jersey which succeeds Tenant in
accordance with applicable statutory provisions for merger or consolidation of
entities and which, by operation of law or by effective provisions contained in
the instruments of merger or consolidation, fully assumes the liabilities of
the entities participating in such merger or consolidation and which has, on
the completion of such merger or consolidation, a net worth equal to or greater
than Tenant's net worth immediately prior to such merger or consolidation.
ARTICLE 11
REPAIRS AND MAINTENANCE
Section 11.01. From and after the delivery of possession of
the Property to Tenant and thereafter throughout the Term, Tenant, at its sole
cost and expense, covenants and agrees to take good care of the Property,
including, without limiting the generality of the foregoing, the structural
elements and roof forming a part thereof, and the plumbing, heating,
ventilating, air conditioning, electrical, mechanical, lighting, sprinkler and
other utility systems and fixtures and other equipment therein or serving the
same and the appurtenances thereto, and all grounds, landscaping, facilities,
vaults, signs, roofs, gutters, sidewalks, curbs and other paved walkways and
areas, exterior lighting fixtures (including replacement of defective or spent
bulbs), water, sewer, gas and other utility
33
<PAGE> 37
connections, pipes and mains, and all other fixtures, machinery and equipment
now or hereafter serving the same, and Tenant agrees to put, keep and maintain
all of the foregoing in a safe, sound and lawful order and condition, and make
all repairs thereto and therein, interior and exterior, structural and
nonstructural, ordinary and extraordinary, foreseen and unforeseen, as shall be
necessary to keep and maintain the same in such safe and sound order and
condition and in compliance with all Governmental and Insurance Requirements,
and howsoever the necessity or desirability therefor may have occurred, and
whether or not necessitated by normal wear, tear, obsolescence or defects,
latent or otherwise, and whether or not now in the contemplation of the
parties. Tenant shall not commit or suffer, and shall use all reasonable
precaution to prevent, waste, damage or injury to the Property or any part
thereof.
Section 11.02. Tenant, at its sole cost and expense, shall
also keep and maintain the Property, including, but not limited to, the
sidewalks, passageways, grounds, parking areas, walks, chutes, sidewalk,
hoists, railings, gutters, alleys and curbs in front of or adjacent to the
Property, in a clean and orderly condition and free from dirt, snow, ice,
rubbish, vermin, obstructions and other encumbrances.
Section 11.03. When used in this Lease, the term "repairs"
shall include (without limitation) all necessary replacements, renewals,
alterations and additions. All repairs to be made by Tenant shall be performed
in a first-class, good and workerlike manner, and shall be made in compliance
with all Governmental Requirements, Insurance Requirements and the then
applicable building code.
Section 11.04. Landlord shall not be required to furnish any
services or facilities whatsoever to the Property. Tenant hereby assumes the
full and sole responsibility for the condition, operation, repair, alteration,
improvement or placement, maintenance and management of the Property. Landlord
shall not be responsible for any loss or damage to any property of Tenant or
any subtenant.
ARTICLE 12
CHANGES, ALTERATIONS AND ADDITIONS
Section 12.01. Tenant covenants and agrees that Tenant shall
not make, or cause to be made, any demolition, replacement, change, alteration
or Material Improvement (as hereinafter defined) to the Property, any part or
parts thereof or space therein, or any addition thereto, whether voluntarily or
in connection with a repair or Restoration required by this Lease
34
<PAGE> 38
(any such action being herein referred to as a "Capital Improvement"), unless
such Capital Improvement shall be performed in compliance with the requirements
set forth below and, if applicable, the additional requirements set forth in
Section 12.02 hereof:
(a) Any Capital Improvement, when completed, shall
be of such a character as not to reduce the value of the Property as a whole,
and/or the portion of the Property on or in which such Capital Improvement
shall be undertaken, below its value immediately before construction of such
Capital Improvement was commenced, and shall be compatible with the overall
design of the Property.
(b) Any Capital Improvement shall be made and
completed promptly (unavoidable delays excepted), in a good and workerlike
manner, in compliance with all applicable permits and authorizations and all
Governmental Requirements and Insurance Requirements and in accordance with
plans and specifications therefor approved by all governmental authorities
having or claiming jurisdiction thereover. Upon completion of any such Capital
Improvement, Tenant shall furnish or cause to be furnished to Landlord,
as-built plans, in a timely manner, and, promptly following the issuance
thereof, copies of appropriate documentation, including, but not limited to
certificates of occupancy (or, as the case may require, similar final approvals
of any applicable governmental authority) and/or Board of Fire Underwriters
Certificates, evidencing that the same has been performed and completed in
accordance with all Governmental Requirements and Insurance Requirements.
(c) The cost of any Capital Improvement shall be
paid so that the Property shall at all times be free of liens for labor and
materials supplied or claimed to have been supplied to the Property, and if any
such lien shall at any time be filed, Tenant shall cause the same to be vacated
or discharged in accordance with the provisions of Article 15.
Section 12.02. Tenant shall not make any Material Improvement
to the Property without Landlord's prior written consent, which consent shall
not be unreasonably withheld. If Landlord gives its written consent, then, in
addition to compliance with the requirements of Section 12.01, such Material
Improvement shall be performed in compliance with the following additional
requirements:
(a) Landlord shall be furnished with a complete set
of working plans and specifications for the proposed Material Improvement
prepared by Tenant's Architect(s) or Tenant's Engineer(s).
35
<PAGE> 39
(b) No Material Improvement shall be undertaken by
Tenant unless and until Landlord shall have approved the same (including the
plans and specifications therefor), and all permits and authorizations of all
governmental authorities shall have been procured and paid for, insofar as the
same may be required from time to time.
(c) No Material Improvement shall be undertaken
unless and until there shall have been delivered to Landlord insurance policies
or certificates thereof issued by insurers complying with Section 7.02, bearing
notations evidencing the payment of premiums or accompanied by other
satisfactory evidence of such payments, for the insurance required to be
maintained by Tenant during the performance of any Capital Improvement by
Section 7.01(b), in addition to, but without duplication of, the insurance
coverages described in Section 7.01(a). If under the provisions of any
property, casualty or other insurance policy or policies then covering the
Property any risks attributable to such Material Improvement shall be excluded
from coverage under such policy or policies or any consent to such Material
Improvement by the insurance company or companies issuing any such policy shall
be required to continue and keep any such policy in full force and effect, such
additional coverage and/or such consents by appropriate endorsements to such
policy or by additional policies shall be obtained, and any additional premiums
or charges therefor that may be imposed by said insurance company or companies
shall be paid or caused to be paid by Tenant.
(d) At least fifteen (15) days before the
commencement of any work in connection with a proposed Material Improvement,
there shall be furnished to Landlord the following:
(i) (A) security or other evidence of
financial resources reasonably acceptable to Landlord,
evidencing funds specifically designated to meet the cost of
the Material Improvement; and
(B) a construction agreement or
agreements, in form and substance previously approved by
Landlord, with a reputable contractor or contractors
previously approved by Landlord, which approval shall not be
unreasonably withheld or delayed.
(ii) Without limiting Tenant's
obligations under clause (i) (A) above or otherwise under this Lease
(including, without limitation, those of Article 28), with respect to the
renovation of the Property to be performed by Tenant following the Commencement
Date ("Tenant's Work") to prepare the Property for Tenant's contemplated use
thereof (including, without limitation, the making of leasehold
36
<PAGE> 40
improvements, additions, improvements and installations): (A) Tenant shall
remove, at the earlier of the expiration or termination of this Lease, at
Tenant's expense, Tenant's Work and restore the Property to the condition
thereof existing on the Commencement Date (the "Removal"), unless Landlord, by
notice hereof given to Tenant at any time during the Term, elects to have the
Property delivered to Landlord without the Removal being performed; (B) Tenant
shall furnish to Landlord, at least fifteen (15) days before the commencement
of Tenant's Work, a detailed cost estimate of all the work which would be
required to secure the Removal, assuming the performance of Tenant's Work,
prepared by Tenant's Architect(s) or Tenant's Engineer(s); and as further
security for the performance by Tenant of its obligations hereunder to secure
the Removal, if the estimated cost of the Removal is: (1) $140,000.00 or less,
then Tenant shall deliver to Landlord, prior to the commencement of Tenant's
Work, an amount equal to such estimated cost (but in no event less than
$100,000.00); or (2) in excess of $140,000.00, then Tenant shall deliver to
Landlord, prior to the commencement of Tenant's Work, the sum of $140,000 (each
such respective amount being "Tenant's Removal Security"). Tenant's Removal
Security shall be maintained by Landlord in an interest-bearing account; the
interest earned thereon shall be accumulated and retained with such Tenant's
Removal Security. It is specifically agreed by Tenant that: (y) Landlord may
use, apply or retain all or any portion of Tenant's Removal Security so
deposited to the extent required by Landlord by reason of a default by Tenant
in the performance of the Removal; and (z) Tenant's Removal Security (or the
portion thereof remaining) shall be held by Landlord for the remainder of the
Term, upon the terms and conditions set forth in Article 35, or such earlier
date as the Closing or the Sale Closing, as the case may be, may occur. The
provisions hereof shall survive the expiration or earlier termination of this
Lease.
(e) As used in this Article, the phrase "Material
Improvement" shall mean and include: (i) the making of any change or alteration
to or affecting (A) any facade or other exterior portion of the Building, or
access thereto; or (B) the structural elements and/or heating, ventilating,
air-conditioning, electrical, plumbing, mechanical or other systems of the
Building; or (ii) a Capital Improvement whose estimated cost, as determined by
a reputable contractor, or as set forth in a construction agreement with a
reputable contractor, will exceed $175,000.00 (not including Tenant's personal
property or trade fixtures); or (iii) the making of any change, addition,
installation, improvement or alteration which is being made as part of Tenant's
Work.
Section 12.03. Subject to the provisions of Section
12.02(d)(ii), title to all additions, alterations, improvements
37
<PAGE> 41
and replacements made by Tenant to the Property, including without limitation,
Capital Improvements, shall forthwith vest in Landlord, without any obligation
by Landlord to pay any compensation therefor to Tenant or those claiming by,
through or under Tenant.
Section 12.04. Tenant agrees that, notwithstanding anything
otherwise herein contained to the contrary, Tenant will not install, affix, add
or paint in or on, nor permit, any work of visual art (as defined in the
Federal Visual Artists' Rights Act of 1990 or any successor law of similar
import) or other alteration, addition, improvement or installation to be
installed in or on, or affixed, added to, or painted on, the interior or
exterior of the Building, or any part thereof, including, but not limited to,
the walls, floors, ceilings, doors, windows, fixtures and/or the Land, which
work of visual art or other alteration, addition, improvement or installation
would, under the provisions of the Federal Visual Artists' Rights Act of 1990,
or any successor law of similar import, require the consent of the author or
artist of such work or alteration, addition, improvement or installation before
the same could be removed, modified, destroyed or demolished.
ARTICLE 13
GOVERNMENTAL REQUIREMENTS
AND INSURANCE REQUIREMENTS
Section 13.01. Tenant, at Tenant's sole cost and expense,
shall promptly comply with: (i) any and all present and future laws, rules,
orders, ordinances (including, without limitation, zoning ordinances),
regulations and requirements (including, without limitation, building codes)
applicable to the Property, or any part thereof, now or hereafter enacted or
promulgated by any Federal, state or municipal governmental or
quasi-governmental authority having jurisdiction over the Property
(collectively, "Governmental Requirements") without regard to the nature of the
work required to be done, extraordinary as well as ordinary, affecting the
maintenance, use or occupation of the Property, including, without limitation,
any street or sidewalk in front of or adjoining the same and/or any vault in or
under the same, or requiring the removal of any encroachments, and also
including, without limitation, all work and/or matters necessary to comply with
the Americans with Disabilities Acts of 1991, as same may be amended or
supplemented from time to time (the "ADA"); and (ii) all requirements of
insurance authorities or companies and the Board of Fire Underwriters affecting
the Property or any parts thereof (collectively, "Insurance Requirements"),
whether or not any of the foregoing involve or require any structural changes
or
38
<PAGE> 42
additions and without regard to whether such changes or additions are required
on account of any particular use (whether or not permitted hereunder) or manner
of use to which the Property, or any parts thereof may be put, and whether or
not now in the contemplation of the parties; provided that, in respect of
Portion A and Portion B, Tenant's obligations hereunder shall accrue from and
after delivery of possession of such respective Portion to Tenant. In the
event that neither the Closing under Article 36 nor the Sale Closing under
Article 37 occur, through no act, omission or default by Tenant thereunder or
otherwise, then thereafter, in respect of the foregoing compliance, Tenant
shall not be required to make structural changes or additions which are not
necessitated by Tenant's specific use or manner of use of the Property, except
Tenant shall be required to do in any event if required to comply with the ADA
or by reason of any work, additions, improvements or installations to the
Property performed by Tenant (including, without limitation, Tenant's Work).
The foregoing shall be subject to Landlord's obligations under Section 38.05.
ARTICLE 14
EQUIPMENT
Section 14.01. Tenant shall not have the right, power or
authority to, and shall not, without the prior consent of Landlord in each
instance, remove or permit the removal from the Property, of any machinery,
equipment or fixtures used in connection with the building systems of the
Property (collectively, "Equipment"), which shall not include Tenant's personal
property, if such removal would reduce the value of the Property, except for
repairs, cleaning or other servicing, or unless the same is promptly replaced
by Equipment of like or better kind and quality, free of any and all liens,
encumbrances or security interests, and Tenant shall, in any event, maintain
such Equipment on the Property as shall be necessary and sufficient, in the
reasonable judgment of Landlord, to enable Tenant to perform all of its
obligations under this Lease.
Section 14.02. Tenant agrees to keep and maintain all
Equipment, at Tenant's sole cost and expense, in good, safe and lawful order,
condition and repair and whenever necessary shall make all required
replacements thereof with items of similar or better utility, quality and
value.
39
<PAGE> 43
ARTICLE 15
DISCHARGE OF LIENS; BONDS
Section 15.01. Tenant shall not create, suffer or permit to
be created or to remain, any lien, encumbrance or charge upon the Property, or
any part thereof or interest therein, or this Lease, and Tenant shall not
suffer any other matter or thing whereby the estate, rights or interests of
Landlord in the Property, or any part thereof or interest therein, or in this
Lease might be impaired. In any event, Tenant shall have no power to do any
act or make any contract which may create or be the foundation of any lien,
mortgage or other encumbrance upon the reversion or other estate of Landlord,
or upon any interest of Landlord in the Property; it being agreed that any
alterations, rebuildings, replacements, repairs, charges, additions or
improvements made to or at the Property by Tenant (and all labor or material
costs related thereto) shall be wholly and solely Tenant's obligation and
neither Landlord nor the Property shall be liable therefor to any extent
whatsoever.
Section 15.02. If any mechanic's, laborer's, real estate
broker's, materialman's or other lien at any time shall be filed or permitted
to exist against the Property or any part thereof or interest therein, by
reason of any work, labor or services performed or materials furnished, or
claimed to have been performed or furnished, or any leasing or licensing of
space within the Property, to or on behalf of Tenant or those claiming under
Tenant, Tenant, within thirty (30) days after notice of the filing thereof,
shall cause the same to be vacated or discharged of record by payment, deposit,
bond, order of a court of competent jurisdiction or otherwise. If Tenant shall
fail to cause such lien to be vacated or discharged as set forth above within
the period aforementioned, Landlord, in addition to any other right or remedy
of Landlord hereunder, may, but shall not be obligated to, discharge the same
either by paying the amount claimed to be due or by procuring the discharge of
such lien by deposit or by bonding proceedings, and in any such event, Landlord
shall be entitled, if it shall so elect, to compel the prosecution of an action
for the foreclosure of such lien by the lienor and to pay the amount of the
judgment in favor of the lienor with interest, costs and allowances. Any
amount so paid by Landlord, and all reasonable costs and expenses, including,
but not limited to, reasonable attorneys' fees and disbursements, incurred by
Landlord in connection therewith, together with interest thereon at the rate of
four (4%) percent in excess of the annual prime rate charged by Citibank, N.A.
from time to time (the "Lease Interest Rate") from the respective dates of
Landlord's making of the payment or incurring of the costs and expenses, shall
constitute Additional Rent payable by Tenant
40
<PAGE> 44
under this Lease and shall be paid by Tenant to Landlord on demand.
Section 15.03. Nothing contained in this Lease shall be
deemed or construed in any way as constituting the consent or request of
Landlord, express or implied, by inference or otherwise, to any contractor,
subcontractor, laborer, materialman or real estate broker for the performance
of any labor or services or the furnishing of any materials for any specific
improvement, alteration to or repair of the Property or any part thereof, nor
as giving Tenant any right, power or authority to contract for or permit the
rendering of any labor or services or the furnishing of materials that would
give rise to the filing of any lien against all or any part of the Property, or
the estate or interest of Landlord therein. Notice is hereby given, and Tenant
shall cause all construction agreements and real estate brokerage agreements to
which it is a party to provide, and shall require that all construction
agreements and real estate brokerage agreements to which a subtenant is a party
to provide, that Landlord shall not be liable for any work or other services
performed or to be performed at the Property for Tenant or any subtenant or for
any materials furnished or to be furnished at the Property to Tenant or any
subtenant, that the contractor or broker performing any work or services and/or
furnishing any materials to the Property for or on behalf of Tenant or any
subtenant shall not look to Landlord for the payment therefor, and that no
mechanic's or other lien for such work, services or materials shall attach to
or affect the estate or interest of Landlord in and to the Property or any part
thereof; provided that, the foregoing shall not affect any obligations of
Landlord to Broker (as hereinafter defined) pursuant to Article 34.
Section 15.04. Nothing contained in this Lease shall grant or
be deemed to have granted to Tenant any authority to bind Landlord to any
contract or to create any other obligation binding on Landlord regardless of
whether such contract or obligation may be the foundation for any lien,
mortgage or other encumbrance upon the estate of Landlord in the Property or
the Land.
ARTICLE 16
NO REPRESENTATIONS BY LANDLORD
Section 16.01. Tenant hereby expressly acknowledges,
confirms, represents, warrants and covenants that, except as expressly set
forth in this Lease, no representations, statements or warranties of any kind,
express or implied, have been made by or on behalf of Landlord in respect of
the Property or its appurtenances, the status of title thereto, the physical
condition or state of repair thereof (including, but not limited to, sub-
41
<PAGE> 45
surface conditions), zoning or other laws, ordinances, building codes,
regulations, rules and orders applicable thereto, or applicable to any
construction work contemplated herein, the Impositions levied against the
Property, or the use that may be made of the Property or any part thereof, that
Tenant has relied on no such representations, statements or warranties, and
that Landlord shall not in any event whatsoever be liable for any latent or
patent defects in the Property or any claimed misrepresentations or breach of
warranties. Without limiting the generality of the foregoing and in addition
thereto, Tenant further expressly acknowledges, confirms, represents, warrants
and covenants that: (a) Tenant has visited or caused to be visited the Property
and is fully familiar therewith; and (b) Tenant accepts or will accept the
Property in its existing condition and state of repair on the Commencement
Date, subject to any and all defects therein, latent or otherwise, "as is", and
subject also to any other matter or thing that may affect same, except as
otherwise specifically provided in Section 38.05.
ARTICLE 17
LANDLORD NOT LIABLE FOR
INJURY OR DAMAGE, ETC.
Section 17.01. Landlord shall not in any event whatsoever be
liable for any injury or damage to Tenant, any subtenant or any other person or
to any property, happening in, on or about the Property and its appurtenances,
nor for any injury or damage to the Property or to any property belonging to
Tenant, any subtenant or any other person which may be caused by any fire or
breakage, or by the use, misuse or abuse of the Property (including, without
limitation, any elevators, hatches, openings, installations, stairways,
hallways or other common facilities), or Equipment, or which may arise from any
other cause whatsoever.
Section 17.02. Landlord shall not be liable for any failure
of water supply, steam, gas, electric current or other utility, nor for any
injury or damage to Tenant, any subtenant or any other person or to any
property or to the Property, or any part thereof, caused by or resulting from
gasoline, oil, steam, gas, electricity, flood, wind, or storms or similar
disturbances, or water, rain or snow which may leak or flow from any river or
street, or from any water, sewer, steam or gas mains, pipes, appliances or
subsurface areas within the Property or elsewhere, or from leakage of gasoline
or oil from pipes or appliances, [unless any of the foregoing shall have
resulted in injury or damage to Tenant or Tenant's Property and shall have been
caused by the negligence of Landlord or Landlord's agents or employees], nor
for any interference with light or air by any person, or caused by any public
or quasi-public work, or for any other
42
<PAGE> 46
matter or thing whatsoever. To the extent that, by reason of the foregoing,
Landlord receives rental insurance proceeds from insurance maintained or caused
to be maintained by Tenant, Tenant shall receive a credit against Rental
payable hereunder equal to the amount of such insurance proceeds Landlord so
receives.
ARTICLE 18
INDEMNIFICATION OF LANDLORD
Section 18.01. Tenant, to the fullest extent permitted by law,
hereby indemnifies and saves Landlord harmless from and against any and all
claims, obligations, liabilities, suits, actions, proceedings, judgments,
fines, damages, penalties, costs, charges and expenses, including, without
limitation, architects' and attorneys' fees and disbursements, of whatsoever
kind or nature which may be asserted against, imposed upon or incurred by
Landlord by reason of any of the following occurring during the Term, unless
resulting from the negligence of Landlord, or Landlord's agents or employees:
(a) Tenant's Work, or any other acts or omissions
of Tenant, any subtenant or its or their respective agents, employees,
contractors, licensees or invitees (collectively, "Agents") in, on or about the
Property or any part thereof, or the streets and sidewalks abutting the same;
(b) any use, non-use, possession, occupation,
repair, alteration, condition, operation, maintenance or management of the
Property or any part thereof, or any vaults, passageways or other space forming
a part thereof, or the streets and sidewalks abutting the same by Tenant, any
subtenant or their respective Agents (subject, however, to the provisions of
Section 2.03(e));
(c) any act, omission or negligence on the part
of Tenant or any subtenant or their respective Agents;
(d) any accident, injury (including death) or
damage to any person or property occurring in, on or about the Property or any
part thereof or the streets or sidewalks abutting the same (subject, however,
to the provisions of Section 2.03(e));
(e) any failure on the part of Tenant to pay any
Rental or to keep, observe, perform or comply with any of the other terms,
covenants, agreements or conditions contained in this Lease on Tenant's part to
be kept, observed, performed or complied with, or the exercise by Landlord of
any remedy provided in this Lease with respect thereto;
43
<PAGE> 47
(f) any lien or claim which may be asserted
against the Property or any part thereof, arising from any failure by Tenant to
perform its obligations under this Lease, or any other agreement affecting the
Property;
(g) any failure on the part of Tenant to keep,
observe and perform any of the terms, covenants, agreements, provisions,
conditions or limitations contained in any subleases of any part of the
Property, or any other contracts or agreements affecting the Property, on
Tenant's part to be kept, observed or performed;
(h) any fee or tax attributable to the recording
of this Lease or a memorandum of this Lease; or
(i) any contest permitted pursuant to the
provisions of Article 4 hereof and initiated by Tenant.
Section 18.02. The obligations of Tenant under this Article
18 shall not be limited or affected in any way by the limits of insurance
required to be carried or caused to be carried by Tenant hereunder or by the
absence in any case of insurance or by the failure or refusal of any insurance
carrier to perform any obligation on its part under insurance policies
affecting the Property, or any parts thereof.
Section 18.03. If any claim, action or proceeding is made or
brought against Landlord by reason of any event with respect to which Tenant
has indemnified Landlord hereunder, then, upon demand by Landlord, Tenant, at
its sole cost and expense, shall resist or defend such claim, action or
proceeding, in Landlord's name if necessary, by the attorneys for Tenant's
insurance carrier (if such claim, action or proceeding is covered by insurance)
or otherwise by such attorneys as Tenant shall select and Landlord shall
approve, which approval shall not be unreasonably withheld. Nothing herein
contained shall prohibit Landlord, at its own expense, from participation in
the defense of such claim, action or proceeding with counsel of its own choice.
Section 18.04. The provisions of this Article 18 shall
survive the termination or expiration of this Lease in respect of any matter
which occurs prior to the termination or expiration of this Lease.
Section 18.05. Landlord hereby indemnifies and saves Tenant
harmless from and against all reasonable attorneys' fees and disbursements paid
by Tenant to such attorneys as Tenant shall select and Landlord shall approve,
to defend itself against such legal actions in which it is named as defendant
which arise
44
<PAGE> 48
from incidents occurring on the Property prior to the Commencement Date.
ARTICLE 19
RIGHT OF ACCESS
Section 19.01. Upon reasonable notice to Tenant, Tenant shall
permit Landlord and its agents, representatives and designees to enter the
Property during normal business hours (or at any time and without notice in the
case of an emergency) for the purpose of (a) inspecting the same, and (b)
making any necessary repairs thereto and performing any other work therein
pursuant to Article 20; but Landlord shall have no obligation to make any
inspection or to make any repairs or do any work at any time or to any extent
whatsoever.
Section 19.02. (a) Any reservation of a right by Landlord to
enter upon the Property and to make or perform any repairs, alterations or
other work in, to or about the Property which, in the first instance, is the
obligation of Tenant pursuant to this Lease, shall not be deemed to: (i) impose
any obligation on Landlord to do so; (ii) render Landlord liable (to Tenant or
any third party) for the failure to do so; or (iii) relieve Tenant from any
obligation to indemnify Landlord as otherwise provided elsewhere in this Lease;
provided that, if Landlord does make or perform such repairs, alterations or
other work, the foregoing shall not relieve Landlord from liability for its
negligence or the negligence of its contractors, agents or representatives.
(b) Landlord agreed that, in exercising the rights
reserved by Landlord in this Article 19, Landlord will not create a condition
in violation of the environmental laws applicable to the Property.
ARTICLE 20
SELF-HELP
Section 20.01. If at any time Tenant shall fail to pay, in
accordance with the provisions hereof, any Imposition for which it is obligated
hereunder, or to take out, pay for, maintain or deliver any of the insurance
policies required of it herein, or to perform any other act on its part to be
made or performed under this Lease or under any other agreement in respect of
the Property to which Tenant is a party, then Landlord, without waiving or
releasing Tenant from any obligation contained in this Lease and in addition to
any and all other remedies Landlord may have hereunder, or otherwise, may (but
shall be under no obligation to), upon the giving of notice to
45
<PAGE> 49
Tenant of such failure and the continuance of such failure by Tenant for
fifteen (15) days after the giving of such notice (except that shorter notice,
to the extent feasible, or no notice, need be given in the case of an
emergency, or in cases when any insurance policy described in Article 7 would
lapse, or be materially changed or reduced in less than fifteen (15) days):
(a) pay or cause to be paid any Imposition
required to be paid by Tenant pursuant to the provisions hereof; or
(b) take out, pay for and maintain any of the
insurance policies provided for herein; or
(c) pay any other sums, costs, expenses, charges,
payments or deposits payable by Tenant hereunder, or perform any other act on
Tenant's part to be made or performed as in this Lease set forth, and Landlord
may enter upon the Property for such purpose and take all such action thereon
as may be necessary therefor.
Section 20.02. All sums paid by Landlord and all reasonable
costs and expenses incurred by Landlord in connection with the performance of
any act permitted by Section 20.01, together with interest thereon at the Lease
Interest Rate from the respective dates of Landlord's making of each such
payment or incurring of each such sum, cost, expense, charge, payment or
deposit, shall be paid by Tenant to Landlord within twenty (20) days after
demand therefor, as Rent. Any payment or performance by Landlord pursuant to
the foregoing provisions of this Article 20 shall not be nor be deemed to be a
waiver or release of the breach or default of Tenant with respect thereto or of
the right of Landlord to terminate this Lease, institute summary proceedings
and/or take such other action as may be permissible hereunder or otherwise if
an Event of Default by Tenant shall have occurred. Landlord shall not be
limited in the proof of any damages which it may claim against Tenant arising
out of or by reason of Tenant's failure to provide and keep insurance in force
as aforesaid to the amount of the insurance premium or premiums not paid, but
Landlord shall also be entitled to recover, as damages for such breach, the
uninsured amount of any loss and damage and the costs and expenses of suit,
including, without limitation, reasonable attorneys' fees and disbursements,
sustained, suffered or incurred by Landlord by reason of damage to or
destruction of the Property or any part thereof.
46
<PAGE> 50
ARTICLE 21
NO ABATEMENT OF RENTAL
Section 21.01. There shall be no abatement, set off,
diminution or reduction of Rental payable by Tenant hereunder or of any of the
other obligations of Tenant hereunder under any circumstances whatsoever,
except as specifically provided for in Sections 2.02, 2.03, 8.07 and 17.02.
ARTICLE 22
PERMITTED USE; NO UNLAWFUL OCCUPANCY
Section 22.01. During the Term, Tenant may use and occupy the
Property solely for the uses noted on Exhibit E annexed hereto and made a part
hereof, provided same are in accordance with local zoning ordinances and other
applicable laws, and for no other purpose.
Section 22.02. Tenant shall not use or occupy, nor permit or
suffer the Property or any part thereof, to be used or occupied for any
unlawful or illegal business, use or purpose, or for any business, use or
purpose which is immoral or disreputable or extra-hazardous, or in such manner
as to constitute a nuisance of any kind (public or private), or for any purpose
or in any way in violation of the certificates of occupancy (or other similar
approvals of applicable governmental authorities), or of any present or future
Governmental Requirements (including, but not limited to, zoning ordinances) or
Insurance Requirements, or which may make void or voidable any insurance then
in force on the Property or which would violate any restrictive covenants or
operating covenants currently of record affecting the Property or which would
cause Tenant to default in any of its other obligations under this Lease. If
any such unlawful, illegal, immoral, disreputable or extra-hazardous use shall
occur, Tenant agrees promptly to take all lawful steps which may be necessary
to compel the discontinuance of such use and/or to oust and remove any
subtenants causing or responsible for such unlawful, illegal, immoral,
disreputable or extra-hazardous use or conduct.
ARTICLE 23
EVENTS OF DEFAULT, CONDITIONAL
LIMITATIONS, REMEDIES, ETC.
Section 23.01. The occurrence at any time during the Term of
any one or more of the events set forth in subsections (a), (b) or (c) of this
Section 23.01 shall constitute an "Event of Default" hereunder:
47
<PAGE> 51
(a) if Tenant shall fail to pay in full any
installment of Base Rent, any item of Additional Rent, or any
other Rental or other payment required to be paid by Tenant
under this Lease, when the same shall become due and payable
hereunder, and such default shall continue for a period of ten
(10) days after notice; or
(b) (i) if Tenant shall fail to deliver
Tenant's Removal Security to Landlord and perform the Removal
in accordance with Article 12; or
(ii) if, in contravention of the applicable
provisions hereof, this Lease or the estate of Tenant
hereunder shall be assigned, transferred, mortgaged or
otherwise encumbered, in whole or in part, or shall pass to or
devolve upon any other person, by operation of law or
otherwise, or if the Property or any part thereof shall be
sublet; or
(iii) if Tenant, after delivering the
Exercise Notice (as hereinafter defined), fails to purchase
the Property and consummate the transactions described in
Article 36, in accordance therewith, subject to the provisions
of Sections 36.09 and 37.03; or
(iv) if Tenant, after receiving the Sale
Notice (as hereinafter defined), fails to purchase the
Property and consummate the transactions described in Article
37, subject to the provisions of Section 37.03, in accordance
therewith; or
(v) if Tenant shall fail to deliver the
Security Replenishment pursuant to Section 1.02; or
(vi) if Tenant shall fail to keep, observe
or perform any of the other terms, covenants, conditions or
agreements of this Lease on Tenant's part to be kept, observed
or performed, and such default shall continue for a period of
thirty (30) days after notice thereof by Landlord to Tenant
specifying such default (unless such default requires work to
be performed, acts to be done or conditions to be removed
which cannot by their nature reasonably be performed, done or
removed, as the case may be, within such thirty (30)-day
period, then if Tenant shall not have promptly commenced
curing the same within such thirty (30)-day period or shall
thereafter fail to diligently and continuously prosecute the
same to completion); or
48
<PAGE> 52
(c) (i) if Tenant is generally not paying
its debts as such debts become due, within the meaning of such
phrase under Title 11 of the United States Code, or shall
admit in writing that it is unable to pay its debts as such
debts become due; or
(ii) if Tenant shall make an assignment
for the benefit of creditors; or
(iii) if Tenant shall file a voluntary
petition under Title 11 of the United States Code, as the same
may be amended, or if such a petition is filed against Tenant
and an order is entered as a result of such petition, or if
Tenant shall file any petition or answer seeking, consenting
to, or acquiescing in any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar
relief under any present or future federal bankruptcy code or
any other present or future applicable federal or state
statute or law, or shall seek or consent to or acquiesce in
the appointment of any custodian, trustee, receiver,
sequestrator, liquidator or other similar official of Tenant
or of all or any substantial part of its property or of the
Property or any interest of Tenant therein, or if Tenant shall
take any action in furtherance of any action described in
subdivisions (i), (ii) or (iii) of this Section 23.01(c); or
(iv) if within sixty (60) days after the
commencement of any proceeding against Tenant seeking any
reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any present
or future federal bankruptcy code or any other present or
future applicable federal or state statute or law, such
proceeding shall not have been dismissed, or if within sixty
(60) days after the appointment, without the consent or
acquiescence of Tenant, of any custodian, trustee, receiver,
assignee, sequestrator, liquidator or any other similar
official of Tenant or of all or any substantial part of its
properties or of the Property or any interest of Tenant
therein, such appointment shall not have been vacated or
stayed on appeal or otherwise, or if within thirty (30) days
after the expiration of any such stay, such appointment shall
not have been vacated.
(d) The word "Tenant" as used in subsection (c) of
this Section 23.01 shall be deemed to mean the Tenant herein
named, or in the event of a permitted assignment of this
Lease, the word "Tenant" shall be deemed to mean only the then
assignee.
49
<PAGE> 53
Section 23.02.
