<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 30, 1999.
REGISTRATION NO. 333-78829
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-1
------------------------
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
BIOPURE CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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<S> <C> <C>
DELAWARE 2836 04-2836871
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
11 HURLEY STREET
CAMBRIDGE, MA 02141
(617) 234-6500
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
JANE KOBER, ESQ.
BIOPURE CORPORATION
11 HURLEY STREET
CAMBRIDGE, MA 02141
(617) 234-6500
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------
COPIES TO:
<TABLE>
<S> <C>
LARS BANG-JENSEN, ESQ. GERALD S. TANENBAUM, ESQ.
LEBOEUF, LAMB, GREENE & MACRAE, L.L.P. CAHILL GORDON & REINDEL
125 WEST 55TH STREET 80 PINE STREET
NEW YORK, NY 10019-5389 NEW YORK, NY 10005
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF THE PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [ ]
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
PROPOSED
MAXIMUM PROPOSED
AMOUNT OFFERING MAXIMUM
TITLE OF EACH CLASS OF TO BE PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER UNIT OFFERING PRICE REGISTRATION FEE(1)
<S> <C> <C> <C> <C>
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Class A Common Stock............ 5,175,000 $17.50 $90,562,500 $25,176
- --------------------------------------------------------------------------------------------------------------------------------
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</TABLE>
(1) The registrant has already paid $23,978.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
PROSPECTUS
Subject to Completion
Dated June 30, 1999
4,500,000 Shares
[Biopure Logo]
Class A Common Stock
Biopure Corporation is selling all of the shares of class A common stock in this
offering.
Prior to the offering, there has been no public market for our class A common
stock. We anticipate that the initial offering price will be between $15.50 and
$17.50 per share. We have applied to list the shares of class A common stock on
the Nasdaq National Market under the symbol "BPUR".
INVESTING IN OUR CLASS A COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS"
BEGINNING ON PAGE 8.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
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PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT COMPANY
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<S> <C> <C> <C>
Per share $ $ $
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Total $ $ $
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</TABLE>
We have agreed to grant the underwriters the right to purchase up to an
additional 675,000 shares of class A common stock to cover over-allotments.
The underwriters expect to deliver the shares of class A common stock to
investors on or about , 1999.
J.P. MORGAN & CO.
ADAMS, HARKNESS & HILL, INC.
ROBERT W. BAIRD & CO.
INCORPORATED
KBC SECURITIES
, 1999
<PAGE> 3
[BIOPURE'S OXYGEN THERAPEUTICS:
ILLUSTRATION 1 is a schematic of a blood vessel with normal blood flow and
oxygen delivery. The heart, lungs and circulating blood regulate the oxygenation
of tissues. Hemoglobin, a protein inside red blood cells, is responsible for the
transport of oxygen from the lungs to the body's tissues.
ILLUSTRATION 2 is a schematic of a blood vessel with anemic blood flow and
oxygen delivery. With anemia, a shortage of red blood cells disrupts this oxygen
delivery system. In severe cases, anemia can cause cell damage and, if
prolonged, death.
ILLUSTRATION 3 is a schematic of a blood vessel depicting oxygen delivery after
treatment with Biopure's products. Biopure's products are designed to compensate
for the decreased oxygen content of the blood caused by anemia.
Pictures of Biopure's products: Hemopure, the human product, is in U.S. Phase
III clinical testing; Oxyglobin, the veterinary product, is approved by the FDA
for canine anemia and commercially available.]
<PAGE> 4
You should rely only on the information contained in this prospectus. We have
not authorized anyone to provide you with information different from that
contained in this prospectus. We are offering to sell, and seeking offers to
buy, shares of class A common stock only in jurisdictions where we are permitted
to make offers and sales. The information in this prospectus is current only as
of its date.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Prospectus Summary.......................... 5
Risk Factors................................ 8
Use of Proceeds............................. 12
Dividend Policy............................. 12
Capitalization.............................. 13
Dilution.................................... 14
Selected Consolidated Financial Data........ 15
Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................ 16
Business.................................... 20
</TABLE>
<TABLE>
<CAPTION>
PAGE
<S> <C>
Management.................................. 33
Certain Relationships and Related
Transactions.............................. 40
Principal Stockholders...................... 41
Description of Capital Stock................ 44
Shares Eligible for Future Sale............. 50
Underwriting................................ 52
Legal Matters............................... 54
Experts..................................... 54
Available Information....................... 54
Index to Consolidated Financial
Statements................................ F-1
</TABLE>
------------------------
Until , 1999, all dealers that effect transactions in our class A
common stock, whether or not participating in the offering, may be required to
deliver a prospectus. This is in addition to the dealers' obligation to deliver
a prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
We intend to provide our stockholders with annual reports containing audited
financial statements and quarterly reports containing unaudited interim
financial information for the first three quarters of each fiscal year.
------------------------
Biopure(R), Hemopure(R) and Oxyglobin(R) are registered trademarks of Biopure.
3
<PAGE> 5
<PAGE> 6
PROSPECTUS SUMMARY
This summary may not contain all the information that may be important to you.
You should read the entire prospectus, especially "Risk Factors" and the
Consolidated Financial Statements and the related Notes, before deciding to
invest in shares of our class A common stock. When we refer to "us", "we", "our"
and "Biopure" in this prospectus, we mean Biopure Corporation. Unless otherwise
indicated, all information in this prospectus (1) reflects a two for three stock
split of our class A common stock which will occur prior to completion of this
offering, and (2) assumes that the underwriters will not exercise their right to
purchase an additional 675,000 shares of class A common stock.
BIOPURE
Biopure is a leading developer, manufacturer and marketer of oxygen
therapeutics. Our oxygen therapeutics are pharmaceuticals administered
intravenously into the circulatory system to increase oxygen delivery to the
body's tissues. We have developed and manufacture two hemoglobin-based oxygen
therapeutic products -- Hemopure, for human use, and Oxyglobin, for veterinary
use. Hemopure is currently in a pivotal Phase III clinical trial in the United
States. Oxyglobin, the only hemoglobin-based oxygen carrier approved by the U.S.
Food and Drug Administration, or the FDA, has been commercially available since
March 1998 for the treatment of anemia in dogs, regardless of cause.
Acute blood loss and other medical conditions can disrupt the delivery of oxygen
to the body's tissues. A red blood cell transfusion is the standard therapy for
blood loss. Hemopure compares favorably to transfused red blood cells in that
it:
- - is highly purified by proprietary and patented processes to remove possible
infectious agents;
- - has a two-year shelf life as compared to blood's 42-day shelf life;
- - does not require refrigeration;
- - maintains full oxygen-releasing capability during storage;
- - does not require blood typing or other tests for compatibility; and
- - has an abundant, low-cost raw material source -- bovine red blood cells.
We believe that Hemopure also has potential for use in the treatment of other
critical care conditions such as trauma, ischemic conditions, including stroke
and heart attack, and malignant hypoxic, or oxygen deficient, tumors. Hemopure:
- - is significantly smaller in molecular size than red blood cells, so it can
flow around partial blockages and through constricted vessels;
- - is less viscous than red blood cells and, therefore, possesses better flow
characteristics;
- - is chemically designed to release more oxygen than the hemoglobin contained in
red blood cells; and
- - facilitates the release of oxygen from red blood cells.
We have infused Hemopure into 421 humans in 19 completed clinical trials at
doses of up to 244 grams of hemoglobin contained in approximately two liters, or
eight units, of Hemopure. We believe Hemopure is a safe, effective alternative
to red blood cell transfusion after blood loss from surgery. Our trials
demonstrate Hemopure's efficacy as measured by the elimination of a significant
percentage of red blood cell transfusions. Biopure expects to file for Hemopure
marketing approval as an alternative to red blood cell transfusions for
specified surgical procedures in South Africa in 1999 and in the United States
and the European Union in 2000.
Oxyglobin is identical to Hemopure except for its molecular size distribution.
Veterinarians report successful use of Oxyglobin in critical care situations
involving blood loss, destruction of red blood cells and ineffective production
of red blood cells in dogs. In 1998, Biopure filed for regulatory approval to
market Oxyglobin to treat canine anemia in the European Union.
Biopure operates a large-scale manufacturing facility with adequate capacity to
produce both Oxyglobin for commercial sale and Hemopure for clinical trials and
market introduction following FDA approval. Biopure believes that its
manufacturing facilities comply with current Good Manufacturing Practices
established by the FDA.
Biopure's incorporation occurred in 1984 in Delaware. Our address is 11 Hurley
Street, Cambridge, Massachusetts 02141 and our telephone number is (617)
234-6500.
5
<PAGE> 7
THE OFFERING
The following information reflects 10,556,342 shares of class A common stock
outstanding as of the date of this prospectus and the conversion of our
convertible preferred stock into an estimated 7,714,171 shares of class A common
stock upon completion of this offering, based upon an assumed initial public
offering price of $16.50 per share, the midpoint of the range shown on the cover
page of this prospectus. The number of outstanding shares of class A common
stock does not include 1,248,295 shares of class A common stock issuable on the
exercise of outstanding stock options and warrants as of May 1, 1999 or
1,286,152 shares of class A common stock issuable on the exercise of stock
options to be granted to employees and directors upon completion of this
offering. In addition, the number of outstanding shares of class A common stock
does not include between 646,667 and 1,272,119 shares of class A common stock
issuable upon the conversion of our class B common stock following FDA approval
of Hemopure or 1,694,273 shares of class A common stock to be repurchased from a
stockholder.
CLASS A COMMON STOCK OFFERED.............4,500,000 shares of class A common
stock
CLASS A COMMON STOCK TO BE
OUTSTANDING AFTER THE OFFERING...........22,770,513 shares of class A common
stock; 23,445,513 shares of class A
common stock if the underwriters'
over-allotment option is exercised in
full
OVER-ALLOTMENT OPTION....................675,000 shares of class A common stock
USE OF PROCEEDS..........................$4.5 million to repay a loan from
Pharmacia & Upjohn, Inc., $4.0 million
to repurchase 1,694,273 shares of our
class A common stock from a
stockholder, $8.7 million for capital
expenditures and the balance for
general corporate purposes, including
$38.0 million for clinical trials for
Hemopure and $10.3 million for
pre-marketing expenditures for Hemopure
and expanded marketing efforts for
Oxyglobin
PROPOSED NASDAQ NATIONAL MARKET SYMBOL..."BPUR"
6
<PAGE> 8
SUMMARY CONSOLIDATED FINANCIAL DATA
The following table summarizes our consolidated statements of operations data
for the fiscal years ended October 31, 1996, 1997 and 1998 and the six months
ended May 2, 1998 and May 1, 1999. Also included in this table are our
consolidated balance sheet data at May 1, 1999, on an actual basis and on a pro
forma as adjusted basis. The following consolidated statements of operations
data for the fiscal years ended October 31, 1996, 1997 and 1998 are derived from
our consolidated financial statements that appear elsewhere in this prospectus
and that have been audited by Ernst & Young LLP, independent auditors. The
consolidated statements of operations data for the six months ended May 2, 1998
and May 1, 1999 and the consolidated balance sheet data at May 1, 1999 are
derived from our unaudited consolidated financial statements that appear
elsewhere in this prospectus, which include all adjustments that we consider
necessary for a fair presentation of the financial position and results of
operations for such periods. You should read the consolidated financial data in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the Consolidated Financial Statements and the
related Notes included elsewhere in this prospectus. Diluted earnings per share
are not presented in the consolidated statements of operations data because we
had losses in all periods.
The pro forma loss per common share data reflect the conversion of our
convertible preferred stock upon completion of this offering. The pro forma as
adjusted balance sheet data reflect that conversion and also reflect the sale of
4,500,000 shares of class A common stock at an assumed initial public offering
price of $16.50 per share, the midpoint of the range shown on the cover page of
this prospectus, after deducting the underwriting discounts and offering
expenses payable by us, and the use of a portion of such net proceeds and
$500,000 from existing cash to repurchase 1,694,273 shares of class A common
stock at $2.95 per share and to repay outstanding long-term debt. In addition,
the pro forma as adjusted balance sheet data reflect the sale in May 1999 of
additional shares of series D convertible preferred stock, which will convert
into an estimated 306,367 shares of class A common stock upon completion of this
offering.
<TABLE>
<CAPTION>
--------------------------------------------------------
FISCAL YEAR ENDED OCTOBER 31, SIX MONTHS ENDED
-------------------------------- --------------------
MAY 2, MAY 1,
1996 1997 1998 1998 1999
-------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
In thousands, except per share data
STATEMENTS OF OPERATIONS DATA:
Total revenues......................................... $ 71 $ -- $ 1,131 $ 214 $ 1,545
Cost of revenues....................................... -- -- 1,543 -- 3,229
-------- -------- -------- -------- --------
Gross profit (loss).................................... 71 -- (412) 214 (1,684)
Operating expenses:
Research and development............................. 18,924 23,494 22,950 12,085 9,871
Sales and marketing.................................. -- 694 2,444 1,069 1,512
General and administrative........................... 3,506 2,920 4,660 2,019 2,414
-------- -------- -------- -------- --------
Total operating expenses............................... 22,430 27,108 30,054 15,173 13,797
-------- -------- -------- -------- --------
Income (loss) from operations.......................... (22,359) (27,108) (30,466) (14,959) (15,481)
Total other income (expense)........................... 765 (310) 419 465 259
-------- -------- -------- -------- --------
Net income (loss)...................................... $(21,594) $(27,418) $(30,047) $(14,494) $(15,222)
======== ======== ======== ======== ========
Historical basic net income (loss) per common share.... $ (1.77) $ (2.23) $ (2.41) $ (1.17) $ (1.23)
Historical weighted-average common shares
outstanding.......................................... 12,215 12,300 12,460 12,425 12,333
Pro forma basic net income (loss) per common share..... $ (1.68) $ (0.82) $ (0.81)
Pro forma weighted-average common shares outstanding... 17,858 17,679 18,803
</TABLE>
<TABLE>
<CAPTION>
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AT MAY 1, 1999
---------------------
PRO FORMA
ACTUAL AS ADJUSTED
------- -----------
(UNAUDITED)
<S> <C> <C>
In thousands
BALANCE SHEET DATA:
Cash and cash equivalents................................... $13,541 $ 77,093
Total current assets........................................ 22,455 86,007
Working capital............................................. 11,014 76,566
Net property and equipment.................................. 29,029 29,029
Total assets................................................ 53,471 116,023
Long-term debt (including current portion).................. 5,000 --
Common stock to be repurchased.............................. 5,300 --
Total stockholders' equity.................................. 31,818 104,670
</TABLE>
7
<PAGE> 9
RISK FACTORS
You should carefully consider each of the risks and uncertainties described
below and all of the other information contained in this prospectus before
deciding to invest in shares of our class A common stock. The trading price of
our class A common stock could decline if any of the following risks and
uncertainties develop into actual events, and you may lose all or part of the
money you paid to buy our class A common stock.
COMPANY RISKS
IF WE CANNOT GENERATE ADEQUATE, PROFITABLE SALES OF HEMOPURE, WE WILL NOT BE
SUCCESSFUL
In order to succeed as a company, we must develop Hemopure commercially and sell
adequate quantities of Hemopure at a high enough price to generate a profit. We
may not accomplish either of these objectives.
Even if we succeed in developing Hemopure commercially, a number of factors may
affect future sales of our product. These factors include:
- - whether physicians, patients and clinicians accept Hemopure as a
cost-effective and therapeutic alternative to other products, including
donated human blood;
- - whether reimbursement for the cost of Hemopure is available; and
- - whether the public accepts the use of a natural protein product extracted from
bovine red blood cells in transfusions, particularly in light of public
perceptions in Europe and elsewhere about the risk of "mad cow disease".
IF WE FAIL TO OBTAIN FDA APPROVAL, WE CANNOT MARKET HEMOPURE IN THE UNITED
STATES
We will not be able to market Hemopure in the United States until we receive FDA
approval. Obtaining FDA approval generally takes years and consumes substantial
capital resources with no assurance of ultimate success. We cannot apply for FDA
approval to market Hemopure until the product successfully completes an ongoing
U.S. pivotal Phase III clinical trial. Several factors may prevent successful
completion of this clinical trial, including an inability to enroll the required
number of patients and insufficient demonstration that Hemopure is safe and
effective for use in humans. If safety problems develop, the FDA could stop our
trial before its completion. Recent publicity about enrollment abuses in the
pharmaceutical industry and regulatory actions taken with respect to some major
research institutes engaged in the clinical testing of pharmaceutical products
could affect the ability of Biopure to enroll patients in its clinical studies.
Even if we complete the trial, we are not certain that we will be able to obtain
FDA approval of Hemopure. We believe that our ongoing U.S. pivotal Phase III
clinical trial is consistent with the FDA's most recent guidance on the design
and efficacy and safety endpoints required for approval of products such as
Hemopure. However, the FDA could change its view or require a change in study
design, additional data or even further clinical trials prior to approval of
Hemopure. If we fail to complete our ongoing U.S. pivotal Phase III clinical
trial and obtain FDA approval, we cannot market Hemopure in the United States.
OUR FAILURE TO OBTAIN REGULATORY APPROVALS IN FOREIGN JURISDICTIONS WILL PREVENT
US FROM MARKETING HEMOPURE ABROAD
We also intend to market our products in international markets, including the
European Union and South Africa. We must obtain separate regulatory approvals in
order to market our products in the European Union, South Africa and many other
foreign jurisdictions. The regulatory approval processes may differ among these
jurisdictions. Approval in any one jurisdiction does not ensure approvals in a
different jurisdiction. As a result, obtaining foreign approvals may require
additional trials and additional expenses.