(a) Upon the occurrence of any of the Events of Default
set forth in Section 23.01(c), Landlord may at any time thereafter serve upon
Tenant a five (5) day notice of termination of this Lease and upon the
expiration of such five (5) day period, this Lease and the Term shall cease,
terminate and expire as fully and completely as if the expiration of such 5-day
period were the date herein definitely fixed for the end and expiration of the
Lease and the Term, and Tenant immediately shall quit and surrender the
Property to Landlord, but Tenant shall remain liable as hereinafter provided;
or if such termination shall be proscribed by any law applicable to the
proceeding or stayed by order of any court having jurisdiction over the
proceeding, then, following the expiration of any stay, or if the trustee
appointed in any such proceeding, Tenant or Tenant as debtor-in-possession
shall fail to assume this Lease in its entirety and all of the covenants
thereof within the period prescribed therefor by law or as may be allowed by
the court, and/or said trustee, Tenant or Tenant as debtor-in-possession shall
fail to provide adequate protection of Landlord's right, title and interest in
and to the Property and adequate assurances of the complete and continuous
future performance of Tenant's obligations under this Lease, Landlord, to the
extent permitted by law or by leave of the court having jurisdiction over the
proceeding, shall have the right, at its election, to terminate this Lease on
five (5) days' notice to Tenant, Tenant as debtor-in-possession or said
trustee, and upon the expiration of said 5-day period this Lease shall cease
and expire as fully and completely as if such date were the date herein
definitely fixed for the end and expiration of this Lease and the Term, and
thereupon neither Tenant nor any subtenant or other person claiming through or
under Tenant or by virtue of any statute or order of any court shall be
entitled to the possession of the Property, or any part thereof, and Landlord,
in addition to the other rights and remedies given pursuant to this Article, or
by virtue of any other provision in this Lease contained, or by virtue of any
statute or rule of law or equity, may retain or receive as partial liquidated
damages any Rental or other moneys received by it from Tenant or others on
behalf of Tenant.
(b) If this Lease shall terminate and expire pursuant to
the provisions of Section 23.02(a), Landlord shall be entitled to prove and
recover in any such bankruptcy, insolvency, receivership, reorganization or
dissolution proceeding all arrears in Rental and, in addition thereto, as
liquidated damages, an amount equal to the maximum allowed by statute or rule
of law in effect at the time when and governing the proceedings in which such
damages are to be proved, whether or not such amount be greater or less than
the amount referred to in Section 23.03 below.
50
<PAGE> 54
Section 23.03.
(a) Upon the occurrence of any of the Events of Default
set forth in Section 23.01(a) or (b), Landlord may at any time thereafter and
during the continuance of any such Event of Default serve upon Tenant a five
(5) day notice of termination of this Lease and upon the expiration of such
five (5)-day period, this Lease and the Term shall cease, end and expire as
fully and completely as if the expiration of such five (5)-day period were the
date herein definitely fixed for the end and expiration of this Lease and the
Term, and thereupon Tenant and any subtenant or other person claiming through
or under Tenant shall quit and surrender the Property to Landlord, but Tenant
shall remain liable as hereinafter provided.
(b) If the notice provided for in Section 23.03(a) shall
have been given, and the Term shall have expired as aforesaid, or if any of the
Events of Default set forth in Section 23.01(a) shall occur (whether or not the
notice provided for in Section 23.03(a) shall have been given), then and in any
of such events Landlord may, without further notice, re-enter and repossess the
Property, using such force for that purpose as may be lawful and necessary
without being liable to indictment, prosecution or damages therefor, and may
dispossess Tenant and any subtenant or other person claiming through or under
Tenant by summary proceedings or other legal proceedings and remove their
effects and hold the Property as of Landlord's former estate as if this Lease
had not been made, and Tenant hereby waives the service of notice of intention
to re-enter or to institute legal proceedings to that end.
Section 23.04. If this Lease and the Term shall have
terminated and expired as provided in Section 23.03(a), or if Landlord shall
have re-entered the Property and/or shall have dispossessed Tenant by summary
proceedings or other legal proceedings as provided in Section 23.03(b):
(a) Tenant shall pay to Landlord all Rental payable under
this Lease to the date upon which this Lease and the Term shall have
terminated, expired and come to an end or to the date of re-entry upon the
Property by Landlord, as the case may be;
(b) Landlord may repair, renovate, remodel and/or alter
the Property or any part thereof in such manner as Landlord may deem necessary
or advisable without thereby relieving Tenant of any liability under this Lease
or otherwise affecting any such liability, and/or Landlord may let or relet the
Property or any parts thereof for the whole or any part of the remainder of the
Term or for a longer period, in Landlord's name or as agent of Tenant, at such
rental and upon such terms and conditions as Landlord shall deem reasonable, to
any tenant it may deem suit-
51
<PAGE> 55
able and for any use or purpose it may deem appropriate, and out of any rent
and other sums collected or received as a result of such reletting Landlord
shall: first, pay to itself all costs and expenses of terminating this Lease,
re-entering, retaking, repossessing and/or repairing the Property or any part
thereof, and the cost and expense of removing all persons and property
therefrom, including, without limitation, reasonable attorneys' fees and
disbursements; second, pay to itself the costs and expenses sustained in
obtaining any new tenants and other occupants, including, without limitation,
brokerage commissions, reasonable attorneys' fees and disbursements and other
reasonable expenses of preparing the Property or any part thereof for reletting
and, if Landlord shall maintain and operate the Property, the cost and expense
of operating and maintaining the Property, and third, pay to itself any balance
remaining on account of the liability of Tenant to Landlord hereunder.
Landlord shall use its commercially reasonable efforts to mitigate damages
incurred as a result of Tenant's default, provided, however, Landlord shall in
no way be responsible or liable for any failure to relet the Property or any
part thereof, or for any failure to collect any rent due on any such reletting,
and no such failure to relet or to collect rent shall operate to relieve Tenant
of any liability under this Lease or otherwise to affect any such liability;
and any rents or other sums received by Landlord on a reletting in excess of
the Rental reserved in this Lease shall belong solely to Landlord;
(c) Tenant shall be liable for and shall pay to Landlord,
as damages, any deficiency (the "Deficiency") between the Rental reserved in
this Lease for the period which otherwise would have constituted the unexpired
portion of the Term and the net amount, if any, of rents collected under any
reletting effected pursuant to Section 23.04(b) for any part of such period
(after first deducting from the rents collected under any such reletting all of
the payments to Landlord described in Section 23.04(b)); any such Deficiency
shall be paid by Tenant in installments on the days specified in this Lease for
the payment of installments of Rental, and Landlord shall be entitled to
recover from Tenant such Deficiency installments as the same shall arise, and
no suits or actions to collect the amount or amounts of any Deficiency for any
period shall prejudice Landlord's right to collect the Deficiency for any
subsequent period by a similar suit or action; and
(d) whether or not Landlord shall have collected any
Deficiency installments as aforesaid, Landlord shall be entitled at any time to
recover from Tenant, and Tenant shall pay to Landlord, on demand, in lieu of
any further Deficiencies, as and for liquidated and agreed final damages (it
being agreed that it would be impracticable or extremely difficult to fix the
actual damages), a sum equal to the amount by which the aggregate Rental
52
<PAGE> 56
reserved in this Lease for the period which at the time of the termination,
re-entry or dispossess would have constituted the unexpired portion of the Term
exceeds the then fair and reasonable rental value of the Property for the same
period, both discounted to present worth at the rate per annum equal to the
average yield of the United States Treasury Securities adjusted to a constant
maturity equal to the then unexpired Term of this Lease, less the aggregate
amount of Deficiencies theretofore collected by Landlord pursuant to Section
23.04(c) for the same period; it being agreed that if before presentation of
proof of such liquidated damages to any court, the Property, or any part
thereof, shall have been relet by Landlord for the period which otherwise would
have constituted the unexpired portion of the Term, or any part thereof, the
amount of rent reserved upon such reletting shall be deemed, prima facie, to be
the fair and reasonable rental value for the part or the whole of the Property
so relet during the term of the reletting.
Section 23.05. No termination of this Lease pursuant to
Section 23.03(a) or otherwise, and no re-entry or taking of possession by
Landlord and/or reletting of the Property or any part thereof pursuant to
Sections 23.03(b) and 23.04(b) or otherwise, shall relieve Tenant of its
liabilities and obligations under this Article 23, all of which shall survive
such expiration, termination, re-entry, repossession or reletting.
Section 23.06. Suit or suits for the recovery of damages, or
for a sum equal to any installment or installments of Rental payable hereunder
or any Deficiency or other sums payable by Tenant to Landlord pursuant to this
Lease, may be brought by Landlord from time to time at Landlord's election, and
nothing herein contained shall be deemed to require Landlord to await the date
whereon this Lease and the Term would have expired by limitation had there been
no Event of Default by Tenant, re-entry or termination.
Section 23.07. Except as otherwise expressly provided herein,
Tenant, to the fullest extent permitted by law, hereby expressly waives the
service of any notice of intention to reenter provided for in any statute, or
of the institution of legal proceedings to that end, and Tenant, for and on
behalf of itself and all persons claiming through or under Tenant, also waives
any and all right of redemption provided by any law or statute now in force or
hereafter enacted or otherwise, or re-entry or repossession or to restore the
operation of this Lease in case Tenant shall be dispossessed by a judgment or
by warrant of any court or judge or in case of reentry or repossession by
Landlord or in case of any expiration or termination of this Lease. The terms
"enter", "re-enter", "entry" or "re-entry", as used in this Lease are not
restricted to their technical legal meaning.
53
<PAGE> 57
Section 23.08. No failure by Landlord or Tenant, as the case
may be, to insist upon the strict performance of any agreement, term, covenant
or condition of this Lease or to exercise any right or remedy consequent upon a
breach thereof, and no acceptance by Landlord of full or partial Rental during
the continuance of any such breach, shall constitute a waiver of any such
breach or of such agreement, term, covenant or condition. No agreement, term,
covenant or condition of this Lease to be performed or complied with by Tenant
or Landlord, as the case may be, and no breach thereof, shall be or be deemed
to be waived, altered or modified except by a written instrument executed by
the other party. No waiver of any breach shall affect or alter this Lease, but
each and every agreement, term, covenant and condition of this Lease shall
continue in full force and effect with respect to any other then existing or
subsequent breach thereof. Any rule of law or other matter to the contrary
notwithstanding, Tenant to the fullest extent possible hereby waives any
requirement that Landlord mitigate damages caused by Tenant, except to the
extent specifically set forth herein.
Section 23.09. Each right and remedy of Landlord provided for
in this Lease and in all other documents executed by the parties
contemporaneously herewith shall be cumulative and shall be in addition to
every other right or remedy provided for in this Lease or in such documents or
now or hereafter existing at law or in equity or by statute or otherwise, and
the exercise or beginning of the exercise by Landlord of any one or more of the
rights or remedies provided for in this Lease or in such other documents or now
or hereafter existing at law or in equity or by statute or otherwise shall not
preclude the simultaneous or later exercise by Landlord of any or all other
such rights or remedies.
Section 23.10.
(a) Either party hereto shall pay to the other party
hereto all reasonable costs and expenses, including, without limitation,
reasonable attorneys' fees and disbursements, incurred by the enforcing party
in any action or proceeding to which the enforcing party may be made a party by
reason of any act or omission of the other party, provided that such act or
omission does not result from any act or omission of the enforcing party.
(b) Either party hereto shall also pay to the other party
hereto all reasonable costs and expenses, including, without limitation,
reasonable attorneys' fees and disbursements, incurred by the enforcing party
in enforcing any of the covenants and provisions of this Lease or incurred in
any action or proceeding brought by the enforcing party against the other on
account of the provisions hereof, provided the enforcing party
54
<PAGE> 58
shall prevail in such action or proceeding, and all such costs, expenses and
attorneys' fees and disbursements may be included in and form a part of any
judgment entered in any action or proceeding brought by the enforcing party
against the other on or under this Lease.
ARTICLE 24
NOTICES
Section 24.01. Whenever it is provided herein or prescribed
by law that notice, demand, request, consent, approval or other communication
shall or may be given to or served upon either of the parties hereto, such
notice, demand, request, consent, approval or other communication shall be in
writing and, unless otherwise prescribed by law or governmental regulation,
shall be effective for any purpose only if given by (i) mailing the same by
registered or certified mail, postage prepaid, return receipt requested, or
(ii) Federal Express or other recognized overnight courier service, addressed
to the parties at the respective addresses set forth below, or to such other
addresses as either party may from time to time designate by like notice given
to the other.
(a) If to Tenant:
Biomatrix, Inc.
1125 Pleasant View Terrace
Ridgefield, New Jersey 07657
with a copy to:
Dollinger & Dollinger
Mack Centre One
365 West Passaic Street
Rochelle Park, New Jersey 07662
Attn: Martin E. Dollinger, Esq.
(b) If to Landlord:
Ridgefield Associates
1000 Huyler Street
Teterboro, New Jersey 07068
Attn: Mr. Alan Ades
55
<PAGE> 59
with a copy to:
Kramer, Levin, Naftalis, Nessen,
Kamin & Frankel
919 Third Avenue
New York, New York 10022
Attn: Larry M. Loeb, Esq.
Section 24.02. Every notice, demand, request, consent,
approval or other communication hereunder shall be deemed to have been given or
served upon receipt or non-acceptance by the addressee.
ARTICLE 25
SUBORDINATION
Section 25.01. This Lease, the leasehold estate of Tenant
created hereby and all rights of Tenant hereunder are and shall be subject and
subordinate to any and all mortgages, encumbrances, conditions of title and
other matters now or hereafter affecting the Property or any part thereof and
to all ground or underlying leases and to all mortgages, encumbrances and
conditions of title which may now or hereafter affect such leases and to all
renewals, modifications, consolidations, replacements and extensions of any
such underlying leases and mortgages. This clause shall be self-operative and
no further instrument of subordination shall be required by any ground or
underlying lessor or by any mortgagee, affecting any lease or the Property or
otherwise. In confirmation of such subordination, Tenant shall from time to
time, promptly on demand, without charge or expense, execute, acknowledge and
deliver any certificate or other instruments or evidence or confirmation of
subordination that Landlord may request.
Section 25.02. Landlord shall cause any future mortgagee of
the Property to enter into a nondisturbance agreement with Tenant,
substantially in the form of Exhibit F annexed hereto and made a part hereof,
failing which, this Lease shall not be subordinate to such future mortgage.
Section 25.03. Tenant covenants and agrees that, except as
herein otherwise set forth, this Lease shall not terminate upon the termination
of any ground lease or underlying lease or mortgage at any time affecting the
Property. If for any reason or cause whatsoever any such ground or underlying
lease is terminated by summary dispossess proceedings or otherwise or if such
ground or underlying lease is terminated through foreclosure proceedings
brought by the holder of any mortgage to which such ground or underlying lease
is subject and/or subordinate or otherwise, or if Landlord's fee title is
foreclosed upon by the
56
<PAGE> 60
holder of any mortgage thereon, all without Tenant having been made a party in
such dispossess and/or foreclosure proceeding, Tenant shall attorn to the
lessor under such ground or underlying lease or the purchaser in any such
foreclosure proceeding, as the case may be, and this Lease shall not be
affected in any way whatsoever (except as herein otherwise expressly provided)
by any such proceeding or termination, and this Lease shall continue in full
force and effect in accordance with its terms; but if Tenant shall be named in
any such dispossess and/or foreclosure proceeding, in the event that Tenant is
in default beyond any applicable grace period under this Lease, this Lease and
Tenant's estate shall be terminated hereby.
ARTICLE 26
CERTIFICATES BY TENANT
Section 26.01. Tenant agrees, at any time and from time to
time upon not less than ten (10) days' prior notice by Landlord, to execute,
acknowledge and deliver to Landlord (or any other parties specified by
Landlord), without charge therefor, a statement certifying: (i) whether this
Lease is unmodified and in full force and effect (or if there have been any
modifications, or supplements or other agreements executed pursuant to the
terms of this Lease that the same, as modified and/or supplemented, is in full
force and effect and stating the modifications and/or supplements); (ii) the
date to which Base Rent and Additional Rent payable by Tenant hereunder has
been paid; (iii) whether there is then any existing default in the performance
of Landlord's obligations under this Lease and, if so, specifying each such
default; (iv) whether there then exist any set-offs or defenses to the
enforcement of this Lease by Landlord or any claims of any kind by Tenant
against Landlord; (v) the status of any Capital Improvements (including,
without limitation, Material Improvements and Tenant's Work) which have been,
are being or are contemplated to be performed; (vi) whether there is a default
by Tenant under Article 38; (vii) as to such other information and matters as
Landlord (or any other parties specified by Landlord) shall require; it being
intended that any such statement may be relied upon by Landlord and/or such
other parties as Landlord shall have designated.
ARTICLE 27
CONSENTS AND APPROVALS
Section 27.01. All consents and approvals which may be given
under this Lease shall, as a condition of their effectiveness, be in writing.
The granting of any consent or approval by Landlord to the performance of any
act by Tenant requiring the consent or approval of Landlord under any of the
57
<PAGE> 61
terms or provisions of this Lease shall relate only to the specified act or
acts thereby consented to or approved and, unless otherwise specified, shall
not be deemed a waiver of the necessity for such consent or approval for the
same or any similar act in the future, and/or the failure on the part of
Landlord to object to any such action taken by Tenant without the consent or
approval of Landlord, shall not be deemed a waiver of Landlord's right to
require such consent or approval for any further similar act. Whenever any
provision in this Lease provides that Landlord will not unreasonably withhold
and/or delay its consent, if Tenant shall at any time claim that Landlord
unreasonably withheld or delayed its consent, Landlord's sole obligation shall
be to so consent thereto if Tenant prevails against Landlord in an action
brought in a court of competent jurisdiction, and Tenant hereby waives and
relinquishes any and all claims for damages or other compensation by reason
thereof.
ARTICLE 28
SURRENDER AT END OF TERM
Section 28.01. On the last day of the Term or upon any sooner
termination of this Lease, or upon a re-entry by Landlord upon the Property
pursuant to Article 23, Tenant agrees that it shall well and truly surrender
and deliver up to Landlord the Property in the condition thereof existing on
the Commencement Date, subject to the provisions of Section 12.02(d)(ii), in
good order, and in the condition and state of repair in which Tenant is
obligated to maintain the same under this Lease, reasonable wear and tear
excepted, free and clear of all subleases, occupancies, liens and encumbrances.
Tenant hereby waives any notice now or hereafter required by law with respect
to vacating the Property on any such expiration or termination date.
Section 28.02. On the last day of the Term or upon any sooner
termination of this Lease, or upon re-entry by Landlord upon the Property
pursuant to Article 23, Tenant agrees to deliver to Landlord such of the
following as shall be in Tenant's possession: (i) all original licenses and
permits then pertaining to the Property; (ii) permanent certificate(s) of
occupancy (or similar final approvals of applicable governmental authorities)
then in effect in respect of the Property; (iii) all warranties and guarantees
then in effect which Tenant has received in connection with any work or
services performed or Equipment installed in any part of the Property, together
with a duly executed assignment thereof to Landlord; and (iv) any and all other
documents of every kind and nature whatsoever which may be necessary for the
maintenance, operation and management of the Property.
58
<PAGE> 62
Section 28.03. If the Property is not surrendered and vacated
as and at the time required by this Lease (time being of the essence), Tenant
shall be liable to Landlord for: (iii) all expenses, losses and damages which
Landlord may incur or sustain by reason thereof, including, without limitation,
reasonable attorneys' fees, and Tenant shall indemnify Landlord against all
claims made by any succeeding tenants or others against Landlord or otherwise
arising out of or resulting from the failure of Tenant timely to surrender and
vacate the Property in accordance with the provisions of this Lease; and (iv)
per diem use and occupancy in respect of the demised premises equal to one and
one-half times the Base Rent and Additional Rent payable hereunder for the last
year of the term of this Lease (which amount Landlord and Tenant presently
agree is the minimum to which Landlord would be entitled and is presently
contemplated by them as being fair and reasonable under such circumstances and
not a penalty). In no event shall any provision hereof be construed as
permitting Tenant to hold over in possession of the Property after expiration
or termination of the Term hereof.
ARTICLE 29
QUIET ENJOYMENT
Section 29.01. Landlord covenants that, if and so long as no
Event of Default shall have occurred hereunder, Tenant shall and may (subject,
however, to the terms and conditions of this Lease), peaceably and quietly
have, hold and enjoy the Property during the Term without molestation or
disturbance by or from Landlord or any person claiming by, through or under
Landlord.
ARTICLE 30
ARBITRATION
Section 30.01. In such cases where this Lease expressly
provides for the settlement of a dispute or question by arbitration, and only
in such cases, either Landlord or Tenant may demand arbitration. Upon such
demand, the dispute or question shall be determined by arbitration conducted in
Bergen County, before and in accordance with the rules then obtaining of the
American Arbitration Association, or any successor thereto.
Section 30.02. The expenses of arbitration shall be shared
equally by Landlord and Tenant, but each party shall be responsible for the
fees of its own attorneys and witnesses. Landlord and Tenant agree to execute
all documents and to do all other things necessary to submit any such matter to
arbitration and further agree that a judgment or order may be entered in any
court of competent jurisdiction based on an arbitration award,
59
<PAGE> 63
including the granting of injunctive relief. In rendering their decision and
award, the arbitrators shall have no power to vary, modify, amend or reform any
of the terms or provisions of this Lease, and the jurisdiction of the
arbitrators is hereby expressly limited accordingly.
ARTICLE 31
INVALIDITY OF CERTAIN PROVISIONS
Section 31.01. If any term or provision of this Lease, or the
application thereof to any person or circumstances shall, to any extent, be
invalid or unenforceable, the remainder of this Lease, or the application of
such term or provision to Persons or circumstances other than those as to which
it is held invalid or unenforceable, shall not be affected thereby, and each
term and provision of this Lease shall be valid and be enforced to the fullest
extent permitted by law.
ARTICLE 32
RENEWAL OPTION
Section 32.01. Provided this Lease is in full force and
effect and that Tenant shall not be in default hereunder, Tenant shall have the
right on one (1) occasion, by giving Landlord unconditional written notice
("Tenant's Renewal Notice") of its exercise of such right between January 1,
2005 and June 30, 2005, time being of the essence, to extend the Expiration
Date of this Lease from the date specified in Article 1 to the tenth (10th)
anniversary of such date (the "Renewal Period"). Upon Tenant's exercise of its
right to extend as aforesaid, this Lease shall be deemed extended until
February 28, 2016, upon the terms and conditions contained herein except that:
(i) Tenant shall have no further right to renew this Lease or extend the term
hereof; and (ii) the Base Rent payable during the Renewal Period shall be fixed
in accordance with the provisions of Section 32.02.
Section 32.02.
(a) Upon receipt of Tenant's Renewal Notice,
Landlord and Tenant shall seek for thirty (30) days to agree upon the Base Rent
for the Renewal Period, which the parties agree shall be the fair market rental
value of the Property, except that in no event and under no circumstances shall
the Base Rent for the Renewal Period be less than the Base Rent payable by
Tenant in respect of the Property immediately prior to the Renewal Period.
Should Landlord and Tenant be unable within thirty (30) days following
Landlord's receipt of Tenant's Renewal Notice to reach agreement as to such
Base Rent and execute an
60
<PAGE> 64
agreement in form and content satisfactory to Landlord confirming the Base
Rent, same shall be determined in accordance with the provisions of subsection
(b) of this Section 32.02.
(b) In the event that the Base Rent is to be
determined in accordance with the provisions of this subsection, the following
procedure shall be utilized. Tenant shall appoint a disinterested person with
at least ten (10) years professional service as a licensed real estate broker
in the State of New Jersey who has been involved in the rental of facilities
comparable to the Property which are located in Bergen County, New Jersey, for
not less than ten (10) years to serve as an appraiser on its behalf and shall
give notice thereof to Landlord within sixty (60) days after Landlord's receipt
of Tenant's Renewal Notice. Landlord shall, within sixty (60) days after
receiving said notice, appoint a second disinterested person having
qualifications similar to those required of the appraiser to be appointed by
Tenant to serve as appraiser on its behalf and shall give notice thereof to
Tenant. If a party who shall have the right pursuant to the foregoing to
appoint an appraiser fails or neglects to timely do so, then in such event the
other party shall select a person to serve as the appraiser not so selected by
the first party, and upon such selection, such appraiser shall be deemed to
have been selected by the first party. The appraisers shall independently,
within thirty (30) days after their appointment, render in writing to Landlord
and Tenant their independent appraisals of what the annual fair market rental
value of the Property would be for a ten (10) year term commencing on March 1,
2006 were the Property then ready to be leased and dedicated for its highest
and best economic use and purpose, assuming the condition of the Property were
that thereof on the Commencement Date (containing high grade and well-lit
office and warehouse space comprised of 12,637 square feet and 79,163 square
feet, respectively) and taking into account all relevant factors, free and
clear of all encumbrances (including the lien of this Lease and any subleases,
except, however, if the inclusion of subleases and the rents thereunder would
increase the fair market rental value of the Property), and taking into account
increases in fixed or minimum rental rates then being included in leases for
comparable space and terms in comparable properties in Bergen County, New
Jersey. If Landlord and Tenant or the two (2) appraisers cannot, within thirty
(30) days thereafter agree on what the annual fair market rental value of the
Property would be for the Renewal Period, the two (2) appraisers theretofore
appointed shall appoint a third disinterested person with at least ten (10)
years professional service as a licensed real estate broker in the State of New
Jersey who has been involved in the rental of facilities comparable to the
Property which are located in Bergen County, New Jersey, for not less than ten
(10) years. If the appraisers thus appointed by Landlord and Tenant shall fail
to appoint such
61
<PAGE> 65
third disinterested appraiser (who is amenable to serving as such) within
thirty (30) days either Landlord or Tenant may, by application to the Presiding
Justice of the Court of Appeals of the State of New Jersey for the Judicial
Department in which the Property is located, seek to appoint such third
disinterested person. Upon such appointment, such person shall be the third
appraiser as if appointed by the original two appraisers. The third appraiser
shall then promptly select the amount set forth in one or the other of the two
appraisals theretofore prepared which such appraiser believes most closely
approximates the annual fair market rental value of the Property and same shall
be the Base Rent for the Renewal Period except that in no event and under no
circumstances shall the Base Rent be less than the Base Rent payable by Tenant
in respect of the Property immediately prior to the beginning of the Renewal
Period. Subject to the qualification in the prior sentence contained, the
determination of the appraiser(s) shall conclusively be and be deemed to be the
Base Rent for the Renewal Period and shall be binding on Landlord and Tenant.
In rendering their determination, the appraisers shall have no power to modify
or in any manner alter or reform any of the provisions of this Lease. The cost
of each party's appraiser (and the third appraiser, if necessary) shall be
shared equally by Landlord and Tenant. Landlord and Tenant agree to sign all
documents and to do all other things necessary to submit the question of the
amount of the fair market rent to the appraisers and further agree to, and
hereby do, waive any and all rights they or either of them may at any time have
to revoke their agreement under this Article 32. If, for any reason
whatsoever, the Base Rent in respect of the Renewal Period has not been
determined at the beginning of the Renewal Period, Tenant shall pay to Landlord
on account of Base Rent (subject to adjustment once the Base Rent is
determined) one hundred ten (110%) percent of the Base Rent reserved hereunder
immediately prior to the Renewal Period. Nothing in this Article 32 contained
shall alter or modify Tenant's obligations during the Renewal Period to pay
Impositions pursuant to Article 4 and to pay all other Additional Rent due
under this Lease or in respect of the Property.
ARTICLE 33
WAIVER OF TRIAL BY JURY
Section 33.01. To the fullest extent permitted by law,
Landlord and Tenant do hereby waive and will waive all rights to trial by jury
on any cause of action, proceeding or counterclaim directly or indirectly
arising out of or in any way connected with this Lease, the Property, Tenant's
use and occupancy of the Property or any matters whatsoever arising out of or
in any way connected with this Lease. The provisions of this Lease relating to
waiver of a jury trial shall survive the expiration of the
62
<PAGE> 66
Term. To the fullest extent permitted by law, Tenant waives and relinquishes
the right to interpose a counterclaim (or to seek consolidation of a lawsuit by
Tenant against Landlord) in or in respect of any action or proceeding Landlord
may institute against Tenant for or relating to the payment of Rent.
ARTICLE 34
BROKER
Section 34.01. Each of Landlord and Tenant acknowledges,
represents and warrants to the other party that it has dealt with no broker
with respect to this Lease or the Property (including the transactions
contemplated under Articles 36 and 37) other than Strategic Alliance Realty,
Inc. and Jacobson, Goldfarb & Tanzman Associates L.L.C. (collectively,
"Broker"). Each of Landlord and Tenant hereby covenants and agrees forever to
defend, indemnify and hold the other party and its successors and assigns
harmless from and against any and all claims, demands or judgments (and for all
expenses, including, but not limited to, reasonable counsel fees and expenses
incurred by the other party in connection therewith) for any commissions, fees
or other compensation of any kind by or in favor of any broker or other party,
other than Broker, claiming to have acted in any capacity, at the behest of the
party making the indemnity, as a broker in bringing about this Lease. As, if
and when this Lease shall be mutually executed and delivered by Landlord and
Tenant, Landlord agrees to pay any commission that may be due Broker in
connection with this Lease in accordance with separate agreements between
Landlord and Broker.
ARTICLE 35
SECURITY
Section 35.01. (a) Within three (3) days after the execution
and delivery of this Lease by Tenant, and subject to the provisions of Section
1.02, Tenant shall deposit with Landlord the sum of $65,025.00 as security for
the faithful performance and observance by Tenant of the terms, provisions,
covenants and conditions of this Lease. It is agreed that if Tenant defaults
in respect of any of the terms, provisions, covenants or conditions of this
Lease, including, but not limited to, the payment of Base Rent or Additional
Rent, Landlord may use, apply and retain the whole or any part of the security
so deposited to the extent required for the payment of any Base Rent or
Additional Rent or any other sum as to which Tenant is in default or for any
sum which Landlord may expend or may be required to expend by reason of
Tenant's default in respect of any of the terms, covenants and conditions of
this Lease, including, but not limited to, any sums due or arising from the
63
<PAGE> 67
Removal (or Tenant's failure to perform same) or any damages or Deficiencies in
reletting of the Property or the leasing of the entire Property, whether such
damages or Deficiencies accrued before or after summary proceedings or other
re-entry by Landlord. In the event that Tenant shall fully and faithfully
comply with all of the terms, provisions, covenants and conditions of this
Lease, the security shall be returned to Tenant within twenty (20) days after
the date herein fixed as the expiration date of this Lease (or the earlier
Closing or Sale Closing, as the case may be) and after the surrender of
possession of the entire Property to Landlord in the manner called for by this
Lease. In the event of a sale of the Property, Landlord shall transfer the
security to the vendee or lessee and Landlord shall thereupon be released by
Tenant from all further liability for the return of the security; and Tenant
agrees to look solely to the new Landlord for the return of the security; and
it is agreed that the provisions hereof shall apply to every transfer or
assignment made of the security to a new Landlord. Tenant further covenants
that it will not assign or encumber or attempt to assign or encumber the monies
deposited hereunder as security and that neither Landlord nor its successors or
assigns shall be bound by any such assignment or encumbrance, or attempted
assignment or attempted encumbrance.
(b) As long as major commercial banks in Bergen
County make interest bearing security deposit accounts available, said security
deposit shall be placed by Landlord or its agent in an interest bearing
account. Interest that may accrue thereon shall belong to Tenant, except such
portion thereof as shall be equal to one (1%) per cent per annum of said
security deposit (or such higher percentage as Landlord may from time to time
be lawfully entitled to retain), which such percentage shall belong to and be
the sole property of Landlord as an administrative fee which Landlord may
withdraw from time to time and retain. That portion of the interest belonging
to Tenant shall be accumulated and retained hereunder. The obligation to pay
any taxes, whether income or otherwise, related to or affecting any interest
earned on such security deposit (except as to that portion thereof which
belongs to Landlord) shall be the sole responsibility of Tenant and Tenant
hereby agrees to pay same and to forever indemnify and save harmless Landlord
in respect thereof. Tenant shall, within fifteen (15) days after demand,
furnish Landlord or its agent with a tax identification number for use in
respect of such deposits.
Section 35.02. In addition to, and not in limitation or
modification of the provisions of Section 1.02, if Landlord at any time
utilizes any portion of the security by reason of any claimed default by Tenant
hereunder, Tenant shall within five (5) days after demand, restore and pay
Landlord the amount so utilized.
64
<PAGE> 68
ARTICLE 36
OPTION TO PURCHASE
Section 36.01. (a) Tenant shall have an option to purchase
the Property, upon and subject to the terms and conditions set forth in this
Article 36, which option shall be exercisable by irrevocable and unconditional
notice to Landlord (the "Exercise Notice") delivered to Landlord prior to
November 14, 1998 (time being of the essence), accompanied by an Acceptable
Check (as hereinafter defined) in the amount of ten (10%) percent of the
Purchase Price (as hereinafter defined) (the "Downpayment"), made payable to
the order of Landlord's attorney as escrowee ("Escrowee"), and which purchase
shall be consummated on the date designated by Tenant in the Exercise Notice,
which date shall be no earlier than ninety (90) days nor later than one hundred
eighty (180) days after the Exercise Notice shall have been given by Tenant
(the "Closing"), time being of the essence as to Tenant's performance of its
obligations hereunder on such 180th day.
(b) The Downpayment shall be held in escrow by Escrowee,
upon and subject to the terms and conditions herein set forth:
(i) Escrowee shall hold the proceeds of the
Acceptable Check representing the Downpayment in escrow in a special bank
account (or as otherwise agreed in writing by Landlord, Tenant and Escrowee)
until the Closing or sooner cancellation of the conveyance contemplated under
this Article 36, and shall pay over or apply such proceeds in accordance with
the terms of this Article 36. Escrowee shall hold such proceeds in an
interest-bearing account; any interest earned thereon shall be paid to the same
party entitled to the escrowed proceeds, and the party receiving such interest
shall pay any income taxes thereon. The tax identification numbers of the
parties shall be furnished to Escrowee upon request. At the Closing, such
proceeds and the interest thereon, if any, shall be paid by Escrowee to
Landlord. If for any reason the Closing does not occur and either party makes
a written demand upon Escrowee for payment of such amount, Escrowee shall give
written notice to the other party of such demand. If Escrowee does not receive
a written objection from the other party to the proposed payment within ten
(10) business days after the giving of such notice, Escrowee is hereby
authorized to make such payment. If Escrowee does receive such written
objection within such ten (10) business day period, Escrowee shall continue to
hold such amount until otherwise directed by written instructions from Landlord
and Tenant or a final judgment of a court. However, Escrowee shall have the
right at any time to deposit the escrowed proceeds and interest thereon, if
any, with the clerk of any court of the
65
<PAGE> 69
county in which the Land is located. Escrowee shall give written notice of
such deposit to Landlord and Tenant. Upon such deposit, Escrowee shall be
relieved and discharged of all further obligations and responsibilities
hereunder.