WE CANNOT EXPAND INDICATIONS FOR OUR PRODUCTS UNLESS WE RECEIVE FDA APPROVAL FOR
EACH PROPOSED INDICATION
The FDA requires a separate approval for each proposed indication for the use of
Hemopure. We expect that our first indication for Hemopure will only involve its
use in elective orthopedic surgery. Subsequently, we expect to expand Hemopure's
indications. In order to do so, we will have to design additional clinical
trials, submit the trial designs to the FDA for review and complete those trials
successfully. We cannot guarantee that the FDA will approve Hemopure for any
indication. We can only promote Hemopure for indications which have been
approved by the FDA. Moreover, it is possible that the FDA may require a label
cautioning against Hemopure's use for any or all other indications.
8
<PAGE> 10
The FDA has approved the use of our veterinary product, Oxyglobin, for the
treatment of anemia in dogs, regardless of cause. Supplemental approvals are
required to market Oxyglobin for any new indications or additional species. We
cannot guarantee that we will receive such approvals.
IF WE CANNOT FIND APPROPRIATE MARKETING PARTNERS, WE MAY NOT BE ABLE TO MARKET
AND DISTRIBUTE HEMOPURE EFFECTIVELY
Our success depends, in part, on our ability to market and distribute Hemopure
effectively. We have no experience in the sale or marketing of medical products
for humans. In the past, we entered into agreements with two established
pharmaceutical companies to market our products upon successful completion of
clinical development. These arrangements ended in 1996 and 1997. In the event
that we obtain FDA approval of Hemopure, we may require the assistance of one or
more experienced pharmaceutical companies to market and distribute Hemopure
effectively.
If we seek an alliance with an experienced pharmaceutical company:
- - we may be unable to find a collaborative partner, enter into an alliance on
favorable terms or enter into an alliance that will be successful;
- - any partner to an alliance might, at its discretion, limit the amount and
timing of resources it devotes to marketing Hemopure; and
- - any marketing partner or licensee may terminate its agreement with us and
abandon our products at any time for any reason without significant payments.
If we do not enter into an alliance with a pharmaceutical company to market and
distribute our products, we may not be successful in entering into alternative
arrangements, whether engaging independent distributors or recruiting, training
and retaining a marketing staff and sales force of our own.
FAILURE TO INCREASE MANUFACTURING CAPACITY MAY PREVENT US FROM SATISFYING DEMAND
FOR HEMOPURE
We will need to construct additional manufacturing facilities to meet annual
demand in excess of 120,000 units of Hemopure. The costs and risks associated
with building and validating these new facilities will be significant. We may
incur significant costs in connection with the construction of additional
manufacturing facilities in advance of FDA approval of Hemopure. In addition, if
Hemopure receives rapid market acceptance, we may experience difficulty
manufacturing enough of the product to meet demand.
FAILURE TO RAISE ADDITIONAL FUNDS IN THE FUTURE MAY AFFECT THE DEVELOPMENT,
MANUFACTURE AND SALE OF OUR PRODUCTS
We require substantial working capital to properly develop, manufacture and sell
our products. We expect to use a significant portion of the net proceeds of this
offering to fund our working capital requirements. Additional manufacturing
facilities will require additional financing. If such financing is not available
when needed or is not available on acceptable terms, we may experience a delay
in developing products, building manufacturing capacity or fulfilling other
important goals.
OUR LACK OF OPERATING HISTORY MAKES EVALUATING OUR BUSINESS DIFFICULT
Licensing fees, payments to us from investors and payments to fund our research
and development activities comprise almost all of our funding to date. We have
no operating history upon which to base an evaluation of our business and our
prospects. We must successfully develop our products and product enhancements,
achieve market acceptance of our products and respond to competition. We cannot
guarantee that we will be successful in doing so, that we will ever be
profitable or, if we are, that we will remain profitable on a quarterly or
annual basis.
WE HAVE A HISTORY OF LOSSES AND EXPECT FUTURE LOSSES
We have had annual losses from operations since our inception in 1984. We expect
to continue to incur losses from operations until we are able to develop
Hemopure commercially and generate a profit. As of May 1, 1999, we had
accumulated a deficit of $212.1 million. Our 1998 auditors' report stated that
our recurring losses from operations raise substantial doubt about our ability
to continue as a going concern.
OUR SUCCESS DEPENDS UPON OUR ABILITY TO PROTECT OUR INTELLECTUAL PROPERTY
We believe that our patents, trademarks and other intellectual property rights,
including our proprietary know-how, will be important to our success. Our
business position will depend, in part, upon our ability to defend our existing
patents and engage in our business free of claims of infringement by third
parties. We will need to obtain additional patents for our products, the
processes utilized to make our products and our product uses. We cannot
guarantee that additional products or
9
<PAGE> 11
processes will achieve patent protection. In addition, third parties may
successfully challenge our patents. Oppositions to one of our European patents
have already led to a narrowing of this patent in Europe and, since some
oppositions are still pending, may lead to further narrowing or even a loss of
this European patent.
We have not filed patent applications in every country of the world. In certain
countries, obtaining patents for our products, processes and uses may be
difficult or impossible. Patents issued in countries other than the United
States and in regions other than Europe may be harder to enforce than, and may
not provide the same protection as, patents obtained in the United States and
Europe.
WE MAY INFRINGE UPON THE INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES
We may, in the future, be involved in litigation involving our intellectual
property or the intellectual property of others. Such litigation may involve a
claim that our activities, our products, the processes used to make our products
or the manner in which our products are used constitute patent infringement. A
third party seeking to challenge the validity, enforceability or scope of our
patents may also initiate litigation. In addition, our intellectual property
could be subject to litigation involving a third party's claim of ownership to
part or all of our intellectual property. We cannot predict the outcome of any
such litigation in advance and as such, cannot determine the effect of any such
litigation on our business.
OUR PROFITABILITY WILL BE AFFECTED IF WE INCUR PRODUCT LIABILITY CLAIMS IN
EXCESS OF OUR INSURANCE COVERAGE
The testing and marketing of medical products, even after FDA approval, have an
inherent risk of product liability. We maintain limited product liability
insurance coverage in the total amount of $10.0 million. Our profitability will
be affected by a successful product liability claim in excess of our insurance
coverage. We cannot guarantee that product liability insurance will be available
in the future or be available on reasonable terms.
WE DEPEND ON SOLE SOURCE SUPPLIERS FOR KEY MATERIALS
We obtain some key materials, including membranes and chemicals, from sole
source suppliers. If such materials were no longer available at a reasonable
cost from our existing suppliers, we would need to obtain supply contracts with
new suppliers for substitute materials. If we need to locate a new supplier, the
substitute or replacement materials will mostly likely be tested for
equivalency. Such evaluations could delay development of a product, limit
commercial sales of an FDA-approved product and cause us to incur significant
additional expense. In addition, the time expended for such tests could delay
the marketing of an FDA-approved product.
CONCENTRATION OF STOCK OWNERSHIP AND PROVISIONS OF OUR RESTATED CERTIFICATE OF
INCORPORATION COULD DISCOURAGE TAKEOVER TRANSACTIONS
Upon completion of this offering, Carl W. Rausch, one of our co-founders and our
current Chairman, Chief Executive Officer and President, will beneficially own
24.2% of our outstanding class A common stock. As a result, Mr. Rausch will have
significant influence over the outcome of all matters requiring stockholder
approval, including the election and removal of directors and a merger or
consolidation of Biopure or sale of all or substantially all of our assets. Mr.
Rausch's influence could discourage others from initiating a potential merger,
takeover or other change of control transaction. In addition, certain provisions
of our Restated Certificate of Incorporation and by-laws, as well as the
adoption of a proposed stockholders' rights plan, could discourage these
transactions. For more information, see "Description of Capital
Stock -- Anti-Takeover Effects of Various Provisions of Delaware Law, Biopure's
Restated Certificate of Incorporation and By-laws and a Proposed Stockholders'
Rights Plan".
INDUSTRY RISKS
INTENSE COMPETITION COULD HARM OUR FINANCIAL PERFORMANCE
The biotechnology and pharmaceutical industries are highly competitive. There
are a number of companies, universities and research organizations actively
engaged in research and development of products that may be similar to Hemopure.
Increased competition could diminish our ability to become profitable or affect
our profitability in the future. Our existing and potential competitors:
- - are also conducting clinical trials of their products;
- - may have substantially greater resources than we do and may be better equipped
to develop, manufacture and market their products;
- - may have their products approved for marketing prior to Hemopure; and
- - may develop superior technologies or products rendering our technology and
products non-competitive or obsolete.
10
<PAGE> 12
THE MANUFACTURE AND MARKETING OF OUR PRODUCTS ARE SUBJECT TO STRINGENT, ONGOING
GOVERNMENT REGULATION
The FDA continues to review products even after they receive FDA approval. If
and when the FDA approves Hemopure, its manufacture and marketing will be
subject to ongoing regulation, including compliance with current Good
Manufacturing Practices, adverse event reporting requirements and the FDA's
general prohibitions against promoting products for unapproved or "off-label"
uses. We are also subject to inspection and market surveillance by the FDA for
compliance with these and other requirements. Any enforcement action resulting
from failure to comply with these requirements could affect the manufacture and
marketing of Hemopure. In addition, the FDA could withdraw a previously approved
product from the market upon receipt of newly discovered information.
We will be subject to a variety of regulations governing clinical trials and
sales of our products outside the United States. Whether or not FDA approval has
been obtained, we must secure approval of a product by the comparable non-U.S.
regulatory authorities prior to the commencement of marketing of the product in
a country. The approval process varies from country to country and the time
needed to secure additional approvals may be longer than that required for FDA
approval. These applications may require the completion of preclinical and
clinical studies and disclosure of information relating to manufacturing and
controls. Unanticipated changes in existing regulations or the adoption of new
regulations could affect the manufacture and marketing of our products.
HEALTH CARE REFORM AND CHANGES IN THE HEALTH CARE INDUSTRY CAN AFFECT THE
PRICING OF HEMOPURE
The federal government and private insurers have considered ways to change, and
have changed, the manner in which health care services are provided in the
United States. Potential approaches and changes in recent years include controls
on health care spending and the creation of large purchasing groups. In the
future, it is possible that the government may institute price controls and
limits on Medicare and Medicaid spending. These controls and limits might affect
the payments we collect from sales of our products. Assuming we succeed in
bringing Hemopure to market, uncertainties regarding future health care reform
and private market practices could impact our ability to sell Hemopure in large
quantities at profitable pricing.
UNCERTAINTY OF THIRD-PARTY REIMBURSEMENT COULD AFFECT OUR PROFITABILITY
Sales of medical products largely depend on the reimbursement of patients'
medical expenses by governmental health care programs and private health
insurers. There is no guarantee that governmental health care programs or
private health insurers will reimburse our sales of Hemopure, or permit us to
sell our products at high enough prices to generate a profit.
OFFERING RISKS
FUTURE SALES OF CLASS A COMMON STOCK COULD DEPRESS THE PRICE OF OUR CLASS A
COMMON STOCK
After this offering, our existing stockholders will hold 81% of the outstanding
shares of class A common stock. A decision by one or more of our stockholders to
sell their class A common stock could depress the market price of our class A
common stock.
PURCHASERS OF SHARES OF CLASS A COMMON STOCK IN THIS OFFERING WILL EXPERIENCE
SUBSTANTIAL DILUTION
Purchasers of shares of class A common stock in this offering will experience
immediate and substantial dilution of $12.15 in pro forma net tangible book
value per share, or approximately 74% of the offering price, assuming an initial
public offering price of $16.50 per share, the midpoint of the range shown on
the cover page of this prospectus. In contrast, existing stockholders paid an
average price of $13.15 per share.
------------------------
This prospectus also contains forward-looking statements that involve risks and
uncertainties. Our actual results could differ materially from those anticipated
in these forward-looking statements as a result of certain factors, including
the risks faced by us described above and elsewhere in this prospectus. We
assume no obligation to update any forward-looking statements or reason why
actual results might differ.
11
<PAGE> 13
USE OF PROCEEDS
The net proceeds we will receive from the sale of the 4,500,000 shares of class
A common stock offered by us are estimated to be $67,880,000, or $78,237,875 if
the underwriters' over-allotment option is exercised in full, after deducting
the estimated underwriting discounts and offering expenses payable by us and
assuming an initial public offering price of $16.50 per share, the midpoint of
the range shown on the cover page of this prospectus.
We currently intend to use the net proceeds of this offering as follows:
- - $4.5 million to repay the principal amount of our loan from Pharmacia &
Upjohn, Inc., which bears interest at the prime rate, 7.75% per annum at April
30, 1999, and is payable in quarterly installments ending October 1, 2001;
- - $4.0 million to repurchase 1,694,273 shares of our class A common stock from a
stockholder;
- - $8.7 million for capital expenditures; and
- - the balance for general corporate purposes, including
-- $38.0 million for clinical trials for Hemopure, and
-- $10.3 million for pre-marketing expenditures for Hemopure and expanded
marketing efforts for Oxyglobin.
Pending such uses, we intend to invest the proceeds in short-term,
investment-grade securities. Although we do not contemplate any changes in the
use of proceeds, we may adjust the amounts shown among the uses indicated above
or use portions of the net proceeds for other purposes.
DIVIDEND POLICY
We do not intend to pay any cash dividends on our class A common stock in the
foreseeable future. We currently intend to retain future earnings, if any, to
fund the development and growth of our business. Our board of directors will
determine whether we will pay dividends in the future.
12
<PAGE> 14
CAPITALIZATION
The following table summarizes, as of May 1, 1999, our capitalization on an
actual basis and on a pro forma as adjusted basis. The pro forma as adjusted
data reflect the sale of 4,500,000 shares of class A common stock in this
offering at an assumed initial public offering price of $16.50 per share, the
midpoint of the range shown on the cover page of this prospectus, after
deducting underwriting discounts and offering expenses payable by us, and the
use of a portion of such net proceeds and $500,000 from existing cash to
repurchase 1,694,273 shares of class A common stock at $2.95 per share and to
repay outstanding long-term debt, the sale of series D convertible preferred
stock in May 1999 and its conversion into an estimated 306,367 shares of class A
common stock upon completion of this offering and the conversion of all shares
of our convertible preferred stock upon completion of this offering. You should
read this information in conjunction with our Consolidated Financial Statements
and the related Notes appearing elsewhere in this prospectus.
This table does not include 1,248,295 shares of class A common stock issuable
upon the exercise of outstanding options and warrants as of May 1, 1999 or
1,286,152 shares of class A common stock issuable on the exercise of stock
options to be granted to employees and directors upon completion of this
offering. In addition, this table does not include between 646,667 and 1,272,119
shares of class A common stock issuable upon conversion of our class B common
stock following FDA approval of Hemopure.
<TABLE>
<CAPTION>
------------------------
MAY 1, 1999
------------------------
PRO FORMA
ACTUAL AS ADJUSTED
--------- -----------
<S> <C> <C>
In thousands, except par value and share data
Long-term debt (including current portion).................. $ 5,000 $ --
Common stock to be repurchased (1,694,273 shares of Class A
common stock actual; none pro forma as adjusted).......... 5,300 --
Stockholders' equity:
Preferred stock (9,000,000 shares authorized actual;
30,000,000 shares authorized pro forma as adjusted):
Series A convertible preferred stock, $0.01 par value
(346,663 shares outstanding actual; none pro forma as
adjusted)............................................. 3 --
Series B convertible preferred stock, $0.01 par value
(2,127,251 shares outstanding actual; none pro forma
as adjusted).......................................... 22 --
Series C convertible preferred stock, $0.01 par value
(2,830,188 shares outstanding actual; none pro forma
as adjusted).......................................... 28 --
Series D convertible preferred stock, $0.01 par value
(2,213,014 shares outstanding actual; none pro forma
as adjusted).......................................... 22 --
Common stock (40,000,179 shares authorized actual;
100,000,179 shares authorized pro forma as adjusted):
Class A common stock, $0.01 par value (10,556,342
shares outstanding actual; 22,770,513 shares
outstanding pro forma as adjusted).................... 106 228
Class B common stock, $1.00 par value (117.7 shares
outstanding actual and pro forma as adjusted)......... -- --
Capital in excess of par value.............................. 221,573 294,379
Contributed capital......................................... 24,574 24,574
Notes receivable............................................ (2,382) (2,382)
Accumulated deficit......................................... (212,128) (212,128)
--------- ---------
Total stockholders' equity............................. 31,818 104,670
--------- ---------
Total capitalization.............................. $ 42,118 $ 104,670
========= =========
</TABLE>
13
<PAGE> 15
DILUTION
Our pro forma net tangible book value as of May 1, 1999 was $36,790,000, or
approximately $1.88 per share of class A common stock. Pro forma net tangible
book value per share is equal to the amount of our total net tangible assets, or
total assets less intangible assets and total liabilities, plus the proceeds
from the sale of series D convertible preferred stock in May 1999, divided by
the pro forma shares of class A common stock as of May 1, 1999. Pro forma shares
of class A common stock reflect, as of May 1, 1999, the conversion of our
convertible preferred stock, including shares of series D convertible preferred
stock sold in May 1999, into an estimated 7,714,171 shares of class A common
stock upon completion of this offering, the repurchase of 1,694,273 shares of
class A common stock at $2.95 per share and the conversion of our class B common
stock. If we receive FDA approval of Hemopure, shares of our class B common
stock will be converted into shares of our class A common stock. We assumed the
conversion of our class B common stock into 1,272,119 shares of class A common
stock, the maximum number of shares that could be issued on conversion. Assuming
the sale by us of 4,500,000 shares of class A common stock in this offering at
an initial public offering price of $16.50 per share, the midpoint of the range
shown on the cover page of this prospectus, after deducting the underwriting
discounts and offering expenses payable by us, and the application of $4.0
million of the proceeds from this offering to repurchase 1,694,273 shares of our
class A common stock, our pro forma net tangible book value as of May 1, 1999
would be $104,670,000, or $4.35 per share of class A common stock. This
represents an immediate increase in pro forma net tangible book value of $2.47
per share to our existing stockholders and an immediate dilution in pro forma
net tangible book value of $12.15 per share to new investors. The following
table illustrates this per share dilution:
<TABLE>
<S> <C> <C>
------------------
Assumed initial public offering price per share............. $ 16.50
Pro forma net tangible book value per share as of May 1,
1999................................................... $ 1.88
Increase to present stockholders attributable to this
offering............................................... 2.47
-------
Pro forma net tangible book value per share after the
offering.................................................. 4.35
-------
Dilution per share to new investors......................... $ 12.15
=======
</TABLE>
The following table summarizes, on the pro forma basis described above, the
total number of shares of class A common stock issued, the total consideration
provided, the average price per share paid by existing stockholders and the
price paid by new investors. Existing stockholders include holders of our class
B common stock and convertible preferred stock and assumes that they purchased,
for the investment made for their class B common stock or their convertible
preferred stock, the number of shares of class A common stock into which their
class B common stock or their convertible preferred stock is convertible.