(ii) The parties acknowledge that Escrowee is acting
solely as a stakeholder at their request and for their convenience, that
Escrowee shall not be deemed to be the agent of either of the parties, and that
Escrowee shall not be liable to either of the parties for any act or omission
on its part unless taken or suffered in bad faith, in willful disregard of this
Article 36 or involving gross negligence. Landlord and Tenant shall jointly
and severally indemnify and hold Escrowee harmless from and against all costs,
claims and expenses, including reasonable attorneys' fees, incurred in
connection with the performance of Escrowee's duties hereunder, except with
respect to actions or omissions taken or suffered by Escrowee in bad faith, in
willful disregard of this Article 36 or involving gross negligence on the part
of Escrowee.
(iii) Escrowee has acknowledged agreement to these
provisions by signing in the place indicated on the signature page of this
Lease.
Section 36.02. The Purchase Price for the Property shall be:
(i) $4,500,000.00, if the Closing takes place on or prior to November 14, 1997;
(ii) $4,550,000.00, if the Closing takes place on or after November 15, 1997
and on or prior to May 14, 1998; and (iii) $4,600,000.00, if the Closing takes
place on or after May 15, 1998 and prior to May 14, 1999.
Section 36.03. The Closing shall take place at the offices in
New York City or Bergen County, New Jersey designated by Tenant's lending
institution's counsel. At the Closing: (a) Tenant shall deliver to Landlord
the balance of the Purchase Price, by good certified check of Tenant drawn on,
or official check issued by a bank which is a member of the New York Clearing
House Association, unendorsed and payable directly to the order of Landlord
(the "Acceptable Check(s)"; provided that, solely in the case of the
Downpayment, the Acceptable Check shall be directly to the order of Escrowee);
(b) Landlord shall deliver to Tenant a bargain and sale deed with covenant
against grantor's acts, in proper statutory short form for record, duly
executed and acknowledged, so as to convey to Tenant fee simple title to the
Property as required by this Article 36, together with a standard affidavit of
title and, if Landlord is a corporation, a certified corporate resolution
authorizing the sale; (c) Landlord shall deliver to Tenant its original
executed copies of this Lease and an executed assignment thereof; Tenant shall
deliver to Landlord an executed assumption of this Lease. The assignment and
assumption of this Lease shall specifically include all of
66
<PAGE> 70
Landlord's right, title and interest to any security then remaining deposited
with Landlord, which security shall, at the option of Landlord, be transferred
to Tenant at the Closing or credited against the balance of the Purchase Price
due at the Closing; (d) Landlord shall deliver to Tenant an executed bill of
sale (with no representations by, or warranty or recourse to, Landlord) for all
personal property owned by Landlord, located at the Property and used in
connection with the ownership, operation, repair and maintenance of the
Property; (e) the parties shall execute and deliver any required State, City
and/or County transfer and/or recording tax returns, and Landlord shall deliver
(or shall instruct Tenant to so deliver, as a credit against the balance of the
Purchase Price otherwise due) certified or official bank checks payable to the
order of the appropriate State, City and/or County officers in the amount of
any applicable transfer and/or recording tax payable by reason of the delivery
or recording of the deed and/or the conveyance of the Property, and Tenant
shall deliver the recording fees for such deed, which amounts, together with
the required tax returns, shall be delivered by Landlord to the appropriate
officer(s) promptly following the Closing; (f) Base Rent and Additional Rent
shall be apportioned as of midnight of the day before the Closing and any
balance due to Landlord shall be payable by Tenant by Acceptable Checks; any
errors or omissions in computing apportionments at the Closing shall be
corrected within a reasonable time following the Closing, which provision shall
survive the Closing; (g) Landlord shall deliver to Tenant a certification of
non- foreign status, which certification shall be in the form then required by
the Foreign Investment in Real Property Tax Act, Internal Revenue Code, Section
1445; (h) Landlord shall deliver to Tenant any notice(s) received by Landlord
of condemnation proceedings affecting the Property or of proceedings to change
the zoning thereof, or of any outstanding violation of any governmental law,
rule, statute, ordinance or regulation affecting the Property; (i) Tenant shall
have complied with all of its obligations under Article 38, which obligation
shall survive the Closing; Landlord agrees to make such filings which, under
ISRA (as hereinafter defined), must be made by the owner of the Property upon
the conveyance thereof, provided that such filings (and the cost thereof) are
purely ministerial in nature (except insofar as they relate to items for which
Landlord is responsible under Section 38.05, in which event Landlord shall, at
its own cost and expense, undertake all required filings, testing, sampling,
investigation and remediation), Tenant acknowledging that it will be the sole
operator of the Property from and after delivery of possession thereof to
Tenant, and further provided that Tenant shall have complied with its
obligations under Article 38; and (j) the parties shall deliver such other
forms which are then customarily required to consummate a conveyance of the
Property, but solely to the extent
67
<PAGE> 71
that the delivery of such forms comports with the intention of this Article 36.
Section 36.04. The Property shall be conveyed at the Closing
together with all right, title and interest of Landlord, if any, in and to any
land lying in the bed of any street, road or highway, opened or proposed, in
front of, adjacent to or adjoining the Land to the center line thereof, and,
subject to the provisions of Section 9.05, to any unpaid award for any taking
by condemnation or any damage to the Land by reason of a change of grade of any
street or highway abutting the Land.
Section 36.05. The Property shall be conveyed to Tenant at
the Closing, and Tenant acknowledges and agrees to accept same, in its "as is"
condition and state of repair at the Closing.
Section 36.06. (a) The Property shall be conveyed subject to:
(i) the Encumbrances, except for mortgages made by Landlord encumbering the
Property and such easements, encroachments, liens and encumbrances created by
Landlord after the execution and delivery of this Lease (provided same are not
created at the request of, or by reason of the acts or omissions of, Tenant or
any default by Tenant under the terms and conditions of this Lease); and (ii)
the terms and conditions of this Lease.
(b) At the Closing, subject to the foregoing provisions
of Section 36.06(a), Landlord shall give and Tenant shall accept such title as
any reputable title insurance company, licensed to issue title insurance in the
State of New Jersey, shall be willing to approve and insure, at regular rates,
in accordance with a standard form of title policy. Tenant shall cause a copy
of the title report issued by such company to be delivered to Landlord no later
than one hundred twenty (120) days before the Closing, and updates thereof
every thirty (30) days thereafter.
(c) If at the date of the Closing Landlord is unable to
transfer title to Tenant in accordance with Section 36.06(a) due to defects in
or objections to title or otherwise (the "Defects"), other than those Defects
subject to which Tenant is obligated to accept title hereunder under Section
36.06(a) or which Tenant may have waived, and if Tenant shall be unwilling to
waive the same and to close title without abatement of the Purchase Price,
Landlord shall be entitled from time to time, upon notice to Tenant, to adjourn
the date for the Closing hereunder for a period or periods not exceeding sixty
(60) days (and the date for the Closing shall be adjourned to a date so
specified by Landlord), to remove, remedy or comply with such Defects. If for
any reason whatsoever, Landlord shall not have
68
<PAGE> 72
succeeded in removing, remedying or complying with such Defects at the
expiration of such adjournment(s), Tenant, nevertheless, may elect to accept
such title as Landlord may be able to convey with a credit against the monies
payable at the Closing equal to the reasonably estimated cost to cure such
Defects (not to exceed one (1%) percent of the Purchase Price), but without any
other credit or liability on the part of Landlord. If Tenant shall not so
elect, then either party may cancel the conveyance contemplated under this
Article 36 by notice to the other given within ten (10) days after such
adjourned date. Landlord shall not be required to bring any action or
proceeding or to incur any expense in excess of one (1%) percent of the
Purchase Price to cure any Defects, but the foregoing shall not permit Landlord
to refuse to pay off at the Closing, to the extent of the monies payable at the
Closing, mortgages made by Landlord encumbering the Property.
(d) If the conveyance contemplated under this Article 36
is cancelled pursuant to the terms of subsection (c) above, this Lease, and the
obligations of Tenant hereunder, shall be, and continue to be, in full force
and effect.
Section 36.07. If Landlord shall willfully default in its
obligations under this Article 36, the sole remedies of Tenant shall be to
either: (i) seek specific performance of Landlord's obligations under this
Article 36 in a court of competent jurisdiction; or (ii) cancel the conveyance
contemplated under this Article 36 and receive a refund of the Downpayment,
plus Tenant's reasonable title examination and survey costs, not to exceed
$2,500. In any such event, Tenant's obligations under this Lease (including,
without limitation, to pay Rental without abatement or offset of any kind)
shall not be impaired or affected thereby, except that Article 37 shall be
rendered null and void for all purposes.
Section 36.08. The option herein granted in this Article 36
may not be assigned by Tenant and any purported assignment thereof shall be
void. Notwithstanding the foregoing, Landlord shall not unreasonably withhold
or delay its consent to a proposed assignment of the option herein granted,
subject to, and conditioned upon compliance with, all of the terms and
conditions set forth in Section 10.02, the terms and provisions of which shall
apply to a proposed assignment of the option herein granted.
Section 36.09. The provisions of Section 37.03(b) shall apply
in the event that, after delivering the Exercise Notice together with the
Downpayment, Tenant fails to consummate the purchase of the Property in the
manner set forth in this Article 36.
69
<PAGE> 73
Section 36.10. If for any reason whatsoever, Tenant fails to
give the Exercise Notice or pay the Downpayment or the balance of the Purchase
Price in the manner or within the time frame herein specified, or there shall
occur an Event of Default under this Lease, the option herein granted shall be
and be deemed to be waived and a nullity.
Section 36.11. Tenant may waive any conditions to the
performance by Tenant of its obligations under this Article 36.
ARTICLE 37
LANDLORD'S RIGHT(S) TO REQUIRE PURCHASE OF
THE PROPERTY BY TENANT
Section 37.01. (a) In the event that, for any reason
whatsoever, Tenant fails to: (i) deliver the Exercise Notice, together with
the Downpayment required under Article 36, prior to November 14, 1998; or (ii)
deliver the Downpayment simultaneously with delivering the Exercise Notice; or
(iii) purchase the Property pursuant to Article 36 on or prior to May 14, 1999,
time being of the essence; then, from and after the occurrence of any such
event, Landlord shall have the right, exercisable by notice given by Landlord
to Tenant on or before November 14, 1999, to require Tenant to purchase the
Property (the "Right to Sell") on the day designated by Landlord which is at
least one hundred sixty-five (165) days after the date Landlord gives Tenant
such notice advising Tenant that Landlord is electing to exercise the Right to
Sell, with the day which is fifteen (15) days following such date designated by
Landlord being of the essence as to Tenant's performance of its obligations
hereunder (the "Sale Closing"). The sale shall be upon the terms and
conditions in this Article 37 set forth.
(b) If Landlord exercises the Right to Sell, then, in
such event, the purchase price payable by Tenant for the Property (the "Sale
Purchase Price") shall equal the sum of $4,600,000.00. The Sale Purchase Price
shall be payable by Tenant as follows: (i) ten (10%) percent thereof (the
"Downpayment") shall be delivered to Landlord by Acceptable Check (which shall
be made payable to the order of Escrowee) within thirty (30) days after
Landlord shall have given Tenant notice of its exercise of the Right to Sell,
time being of the essence; and (ii) the balance of the Sale Purchase Price
shall be paid by Acceptable Check at the Sale Closing.
Section 37.02. In the event Landlord exercises the Right to
Sell, the terms and provisions of Sections 36.01(b), 36.03, 36.04, 36.05,
36.06, 36.07 and 36.11 shall be applicable to the conveyance by Landlord
hereunder, except that, for purposes of this Article 37, reference in said
Sections to: (a)
70
<PAGE> 74
the "Closing" shall be deemed to mean the "Sale Closing"; (b) the "Purchase
Price" shall be deemed to mean the "Sale Purchase Price"; and (c) "this Article
36" shall be deemed to mean "this Article 37."
Section 37.03. (a) In the event Tenant defaults in the
payment of the Downpayment in accordance with this Article 37, such failure
shall constitute an immediate incurable Event of Default under this Lease, and
Landlord shall be entitled to both terminate this Lease and avail itself of
such damages as are provided for in Article 23 and to also avail itself of such
remedies as are available at law, equity or otherwise by reason of the failure
by Tenant to consummate the purchase transaction contemplated under this
Article 37.
(b) In the event Tenant, after paying the Downpayment in
accordance with this Article 37, fails to consummate the transactions
contemplated under this Article 37, then: (i) Landlord may retain the
Downpayment as liquidated damages for the loss, damage and expense suffered by
Landlord by reason of such failure, it being agreed that Landlord's damages are
difficult to ascertain and such Downpayment shall constitute a fair and
reasonable estimation of such damages, being liquidated damages and not a
penalty; and (ii) within ninety (90) days following the occurrence of such
failure, Landlord may declare such failure by Tenant to consummate the purchase
of the Property to constitute an incurable Event of Default under this Lease,
and Landlord shall be entitled to terminate this Lease, as provided for in
Article 23, and obtain such damages as are therein and otherwise provided for;
provided that, if Tenant does not contest any action or proceeding brought by
Landlord to terminate this Lease and if Tenant shall deliver to Landlord:
(1) on or prior to the date the Sale Closing would
have occurred, the sum of $100,000.00, to be held by Landlord as additional
security under Article 35; and
(2) within three (3) days after demand therefor
by Landlord, an executed copy of a stipulation (the "Stipulation") prepared by
Landlord in respect of any action or proceeding brought by Landlord to
terminate this Lease which, among other provisions, contains the following:
(A) Tenant's acknowledgment of its appearance in the action or proceeding; (B)
Tenant's acknowledgment of proper and effective service upon it, and receipt by
it, of all notices, petitions, complaints and other relevant documents in the
action or proceeding; (C) Tenant's consent to jurisdiction of the court over
it; (D) Tenant's waiver of any and all set-offs, counterclaims and defenses
that could be asserted in the action or proceeding including, without
limitation, all jurisdictional defenses; (E) Tenant's waiver of the right to
appeal; (F) Tenant's
71
<PAGE> 75
agreement that it shall not make any application to any court to stay the
execution of a warrant of eviction from the Property or to vacate the
Stipulation; (G) Tenant's verifying the truth of the allegations in Landlord's
complaint and any documents served; (H) Tenant's joining in Landlord's
application that the Stipulation be "So Ordered" by the Court; (I) Tenant's
admitting to the validity of this Lease; (J) Tenant's agreeing that final
judgment shall be granted upon consent, in favor of Landlord, and that a
warrant of eviction (the "Warrant") shall issue forthwith; (K) Tenant
unconditionally agreeing to vacate and surrender the Property to Landlord on a
date designated by Landlord in accordance with this Article 37; (L) Tenant
agreeing that if it fails to vacate the Property on the date so designated by
Landlord under clause (K) above, Landlord shall have the immediate right to
execute upon the Warrant and have Tenant evicted; (M) Tenant waiving all rights
it may then or thereafter have under New Jersey law to stay, vacate, modify or
otherwise delay the issuance or execution of any warrant for Tenant's removal
from the Property on or after the date so designated by Landlord or to
challenge in any way or for any reason whatsoever the issuance or execution of
such warrant; (N) Tenant agreeing that time is of the essence in all of the
obligations and actions Tenant has agreed and consented to undertake pursuant
to the terms of the Stipulation and the agreements incorporated by reference
therein; (O) Tenant agreeing that the stay of the Warrant shall be ended and
dissolved and the Warrant may immediately be executed if Tenant violates any of
the terms or conditions of this Lease or the Stipulation; for purposes of said
provision, a sworn affidavit submitted by Landlord to the court setting forth
that Tenant has violated a provision of the Stipulation and/or this Lease shall
be sufficient to conclusively prove such violation; and (P) Tenant agreeing to
the entry of the Stipulation into the Court's record of the action or
proceeding and the Stipulation being "So Ordered", if Landlord so elects;
then the Warrant issued in connection with such termination of this Lease shall
be stayed for one (1) year from the date on which the Sale Closing was
otherwise to have occurred, or such shorter period than one (1) year as is
designated by Tenant upon not less than six (6) months' notice thereof to
Landlord given within sixty (60) days following the date the Sale Closing was
otherwise to have occurred (the "Stay Period"). The stay shall be effective so
long as Tenant is not otherwise in default under the terms and provisions of
this Lease or the Stipulation during such Stay Period.
72
<PAGE> 76
ARTICLE 38
ENVIRONMENTAL COMPLIANCE
Section 38.01. Subject to the provisions of Section 38.05,
Tenant covenants and agrees that it shall not use or suffer the Property to be
used in any manner as to create or cause a violation of environmental laws or
regulations applicable to Tenant and/or the Property. It is expressly
understood and agreed that Tenant shall not cause or suffer to be caused any
chemical contamination or discharge into the environment of any substance of
any nature which, under any applicable law, rule or regulation of any
governmental authority having jurisdiction, constitutes a hazardous substance
or hazardous waste in violation of any such law or regulation. Tenant hereby
further covenants and agrees that: (a) Tenant shall not generate, manufacture,
refine, transport, treat, store, handle, dispose of or otherwise deal with any
"hazardous substance" or "hazardous waste", as such terms presently or in the
future are defined in the Industrial Site Recovery Act of New Jersey (N.J.S.A.
13:1K-6 et seq.), the regulations promulgated thereunder and any amending and
successor legislation ("ISRA"), in violation of any applicable law or
regulation (the generation, manufacture, refinement, transportation, treatment,
storage, handling, disposition and/or otherwise dealing with such hazardous
substance or hazardous waste, as the case may be, being referred to for
convenience as "dealing with" such hazardous substance or hazardous waste); (b)
if at any time during the Term there shall be required as a result of an act of
Tenant, with respect to the Property or any part thereof, any act pursuant to
or in compliance with ISRA, including the filing of any required forms,
affidavits, applications or any other matter, or the preparation or
effectuation of any clean-up plans, Tenant shall be responsible for such
compliance as if Tenant were the "owner" of the Property as defined by ISRA
(but the foregoing shall not be deemed to vitiate the provisions of Section
38.05); and (c) Tenant shall, subject to the provisions of Section 38.05,
indemnify and hold Landlord harmless against any liability, loss, cost or
expense, including court costs and attorneys' fees, incurred by reason of any
failure by Tenant to comply with ISRA, or any other environmental law now or
hereafter in effect. Tenant expressly acknowledges its understanding and
agreement that at the expiration or earlier termination of this Lease
(including, without limitation, by reason of a conveyance pursuant to Articles
36 or 37), or of any sublease or subtenancy, certain notices, letters, forms,
applications, affidavits, filings and, possibly, sampling plans,
investigations, cleanup plans and remediation/cleanup work may be required
pursuant to ISRA and that Tenant shall, subject to Section 38.05, either in its
own name or, if required, in the name of Landlord, comply, at Tenant's own
expense, with all such applicable notices, filings
73
<PAGE> 77
and the like and indemnify and hold harmless Landlord, against any
responsibility which may be placed upon Landlord for or relating to the matter
or such requirement. Provided that no liability may be incurred by Landlord by
reason thereof, Landlord agrees to cooperate with Tenant by executing such
filings which, under ISRA, must be made by the owner of the Property. In
addition, Landlord shall, at no charge to Tenant, provide Tenant with such
information directly relevant to ISRA which is in Landlord's possession and is
required for a filing with the DEP. At the request of Landlord from time to
time, Tenant shall: (i) provide to Landlord copies of any documents filed by
Tenant pursuant to ISRA; (ii) permit Landlord to be present at any inspections,
on or off site, and at any meeting of the DEP or other meetings, relating to
ISRA; and (iii) provide Landlord with an inventory of hazardous substances and
wastes dealt with by Tenant at the Property, as well as such additional
information reasonably requested by Landlord in order that Landlord be able to
provide required information for ISRA filings or for determination of whether
there has been compliance with any applicable environmental law, including
ISRA, including but not limited to the following information with respect to
Tenant and all or any subtenant(s), as requested: the standard industrial
classification number applicable to Tenant and such subtenant(s); any inventory
of hazardous substances and wastes dealt with at the Property by Tenant or any
subtenant(s), a listing of all Federal and State environmental permits and
enforcement actions against Tenant or any subtenant(s) with respect to the
Property, for violation of environmental laws, a scaled site map identifying
all areas where hazardous substances or wastes are dealt with; a description of
storage vessels containing hazardous wastes or substances, by type and
location; notification regarding any spill or discharge of hazardous substances
or wastes in violation of environmental laws applicable to Tenant or the
Property, including a description and location of such spills or discharges;
and copies of all soil, ground water or surface water sampling results
performed by or on behalf of Tenant, including effluent quality monitoring,
conducted at the Property.
Section 38.02. Subject to the provisions of Section 38.05,
Tenant, to the fullest extent permitted by law, hereby indemnifies and saves
Landlord harmless from and against any and all claims, obligations,
liabilities, suits, actions, proceedings, judgments, fines, damages, penalties,
costs, charges and expenses, including, without limitation, attorneys' fees and
disbursements, of whatsoever kind or nature which may be asserted against,
imposed upon or incurred by Landlord by reason of any discharge by Tenant on
the Property and/or default by Tenant under this Article 38. In the event a
claim is made in an action or proceeding against Landlord for which indemnity
is sought from Tenant hereunder: (a) Landlord shall give Tenant prompt notice
thereof following Landlord's receipt of notice of such claim;
74
<PAGE> 78
(b) Tenant shall defend such claim, at its sole cost and expense, with due
diligence, retaining counsel reasonably satisfactory to Landlord; (c) Landlord
shall reasonably cooperate with Tenant in such defense; and (d) Landlord will
not settle any such claim which Tenant is diligently defending provided that
Landlord, in its reasonable judgment, determines that it will not incur any
liability by reason of such failure to settle and that the Property is not in
danger of being forfeited, lost or diminished in value.
Section 38.03. The provisions of Sections 38.01 and 38.02
shall survive the expiration or earlier termination of this Lease, and it shall
be the responsibility of Tenant to require any subtenant of the Property to
expressly agree in writing to comply with the provisions of this Article.
Section 38.04. Tenant may contest, at its sole cost and
expense, in a court of competent jurisdiction, any alleged violation of
applicable environmental law, provided that Landlord, in its reasonable
judgment, determines that it will not incur any liability in respect thereof
and that the Property is not in danger of being forfeited, lost or diminished
in value.
Section 38.05. Notwithstanding anything to the contrary set
forth in this Lease, except as set forth in Section 1.02, if any "hazardous
substance" or "hazardous waste" (as such terms are now or hereafter defined
under applicable law or regulation), or friable asbestos, were discharged in,
on, under or about the Property during the ownership thereof by Landlord prior
to the Commencement Date (and, in the case of Portion A and Portion B, prior to
the delivery of possession thereof to Tenant), then Landlord shall be
responsible, at Landlord's own cost and expense, to promptly undertake all
filings, investigation, sampling and remediation required, including, without
limitation, removing same from the Property, in compliance with all applicable
environmental laws and/or regulations now or hereafter in effect, and shall
indemnify, defend and hold Tenant harmless from and against any and all claims,
obligations, liabilities, suits, actions, proceedings, judgments, fines,
losses, damages, penalties, costs, charges, expenses and disbursements of
whatever kind or nature, including, without limitation, reasonable counsel,
engineering and other professional or expert fees which may be asserted
against, imposed upon or incurred by Tenant, as a result of such discharge
and/or a default by Landlord under this Section 38.05; Tenant represents and
warrants to Landlord that as of the date of execution and delivery of this
Lease, Tenant does not know of such hazardous substance or hazardous waste, or
friable asbestos that would trigger this indemnification. In no event shall
Landlord undertake any remedial activity that shall result in engineering or
institutional controls inconsistent with the
75
<PAGE> 79
provisions and limitations set forth in Exhibit B. The indemnity in this
Section 38.05 shall survive the Closing or the Sale Closing, or if neither the
Closing nor the Sale Closing occurs, the expiration or earlier termination of
this Lease, except that if Tenant has defaulted hereunder resulting in the
termination of this Lease by final non-appealable court order, Landlord's
indemnity shall survive only in respect of claims by independent third parties
(including, without limitation, governmental entities) and only to the extent
that same exceed amounts due from Tenant to Landlord in connection with such
default or otherwise (whether as damages or otherwise). Notwithstanding the
foregoing, Landlord shall not be responsible for those hazardous substances or
hazardous wastes disclosed in the Reports in those areas disclosed in the
Reports.
ARTICLE 39
MISCELLANEOUS
Section 39.01. The captions of this Lease are for convenience
of reference only and in no way define, limit or describe the scope or intent
of this Lease or in any way affect this Lease.
Section 39.02. The Table of Contents is for convenience of
reference only and is not to be deemed or construed in any way as part of this
Lease or as supplemental thereto or amendatory thereof. All references herein
to Articles, Sections, subsections or subdivisions, shall, unless the context
shall clearly evidence a contrary intention, refer to the Articles, Sections,
subsections and subdivisions of this Lease.
Section 39.03. Any reference herein to any one gender,
masculine, feminine or neuter, includes the other two, and the singular
includes the plural and vice versa, unless the context requires otherwise. The
use herein of the words "successors and assigns" or "successors or assigns" of
Landlord or Tenant shall be deemed to include the heirs, legal representatives
and assigns of any individual Landlord or Tenant.
Section 39.04. Nothing contained in this Lease or otherwise
is intended (and same shall not be so deemed, held or construed) to make
Landlord a partner or associate of Tenant, or a joint venturer with Tenant, or
as making or rendering Landlord in any way liable or responsible for any debts,
losses, liabilities or obligations of any kind incurred by Tenant, or for the
acts or omissions of Tenant, its agents, officers, servants, employees,
representatives, contractors, invitees or subtenants, it being expressly
acknowledged, understood and agreed that the re-
76
<PAGE> 80
lationship between the parties is and shall remain solely that of landlord and
tenant and not otherwise.
Section 39.05. If more than one party is named as or becomes
Tenant hereunder, Landlord may require the signatures of all such parties in
connection with any notice to be given or action to be taken by Tenant
hereunder, unless such parties designate otherwise in form satisfactory to
Landlord. Each party named as Tenant shall be jointly and severally liable for
all of Tenant's obligations hereunder. Any notice by Landlord to any party
named as Tenant shall be sufficient and shall have the same force and effect as
though given to all parties named as Tenant.
Section 39.06. Notwithstanding anything in this Lease or at
law or in equity to the contrary, it is expressly understood, acknowledged and
agreed that there shall at no time be or be construed as being any personal
liability by or on the part of Landlord (or any officer, director, shareholder,
agent, employee, or principal [disclosed or undisclosed] of Landlord) under or
in respect of this Lease or in any wise related hereto or the Property, it
being further understood, acknowledged and agreed that Tenant is accepting this
Lease and the estate created hereby upon and subject to the understanding that
it shall not enforce or seek to enforce any claim or judgment or any other
matter, for money or otherwise, personally or directly against Landlord (or any
officer, director, shareholder, member, partner, joint venturer, principal
[disclosed or undisclosed], representative or agent of Landlord) or any other
property of Landlord, but shall look solely to the equity of Landlord in and to
its interest in the Property for the satisfaction of any and all claims,
judgments or remedies of Tenant in the event of any breach by Landlord of any
terms, covenants or agreements to be performed by Landlord under this Lease or
otherwise, and no other assets or funds of Landlord (or any officer, director,
shareholder, agent, employee or principal [disclosed or undisclosed] of
Landlord) shall be subject to levy, execution or other judicial process for the
satisfaction of any or all of Tenant's claims, judgments or remedies; such
exculpation from personal liability as herein set forth to be absolute,
unconditional and without exception of any kind.
Section 39.07. The term "Landlord" on the date as of which
this Lease is delivered, shall mean Ridgefield Associates, but thereafter
"Landlord" shall mean only the holder of landlord's interest in this Lease at
the time in question so that if Ridgefield Associates, or any successor to its
interest hereunder ceases to have any interest in the Property or there is any
transfer or transfers of Landlord's interest in the Property, the transferor
shall be and hereby is entirely freed and relieved of all agreements, covenants
and obligations of Landlord hereunder to be performed on or after (but not
prior to) the date
77
<PAGE> 81
of such transfer, and it shall be deemed and construed without further
agreement between the parties or their successors in interest or between the
parties and the person who acquires Landlord's interest in this Lease that such
person has assumed and agreed to carry out any and all agreements, covenants
and obligations of Landlord hereunder accruing from and after the date of such
transfer.
Section 39.08. Neither the submission of this Lease form to
Tenant nor the execution of this Lease by Tenant shall constitute an offer by
Landlord to Tenant to lease the Property or otherwise. This Lease shall not be
or become binding upon Landlord to any extent or for any purpose unless and
until it is executed by Landlord and a fully executed copy thereof is delivered
to Tenant or Tenant's counsel.
Section 39.09. This Lease or any of its provisions may not be
waived, changed, modified or terminated orally, but only by a written
instrument of waiver, change, modification or termination executed by the party
against whom enforcement of any such waiver, change, modification or
termination is sought.
Section 39.10. This Lease shall be governed by and construed
in accordance with the laws of the State of New Jersey (excluding New Jersey
conflict of laws) and by the State courts of New Jersey.
Section 39.11. Tenant agrees to provide to Landlord: (a)
within forty-five (45) days after the expiration of each quarterly period of
Tenant's fiscal year during the term of this Lease, a true and correct
financial statement of Tenant for such preceding quarter, showing current
assets and liabilities, certified to by Tenant's chief financial officer; and
(b) within ninety (90) days after the expiration of each fiscal year of Tenant
during the term of this Lease, a true and correct financial statement of Tenant
for such year, showing current assets and liabilities, audited by a certified
public accountant reasonably acceptable to Landlord.
Section 39.12. The agreements, terms, covenants and
conditions herein contained shall be binding upon, and shall
78
<PAGE> 82
inure to the benefit of, Landlord and Tenant and their respective successors
and (except as otherwise provided herein) assigns.
IN WITNESS WHEREOF, Landlord and Tenant have executed this
Lease as of the day and year first above written.
LANDLORD:
RIDGEFIELD ASSOCIATES
By:____________________________
TENANT:
BIOMATRIX, INC.
By:_____________________________
KRAMER, LEVIN, NAFTALIS,
NESSEN, KAMIN & FRANKEL
(solely to signify its
agreement to act as Escrowee
pursuant to Section 36.01(b))
By:__________________________
79
<PAGE> 83
EXHIBIT A
REAL ESTATE AND IMPROVEMENTS
ALL that certain tract or parcel of land and premises, situate, lying
and being in the Borough of Ridgefield in the County of Bergen and State of New
Jersey, more particularly described as follows:
BEGINNING at a point in the Northerly side line of Pleasant View
Terrace West, distant 725.55 feet Westerly from the point of intersection of
said Northerly side line of Pleasant View Terrace West with the Westerly line
of Railroad Avenue, and running thence (1) North 75 degrees 43 minutes West and
partly along the said Northerly side line of said Pleasant View Terrace West
and partly along the Northerly line of said Pleasant View Terrace West, if
extended, 350.00 feet to a point; thence (2) North 2 degrees 29 minutes 39
seconds West 842.22 feet to a point in the center line of Martling Ditch;
thence (3) South 86 degrees 59 minutes East and along the said center line of
Martling Ditch 430.00 feet to a point in the Westerly line of lands now or
formerly of Faberge, Inc.; thence (4) South 3 degrees 38 minutes East and along
the said Westerly line of lands of Faberge, Inc., 378.00 feet to a point;
thence (5) South 8 degrees 21 minutes 16 seconds West and still along the said
Westerly line of lands of Faberge, Inc. 533.56 feet to a point in the said
Northerly side line of Pleasant View Terrace West and the point or place of
BEGINNING.
TOGETHER with an easement 15 feet wide and running along the Easterly
boundary of the land described above for the construction and maintenance of a
ditch or canal to be used by the owners of the abutting premises for the
drainage of surface waters, from their respective land, the center line of said
ditch or canal to be located along the center line of the easement 7.5 feet
Easterly and parallel with the Easterly boundary of the land described above.
BEING also known as Lot 25 in Block 167 on the Assessment Map of the
Borough of Ridgefield, Bergen County, New Jersey.
TOGETHER with a non-exclusive permanent easement in favor of the
Grantee for the purpose of connecting to the railroad siding serving the lands
conveyed herein with the industrial railroad spur constructed and connected
with the main line of the Northern Railroad of New Jersey over the premises
described above as set forth in Deed Book 5115, Page 346 and modified in Deed
Book 5347, Page 246; the right conveyed, with respect to such railroad
easement, is limited to the use of the industrial railroad spur
A-1
<PAGE> 84
in common with others and to the terms, conditions, area, agreements as
contained in the easements, agreements between users, and the railroad, all as
more fully set forth in Deed Book 5115, Page 346 and modified in Deed Book
5347, Page 246.
The above description being drawn in accordance with a survey made by
Franklyn C. Glucker, Dated July 9, 1982.
SUBJECT to rights of adjoining owners and others in and to any brook,
drain, water course or other ditch which may cross part of premises in question
or may cross easement areas including any lands lying north of the southerly
bank of the Martling Ditch.
ALSO SUBJECT to conditions, limitations, and provisions in Deed Book
4492, Page 57, and in Deed of the State of New Jersey to the Mayor and Council
of the Borough of Ridgefield, dated September 25, 1967, relating to
restrictions on the exclusion of tidewaters, the erection of piers or other
improvements or the improvement of lands under water without prior permit from
the Department of Conservation and Economic Development, Division of Resource
Development.