<TABLE>
<CAPTION>
---------------------------------------------------------------
SHARES PURCHASED TOTAL CONSIDERATION
-------------------- ---------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
---------- ------- ------------ ------- -------------
<S> <C> <C> <C> <C> <C>
Existing stockholders........................... 19,542,632 81.3% $256,978,000 77.6% $13.15
Purchasers of class A common stock in the
offering...................................... 4,500,000 18.7 74,250,000 22.4 $16.50
---------- ----- ------------ -----
Total................................. 24,042,632 100.0% $331,228,000 100.0%
========== ===== ============ =====
</TABLE>
The foregoing tables and calculations assume no exercise of outstanding options
and warrants.
14
<PAGE> 16
SELECTED CONSOLIDATED FINANCIAL DATA
The following table summarizes our consolidated statements of operations data
for the fiscal years ended October 31, 1994, 1995, 1996, 1997 and 1998 and the
six months ended May 2, 1998 and May 1, 1999. Also included in this table are
our consolidated balance sheet data at October 31, 1994, 1995, 1996, 1997 and
1998 and at May 1, 1999, on an actual and a pro forma as adjusted basis. The
following consolidated financial data with respect to our statements of
operations for the years ended October 31, 1996, 1997 and 1998 and with respect
to our balance sheets as of October 31, 1997 and 1998 are derived from our
consolidated financial statements that appear elsewhere in this prospectus and
that have been audited by Ernst & Young LLP, independent auditors. The following
consolidated financial data with respect to our statements of operations for the
years ended October 31, 1994 and 1995 and with respect to our balance sheets as
of October 31, 1994, 1995 and 1996 are derived from our audited consolidated
financial statements that are not included herein. The consolidated financial
data for the six months ended May 2, 1998 and May 1, 1999 are derived from our
unaudited consolidated financial statements that appear elsewhere in this
prospectus, which include all adjustments that we consider necessary for a fair
presentation of the financial position and results of operations for such
periods. You should read the consolidated financial data in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Consolidated Financial Statements and the related Notes
included elsewhere in this prospectus. Diluted earnings per share are not
presented in the consolidated statement of operations data because we had losses
in all periods.
The pro forma loss per common share data reflect the conversion of our
convertible preferred stock upon completion of this offering. The pro forma as
adjusted balance sheet data reflect that conversion and also reflect the sale of
4,500,000 shares of class A common stock at an assumed initial public offering
price of $16.50 per share, the midpoint of the range shown on the cover page of
this prospectus, after deducting the underwriting discounts and offering
expenses payable by us, and the use of a portion of such net proceeds and
$500,000 from existing cash to repurchase 1,694,273 shares of class A common
stock at $2.95 per share and to repay outstanding long-term debt. In addition,
the pro forma as adjusted balance sheet data reflect the sale in March 1999 of
additional shares of the series D convertible preferred stock, which will
convert into an estimated 306,367 shares of class A common stock upon completion
of this offering.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
SIX MONTHS ENDED
FISCAL YEAR ENDED OCTOBER 31, ------------------------
---------------------------------------------------------- MAY 2, MAY 1,
1994 1995 1996 1997 1998 1998 1999
-------- -------- -------- -------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
In thousands, except per share data
STATEMENTS OF OPERATIONS DATA:
Total revenues......................... $ -- $ 46 $ 71 $ -- $ 1,131 $ 214 $ 1,545
Cost of revenues....................... -- -- -- -- 1,543 -- 3,229
-------- -------- -------- -------- ---------- ---------- ----------
Gross profit (loss).................... -- 46 71 -- (412) 214 (1,684)
Operating expenses:
Research and development............. 17,896 16,498 18,924 23,494 22,950 12,085 9,871
Sales and marketing.................. -- -- -- 694 2,444 1,069 1,512
General and administrative........... 3,811 3,945 3,506 2,920 4,660 2,019 2,414
-------- -------- -------- -------- ---------- ---------- ----------
Total operating expenses............... 21,707 20,443 22,430 27,108 30,054 15,173 13,797
-------- -------- -------- -------- ---------- ---------- ----------
Income (loss) from operations.......... (21,707) (20,397) (22,359) (27,108) (30,466) (14,959) (15,481)
Total other income (expense)........... (1,161) (623) 765 (310) 419 465 259
-------- -------- -------- -------- ---------- ---------- ----------
Net income (loss)...................... $(22,868) $(21,020) $(21,594) $(27,418) $ (30,047) $ (14,494) $ (15,222)
======== ======== ======== ======== ========== ========== ==========
Historical basic net income (loss) per
common share......................... $ (1.85) $ (1.73) $ (1.77) $ (2.23) $ (2.41) $ (1.17) $ (1.23)
Historical weighted-average common
shares outstanding................... 12,335 12,171 12,215 12,300 12,460 12,425 12,333
Pro forma basic net income (loss) per
common share......................... $ (1.68) $ (0.82) $ (0.81)
Pro forma weighted-average common
shares outstanding................... 17,858 17,679 18,803
</TABLE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------
AT MAY 1, 1999
AT OCTOBER 31, ----------------------
-------------------------------------------------------- PRO FORMA
1994 1995 1996 1997 1998 ACTUAL AS ADJUSTED
-------- -------- -------- -------- -------- ------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
In thousands
BALANCE SHEET DATA:
Cash and cash equivalents.................. $ 4,503 $ 7,924 $ 12,772 $ 13,527 $ 6,063 $13,541 $ 77,093
Total current assets....................... 10,047 10,453 13,636 15,221 13,175 22,455 86,007
Working capital............................ 1,848 3,406 8,111 5,368 1,986 11,014 76,566
Net property and equipment................. 12,723 28,272 29,438 27,408 29,606 29,029 29,029
Total assets............................... 24,237 40,218 43,462 44,054 44,848 53,471 116,023
Long-term debt (including current
portion)................................. -- -- 9,000 8,000 6,000 5,000 --
Common stock to be repurchased............. -- -- -- 6,300 6,300 5,300 --
Total stockholders' equity................. 14,911 31,875 26,417 20,222 21,449 31,818 104,670
</TABLE>
15
<PAGE> 17
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion of our financial condition and results of operations
should be read in conjunction with the Consolidated Financial Statements and the
related Notes included elsewhere in this prospectus. This discussion contains
forward-looking statements that involve risks and uncertainties. Our actual
results may differ materially from those anticipated in these forward-looking
statements as a result of certain factors, including, but not limited to, those
set forth under "Risk Factors" and elsewhere in this prospectus.
OVERVIEW
We are a leading developer, manufacturer and marketer of oxygen therapeutics.
Our oxygen therapeutics are pharmaceuticals that one administers intravenously
into the circulatory system to increase oxygen delivery to the body's tissues.
We have developed and manufacture, using a proprietary process and patented
technology, two hemoglobin-based oxygen carriers. Hemopure, for human use, is
currently in a pivotal Phase III clinical trial in the United States. Oxyglobin,
for veterinary use, is the only hemoglobin-based oxygen carrier approved by the
FDA.
Since inception, we have devoted substantially all of our resources to our
research and development programs and manufacturing. We have been dependent upon
funding from debt and equity financings, strategic corporate alliances,
licensing agreements and interest income. We have not been profitable since
inception and had an accumulated deficit of $212.1 million as of May 1, 1999. We
expect to incur additional operating losses over the next several years in
connection with clinical trials, pre-marketing expenditures for Hemopure,
expanded marketing of Oxyglobin and increases in production. We began generating
revenue from the sale of Oxyglobin in fiscal 1998.
We agreed to issue an additional 1,080,000 shares of class A common stock to
holders of our series B and series C convertible preferred stock to obtain their
consent to convert their preferred stock in connection with this offering. The
value of such additional shares will, for accounting purposes, be treated as a
dividend on such convertible preferred stock in the quarter in which the
offering and conversion occur and, consequently, will increase net loss
applicable to common stockholders.
RESULTS OF OPERATIONS
Six Months Ended May 1, 1999 and May 2, 1998
Total revenues increased to $1.5 million in the first half of fiscal 1999 from
$214,000 in the first half of fiscal 1998. Revenues in the first half of fiscal
1999 include $1.5 million of Oxyglobin sales reflecting the national launch of
Oxyglobin in October 1998. Total revenues also reflect fees from license and
development activities unrelated to our oxygen therapeutic products of $64,000
in the first half of fiscal 1999 and $90,000 in the first half of fiscal 1998.
Cost of revenues was $3.2 million in the first half of fiscal 1999. We did not
recognize any cost of revenues in the first six months of fiscal 1998. All such
costs during the first half of 1998 were allocated to research and development
expenses prior to FDA approval of Oxyglobin in March 1998 and while we expanded
manufacturing capacity following FDA approval.
Research and development expenses decreased 18.3% to $9.9 million in the first
half of fiscal 1999 from $12.1 million in the first half of fiscal 1998. This
decrease was primarily attributable to the allocation of that portion of
manufacturing expenses associated with the production of Oxyglobin to cost of
revenues.
Sales and marketing expenses increased 41.4% to $1.5 million in the first half
of fiscal 1999 from $1.1 million in the first half of fiscal 1998. This increase
was primarily attributable to increased sales and marketing personnel and
product launch, selling, marketing and distribution expenses related to
Oxyglobin.
General and administrative expenses increased 19.6% to $2.4 million in the first
half of fiscal 1999 from $2.0 million in the first half of fiscal 1998. This
increase was primarily attributable to an average increase of seven people in
our general and administrative department.
Total other income (expense) decreased 44.3% to $259,000 in the first half of
fiscal 1999 from $465,000 in the first half of fiscal 1998. This decrease was
primarily associated with a $552,000 decrease in interest income associated with
a decrease in average cash balances. Average cash balances were approximately
$10.9 million in the first half of fiscal 1999 compared to $29.2 million in the
first half of fiscal 1998. The decrease in interest income was partially offset
by the receipt of $200,000 under a settlement agreement associated with a
discontinued development project unrelated to oxygen therapeutics.
16
<PAGE> 18
Fiscal Years Ended October 31, 1998 and 1997
Total revenues were $1.1 million in fiscal 1998. We did not realize any revenues
in fiscal 1997. Revenues in fiscal 1998 included $942,000 of Oxyglobin sales.
Oxyglobin sales commenced in mid-March of fiscal 1998 to a discrete number of
emergency and specialty practices in the United States. We launched Oxyglobin
nationally in October 1998. Total revenues in fiscal 1998 also reflect $189,000
from license and development activities and product sales unrelated to our
oxygen therapeutic products.
Cost of revenues was $1.5 million in fiscal 1998. We did not realize any cost of
revenues in fiscal 1997. Cost of revenues in fiscal 1998 reflects the allocation
of a portion of the manufacturing costs after FDA approval for Oxyglobin and
completion of a process expansion project in August 1998. These costs were
entirely allocated to research and development expenses prior to August 1998.
Research and development expenses decreased 2.3% to $23.0 million in fiscal 1998
from $23.5 million in fiscal 1997. This decrease was attributable to the $1.5
million allocation of manufacturing expenses associated with the production of
Oxyglobin to cost of revenues from research and development expenses. This
decrease was partially offset by an increase in preclinical activities during
fiscal 1998 as compared to fiscal 1997.
Sales and marketing expenses increased 252.2% to $2.4 million in fiscal 1998
from $694,000 in fiscal 1997. This increase was primarily attributable to
increased sales and marketing personnel and product launch, selling, marketing
and distribution expenses related to Oxyglobin.
General and administrative expenses increased 59.6% to $4.7 million in fiscal
1998 from $2.9 million in fiscal 1997. This increase was primarily attributable
to the addition of five people in the general and administrative department and
expenses related to Hemopure market research and public relations activities.
Total other income (expense) was income of $419,000 in fiscal 1998 compared to
an expense of $310,000 in fiscal 1997. This change of $729,000 was primarily
associated with increased interest income from higher average cash balances
which were approximately $21.6 million in fiscal 1998 compared to $10.6 million
in fiscal 1997.
Fiscal Years Ended October 31, 1997 and 1996
We did not realize any revenues in fiscal 1997 as compared to $71,000 in fiscal
1996. Fiscal 1996 revenues were primarily attributable to license and
development revenues and were not associated with oxygen therapeutics.
Research and development expenses increased 24.1% to $23.5 million in fiscal
1997 from $18.9 million in fiscal 1996. This increase in research and
development expenses was primarily attributable to the completion of plant
construction projects, resulting in increased validation and depreciation
expenses, and increased preclinical and clinical trial activity.
Sales and marketing expenses were $694,000 in fiscal 1997. We did not have any
sales and marketing expenses in fiscal 1996 because our products were awaiting
FDA approval. The increase in sales and marketing expenses was primarily
attributable to pre-launch sales activities for Oxyglobin, which commenced in
1997.
General and administrative expenses decreased 16.7% to $2.9 million in fiscal
1997 from $3.5 million in fiscal 1996. This decrease was primarily attributable
to expenses recorded in 1996 as bonuses related to our agreement with Pharmacia
& Upjohn, Inc.
Total other income (expense) was an expense of $310,000 in fiscal 1997 compared
to income of $765,000 in fiscal 1996. This change of $1.1 million was primarily
due to a gain of $1.0 million in 1996 as a result of a merger between an
affiliate in an unrelated business into another company. As a result of the
merger, we were relieved of loan guarantee obligations and were paid for
accounts receivable for enzymes previously shipped to the affiliate, both of
which had been fully reserved prior to 1996.
LIQUIDITY AND CAPITAL RESOURCES
At May 1, 1999, we had current assets of $22.5 million, which consisted
primarily of $13.5 million in cash and cash equivalents, $4.6 million in net
inventory and $3.5 million held in an escrow account by Biopure as a settlement
payment by which we reacquired shares of class A common stock and license
rights. At May 1, 1999, current liabilities were $11.4 million.
We have financed operations from inception primarily through sales of equity
securities, development and license agreement payments, interest income and
debt. In January 1997, we sold an additional 3.2 shares of class B common stock
with net proceeds of $3.2 million. In June, July and August 1997, we sold class
A common stock with net proceeds of $2.4 million. In
17
<PAGE> 19
separate transactions between June and November 1997, we sold series B and
series C convertible preferred stock with aggregate net proceeds of $49.9
million. In May and October 1998, we sold class A common stock with net proceeds
of $2.5 million. In December 1998 and April 1999, we sold series D convertible
preferred stock with aggregate net proceeds of $25.6 million. Subsequent to May
1, 1999, we sold an additional 397,250 shares of Series D convertible preferred
stock with aggregate net proceeds of $4.7 million. Our primary investment
objective is preservation of principal and currently we invest in high grade
commercial paper.
In October 1996, we incurred $9.0 million in long-term debt to Pharmacia &
Upjohn, Inc. in connection with the mutual termination of a strategic alliance.
As of May 1, 1999, we have repaid $4.0 million of the principal amount of this
debt. At May 1, 1999, the $2.0 million current portion of this debt was
reflected in current liabilities and the balance of $3.0 million was classified
as long-term debt. The loan is payable quarterly in equal installments of
$500,000 principal amount through October 1, 2001. The outstanding principal
balance is subject to mandatory prepayment upon certain financing events,
including a financing in excess of $50.0 million or this initial public
offering.
We plan to spend $8.7 million in the remainder of 1999 and 2000 on capital
projects for our existing facilities. We will need to construct additional
manufacturing facilities to attain annual capacity in excess of 120,000 units of
Hemopure. We may incur additional costs in fiscal 2000 to begin engineering and
design work of these facilities. We will need additional financing for any new
facility. We have not been profitable since inception and had an accumulated
deficit of $212.1 million as of May 1, 1999. We will continue to generate losses
from operations for the foreseeable future. We will explore opportunities to
raise capital through sales of equity and debt securities, bank borrowings or
leasing arrangements.
We believe our current cash, cash equivalents and short-term investments,
together with the net proceeds of this offering, should be sufficient to meet
our projected requirements until our anticipated filing in 2000 for FDA approval
of Hemopure, exclusive of new plant construction. Our cash requirements may vary
significantly from current projections.
As of October 31, 1998, we had net operating loss carryforwards of approximately
$140.0 million to offset future federal and state taxable income through 2013.
Due to the degree of uncertainty related to the ultimate realization of such
prior losses, no benefit has been recognized in our financial statements as of
October 31, 1998. Utilization of such losses in future years may be limited
under the change of stock ownership rules of the Internal Revenue Service.
YEAR 2000 COMPLIANCE
Some currently installed computer systems and software products are coded to
accept or recognize only two digit entries in the date code field. These systems
and software products will need to accept four digit entries to distinguish 21st
century dates from 20th century dates. As a result, computer systems and
software used by many companies and governmental agencies may need to be
upgraded to comply with such Year 2000 requirements or risk system failure or
miscalculations causing disruptions of normal business activities.