ALSO SUBJECT to Utility Easement recorded in Deed Book 5234, Page 476
in favor of Public Service Electric and Gas Company and New Jersey Bell
Telephone Company.
ALSO SUBJECT to rights and conditions granted to Jos. Muscarelle, Inc.
by Hanson & Hanson, Inc., the original grantor, in a Deed dated June 20, 1963
and recorded in Deed Book 4508, Page 250, affecting the railroad easement of
Grantor.
ALSO SUBJECT to agreement for railroad right of way dated March 24,
1969 and recorded in Deed Book 5303, Page 8 and supplemental agreement dated
March 3, 1970 and recorded in Deed Book 5413, Page 113, between Hanson &
Hanson, Inc. and Holland House Brands, Inc.
ALSO SUBJECT to easement in Deed Book 591, Page 619 (affecting
railroad easement).
A-2
<PAGE> 85
EXHIBIT B
For purposes of the Lease to which this Exhibit is annexed, an
"Acceptable Letter" shall mean a no further action letter addressed to all or
any of Landlord, Tenant and/or their respective counsel from the New Jersey
Department of Environmental Protection stating in substance that: (i) no
further investigation or remediation need be taken with respect to the
Property, including without limitation the areas of environmental concern
identified in the reports, test results and other materials (the "Reports")
dated May, 1996 regarding the Property prepared by Paulus, Sokolowski & Sartor,
Inc., Tenant's environmental consultant; and that no engineering or
institutional controls, including without limitation capping, a deed notice, a
declaration of environmental restrictions or other institutional control notice
pursuant to P.L. 1993, c. 139 are required with respect to the Property; (ii)
no further investigation or remediation need be taken with respect to the
Property, including without limitation the areas of environmental concern
identified in the Reports provided that a declaration of environmental
restrictions, pursuant to P.L. 1993, c. 139, be recorded, which declaration of
environmental restrictions shall provide, as its sole and exclusive
restriction(s), the prohibition against the use of the Property for residential
purposes and/or the identification of the presence of the hazardous waste
and/or hazardous substance on the Property identified in the Reports; or (iii)
no further investigation or remediation need be taken with respect to the
Property, including without limitation the areas of environmental concern
identified in the Reports provided that a declaration of environmental
restrictions, pursuant to P.L. 1993, c. 139, be recorded, which declaration of
environmental restrictions shall provide, as the only two restrictions, (x) the
prohibition against the use of the Property for residential purposes and/or the
identification of the presence of the hazardous waste and/or hazardous
substance on the Property identified in the Reports, and (y) the imposition of
engineering controls in the form only of either the existing parking lot,
and/or the expansion thereof, or the Building, or both, and which declaration
of environmental restrictions shall not impose any financial obligation upon
Tenant beyond normal maintenance of the parking lot (as expanded, if required)
and/or the Building.
B-1
<PAGE> 86
EXHIBIT E
PERMITTED USES
1. Fabrication, assembling or other processing of:
(a) Light machinery, such as cash registers, typewriters and other
office machines
(b) Metal products, such as baby carriages, toys, bicycles and
metal furniture
(c) Paper products, such as boxes, cabinets, furniture and toys
(d) Nonalcoholic beverages and foods
(provided that no such fabrication, assemblage or processing entails
the use, production or storage of flammable, explosive or toxic
materials as a principal use).
2. Biological, chemical, dental, electronic and pharmaceutical
laboratories.
3. The manufacture of thread and yarn, sporting goods, jewelry,
cosmetics, pharmaceutical items and leather goods (but not curing,
tanning or finishing of hides).
4. Warehousing and storage of nontoxic materials.
5. Offices.
6. Establishments for scientific research and development.
7. Any and all uses currently made or conducted by Tenant at its current
New Jersey facility or as a direct extension of such activities.
8. Accessory uses customarily incident to the aforesaid uses.
E-1
<PAGE> 87
EXHIBIT F
SUBORDINATION, NON-DISTURBANCE
AND ATTORNMENT AGREEMENT
THIS AGREEMENT, made and entered into as of the _____ day of
___________, 1996__, by and between (hereinafter called "Mortgagee"), Ridgefield
Associates, a New York general partnership (hereinafter called "Lessor"), and
Biomatrix, Inc., a Delaware corporation (hereinafter called "Lessee");
W I T N E S S E T H :
WHEREAS, by a written lease dated as of January 29, 1996 (hereinafter
called the "Lease"), Lessee has leased from Lessor the real estate and
improvements thereon located in the Borough of Ridgefield, County of Bergen,
State of New Jersey more particularly described in Exhibit A attached hereto
(the "Demised Premises"); and
WHEREAS, Mortgagee is the holder of that certain mortgage, dated as of
________________, made by Lessor to Mortgagee, encumbering the Demised Premises
(the "Mortgage"); and
WHEREAS, Lessee, Lessor and Mortgagee have agreed to the following
with respect to their mutual rights and obligations pursuant to the Lease and
the Mortgage;
NOW, THEREFORE, for and in consideration of Ten Dollars ($10.00) paid
by each party to the other and the mutual covenants and agreements herein
contained and other good and valuable consideration, the receipt whereof is
hereby acknowledged, the parties hereto do hereby covenant and agree as
follows:
(1) Lessee's interest in the Lease and all rights of Lessee thereunder
shall be and are hereby declared subject and subordinate to the
Mortgage upon the Demised Premises and its terms, and the term
"Mortgage" as used herein shall also include any amendment,
supplement, modification, renewal or replacement thereof.
(2) In the event of any foreclosure of the Mortgage or any conveyance in
lieu of foreclosure, provided that Lessee shall not then be in default
beyond any grace period under
F-1
<PAGE> 88
the Lease, Lessee shall not be made a party in any action or
proceeding to remove or evict Lessee or to disturb its possession, nor
shall the leasehold estate of Lessee created by the Lease be affected
in any way, and the Lease shall continue in full force and effect as a
direct lease between Lessee and Mortgagee.
(3) After the receipt by Lessee of notice from Mortgagee of any
foreclosure of the Mortgage or any conveyance in lieu of foreclosure,
Lessee will thereafter attorn to and recognize Mortgagee or any
purchaser from Mortgagee at any foreclosure sale or otherwise as its
substitute Lessor, and having thus attorned, Lessee's possession shall
not thereafter be disturbed provided, and so long as, Lessee shall
continue to timely pay all rentals under the Lease and otherwise
observe and perform the covenants, terms and conditions of the Lease.
(4) Except as specifically provided for in the Lease, Lessee shall not
prepay any of the rents under the Lease more than one month in advance
except with the prior written consent of Mortgagee.
(5) In no event shall Mortgagee be liable for any act or omission of
Lessor, nor shall Mortgagee be subject to any offsets or deficiencies
which Lessee may be entitled to assert against Lessor as a result of
any act or omissions of Lessor occurring prior to Mortgagee's
obtaining possession of the Demised Premises.
(6) Except as specifically provided for in the Lease (including, without
limitation, Articles 36 and 37 thereof), the Lease may not be amended,
altered, or consensually terminated without the prior written consent
of Mortgagee.
(7) This Agreement and its terms shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and
assigns, including without limitation, any purchaser at any
foreclosure sale.
F-2
<PAGE> 89
IN WITNESS WHEREOF, this Agreement has been fully executed under seal
on the day and year first above written.
_______________________________
By ____________________________
RIDGEFIELD ASSOCIATES
By ____________________________
BIOMATRIX, INC.
By ____________________________
- ADD ACKNOWLEDGEMENTS -
F-3
<PAGE> 1
10.4 Restated
INTERNATIONAL
DISTRIBUTION AGREEMENT
THIS AGREEMENT is made as of the 14th day of June 1996 by and between
BIOMATRIX, INC., a corporation duly organized and existing under the laws of
the State of Delaware, having its principal office at 65 Railroad Avenue,
Ridgefield, New Jersey 07657, U.S.A. ("Biomatrix") and COLLAGEN CORPORATION, a
corporation duly organized and existing under the laws of the State of
Delaware, having its principal office at 2500 Faber Place, Palo Alto,
California 94303, U.S.A. (the "Distributor").
WHEREAS, Biomatrix is engaged in the development and manufacture of
the Agreement Product (as hereinafter defined);
WHEREAS, the Distributor desires to enter into a distribution
agreement and be appointed the exclusive distributor (even to Biomatrix) of the
Agreement Product and any Improved Agreement Product(s) in the Territory (as
such terms are hereinafter defined), and Biomatrix is willing to so appoint the
Distributor on the terms and subject to the conditions set forth herein; and
WHEREAS, the Distributor desires to purchase from Biomatrix, and
Biomatrix desires to sell to the Distributor, the Distributor's orders of the
Agreement Product and any Improved Agreement Product(s) in the Territory on the
terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants of the parties hereto, it is hereby agreed as follows:
1. DEFINITIONS AND INTERPRETATION.
1.1. In this Agreement, the following words and expressions shall
have the following meanings:
"Affiliate" shall mean, with respect to any party, any Person which,
directly or indirectly, is controlled by, controls or is under common
control with such party. For purposes of this definition, the term
"control" (including with correlative meanings, the terms "controlled
by" and "under common control with") shall mean, with respect to any
Person, the direct or indirect ownership of more than fifty percent
(50%) of the voting or income interest in such Person or the
possession otherwise, directly or indirectly, of the power to direct
the management or policies of such Person.
<PAGE> 2
-2-
"Agreement Product" shall mean the one product made of hylan B and
called by Biomatrix Hylaform(R), the specifications for which are set
forth on Exhibit A, for use in the correction of wrinkles and
depressed scars.
"Agreement Product Specifications" shall mean the specifications for
the Agreement Product set forth in Exhibit A, as such specifications
may be modified or supplemented by Biomatrix from time to time in
accordance with Product License Approvals or to reflect any Improved
Agreement Product(s).
"Agreement Year" shall mean, with respect to a country or Region, as
applicable, in the Territory, the twelve (12) month period commencing
on the date of first commercial sale of the Agreement Product in such
country or Region, as applicable, and each separate successive twelve
(12) month period thereafter.
"Contract Quarter" shall mean, for sales of Agreement Product in a
country or Region, as applicable in the Territory, the period
commencing with the Distributor's first commercial sale of the
Agreement Product in such country or Region, as applicable, and ending
on the first to occur of March 31, June 30, September 30 and December
31, as applicable, and each three (3) month period thereafter
throughout the term of this Agreement.
"Dermal Tissue Augmentation Products" shall mean biomaterial(s) that are
*
"Dollars" and "$" shall mean the lawful currency of the United States
of America.
"Effective Date" shall mean June 17, 1996.
"EU Countries" shall mean, collectively, Austria, Belgium, Denmark,
Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the
Netherlands, Portugal, Spain, Sweden and the United Kingdom.
"European Territory" shall mean, collectively, the EU Countries,
Switzerland, Norway, Liechtenstein and Iceland.
"Formula Price" shall mean an amount equal to *
of the Agreement Product by Distributor or an Affiliate of
Distributor, calculated on a * basis, provided that if the
* the Agreement Product in a Region
* , then the Formula Price for such Region
shall mean an amount equal to * of the
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 3
-3-
Agreement Product on a * basis by Distributor or an
Affiliate of Distributor in such Region. * the
Formula Price shall mean an amount equal to
* by Distributor
or an Affiliate of Distributor, * , for or an
* , including without
limitation
*
"Improved Agreement Product(s)" shall mean (i) any modification of the
Agreement Product (made entirely from hylan B) regarding the
formulation of hylan B in the Agreement Product, that is changes of
concentration of the polymer or other changes in the Agreement Product
Specifications, whether or not requiring new regulatory approval in
the EU Countries or in the United States, and (ii) any modifications
or changes related to the packaging of the Agreement Product,
including the syringe used, mode of application or dosage.
"Incremental Royalties" shall mean that term as defined in Section
8.2.
"Initial Term" shall mean that term as defined in Section 3.2.
"Launch" shall mean, with respect to a country in the Territory, the
commencement by Distributor of sales of the Agreement Product in
commercial quantities for use in such country. Such Launch shall be
made with respect to each country in the Territory in accordance with
the dates set forth on Exhibit B.
"Minimum Price" shall mean an amount equal to * for each
Treatment Syringe, * , then the Minimum Price payable in such
Region * Agreement Years immediately following such * shall
equal * , and * such * shall equal
* for each Treatment Syringe.
"Net Retail Sales" shall mean, with respect to sales of a Dermal
Tissue Augmentation Product in a country in the Territory, the
aggregate gross price invoiced for retail sales of such product during
a period in such country to unaffiliated third-party purchasers
*
It is
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 4
-4-
Biomatrix's understanding that the foregoing definition is consistent
with how the Distributor reports its sales in its audited financial
statements.
"New Products" shall mean
*
"Patents" shall mean Letters Patent or similar statutory rights
relating to any Agreement Product and any Improved Agreement
Product(s) (including any continuation-in-part, continuation or
division thereof or substitute thereof), and patent applications which
are pending as of the Effective Date, in each case as set forth in
Exhibit C, together with any supplementary or complementary protection
certificates therefor if and when such are granted.
"Person" shall mean an individual, a corporation, limited liability
company, a partnership, a trust, an unincorporated organization or a
government or any agency or political subdivision thereof.
"Product License Approvals" shall mean those regulatory approvals
required for the importation, promotion, marketing and sale of the
Agreement Product and any Improved Agreement Product(s) in the
Territory (including any reimbursement or pricing approvals).
"Region" shall mean any one of the following countries or groups of
countries:
*
"Supply Forecast" shall mean that term as defined in Section 7.3(b).
"Territory" shall mean, collectively, the EU Countries, Switzerland,
Norway, Liechtenstein, Iceland, Australia, New Zealand, Japan, Israel,
Argentina, Brazil, Mexico, Chile, Columbia, Cyprus, Lebanon, Turkey
and Canada and any countries added hereto pursuant to Section 2.4.
"Trademarks" shall mean (i) the trademark Hylaform(R), the details of
which are described in Exhibit C, and (ii) any other trademarks, as
may be agreed upon in writing from time to time by the parties hereto
for use by the Distributor in
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 5
-5-
connection with the promotion, marketing and sale of the Agreement
Product and any Improved Agreement Product(s) under this Agreement.
"Treatment Syringe" shall mean a ready-for-injection 1.0cc syringe
of the Agreement Product.
"United States Consumer Price Index" shall mean the Consumer Price
Index, All Items, United States, as published by the Bureau of Labor
Statistics.
1.2. In this Agreement, unless the context otherwise requires:
(a) clause headings are inserted for convenience of reference only
and have no legal effect;
(b) references to sections, exhibits and schedules are to be
construed as references to the sections of, and exhibits and schedules to, this
Agreement and references to this Agreement include its exhibits and schedules.
(c) references to (or to any specified provision of) this
Agreement or any other document shall be construed as references to this
Agreement, that provision or that document as in force for the time being and
as amended, varied, substituted, supplemented, restated or novated in
accordance with the terms thereof or, as the case may be, with the agreement of
the relevant parties and (where such consent is, by the terms of this Agreement
or the relevant document, required to be obtained as a condition to such
amendment being permitted) the prior written consent of Biomatrix;
(d) words importing the plural shall include the singular and vice
versa;
(e) references to a person shall be construed as including
references to an individual, firm, consortium, company, corporation,
unincorporated body of persons or any State or any agency thereof; and
(f) references to statutory provisions shall be construed as
references to those provisions as replaced, amended or re-enacted from time to
time.
2. APPOINTMENT; BEST EFFORTS; EXCLUSIVITY.
2.1. Appointment.
(a) Subject to the terms and conditions hereinafter set forth,
Biomatrix hereby appoints the Distributor as its exclusive * (except to the
extent set forth in Section 2.3) distributor for the registration (other than
in the European Territory), promotion,
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 6
-6-
marketing, sale and distribution within the Territory of the Agreement Product
and any Improved Agreement Product(s) supplied by Biomatrix or an Affiliate of
Biomatrix to the Distributor pursuant to this Agreement. Such appointment does
not include the right to sublicense or appoint subdistributors except to an
Affiliate of Distributor or a Subdistributor of Distributor set forth on
Exhibit E hereto (each a "Subdistributor") without the approval of Biomatrix;
(and only for such time as such an Affiliate remains an Affiliate or
Subdistributor of Distributor).
(b) Except as specifically provided to the contrary herein, the
foregoing appointment shall not be construed, by implication or otherwise, (i)
to effect any sale of proprietary Biomatrix technology, (ii) to grant any
license relating to Biomatrix's proprietary methods of formulating, fabricating
and manufacturing the Agreement Product or any Improved Agreement Product(s),
or (iii) to grant the Distributor any rights in or to any proprietary
technology or Patents or Trademarks of Biomatrix.
(c) During the term of this Agreement the Distributor shall
neither seek customers for the Agreement Product or any Improved Agreement
Product(s) outside the Territory nor establish any branch or maintain any
distribution facilities outside the Territory for the registration, promotion,
marketing, sale or distribution of the Agreement Product or any Improved
Agreement Product(s).
(d) * to enter into subdistribution arrangements
* hereto and no Subdistributor shall have any further
right to sublicense any rights or appoint additional subdistributors. The
rights of Subdistributors to maintain a sublicense hereunder shall be subject
to the following:
(i) Each Subdistributor shall agree with Distributor that
its rights to sell the Agreement Product and Improved
Agreement Product(s) are subject to the terms of this
Agreement, including without limitation Distributor's
or Biomatrix's rights to terminate or convert this
Agreement into a non-exclusive arrangement;
(ii)
*
(iii)
*
(iv) Without the prior written consent of Biomatrix,
Distributor shall not waive any default or breach of
any Subdistributor which would adversely affect
Biomatrix; and
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 7
-7-
(v) Upon any termination of this Agreement (or with
respect to any country), all subdistributor
arrangements shall automatically terminate; provided
that Biomatrix may, in its sole discretion, negotiate
a license directly with any terminated
Subdistributor.
2.2. Acceptance of Obligations; Best Efforts. The Distributor
hereby accepts the appointment described in Section 2.1 and hereby agrees to
use its best efforts at all times during the term hereof to register, promote,
market, sell and distribute the Agreement Product and any Improved Agreement
Product(s) in the Territory.
*
2.3. Conversion to Non-Exclusive Distributorship. In the event that
(i) in any Agreement Year after and including the third Agreement Year or (ii)
from, after and including the first year of the Distributor acquiring and/or
commercializing a New Product pursuant to Section 10.1(b) (and so long as (i) no
force majeure condition of the Distributor exists at such time pursuant to
Section 20, (ii) Biomatrix has met its supply obligations under Section 7.4 and
(iii) Distributor is able to lawfully sell the Agreement Product and any
Improved Agreement product(s) in each of the countries within any such Region)
the Distributor's (or its Affiliates' or Subdistributors', as applicable) Net
Retail Sales of the Agreement Product and any Improved Agreement Product(s) in a
Region comprise less than * of its Net Retail Sales of
* , including the Agreement Product and any Improved Agreement
Product(s),
*
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 8
-8-
*
Upon conversion of Distributor's rights
to a non-exclusive distribution arrangement in any Region, Biomatrix shall have
the right to distribute the Agreement Product and Improved Agreement Product
and/or engage another distributor for such Region. Biomatrix will give
Distributor * days notice prior to appointing a third party
distributor for such Region. From and after the date of a conversion to a
non-exclusive distribution arrangement within a Region, the Distributor shall
lose its rights hereunder to register, promote, market, sell and distribute
within such Region any Improved Agreement Product(s) commercialized on or after
such date. Notwithstanding the foregoing, the Distributor shall retain the
exclusive rights in all trademarks under which the Distributor launched the
Agreement Product or any Improved Agreement Product(s) in such Region. Upon
conversion of Distributor's rights to a non-exclusive distribution arrangement
in any Region in the European Territory, the arrangements between the parties
under this Agreement shall no longer be governed by this Agreement and such
Region shall no longer be deemed a part of the Territory, but rather, such
Region shall become the subject of a new agreement between the parties upon the
same terms and conditions set forth in this Agreement. Upon such conversion to
a non-exclusive arrangement, the parties agree to execute such further
documents and agreements as are necessary in order to give effect to the
provisions of this Section.
2.4. Expansion of Territory. One or more countries may be added to
the Territory from time to time after the Effective Date by mutual written
agreement of the parties hereto, conditional upon the satisfactory completion
of the necessary due diligence in such country and the satisfaction of
Biomatrix with the proposed arrangements for the registration, promotion,
marketing, sale and distribution of the Agreement Product and any Improved
Agreement Product(s) by the Distributor in such country. Biomatrix agrees to
discuss the appointment of Distributor or one of its subdistributors prior to
appointing a third party distributor of the Agreement Product in any additional
country.
3. TERM AND TERMINATION.
3.1. Effective Date. This Agreement shall take effect as of the
Effective Date.
3.2. Term.
(a) Unless this Agreement is sooner terminated, in its entirety or
as to a country or Region in the Territory in accordance with the provisions of
this Agreement, the term of the appointment hereunder for a country in the
Territory shall commence on the first day of the first Agreement Year for such
country and shall end on the last day of the * Agreement Year for such
country (the "Initial Term").
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 9
-9-
(b) Unless this Agreement is sooner terminated, in its entirety or
as to any Region in the Territory in accordance with the provisions of this
Agreement, the appointment of the Distributor hereunder as exclusive
distributor of the Agreement Product for each Region in the Territory shall be
renewable by the Distributor, at its option, upon written notice to Biomatrix
received at least * prior to the end of the Initial Term for
such Region, for an additional consecutive term of * following
the date of expiration of the Initial Term for such Region, provided that the
Distributor shall only be entitled to exercise such renewal option with respect
to any Region if as of the date of expiration of the Initial Term for such
Region the Distributor is not in material breach of any of its obligations
under this Agreement with respect to any Region (it being understood that any
payment default by Distributor under this Agreement will be deemed a default as
to the entire Territory). Thereafter, the appointment of the Distributor as
exclusive distributor of the Agreement Product for such Region shall be
renewable upon the expiration of such additional * term, upon
written notice to Biomatrix received at least * prior to the end of such term
for such Region, for one additional consecutive renewal term of * ,
provided that, as of the date of expiration of the first renewal term for such
Region, the Distributor is not in material breach of any of its obligations
under this Agreement with respect to any Region (it being understood that any
payment default by Distributor under this Agreement will be deemed a default as
to the entire Territory). For the avoidance of any doubt, the Distributor's
rights with respect to any Improved Agreement Product(s) commercialized after
the * of the Effective Date shall terminate upon the *
of the Effective Date. Subject to the terms of this Agreement, Distributor
shall have the right to continue to sell the Agreement Product and any Improved
Agreement Products it is then currently selling.
(c) This Agreement may be terminated with respect to any country
in the Territory by either party, by written notice to the other party, in the
event that (i) a mutual decision not to Launch the Agreement Product in such
country is reached or (ii) a Launch is not commenced with respect to such
country within * after the time period set forth on Exhibit B.
(d) In the event that in any Agreement Year commencing with the
* Agreement Year (and so long as (i) no force majeure condition of the
Distributor exists at such time pursuant to Section 20, (ii) Biomatrix has met
its supply obligations under Section 7.4, and (iii) Distributor is able to
lawfully sell the Agreement product and any Improved Agreement Product(s) in
each of the countries within any such Region), the Distributor's (and its
Affiliates' or Subdistributors', as applicable) Net Retail Sales of the
Agreement Product and any Improved Agreement Product(s) in any Region comprise
less than * in such Region of all Dermal Tissue
Augmentation Products, including the Agreement Product and any Improved
Agreement Product(s), the Distributor's distribution rights (including, without
limitation, its right to use the Trademarks) under this Agreement for the
Agreement Product and any Improved
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 10
-10-
Agreement Product(s) in such Region shall terminate upon *
after the end of the applicable Agreement Year, to Distributor from Biomatrix;
*
By way of example, if Distributor's Net Retail Sales of all
Dermal Tissue Augmentation Products in a Region in a given Agreement Year were
* , and Distributor's Net Retail Sales of the Agreement Product in such
Region in such Agreement Year were $500,
*
; further provided that with respect to any such Region, at Biomatrix's
election, Biomatrix may
*
Upon any such termination of the
Distributor's distribution rights in a Region, the Distributor's obligation to
pay any royalties pursuant to Sections 8.1 and 8.2 for any sales in such Region
after such termination shall cease, but the Distributor shall remain obligated
to pay all such royalties for sales in such Region accrued prior to such
termination.
(e) If the Distributor's rights to distribute the Agreement
Product and any Improved Agreement Product(s) in any country in the European
Territory shall terminate solely pursuant to subsection (d) above, Biomatrix
agrees to sell the Agreement Product and any Improved Agreement Product(s)
developed before the date of such termination to the Distributor a
* for the period of time equal to the period that would have remained in the
Initial Term in such country had the Distributor's distribution rights not
terminated.
3.3. Inventory.
(a) Upon termination of this Agreement for any reason, Biomatrix
shall have the right (but not the obligation) to repurchase all or part of the
inventory of the Agreement Product and any Improved Agreement Product(s) held
by the Distributor or its Affiliates or Subdistributors.
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 11
-11-
(b) The price for inventory to be repurchased by Biomatrix
pursuant to Section 3.3(a) above shall be the landed cost thereof actually paid
by the Distributor to Biomatrix. With respect to any quantities not
repurchased by Biomatrix, the Distributor shall have the right to sell such
inventory of the Agreement Product and any Improved Agreement Product(s), in
its usual and customary manner, in the ordinary course of business, for a
period of six (6) months following termination of this Agreement and
notwithstanding such termination the terms and conditions of this Agreement
shall apply to such sales.
3.4. Insolvency. This Agreement may be immediately terminated as
to the entire Territory by either party, upon giving written notice to the
other party, in the event that the other party shall become insolvent or be
declared bankrupt by a court of competent jurisdiction or shall be the subject
of any reorganization (other than a corporate reorganization effected in the
ordinary course of business and not arising out of any insolvency) or winding
up, receivership or dissolution, bankruptcy or liquidation proceeding, or any
proceeding or action similar to one or more of the above, in which case
termination shall be effective upon such written notice. The failure of either
party to give notice of termination upon obtaining knowledge of any such event
shall not be interpreted as a waiver of such party's rights under this Section
3.4, and such party reserves the right to exercise any such rights at any time
after the occurrence of any such event.
3.5. Breach. This Agreement may be terminated as to the entire
Territory by either party if the other party shall breach any of its payment
obligations hereunder or with respect to any Region if Distributor (or its
Affiliates or Subdistributors, as applicable) shall commit a material breach of
any of its warranties, covenants, conditions, obligations or agreements
contained herein with respect to such Region, provided that such breach shall
continue for a period of thirty (30) days after written notice thereof and
provided further that such termination shall be immediately effective upon
further written notice to that effect to the breaching party after its failure
to cure such breach within such applicable notice period. For avoidance of
doubt, the parties agree that if a Launch is not reached with respect to a
country within thirty days after the time period set forth on Exhibit B, then
either party may terminate this Agreement with respect to such country
(provided that such failure to reach a Launch is not caused by a force majeure
condition of the Distributor or Biomatrix's failure to meet its supply
obligations under Section 7.4).
3.6. Certain Rights Upon Termination. Upon termination of this
Agreement for any reason whatsoever, Biomatrix shall have the following rights,
or if such termination is as to a country in the Territory in accordance with
the provisions of this Agreement, Biomatrix shall have the following rights in
such country:
(a) Biomatrix shall have the unrestricted right to review, access,
use and permit others to review, access and use, either directly or by
cross-reference or incorporation or otherwise, all information, data,
investigations, preclinical and clinical protocols, marketing information
disseminated by Distributor publicly to customers and patients and
<PAGE> 12
-12-
all information required to be provided to Biomatrix by law, information
relating to laboratory, animal and human studies, and related regulatory
approvals pertaining to the Agreement Product or any Improved Agreement
Product(s) (the "Information") which are possessed or controlled by the
Distributor or any of its Affiliates or Subdistributors, or to which the
Distributor or any of its Affiliates or Subdistributors has a right to review,
access or use. The Distributor unconditionally agrees promptly to take any
action and to execute and deliver to Biomatrix any documents or instruments
reasonably requested by Biomatrix to permit Biomatrix to make full use of such
unrestricted right.
(b) Further, Biomatrix shall have exclusive ownership rights to
the Trademarks and to all other product specific logos, slogans and other
intangibles used by the Distributor solely in association with the independent
sale of the Agreement Product and any Improved Agreement Product(s) (including
all registrations relating thereto) possessed or controlled by the Distributor
or any of its Affiliates or Subdistributors, and the Distributor
unconditionally agrees, subject to the provisions of Section 3.3(b), (i)
immediately upon termination to cease using the Trademarks and any such logos,
slogans, and marketing rights of Biomatrix or any imitations thereof and (ii)
immediately to execute and deliver to Biomatrix any documents or instruments
reasonably requested by Biomatrix to give full effect to the provisions of this
Section 3.6; provided, however, if the Distributor maintains a license to
distribute the Agreement Product(s) in (a) two Regions, (b) one Region in the
European Territory or (c) in the United States, then Distributor shall retain
the exclusive rights in the Trademarks in the entire Territory.
(c) In addition, the Distributor unconditionally agrees, subject
to the provisions of Section 3.3(b), that it shall, upon the request of
Biomatrix, immediately inform all relevant regulatory authorities that the
Distributor (or its Affiliate or Subdistributor) is no longer a distributor of
the Agreement Product or the Improved Agreement Product(s) and shall take all
action and execute and deliver all documents and instruments necessary in order
to transfer to the fullest extent permitted under applicable law all
registrations and Product License Approvals, or applications therefor, for the
Agreement Product or any Improved Agreement Product(s) to Biomatrix or any
Person nominated by Biomatrix.
3.7. Effects of Termination.
(a) Upon termination of this Agreement for any reason, the
Distributor shall immediately discontinue making any representations regarding
its status as a distributor for Biomatrix and shall immediately cease
conducting any activities with respect to the marketing, promotion, sale or
distribution of the Agreement Product and any Improved Agreement Product(s),
provided, however, that the Distributor shall be permitted to sell inventory
not repurchased by Biomatrix in accordance with Section 3.3.
(b) Termination of this Agreement shall not affect obligations of
either party that may have accrued prior to the effective date of termination.
Subject to Clause 3.8 below, termination of this Agreement shall be in addition
to, and shall not be exclusive of
<PAGE> 13
-13-
or prejudicial to, any other grounds for termination or rights or remedies at
law or in equity which either party may have on account of any default of the
other party.
3.8. Waiver. The Distributor (for itself and on behalf of its
Affiliates and Subdistributors) hereby waives, to the extent it is able to do
so under the law of every country in the Territory and other applicable law,
any statutory rights it may have or acquire in respect of the termination of
the relationship established hereby pursuant to the terms hereof, and agrees
that the rights available to it hereunder in the event of such termination are
adequate and reflect the agreement of the parties. The Distributor shall not
have any right to claim any indemnity for goodwill or lost profits or any
damages arising from the rightful termination of this Agreement in accordance
with the terms hereof.
4. PAYMENTS. All payments hereunder shall be made in Dollars.
Payments to Biomatrix shall be wired to an account designated by Biomatrix and
the costs of any such remittance shall be borne by the Distributor. All
amounts (except for the Minimum Price, which shall be denominated in Dollars)
denominated in another currency shall be converted to Dollars using the average
month-end rates of exchange for the relevant period as published in The Wall
Street Journal (or, if The Wall Street Journal shall no longer publish such
exchange rates, as determined by a method that is mutually agreed upon in
writing by the parties).
5. WITHHOLDING. All payments to be made by the Distributor under
this Agreement shall be made in full, free and clear of and without any
deduction of or withholding for or on account of any taxes levied in any
country of the Territory or elsewhere; provided that if the Distributor shall
be required by law to make any deduction or withholding from any payment to
Biomatrix then:
(a) the Distributor shall ensure that such deduction or
withholding does not exceed the minimum legal liability therefor; and
(b) not later than five (5) days before each deduction or
withholding of any taxes, the Distributor shall forward to Biomatrix such
documentary evidence as may be required by Biomatrix in respect of the proposed
deduction, withholding or payment; and
(c) prior to any deduction or withholding the parties shall
attempt in good faith to agree upon revised mutually acceptable pricing and/or
payment terms.
6. TRADEMARKS; AGREEMENT PRODUCT MARKING; PROMOTIONAL
INFORMATION.
6.1. Trademarks. Subject to the provisions of Section 3.6,
Biomatrix hereby licenses to the Distributor the right to use, and hereby
requires solely in association with the independent sale by the Distributor of
the Agreement Product and any Improved Agreement Products the use of, the
Trademarks in the Territory during the term of this
<PAGE> 14
-14-
Agreement. The Distributor warrants that it shall not use any of the
Trademarks at any time outside the Territory or use any of the Trademarks for
any products other than the Agreement Product and any Improved Agreement
Product(s) within the Territory. The Distributor shall not use a trademark or
other mark (other than a Trademark) in connection with its distribution of the
Agreement Product and any Improved Agreement Products unless and until it has
been agreed upon in writing by each of the parties and become a Trademark as
defined herein. Biomatrix shall prosecute, maintain and defend the Trademarks
throughout the Term of this Agreement in all countries in the Territory in
which the Distributor, any of its Affiliates or any Subdistributor is selling
the Agreement Product and/or any Improved Agreement Product. The parties shall
execute a short form Trademark assignment agreement to the extent that it is
necessary to record the Trademark license under this Section 6.1 in any country
whose laws require any such registration.
6.2. Termination of Right to Use Trademarks. Subject to the
sell-out right of Section 3.3(b) and except as otherwise provided in Section
3.6, upon termination of this Agreement, the license to use the Trademarks in
the Territory shall terminate, and the Distributor unconditionally agrees
promptly to take all necessary action and execute and deliver to Biomatrix all
necessary documents and instruments to remove the Distributor as a registered
user and/or a recorded licensee of the Trademarks. In the event that the
Distributor fails promptly upon written request by Biomatrix to comply with any
of its agreements in the preceding sentence of this Section 6.2, the
Distributor hereby irrevocably consents to Biomatrix's taking any action
necessary to give effect to such agreements.
6.3. Notice. Each party hereto agrees promptly to notify the other
in writing of any infringements or imitations of the Trademarks by third
parties which may come to its attention.