State of Readiness
We have made an assessment of the ability of our critical information and
non-critical information systems to function properly with respect to dates in
the year 2000 and thereafter. We have based this assessment upon communications
with equipment and software vendors, literature supplied with software and in
connection with maintenance contracts and test evaluations of our systems. Our
critical systems are defined as: transactional systems affecting product
manufacturing, delivery and quantity; systems which play an infrastructure role
in supporting our business and scientific operations; and systems which use
forward-looking or date-based forecasting such as sample or batch expiration
dates.
We have identified potential problems in some of our critical systems and began
repairing, upgrading or replacing such systems in the second quarter of fiscal
1999. We expect to complete this process by the end of the fourth quarter of
fiscal 1999. We expect to repair, replace or upgrade non-critical systems by the
end of calendar year 1999. We will continue to monitor and remediate our
critical and non-critical systems.
Costs
To date, we have incurred, or are committed to incur, approximately $70,000 in
costs in connection with identifying and evaluating Year 2000 compliance issues.
Most of our expenses relate to, and are expected to continue to relate to, the
operating costs associated with time spent by employees in the assessment
process, the repair, upgrade or replacement process and Year 2000 compliance
matters generally. We estimate that the total cost of our Year 2000 project will
be $300,000 and intend to expense such costs as they are incurred. We expect to
fund all of these expenses from working capital. In the event that we incur
expenses higher than anticipated, such additional expenses could harm our
business.
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Risks
We have also commenced an assessment of the Year 2000 risks of our key
suppliers, including contract research organizations working on our clinical
trials, vendors and veterinary distributors of Oxyglobin. Our assessment is
based upon questionnaires submitted to these third parties. We believe that any
Year 2000 risks associated with these third parties will not have a material
effect on our business. We base our beliefs on the following facts: our key
suppliers, vendors and veterinary distributors are in the process of upgrading
to Year 2000-compliant systems, and our clinical trial information that might be
sensitive to the change from 1999 to 2000 is minimal.
Contingency Plan
In the event that we do not complete our Year 2000 conversion, we will manually
perform those tasks which would otherwise be performed by our non-Year
2000-compliant systems until such systems are repaired, upgraded or replaced. In
this event, we anticipate that we will experience delays in our production runs.
RECENTLY ISSUED ACCOUNTING STANDARDS
In June 1997, the Financial Accounting Standards Board issued Statement No. 131,
Disclosures About Segments of an Enterprise and Related Information, or
Statement 131, which establishes standards for public companies to report
information about operating segments in financial statements. Statement 131
supersedes Statement No. 14, Financial Reporting for Segments of a Business
Enterprise; however, Statement 131 retains the requirements to report
information about major customers. We adopted Statement 131 effective November
1, 1998. We do not expect disclosures required in future periods under Statement
131 to be significant.
In March 1998, the Accounting Standards Executive Committee, or AcSEC, issued
Statement of Position No. 98-1, Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use, or SOP No. 98-1. SOP No. 98-1 provides
guidance for the capitalization of certain costs incurred for the development or
acquisition of internal-use software. SOP No. 98-1 is effective for fiscal 2000.
We do not expect the adoption of this standard to have a material effect on our
financial position or operating results.
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<PAGE> 21
BUSINESS
The following section contains forward-looking statements which involve risks
and uncertainties. Our actual results could differ materially from those
anticipated in these forward-looking statements as a result of various factors,
including those set forth in "Risk Factors" and elsewhere in this prospectus.
Biopure develops, manufactures and markets oxygen therapeutics. Its products are
Hemopure, for human use, and Oxyglobin, for veterinary use. Biopure is
developing Hemopure as an alternative to red blood cell transfusions as well as
for use in the treatment of other critical care conditions. Hemopure is
currently in a pivotal Phase III clinical trial in the United States. In 1998,
following FDA approval, Biopure began selling Oxyglobin in the United States.
SCIENTIFIC OVERVIEW
Oxygen is indispensable to the life of all human tissues. Hemoglobin, a protein
normally contained within red blood cells, is the molecule responsible for
carrying and releasing oxygen to the body's tissues. Hemoglobin's protein
structure is similar in many different animal species, including humans. Under
normal conditions, hemoglobin contained within red blood cells carries
approximately 98% of the body's oxygen and the remaining two percent is
dissolved in the plasma, or fluid part of the blood.
As the heart pumps blood, hemoglobin within the red blood cells takes up oxygen
in the lungs and carries it to various parts of the body. Blood travels through
progressively smaller blood vessels to the capillaries, some of which are so
narrow that red blood cells can only pass through them in single file. Most of
the oxygen release occurs in the capillaries. Blood then returns to the lungs to
reload the red blood cells with oxygen. Adequate blood pressure and red blood
cell counts are crucial to this process. Oxygen deprivation, even for several
minutes, can result in cell damage, organ dysfunction and, if prolonged, death.
The causes of inadequate tissue oxygenation generally can be classified into
three categories:
- - anemia -- insufficient hemoglobin. Blood loss from injury or surgery or
disorders that affect red blood cell production or maintenance, such as bone
marrow disease, can cause anemia;
- - ischemia -- inadequate red blood cell flow for tissue oxygenation. Obstructed
or constricted blood vessels can result in ischemia. Ischemia can lead to
stroke, heart attack or other organ or tissue dysfunction; and
- - cardiopulmonary failure -- impaired function of the heart or lungs. The
heart's inability to pump sufficient quantities of blood to meet the needs of
the tissues or the failure of the lungs to oxygenate blood adequately can
cause cardiopulmonary failure.
A red blood cell transfusion is the standard therapy for anemia resulting from
blood loss. Sources of red blood cells for transfusions include stored supplies
of donated blood or of the recipient's own pre-donated blood. Health care
professionals also may use medications that stimulate red blood cell production
if anemia is anticipated, for example, as a result of planned surgery.
Red blood cell transfusions have certain risks and limitations. As HIV,
hepatitis and other diseases have infected the world's blood supply, the need
for a sterile blood product has become increasingly apparent. There is currently
no 100% effective method for detecting blood-borne diseases or for sterilizing
donated blood. As a result, the risk of disease transmission from donated blood
is an ongoing concern to physicians and patients, although less so than in the
past. Handling errors in typing and cross-matching blood, as well as the
inadvertent introduction of pathogens, can also result in significant medical
problems. Blood typing and handling requirements, particularly refrigeration,
limit the feasibility of red blood cell transfusions in pre-hospital emergency
treatment situations. Shortages of certain types of blood can occur due to
seasonal factors or disasters. Donated red blood cells are available for use in
transfusions for only 42 days after collection and this limitation affects the
ability to stockpile red blood cell supplies. Although freezing can extend the
life of red blood cells, the freezing and thawing processes require chemical
treatment of the red blood cells and reduce the efficacy of those red blood
cells. Finally, the longer red blood cells are stored, the longer it takes them
to reach their maximum oxygen-releasing capacity and the more they break down,
limiting their effectiveness in delivering oxygen. Red blood cells lose
approximately 75% of their oxygen-releasing ability after eight days of storage.
Blood banks generally release the oldest stored blood first to prevent outdating
after 42 days.
Red blood cell transfusions generally are not effective for ischemic conditions.
In such situations, an obstructed or constricted blood vessel that is too narrow
to permit the normal passage of red blood cells can prevent oxygen from reaching
the body's tissues. Similarly, red blood cell transfusions are generally not
effective in overcoming poor oxygenation due to impaired heart or lung function.
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Existing alternatives to red blood cell transfusions are limited. In trauma
situations, victims may experience massive bleeding resulting in rapid loss of
blood volume and oxygen-carrying capacity. In an effort to stabilize trauma
patients, emergency caregivers typically administer commonly used intravenous
fluids, such as Ringer's lactate or saline. Ringer's lactate consists of water
and electrolytes and is generally administered to patients who have lost
substantial amounts of bodily fluids as a result of bleeding, vomiting or
diarrhea. Both Ringer's lactate and saline restore blood volume, but do not
carry oxygen.
For anemia in non-acute situations, there are currently two biological products
on the market. Both of these products are formulations of a protein called
erythropoietin. Erythropoietin stimulates the body's ability to produce its own
red blood cells. This stimulation is called an erythropoietic effect. In a
surgical setting, these products are administered in anticipation of blood loss
during surgery, thereby potentially reducing the need for red blood cell
transfusions. However, erythropoietin does not deliver oxygen to the body's
tissues and does not act as a blood volume expander. As a result, these products
are not effective in treating acute blood loss and are generally not used in
cases of unplanned surgeries or emergency need. In addition, the labels on these
products caution against their use in cardiac surgery patients.
BIOPURE'S OXYGENATION TECHNOLOGY
Biopure has two proprietary oxygen therapeutic products that are identical
except for their molecular size distributions. Biopure defines its products as
therapeutics because they remediate oxygen deprived tissues. One administers
these products intravenously. Biopure's products consist of bovine hemoglobin
that has been purified, chemically modified and cross-linked for stability. The
resulting hemoglobin solutions do not contain red blood cells and are formulated
in a balanced salt solution similar to Ringer's lactate.
The average Hemopure molecule is less than 1/1000th the size of a red blood
cell. Once infused into a patient, the Hemopure molecules disperse throughout
the entire plasma space, including the area between and around red blood cells,
and are in continuous contact with the blood vessel wall where oxygen transport
to tissues takes place. The following schematic illustrates the movement of red
blood cells and Hemopure in blood vessels.
[Schematic of Blood Vessel]
In the above schematic, the large circles represent red blood cells, which are
surrounded by plasma. The small particles shown in the plasma solution represent
Hemopure molecules. Hemopure, by filling plasma with hemoglobin molecules,
immediately turns the plasma into an oxygen-delivering substance. Plasma
containing Hemopure flows everywhere that blood ordinarily flows and can also
bypass partial blockages or pass through constricted vessels that impede the
normal passage of red blood cells. Furthermore, introducing Hemopure into the
bloodstream enables red blood cells to release more oxygen to the tissues than
they otherwise would. In addition to delivering oxygen to tissues, Hemopure also
acts as a blood volume expander and may have an erythropoietic effect,
stimulating the body's ability to produce red blood cells.
Hemopure molecules hold the same amount of oxygen as the hemoglobin molecules in
red blood cells on a gram-for-gram basis. Hemopure molecules, however, are
chemically modified to have less affinity for oxygen than red blood cells,
enabling Hemopure to release oxygen to tissues more efficiently than red blood
cells. Human hemoglobin, unlike bovine hemoglobin,
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depends on the action of 2,3 diphosphoglycerate, or 2,3 DPG, a substance found
in high concentrations only within the red blood cell, for optimal offloading,
or release, of oxygen to tissues. The 2,3 DPG breaks down rapidly in stored
blood causing red blood cells to lose approximately 75% of their ability to
release oxygen after eight days of storage. The 2,3 DPG breakdown reduces the
oxygen offloading efficiency of transfused red blood cells until its levels are
restored. Transfused red blood cells can require hours to regain their oxygen
offloading capability. Biopure's bovine hemoglobin permits the efficient
offloading of oxygen in the absence of 2,3 DPG, thereby allowing Hemopure to be
at its optimal oxygen offloading effectiveness immediately upon infusion.
Hemoglobin molecules in different species have demonstrated low antigenicity,
which means that they do not readily elicit an immune or allergic response.
Biopure has confirmed Hemopure's low antigenicity, as indicated by the absence
of certain effects, through in vitro and in vivo studies. No clinically
significant levels of antibodies were observed in Biopure's trials, including
one human study lasting more than a year with multiple doses.
The following chart lists Hemopure's characteristics in comparison to transfused
red blood cells:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CHARACTERISTIC HEMOPURE TRANSFUSED RED BLOOD CELLS
-------------- -------- --------------------------
<S> <C> <C>
Onset of action Immediate -- not 2,3 DPG-dependent Initially limited -- 2,3
DPG-dependent
Oxygen affinity More efficient oxygen release to Less efficient oxygen release to
tissues tissues
Oxygen transport Red blood cells and plasma Red blood cells only
Risk of disease transmission Product purity maintained through Risk minimized by testing, donor
a reproducible and controllable selection and administration
manufacturing process that protocols, and ongoing
complies with current Good surveillance for emerging
Manufacturing Practices; no pathogens; leukocyte exposure
leukocyte, or white blood cell,
exposure
Storage Room temperature; no loss of Refrigeration required; loss of
efficacy efficacy
Shelf life 2 years 42 days
Compatibility Universal Type-specific
Preparation Ready-to-use Requires typing and cross-matching
Viscosity Low High
Raw material source Controlled Not controlled
Duration of action Maximum of 3 days Maximum of 120 days
</TABLE>
In addition to Hemopure's use as an alternative to red blood cell transfusions
in surgery, human clinical testing and preclinical studies suggest that Hemopure
also could be a readily available therapeutic with a broad range of potential
applications. These applications include the treatment of trauma, ischemic
conditions, including stroke and heart attack, and malignant hypoxic tumors.
Hemopure has a two-year shelf life at room temperature, is universally
compatible and can be stocked well in advance of anticipated use. Consequently,
when blood is not available, Hemopure could be used to maintain a patient until
the needed type and quantity of red blood cells arrive, until the patient can be
transported to a hospital or until a patient's body produces its own red blood
cells. Hemopure thus could be an effective "oxygen bridge" to a red blood cell
transfusion or the body's ability to regenerate its own fresh red blood cells.
Hemopure may be particularly well-suited for this "oxygen bridge" function
because the duration of action of a single infusion is about two to three days
with 50% of the Hemopure molecules retained in the circulatory system for 24 to
36 hours following administration. In clinical trial data, Biopure has observed
that the redosing of Hemopure over several days can prolong Hemopure's "oxygen
bridge" effect.
Transfused red blood cells, however, have some advantages when compared to
Hemopure. Transfused red blood cells have a longer duration of action and can
persist in the body for up to 120 days. Hemopure, on the other hand, depending
on the amount infused, can last between one and three days and may require
repeat administration. Biopure has also observed slight increases in blood
pressure and abdominal discomfort in Hemopure-infused patients. Fluctuations in
a patient's blood pressure can affect the manner in which health care
professionals, who are accustomed to transfusing red blood cells, manage a
patient's care. Furthermore, Biopure cannot be certain that Hemopure will not
elicit an immune response in some individuals as do some other proteins. In
addition, it is anticipated that the cost of Hemopure will be significantly
greater to the patient than the cost of transfused red blood cells.
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STRATEGY
Biopure intends to expand its leadership position in the development,
manufacture and marketing of oxygen therapeutics through the following strategy:
- - Develop and Commercialize Hemopure as an Alternative to Red Blood Cell
Transfusions. Biopure's advanced clinical trials have demonstrated Hemopure's
efficacy as an alternative to red blood cell transfusions in certain surgical
procedures. While Biopure does not anticipate that Hemopure will replace all
red blood cell transfusions, Biopure expects that Hemopure's use in surgery
will demonstrate Hemopure to be a safe and effective oxygen therapeutic in a
wide range of patients. Biopure expects to file for marketing approval of
Hemopure in South Africa in 1999 and complete its U.S. pivotal Phase III
clinical trial and file for approval in the United States and the European
Union in 2000.
- - Pursue Approvals of Hemopure for Additional Therapeutic Applications. Biopure
will seek regulatory approvals for the use of Hemopure as an adjunct to red
blood cell transfusions. In addition, because of its special oxygen
therapeutic characteristics, Biopure will seek to develop Hemopure as a
therapy for indications such as trauma, ischemic conditions, including stroke
and heart attack, and as an adjunct to therapy for malignant hypoxic tumors.
Observations from Biopure's clinical trials and the results of preclinical
studies and field reports support the use of Hemopure for these conditions.
- - Increase Market Awareness for Hemopure. Biopure intends to increase market
awareness for Hemopure by identifying the issues and promoting standards
necessary for widespread acceptance of oxygen therapeutics by the medical
community. Biopure has contracted with a medical education firm to work with
physician thought leaders to advocate the clinical benefits of Hemopure and
expects to expand this effort.
- - Expand Market for Oxyglobin. Biopure will seek to broaden Oxyglobin's use to
other canine indications, other animal species and selected international
markets. In 1998, Biopure filed for marketing approval in the European Union
for canine anemia. Biopure will continue advertising and educational
initiatives to further penetrate U.S. veterinary practices. Biopure may also
seek one or more marketing alliances in the United States or other geographic
areas.
BIOPURE'S PRODUCTS
Biopure's two products are oxygen therapeutics. Hemopure, for human use, is
currently in a U.S. pivotal Phase III clinical trial. Biopure expects that this
trial, together with the results of prior clinical trials, will form the basis
for an FDA marketing application in the year 2000 for the use of Hemopure as an
alternative to red blood cell transfusions before, during or after elective
orthopedic surgery. The FDA has approved the use of Oxyglobin, Biopure's
veterinary product, for the treatment of anemia in dogs, regardless of cause.
Oxyglobin is marketed and sold to veterinary hospitals and to small animal
veterinary practices. Biopure has tested Hemopure and Oxyglobin in approximately
19 completed clinical trials and 150 completed preclinical studies involving
more than 400 humans and 1,500 animals from 10 species.
HEMOPURE
Biopure is pursuing the development and approval of Hemopure both as an
alternative to red blood cell transfusions and as a therapeutic for indications
such as trauma, ischemic conditions, including stroke and heart attack, and
malignant hypoxic tumors.
Red Blood Cell Transfusion Alternative
Biopure plans to file for human approval in South Africa in 1999 for Hemopure's
use as an alternative to red blood cell transfusions for elective surgery.
Hemopure would serve as an alternative to a red blood cell transfusion or as an
"oxygen bridge" pending the acquisition or production of suitable red blood
cells. Biopure does not expect Hemopure to replace all red blood cell
transfusions. However, Hemopure's oxygen-carrying properties, storage and
infusion advantages address many of the limitations associated with red blood
cell transfusions. The National Blood Data Resource Center, a subsidiary of the
American Association of Blood Banks, estimated that approximately 11.5 million
units of red blood cells and whole blood, including the patient's own previously
donated blood, were transfused in the United States in 1997.