6.4. Labelling and Promotional Materials; Approved Use of Product.
(a) The Distributor shall provide Biomatrix with labelling
masters, instructions, specifications and copies of all marketing, labelling
and promotional material it intends to use relating to the Agreement Product
and any Improved Agreement Product(s). All such labelling, packaging and
promotional material shall be consistent with the relevant Product License
Approvals and all labelling and packaging materials shall be reviewed by
Biomatrix and shall be subject to its written approval prior to use, such
approval not to be unreasonably withheld. Biomatrix shall communicate its
acceptance or rejection of such labelling, packaging and any major promotional
materials that include claims or items impacting regulatory approvals within
* of its receipt thereof and if no such communication is received by
Distributor from Biomatrix within such * Biomatrix shall be deemed
to have accepted. Distributor shall provide Biomatrix with all major
promotional materials for launches and subsequent promotions within a
reasonable time prior to their use in order to allow Biomatrix to comment on
such materials.
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 15
-15-
Distributor shall provide Biomatrix with copies of all other promotional
materials at or prior to their use.
(b) The Distributor agrees that its (and its Affiliates' and
Subdistributors') promotion, marketing, sale and distribution of the Agreement
Product and any Improved Agreement Product(s) in the Territory, and the
promotional materials and labelling used in connection therewith, shall be
strictly in accordance with the approved use of the Agreement Product and any
Improved Agreement Product(s) as specified in the Product License Approvals and
as further provided in this Agreement. Specifically, for purposes of this
Agreement, the Distributor (and its Affiliates and Subdistributors) agrees
* , or unless agreed to in
writing by Biomatrix.
6.5. Legend. Subject to applicable laws and regulations in the
Territory, all relevant packaging and promotional material for the Agreement
Product and any Improved Agreement Product(s) used or sold by the Distributor
(and its Affiliates and Subdistributors) shall contain (i) all applicable
markings needed to keep the Trademarks enforceable throughout the Territory as
reasonably specified by Biomatrix to the Distributor and (ii) a legend which
shall be displayed in a reasonably conspicuous manner on all packaging of such
Agreement Product and any Improved Agreement Product(s) containing the
corporate identification logo of Biomatrix and indicating that such product has
been developed and manufactured by Biomatrix, Inc., and its affiliates, 65
Railroad Avenue, Ridgefield, New Jersey, 07657 U.S.A.
6.6. Promotional Support. Biomatrix and the Distributor (and its
Affiliates and Subdistributors) shall provide to each other on an ongoing basis
and without charge (to the extent not prevented by law or contract from doing
so) all medical information relating to the Agreement Product and any Improved
Agreement Product(s) (including summary data from studies, clinical trials and
the like as well as information regarding adverse events associated with the
use of the Agreement Product), the proceedings of all symposia on the Agreement
Product and any Improved Agreement Product(s) and all promotional information
that is available to such party relating to the Agreement Product and any
Improved Agreement Product(s). In addition, Biomatrix and the Distributor (and
its Affiliates and Subdistributors) shall provide each other with access to
such primary data and information in its possession as the other may reasonably
request regarding the results of the studies contained in such summary data
referred to above.
6.7 Joint Coordinating Committee. Upon the execution of this
Agreement, Biomatrix and the Distributor shall establish a joint coordinating
committee (the "Committee") to review all matters relating to product
labelling, product claims, regulatory matters or clinical trials. The
Committee shall consist of an equal number, not to * ,
of voting representatives from each of Biomatrix and the
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 16
-16-
Distributor and shall meet * . In the
event of a dispute between representatives of Biomatrix and the Distributor on
the Committee, a senior representative of each such party shall be appointed to
resolve such dispute, and in the event such senior representatives are unable to
resolve the matter, Biomatrix's view shall prevail over the Distributor's.
6.8 Recalls of the Agreement Product.
(a) If either party in good faith determines that a recall of the
Agreement Product in any country in the Territory is warranted, such party
shall immediately notify the other party in writing and shall advise such other
party of the reasons underlying its determination that a recall is warranted.
The parties shall consult with each other as to any action to be taken in
regard to such a recall, but in any event if after consultations either party
in good faith still believes that such a recall should be undertaken, the
parties shall cooperate in carrying out such recall.
(b) Except as otherwise provided in (c) below, in the event of a
recall of the Agreement Product, Biomatrix shall correct any deficiency
relating to its manufacturing, packaging, testing, labelling, storing or
handling of the Agreement Product for which it is responsible, if applicable,
and shall at its cost replace the Agreement Product recalled.
(c) Biomatrix shall reimburse Distributor for all direct costs and
expenses (including without limitation shipping, quality control testing and
notification costs) incurred by Distributor and its Affiliates as a result of
any recall, except where such recall (i) is the result of the failure of
Distributor or its Affiliates or Subdistributors to comply with their
obligations under this Agreement and/or (ii) was opposed by Biomatrix and
proved to be unwarranted, in which case Distributor shall reimburse Biomatrix
for all direct costs and expenses (including without limitation shipping,
quality control testing and notification costs) incurred by Biomatrix and its
Affiliates as a result of such recall.
6.9. Product Vigilance System. The Distributor shall be
responsible for maintaining medical device vigilance systems, as established
for the Agreement Product by Biomatrix, and shall promptly provide Biomatrix
with notice of all product complaints, including medical complaints. Biomatrix
shall be solely responsible for processing, analyzing and, if necessary,
reporting medical complaints to regulatory authorities. The Distributor shall
provide all necessary support to Biomatrix for carrying out such activities.
7. SUPPLY OF AGREEMENT PRODUCT.
7.1. General; Fee.
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 17
-17-
(a) Biomatrix agrees to sell the Agreement Product and any
Improved Agreement Product(s) to the Distributor, on the terms and subject to
the conditions set forth herein, for resale by the Distributor within the
Territory, and the Distributor shall obtain the Agreement Product and any
Improved Agreement Product(s) for resale in the Territory only from Biomatrix
or its Affiliates. Biomatrix shall not sell the Agreement Product or any
Improved Agreement Product(s) itself or supply or license the manufacture of
the Agreement Product or any Improved Agreement Product(s) to any third party
for resale within the Territory, provided that Biomatrix's obligations under
this sentence shall be subject to (i) applicable law, including without
limitation EU competition law and, in particular, EEC Regulation 1983/83 (as
amended or succeeded) and (ii) the provisions of this Agreement, including
Section 2.3.
(b)
* ,
the Distributor shall pay to Biomatrix a fee in the amount of five million
Dollars (US$5,000,000) in cash or by wire transfer on the execution of this
Agreement by the parties hereto. Such fee shall not be refundable in whole or
part.
7.2. Price; Adjustment; Reports; Payment.
(a) The parties shall attempt in good faith to agree in writing,
prior to the Launch in each country, upon mutually acceptable supply pricing
for the Distributor's purchase of the Agreement Product and any Improved
Agreement Product(s), but such pricing in any event shall not be less than the
greater of (i) the Minimum Price, or (ii) the Formula Price, except as provided
in subsection (b) below. The parties shall attempt in good faith to agree in
writing upon mutually acceptable minimum pricing for the Agreement Product in
sizes other than the 1.0cc Treatment Syringe and for any Improved Agreement
Product(s). For any syringe with a fill volume of greater than one cc(1cc),
the Minimum Price shall be the amount calculated as *
plus the dollar amount which equals * of such product
with a larger fill volume * of the one cc(1cc) syringe. In
the event that Biomatrix's actual incremental Cost of Goods Sold exceeds such
dollar amount, the Minimum Price shall be the amount calculated as
* . Subject to the general commercial availability of appropriate syringes for
the Agreement Product, the * for a one and
one-half (1.5)cc syringe, * for a two (2.0)cc
syringe, and * for a two and one-half (2.5)cc
syringe.
(b) If Biomatrix has appointed a new distributor for a country in
the Territory pursuant to Section 2.3 and the Distributor has the right to
distribute the Agreement Product and any Improved Agreement Product(s) in such
country, the supply pricing for
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 18
-18-
the Distributor's purchase of the Agreement Product and any Improved Agreement
Product(s) for resale in such country
*
(c) The price initially payable by the Distributor to Biomatrix
for each unit of the Agreement Product during each month of each Agreement Year
shall be the Minimum Price applicable to sales in such country (subject to
adjustment at the close of each applicable Contract Quarter and Agreement Year
in accordance with Section 7.2(e) below).
(d) Within * after the end of each month of each
Agreement Year for each country in the Territory, the Formula Price for the
Agreement Product in such country shall be calculated, and, to the extent that
such Formula Price exceeds the applicable Minimum Price for such Agreement Year
for such country, an adjustment resulting from the
* with respect to all units of the Agreement Product sold by the Distributor
(and its Affiliates and Subdistributors) in such country during such monthly
period, such payment to be made * after the end of
the month following such monthly period.
(e) Within * after the end of each
Contract Quarter and Agreement Year for each country, the Formula Price for the
Agreement Product in such country shall be calculated and an adjustment
resulting from the
*
as appropriate, to the other party with
respect to all units of the Agreement Product sold by the Distributor in such
country during such Contract Quarter and Agreement Year, such payment to be
made within * after the end of such *
period following the end of such Contract Quarter and Agreement Year. The
price calculated annually in this manner shall be the final price payable for
all units of the Agreement Product sold by the Distributor, any Affiliates or
Subdistributors of Distributor during such Agreement Year. For the avoidance
of doubt, the aggregate amount payable by Distributor for the Agreement
Product(s) and any Improved Agreement Product(s) in any country for any
Agreement Year shall in no event be lower than the Minimum Price multiplied by
the total units sold in such Agreement Year in such country.
(f) Within * following the end of each
calendar month in each Agreement Year, the Distributor shall submit to
Biomatrix written reports detailing the units and value of the Distributor's,
Affiliates' and Subdistributors' Net Retail Sales and aggregate number of units
sold of the Agreement Product and any
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 19
-19-
Improved Agreement Product(s) in each country in the Territory during the
immediately preceding calendar month.
(g) Within * following the end of each Agreement Year,
the Distributor shall submit to Biomatrix written reports detailing the
Distributor's and its Affiliates' and Subdistributors' sales of the Agreement
Product and any Improved Agreement Product(s) during the immediately preceding
Agreement Year, which reports shall contain the Net Retail Sales of the
Agreement Product and any Improved Agreement Product(s) in each country in the
Territory, and the aggregate number of units of the Agreement Product and any
Improved Agreement Product(s) sold in each country in the Territory during the
applicable Agreement Year.
(h) All purchases of the Agreement Product and any Improved
Agreement Product(s) hereunder shall be billed and paid in Dollars within *
after the later of the date of delivery or the date of the Distributor's
receipt of the invoice for each shipment of same to the Distributor.
7.3. Sales and Supply Forecasts; Accounts.
(a) Exhibit D, which shall be supplied by the Distributor within
* of the Effective Date, sets forth a sales forecast of units
of the Agreement Product in the Territory for the first year after the
Effective Date.
(b) Within * after the end of each month, the Distributor
shall provide to Biomatrix an updated rolling twelve (12) month monthly supply
forecast for all unit sizes of the Agreement Product in the Territory. Each
such supply forecast described in this subsection (b) is referred to herein as
a "Supply Forecast"; provided, that updated Supply Forecasts shall not vary
(whether up or down) from the immediately preceding Supply Forecast by more
than * with respect to each month covered by such preceding
Supply Forecast.
(c) The Distributor shall maintain, and shall require its
Affiliates and Subdistributors to maintain, books of account with respect to
sales of the Agreement Product in the Territory by it and its Affiliates and
Subdistributors. Biomatrix shall have the right, not more than once during
each calendar year, to have an independent accountant selected and retained by
Biomatrix (reasonably acceptable to the Distributor, provided that any "big
six" accounting firm shall be deemed reasonable) to inspect and examine such
books of the Distributor, its Affiliates and Subdistributors during regular
business hours for the purpose of verifying the statements of the aggregate Net
Retail Sales of all Dermal Tissue Augmentation Products for all purposes
hereunder, including verification of Formula Price and the royalties described
in Section 8. The cost of each such audit shall be borne by Biomatrix unless a
material error is discovered in the course of such audit, in which case the
cost shall be borne by the Distributor. For purposes of
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 20
-20-
this Section 7.3(d), a material error shall be defined as an understatement of
five percent (5%) or more of the aggregate amount owed to Biomatrix with
respect to sales of Dermal Tissue Augmentation Products in a country in the
Territory. Any additional payments required as a result of such inspection and
examination shall be immediately paid to Biomatrix and shall bear interest from
the date such amount would otherwise have been paid until the date of actual
payment at the rate per annum set forth in Section 20. Such independent
accounting firm shall conduct such inspections and examinations under
conditions of confidentiality.
7.4. Shipment and Delivery; Packaging.
(a) Biomatrix or an Affiliate of Biomatrix shall arrange for
shipment to the Distributor of the Agreement Product and any Improved Agreement
Product(s) ordered by the Distributor * . The Distributor shall pay
all customs duties, sales taxes and other governmental charges relating to the
Agreement Product and any Improved Agreement Product(s), and shall be solely
responsible for clearing such products through customs throughout the
Territory.
(b) The Distributor shall submit a firm purchase order setting
forth the quantities, delivery date and shipping instructions with respect to
each shipment of the Agreement Product and any Improved Agreement Product(s),
such purchase orders to be received by Biomatrix at least * prior to
the requested delivery date; provided that the Distributor shall not submit any
purchase order for fewer than * units of the Agreement Product or the
Improved Agreement Product(s) (although multiple delivery sites for purchase
orders shall be allowed). Biomatrix shall use commercially reasonable efforts
but shall have no obligation to supply Distributor with quantities of the
Agreement Product(s) and Improved Agreement Product(s) in excess of the amounts
in the then current Supply Forecast for the relevant monthly period. For
avoidance of doubt, so long as Biomatrix supplies Distributor with quantities
of the Agreement Product and Improved Agreement Product(s) as set forth in the
Supply Forecast, then Biomatrix shall not be deemed to be in default under this
section or any other provision of this Agreement relating to Biomatrix's supply
obligations. In addition to the foregoing, within
*
, in consideration for which units the
Distributor shall pay to Biomatrix a price of * per unit.
(c) Biomatrix agrees that with respect to languages for packaging
for the European Territory three separate forms of packaging shall be made
available, as applicable, as follows:
(i) Northern Europe - English, Dutch, French, German and
Italian;
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 21
-21-
(ii) Southern Europe - English, Italian, Spanish,
Portuguese and Greek; and
(iii) Scandinavia - English, Swedish, Norwegian, Danish and
Finnish.
(d) Each unit of the Agreement Product and any Improved Agreement
Products shipped to the Distributor shall have, as of the time of delivery, a
remaining shelf life of no less than * less than the maximum
shelf life for such product, as approved by the United States Food and Drug
Administration. Biomatrix shall continually use its best efforts at all times
during the term hereof to lengthen to * the shelf life of the
Agreement Product and any Improved Agreement Products to the extent supported
by stability data. Biomatrix' "best efforts" in this section shall mean that
Biomatrix shall use such methods, exercise such degree of effort and diligence,
and adhere to such standards as are commercially reasonable.
7.5. Title. Legal title to all quantities of the Agreement Product
and any Improved Agreement Product(s) sold hereunder shall remain in Biomatrix
until delivery of the Agreement Product and any Improved Agreement Product(s)
to Distributor or its agent and acceptance thereof and upon such delivery and
acceptance the title to such Agreement Product and any Improved Agreement
Product(s) shall, without further action, be transferred to and vested in the
Distributor.
7.6. Risk of Loss. Biomatrix shall bear all risk of loss of, or
damage to, all units of the Agreement Product and any Improved Agreement
Product(s) to the extent the same is in its possession or the possession of its
Affiliates, nominees or agents. The Distributor shall bear all risk of loss
of, or damage to, all units of the Agreement Product and any Improved Agreement
Product(s) after delivery to a common carrier for shipment to the Distributor
in accordance with Section 7.4.
7.7. Acceptance.
*
. All units of the Agreement Product
and Improved Agreement Products delivered to Distributor pursuant to this
Agreement shall be
*
, the specifications listed in Exhibit A. Any non-conformity which
arises after acceptance by Distributor directly associated with product
specification shall be the responsibility of Biomatrix unless such
non-conformity is due to improper storage
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 22
-22-
conditions subsequent to delivery of the Agreement Product. All other
non-conformities of the Agreement Product shall be the responsibility of the
Distributor. Biomatrix and the Distributor agree to consult with each other in
order to resolve the discrepancy between each other's determinations. If such
consultation does not resolve the discrepancy, the parties agree to nominate a
reputable independent laboratory, acceptable to both parties, that shall carry
out tests on representative samples taken from such shipment, and the results
of such tests shall be binding on the parties. Biomatrix shall at its expense
replace any such shipment to the extent that it does not conform to the
Agreement Product Specifications. All defective units of the Agreement Product
or any Improved Agreement Product(s) shall be returned to Biomatrix at the
address set forth in Section 23 of this Agreement, accompanied or preceded by a
reasonably detailed statement of the claimed defect or non- conformity and
proof of date of purchase, and packed and shipped according to instructions
provided by Biomatrix. The shipping costs of any such returned units shall be
borne by Biomatrix, unless such units are determined not to be defective under
the terms of this Agreement, in which case such shipping costs shall be borne
by the Distributor.
7.8. Purchase Orders. The provisions of this Agreement shall
prevail over any inconsistent statement or provisions contained in any document
related to this Agreement passing between the parties hereto including, but not
limited to, any purchase order, acknowledgment, confirmation or notice.
7.9. Limited Warranty; Limitation on Liability.
Biomatrix represents and warrants that the Agreement Product and any
Improved Agreement Product(s) supplied to the Distributor hereunder shall:
(a) conform to the Agreement Product Specifications; and
(b) be manufactured, labelled, packaged and tested (while in the
possession or control of Biomatrix) in accordance with the applicable Product
License Approvals therefor and all applicable laws and regulations in the
Territory relating to the manufacture, labelling, packaging and testing of the
Agreement Product, and shall be manufactured for use for the indications
specified in the applicable Product License Approvals therefor.
THE FOREGOING WARRANTY IS THE SOLE AND EXCLUSIVE WARRANTY GIVEN BY
BIOMATRIX WITH RESPECT TO THE AGREEMENT PRODUCT, AND BIOMATRIX GIVES AND MAKES
NO REPRESENTATIONS OR WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, OTHER THAN
THE FOREGOING. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, NO IMPLIED
WARRANTY OF MERCHANTABILITY, NO IMPLIED WARRANTY OF FITNESS FOR ANY PARTICULAR
PURPOSE, AND NO IMPLIED WARRANTY ARISING BY USAGE OF TRADE, COURSE OF DEALING
OR COURSE OF PERFORMANCE IS GIVEN OR MADE BY BIOMATRIX OR SHALL
<PAGE> 23
-23-
ARISE BY OR IN CONNECTION WITH ANY SALE OR PROVISION OF THE AGREEMENT PRODUCT
BY BIOMATRIX, OR THE DISTRIBUTOR'S (OR ITS AFFILIATES' OR SUBDISTRIBUTORS') USE
OR SALE OF THE AGREEMENT PRODUCT, OR BIOMATRIX'S AND/OR THE DISTRIBUTOR'S (OR
ITS AFFILIATES' OR SUBDISTRIBUTORS') CONDUCT IN RELATION THERETO OR TO EACH
OTHER. NO REPRESENTATIVE OF BIOMATRIX IS AUTHORIZED TO GIVE OR MAKE ANY OTHER
REPRESENTATION OR WARRANTY OR TO MODIFY THE FOREGOING WARRANTY IN ANY WAY.
The limited warranty set forth in this Section 7.9 does not apply to
any non-conformity of the Agreement Product or any Improved Agreement
Product(s) resulting from (a) repair or alteration by any party other than
Biomatrix or its Affiliates, (b) misuse, negligence, abuse, accident,
mishandling or storage in an improper environment by any party other than
Biomatrix or its Affiliates, or (c) use, handling, storage or maintenance other
than in accordance with instructions and recommendations provided by Biomatrix
or its Affiliates.
Biomatrix's obligation with respect to units of the Agreement Product
and any Improved Agreement Product(s) which do not meet the warranty contained
herein is limited to replacement of such units of the Agreement Product or
Improved Agreement Product(s) as applicable, provided that such units are
returned to Biomatrix accompanied by a reasonably detailed statement of the
claimed defect or non-conformity and proof of date of purchase, and packed and
shipped according to instructions provided by Biomatrix, and only if, upon
examination by Biomatrix, such units of the Agreement Product or the Improved
Agreement Product(s) are determined to have been defective under the terms of
this Agreement.
BIOMATRIX'S LIABILITY, AND THE EXCLUSIVE REMEDY, IN CONNECTION WITH
THE SALE OR USE OF THE AGREEMENT PRODUCT AND ANY IMPROVED AGREEMENT PRODUCT(S)
(WHETHER BASED ON CONTRACT, NEGLIGENCE, BREACH OF WARRANTY, STRICT LIABILITY OR
ANY OTHER LEGAL THEORY), SHALL BE STRICTLY LIMITED TO BIOMATRIX'S OBLIGATIONS
AS SPECIFICALLY AND EXPRESSLY PROVIDED IN THIS SECTION 7.9 AND IN SECTION 9
BELOW. EXCEPT AS SPECIFICALLY PROVIDED IN THIS SECTION 7.9 AND IN SECTION 9
BELOW, BIOMATRIX SHALL HAVE NO LIABILITY, OBLIGATION OR RESPONSIBILITY OF ANY
KIND, IN ANY WAY OR TO ANY EXTENT, FOR ANY DAMAGES, LOSSES, COSTS, EXPENSES OR
LIABILITIES FOR ANY REPRESENTATION OR WARRANTY OF ANY KIND WITH RESPECT TO THE
AGREEMENT PRODUCT AND ANY IMPROVED AGREEMENT PRODUCT(S) OR THE PERFORMANCE
THEREOF, OR ARISING IN ANY WAY IN CONNECTION WITH THE PURCHASE OR USE OR
INABILITY TO USE THE AGREEMENT PRODUCT OR ANY IMPROVED AGREEMENT PRODUCT(S),
EVEN IF BIOMATRIX HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. IN NO
EVENT WHATSOEVER SHALL BIOMATRIX HAVE ANY LIABILITY,
<PAGE> 24
-24-
OBLIGATION OR RESPONSIBILITY FOR ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL,
SPECIAL OR EXEMPLARY DAMAGES ARISING IN ANY WAY IN CONNECTION WITH THE
AGREEMENT PRODUCT OR ANY IMPROVED AGREEMENT PRODUCT(S) OR THEIR SALE OR USE.
8. ROYALTY PAYMENTS BY DISTRIBUTOR.
8.1. Royalties for Sales of Dermal Tissue Augmentation Products.
The Distributor shall pay to Biomatrix a royalty of * of the Net Retail
Sales by the Distributor and its Affiliates and Subdistributors of all Dermal
Tissue Augmentation Products (other than sales of the Agreement Product and any
Improved Agreement Product(s)) in all countries in the Territory on a
country-by-country basis, including any countries that are added to the
Territory after the Effective Date,
*
. Such royalty shall commence with respect to each country in the
Territory at the earlier of (a) the Launch of the Agreement Product in such
country or (b) the Launch date for such country set forth on Exhibit B;
provided that if a Launch is delayed due to Biomatrix's failure to meet its
supply obligations under Section 7.4, due to a force majeure condition of
Distributor or if the Distributor is not able to lawfully sell the Agreement
product in such country, such royalty with respect to any such country shall
not commence until Biomatrix meets its supply obligations, Distributor is able
to lawfully sell the Agreement Product in such country, or until such force
majeure condition ceases. Such royalty shall be paid by not later than *
after the end of each Contract Quarter.
8.2. Incremental Royalties. The Distributor shall pay to Biomatrix
the following annual royalties (the "Incremental Royalties") on the
Distributor's and its Affiliates' and Subdistributors' total incremental
increases in Net Retail Sales of all Dermal Tissue Augmentation Products
(including the Agreement Product and any Improved Agreement Product(s)), in
each country in the Territory based on the incremental increases, if any, in
Net Retail Sales of all Dermal Tissue Augmentation Products in such country in
each Agreement Year over a base year amount comprised of Net Retail Sales of
Dermal Tissue Augmentation Products in the twelve (12) months immediately
preceding the first commercial sale of either the Agreement Product or any
Improved Agreement Product(s) in such country:
Increase in Total Royalty on Total
Sales Over Base Incremental Sales
Year Amount
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 25
-25-
*
The Distributor's obligation to pay the Incremental Royalties shall cease with
respect to a country in the Territory in the event that the Distributor's
rights to sell, distribute, market and promote the Agreement Product and any
Improved Agreement Product have become non-exclusive with respect to such
country pursuant to Section 2.3 or have terminated pursuant to Section 3.2(d).
The Incremental Royalty shall be paid by not later than * after the
end of each Agreement Year. For the avoidance of doubt, if the Distributor had
no sales of any Dermal Tissue Augmentation Products in a country prior to the
first commercial sale of either the Agreement Product or any Improved Agreement
Product in such country, the Distributor shall be obligated to pay a *
royalty on Net Retail Sales of all Dermal Tissue Augmentation products sold
after such first commercial sale.
9. INDEMNIFICATION; CONFIDENTIALITY; PUBLIC ANNOUNCEMENT
9.1. Indemnification from the Distributor. Subject to the
provisions of Section 9.3, the Distributor shall defend, indemnify and hold
Biomatrix and its Affiliates and their respective directors, officers, agents
and employees harmless from and against any and all liabilities, claims,
damages and expenses (including without limitation actual court costs and
reasonable attorneys' fees regardless of outcome) resulting from claims of
third parties or arising out of:
*
provided, however, that upon Biomatrix being advised of any assertions of any
such third party claims or suits or upon the bringing or filing of such claims
or suits by any third party against Biomatrix, Biomatrix will promptly notify
the Distributor thereof and Biomatrix may, at its option, permit the
Distributor's attorneys to handle and control the defense of such claims or
suits at the Distributor's cost and Biomatrix will co-operate with the
Distributor in the defense thereof. The parties agree that there shall be no
settlements, whether agreed to in court or out of court, without the prior
written consent of the indemnifying party.
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 26
-26-
9.2. Indemnification from Biomatrix. Subject to the provisions of
Section 9.3, Biomatrix shall defend, indemnify and hold the Distributor and its
Affiliates and their respective directors, officers, agents and employees
harmless from and against any and all liabilities, claims, damages and expenses
(including without limitation actual court costs and reasonable attorneys' fees
regardless of outcome) resulting from claims of third parties arising out of:
*
provided, however, that upon the Distributor being advised of any assertions of
any such third party claims or suits or upon the bringing or filing of such
claims or suits by any third party against the Distributor, the Distributor
will promptly notify Biomatrix thereof and, at Biomatrix's cost, permit
Biomatrix's attorneys to handle and control the defense of such claims or suits
and will co-operate with Biomatrix in the defense thereof. The parties agree
that there shall be no settlements, whether agreed to in court or out of court,
without the prior written consent of the indemnifying party.
9.3. Limitation on Liability.
NOTWITHSTANDING ANY PROVISION TO THE CONTRARY IN SECTIONS 9.1 AND 9.2
ABOVE, OR ANY OTHER PROVISION OF THIS AGREEMENT, IN NO EVENT (INCLUDING THE
FAULT, NEGLIGENCE OR STRICT LIABILITY OF EITHER PARTY) SHALL EITHER PARTY BE
LIABLE TO THE OTHER PARTY FOR INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL OR
EXEMPLARY DAMAGES OTHER THAN TO THE EXTENT NECESSARY TO REIMBURSE SUCH OTHER
PARTY FOR DAMAGES ACTUALLY PAID TO A NON-AFFILIATED THIRD PARTY, PROVIDED THAT
SUCH DAMAGES ARE OTHERWISE COVERED BY THE PROVISIONS OF SECTION 9.1 OR SECTION
9.2, AS THE CASE MAY BE.
9.4. Confidential Information. All information acquired by either
party (the "Recipient") from the other party or any of its Affiliates (the
"Discloser") during the term of this Agreement or prior to the Effective Date,
relating directly or indirectly to the present or potential business,
operations, corporate, technical or financial situation of the Discloser, or to
manufacturing know-how, patents, data, test results, techniques, processes,
procedures, raw materials, dealer, supplier and customer lists, pre-clinical
and
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 27
-27-
clinical protocols or any improvements thereof of the Discloser ("Confidential
Information") is confidential, and shall be held in trust by the Recipient for
the exclusive benefit of the Discloser. Unless otherwise agreed to in writing
by the Discloser, the Recipient shall not at any time, either during or
subsequent to the term of this Agreement, use for itself (other than in
accordance with the terms of this Agreement) or any other Person, or disclose
or divulge to any Person, other than to those of its employees and advisors and
Affiliates who require the same for the purposes hereof and who are bound by
the same obligations of confidentiality, non-disclosure and non-use as set
forth herein, any Confidential Information or any other confidential or
proprietary information of the Discloser of which the Recipient may acquire
knowledge; provided, however, that the confidentiality, non-disclosure and
non-use provisions contained in this Section 9.4 shall not apply to any
information or data to the extent that the Recipient:
(a) shall demonstrate by clear and convincing evidence that such
information or data is known generally to persons in the trade through no act
or omission of the Recipient or any of its Affiliates;
(b) is required by any government authority to disclose such
information or data, including without limitation for the purposes of obtaining
and maintaining any Product License Approvals under this Agreement; or
(c) shall demonstrate by its written records was disclosed to or
created by it or its Affiliates on a non-confidential basis from a source other
than the Discloser or its Affiliates and that such disclosure or creation did
not constitute a breach of any applicable confidentiality obligations.
Confidential Information shall be immediately returned to the Discloser upon
termination of this Agreement, along with any copies, reproductions, digests,
abstracts or the like of all or any part thereof in the Recipient's possession
or under the Recipient's control, and upon such return any computer entries or
the like relating thereto shall, to the extent legally permissible, be
destroyed. Such return (and destruction) will not affect the Recipient's
obligations hereunder which shall survive indefinitely. Notwithstanding
anything herein to the contrary, the provisions of this Section 9.4 shall be
subject to Biomatrix's rights under Section 3.6.
9.5. Public Announcement. Except as shall be necessary for
governmental notification purposes or to comply with applicable laws and
regulations, and except as otherwise agreed to by the parties hereto in
writing, the parties agree to keep the existence of this Agreement, and the
transactions contemplated hereby, strictly confidential. In the event that a
party must file this document or otherwise disclose any of its subject matter
pursuant to public filing requirements, such party shall seek confidential
treatment of those portions of the Agreement as the parties shall mutually
agree upon; provided, however, that the Distributor must provide written notice
to Biomatrix no later than June 30, 1996 of those portions of the Agreement for
which the Distributor requests confidential treatment. The parties shall agree
upon the text of an initial public
<PAGE> 28
-28-
announcement relating to the transactions contemplated by this Agreement as
soon as possible. Any subsequent public announcements regarding this Agreement
or the transactions contemplated herein shall also be agreed upon in writing
between the parties prior to any release thereof.
10. NEW PRODUCTS.
10.1 *
, Distributor shall not commercialize nor begin the commercialization process
with respect to or acquire any New Product anywhere in the Territory or the
United States, either independently or in conjunction with one or more third
parties, unless and until the following conditions have been satisfied:
(a) Distributor has made a commercially reasonable written offer
to Biomatrix to participate with Distributor in the development and
commercialization of such New Product; and
(b) Biomatrix has failed to accept such written offer within *
of its receipt of such offer.
In the event that Biomatrix fails to accept any written offer made by
Distributor pursuant to this Section 10.1 within * of Biomatrix's
receipt thereof, then Distributor, subject to the terms of this Agreement,
shall have the right to independently or with other parties develop and/or
commercialize any New Product to which such written offer relates; provided,
however, that any such New Product does not infringe upon any of the
intellectual property rights of Biomatrix. Distributor shall not be required
to make the written offer to Biomatrix set forth in Section 10.1(a) above only
in the event and to the extent that it is prevented from doing so due to
patented proprietary rights of a third party.
(c) At all times during the term of this Agreement, Distributor
shall notify Biomatrix in writing within * of each occurrence
of one or more of the following:
(i) Distributor's entering into an agreement with one or
more third parties with regard to the development,
acquisition and/or commercialization of any New
Product, and Distributor shall provide to Biomatrix
notice of such agreement and any and all agreements
relating thereto and a non-confidential summary of
such agreements; or
(ii) Distributor's commencing a clinical trial (either
alone or in conjunction with a third party) with
respect to any New Product,
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 29
-29-
together with notice of the commencement of such clinical trial and a list of
all countries where such clinical trial will take place; or
(iii) Distributor's filing of an application (either alone
or in conjunction with a third party) for marketing
approval with the United States Food and Drug
Administration or an equivalent regulatory agency in
any country with respect to any New Product stating
in which countries any such filings have been made.
10.2
*
10.3. Nothing in this Section 10 shall be construed, by implication
or otherwise, (i) to effect any sale or license of proprietary Biomatrix
technology (including any New
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 30
-30-
Products), (ii) to grant any license relating to Biomatrix's proprietary
methods of formulating, fabricating and manufacturing the Agreement Product,
Improved Agreement Products or New Products, or (iii) to grant Distributor any
rights in or to any proprietary technology or Patents or Trademarks of
Biomatrix.
11. REPRESENTATIONS OF BIOMATRIX. Biomatrix represents, warrants
and covenants as follows:
11.1. It is a corporation duly organized and validly existing under
the laws of the State of Delaware with the full power to conduct its affairs as
currently conducted and contemplated hereunder. All necessary action has been
taken to enable it to execute and deliver this Agreement and perform its
obligations hereunder.
11.2. This Agreement is a valid and binding obligation of Biomatrix
enforceable in accordance with its terms. Biomatrix has the unencumbered right
to enter into this Agreement and to fulfill its duties hereunder. It is not
and will not become a party to any agreement in conflict herewith.
Accordingly, Biomatrix has the right to appoint the Distributor as the
exclusive distributor of the Agreement Product in the Territory in accordance
with the terms of this Agreement and such appointment will not constitute a
breach of any existing contractual or other arrangements between Biomatrix and
any Affiliated or non-Affiliated third party, nor shall it infringe the rights
of any Affiliated or non-Affiliated third party.