Biopure's clinical trials have demonstrated Hemopure's efficacy as an
alternative to red blood cell transfusions in surgery patients as measured by
the elimination of red blood cell transfusions. In all of Biopure's advanced
clinical trials, Biopure evaluated Hemopure's efficacy as an oxygen therapeutic
by determining, within the context of a written set of guidelines known as a
protocol, the percentage of patients given Hemopure who did not require a
subsequent transfusion of red blood cells. In these trials, Hemopure was
administered only to patients who needed a red blood cell transfusion. Trial
design limited the amount of Hemopure that could be infused and the number of
post-operative days during which it could be infused. Elimination was deemed to
occur if the patient did not require a subsequent red blood cell transfusion.
Elimination was
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deemed not to occur if the patient was administered the maximum number of
Hemopure units permitted by the particular trial design and subsequently needed
a red blood cell transfusion. Despite these trial limitations, Hemopure's
clinical trials demonstrate statistically significant elimination of red blood
cell transfusions.
In 1998, the FDA agreed to a protocol with a primary endpoint of 35% elimination
for Biopure's ongoing U.S. pivotal Phase III clinical trial in orthopedic
surgery patients. The most recently completed trial, a Phase III clinical trial
conducted in Europe and South Africa with non-cardiac surgery patients, showed
elimination of 43%.
The following chart summarizes Biopure's advanced clinical trials that Biopure
will use for the initial applications for marketing approval of Hemopure as an
alternative to red blood cell transfusions.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
NO. OF TOTAL
DOSING: GRAMS PATIENTS/NO. OF
HEMOGLOBIN (UNITS PATIENTS TREATED
TYPE OF SURGERY DEVELOPMENT STATUS HEMOPURE) WITH HEMOPURE RESULTS
- --------------- ------------------ ----------------- ---------------- -------
<S> <C> <C> <C> <C>
Elective orthopedic U.S. pivotal Phase III Up to 300 grams 640/320 Trial ongoing
surgery (ongoing) trial ongoing (10 units) over 6
days
Non-cardiac elective Phase III trial Up to 210 grams 160/83 43% elimination of red
surgery (1998) completed in Europe and (7 units) over 6 blood cell
South Africa; the basis days transfusions
for filing in South
Africa in 1999
Post cardiopulmonary Phase II trial Up to 120 grams 98/50 34% elimination of red
bypass surgery (1996) completed in the U.S.; (4 units) over 3 blood cell
supportive trial for days; first dose transfusions
the South African 1999 administered
filing post-surgery
Aortic aneurysm Intraoperative Phase II Up to 150 grams 72/48 27% elimination of red
reconstruction surgery trial completed in the (5 units) over 4 blood cell
(1996) U.S.; supportive trial days; first dose transfusions
for the South African administered
1999 filing during surgery,
if required
</TABLE>
U.S. Pivotal Phase III Orthopedic Surgery Trial. Biopure, with FDA agreement,
began a pivotal Phase III trial in the United States in March 1999 in elective
orthopedic surgery. Elective orthopedic surgery includes non-emergency surgery
involving bones and joints as well as artificial limbs. The primary objective of
this trial is the avoidance of red blood cell transfusions for six weeks after
orthopedic surgery. Biopure designed this randomized, red blood cell controlled,
multi-center study to enroll a total of 640 patients in the United States,
Europe, Canada and South Africa, of whom approximately one-half will be in the
Hemopure treatment group and the other half will receive red blood cells. Up to
300 grams of hemoglobin, or ten units of Hemopure, may be infused before, during
or after surgery for a total of up to six treatment days. The primary endpoint
of this trial is the elimination of red blood cell transfusions in 35% of the
patients who receive Hemopure.
Non-U.S. Phase III Non-cardiac Surgery Trial. Biopure completed a Phase III
trial in Europe and South Africa in 1998 in non-cardiac surgery. Non-cardiac
surgery refers to surgery that does not involve the heart and can include
surgery of the digestive or urinary tract as well as orthropedic surgery. The
primary objective of this trial was the avoidance of red blood cell transfusions
for 28 days after non-cardiac surgery. This randomized, red blood cell
controlled, multi-center study enrolled 160 patients, 83 of whom were infused
with Hemopure. Up to 210 grams of hemoglobin, or seven units of Hemopure, were
permitted during a six-day treatment period. The trial resulted in the
statistically significant elimination of red blood cell transfusions in 43% of
the patients who received Hemopure.
U.S. Phase II Post Cardiopulmonary Bypass Surgery Trial. Human testing was
completed in 1997 in a double-blind, randomized, red blood cell controlled,
multi-center study in post cardiopulmonary bypass surgery patients. During
cardiopulmonary bypass surgery, patients are connected to a heart and lung
machine that replaces functions of the heart and lungs during surgery. The
primary objective of this trial was the avoidance of red blood cell transfusions
for 28 days after surgery. The study treated 98 patients, 50 of whom were
infused with Hemopure. Up to 120 grams of hemoglobin, or four units of Hemopure,
were administered over a three-day treatment period following surgery. The trial
resulted in the statistically significant elimination of red blood cell
transfusions in 34% of the patients that received Hemopure. In this study, 100%
of the patients who received Hemopure did not require any red blood cells during
the day of surgery.
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Additionally, Biopure observed that the hematocrit, or packed red blood cell
volume as a percentage of total blood volume, of the patients treated with
Hemopure recovered to a degree that was indistinguishable from the red blood
cell treated patients at both six and 28 days post-surgery. This observation
supports the potential use of Hemopure as an erythropoietic agent.
U.S. Phase II Aortic Aneurysm Reconstruction Surgery Trial. In 1998, Biopure
completed a randomized, red blood cell controlled, multi-center trial in
abdominal aortic aneurysm reconstruction surgery. Aortic aneurysm reconstruction
surgery involves repairing a damaged segment of the aorta, the body's principal
artery. This study treated 72 patients, 48 of whom were infused with Hemopure.
The maximum dosage was 150 grams of hemoglobin, 30 grams more than the post
cardiopulmonary bypass trial. Usually aortic aneurysm reconstruction surgery
involves much more blood loss than post cardiopulmonary bypass surgery. In this
trial, Hemopure was used during the surgery in contrast to the post
cardiopulmonary bypass trial, where use began after surgery. The trial resulted
in the statistically significant elimination of red blood cell transfusions in
27% of the patients that received Hemopure.
Trauma
Biopure has observed a 100% elimination of red blood cell transfusions on the
day of surgery in patients infused with Hemopure. As a result, Biopure believes
that Hemopure could be infused immediately at the site of an accident,
potentially extending the time that a trauma patient could be supported awaiting
definitive hospital care. Hemopure also acts as an expander of blood volume, a
common therapy used to stabilize trauma patients. Biopure has initiated a Phase
II trial in non-cardiac surgery patients, including stabilized trauma patients.
This trial includes both military and civilian hospitals. In this Phase II
trial, Biopure may administer Hemopure to a maximum dose of 10 units or 300
grams of hemoglobin. Biopure expects this trial to provide information useful in
designing a clinical development plan for trauma.
In addition, preclinical animal model studies performed in academic and military
research laboratories have shown the benefit of using Hemopure in situations
involving severe trauma, hemorrhagic shock, hemorrhagic shock with tissue injury
and resuscitation from cardiac arrest resulting from severe hemorrhage.
Ischemia
The ability of Hemopure molecules to circumvent partial occlusions could
potentially benefit patients suffering from ischemic conditions by supplying
oxygen to tissues that are receiving inadequate numbers of red blood cells.
Inadequate tissue oxygenation due to partial vessel blockage or constriction can
cause heart attack, angina and transient ischemic attack, which is a precursor
to stroke. In these situations, treatment with red blood cell transfusions would
not be effective because red blood cells are too large to navigate around
blockages. Biopure has completed preclinical studies with results supporting
these potential indications. One preclinical study demonstrated that infusing
Hemopure before there is a blockage in a coronary artery leading to a heart
attack can limit potential damage to the heart. Although Hemopure would not
attack the root cause of the ischemia, such as a clot or plaque in the arteries,
it could maintain oxygenation under certain circumstances and thereby sustain
tissue pending a correction of the blockage or could lessen the damage from
ischemia if infused in time. In 1996, the American Heart Association reported
that approximately 900,000 people in the United States each year experience
heart attacks, of which approximately one quarter are fatal. In its 1999 Heart
and Stroke Statistical Update, the American Heart Association reported that
approximately 600,000 people suffer a new or recurrent stroke each year.
Cancer Therapy Adjunct
Radiation therapy and many types of chemotherapy depend on the adequate
oxygenation of tumors to kill cancer cells. Malignant cancer tumors, such as
breast, prostate and other solid tumors, are dense tumors which often outgrow
their blood supply, leaving much of the tumor without oxygen. Consequently, they
resist chemotherapy and radiation treatment. Biopure, in collaboration with the
Dana-Farber Cancer Institute in Boston, has developed a patented method for
oxygenating hypoxic, or oxygen deficient, tumor cells that could potentially
increase the tumor-killing effects of radiation and chemotherapy. Preclinical
studies have shown the feasibility of this application. In 1999, Biopure
initiated clinical development of this indication through preliminary human
trials at two cancer treatment institutions.
Plasma-Expanding Agent
After blood loss, health care professionals typically administer human serum
albumin, or HSA, or other volume expanding fluids to restore blood volume.
Adequate blood volume is necessary to maintain effective blood pressure and
heart rate. HSA is a naturally occurring protein that is part of the plasma.
Hemopure molecules are also proteins. Hemopure maintains the volume of blood in
a manner similar to HSA. In patients suffering from severe blood loss, Biopure
believes that Hemopure would be preferable to currently available plasma
expanding agents, which do not carry or offload oxygen.
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Hemodilution Agent
Acute normovolemic hemodilution, or ANH, is a technique that reduces the need
for donated blood. ANH refers to a practice where the patient donates one to
three units of blood immediately before surgery and is infused with a non-oxygen
plasma expander such as Ringer's lactate. The patient is then transfused with
his or her own blood during or after surgery. Biopure has administered Hemopure
in three clinical safety trials involving humans undergoing ANH. As an oxygen
carrier and a plasma-expanding agent, Hemopure could potentially temporarily
replace the oxygen-carrying support and volume lost from donating blood. Used in
this manner, Hemopure may enhance the safety of ANH or allow more units to be
safely withdrawn prior to surgery. Additionally, use of Hemopure in ANH
procedures would also allow for greater blood conservation, which could be
particularly valuable in times of shortages. At present, ANH is not widely used
in the United States but is more commonly used in Europe.
Erythropoietic Agent
In Biopure's Phase II post cardiopulmonary bypass clinical trial, which compared
the post-operative use of Hemopure to donated red blood cells in cardiac
surgery, the hematocrit, or packed red blood cell volume as a percentage of
total blood volume, was similar for both the Hemopure-infused and the control
patients on the sixth day following surgery. Both groups maintained this
similarity when measured again at a follow-up visit 28 days after surgery,
suggesting that Hemopure may promote the regeneration of red blood cells. In
addition, in one "compassionate use" case, a patient with a critically low
hematocrit, who received Hemopure but not red blood cells, was stabilized for
several days and then was able to restore her hematocrit. As such, Hemopure
could potentially be used in conjunction with, or as an alternative to,
erythropoietin, a hormone that enhances the production of red blood cells. A
preclinical study supports the use of Hemopure as an erythropoietic agent. This
study involved eight conscious sheep, all of whom underwent an exchange
transfusion involving the replacement of at least 95% of their blood with an
early formulation of Hemopure. Even with critically low hematocrits, these
animals achieved stable hemodynamics, demonstrated no clinical signs of distress
and survived long term with a rapid resynthesis of their red blood cells.
OXYGLOBIN
Oxyglobin is identical to Hemopure except for its molecular size distribution,
and has the same advantages over red blood cells as Hemopure. The FDA Center for
Veterinary Medicine approved Oxyglobin in January 1998 for the treatment of
canine anemia, regardless of cause. Oxyglobin's characteristics are well suited
for use by small animal practitioners for treatment of anemia and other critical
care situations involving acute blood loss. Acute blood loss often results from
surgery, trauma, hemolysis, gastrointestinal blood loss, which is most
frequently a result of parasitism or intestinal infection, urinary tract blood
loss, iron deficiency and rodenticide toxicity. Biopure estimates that there are
at least 15,000 small animal veterinary practices in the United States and
another 4,000 mixed animal practices treating small and large animals. Biopure
believes that the average veterinary practice treats only a small percentage of
canine anemia cases with a red blood cell transfusion. The remainder receive
either cage rest or a minimally effective treatment such as fluid
administration, iron supplements, nutritional supplements or inspired oxygen.
Biopure's strategy to increase the market for Oxyglobin includes expanding the
Oxyglobin label as follows:
- - add European, Japanese and other foreign approvals -- filed for European Union
approval in 1998;
- - change to flexible dosing -- this application has been filed with the FDA;
- - add the opportunity for repeat dosing -- expected FDA filing in 1999;
- - add other applications;
- - offer a smaller package size; and
- - add other species.
MANUFACTURING
Biopure uses proprietary and patented purification and polymerization processes
in the manufacture of its oxygen therapeutic products. Biopure believes its
processes comply with current Good Manufacturing Practices established by the
FDA and comparable standards required in the European Union for
biopharmaceutical and chemical manufacturing and permit large-scale production
of the products for commercial use. Biopure's scientific and engineering team
has designed and built much of its large-scale critical equipment. A proprietary
computer software system operates and monitors most aspects of this process.
Biopure has produced consistent product, both Hemopure and Oxyglobin, since 1991
and its facilities currently have
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the capacity to produce 40,000 units of Hemopure or 140,000 units of Oxyglobin
per year. Through the installation of additional water supply and the completion
of its automated filling line, Biopure can attain capacity to produce 120,000
units of Hemopure or 360,000 units of Oxyglobin per year in its current
facilities. This capacity can be used for any combination of Oxyglobin and
Hemopure units.
Raw Material Source
Biopure's products consist of bovine hemoglobin that has been purified,
chemically modified and cross-linked for stability. Controlled herds of U.S.
cattle destined for meat processing provide the raw material used in Biopure's
products. Biopure monitors the source, health, location, feed consumption and
quality of the cattle to be used as a raw material source, a safety standard
that is not and cannot be established for donated human blood. Suppliers to
Biopure contract to maintain traceable records on animal origin, health, feed
and care to assure the use of known, healthy animals.
Raw Material Collection
At a high volume slaughterhouse, Biopure collects bovine whole blood into
individual presanitized containers and transports them to a separation facility.
Following blood collection, the animals pass U.S. Department of Agriculture, or
USDA, inspection for use as beef for human consumption. If an animal is not
approved for human consumption, Biopure also rejects the corresponding container
of whole blood. The USDA considers the United States to be free of pathogens
associated with "mad cow disease".
Safety
In addition to safety from bacterial and viral pathogens, such as those leading
to AIDS and hepatitis, Biopure's sourcing and manufacturing processes safeguard
humans from potential risks associated with diseases including transmissible
spongiform encephalopathies, more commonly known as the cause of diseases such
as "mad cow disease". Health and regulatory authorities have given guidance
directed at three factors to control these diseases: source of animals, nature
of tissue used and manufacturing process. Biopure complies with, and believes it
exceeds, all current guidelines regarding such risks for human pharmaceutical
products. Bovine red blood cells are considered to be safe, and blood generally
has been found to have little or no potential for transmitting transmissible
spongiform encephalopathies. Furthermore, Biopure's patented purification and
manufacturing process has been tested to demonstrate that the infectious agents
for these diseases, if present, would be effectively removed or inactivated.
Manufacturing Processes
At Biopure's separation facility, a filtration process removes plasma proteins
in the bovine blood. Washed cells are next placed in a centrifuge that separates
the red blood cells from the rest of the blood. The hemoglobin is extracted from
the red blood cells and is then diafiltered to remove red blood cell wall debris
and other contaminants. The resulting material is a cell-free hemoglobin
intermediate. A semi-continuous purification process involving a high
performance liquid chromatography process purifies the hemoglobin intermediate.
Next, the purified hemoglobin is polymerized, or linked, by the addition of a
cross-linking agent. Polymerized and stabilized material is then fractionated
and concentrated. The final product is filtered into sterilized batch holding
tanks until it is sterile filled into bags.
MARKETING
Hemopure
Upon receipt of FDA approval, if granted, Biopure expects to market Hemopure to
physician practices and hospitals. It also believes that military customers will
be significant. Biopure recognizes that it is crucial to establish a core belief
among opinion leaders that Hemopure fills an important medical need and that
systematic development of opinion leader advocacy is necessary for capturing and
maintaining a leadership position. Consequently, Biopure has contracted with a
medical education agency to build product awareness and to position the company
in a leadership role through the development of advocates at the national and
regional levels. As part of this process, Biopure engaged a medical advisory
board consisting of 13 leading physicians who participated in an educational
program and forum with Biopure. Biopure expects to reach anesthesiologists,
surgeons, oncologists, critical care and other physician-specialists through
publications and educational forums, such as seminars and presentations at
meetings of specialists.
Biopure will explore various means of selling Hemopure. Among other options,
Biopure may seek to enter into licensing or co-marketing agreements for parts or
all of the world in order to avail itself of the marketing expertise of one or
more seasoned pharmaceutical companies. Alternatively, it could engage
"contract" sales organizations from vendors, contract pharmaceutical companies
that supply sales services or recruit and train its own marketing and sales
force.
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Oxyglobin
Biopure began selling Oxyglobin in March 1998 to a discrete number of emergency
and specialty practices in the United States. Biopure began selling Oxyglobin
nationally in October 1998. Since October 1998, Biopure has sold more than
18,000 units of Oxyglobin. Veterinarians report successful use of Oxyglobin in
critical care situations involving blood loss, destruction of red blood cells
and ineffective production of red blood cells. In 1998, Biopure filed for
veterinary approval to market Oxyglobin to treat canine anemia in the European
Union.
Biopure sells Oxyglobin directly to veterinarians in the United States through
veterinary product distributors -- one national and eight regional. Biopure
coordinates marketing and distribution activities through five full-time sales
employees.
Marketing programs have included advertising, direct mail, educational seminars,
conference calls and attendance at trade shows. Biopure has established a core
group of veterinary practices that use the product regularly. These
veterinarians are effective advocates of the product when interacting with other
veterinarians. Biopure sponsors evening seminars featuring these veterinarians.
Most veterinarians who buy the product reserve its use for the most severe
clinical situations. In May 1999, veterinarians paid an average of $124 per
15-gram hemoglobin unit. Biopure may seek one or more marketing alliances for
marketing and distribution of Oxyglobin in selected geographic areas.
COMPETITION
Hemopure will compete with traditional therapies and with other oxygen
therapeutics. Comparisons with traditional therapies, including red blood cell
transfusions, are described under "-- Scientific Overview", "-- Biopure's
Oxygenating Technology" and "-- Biopure's Products". Oxygen therapeutics under
development fall into two categories:
- - hemoglobin-based oxygen carriers, including Hemopure and Oxyglobin, consist of
natural hemoglobin from a mammal or genetically engineered source that has
been modified to improve stability, efficacy and safety; and
- - perfluorocarbon emulsions are chemicals administered intravenously.
Perfluorocarbon emulsions are effective principally under conditions of high
oxygen partial pressure to assist in oxygen delivery by forcing dissolved
oxygen into the plasma space.
Biopure believes that the competitive factors for its oxygen therapeutics will
be efficacy, safety, ease of use and cost. Biopure believes that it has
significant advantages as compared to its competitors including:
- - patents covering its processes, its products and their uses;
- - large molecule size resulting in longer duration of action than most other
oxygen therapeutics under development;
- - long-term room temperature stability;
- - completed and operational large-scale manufacturing facility compliant with
current Good Manufacturing Practices;
- - safe, ample, inexpensive source of raw material; and
- - FDA approval of Oxyglobin in 1998.
Many of Biopure's competitors and potential competitors in the development of
oxygen therapeutic products have significantly greater financial and other
resources to develop, manufacture and market their products. Existing
competitors in the development of hemoglobin-based investigational products use
outdated human red blood cells or bovine hemoglobin as their raw material.
Biopure is aware of one first generation, genetically engineered investigational
product that advanced to human clinical trials, but its development was
discontinued. Biopure believes that its use of bovine red blood cells is an
advantage over products made from outdated donated human red blood cells because
of the availability, abundance, cost and relative safety of bovine red blood
cells. However, the use of bovine derived blood products may encounter
resistance from physicians and patients. Among other things, public perceptions
about the risk of "mad cow disease" may affect market acceptance of Hemopure.
Biopure also believes that competitors may find it difficult to make or offer a
hemoglobin-based oxygen carrier product having the product characteristics of
Hemopure without infringing on one or more Biopure patents. In addition, the
relatively low viscosity of Hemopure is a potential advantage, particularly in
large doses, in permitting perfusion at low blood pressure.
Biopure is aware of one perfluorocarbon oxygen carrier in advanced clinical
trials. This product is a chemical fluid infused into the body. This chemical
attracts oxygen and takes it into the plasma. The patient needs an oxygen mask
for this process because perfluorocarbons require high oxygen environments in
order to be effective. The perfluorocarbon solution does not persist in the
body, so repeat dosing is necessary. These limitations may reduce the number of
potential applications for the
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product. As far as Biopure is aware, applications pursued for this product do
not include any of the applications Biopure might pursue other than acute
normovolemic hemodilution.
Biopure knows of no companies developing oxygen therapeutics intended to compete
with Oxyglobin in the veterinary market.
INTELLECTUAL PROPERTY
Patents, trademarks, trade secrets, technological know-how and other proprietary
rights are important to Biopure's business. Biopure actively seeks patent
protection both in the United States and abroad. Biopure filed its initial
patent in 1986 in the United States. Three U.S. patents have issued from this
filing. These patents describe and claim ultra-pure semi-synthetic blood
substitutes and methods for their preparation.
In total, Biopure has 14 U.S. patents granted and six applications pending,
three of which are allowed, relating to oxygen therapeutics. Biopure's granted
U.S. patents relating to oxygen therapeutics include:
- - two patents covering an ultra-purification process for hemoglobin solutions,
regardless of the source of hemoglobin, which expire in 2011 and 2012, and two
patents covering the ultra-pure oxygen therapeutic solutions produced by this
process expiring in 2009 and 2014;
- - three patents regarding compositions having improved stability, of which two
expire in 2015 and the third expires in 2016;
- - one patent, which expires in 2015, covering improvements in preservation of
such hemoglobin solutions;
- - one patent, which expires in 2015, covering improved methods for separating
polymerized from unpolymerized hemoglobin;
- - one patent, which expires in 2015, covering methods of oxygenating tissue
affected by inadequate red blood cell flow;
- - one patent, which expires in 2016, covering the removal of pathogens, if
present, from Biopure's source material; and
- - three patents, which expire in 2011, 2014 and 2015, covering methods for
treating tumors.
Biopure also filed its original patent in Europe. Although granted, third
parties subsequently opposed Biopure's European patent. As a result of the
opposition proceeding, the patent was revoked. However, Biopure filed an appeal
that reinstated the patent during the appeal and is awaiting a decision on the
appeal. In the opposition process, Biopure narrowed its claims. Despite the
narrowing, Biopure believes that these claims provide protection for Biopure's
existing process and products. Biopure further believes that a narrowed European
patent should be sustained. During the opposition proceeding, some pre-existing
patents and articles not presented to the United States Patent Office during the
prosecution of patents already issued in the United States were presented to the
European Patent Office by the opponents. These preexisting patents and articles
are not expected to affect claims of Biopure patents in the rest of the world.
Biopure also has other foreign patents and patent applications.
Biopure believes that it is not economically practicable to determine in advance
whether its products, product components, manufacturing processes or the uses
infringe the patent rights of others. It is likely that, from time to time,
Biopure will receive notices from others of claims or potential claims of
intellectual property infringement or Biopure may be called upon to defend a
customer, vendee or licensee against such third-party claims. Responding to
these kinds of claims, regardless of merit, could consume valuable time, result
in costly litigation or cause delays, all of which could harm Biopure's
business. Responding to these claims could also require Biopure to enter into
royalty or licensing agreements with the third parties claiming infringement.
Such royalty or licensing agreements, if available, may not be available on
terms acceptable to Biopure.
FACILITIES
Biopure has manufacturing facilities in Pennsylvania for the collection and
separation of blood and in Cambridge, Massachusetts where processing is
completed. The FDA has inspected these facilities and determined that they
comply with current Good Manufacturing Practices. The Medicines Control Agency,
on behalf of the European Medicines Evaluation Agency, has also inspected
Biopure's facilities.
Biopure manufactures separation materials in a 10,000 square foot plant in New
Hampshire. The current annual lease payment for this facility is $38,000. The
lease expires on March 31, 2000. Biopure has an option to extend this lease for
an additional five years.
Biopure leases two facilities for office and research space in Massachusetts.
One lease covers 24,000 square feet, and its current annual lease payment is
$239,000. This lease expires on December 31, 2007. Biopure has an option to
extend this lease for ten five-year periods, or an additional 50 years. The
other lease covers 13,000 square feet, and its current annual
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lease payment is $378,000. This lease expires on August 31, 2001. Biopure does
not have an option to extend this lease. It leases 18,000 square feet of
warehouse space in Massachusetts. The current annual lease payment for this
facility is $95,000. The lease expires on September 30, 2001. Biopure has an
option to extend this lease for two five-year periods, or an additional ten
years.
Biopure leases 32,000 square feet of manufacturing space under three leases in
Massachusetts. The current annual lease payments for these facilities is
$236,000. The leases expire on November 30, 2000. Biopure has an option to
extend these leases for five five-year periods, or an additional 25 years, with
an exclusive right to negotiate for an additional 25 years. Biopure also leases
18,000 square feet of manufacturing space in Pennsylvania. The current annual
payment for a ground lease for this facility is $21,000. The lease expires on
October 20, 2014. Biopure has an option to extend this lease for nine years.
Biopure's current process is designed to be scalable, such that additional
capacity can be obtained by adding duplicate equipment and additional raw
material including power and water. However, Biopure is space constrained at its
existing facility in Cambridge, Massachusetts, so it anticipates that it will
need to add a new facility at a new location prior to large-scale
commercialization of Hemopure.
EMPLOYEES
As of May 1, 1999, Biopure employed 177 persons. Of its total work force, 101
employees are engaged in manufacturing and related manufacturing support
services, 38 are engaged in research and development activities, nine are
engaged in sales and marketing, primarily veterinary, and 29 are engaged in
support and administrative activities. None of Biopure's employees are covered
by a collective bargaining agreement. Biopure believes its relations with its
employees are good.
PAST COLLABORATIONS
In December 1990, Biopure and The Upjohn Company entered into an alliance to
develop and market Biopure's human and veterinary products. From that time until
1996, Biopure benefitted from equity investment and development expenditures of
approximately $140.0 million and from the experience, personnel and facilities
of The Upjohn Company. From 1987 until 1996, Biopure had a license agreement
with B. Braun Melsungen AG, a German hospital supply company. This license
agreement and certain related agreements contemplated the product testing,
approval, manufacture and marketing of Biopure's products by B. Braun Melsungen
AG in Europe. See "Certain Relationships and Related Transactions" for
additional information concerning these collaborations.
GOVERNMENT REGULATION
New Drug or Biologic Approval for Human Use
Governmental authorities in the United States and other countries extensively
regulate the testing, manufacturing, labeling, advertising, promotion, export
and marketing, among other things, of Biopure's oxygen therapeutic products. Any
oxygen therapeutic product administered to human patients is regulated as a drug
or a biologic drug and requires regulatory approval before it may be
commercialized.
In the United States, Hemopure is regulated as a human biologic. The FDA will
require Biopure to file and obtain approval of a Biologics License Application
covering both Hemopure and the facility in which it is manufactured.
The steps required before approval of a biologic for marketing in the United
States generally include:
- - preclinical laboratory tests and animal tests;
- - the submission to the FDA of an Investigational New Drug, or IND, application
for human clinical testing, which must become effective before human clinical
trials may lawfully commence;
- - adequate and well-controlled human clinical trials to establish the safety and
efficacy of the product;
- - the submission to the FDA of a Biologics License Application;
- - FDA review of the Biologics License Application; and
- - satisfactory completion of an FDA inspection of the manufacturing facilities
at which the product is made to assess compliance with current Good
Manufacturing Practices which includes elaborate testing, control,
documentation and other quality assurance procedures.
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The testing and approval process requires substantial time, effort and financial
resources. After approval is obtained, a supplemental approval is generally
required for each proposed new indication, often accompanied by data similar to
that submitted with the original Biologics License Application.
Preclinical studies include laboratory evaluation of the product and animal
studies to assess the safety and potential efficacy of the product. The results
of the preclinical studies, together with manufacturing information and
analytical data, are submitted to the FDA as part of the IND. The IND
automatically will become effective in 30 days unless the FDA, before that time,
raises concerns or questions and imposes a "clinical hold". In such case, the
IND sponsor and the FDA must resolve any outstanding concerns before the trial
can proceed. Once trials have commenced, the FDA may stop the trials, or
particular types of trials, by imposing a clinical hold because of concerns
about, for example, the safety of the product being tested or the adequacy of
the trial design.
Clinical trials involve the administration of investigational products to
healthy volunteers or patients under the supervision of a qualified principal
investigator consistent with an informed consent. An independent Institutional
Review Board, or IRB, must review and approve each clinical trial at each
institution at which the study will be conducted. The IRB will consider, among
other things, ethical factors, the safety of human subjects and the possible
liability of the institution.
Clinical trials typically are conducted in three sequential phases, but the
phases may overlap. In Phase I, the initial introduction of the drug into human
subjects, the drug is usually tested for safety or adverse effects, dosage
tolerance, absorption, metabolism, distribution, excretion and pharmacodynamics.
Phase II clinical trials usually involve studies in a limited patient population
to evaluate the efficacy of the drug for specific, targeted indications,
determine dosage tolerance and optimal dosage and identify possible adverse
effects and safety risks. Phase III clinical trials generally further evaluate
clinical efficacy and test further for safety within an expanded patient
population and at multiple clinical sites. Phase IV clinical trials are
conducted after approval to gain additional experience from the treatment of
patients in the intended therapeutic indication. If the FDA approves a product,
additional clinical trials may be necessary. A company may be able to use the
data from these clinical trials to meet all or part of any Phase IV clinical
trial requirement. These clinical trials are often referred to as Phase III/IV
post-approval clinical trials.
Biopure believes that its ongoing U.S. pivotal Phase III clinical trial is
consistent with the FDA's most recent guidance on the design and efficacy and
safety endpoints required for approval of products such as Hemopure. However,
the FDA could change its view or require a change in study design, additional
data or even further clinical trials prior to approval of Hemopure.
The results of the preclinical studies and clinical trials, together with
detailed information on the manufacture and composition of the product, are
submitted to the FDA in the application requesting approval to market the
product. Before approving a Biologics License Application, the FDA will inspect
the facilities at which the product is manufactured and will not approve the
product unless the manufacturing facility is in compliance with current Good
Manufacturing Practices. The FDA may delay approval of a Biologics License
Application if applicable regulatory criteria are not satisfied, require
additional testing or information, and/or require postmarketing testing and
surveillance to monitor safety, purity or potency of a product. It may also
limit the indicated uses for which an approval is given.
New Drug Approval for Veterinary Use
New drugs for companion animals must receive New Animal Drug Application, or
NADA, approval prior to marketing in the U.S. The requirements for approval are
similar to those for new human drugs. Obtaining NADA approval often requires
clinical field trials and the submission of an Investigational New Animal Drug
Application, which for non-food animals becomes effective upon acceptance for
filing.
Pervasive and Continuing Regulation
Any product approvals that are granted remain subject to continual FDA review,
and newly discovered or developed safety or efficacy data may result in
withdrawal of products from marketing. Moreover, if and when such approval is
obtained, the manufacture and marketing of Biopure's products remain subject to
extensive regulatory requirements administered by the FDA and other regulatory
bodies, including compliance with current Good Manufacturing Practices, adverse
event reporting requirements and the FDA's general prohibitions against
promoting products for unapproved or "off-label" uses. Biopure is subject to
inspection and market surveillance by the FDA for compliance with these
regulatory requirements. Failure to comply with the requirements can, among
other things, result in warning letters, product seizures, recalls, fines,
injunctions, suspensions or withdrawals of regulatory approvals, operating
restrictions and criminal prosecutions. Any such enforcement action could have a
material adverse effect on Biopure. Unanticipated changes in existing regulatory
requirements or the adoption of new requirements could also have a material
adverse effect on Biopure.
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Biopure also is subject to numerous federal, state and local laws relating to
such matters as safe working conditions, manufacturing practices, environmental
protection, fire hazard control and hazardous substance disposal.
Foreign Regulation
Biopure will be subject to a variety of regulations governing clinical trials
and sales of its products outside the United States. Biopure must obtain
approval of its products by the comparable non-U.S. regulatory authorities prior
to the commencement of product marketing in the country whether or not Biopure
has obtained FDA approval. The approval process varies from country to country
and the time needed to secure approval may be longer or shorter than that
required for FDA approval. The European Union requires approval of a Marketing
Authorization Application by the European Medicines Evaluation Agency. These
applications require the completion of extensive preclinical and clinical
studies and manufacturing and controls information.
Reimbursement
Biopure's ability to successfully commercialize its human product will depend in
significant part on the extent to which reimbursement of the cost of such
product and related treatment will be available from government health
administration authorities, private health insurers and other organizations.
Third-party payors are increasingly challenging the price of medical products
and services. Significant uncertainty exists as to the reimbursement status of
newly approved health care products, and there can be no assurance that adequate
third-party coverage will be available to enable Biopure to maintain price
levels sufficient for realization of an appropriate return on its investment in
product development. The public and the federal government have recently focused
significant attention on reforming the health care system in the United States.
A number of health care reform measures have been suggested, including price
controls on therapeutics. Public discussion of such measures is likely to
continue, and concerns about the potential effects of different possible
proposals have been reflected in the volatility of the stock prices of companies
in the health care and related industries.
LITIGATION
Biopure is a party to an action filed on July 18, 1990 in the United States
District Court for the District of Massachusetts under the caption Peter Fisher,
et al. v. William P. Trainor, et al. In this litigation, the plaintiffs alleged
breach of agreements by Biopure and against one another. Biopure is also a party
to a related action filed on November 8, 1990 in the United States District
Court for the District of Massachusetts under the caption Bio-Vita Ltd., et al.
v. Carl W. Rausch, et al.
Summary judgments were entered against the plaintiffs in both of these actions
in 1994. The plaintiffs appealed. One appeal filed in Bio-Vita Ltd., et al. v.
Carl W. Rausch, et al. was voluntarily dismissed and the other was remanded to
the trial court. The other appeal was remanded to the trial court for further
findings based on lack of jurisdiction. This jurisdictional issue has been
briefed following additional discovery and is before the trial court. The
remaining plaintiff is seeking $250.0 million in damages. Biopure believes that
the ultimate resolution of this matter will not have a material adverse effect
on its financial position or results of operations.