11.3 No approval, consent, order, authorization or license by,
giving notice to or taking any other action with respect to, any governmental
or regulatory authority is required in connection with the execution and
delivery of this Agreement by Biomatrix and the performance by Biomatrix of its
obligations hereunder.
12. REPRESENTATIONS OF THE DISTRIBUTOR. The Distributor
represents, warrants and covenants as follows:
12.1 It is a corporation duly organized and validly existing under
the laws of Delaware with full power to conduct its affairs as currently
conducted and contemplated hereunder. All necessary action has been taken to
enable it to execute and deliver this Agreement and perform its obligations
hereunder.
12.2. This Agreement is the Distributor's valid and binding
obligation enforceable in accordance with its terms. The Distributor has the
unencumbered right to enter into this Agreement and to fulfill its obligations
hereunder. It is not and will not become a party to any agreement in conflict
herewith. Accordingly, the Distributor has the right to act as the exclusive
distributor of the Agreement Product in the Territory in accordance with the
terms of this Agreement and the performance of its obligations hereunder will
not constitute a breach of any existing contractual or other arrangements
between the
<PAGE> 31
-31-
Distributor and any Affiliated or non-Affiliated third party, nor shall it
infringe the rights of any Affiliated or non-Affiliated third party.
12.3. No approval, consent, order, authorization or license by,
giving notice to or taking any other action with respect to any governmental or
regulatory authority is required in connection with the execution and delivery
of this Agreement by the Distributor and the performance by the Distributor of
its obligations hereunder.
13. INSURANCE. Each party hereto shall (a) obtain and maintain
such insurance policies as are adequate to cover its respective obligations
hereunder and which are consistent with normal business practices of prudent
companies similarly situated and (b) provide the other party, upon request,
with certificates of insurance confirming the existence of such insurance
policies.
14. INFRINGEMENT. Each of the Distributor and Biomatrix will
promptly notify the other party in writing of any infringement of a Patent or
Trademark or unauthorized disclosure or use of any Confidential Information, of
which it becomes aware in the Territory. Biomatrix shall have the exclusive
right at its own cost to take all legal action in the Territory it deems
necessary or advisable to eliminate or minimize the consequences of such
infringement of a Patent or Trademark in the Territory. For the purpose of
taking any such legal action, Biomatrix shall have the right, subject to the
Distributor's consent which consent shall not be unreasonably withheld or
delayed, to use the name of the Distributor as plaintiff, either solely or
jointly in accordance with the applicable rules of procedure; provided that
Biomatrix shall give the Distributor prior notice of such use of the
Distributor's name. The Distributor shall promptly furnish Biomatrix with
whatever written authority may be required in order to enable Biomatrix to use
the Distributor's name in connection with any such legal action, and shall
otherwise cooperate fully and promptly with Biomatrix in connection with any
such action. All proceeds realized upon any judgment or settlement regarding
such action shall belong to Biomatrix.
15. REGULATORY ACTIVITIES; CLINICAL TRIALS AND MARKETING STUDIES.
15.1. General.
(a) Biomatrix shall be responsible for maintaining at its cost the
Product License Approvals required for the marketing and sale of the Agreement
Product and any Improved Agreement Product(s) in the European Territory
throughout the term of this Agreement. The Distributor shall use its best
efforts to obtain and maintain at its cost any Product License Approvals and to
conduct at its cost any clinical trials required for the marketing and sale of
the Agreement Product and any Improved Agreement Product(s) in each country in
the Territory, except for the European Territory, throughout the term of this
Agreement. "Best efforts" in this context shall mean such that Distributor
shall generally use the same methods, exercise the same degree of effort and
diligence, and adhere to the same standards as Distributor and its Affiliates
would apply to their own
<PAGE> 32
-32-
actively promoted pharmaceutical products in the Territory, and shall be as are
commercially reasonable.
(b) Biomatrix shall assist the Distributor in submitting
applications for Product License Approvals, provided that (i) Biomatrix shall
be entitled generally to oversee the strategy and content of regulatory
approval applications (in their original form whether in English or any other
language) and (ii) the content of all such applications shall be subject to
Biomatrix's prior written approval, such approval or disapproval to be given by
Biomatrix within * of its receipt thereof. The timing of such
applications shall be mutually agreed in writing by the parties. Biomatrix
shall hold in its name all regulatory approvals required for the marketing and
sale of the Agreement Product and any Improved Agreement Product(s) in the
Territory, except to the extent that applicable law requires that such
regulatory approvals be held in the name of the Distributor.
(c) The Distributor and Biomatrix shall provide reasonable advice
and assistance to each other as may be necessary to obtain and maintain Product
License Approvals.
(d) Except to the extent necessary to give effect to the
provisions of Section 3.3(b), the Product License Approvals relating to the
Agreement Product and any Improved Agreement Product(s) in the Territory in the
name of the Distributor or any of its Affiliates shall be transferred to
Biomatrix immediately upon termination of the Agreement.
(e) During the term of this Agreement, each party shall
immediately notify the other in writing in the event that such party becomes
aware of any failure of the Agreement Product and any Improved Agreement
Product(s) to comply with any of the requirements therefor specified in any
Product License Approvals.
(f) Each of the Distributor and Biomatrix shall keep the other
advised of regulatory interactions, activities and correspondence and the
registration status of the Agreement Product and any Improved Agreement
Product(s) on at least a quarterly basis, and any matters requiring immediate
attention shall be communicated as soon as practicable.
15.2. Clinical Trials and Marketing Studies.
(a) The Distributor shall be responsible at its own cost for
conducting and managing any clinical trials which the Distributor or Biomatrix
may be required to undertake in order to obtain Product License Approvals in
the Territory, except in the European Territory. The protocols for any such
clinical trials will be developed jointly by Biomatrix and the Distributor, and
Biomatrix shall have the right to audit the performance
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 33
-33-
of any clinical studies performed by or on behalf of the Distributor in respect
of the Agreement Product and any Improved Agreement Product(s). The
Distributor shall provide Biomatrix with the results of all such clinical
trials, and Biomatrix and its Affiliates shall be free to use the results of
such clinical trials.
(b) The parties agree that if any marketing-related studies are
deemed necessary, such studies will not delay the Launch in any country in the
European Territory. The protocols for any marketing-related studies requested
by the Distributor will be developed jointly by Biomatrix and the Distributor,
and the Distributor will be responsible for conducting and managing such
studies at its own expense. Biomatrix shall have the right to audit the
performance of any marketing-related studies performed by or on behalf of the
Distributor. The results of such studies will not be published or publicized
in any way without the prior written approval of Biomatrix.
16. FURTHER ASSURANCES. The parties hereto agree to execute such
further or other documents and assurances as are necessary from time to time in
order to give effect to the provisions of this Agreement.
17. ASSIGNMENT. The rights and obligations of the parties hereto
shall inure to the benefit of and shall be binding upon the authorized
successors and permitted assigns of each party. Neither party may assign its
rights or obligations under this Agreement or may designate another person to
perform all or part of its obligations under this Agreement, or to have all or
part of its rights and benefits under this Agreement without the prior written
consent of the other party, except to an Affiliate or to a successor of the
business, by merger or otherwise, to which this Agreement relates, provided
that in the case of an assignment to an Affiliate the assigning party shall
promptly notify the other party in writing of such assignment and shall remain
liable (both directly and as guarantor) with respect to all obligations so
assigned. In the event of any assignment or in the event that an Affiliate of
either party shall exercise rights and/or perform obligations hereunder
pursuant to the terms of this Agreement, the assignee or Affiliate, as the case
may be, shall specifically assume and be bound by the provisions of the
Agreement by executing and agreeing to an assumption agreement satisfactory to
the other party hereto.
18. GOVERNING LAW; ARBITRATION; INJUNCTIVE RELIEF.
(a) This Agreement shall be governed by and construed in
accordance with the internal and substantive laws of the State of New York,
United States of America. The parties hereby agree that the United Nations
Convention on Contracts for the International Sale of Goods shall not apply to
this Agreement or any other document contemplated hereby. In the event of any
dispute touching or concerning this Agreement, the parties hereby agree to
submit such dispute to their respective presidents by notice delivered in
accordance with the provisions of Section 23, and if within thirty (30) days,
or such other period as is agreed upon in writing by the parties hereto,
following such reference the
<PAGE> 34
-34-
dispute remains unresolved, to submit the dispute for arbitration in Boston,
Massachusetts under the Rules of the American Arbitration Association in effect
on the date of this Agreement (the "Rules") by arbitrators appointed in
accordance with said Rules. Any decision of such arbitrators shall be written
and shall be final and binding upon the parties. In any arbitration pursuant
to this Section the award shall be rendered by a majority of three (3)
arbitrators, one (1) of whom shall be appointed by each party and the third of
whom shall be appointed by mutual agreement of the two (2) party-appointed
arbitrators. In the event of failure of a party to appoint an arbitrator
within thirty (30) days after commencement of the arbitration proceeding or in
the event of failure of the two (2) party-appointed arbitrators to agree upon
the appointment of the third arbitrator within sixty (60) days after
commencement of the arbitration proceeding, such arbitrator shall be appointed
by the American Arbitration Association in accordance with the Rules. The
arbitrators shall apply the governing law set forth in this Section. Judgment
upon an award rendered by the arbitrators may be entered in any court having
jurisdiction thereof.
(b) Each of the parties hereto acknowledges and agrees that
damages will not be an adequate remedy for any material breach or violation of
this Agreement if such material breach or violation would cause immediate and
irreparable harm (an "Irreparable Breach"). Accordingly, notwithstanding the
provisions of Section 18(a) to the contrary, in the event of a threatened or
ongoing Irreparable Breach, each party hereto shall be entitled to seek, in any
state or federal court in the State of New York, equitable relief of a kind
appropriate in light of the nature of the ongoing threatened Irreparable
Breach, which relief may include, without limitation, specific performance or
injunctive relief; provided, however, that if the party bringing such action is
unsuccessful in obtaining the relief sought, the moving party shall pay the
non-moving party's reasonable costs, including attorney's fees, incurred in
connection with defending such action. Such remedies shall not be the
parties' exclusive remedies, but shall be in addition to all other remedies
provided in this Agreement.
19. SEVERABILITY. In the event that any provision of this
Agreement shall be held by a court of competent jurisdiction or by any
governmental body to be invalid or unenforceable, such provision shall be
deemed severable and the remaining parts and provisions of this Agreement shall
remain in full force and effect.
20. FORCE MAJEURE. Each of the parties shall be excused from the
performance of its obligations hereunder in the event such performance is
prevented by force majeure, and such excuse shall continue as long as the
condition constituting such force majeure continues. For the purpose of this
Agreement, force majeure is defined as contingencies beyond the reasonable
control of either party, including, without limitation, acts of God, judicial
or regulatory action, war, civil commotion, destruction of production
facilities or materials by fire, earthquake or storm and labor disturbances
(whether or not any such labor disturbance is within the power of the affected
party to settle).
<PAGE> 35
-35-
21. INTEREST. Any overdue amounts payable by either party
hereunder shall bear interest compounded monthly at the prime lending rate for
Dollars published from time to time in The Wall Street Journal plus
* per annum, or, if lower, the highest rate permissible by applicable
law, from the due date until the date of payment.
22. NO PARTNERSHIP OR AGENCY. This Agreement and the relations
hereby established by and between Biomatrix and the Distributor do not
constitute a partnership, joint venture, agency or contract of employment
between them.
23. NOTICES. All communications in connection with this Agreement
shall be in writing and sent by postage prepaid first class mail, courier, or
telefax, and if relating to default, late payment or termination, by certified
mail, return receipt requested, telefax or courier, addressed to each party at
the address set forth at the beginning of this Agreement, in the case of
Biomatrix, Attn: Chief Executive Officer, with a copy to: Justin P. Morreale,
Esq., Bingham, Dana & Gould LLP, 150 Federal Street, Boston, Massachusetts
02110, U.S.A., and in the case of the Distributor, Attn: President, with a copy
to Kimberlie L. Cerrone, Esq., Venture Law Group, 2800 Sand Hill Road, Menlo
Park, California 94025, or to such other address as the addressee shall last
have designated by notice to the communicating party. The date of giving any
notice shall be the date of its actual receipt.
24. EU REGULATIONS. It is the intention of the parties hereto
that this Agreement shall at all times qualify for the exemption from the
provisions of Article 85(1) of the Treaty of Rome dated 25 March, 1957, as
amended, which either (a) is available under EEC Regulation Number 1983/83, or
(b) may subsequently be available under any successor regulation or regulations
thereto. In the event that any provision of this Agreement is deemed to
violate the conditions for qualifying for the exemption, set out in whichever
of those regulations may be in effect at the relevant time, or if any such
regulation is amended after the date of this Agreement so as to cause this
Agreement to fail to qualify for the exemption, the parties hereto agree that
they will, as soon as it is practicable to do so, enter into good faith
negotiations to amend this Agreement as necessary in order to re-qualify for
the exemption or to notify the Agreement. If those negotiations are not
successfully concluded within a reasonable time (not to exceed ninety (90)
days, or such other period as is agreed upon in writing by the parties hereto,
after the relevant regulation is amended), either party may terminate this
Agreement upon written notice to the other party.
25. SURVIVAL. The provisions of Sections 3.3, 3.6, 3.7, 3.8, 6.2,
9.1, 9.2, 9.3, 9.4 and 9.5 of this Agreement shall survive the termination or
expiration of this Agreement (as the case may be) and shall remain in full
force and effect. The provisions of this Agreement that do not survive
termination or expiration hereof (as the case may be) shall, nonetheless, be
controlling on, and shall be used in construing and interpreting
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 36
-36-
the rights and obligations of the parties hereto with regard to, any dispute,
controversy or claim which may arise under, out of, or in connection with this
Agreement.
26. MISCELLANEOUS. This Agreement sets forth the entire agreement
between the parties with respect to the transactions and arrangements
contemplated hereby and supersedes all prior oral or written arrangements.
This Agreement may be modified or amended only by a written instrument executed
and delivered by both parties. None of the provisions of this Agreement shall
be deemed to have been waived by any act or acquiescence on the part of either
party except by an instrument in writing signed and delivered by the party
executing the waiver. This Agreement may be executed in several identical
counterparts, each of which shall be an original, but all of which constitute
one instrument, and in making proof of this Agreement it shall not be necessary
to produce or account for more than one such counterpart.
[The remainder of this page is intentionally left blank.]
<PAGE> 37
-37-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
COLLAGEN CORPORATION
By: /s/ Howard D. Palefsky
------------------------------
Name: Howard D. Palefsky
Title: Chairman & CEO
BIOMATRIX, INC.
By: /s/ Endre A. Balazs
------------------------------
Name: Endre A. Balazs
Title: CEO
<PAGE> 38
EXHIBITS
Exhibit A - Agreement Product Specification and Approval
Documents
Exhibit B - Launch Schedule
Exhibit C - Patents and Trademarks
Exhibit D - Sales Forecasts
Exhibit E - Subdistributors
<PAGE> 39
EXHIBIT A
Agreement Product Specification and Approval Documents
*
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 40
-40-
EXHIBIT B
Launch Schedule
<TABLE>
<CAPTION>
Country: Date of Launch
------- --------------
<S> <C> <C>
1. Australia *
2. Austria *
3. Belgium *
4. Denmark *
5. Finland *
6. France *
7. Germany *
8. Greece *
9. Iceland *
10. Ireland *
11. Italy *
12. Japan *
13. Liechtenstein *
14. Luxembourg *
15. The Netherlands *
16. New Zealand *
17. Norway *
</TABLE>
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 41
-41-
<TABLE>
<S> <C> <C>
18. Portugal *
19. Spain *
20. Sweden *
21. Switzerland *
22. United Kingdom *
23. Israel *
24. Argentina *
25. Brazil *
26. Mexico *
27. Canada *
28. Chile *
</TABLE>
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 42
-42-
EXHIBIT C
Patents and Trademarks
Patents (1)
*
(1) All numbers given are for issued patents except
* , and *
(2) This * has been allowed and will issue in
the next few months under the same number.
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 43
-43-
*
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 44
-44-
*
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 45
-45-
Trademark - Hylaform*
Country and Status Ser Nos. or Reg. Nos.
*
________________________
* Filed in International Classes 5 and 10
Legend: *
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 46
-46-
EXHIBIT D
Sales Forecasts(1)
(Units)
First Agreement Year
(1) The parties acknowledge that in the event of the addition of other
syringe sizes this forecast is subject to adjustment to incorporate
such new sizes.
<PAGE> 47
-47-
EXHIBIT E
Collagen Subdistributors
<TABLE>
<CAPTION>
Country Subdistributor
------- --------------
<S> <C>
Argentina New Pharma S.A.
Brazil Magistral
Chile Prater Laboratorios
Mexico Bard Mexico SA
Israel T.C. Technocare Ltd.
Japan Lederle (Japan) K.K. Ltd.
Columbia Consumed
Cyprus Charitonos Enterprises
Lebanon Pharmed S.A.L.
Turkey Assos Pharmaceuticals
</TABLE>
<PAGE> 1
10.5 REDACTED
UNITED STATES
DISTRIBUTION AGREEMENT
THIS AGREEMENT is made as of the 14th day of June 1996 by and between
BIOMATRIX, NC., a corporation duly organized and existing under the laws of the
State of Delaware, having its principal office at 65 Railroad Avenue,
Ridgefield, New Jersey 07657, U.S.A. ("Biomatrix") and COLLAGEN CORPORATION, a
corporation duly organized and existing under the laws of the State of
Delaware, having its principal office at 2500 Faber Place, Palo Alto,
California 94303, U.S.A. (the "Distributor").
WHEREAS, Biomatrix is engaged in the development and manufacture of
the Agreement Product (as hereinafter defined);
WHEREAS, the Distributor desires to enter into a distribution
agreement and be appointed the exclusive distributor (even to Biomatrix) of the
Agreement Product and any Improved Agreement Product(s) in the Territory (as
such terms are hereinafter defined), and Biomatrix is willing to so appoint the
Distributor on the terms and subject to the conditions set forth herein; and
WHEREAS, the Distributor desires to purchase from Biomatrix, and
Biomatrix desires to sell to the Distributor, the Distributor's orders of the
Agreement Product and any Improved Agreement Product(s) in the Territory on the
terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants of the parties hereto, it is hereby agreed as follows:
1. DEFINITIONS AND INTERPRETATION.
1.1. In this Agreement, the following words and expressions shall
have the following meanings:
"Affiliate" shall mean, with respect to any party, any Person which,
directly or indirectly, is controlled by, controls or is under common
control with such party. For purposes of this definition, the term
"control" (including with correlative meanings, the terms "controlled
by" and "under common control with") shall mean, with respect to any
Person, the direct or indirect ownership of more than fifty percent
(50%) of the voting or income interest in such Person or the possession
otherwise, directly or indirectly, of the power to direct the
management or policies of such Person.
<PAGE> 2
-2-
"Agreement Product" shall mean the one product made of hylan B and
called by Biomatrix Hylaform(R), the specifications for which are set
forth on Exhibit A, for use in the correction of wrinkles and depressed
scars.
"Agreement Product Specifications" shall mean the specifications for
the Agreement Product set forth in Exhibit A, as such specifications
may be modified or supplemented by Biomatrix from time to time in
accordance with Product License Approvals or to reflect any Improved
Agreement Product(s).
"Agreement Year" shall mean the twelve (12) month period commencing on
the date of first commercial sale of the Agreement Product in the
United States and each separate successive twelve (12) month period
thereafter.
"Contract Quarter" shall mean, for sales of Agreement Product, the
period commencing with the Distributor's first commercial sale of the
Agreement Product in the United States and ending on the first to occur
of March 31, June 30, September 30 and December 31, as applicable, and
each three (3) month period thereafter throughout the term of this
Agreement.
"Dermal Tissue Augmentation Products" shall mean biomaterial(s) that
are
*
"Dollars" and "$" shall mean the lawful currency of the United States
of America.
"Effective Date" shall mean June 17, 1996.
"EU Countries" shall mean, collectively, Austria, Belgium, Denmark,
Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the
Netherlands, Portugal, Spain, Sweden and the United Kingdom.
"European Territory" shall mean, collectively, the EU Countries,
Switzerland, Norway, Liechtenstein and Iceland.
"Formula Price" shall mean an amount equal to *
of the Product, provided that if the *
the Agreement Product in the Territory * ,
then the Formula Price shall mean an amount equal to *
of the Agreement Product * .
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 3
-3-
"Improved Agreement Product(s)" shall mean (i) any modification of the
Agreement Product (made entirely from hylan B) regarding the
formulation of hylan B in the Agreement Product, that is changes of
concentration of the polymer or other changes in the Agreement Product
Specifications, whether or not requiring new regulatory approval in the
EU Countries or in the United States, and (ii) any modifications or
changes related to the packaging of the Agreement Product, including
the syringe used, mode of application or dosage.
"Incremental Royalties" shall mean that term as defined in Section 8.2.
"Initial Term" shall mean that term as defined in Section 3.2.
"International Agreement" means the Distribution Agreement between
Biomatrix and Distributor, dated as of the date hereof, relating to the
sale of the Agreement Product in the EU Countries, Switzerland, Norway,
Liechtenstein, Iceland, Australia, New Zealand, Canada, Israel,
Argentina, Mexico, Chile and Brazil.
"International Territory" shall mean, collectively, the EU Countries,
Switzerland, Norway, Liechtenstein, Iceland, Australia, New Zealand and
Japan, Israel, Argentina, Brazil, Chile, Mexico and Canada.
"Launch" shall mean the commencement by the Distributor of sales of the
Agreement Product in commercial quantities in the Territory for use in
the Territory.
"Minimum Price" shall mean an amount equal to * for each
Treatment Syringe, * , then the Minimum
Price payable * Agreement
Years immediately following such * shall equal
* , and *
Agreement Years following such *
shall equal * for each Treatment Syringe.
"Net Retail Sales" shall mean, with respect to sales of a Dermal Tissue
Augmentation Product in the Territory, the aggregate gross price
invoiced for retail sales of such product during a period in such
country to unaffiliated third-party purchasers
*
It is Biomatrix's
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 4
-4-
understanding that the foregoing definition is consistent with how the
Distributor reports its sales in its audited financial statements.
"New Products" shall mean
*
"Patents" shall mean Letters Patent or similar statutory rights
relating to any Agreement Product and any Improved Agreement Product(s)
(including any continuation-in-part, continuation or division thereof
or substitute thereof), and patent applications which are pending as of
the Effective Date, in each case as set forth in Exhibit C, together
with any supplementary or complementary protection certificates
therefor if and when such are granted.
"Person" shall mean an individual, a corporation, limited liability
company, a partnership, a trust, an unincorporated organization or a
government or any agency or political subdivision thereof.
"Region" shall mean any one of the following countries or groups of
countries:
*
"Supply Forecast" shall mean that term as defined in Section 7.3(b).
"Territory" shall mean the United States.
"Trademarks" shall mean (i) the trademark Hylaform(R), the details of
which are described in Exhibit C, and (ii) any other trademarks, as may
be agreed upon in writing from time to time by the parties hereto for
use by the Distributor in connection with the promotion, marketing and
sale of the Agreement Product and any Improved Agreement Product(s)
under this Agreement.
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 5
"Treatment Syringe" shall mean a ready-for-injection 1.0cc syringe of
the Agreement Product.
"United States Consumer Price Index" shall mean the Consumer Price
Index, All Items, United States, as published by the Bureau of Labor
Statistics.
1.2. In this Agreement, unless the context otherwise requires:
(a) clause headings are inserted for convenience of reference only
and have no legal effect;
(b) references to sections, exhibits and schedules are to be
construed as references to the sections of, and exhibits and schedules to, this
Agreement and references to this Agreement include its exhibits and schedules.
(c) references to (or to any specified provision of) this
Agreement or any other document shall be construed as references to this
Agreement, that provision or that document as in force for the time being and
as amended, varied, substituted, supplemented, restated or novated in
accordance with the terms thereof or, as the case may be, with the agreement of
the relevant parties and (where such consent is, by the terms of this Agreement
or the relevant document, required to be obtained as a condition to such
amendment being permitted) the prior written consent of Biomatrix;
(d) words importing the plural shall include the singular and vice
versa;
(e) references to a person shall be construed as including
references to an individual, firm, consortium, company, corporation,
unincorporated body of persons or any State or any agency thereof; and
(f) references to statutory provisions shall be construed as
references to those provisions as replaced, amended or re-enacted from time to
time.
2. APPOINTMENT; BEST EFFORTS; EXCLUSIVITY.
2.1. Appointment.
(a) Subject to the terms and conditions hereinafter set forth,
Biomatrix hereby appoints the Distributor as its exclusive * (except to the
extent set forth in Section 2.3) distributor for the promotion, marketing, sale
and distribution within the Territory of the Agreement Product and any Improved
Agreement Product(s) supplied by Biomatrix or an Affiliate of Biomatrix to the
Distributor pursuant to this Agreement. Such appointment does not include the
right to sublicense or appoint subdistributors except to an Affiliate of
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 6
-6-
Distributor without the approval of Biomatrix; (and only for such time as such
an Affiliate remains an Affiliate of Distributor).
(b) Except as specifically provided to the contrary herein, the
foregoing appointment shall not be construed, by implication or otherwise, (i)
to effect any sale of proprietary Biomatrix technology, (ii) to grant any
license relating to Biomatrix's proprietary methods of formulating, fabricating
and manufacturing the Agreement Product or any Improved Agreement Product(s),
or (iii) to grant the Distributor any rights in or to any proprietary
technology or Patents or Trademarks of Biomatrix.
2.2. Acceptance of Obligations; Best Efforts. The Distributor
hereby accepts the appointment described in Section 2.1 and hereby agrees to
use its best efforts at all times during the term hereof to promote, market,
sell and distribute the Agreement Product and any Improved Agreement Product(s)
in the Territory.
*
2.3. Conversion to Non-Exclusive Distributorship. In the event
that (i) in any Agreement Year after and including the third Agreement Year or
(ii) from, after and including the first year of the Distributor acquiring
and/or commercializing a New Product pursuant to Section 10.1(b) (and so long
as (i) no force majeure condition of Distributor exists at such time pursuant
to Section 20, (ii) Biomatrix has met its supply obligations under Section 7.4
and (iii) Distributor is able to lawfully sell the Agreement Product and any
Improved Agreement Product(s) in the Territory) the Distributor's Net Retail
Sales of the Agreement Product and any Improved Agreement Product(s) in the
Territory, comprise less than * of its Net Retail Sales of
* , including the Agreement Product
and any Improved Agreement Product(s),
*
, within * after receipt of any such notice
from Biomatrix, a shortfall of * with respect to the Territory for an
Agreement Year by
*
Biomatrix shall have the right to distribute the Agreement Product and Improved
Agreement Product and/or engage another distributor for the Territory. From
and after
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 7
-7-
the date of a conversion to a non-exclusive distribution arrangement within the
Territory, the Distributor shall lose its rights hereunder to promote, market,
sell and distribute within the Territory any Improved Agreement Product(s)
commercialized on or after such date. Notwithstanding the foregoing, the
Distributor shall retain the exclusive right to use all trademarks under which
the Distributor launched the Agreement Product or any Improved Agreement
Product(s) in the Territory.
3. TERM AND TERMINATION.
3.1. Effective Date. This Agreement shall take effect as of the
Effective Date.
3.2. Term.
(a) Unless this Agreement is sooner terminated in accordance with
the provisions of this Agreement, the term of the appointment hereunder for
shall commence on the first day of the first Agreement Year and shall end on
the last day of the * Agreement Year (the "Initial Term").
(b) Unless this Agreement is sooner terminated in accordance with
the provisions of this Agreement, the appointment of the Distributor hereunder
as exclusive distributor of the Agreement Product shall be renewable by the
Distributor, at its option, upon written notice to Biomatrix received at least
* prior to the end of the Initial Term, for an additional consecutive
term of * following the date of expiration of the Initial Term,
provided that the Distributor shall only be entitled to exercise such renewal
option if as of the date of expiration of the Initial Term the Distributor is
not in material breach of any of its obligations under this Agreement.
Thereafter, the appointment of the Distributor as exclusive distributor of the
Agreement Product shall be renewable upon the expiration of such additional
* term, upon written notice to Biomatrix received at least *
prior to the end of such term for one additional consecutive renewal term of
* , provided that, as of the date of expiration of the first renewal
term, the Distributor is not in material breach of any of its obligations under
this Agreement. For the avoidance of any doubt, Distributor's rights with
respect to any Improved Agreement Product(s) commercialized after the *
of the Effective Date shall terminate upon the * of the Effective
Date. Subject to the terms of this Agreement, Distributor shall have the right
to continue to sell the Agreement Product and any Improved Agreement Products
it is then currently selling.
(c) This Agreement may be terminated by either party, by written
notice to the other party, in the event that (i) a mutual decision not to
Launch the Agreement Product in such country is reached or (ii) a Launch is not
commenced within the time period set forth on Exhibit B.
(d) In the event that in any Agreement Year after and including
the *
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 8
-8-
Agreement Year (and so long as (i) no force majeure condition of Distributor
exists at such time pursuant to Section 20, (ii) Biomatrix has met its supply
obligations under Section 7.4, and (iii) Distributor is able to lawfully sell
the Agreement Product and any Improved Agreement Product(s) in the Territory),
the Distributor's Net Retail Sales of the Agreement Product and any Improved
Agreement Product(s) in the Territory comprise less than
* in the Territory of all Dermal Tissue Augmentation
Products, including the Agreement Product and any Improved Agreement
Product(s), the Distributor's distribution rights (including, without
limitation, its right to use the Trademarks) under this Agreement for the
Agreement Product and any Improved Agreement Product(s) in the Territory shall
terminate upon *
after the end of the applicable Agreement Year, at the election of
Biomatrix;
*
Upon any such termination of the Distributor's distribution rights in
the Territory, the Distributor's obligation to pay any royalties pursuant to
Sections 8.1 and 8.2 for any sales in the Territory after such termination
shall cease, but the Distributor shall remain obligated to pay all such
royalties for sales in the Territory accrued prior to such termination.
(e) Notwithstanding any other provision of this Agreement to the
contrary, Biomatrix may terminate this Agreement at any time prior to receipt
of the Approved Letter (as defined hereafter) from the U.S. Food and Drug
Administration if Distributor is in material breach of the International
Agreement, which material breach has not been cured within thirty (30) days
after written notice of such breach is received by Distributor. The parties
expressly agree that Distributor's failure to meet or adhere to the launch
schedule for the Agreement Product for each country as set forth in the
International Agreement shall be deemed a material breach of the International
Agreement except to the extent that Distributor's failure to meet such launch
schedule is due to (i) Biomatrix's failure to meet its supply obligations under
the International Agreement, (ii) a force majeure condition of the Distributor,
or (iii) it being unlawful for the Distributor to sell the Agreement Product or
any Improved Agreement Product in the Territory, provided that such
unlawfulness is not the result of any act or failure to act of the Distributor.
(f) Notwithstanding any other provision in this Agreement to the
contrary, the Distributor may terminate this Agreement upon notice to Biomatrix
of the Distributor's decision not to pay the fee called for in Section 7.1(b).
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 9
-9-
3.3. Inventory.
(a) Upon termination of this Agreement for any reason, Biomatrix
shall have the right (but not the obligation) to repurchase all or part of the
inventory of the Agreement Product and any Improved Agreement Product(s) held
by the Distributor or its Affiliates.
(b) The price for inventory to be repurchased by Biomatrix
pursuant to Section 3.3(a) above shall be the landed cost thereof actually paid
by the Distributor to Biomatrix. With respect to any quantities not
repurchased by Biomatrix, the Distributor shall have the right to sell such
inventory of the Agreement Product and any Improved Agreement Product(s), in
its usual and customary manner, in the ordinary course of business, for a
period of six (6) months following termination of this Agreement and
notwithstanding such termination the terms and conditions of this Agreement
shall apply to such sales.
3.4. Insolvency. This Agreement may be immediately terminated by
either party, upon giving written notice to the other party, in the event that
the other party shall become insolvent or be declared bankrupt by a court of
competent jurisdiction or shall be the subject of any reorganization (other
than a corporate reorganization effected in the ordinary course of business and
not arising out of any insolvency) or winding up, receivership or dissolution,
bankruptcy or liquidation proceeding, or any proceeding or action similar to
one or more of the above, in which case termination shall be effective upon
such written notice. The failure of either party to give notice of termination
upon obtaining knowledge of any such event shall not be interpreted as a waiver
of such party's rights under this Section 3.4, and such party reserves the
right to exercise any such rights at any time after the occurrence of any such
event.
3.5. Breach. This Agreement may be terminated by either party if
the other party shall breach any of its payment obligations hereunder or if
Distributor shall commit a material breach of any of its warranties, covenants,
conditions, obligations or agreements contained herein, provided that such
breach shall continue for a period of thirty (30) days (ten (10) days in the
event that such breach is the failure of the Distributor to pay the fee called
for in Section 7.1(b)) after written notice thereof and provided further that
such termination shall be immediately effective upon further written notice to
that effect to the breaching party after its failure to cure such breach within
such applicable notice period. For avoidance of doubt, the parties agree that
if a Launch is not reached within thirty days after the time period set forth
on Exhibit B, then either party may terminate this Agreement (provided that
such failure to reach a Launch is not due to (i) a force majeure condition of
the Distributor, (ii) Biomatrix's failure to meet its supply obligations under
Section 7.4, or (iii) it being unlawful for the Distributor to sell the
Agreement Product or any Improved Agreement Product in the Territory, provided
that such unlawfulness is not the result of any act or failure to act of the
Distributor).