In addition, proceedings in Europe are ongoing with regard to Biopure's European
patent. Biopure was granted a patent on April 1, 1992 by the European Patent
Office. Within the nine-month period from the grant date for the filing of
oppositions, six parties filed oppositions requesting that all of the claims of
this patent be revoked. Of these, three opposing parties remain: Baxter
International, Enzon, Inc. and Northfield Laboratories, Inc. Following oral
proceedings conducted by the Opposition Division at the European Patent Office
in November 1995, the Opposition Division revoked the patent.
Biopure has appealed this decision of the Opposition Division and is currently
awaiting a decision on its appeal. The appeal has the technical result of
reinstating the patent during the appeal process. Prior to filing its appeal
papers, Biopure narrowed its claims further to increase the probability of
winning at the appeal level. Biopure further believes that a narrowed patent
should be sustained.
Future claims against Biopure may arise and, if they do, there can be no
assurance that they will be successfully defended.
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MANAGEMENT
The following table lists members of our board of directors and our executive
officers, with the position held by each and their ages as of May 1, 1999.
Directors may hold office until removed by a resolution of our stockholders,
removal by all members of the board of directors, resignation, death or the
expiration of the term of their appointment.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
NAME AGE POSITION
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Carl W. Rausch.................................. 50 Chairman, Chief Executive Officer and President
David N. Judelson............................... 70 Vice Chairman
Stephen A. Kaplan............................... 40 Director
C. Everett Koop, M.D............................ 82 Director
Charles A. Sanders, M.D......................... 67 Director
Daniel R. Davis................................. 33 Senior Vice President and Chief Financial
Officer
Maria S. Gawryl, Ph.D........................... 45 Senior Vice President, Research and Development
Edward E. Jacobs, Jr., M.D...................... 58 Senior Vice President
Jane Kober...................................... 55 Senior Vice President, General Counsel and
Secretary
Bing L. Wong, Ph.D.............................. 52 Senior Vice President, International
Bernadette L. Alford, Ph.D...................... 50 Vice President, Regulatory Affairs
Geoffrey J. Filbey.............................. 55 Vice President, Engineering
Carolyn R. Fuchs................................ 46 Vice President, Human Resources
William D. Hoffman, M.D......................... 45 Chief Medical Officer
Brian A. Lajoie................................. 52 Vice President, Controller
Andrew W. Wright................................ 39 Vice President, Veterinary Products
</TABLE>
CARL W. RAUSCH is a co-founder and has served as Chairman, Chief Executive
Officer and President of Biopure since 1984. Effective July 1, 1999, Mr. Rausch
will no longer serve as President of Biopure. Prior to Biopure's founding, Mr.
Rausch was Vice President, Preparative and Process, at Millipore Corporation. He
holds an M.S. degree in chemical engineering from Tufts University, an M.S.
degree in chemical engineering from the Massachusetts Institute of Technology
and a B.S. degree in chemical engineering from Tufts University.
DAVID N. JUDELSON is a co-founder and serves as Vice Chairman of Biopure. Mr.
Judelson is also a co-founder of Gulf and Western Industries, Inc., currently
known as Paramount Communications, Inc., where he served as President and Chief
Operating Officer from 1967 to 1983. Since 1985, he has been Vice Chairman of
Horsehead Industries, Inc., a privately owned industrial company. Mr. Judelson
holds an M.E. degree from New York University College of Engineering and a B.S.
degree in mechanical engineering from New York University.
STEPHEN A. KAPLAN has served as a director of Biopure since November 1997. Since
May 1995, Mr. Kaplan has been a principal in the Oaktree Financial Management
Principal Activities Group. From November 1993 to April 1995, he was Managing
Director of Trust Company of the West. Since November 1993, Mr. Kaplan has also
served as portfolio manager of The Principal Fund. He holds a J.D. degree from
New York University School of Law and a B.S. degree in political science from
the State University of New York at Stony Brook.
C. EVERETT KOOP, M.D. has served as a director of Biopure since December 1990.
From September 1994 to November 1997, Dr. Koop was the Chairman of the Board of
Patient Education Media, Inc. Dr. Koop served as the Surgeon General of the
United States from 1981 until 1989 and continues to educate the public about
health issues through his writings and the electronic media, as Senior Scholar
of the C. Everett Koop Institute at Dartmouth College. Dr. Koop received an
Sc.D. degree from the Graduate School of the University of Pennsylvania, an M.D.
degree from the Cornell University Medical College and an A.B. degree from
Dartmouth College.
CHARLES A. SANDERS, M.D. has served as a director of Biopure since October 1997.
From July 1989 until his retirement in May 1995, Dr. Sanders was the Chairman
and Chief Executive Officer of Glaxo Inc. Dr. Sanders serves on the boards of
Magainin Pharmaceuticals Inc., Vertex Pharmaceuticals, Inc., StaffMark, Inc.,
Scios Inc., Trimens, Inc., Kendle International Inc. and Pharmacopeia, Inc. and
is a member of the President's Committee of Advisors on Science and Technology.
He was previously General Director of Massachusetts General Hospital and
Professor of Medicine at Harvard Medical School. He received his M.D. degree
from the Southwestern Medical College of the University of Texas.
33
<PAGE> 35
DANIEL R. DAVIS joined Biopure in December 1998 as Senior Vice President and
Chief Financial Officer. From 1995 to November 1998, Mr. Davis was at Knowledge
Universe. Mr. Davis holds an M.B.A. degree in finance from The Wharton School at
the University of Pennsylvania and a B.A. degree in political science from Brown
University.
MARIA S. GAWRYL, PH.D. has been Senior Vice President, Research and Development
of Biopure since April 1999. From September 1990 to April 1999, she was Vice
President, Research and Development. Dr. Gawryl holds a Ph.D. in immunology from
the University of Connecticut. She did post-doctoral work at the University of
Connecticut Health Center and Rush Presbyterian, St. Luke's Medical Center. She
holds a B.S. degree in math and chemistry from Antioch College.
EDWARD E. JACOBS, JR., M.D. has been a Senior Vice President of Biopure since
August 1997. From April 1995 to August 1997, he was Senior Medical Advisor of
Biopure. Since 1988, he has been an Assistant Clinical Professor at Harvard
Medical School. He holds an M.D. degree from Harvard Medical School and a B.A.
degree in philosophy from Princeton University.
JANE KOBER has been Senior Vice President, General Counsel and Secretary of
Biopure since May 1998. From June 1989 to April 1998, she was a partner in
LeBoeuf, Lamb, Greene & MacRae, L.L.P. Ms. Kober holds a J.D. degree from Case
Western Reserve University, an M.A. degree from the University of Chicago and a
B.A. in English from the Pennsylvania State University. She serves as a director
of HTV Industries, Inc.
BING L. WONG, PH.D. has been a Senior Vice President, International of Biopure
since May 1999. From June 1992 to May 1999, Dr. Wong was a Senior Vice
President, Development of Strategic Business Ventures. Dr. Wong taught in the
Chemical Engineering Department at Tufts University as Assistant Professor and
Adjunct Associate Professor while he served as Associate and Acting Director of
the New England Enzyme Center. He holds M.S. and Ph.D. degrees from the
Department of Chemical Engineering, Tufts University and a B.S. degree from the
Department of Chemical Engineering, National Taiwan University.
BERNADETTE L. ALFORD, PH.D. has been Vice President, Regulatory Affairs of
Biopure since September 1998. From September 1994 to September 1998, she was
Senior Vice President, Product Development for Alexion Pharmaceuticals Inc. She
holds a Ph.D. degree in molecular biology and an M.S. degree in biochemistry
from Texas University and a B.S. degree in biology from Marywood University.
GEOFFREY J. FILBEY joined Biopure in 1985 and has served as Vice President,
Engineering since 1995. Mr. Filbey holds a B.Sc. degree in engineering from the
City University in London, England.
CAROLYN R. FUCHS has served as Vice President, Human Resources since June 1998.
From October 1996 to June 1998, she was an independent consultant. From May 1991
to October 1996, she worked at National Medical Care. Ms. Fuchs holds an M.Ed.
degree in counseling and a B.S. degree in psychology from the University of
Massachusetts at Amherst.
WILLIAM D. HOFFMAN, M.D. joined Biopure in January 1998 as Director of Medical
Affairs and was named Chief Medical Officer in March 1999. From 1994 until
January 1998, Dr. Hoffman was Director of Surgical Intensive Care at The
Cleveland Clinic Foundation. He holds an M.D. degree from the University of
Massachusetts Medical School and a B.S. degree in physics from Carnegie-Mellon
University.
BRIAN A. LAJOIE has served as Vice President, Controller of Biopure since May
1999. From August 1989 to May 1999, he served as Vice President, Finance. He
holds a B.A. degree in economics from the University of Massachusetts at
Amherst.
ANDREW W. WRIGHT has been Vice President, Veterinary Products of Biopure since
August 1996. From March 1992 to August 1996, Mr. Wright worked with IDEXX
Laboratories, Inc. where he held several management positions, including
Director of Corporate Development, Director of Marketing and Senior Product
Manager. He holds an M.B.A. degree from the University of Chicago and a B.A.
degree in economics from Carleton College.
MANAGEMENT AND DIRECTOR CHANGES
On June 24, 1999, our board elected Paul A. Looney and Daniel P. Harrington as
directors with terms beginning upon the completion of this offering.
- - DANIEL P. HARRINGTON, 43, has been the President of HTV Industries, Inc. since
May 1991. Mr. Harrington is a director of Churchill Downs, Inc.
- - PAUL A. LOONEY, 59, will become the President of Biopure on July 1, 1999.
Since May 1995, Mr. Looney has been a consultant to various biotechnology
companies. Between September 1993 and May 1995, Mr. Looney was the Chief
Executive Officer, Chief Operating Officer and President of Corning Costar
Inc. Between 1987 and September 1993, Mr. Looney was President of Costar Inc.
34
<PAGE> 36
In addition, on June 9, 1999, we entered into an employment agreement with Paul
A. Looney. Beginning July 1, 1999, Mr. Looney will serve as President of Biopure
with all the duties and responsibilities of Chief Operating Officer. The
employment agreement has a three year term and may be extended. Under the terms
of his employment agreement, Mr. Looney is entitled to an annual base salary of
not less than $295,000, subject to annual adjustment, and is eligible to
participate in all incentive, savings and retirement plans and welfare benefit
plans and programs that we maintain or implement. In addition, at the earlier of
the completion of this offering or January 1, 2000, Mr. Looney will receive
stock options to purchase 233,333 shares of our class A common stock at an
exercise price equal to the price to the public in this offering. These options
will have terms of 10 years and will be immediately exercisable in the event of
a change of control or in the event of Mr. Looney's death, disability,
retirement, termination of employment for reasons other than cause or voluntary
termination under certain circumstances. Otherwise, the options shall become
exercisable in 25% increments on July 1, 2000, 2001, 2002 and 2003.
This employment agreement also includes non-solicitation and non-competition
provisions, restricting Mr. Looney's ability to engage in any activities that
would compete with our business during his employment and for one year
thereafter.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The compensation committee of the board of directors will consist of Mr. Kaplan,
Dr. Sanders and Mr. Judelson. Mr. Rausch will serve as a non-voting member of
this committee. Of the four, only Mr. Rausch has been an officer or employee of
Biopure at any time since our inception. No executive officer of Biopure serves
as a member of the board of directors or compensation committee of any entity
that has one or more executive officers serving as a member of our board of
directors or compensation committee. Certain members of our board of directors
are or have been parties to consulting agreements with Biopure. These agreements
are described under "Certain Relationships and Related Transactions".
Our audit committee will consist of Mr. Harrington and Dr. Sanders. Mr. Looney
will serve as a non-voting member of this committee.
DIRECTOR COMPENSATION
For each board of directors' meeting attended, our non-employee directors
receive a fee of $500 plus expenses.
35
<PAGE> 37
EXECUTIVE COMPENSATION
Summary Compensation Table
The following summary compensation table summarizes information regarding the
compensation of our Chief Executive Officer and our other four most highly
compensated executive officers for the fiscal years ended October 31, 1996, 1997
and 1998. The non-recurring bonus Mr. Rausch received in 1996 was related to our
agreement with Pharmacia & Upjohn, Inc. The other annual compensation Dr. Jacobs
received in fiscal 1997 and fiscal 1996 represents the difference between the
fair market value and the exercise price of non-qualified stock options at the
date of exercise. Dr. Esseltine resigned in April 1999.
<TABLE>
<CAPTION>
--------------------------------------------------
ANNUAL
COMPENSATION
--------------------------------------------------
FISCAL OTHER ANNUAL
YEAR SALARY($) BONUS($) COMPENSATION($)
NAME AND PRINCIPAL POSITION ------ --------- -------- ---------------
<S> <C> <C> <C> <C>
Carl W. Rausch.............................................. 1998 307,008 75,000 --
Chairman, Chief Executive 1997 252,866 30,000 --
Officer and President 1996 243,208 22,000 182,692
Edward E. Jacobs, Jr., M.D.................................. 1998 205,010 25,000 --
Senior Vice President 1997 169,698 -- 228,000
1996 160,004 8,000 388,800
Maria S. Gawryl, Ph.D....................................... 1998 195,000 40,000 --
Senior Vice President -- 1997 162,040 20,000 --
Research and Development 1996 153,037 15,225 --
Dixie L. Esseltine, M.D..................................... 1998 185,016 10,000 --
Vice President -- Clinical 1997 24,194 5,000 --
Research 1996 -- -- --
Brian A. Lajoie............................................. 1998 169,000 18,000 --
Vice President -- Controller 1997 156,529 17,000 --
1996 148,070 14,810 --
</TABLE>
Summary Long-Term Compensation
The following table sets forth information regarding the long-term compensation
of our Chief Executive Officer and our other four most highly compensated
executive officers for the fiscal years ended October 31, 1996, 1997 and 1998.
Dr. Esseltine resigned in April 1999.
<TABLE>
<CAPTION>
----------------------------------------------------
AWARDS PAYOUTS
---------- ----------------------------
SECURITIES EARNINGS ON
FISCAL UNDERLYING DEFERRED
YEAR OPTIONS(#) COMPENSATION($) 401(K)($)
NAME AND PRINCIPAL POSITION ------ ---------- --------------- ---------
<S> <C> <C> <C> <C>
Carl W. Rausch.............................................. 1998 83,333 104,408 4,370
Chairman, Chief Executive Officer and 1997 -- 94,353 4,725
President 1996 -- 90,393 4,372
Edward E. Jacobs, Jr., M.D. ................................ 1998 10,000 -- 4,565
Senior Vice President 1997 -- -- 4,852
1996 -- -- 4,410
Maria S. Gawryl, Ph.D. ..................................... 1998 53,334 -- 4,653
Senior Vice President -- Research and 1997 -- -- 4,839
Development 1996 2,333 -- 4,591
Dixie L. Esseltine, M.D..................................... 1998 6,667 -- --
Vice President -- Clinical Research 1997 -- -- --
1996 -- -- --
Brian A. Lajoie............................................. 1998 10,000 -- 4,607
Vice President -- Controller 1997 -- -- 4,795
1996 1,667 -- 4,374
</TABLE>
36
<PAGE> 38
Option Grants in Last Fiscal Year
The following table summarizes information regarding options granted to our
Chief Executive Officer and our other four most highly compensated executive
officers during the fiscal year ended October 31, 1998. Dr. Esseltine resigned
in April 1999.
Amounts in the following table represent hypothetical gains that could be
achieved for the respective options if exercised at the end of the option term.
The 5% and 10% assumed annual rates of compounded stock price appreciation are
mandated by the rules of the Securities and Exchange Commission and do not
represent an estimate or projection of our future class A common stock prices.
These amounts represent certain assumed rates of appreciation in the value of
our class A common stock from the fair market value on the date of grant. Actual
gains, if any, on stock option exercises are dependent on the future performance
of the class A common stock and overall stock market conditions. The amounts
reflected in the following table may not necessarily be achieved.
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------
INDIVIDUAL GRANTS
------------------------------------------------------ POTENTIAL REALIZABLE
PERCENT OF VALUE AT
NUMBER OF TOTAL ASSUMED ANNUAL RATES OF
SECURITIES OPTIONS STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM($)
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION ------------------------
GRANTED(#) 1998(%) SHARE($) DATE 5% 10%
NAME AND PRINCIPAL POSITION ----------- ------------ --------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Carl W. Rausch..................... 64,400 20.32 19.20 01/19/08 777,616 1,970,631
Chairman, Chief Executive 18,933 5.98 21.12 01/19/03 110,477 244,126
Officer and President
Edward E. Jacobs, Jr., M.D. ....... 10,000 3.16 19.20 01/19/08 120,748 305,999
Senior Vice President
Maria S. Gawryl, Ph.D. ............ 53,334 16.83 19.20 01/19/08 643,988 1,631,992
Senior Vice President -- Research
and Development
Dixie L. Esseltine, M.D............ 6,667 2.10 19.20 11/19/07 80,499 203,999
Vice President -- Clinical
Research
Brian A. Lajoie.................... 10,000 3.16 19.20 01/19/08 120,748 305,999
Vice President -- Controller
</TABLE>
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
The following table summarizes information concerning options to purchase our
class A common stock exercised by our Chief Executive Officer and our other four
most highly compensated executive officers during the fiscal year ended October
31, 1998 and the number and value of unexercised options held by each of them at
October 31, 1998.
There was no public market for our class A common stock on October 31, 1998. The
fair market value on October 31, 1998 was determined by the board of directors
to be $19.20 per share. Dr. Esseltine resigned in April 1999.