<PAGE> 10
-10-
3.6. Certain Rights Upon Termination. Upon termination of this
Agreement for any reason whatsoever, Biomatrix shall have the following rights:
(a) Biomatrix shall have the unrestricted right to review, access,
use and permit others to review, access and use, either directly or by
cross-reference or incorporation or otherwise, all information, data,
investigations, preclinical and clinical protocols, marketing information
disseminated by Distributor publicly to customers and patients and all
information required to be provided to Biomatrix by law, information relating
to laboratory, animal and human studies, and related regulatory approvals
pertaining to the Agreement Product or any Improved Agreement Product(s) (the
"Information") which are possessed or controlled by the Distributor or any of
its Affiliates, or to which the Distributor or any of its Affiliates has a
right to review, access or use. The Distributor unconditionally agrees
promptly to take any action and to execute and deliver to Biomatrix any
documents or instruments reasonably requested by Biomatrix to permit Biomatrix
to make full use of such unrestricted right.
(b) Further, Biomatrix shall have exclusive ownership rights to
the Trademarks and to all other product specific logos, slogans and other
intangibles used by the Distributor solely in association with the independent
sale of the Agreement Product and any Improved Agreement Product(s) (including
all registrations relating thereto) possessed or controlled by the Distributor
or any of its Affiliates, and the Distributor unconditionally agrees, subject
to the provisions of Section 3.3(b), (i) immediately upon termination to cease
using the Trademarks and any such logos, slogans, and marketing rights of
Biomatrix or any imitations thereof and (ii) immediately to execute and deliver
to Biomatrix any documents or instruments reasonably requested by Biomatrix to
give full effect to the provisions of this Section 3.6.
(c) In addition, the Distributor unconditionally agrees, subject
to the provisions of Section 3.3(b), that it shall, upon the request of
Biomatrix, immediately inform all relevant regulatory authorities that the
Distributor is no longer a distributor of the Agreement Product or the Improved
Agreement Product(s) and shall take all action and execute and deliver all
documents and instruments necessary in order to transfer to the fullest extent
permitted under applicable law all registrations and Product License Approvals,
or applications therefor, for the Agreement Product or any Improved Agreement
Product(s) to Biomatrix or any Person nominated by Biomatrix.
3.7. Effects of Termination.
(a) Upon termination of this Agreement for any reason, the
Distributor shall immediately discontinue making any representations regarding
its status as a distributor for Biomatrix and shall immediately cease
conducting any activities with respect to the marketing, promotion, sale or
distribution of the Agreement Product and any Improved Agreement Product(s),
provided, however, that the Distributor shall be permitted to sell inventory
not repurchased by Biomatrix in accordance with Section 3.3.
<PAGE> 11
-11-
(b) Termination of this Agreement shall not affect obligations of
either party that may have accrued prior to the effective date of termination.
Subject to Clause 3.8 below, termination of this Agreement shall be in addition
to, and shall not be exclusive of or prejudicial to, any other grounds for
termination or rights or remedies at law or in equity which either party may
have on account of any default of the other party.
3.8. Waiver. The Distributor hereby waives, to the extent it is
able to do so under the laws of the United States and other applicable law, any
statutory rights it may have or acquire in respect of the termination of the
relationship established hereby pursuant to the terms hereof, and agrees that
the rights available to it hereunder in the event of such termination are
adequate and reflect the agreement of the parties. The Distributor shall not
have any right to claim any indemnity for goodwill or lost profits or any
damages arising from the rightful termination of this Agreement in accordance
with the terms hereof.
4. PAYMENTS. All payments hereunder shall be made in Dollars.
Payments to Biomatrix shall be wired to an account designated by Biomatrix and
the costs of any such remittance shall be borne by the Distributor.
5. WITHHOLDING. All payments to be made by the Distributor under
this Agreement shall be made in full, free and clear of and without any
deduction of or withholding for or on account of any taxes levied in any
country of the Territory or elsewhere; provided that if the Distributor shall
be required by law to make any deduction or withholding from any payment to
Biomatrix then:
(a) the Distributor shall ensure that such deduction or
withholding does not exceed the minimum legal liability therefor; and
(b) not later than five (5) days before each deduction or
withholding of any taxes, the Distributor shall forward to Biomatrix such
documentary evidence as may be required by Biomatrix in respect of the proposed
deduction, withholding or payment; and
(c) prior to any deduction or withholding the parties shall
attempt in good faith to agree upon revised mutually acceptable pricing and/or
payment terms.
6. TRADEMARKS; AGREEMENT PRODUCT MARKING; PROMOTIONAL INFORMATION.
6.1. Trademarks. Subject to the provisions of Section 3.6,
Biomatrix hereby licenses to the Distributor the right to use, and hereby
requires solely in association with the independent sale by the Distributor of
the Agreement Product and any Improved Agreement Products the use of, the
Trademarks in the Territory during the term of this Agreement. The Distributor
warrants that it shall not use any of the Trademarks at any time outside the
Territory or use any of the Trademarks for any products other than the
Agreement Product and any Improved Agreement Product(s) within the Territory.
The
<PAGE> 12
-12-
Distributor shall not use a trademark or other mark (other than a Trademark) in
connection with its distribution of the Agreement Product and any Improved
Agreement Products unless and until it has been agreed upon in writing by each
of the parties and become a Trademark as defined herein. Biomatrix shall
prosecute, maintain and defend the Trademarks throughout the Term of this
Agreement in the Territory. The parties shall execute a short form Trademark
assignment agreement to the extent that it is necessary to record the Trademark
license under this Section 6.1.
6.2. Termination of Right to Use Trademarks. Subject to the
sell-out right of Section 3.3(b) and except as otherwise provided in Section
3.6, upon termination of this Agreement, the license to use the Trademarks in
the Territory shall terminate, and the Distributor unconditionally agrees
promptly to take all necessary action and execute and deliver to Biomatrix all
necessary documents and instruments to remove the Distributor as a registered
user and/or a recorded licensee of the Trademarks. In the event that the
Distributor fails promptly upon written request by Biomatrix to comply with any
of its agreements in the preceding sentence of this Section 6.2, the
Distributor hereby irrevocably consents to Biomatrix's taking any action
necessary to give effect to such agreements.
6.3. Notice. Each party hereto agrees promptly to notify the other
in writing of any infringements or imitations of the Trademarks by third
parties which may come to its attention.
6.4. Labelling and Promotional Materials; Approved Use of Product.
(a) The Distributor shall provide Biomatrix with labelling
masters, instructions, specifications and copies of all marketing, labelling
and promotional material it intends to use relating to the Agreement Product
and any Improved Agreement Product(s). All such labelling, packaging and
promotional material shall be consistent with the relevant Product License
Approvals and all labelling and packaging materials shall be reviewed by
Biomatrix and shall be subject to its written approval prior to use, such
approval not to be unreasonably withheld. Biomatrix shall communicate its
acceptance or rejection of such labelling packaging and any major promotional
materials that include claims or items impacting regulatory approvals within
* of its receipt thereof and if no such communication is received by
Distributor from Biomtrix within such * Biomatrix shall be deemed
to have accepted. Distributor shall provide Biomatrix with all other major
promotional materials for launches and subsequent promotions within a
reasonable time prior to their use in order to allow Biomatrix to comment on
such materials. Distributor shall provide Biomatrix with copies of all other
promotional materials at or prior to their use.
(b) The Distributor agrees that its promotion, marketing, sale and
distribution of the Agreement Product and any Improved Agreement Product(s) in
the Territory, and
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 13
-13-
the promotional materials and labelling used in connection therewith, shall be
strictly in accordance with the approved use of the Agreement Product and any
Improved Agreement Product(s) as specified in the Product License Approvals and
as further provided in this Agreement. Specifically, for purposes of this
Agreement, the Distributor agrees * , or unless
agreed to in writing by Biomatrix.
6.5. Legend. Subject to applicable laws and regulations in the
Territory, all relevant packaging and promotional material for the Agreement
Product and any Improved Agreement Product(s) used or sold by the Distributor
shall contain (i) all applicable markings needed to keep the Trademarks
enforceable throughout the Territory as reasonably specified by Biomatrix to
the Distributor and (ii) a legend which shall be displayed in a reasonably
conspicuous manner on all packaging of such Agreement Product and any Improved
Agreement Product(s) containing the corporate identification logo of Biomatrix
and indicating that such product has been developed and manufactured by
Biomatrix, Inc., and its affiliates, 65 Railroad Avenue, Ridgefield, New
Jersey, 07657 U.S.A.
6.6. Promotional Support. Biomatrix and the Distributor shall
provide to each other on an ongoing basis and without charge (to the extent not
prevented by law or contract from doing so) all medical information relating to
the Agreement Product and any Improved Agreement Product(s) (including summary
data from studies, clinical trials and the like as well as information
regarding adverse events associated with the use of the Agreement Product), the
proceedings of all symposia on the Agreement Product and any Improved Agreement
Product(s) and all promotional information that is available to such party
relating to the Agreement Product and any Improved Agreement Product(s). In
addition, Biomatrix and the Distributor shall provide each other with access to
such primary data and information in its possession as the other may reasonably
request regarding the results of the studies contained in such summary data
referred to above.
6.7 Joint Coordinating Committee. Upon the execution of this
Agreement, Biomatrix and the Distributor shall establish a joint coordinating
committee (the "Committee") to review all matters relating to product
labelling, product claims, regulatory matters or clinical trials. The
Committee shall consist of an equal number, not to *
, of voting representatives from each of Biomatrix and the Distributor and
shall meet * . In the event of a dispute
between representatives of Biomatrix and the Distributor on the Committee, a
senior representative of each such party shall be appointed to resolve such
dispute, and in the event such senior representatives are unable to resolve the
matter, Biomatrix's view shall prevail over the Distributor's.
6.8. Recalls of the Agreement Product.
(a) If either party in good faith determines that a
recall of the Agreement
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 14
-14-
Product in the Territory is warranted, such party shall immediately notify the
other party in writing and shall advise such other party of the reasons
underlying its determination that a recall is warranted. The parties shall
consult with each other as to any action to be taken in regard to such a
recall, but in any event if after consultations either party in good faith
still believes that such a recall should be undertaken, the parties shall
cooperate in carrying out such recall.
(b) Except as otherwise provided in (c) below, in the
event of a recall of the Agreement Product, Biomatrix shall correct any
deficiency relating to its manufacturing, packaging, testing, labelling,
storing or handling of the Agreement Product for which it is responsible, if
applicable, and shall at its cost replace the Agreement Product recalled.
(c) Biomatrix shall reimburse Distributor for all direct
costs and expenses (including without limitation shipping, quality control
testing and notification costs) incurred by Distributor and its Affiliates as a
result of any recall, except where such recall (i) is the result of the failure
of Distributor or its Affiliates to comply with their obligations under this
Agreement and/or (ii) was opposed by Biomatrix and proved to be unwarranted, in
which case Distributor shall reimburse Biomatrix for all direct costs and
expenses (including without limitation shipping, quality control testing and
notification costs) incurred by Biomatrix and its Affiliates as a result of
such recall.
6.9 Product Vigilance System. The Distributor shall be
responsible for maintaining medical device vigilance systems, as established
for the Agreement Product by Biomatrix, and shall promptly provide Biomatrix
with notice of all product complaints, including medical complaints. Biomatrix
shall be solely responsible for processing, analyzing and, if necessary,
reporting medical complaints to regulatory authorities. The Distributor shall
provide all necessary support to Biomatrix for carrying out such activities.
7. SUPPLY OF AGREEMENT PRODUCT.
7.1. General; Fee.
(a) Biomatrix agrees to sell the Agreement Product and any
Improved Agreement Product(s) to the Distributor, on the terms and subject to
the conditions set forth herein, for resale by the Distributor within the
Territory, and the Distributor shall obtain the Agreement Product and any
Improved Agreement Product(s) for resale in the Territory only from Biomatrix
or its Affiliates. Biomatrix shall not sell the Agreement Product or any
Improved Agreement Product(s) itself or supply or license the manufacture of
the Agreement Product or any Improved Agreement Product(s) to any third party
for resale within the Territory, provided that Biomatrix's obligations under
this sentence shall be subject to (i) applicable law and (ii) the provisions of
this Agreement, including Section 2.3.
<PAGE> 15
-15-
(b)
*
7.2. Price; Adjustment; Reports; Payment.
(a) The parties shall attempt in good faith to agree in writing,
prior to the Launch in each country, upon mutually acceptable supply pricing
for the Distributor's purchase of the Agreement Product and any Improved
Agreement Product(s), but such pricing in any event shall not be less than the
greater of (i) the Minimum Price, or (ii) the Formula Price, except as provided
in subsection (b) below. The parties shall attempt in good faith to agree in
writing upon mutually acceptable minimum pricing for the Agreement Product in
sizes other than the 1.0cc Treatment Syringe and for any Improved Agreement
Product(s). For any syringe with a fill volume of greater than one cc (1cc),
the Minimum Price shall be the amount calculated as *
plus the dollar amount which equals * of such product with a
larger fill volume * of the one cc (1cc) syringe. In the event that
Biomatrix's actual incremental Cost of Goods Sold exceeds such dollar amount,
the Minimum Price shall be the amount calculated as
* . Subject to the general commercial availability of appropriate
syringes for the Agreement Product, the * for
a one and one-half (1.5)cc syringe, *
for a two (2.0)cc syringe, and * for a
two and one-half (2.5)cc syringe.
(b) If Biomatrix has appointed a new distributor in the Territory
pursuant to Section 2.3 and the Distributor has the right to distribute the
Agreement Product and any Improved Agreement Product(s) in the Territory, the
supply pricing for the Distributor's purchase of the Agreement Product and any
Improved Agreement Product(s) for resale in the Territory
*
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 16
-16-
(c) The price initially payable by the Distributor to Biomatrix
for each unit of the Agreement Product during each month of each Agreement Year
shall be the Minimum Price (subject to adjustment at the close of each
applicable Contract Quarter and Agreement Year in accordance with Section
7.2(e) below).
(d) Within * after the end of each month of each
Agreement Year, the Formula Price for the Agreement Product shall be
calculated, and, to the extent that such Formula Price exceeds the applicable
Minimum Price for such Agreement Year, an adjustment resulting from the
* with respect to all units
of the Agreement Product sold by the Distributor in the Territory during such
monthly period, such payment to be made * after the end of the
month following such monthly period.
(e) Within * after the end of each Contract Quarter and
Agreement Year, the Formula Price for the Agreement Product shall be calculated
and an adjustment resulting from the
*
, as appropriate, to the other party with respect to all units of the
Agreement Product sold by the Distributor in the Territory during such Contract
Quarter and Agreement Year, such payment to be made within *
after the end of such * period following the end of such Contract Quarter
and Agreement Year. The price calculated annually in this manner shall be the
final price payable for all units of the Agreement Product sold by the
Distributor or any Affiliate during such Agreement Year. For the avoidance of
doubt, the aggregate amount payable by Distributor for the Agreement Product(s)
and any Improved Agreement Product(s) for any Agreement Year shall in no event
be lower than the Minimum Price multiplied by the total units sold in such
Agreement Year in the Territory.
(f) Within * following the end of each calendar month in
each Agreement Year, the Distributor shall submit to Biomatrix written reports
detailing the units and value of the Distributor's and its Affiliates' Net
Retail Sales and aggregate number of units sold of the Agreement Product and
any Improved Agreement Product(s) in the Territory during the immediately
preceding calendar month.
(g) Within * following the end of each Agreement Year,
the Distributor shall submit to Biomatrix written reports detailing the
Distributor's and its Affiliates' sales of the Agreement Product and any
Improved Agreement Product(s) during the immediately preceding Agreement Year,
which reports shall contain the Net Retail Sales of the Agreement Product and
any Improved Agreement Product(s) in the Territory, and the aggregate number of
units of the Agreement Product and any Improved Agreement Product(s) sold in
the Territory during the applicable Agreement Year.
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 17
-17-
(h) All purchases of the Agreement Product and any Improved
Agreement Product(s) hereunder shall be billed and paid in Dollars within *
after the later of the date of delivery or the date of the Distributor's
receipt of the invoice for each shipment of same to the Distributor.
7.3. Sales and Supply Forecasts; Accounts.
(a) Exhibit D, which shall be supplied by the Distributor within
* of the Distributor's receipt of notice from Biomatrix of
* , shall set forth a sales
forecast of units of the Agreement Product in the Territory for the first
Agreement Year.
(b) Within * after the end of each month of each
Agreement Year in the Territory, the Distributor shall provide to Biomatrix an
updated rolling twelve (12) month monthly supply forecast for all unit sizes of
the Agreement Product. Each such supply forecast described in this subsection
(b) is referred to herein as a "Supply Forecast"; provided, that updated Supply
Forecasts shall not vary (whether up or down) from the immediately preceding
Supply Forecast by more than * with respect to each month covered
by such preceding Supply Forecast.
(c) The Distributor shall maintain books of account with respect
to its sales of the Agreement Product in the Territory. Biomatrix shall have
the right, not more than once during each calendar year, to have an independent
accountant selected and retained by Biomatrix (reasonably acceptable to
Distributor, provided that any "big six" accounting firm shall be deemed
reasonable) to inspect and examine such books of the Distributor during regular
business hours for the purpose of verifying the statements of the aggregate Net
Retail Sales of all Dermal Tissue Augmentation Products for all purposes
hereunder, including verification of Formula Price and the royalties described
in Section 8. The cost of each such audit shall be borne by Biomatrix unless a
material error is discovered in the course of such audit, in which case the
cost shall be borne by the Distributor. For purposes of this Section 7.3(d), a
material error shall be defined as an understatement of five percent (5%) or
more of the aggregate amount owed to Biomatrix with respect to sales of Dermal
Tissue Augmentation Products in the Territory. Any additional payments
required as a result of such inspection and examination shall be immediately
paid to Biomatrix and shall bear interest from the date such amount would
otherwise have been paid until the date of actual payment at the rate per annum
set forth in Section 20. Such independent accounting firm shall conduct such
inspections and examinations under conditions of confidentiality.
7.4. Shipment and Delivery; Packaging; Shelf Life.
(a) Biomatrix or an Affiliate of Biomatrix shall arrange for
shipment to the
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 18
-18-
Distributor of the Agreement Product and any Improved Agreement Product(s)
ordered by the Distributor * . The Distributor shall pay all
customs duties, sales taxes and other governmental charges relating to the
Agreement Product and any Improved Agreement Product(s), and shall be solely
responsible for clearing such products through customs throughout the
Territory.
(b) The Distributor shall submit a firm purchase order setting
forth the quantities, delivery date and shipping instructions with respect to
each shipment of the Agreement Product and any Improved Agreement Product(s),
such purchase orders to be received by Biomatrix at least * prior to
the requested delivery date; provided that the Distributor shall not submit any
purchase order for fewer than * units of the Agreement Product or the Improved
Agreement Product(s) (although multiple delivery site for purchase orders shall
be allowed). Biomatrix shall have no obligation to supply Distributor with
quantities of the Agreement Product(s) and Improved Agreement Product(s) in
excess of the amounts in the then current Supply Forecast for the relevant
monthly period.
(c) Each unit of the Agreement Product and any Improved Agreement
Products shipped to the Distributor shall have, as of the time of delivery, a
remaining shelf life of no less than * less than the maximum
shelf life for such product, as approved by the U.S. Food and Drug
Administration. Biomatrix shall continually use its best efforts at all times
during the term hereof to lengthen to * the shelf life of the Agreement
Product and any Improved Agreement Products to the extent supported by
stability data. Biomatrix' "best efforts" in this section shall mean that
Biomatrix shall use such methods, exercise such degree of effort and diligence,
and adhere to such standards as are commercially reasonable.
7.5. Title. Legal title to all quantities of the Agreement Product
and any Improved Agreement Product(s) sold hereunder shall remain in Biomatrix
until delivery of the Agreement Product and any Improved Agreement Product(s)
to Distributor or its agent and acceptance thereof, and upon such delivery and
acceptance the title to such Agreement Product and any Improved Agreement
Product(s) shall, without further action, be transferred to and vested in the
Distributor.
7.6. Risk of Loss. Biomatrix shall bear all risk of loss of, or
damage to, all units of the Agreement Product and any Improved Agreement
Product(s) to the extent the same is in its possession or the possession of its
Affiliates, nominees or agents. The Distributor shall bear all risk of loss
of, or damage to, all units of the Agreement Product and any Improved Agreement
Product(s) after delivery to a common carrier for shipment to the Distributor
in accordance with Section 7.4.
7.7. Acceptance. *
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 19
-19-
*
All units of the Agreement Product and Improved
Agreement Products delivered to Distributor pursuant to this Agreement shall be
*
the specification listed in Exhibit A. Any non-conformity which arises after
acceptance by Distributor directly associated with Product specification shall
be the responsibility of Biomatrix unless such non-conformity is due to
improper storage conditions subsequent to delivery of the Agreement Product.
All other non-conformities of the Agreement Product shall be the responsibility
of the Distributor. Biomatrix and the Distributor agree to consult with each
other in order to resolve the discrepancy between each other's determinations.
If such consultation does not resolve the discrepancy, the parties agree to
nominate a reputable independent laboratory, acceptable to both parties, that
shall carry out tests on representative samples taken from such shipment, and
the results of such tests shall be binding on the parties. Biomatrix shall at
its expense replace any such shipment to the extent that it does not conform to
the Agreement Product Specifications. All defective units of the Agreement
Product or any Improved Agreement Product(s) shall be returned to Biomatrix at
the address set forth in Section 23 of this Agreement, accompanied or preceded
by a reasonably detailed statement of the claimed defect or non-conformity and
proof of date of purchase, and packed and shipped according to instructions
provided by Biomatrix. The shipping costs of any such returned units shall be
borne by Biomatrix, unless such units are determined not to be defective under
the terms of this Agreement, in which case such shipping costs shall be borne
by the Distributor.
7.8. Purchase Orders. The provisions of this Agreement shall
prevail over any inconsistent statement or provisions contained in any document
related to this Agreement passing between the parties hereto including, but not
limited to, any purchase order, acknowledgment, confirmation or notice.
7.9. Limited Warranty; Limitation on Liability.
Biomatrix represents and warrants that the Agreement Product and any
Improved Agreement Product(s) supplied to the Distributor hereunder shall:
(a) conform to the Agreement Product Specifications; and
(b) be manufactured, labelled, packaged and tested (while in the
possession or control of Biomatrix) in accordance with the applicable Product
License Approvals
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 20
-20-
therefor and all applicable laws and regulations in the Territory relating to
the manufacture, labelling, packaging and testing of the Agreement Product, and
shall be manufactured for use for the indications specified in the applicable
Product License Approvals therefor.
THE FOREGOING WARRANTY IS THE SOLE AND EXCLUSIVE WARRANTY GIVEN BY
BIOMATRIX WITH RESPECT TO THE AGREEMENT PRODUCT, AND BIOMATRIX GIVES AND MAKES
NO REPRESENTATIONS OR WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, OTHER THAN
THE FOREGOING. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, NO IMPLIED
WARRANTY OF MERCHANTABILITY, NO IMPLIED WARRANTY OF FITNESS FOR ANY PARTICULAR
PURPOSE, AND NO IMPLIED WARRANTY ARISING BY USAGE OF TRADE, COURSE OF DEALING
OR COURSE OF PERFORMANCE IS GIVEN OR MADE BY BIOMATRIX OR SHALL ARISE BY OR IN
CONNECTION WITH ANY SALE OR PROVISION OF THE AGREEMENT PRODUCT BY BIOMATRIX, OR
THE DISTRIBUTOR'S (OR ITS AFFILIATES') USE OR SALE OF THE AGREEMENT PRODUCT, OR
BIOMATRIX'S AND/OR THE DISTRIBUTOR'S (OR ITS AFFILIATES') CONDUCT IN RELATION
THERETO OR TO EACH OTHER. NO REPRESENTATIVE OF BIOMATRIX IS AUTHORIZED TO GIVE
OR MAKE ANY OTHER REPRESENTATION OR WARRANTY OR TO MODIFY THE FOREGOING
WARRANTY IN ANY WAY.
The limited warranty set forth in this Section 7.9 does not apply to
any non-conformity of the Agreement Product or any Improved Agreement
Product(s) resulting from (a) repair or alteration by any party other than
Biomatrix or its Affiliates, (b) misuse, negligence, abuse, accident,
mishandling or storage in an improper environment by any party other than
Biomatrix or its Affiliates, or (c) use, handling, storage or maintenance other
than in accordance with instructions and recommendations provided by Biomatrix
or its Affiliates.
Biomatrix's obligation with respect to units of the Agreement Product
and any Improved Agreement Product(s) which do not meet the warranty contained
herein is limited to replacement of such units of the Agreement Product or
Improved Agreement Product(s) as applicable, provided that such units are
returned to Biomatrix accompanied by a reasonably detailed statement of the
claimed defect or non-conformity and proof of purchase, and packed and shipped
according to instructions provided by Biomatrix, and only if, upon examination
by Biomatrix, such units of the Agreement Product or the Improved Agreement
Product(s) are determined to have been defective under the terms of this
Agreement.
BIOMATRIX'S LIABILITY, AND THE EXCLUSIVE REMEDY, IN CONNECTION WITH
THE SALE OR USE OF THE AGREEMENT PRODUCT AND ANY IMPROVED AGREEMENT PRODUCT(S)
(WHETHER BASED ON CONTRACT, NEGLIGENCE, BREACH OF WARRANTY, STRICT LIABILITY OR
<PAGE> 21
-21-
ANY OTHER LEGAL THEORY), SHALL BE STRICTLY LIMITED TO BIOMATRIX'S OBLIGATIONS
AS SPECIFICALLY AND EXPRESSLY PROVIDED IN THIS SECTION 7.9 AND IN SECTION 9
BELOW. EXCEPT AS SPECIFICALLY PROVIDED IN THIS SECTION 7.9 AND IN SECTION 9
BELOW, BIOMATRIX SHALL HAVE NO LIABILITY, OBLIGATION OR RESPONSIBILITY OF ANY
KIND, IN ANY WAY OR TO ANY EXTENT, FOR ANY DAMAGES, LOSSES, COSTS, EXPENSES OR
LIABILITIES FOR ANY REPRESENTATION OR WARRANTY OF ANY KIND WITH RESPECT TO THE
AGREEMENT PRODUCT AND ANY IMPROVED AGREEMENT PRODUCT(S) OR THE PERFORMANCE
THEREOF, OR ARISING IN ANY WAY IN CONNECTION WITH THE PURCHASE OR USE OR
INABILITY TO USE THE AGREEMENT PRODUCT OR ANY IMPROVED AGREEMENT PRODUCT(S),
EVEN IF BIOMATRIX HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. IN NO
EVENT WHATSOEVER SHALL BIOMATRIX HAVE ANY LIABILITY, OBLIGATION OR
RESPONSIBILITY FOR ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL OR
EXEMPLARY DAMAGES ARISING IN ANY WAY IN CONNECTION WITH THE AGREEMENT PRODUCT
OR ANY IMPROVED AGREEMENT PRODUCT(S) OR THEIR SALE OR USE.
8. ROYALTY PAYMENTS BY DISTRIBUTOR.
8.1. Royalties for Sales of Dermal Tissue Augmentation Products.
The Distributor shall pay to Biomatrix a royalty of * of the Net Retail
Sales by the Distributor and its Affiliates of all Dermal Tissue Augmentation
Products (other than sales of the Agreement Product and any Improved Agreement
Product(s)) in the Territory, including any countries that are added to the
Territory after the Effective Date,
*
Such royalty shall commence at the earlier of (a)
Launch of the Agreement Product in the Territory or (b) the Launch date set
forth on Exhibit B; provided that if a the Launch is delayed due to Biomatrix's
failure to meet its supply obligations under Section 7.4, due to a force
majeure condition of Distributor or if Distributor is not able to lawfully sell
the Agreement Product in the Territory, such royalty shall not commence until
Biomatrix meets its supply obligations, until Distributor is able to sell the
Agreement Product in the Territory, or until such force majeure condition
ceases. Such royalty shall be paid by not later than * after
the end of each Contract Quarter.
8.2. Incremental Royalties. The Distributor shall pay to Biomatrix
the following annual royalties (the "Incremental Royalties") on the
Distributor's and its Affiliates' total incremental increases in Net Retail
Sales of all Dermal Tissue Augmentation Products
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 22
-22-
(including the Agreement Product and any Improved Agreement Product(s)), in the
Territory based on the incremental increases, if any, in Net Retail Sales of
all Dermal Tissue Augmentation Products in each Agreement Year over a base year
amount comprised of Net Retail Sales of Dermal Tissue Augmentation Products in
the twelve (12) months immediately preceding the first commercial sale of
either the Agreement Product or any Improved Agreement Product(s):
Increase in Total Royalty on Total
Sales Over Base Incremental Sales
Year Amount
*
The Distributor's obligation to pay the Incremental Royalties shall cease in
the event that the Distributor's rights to sell, distribute, market and promote
the Agreement Product and any Improved Agreement Product have become
non-exclusive pursuant to Section 2.3 or have terminated pursuant to Section
3.2(d). The Incremental Royalty shall be paid by not later than *
after the end of each Agreement Year. For the avoidance of doubt, if the
Distributor had no sales of any Dermal Tissue Augmentation Products prior to
the first commercial sale of either the Agreement Product or any Improved
Agreement Product, the Distributor shall be obligated to pay a * royalty on
Net Retail Sales of all Dermal Tissue Augmentation products sold after such
first commercial sale.
9. INDEMNIFICATION; CONFIDENTIALITY; PUBLIC ANNOUNCEMENT
9.1. Indemnification from the Distributor. Subject to the
provisions of Section 9.3, the Distributor shall defend, indemnify and hold
Biomatrix and its Affiliates and their respective directors, officers, agents
and employees harmless from and against any and all liabilities, claims,
damages and expenses (including without limitation actual court costs and
reasonable attorneys' fees regardless of outcome) resulting from claims of
third parties or arising out of:
*
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 23
-23-
provided, however, that upon Biomatrix being advised of any assertions of any
such third party claims or suits or upon the bringing or filing of such claims
or suits by any third party against Biomatrix, Biomatrix will promptly notify
the Distributor thereof
*
. The parties agree that there shall be no
settlements, whether agreed to in court or out of court, without the prior
written consent of the indemnifying party.
9.2. Indemnification from Biomatrix. Subject to the provisions of
Section 9.3, Biomatrix shall defend, indemnify and hold the Distributor and its
Affiliates and their respective directors, officers, agents and employees
harmless from and against any and all liabilities, claims, damages and expenses
(including without limitation actual court costs and reasonable attorneys' fees
regardless of outcome) resulting from claims of third parties arising out of:
*
provided, however, that upon the Distributor being advised of any assertions of
any such third party claims or suits or upon the bringing or filing of such
claims or suits by any third party against the Distributor, the Distributor
will promptly notify Biomatrix thereof * The parties agree that there
shall be no settlements, whether agreed to in court or out of court, without
the prior written consent of the indemnifying party.
9.3. Limitation on Liability.
NOTWITHSTANDING ANY PROVISION TO THE CONTRARY IN SECTIONS 9.1 AND 9.2
ABOVE, OR ANY OTHER PROVISION OF THIS AGREEMENT, IN NO EVENT (INCLUDING THE
FAULT, NEGLIGENCE OR STRICT LIABILITY OF EITHER PARTY) SHALL EITHER PARTY BE
LIABLE TO THE OTHER PARTY FOR INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL OR
EXEMPLARY DAMAGES OTHER THAN TO THE EXTENT NECESSARY TO REIMBURSE SUCH OTHER
PARTY FOR DAMAGES ACTUALLY PAID TO A NON-AFFILIATED THIRD PARTY, PROVIDED THAT
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 24
-24-
SUCH DAMAGES ARE OTHERWISE COVERED BY THE PROVISIONS OF SECTION 9.1 OR SECTION
9.2, AS THE CASE MAY BE.
9.4. Confidential Information. All information acquired by either
party (the "Recipient") from the other party or any of its Affiliates (the
"Discloser") during the term of this Agreement or prior to the Effective Date,
relating directly or indirectly to the present or potential business,
operations, corporate, technical or financial situation of the Discloser, or to
manufacturing know-how, patents, data, test results, techniques, processes,
procedures, raw materials, dealer, supplier and customer lists, pre-clinical
and clinical protocols or any improvements thereof of the Discloser
("Confidential Information") is confidential, and shall be held in trust by the
Recipient for the exclusive benefit of the Discloser. Unless otherwise agreed
to in writing by the Discloser, the Recipient shall not at any time, either
during or subsequent to the term of this Agreement, use for itself (other than
in accordance with the terms of this Agreement) or any other Person, or
disclose or divulge to any Person, other than to those of its employees and
advisors and Affiliates who require the same for the purposes hereof and who
are bound by the same obligations of confidentiality, non-disclosure and
non-use as set forth herein, any Confidential Information or any other
confidential or proprietary information of the Discloser of which the Recipient
may acquire knowledge; provided, however, that the confidentiality,
non-disclosure and non-use provisions contained in this Section 9.4 shall not
apply to any information or data to the extent that the Recipient:
(a) shall demonstrate by clear and convincing evidence that such
information or data is known generally to persons in the trade through no act
or omission of the Recipient or any of its Affiliates;
(b) is required by any government authority to disclose such
information or data, including without limitation for the purposes of obtaining
and maintaining any Product License Approvals under this Agreement; or
(c) shall demonstrate by its written records was disclosed to or
created by it or its Affiliates on a non-confidential basis from a source other
than the Discloser or its Affiliates and that such disclosure or creation did
not constitute a breach of any applicable confidentiality obligations.
Confidential Information shall be immediately returned to the Discloser upon
termination of this Agreement, along with any copies, reproductions, digests,
abstracts or the like of all or any part thereof in the Recipient's possession
or under the Recipient's control, and upon such return any computer entries or
the like relating thereto shall, to the extent legally permissible, be
destroyed. Such return (and destruction) will not affect the Recipient's
obligations hereunder which shall survive indefinitely. Notwithstanding
anything herein to the contrary, the provisions of this Section 9.4 shall be
subject to Biomatrix's rights under Section 3.6.
<PAGE> 25
-25-
9.5. Public Announcement. Except as shall be necessary for
governmental notification purposes or to comply with applicable laws and
regulations, and except as otherwise agreed to by the parties hereto in
writing, the parties agree to keep the existence of this Agreement, and the
transactions contemplated hereby, strictly confidential. In the event that a
party must file this document or otherwise disclose any of its subject matter
pursuant to public filing requirements, such party shall seek confidential
treatment of those portions of the Agreement as the parties shall mutually
agree upon; provided, however, that the Distributor must provide written notice
to Biomatrix no later than June 30, 1996 of those portions of the Agreement for
which the Distributor requests confidential treatment. The parties shall agree
upon the text of an initial public announcement relating to the transactions
contemplated by this Agreement as soon as possible. Any subsequent public
announcements regarding this Agreement or the transactions contemplated herein
shall also be agreed upon in writing between the parties prior to any release
thereof.
10. NEW PRODUCTS.
10.1 *
, Distributor shall not commercialize nor begin the commercialization process
with respect to or acquire any New Product anywhere in the International
Territory or the United States, either independently or in conjunction with one
or more third parties, unless and until the following conditions have been
satisfied:
(a) Distributor has made a commercially reasonable written offer
to Biomatrix to participate with Distributor in the development and
commercialization of such New Product; and
(b) Biomatrix has failed to accept such written offer within *
of its receipt of such offer.
In the event that Biomatrix fails to accept any written offer made by
Distributor pursuant to this Section 10.1 within * of Biomatrix's
receipt thereof, then Distributor, subject to the terms of this Agreement,
shall have the right to independently or with other parties develop and/or
commercialize any New Product to which such written offer relates; provided,
however, that any such New Product does not infringe upon any intellectual
property rights of Biomatrix. Distributor shall not be required to make the
written offer to Biomatrix set forth in Section 10.1(a) above only to the
extent that it is prevented from doing so due to the patented proprietary
rights of a third party.
(c) At all times during the term of this Agreement, Distributor
shall notify Biomatrix in writing within * of each occurrence
of one or more of the following:
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 26
-26-
(i) Distributor's entering into an agreement with one or
more third parties with regard to the development,
acquisition and/or commercialization of any New
Product, and Distributor shall provide to Biomatrix
notice of such agreement and any and all agreements
relating thereto and a non-confidential summary of
such agreements; or
(ii) Distributor's commencing a clinical trial (either
alone or in conjunction with a third party) with
respect to any New Product, together with a notice of
the commencement of such clinical trial and a list of
all countries where such clinical trials will take
place; or
(iii) Distributor's filing of an application (either alone
or in conjunction with a third party) for marketing
approval with the United States Food and Drug
Administration or an equivalent regulatory agency in
any country with respect to any New Product stating
in which countries any such filings have been made.
10.2
*
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 27
-27-
*
10.3. Nothing in this Section 10 shall be construed, by implication
or otherwise, (i) to effect any sale or license of proprietary Biomatrix
technology (including any New Products), (ii) to grant any license relating to
Biomatrix's proprietary methods of formulating , fabricating and manufacturing
the Agreement Product, Improved Agreement Products or New Products, or (iii) to
grant Distributor any rights in or to any proprietary technology or Patents or
Trademarks of Biomatrix.
11. REPRESENTATIONS OF BIOMATRIX. Biomatrix represents, warrants
and covenants as follows:
11.1. It is a corporation duly organized and validly existing under
the laws of the State of Delaware with the full power to conduct its affairs as
currently conducted and contemplated hereunder. All necessary action has been
taken to enable it to execute and deliver this Agreement and perform its
obligations hereunder.
11.2. This Agreement is a valid and binding obligation of Biomatrix
enforceable in accordance with its terms. Biomatrix has the unencumbered right
to enter into this Agreement and to fulfill its duties hereunder. It is not
and will not become a party to any agreement in conflict herewith.
Accordingly, Biomatrix has the right to appoint the Distributor as the
exclusive distributor of the Agreement Product in the Territory in accordance
with the terms of this Agreement and such appointment will not constitute a
breach of any existing contractual or other arrangements between Biomatrix and
any Affiliated or non-Affiliated third party, nor shall it infringe the rights
of any Affiliated or non-Affiliated third party.
11.3 No approval, consent, order, authorization or license by,
giving notice to or taking any other action with respect to, any governmental
or regulatory authority is required in connection with the execution and
delivery of this Agreement by Biomatrix and the performance by Biomatrix of its
obligations hereunder.
12. REPRESENTATIONS OF THE DISTRIBUTOR. The Distributor
represents, warrants and covenants as follows:
12.1 It is a corporation duly organized and validly existing under
the laws of Delaware with full power to conduct its affairs as currently
conducted and contemplated hereunder. All necessary action has been taken to
enable it to execute and deliver this Agreement and perform its obligations
hereunder.
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 28
-28-
12.2. This Agreement is the Distributor's valid and binding
obligation enforceable in accordance with its terms. The Distributor has the
unencumbered right to enter into this Agreement and to fulfill its obligations
hereunder. It is not and will not become a party to any agreement in conflict
herewith. Accordingly, the Distributor has the right to act as the exclusive
distributor of the Agreement Product in the Territory in accordance with the
terms of this Agreement and the performance of its obligations hereunder will
not constitute a breach of any existing contractual or other arrangements
between the Distributor and any Affiliated or non-Affiliated third party, nor
shall it infringe the rights of any Affiliated or non-Affiliated third party.
12.3. No approval, consent, order, authorization or license by,
giving notice to or taking any other action with respect to any governmental or
regulatory authority is required in connection with the execution and delivery
of this Agreement by the Distributor and the performance by the Distributor of
its obligations hereunder.
13. INSURANCE. Each party hereto shall (a) obtain and maintain
such insurance policies as are adequate to cover its respective obligations
hereunder and which are consistent with normal business practices of prudent
companies similarly situated and (b) provide the other party, upon request,
with certificates of insurance confirming the existence of such insurance
policies.
14. INFRINGEMENT. Each of the Distributor and Biomatrix will
promptly notify the other party in writing of any infringement of a Patent or
Trademark or unauthorized disclosure or use of any Confidential Information, of
which it becomes aware in the Territory. Biomatrix shall have the exclusive
right at its own cost to take all legal action in the Territory it deems
necessary or advisable to eliminate or minimize the consequences of such
infringement of a Patent or Trademark in the Territory. For the purpose of
taking any such legal action, Biomatrix shall have the right, subject to the
Distributor's consent which consent shall not be unreasonably withheld or
delayed, to use the name of the Distributor as plaintiff, either solely or
jointly in accordance with the applicable rules of procedure; provided that
Biomatrix shall give the Distributor prior notice of such use of the
Distributor's name. The Distributor shall promptly furnish Biomatrix with
whatever written authority may be required in order to enable Biomatrix to use
the Distributor's name in connection with any such legal action, and shall
otherwise cooperate fully and promptly with Biomatrix in connection with any
such action. All proceeds realized upon any judgment or settlement regarding
such action shall belong to Biomatrix.
<PAGE> 29
-29-
15. REGULATORY ACTIVITIES; CLINICAL TRIALS AND MARKETING STUDIES.
15.1. General.
(a) Biomatrix shall be responsible for maintaining at its cost the
Product License Approvals required for the marketing and sale of the Agreement
Product and any Improved Agreement Product(s) in the Territory throughout the
term of this Agreement.
(b) Biomatrix shall hold in its name all regulatory approvals
required for the marketing and sale of the Agreement Product and any Improved
Agreement Product(s) in the Territory.
(c) The Distributor and Biomatrix shall provide reasonable advice
and assistance to each other as may be necessary to obtain and maintain Product
License Approvals.
(d) During the term of this Agreement, each party shall
immediately notify the other in writing in the event that such party becomes
aware of any failure of the Agreement Product and any Improved Agreement
Product(s) to comply with any of the requirements therefor specified in any
Product License Approvals.
(e) Each of the Distributor and Biomatrix shall keep the other
advised of regulatory interactions, activities and correspondence relating to
the Agreement Product and any Improved Agreement Product(s) on at least a
quarterly basis, and any matters requiring immediate attention shall be
communicated as soon as practicable. Notwithstanding the foregoing, within
*
, Biomatrix shall deliver * to the Distributor.
15.2. Marketing Studies. The parties agree that if any
marketing-related studies are deemed necessary, such studies will not delay the
Launch in the Territory. The protocols for any marketing-related studies
requested by the Distributor will be developed jointly by Biomatrix and the
Distributor, and the Distributor will be responsible for conducting and
managing such studies at its own expense. Biomatrix shall have the right to
audit the performance of any marketing-related studies performed by or on
behalf of the Distributor. The results of such studies will not be published
or publicized in any way without the prior written approval of Biomatrix.
16. FURTHER ASSURANCES. The parties hereto agree to execute such
further or other documents and assurances as are necessary from time to time in
order to give effect to the provisions of this Agreement.
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 30
-30-
17. ASSIGNMENT. The rights and obligations of the parties hereto
shall inure to the benefit of and shall be binding upon the authorized
successors and permitted assigns of each party. Neither party may assign its
rights or obligations under this Agreement or may designate another person to
perform all or part of its obligations under this Agreement, or to have all or
part of its rights and benefits under this Agreement without the prior written
consent of the other party, except to an Affiliate or to a successor of the
business, by merger or otherwise, to which this Agreement relates, provided
that in the case of an assignment to an Affiliate the assigning party shall
promptly notify the other party in writing of such assignment and shall remain
liable (both directly and as guarantor) with respect to all obligations so
assigned. In the event of any assignment or in the event that an Affiliate of
either party shall exercise rights and/or perform obligations hereunder
pursuant to the terms of this Agreement, the assignee or Affiliate, as the case
may be, shall specifically assume and be bound by the provisions of the
Agreement by executing and agreeing to an assumption agreement satisfactory to
the other party hereto.
18. GOVERNING LAW; ARBITRATION; INJUNCTIVE RELIEF.
(a) This Agreement shall be governed by and construed in
accordance with the internal and substantive laws of the State of New York,
United States of America. The parties hereby agree that the United Nations
Convention on Contracts for the International Sale of Goods shall not apply to
this Agreement or any other document contemplated hereby. In the event of any
dispute touching or concerning this Agreement, the parties hereby agree to
submit such dispute to their respective presidents by notice delivered in
accordance with the provisions of Section 23, and if within * , or
such other period as is agreed upon in writing by the parties hereto, following
such reference the dispute remains unresolved, to submit the dispute for
arbitration in Boston, Massachusetts under the Rules of the American
Arbitration Association in effect on the date of this Agreement (the "Rules")
by arbitrators appointed in accordance with said Rules. Any decision of such
arbitrators shall be written and shall be final and binding upon the parties.
In any arbitration pursuant to this Section the award shall be rendered by a
majority of three (3) arbitrators, one (1) of whom shall be appointed by each
party and the third of whom shall be appointed by mutual agreement of the two
(2) party-appointed arbitrators. In the event of failure of a party to appoint
an arbitrator within thirty (30) days after commencement of the arbitration
proceeding or in the event of failure of the two (2) party-appointed
arbitrators to agree upon the appointment of the third arbitrator within sixty
(60) days after commencement of the arbitration proceeding, such arbitrator
shall be appointed by the American Arbitration Association in accordance with
the Rules. The arbitrators shall apply the governing law set forth in this
Section. Judgment upon an award rendered by the arbitrators may be entered in
any court having jurisdiction thereof.
(b) Each of the parties hereto acknowledges and agrees that
damages will not be
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 31
-31-
an adequate remedy for any material breach or violation of this Agreement if
such material breach or violation would cause immediate and irreparable harm
(an "Irreparable Breach"). Accordingly, notwithstanding the provisions of
Section 18(a) to the contrary, in the event of a threatened or ongoing
Irreparable Breach, each party hereto shall be entitled to seek, in any state
or federal court in the State of New York, equitable relief of a kind
appropriate in light of the nature of the ongoing threatened Irreparable
Breach, which relief may include, without limitation, specific performance or
injunctive relief; provided, however, that if the party bringing such action is
unsuccessful in obtaining the relief sought, the moving party shall pay the
non-moving party's reasonable costs, including attorney's fees, incurred in
connection with defending such action. Such remedies shall not be the
parties' exclusive remedies, but shall be in addition to all other remedies
provided in this Agreement.
19. SEVERABILITY. In the event that any provision of this
Agreement shall be held by a court of competent jurisdiction or by any
governmental body to be invalid or unenforceable, such provision shall be
deemed severable and the remaining parts and provisions of this Agreement shall
remain in full force and effect.
20. FORCE MAJEURE. Each of the parties shall be excused from the
performance of its obligations hereunder in the event such performance is
prevented by force majeure, and such excuse shall continue as long as the
condition constituting such force majeure continues. For the purpose of this
Agreement, force majeure is defined as contingencies beyond the reasonable
control of either party, including, without limitation, acts of God, judicial
or regulatory action, war, civil commotion, destruction of production
facilities or materials by fire, earthquake or storm and labor disturbances
(whether or not any such labor disturbance is within the power of the affected
party to settle).
21. INTEREST. Any overdue amounts payable by either party
hereunder shall bear interest compounded monthly at the prime lending rate for
Dollars published from time to time in The Wall Street Journal plus
* per annum, or, if lower, the highest rate permissible by
applicable law, from the due date until the date of payment.
22. NO PARTNERSHIP OR AGENCY. This Agreement and the relations
hereby established by and between Biomatrix and the Distributor do not
constitute a partnership, joint venture, agency or contract of employment
between them.
23. NOTICES. All communications in connection with this Agreement
shall be in writing and sent by postage prepaid first class mail, courier, or
telefax, and if relating to default, late payment or termination, by certified
mail, return receipt requested, telefax or courier, addressed to each party at
the address set forth at the beginning of this Agreement, in the case of
Biomatrix, Attn: Chief Executive Officer, with a copy to:
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 32
-32-
Justin P. Morreale, Esq., Bingham, Dana & Gould LLP, 150 Federal Street,
Boston, Massachusetts 02110, U.S.A., and in the case of the Distributor, Attn:
President, with a copy to Kimberlie L. Cerrone, Esq., Venture Law Group, 2800
Sand Hill Road, Menlo Park, California 94025, or to such other address as the
addressee shall last have designated by notice to the communicating party. The
date of giving any notice shall be the date of its actual receipt.
24. SURVIVAL. The provisions of Sections 3.3, 3.6, 3.7, 3.8, 6.2,
9.1, 9.2, 9.3, 9.4 and 9.5 of this Agreement shall survive the termination or
expiration of this Agreement (as the case may be) and shall remain in full
force and effect. The provisions of this Agreement that do not survive
termination or expiration hereof (as the case may be) shall, nonetheless, be
controlling on, and shall be used in construing and interpreting the rights and
obligations of the parties hereto with regard to, any dispute, controversy or
claim which may arise under, out of, or in connection with this Agreement.
25. MISCELLANEOUS. This Agreement sets forth the entire agreement
between the parties with respect to the transactions and arrangements
contemplated hereby and supersedes all prior oral or written arrangements.
This Agreement may be modified or amended only by a written instrument executed
and delivered by both parties. None of the provisions of this Agreement shall
be deemed to have been waived by any act or acquiescence on the part of either
party except by an instrument in writing signed and delivered by the party
executing the waiver. This Agreement may be executed in several identical
counterparts, each of which shall be an original, but all of which constitute
one instrument, and in making proof of this Agreement it shall not be necessary
to produce or account for more than one such counterpart.
[The remainder of this page is intentionnaly left blank.]
<PAGE> 33
-33-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
COLLAGEN CORPORATION
By: /s/ Howard D. Palefsky
----------------------------------------
Name: Howard D. Palefsky
Title: Chairman and CEO
BIOMATRIX, INC.
By: /s/Endre A. Balazs
----------------------------------------
Name: Endre A. Balazs
Title: CEO
<PAGE> 34
-34-
EXHIBITS
Exhibit A - Agreement Product Specification and Approval
Documents
Exhibit B - Launch Schedule
Exhibit C - Patents and Trademarks
Exhibit D - Sales Forecasts
<PAGE> 35
EXHIBIT A
Agreement Product Specification and Approval Documents
TESTS PROCEDURES SPECIFICATIONS
*
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 36
EXHIBIT B
Launch Schedule
Date of Launch
United States
*
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 37
EXHIBIT C
Patents and Trademarks
Patents
*
Trademarks
*
* Confidential portions have been omitted and filed separately with the
Commission.
<PAGE> 38
EXHIBIT D
Sales Forecasts(1)
(Units)
First Agreement Year
(1) The parties acknowledge that in the event of the addition of other syringe
sizes this forecast is subject to adjustment to incorporate such new sizes.
<PAGE> 1
10.6
EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated as of the 2nd day of April 1996, is made by and
between Biomatrix, Inc., a Delaware corporation with its principal place of
business at 65 Railroad Avenue, Ridgefield, New Jersey 07657 (the "Employer"),
and Rory B. Riggs, an individual residing at 115 Central Park West, New York,
New York 10023 (the "Employee").
Section 1. FREEDOM TO CONTRACT.
The Employee represents that he is free to enter into this Agreement,
and that he has not made and will not make any agreements in conflict with this
Agreement, other than as noted on Exhibit A hereto. The Employee will not, and
the Employer will not require the Employee to, disclose to the Employer, or use
for the Employer's benefit, any trade secrets or confidential information now
or hereafter in the Employee's possession which is the property of any other
party.
Section 2. EMPLOYMENT.
The Employer hereby employs the Employee, and the Employee hereby
accepts his employment by the Employer, upon the terms and conditions set forth
herein.
Section 3. EFFECTIVE DATE AND TERM.
This Agreement shall take effect as of April 1, 1996 (the "Effective
Date"), and shall continue in full force and effect until terminated in
accordance with Section 6 herein.
Section 4. TITLE AND DUTIES; EXTENT OF SERVICES.
The Employee shall promote the business and affairs of the Employer as
President of the Employer, with responsibility for performing such duties
consistent with such position as the Board of Directors or Chief Executive
Officer of the Employer may from time to time designate. Except as otherwise
provided in this Agreement and except for vacations and absences due to
temporary illness, the Employee shall devote his full time and efforts to the
business and affairs of the Employer, provided that, with the Employer's prior
written consent the Employee may engage in such other business activities
outside the scope of his employment hereunder as in the reasonable judgment of
the Employer will not materially adversely affect the Employee's ability to
perform his obligations under this Agreement. The Employee and the Employer
acknowledge that they have fully discussed each matter set forth on Exhibit A
hereto and the implications thereof on the employment arrangement established
hereby. The
<PAGE> 2
Employee agrees to inform the Employer promptly of any material change in
circumstances relating to any matter set forth on Exhibit A hereto. The
Employee shall report all future board of directors memberships to Employer for
approval, provided that the board of directors memberships listed on Exhibit B
hereto are approved.
Section 5. COMPENSATION AND FRINGE BENEFITS.
Section 5.1. Base Salary. In consideration of the services rendered
by the Employee under this Agreement, the Employer shall pay the Employee a
base salary (the "Base Salary") at an annual rate of One Hundred Forty Thousand
Dollars ($140,000), payable monthly in arrears.
Section 5.2. Performance Bonus. On an annual basis, the Employer's
Chief Executive Officer, in consultation with the Employee, shall recommend to
the Compensation Committee of the Board (the "Compensation Committee"), and the
Compensation Committee shall establish, objective written performance goals for
the Employee. Upon the attainment of such performance goals, in addition to
his Base Salary, the Employee shall be entitled to a cash bonus in an amount
determined in the discretion of the Compensation Committee. Any such
performance bonus shall be due and payable within one hundred twenty (120) days
after the end of the calendar year to which it relates.
Section 5.3. Restricted Stock. Employee shall purchase 200,000
shares of restricted common stock of Employer at a price equal to the fair
market value of the Employer's common stock at the close of business on April
2, 1996. Upon execution of this Agreement, the parties shall execute a
Restricted Stock Purchase Agreement, Secured Promissory Note and Stock Pledge
Agreement, substantially in the forms of Exhibits C, D and E hereto.
Section 5.4. Fringe Benefits. The Employee shall be entitled to such
life insurance, health insurance and other employee fringe benefits as may be
offered or generally made available by the Employer to its executive officers.
Section 5.5. Outstanding Stock Options. Upon execution of this
Agreement, all currently outstanding options issued by the Employer to the
Employee to purchase shares of the Employer's common stock shall become
immediately exercisable.
Section 6. TERMINATION.
Section 6.1. Termination of Employment. The Employee's employment
hereunder shall terminate upon the Employee's death or Permanent Disability.
For purposes of this Agreement, "Permanent Disability" shall mean the
Employee's inability to perform his duties hereunder for a continuous period of
three (3) months by reason of his physical or mental illness or incapacity. In
the
<PAGE> 3
-3-
event of any dispute concerning the existence of a Permanent Disability, such
question shall be determined by a licensed physician selected by the Employer
and reasonably acceptable to the Employee, whose determination shall be final
and binding upon the parties. The Employee shall submit to such examinations
and furnish such information as such physician may reasonably request. The
Employee's employment hereunder may also be terminated:
(a) By the Employee at any time upon at least thirty (30)
days prior written notice to the Employer; or
(b) By the Employer at any time upon at least thirty (30)
days prior written notice to the Employee or immediately if Employer
pays Employee 30 days' salary upon termination; or
(c) By the Employer at any time for cause, including but
not limited to:
(i) the Employee's gross negligence or willful
misconduct with respect to the business and affairs of the
Employer; or
(ii) the Employee's material breach of this
Agreement; or
(iii) the commission by the Employee of an act
involving moral turpitude or fraud; or
(iv) the Employee's conviction of any felony.
The provisions of Sections 6.2, 7, 8, 9 and 10 shall survive any termination of
the Employee's employment hereunder and shall continue in effect until such time
as all obligations of the parties described therein have been satisfied.
Section 6.2. Compensation Following Termination; Severance Pay.
(a) If the Employee terminates his employment pursuant to
Section 6.1(a) hereof, or if such employment is terminated by the
death or Permanent Disability of the Employee, the Employee shall not
be entitled to compensation, severance pay or fringe benefits beyond
the date upon which he ceases to be employed hereunder (the
"Employment Termination Date") except as may be otherwise provided in
any then existing insurance or health benefit programs of the
Employer.
(b) If the Employer terminates the employment of the
Employee pursuant to Section 6.1(b) hereof, the Employee shall be
entitled to severance pay in an amount equal to one (1) month of his
Base Salary (as in effect on the Employment Termination Date). Except
as expressly provided in this Section 6.2(b), the Employee shall not
be entitled to compensation or fringe
<PAGE> 4
-4-
benefits hereunder beyond the Employment Termination Date in the event
his employment is terminated pursuant to Section 6.1(b) hereof.
(c) If the Employer terminates the employment of the
Employee for cause pursuant to Section 6.1(c) hereof, the Employee
shall not be entitled to compensation, performance bonus or fringe
benefits hereunder beyond the Employment Termination Date.
Section 7. INTELLECTUAL PROPERTY MATTERS.
Section 7.1. Inventions. All discoveries, inventions, improvements,
techniques, trademarks and innovations, whether or not patentable or subject to
copyright protection (including all data and records pertaining thereto), which
the Employee may invent, discover, originate or make during the term of his
employment with the Employer either alone or with others and whether or not
during working hours or by the use of facilities of the Employer, and which
relate to, or are, or may likely be useful in connection with the business of
the Employer ("Inventions"), shall be the exclusive property of the Employer.
The Employee shall promptly and fully disclose Inventions to the Employer and
shall promptly record Inventions in such form as the Employer may request.
Section 7.2. Assignments. The Employee shall assign to the Employer
all right, title and interest to all Inventions reduced to writing, drawings or
practice by or for the Employee during the term of his employment. The
Employee shall execute upon the Employer's request at any time, and at the
Employer's sole expense, any applications, assignments and other documents that
the Employer may deem necessary or desirable to protect or perfect its rights,
including any patent rights in Inventions, and shall assist the Employer, at
the Employer's sole expense, in obtaining, defending and enforcing its rights
thereon. The Employee hereby appoints the Employer his attorney-in-fact for
purposes of effecting any assignments hereunder.
Section 7.3. Confidential Information. The Employee acknowledges
that all information acquired by the Employee from the Employer, its customers,
suppliers or others, or developed by the Employee alone or in conjunction with
others during the term of his employment which relate directly or indirectly to
the present or potential business of the Employer, including but not limited to
any ideas, formulae, processes, know- how, data, test results, raw materials,
prospective products or services, techniques, models, computer programs, plans,
schedules, sketches, notebooks drawings, process sheets, customer or supplier
lists, and financial information ("Confidential Information"), is a valuable
and unique asset of the Employer for the Employer's sole benefit. Except as
set forth below, the Employee shall not, at any time during or after the term
of his employment, use for himself or others, or disclose or communicate to any
person, firm, corporation, association, or other entity for any reason or
purposes whatsoever (other than to Directors, officers and employees of the
Employer in
<PAGE> 5
-5-
the regular course of the Employer's business or to others subject to
appropriate confidentiality restrictions), any Confidential Information without
the prior written consent of the Employer; provided, however, that the
confidentiality and nondisclosure provisions of this Section 7.3 shall not
apply to (i) a disclosure of any Confidential Information which, as of the time
of such disclosure, or thereafter, shall have become a part of the public
knowledge through no fault of the Employee, (ii) a disclosure of Confidential
Information by the Employee to a governmental entity in fulfillment of a legal
obligation of the Employee to such governmental authority, (iii) Confidential
Information that the Employee can establish was lawfully in his possession at
the time of disclosure by Employer and was not acquired, directly or
indirectly, from Employer and (iv) Confidential Information which Employee
lawfully receives from a third party, provided, however, that such Confidential
Information was not obtained by said third party, directly or indirectly, from
the Employer.
Section 7.4. Proprietary Items. All originals, copies and summaries
of manuals, memoranda, notes, photographs, notebooks, records, reports, plans,
drawings and other documents or items of any kind concerning any matters
affecting or relating to the present or potential business of the Employer,
whether or not they contain Confidential Information, are, and shall continue
to be, the property of the Employer, and all of such documents or items in the
possession or control of the Employee shall be delivered to the Employer by the
Employee immediately upon the Employer's request or termination of the
Employee's employment hereunder.
Section 8. NON-COMPETITION.
Section 8.1 Agreement Not To Compete. In view of the unique nature
of the business of the Employer and the need of the Employer to maintain its
competitive advantage in the industry through the protection of its trade
secrets and proprietary information, the Employee agrees that during the term
of his employment with the Employer and for a period of four (4) years
thereafter, the Employee shall not, directly or indirectly, within the United
States of America or its territories or possessions, or within any other
country in which the Employer conducts or plans to conduct its business or
distributes any of its products or renders any services in connection therewith
(determined in each case as of the Employment Termination Date), engage in
business with, own an interest in, be employed by, or consult or advise for,
any person or entity (except as a holder of not more than a one percent (1%)
equity interest in a publicly-traded entity) which engages in activities in
competition with the business of the Employer. For purposes of this Section 8,
the Business of the Employer shall be defined as the development, manufacture
and sale of medical products, drugs and devices consisting in whole or in part
of, or employing utilizing in any way, hyaluronan, collagen, elastin or any
intercellular matrix polymer, including but not limited to polysaccharides,
protoglycans and glycoproteins, or any other natural or synthetic polymer, or
any combination, modification, or derivative of any thereof.
<PAGE> 6
-6-
If at any time the foregoing provisions shall be deemed to be invalid or
unenforceable or are prohibited by the laws of the state or place where they
are to be performed by reason of being vague or unreasonable as to duration or
place of performance, this section shall be considered divisible and shall
become and be immediately amended to include only such time and such area as
shall be determined to be reasonable and enforceable by the court or other body
having jurisdiction over this Agreement; and the Employee and the Employer
expressly agree that this section, as so amended, shall be valid and binding as
though any invalid or unenforceable provision had not been included herein.
The Employee further agrees that he shall not solicit any other employee of or
consultant or advisor to, or client, supplier customer or partner of the
Employer to terminate his or her relationship with the Employer during, and for
a period of four (4) years after termination of, the Employee's employment
hereunder. The time periods provided for in this Section 8 shall be extended
for a period of time in which Employee is in violation of any of the provisions
of this Section 8.
Section 8.2 Exception. Notwithstanding anything to the contrary in
Section 8.1, the Employer agrees that the matter set forth in Exhibit A hereto,
as of the date hereof, shall not be deemed a breach of the restrictions set
forth in Section 8.1.
Section 9. REMEDIES.
The Employer and Employee agree and acknowledge that the rights and
obligations set forth under this Agreement are of a unique and special nature
and that each party is, therefore, without an adequate legal remedy in the
event of the other party's violation of the covenants set forth in this
Agreement. The Employer and Employee agree, therefore, that the covenants made
under this Agreement shall be specifically enforceable in equity, in addition
to all other rights and remedies, at law or in equity or otherwise (including
termination of employment) that may be available to the parties.
Section 10. PROVISIONS OF GENERAL APPLICATION.
Section 10.1. Disputes. In the event of any dispute touching or
concerning this Agreement, the parties will submit to the exclusive
jurisdiction and venue of any court of competent jurisdiction sitting in Bergen
County, New Jersey, and the parties agree to comply with all requirements
necessary to give such court jurisdiction over the parties and the controversy.
EACH PARTY HEREBY WAIVES ANY RIGHT TO A JURY TRIAL AND TO CLAIM OR RECOVER
PUNITIVE DAMAGES.
Section 10.2. Governing Law. This Agreement and the rights and
obligations of the parties hereunder shall be construed, interpreted and
determined in accordance with the internal
<PAGE> 7
-7-
substantive laws of the State of New Jersey (excluding choice of law or
conflict of law provisions).
Section 10.3. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be an original and all of which,
taken together, shall constitute one and the same document. In making proof of
this Agreement it shall not be necessary to produce or account for more than
one such counterpart.
Section 10.4. Other Agreements. This Agreement represents the entire
understanding and agreement between the parties as to the subject matter hereof
and supersedes all prior or concurrent oral or written agreements relating
thereto.
Section 10.5. Amendment. This Agreement may be amended only by a
written document executed in one or more counterparts by the parties hereto.
Section 10.6. Waiver. No consent to or waiver of any breach or
default in the performance of any obligation hereunder shall be deemed or
construed to be a consent to or waiver of any other breach or default in the
performance of any of the same or any other obligation hereunder. Failure on
the part of either party to complain of any act or failure to act of the other
party or to declare the other party in default, irrespective of the duration of
such failure, shall not constitute a waiver of rights hereunder and no waiver
hereunder shall be effective unless it is in writing, executed by the party
waiving the breach or default hereunder.
Section 10.7. Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their successors and assigns.
This Agreement may be assigned by the Employer to any Affiliate (as hereinafter
defined) or to a successor to the portion of its business to which this
Agreement relates (whether by purchase or otherwise). For purposes of this
Agreement, "Affiliate" shall mean any person or entity which, directly or
indirectly, controls or is controlled by or is under common control with the
Employer and, for the purposes of this definition, "control" (including the
terms "controlled by" and "under common control with"), shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of another, whether through the
ownership of voting securities or holding of office in another, by contract or
otherwise. The Employee may not assign or transfer any of his rights or
obligations under this Agreement.
Section 10.8. Headings. The headings of sections and subsections of
this Agreement have been inserted for convenience of reference only and shall
not be deemed to be a part of this Agreement or to affect the meaning of any of
its provisions.
<PAGE> 8
-8-
Section 10.9. Severability. If any provision of this Agreement
shall, in whole or in part, prove to be invalid for any reason, such invalidity
shall affect only the portion of such provision which shall be invalid, and in
all other respects this Agreement shall stand as if such invalid provisions, or
the invalid portion thereof, had not been a part hereof.
IN WITNESS WHEREOF, this Agreement has been executed by the Employer,
by its duly authorized officer, and by the Employee, as of the date first above
written.
BIOMATRIX, INC.
By: /s/ Endre A. Balazs
-----------------------
Endre A. Balazs
Chief Executive Officer
EMPLOYEE
By: /s/ Rory B. Riggs
-----------------------
Rory B. Riggs
<PAGE> 9
Exhibit A
1. The Employee is a director and a substantial shareholder of Fibrogen,
Inc. ("Fibrogen"), a biomedical products company that may in the
future compete with the Employer's business. The Employee agrees to
inform the Employer promptly of any material change with respect to
the Employee's relationship with Fibrogen or the nature of the
business conducted by Fibrogen.
<PAGE> 10
Exhibit B
1. Biomatrix, Inc.
2. Fibrogen, Inc.
<PAGE> 1
10.10
SECOND AMENDMENT
TO
CONSULTING AGREEMENT
This Second Amendment (the "Amendment") is dated as of May 31, 1996,
and is an amendment to the Consulting Agreement (the "Consulting Agreement")
dated as of June 1, 1993, by and between BIOMATRIX, INC., a Delaware
corporation (the "Company"), and Julius A. Vida, an individual residing at 27
Sachem Road, Greenwich, Connecticut ("Consultant").
WHEREAS, the undersigned desire to amend the Consulting Agreement to
modify the term of the Consulting Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, and intending to be legally bound, the parties
hereto do hereby amend the Consulting Agreement as follows:
Section 3.1 of the Consulting Agreement is hereby amended by modifying
the first sentence of Section 3.1 to remove the date "May 31, 1996" and
replacing it with "May 31, 1999".
IN WITNESS WHEREOF, the parties hereto have duly executed this Second
Amendment as an instrument under seal as of the date first written above.
BIOMATRIX, INC.
By: /s/ Endre A. Balazs /s/ Julius A. Vida
-------------------------------- ---------------------
Title: Chief Executive Officer/ Julius A. Vida, Ph.D.
Chief Scientific Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 4,996,092
<SECURITIES> 9,743,595
<RECEIVABLES> 1,054,703
<ALLOWANCES> 25,500
<INVENTORY> 558,638
<CURRENT-ASSETS> 16,865,108
<PP&E> 7,992,528
<DEPRECIATION> 3,298,467
<TOTAL-ASSETS> 21,677,616
<CURRENT-LIABILITIES> 2,651,884
<BONDS> 1,288,564
0
0
<COMMON> 53,586,717
<OTHER-SE> (874,130)
<TOTAL-LIABILITY-AND-EQUITY> 21,677,616
<SALES> 2,161,478
<TOTAL-REVENUES> 10,281,587
<CGS> 1,355,361
<TOTAL-COSTS> 6,621,348
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 66,375
<INCOME-PRETAX> 3,955,313
<INCOME-TAX> 0
<INCOME-CONTINUING> 3,955,313
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,955,313
<EPS-PRIMARY> .39
<EPS-DILUTED> .39
</TABLE>