<TABLE>
<CAPTION>
------------------------------------------------------------
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
FISCAL YEAR END(#) Fiscal Year End($)
---------------------------- ----------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
NAME AND PRINCIPAL POSITION ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Carl W. Rausch....................................... -- 83,333 -- --
Chairman, Chief Executive Officer and President
Edward E. Jacobs, Jr., M.D. ......................... -- 10,000 -- --
Senior Vice President
Maria S. Gawryl, Ph.D. .............................. 7,167 56,500 -- --
Senior Vice President -- Research and Development
Dixie L. Esseltine, M.D.............................. -- 6,667 -- --
Vice President -- Clinical Research
Brian A. Lajoie...................................... 3,333 11,667 -- --
Vice President -- Controller
</TABLE>
37
<PAGE> 39
NON-COMPETITION AGREEMENTS
All of our executive officers, except Daniel R. Davis, our Senior Vice President
and Chief Financial Officer, have agreed not to engage in any activities that
would compete with our current business or any potential business during their
employment terms and for five years thereafter.
DEFERRED COMPENSATION AGREEMENT
On August 8, 1990, we entered into a deferred compensation agreement with Carl
Rausch, our Chairman, Chief Executive Officer and President, which provided that
we would pay him a lump sum of $700,000 plus interest accrued from August 8,
1990 to the date of payment. The total payment will be due July 31, 2003. The
amount of the payment with interest, calculated at the prime interest rate
through June 24, 1999 and thereafter at 4.71%, will be $1,679,000. The deferred
compensation agreement was entered into as part of Mr. Rausch's overall
long-term compensation agreement. Mr. Rausch borrowed money from us in 1990 to
purchase class A common stock. See "Certain Relationships and Related
Transactions" for more information about this loan.
1990 INCENTIVE COMPENSATION AND COMPANY STOCK PURCHASE PLAN
Under an Incentive Compensation and Company Stock Purchase Plan, we sold
approximately 1,606,000 "non-lapse" restricted shares of class A common stock in
August 1990 to certain of our key employees, consultants and directors at a
purchase price of $1.35 per share. At the time of purchase, these shares had an
estimated fair market value of $5.40 per share. The price paid for these shares
represented a discount of $4.05 per share. All of these shares were contributed
to Biopure Associates Limited Partnership II.
Under the terms of separate stock purchase agreements entered into with each
purchaser, the resale price of these shares, whether sold to us or to a third
party, would be equal to the price of our class A common stock less the discount
with accrued interest. Any purchaser of such shares would be subject to the same
restrictions. At May 1, 1999, the discount plus accrued interest per share was
$7.92. These shares are subject to certain transfer and resale restrictions,
including a right of first refusal granted to us.
Our board has agreed to modify these resale restrictions. In particular, the
discount plus accrued interest per share has been fixed at $7.92, and holders
may sell their shares or eliminate the restrictions at any time by the payment
to us of $7.92 per share. In addition, we will have the right, exercisable at
any time during the 12 months beginning August 1, 2004, to exchange these
restricted shares for a number of shares of class A common stock having
equivalent value after taking in account the discount of $7.92 per share.
THE 1998 STOCK OPTION PLAN
In March 1998, our board of directors adopted the 1998 Stock Option Plan as a
replacement for the 1988 Stock Option Plan which expired in March 1998. Awards
under this plan were in the form of incentive options, which are defined in the
Internal Revenue Code of 1986, or non-statutory options. Options granted under
this plan vest in such installments, cumulative or non-cumulative, as the board
may determine. Attendant to the adoption of the 1999 Omnibus Securities and
Incentive Plan described below, no further grants will be made under this plan.
1999 OMNIBUS SECURITIES AND INCENTIVE PLAN
On June 24, 1999, our board adopted the 1999 Omnibus Securities and Incentive
Plan, which has the terms described below. This plan is intended to promote our
long-term financial interests and growth by providing incentives to employees
and directors and to align their interests with those of our stockholders by
acquiring a proprietary interest in our long-term success.
General
The 1999 Omnibus Securities and Incentive Plan provides for the granting of
stock options, restricted stock awards, unrestricted stock awards, performance
share awards, performance unit awards, distribution equivalent rights, or any
combination of the foregoing to employees and directors of Biopure or our
affiliates. Our Compensation Committee will administer this plan.
The maximum number of shares of class A common stock reserved for issuance under
this plan is 1,866,666. Our board has resolved to grant options to purchase a
maximum of 1,259,668 shares of class A common stock to directors and employees.
These options will be exercisable at a price per share equal to the price to the
public in this offering and are conditioned upon the completion of this
offering. Mr. Rausch will receive options to purchase 166,667 shares of class A
common stock; Dr. Jacobs will receive options to purchase 16,667 shares of class
A common stock; Dr. Gawryl will receive options to purchase 100,000 shares of
class A common stock; and Mr. Lajoie will receive options to purchase 13,333
shares of class A common stock.
38
<PAGE> 40
Stock Options
Under the plan, the committee may award stock options, the term and vesting
rules of which are to be specified in the respective stock option award
agreements. The committee will determine whether to award incentive stock
options or nonqualified stock options, as described in the applicable stock
option award agreement. The granting of incentive stock options, as defined in
the Internal Revenue Code of 1986, is subject to certain limitations as
described in the plan, including the requirement that incentive stock options
cannot be granted to non-employee directors. The committee will determine the
option price, but, in the case of an incentive stock option, the option price
will not be less than the fair market value of a share of class A common stock
on the date of the grant of the option.
Restricted Stock Awards
The committee may grant restricted stock awards to key management employees and
directors pursuant to a restricted stock award agreement. The restricted stock
award agreements will describe the rights of the recipient of the restricted
stock award, which rights may include or exclude voting rights. During the
restriction period, the recipient of a restricted stock award will not receive
the certificate representing shares of class A common stock, will not receive
dividends and will not be entitled to sell, transfer, pledge or otherwise
dispose of the shares. At the end of the restriction period, assuming the
recipient has not breached the terms and conditions contained in the restricted
stock award agreement, the recipient will receive the certificate representing
shares of class A common stock.
Unrestricted Stock Awards
The committee may, in its discretion, award, or sell at a discount, as
compensation for past services rendered to us, unrestricted shares of class A
common stock. Unrestricted stock is not subject to restrictions on transfer.
Performance Unit Awards
The committee has discretion to set performance goals for an employee or
director and related performance units with their dollar value. If the goals are
met, we will make payment of a cash award equal to the number of bookkeeping
units awarded at the dollar value assigned to each such unit.
Performance Share Awards
The committee has discretion to set performance goals for an employee or
director which, if met, will result in the receipt of shares of class A common
stock. The holder of a performance share award will have no rights as a
stockholder until such time, if any, as the holder actually receives shares of
class A common stock pursuant to the performance share award.
Distribution Equivalent Rights
The committee has discretion to grant an award entitling the holder to receive
bookkeeping credits, cash payments and/or class A common stock distributions
equal in an amount to the distributions that would have been made to the holder
had the holder held a specified number of shares of class A common stock during
the period that the holder held the distribution equivalent right.
Other Features of the 1999 Omnibus Securities and Incentive Plan
Unless otherwise provided in an award agreement, the plan provides that in the
event of a change of control, as defined in the plan, and the termination of
employment or, removal, in the case of a director, under specified
circumstances, the holder's outstanding awards will become fully vested and
immediately exercisable, all transfer restrictions will lapse and all
performance goals will be deemed to have been fully satisfied. The committee,
however, can determine that upon a change of control, all outstanding awards
will terminate and be cashed out within a specified time period.
Our board of directors may terminate, alter or amend the 1999 Omnibus Securities
and Incentive Plan; provided, however, that no such action may, without the
consent of a holder, materially and adversely impair the rights under any
outstanding award.
INCENTIVE COMPENSATION PLAN
We have an incentive compensation plan in place for employees selected at the
beginning of each fiscal year by a committee of the board of directors. At the
end of each fiscal year, the committee determines the total amount of funds to
be made available for incentive compensation for the previous fiscal year. The
allotment of the incentive compensation funds among the participants is at the
sole discretion of the committee. Awards are not paid out until the April
following the third anniversary of the date on which the award was credited to
the participant's account. Biopure's general funds are the sole source of
payment under this plan.
39
<PAGE> 41
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In December 1990, we entered into an alliance with The Upjohn Company, or
Upjohn, to develop and market our human and veterinary products. From that time
until the alliance ended in July 1996, we received equity investment and funding
for development of approximately $140.0 million from Upjohn and benefitted from
its experience, personnel and facilities. When our company and Upjohn mutually
agreed to end the alliance in July 1996, Upjohn loaned us $9.0 million, at an
interest rate based on the prime rate. This loan is due on October 1, 2001. As
of May 1, 1999, the remaining principal balance of the loan was $5.0 million
with a principal installment of $500,000 due July 1, 1999. Biopure intends to
repay the remaining balance of this loan with proceeds from this offering.
Upjohn retained no license or other rights to our technology or products. Upjohn
maintains an equity stake in Biopure, holding class B common stock convertible,
according to a formula, into a maximum of 1,272,119 shares of our class A common
stock after FDA approval of Hemopure.
In 1987, we entered into a license agreement with B. Braun Melsungen AG, also
known as Braun, a German hospital supply company. The license and related
agreements contemplated product testing, approval, manufacture and marketing of
Hemopure by Braun in Europe. In 1997, our company and Braun mutually agreed to
end this collaboration. Our termination agreement with Braun provides for both
the repurchase by us of all of the shares of our class A common stock then owned
by Braun and the reacquisition of the exclusive rights to manufacture and market
Hemopure in Europe for the approximate amount previously paid by Braun for these
shares and rights.
We agreed to pay Braun a total of $6.3 million by 2002 in order to reacquire the
2,013,956 shares of class A common stock owned by Braun. Our termination
agreement with Braun requires us to place in escrow installment payments of the
purchase price equal to an annual amount of $1.0 million plus five percent of
our revenues from human product sales and license fees in a certain European
region. We paid one installment of $1.0 million in 1998 and completed the
repurchase of 319,683 shares. We paid a second installment of $1.0 million in
February 1999. We have the right to prepay the balance of the purchase price and
reacquire the remaining 1,694,273 shares at any time. As part of the termination
agreement, we will also pay a royalty at the rate of two percent of our revenues
from human product sales and license fees received in the European region
covered by the terminated license up to an aggregate of $7.5 million.
We have agreed with Braun to accelerate the repurchase of the remaining
1,694,273 shares of class A common stock for $5.0 million, $1.0 million of which
we placed in escrow in February 1999, after the completion of this offering.
We have consulting arrangements with two of our directors: C. Everett Koop M.D.
and David N. Judelson. For the fiscal years ended October 31, 1997 and 1998, we
paid Dr. Koop $92,941 and $123,780, respectively. We paid $75,500 to Mr.
Judelson in each of fiscal 1997 and fiscal 1998.
In August 1990, we made loans to some of our directors and officers and they
used the proceeds from such loans to purchase our class A common stock. The
principal and interest on each loan is due to be paid in full on July 31, 2000.
The interest rate of each loan is set with reference to the "base rate"
announced by Fleet Bank of Massachusetts, N.A. At April 30, 1999, the interest
rate was 7.75% and the amount of indebtedness due under the remaining loans with
a principal balance of $60,000 or more was:
Carl W. Rausch, Chairman, Chief Executive Officer and President, owes us
approximately $1.7 million;
Edward E. Jacobs, Jr., Senior Vice President, owes us $356,632;
Bing L. Wong, Senior Vice President, International, owes us $96,212; and
Geoffrey J. Filbey, Vice President, Engineering, owes us $64,909.
40
<PAGE> 42
PRINCIPAL STOCKHOLDERS
The following table summarizes certain information as of June 15, 1999, with
respect to the beneficial ownership of shares of our class A common stock,
series A convertible preferred stock, series B convertible preferred stock,
series C convertible preferred stock and series D convertible preferred stock.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. Beneficial ownership generally includes
voting or investment power with respect to securities. A person is deemed to be
the beneficial owner of shares that he or she can acquire within 60 days of June
15, 1999 upon the exercise of options or warrants. Biopure has determined each
beneficial owner's percentage ownership by assuming that options or warrants
held by such person which are exercisable within 60 days from June 15, 1999 have
been exercised. Except as indicated by the footnotes to the table below, we
believe, based on information furnished to us, that the persons and entities
named in the table below have sole voting and investment power with respect to
all shares of class A common stock and convertible preferred stock shown as
beneficially owned by them and the shares of class A common stock that will be
issued to them when their convertible preferred stock is converted upon
consummation of this prospectus. Percent of pro forma class A common stock
includes shares of class A common stock issuable upon conversion of our
convertible preferred stock outstanding, but does not include shares of class A
common stock sold in this offering or shares of class A common stock issuable
upon conversion of our class B common stock, which is non-voting stock.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------
PREFERRED STOCK
CLASS A -------------------------------------------------------------
COMMON STOCK SERIES A SERIES B SERIES C
------------------- ------------------- ----------------- -------------------
SHARES PERCENT SHARES PERCENT SHARES PERCENT SHARES PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNERS --------- ------- --------- ------- ------- ------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Carl W. Rausch(1).................. 5,505,255 44.2% -- --% -- --% -- --%
11 Hurley Street
Cambridge, MA 02141
Biopure Associates Limited
Partnership(2)................... 2,704,195 21.7 -- -- -- -- -- --
c/o Biopure Corporation
11 Hurley Street
Cambridge, MA 02141
Biopure Associates Limited
Partnership II(2)................ 2,226,667 17.9 -- -- -- -- -- --
c/o Biopure Corporation
11 Hurley Street
Cambridge, MA 02141
OCM Principal Opportunities
Fund, L.P. ...................... -- -- -- -- -- -- 2,618,773 92.5
c/o Oaktree Capital Management
333 S. Grand Avenue
Los Angeles, CA 90071
B. Braun Melsungen AG(3)........... 1,694,273 13.6 -- -- -- -- -- --
Carl Braun Strasse 1
D-34212 Melsungen, Germany
HTV Industries, Inc.(4)............ 1,251,252 10.0 -- -- -- -- -- --
Pavilion Office Building
24100 Chagrin Boulevard
Suite 340
Beachwood, OH 44122
TVI Corp.(4)....................... -- -- -- -- -- -- -- --
300 Delaware Avenue
Suite 1704
Wilmington, DE 19801
Aspen Venture Partners, L.P........ 782,708 6.3 26,666 7.7 283,020 13.3 -- --
222 Berkeley Street
Boston, MA 02116
Allan Ferguson(5).................. 804,375 6.5 26,666 7.7 313,020 14.7 10,000 0.4
222 Berkeley Street
Boston, MA 02116
New Enterprise Associates, L.P..... 129,630 1.0 213,333 61.5 -- -- -- --
1119 St. Paul Street
Baltimore, MD 21202
<CAPTION>
--------------------------------
PERCENT OF
PREFERRED STOCK
-----------------
SERIES D PRO FORMA
----------------- CLASS A
SHARES PERCENT COMMON STOCK
NAME AND ADDRESS OF BENEFICIAL OWNERS ------- ------- ------------
<S> <C> <C> <C>
Carl W. Rausch(1).................. -- --% 27.3%
11 Hurley Street
Cambridge, MA 02141
Biopure Associates Limited
Partnership(2)................... -- -- 13.4
c/o Biopure Corporation
11 Hurley Street
Cambridge, MA 02141
Biopure Associates Limited
Partnership II(2)................ -- -- 11.0
c/o Biopure Corporation
11 Hurley Street
Cambridge, MA 02141
OCM Principal Opportunities
Fund, L.P. ...................... 83,333 3.8 12.7
c/o Oaktree Capital Management
333 S. Grand Avenue
Los Angeles, CA 90071
B. Braun Melsungen AG(3)........... -- -- 8.4
Carl Braun Strasse 1
D-34212 Melsungen, Germany
HTV Industries, Inc.(4)............ -- -- 6.2
Pavilion Office Building
24100 Chagrin Boulevard
Suite 340
Beachwood, OH 44122
TVI Corp.(4)....................... 166,667 7.5 0.6
300 Delaware Avenue
Suite 1704
Wilmington, DE 19801
Aspen Venture Partners, L.P........ 166,666 7.5 6.2
222 Berkeley Street
Boston, MA 02116
Allan Ferguson(5).................. 170,833 7.7 6.4
222 Berkeley Street
Boston, MA 02116
New Enterprise Associates, L.P..... -- -- 4.2
1119 St. Paul Street
Baltimore, MD 21202
</TABLE>
41
<PAGE> 43
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------
PREFERRED STOCK
CLASS A -------------------------------------------------------------
COMMON STOCK SERIES A SERIES B SERIES C
------------------- ------------------- ----------------- -------------------
SHARES PERCENT SHARES PERCENT SHARES PERCENT SHARES PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNERS --------- ------- --------- ------- ------- ------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Henry W. Kendall Revocable Trust... 6,667 0.1% -- -- 801,889 37.7% -- --
c/o Faneuil Hall Associates
176 Federal Street, 2nd Floor
Boston, MA 02110
Zesiger Capital Group LLC.......... -- -- -- -- 745,300 35.0 -- --
320 Park Avenue, 30th Floor
New York, NY 10022
Providence Partnership II.......... 37,500 0.3 60,000 17.3 -- -- -- --
c/o Kinship Capital Corporation
400 Skokie Blvd, Suite 675
Northbrook, IL 60062
NEGF II, L.P. ..................... -- -- -- -- -- -- 188,679 6.7
c/o New England Partners
One Boston Place, Suite 2100
Boston, MA 02108
Schooner Capital LLC............... -- -- -- -- 66,038 3.1 -- --
745 Atlantic Avenue
Boston, MA 02111
KBC Insurance N.V. ................ -- -- -- -- -- -- -- --
Wasistraat 6
B-3000 Leuven, Belgium
H & Q Capital Management Inc.......
50 Rowes Wharf
Boston, MA 02110
J.B. Partners...................... -- -- 26,666 7.7 -- -- -- --
645 Madison Avenue
New York, NY 10022
David N. Judelson(6)............... 1,694,748 13.6 -- -- -- -- -- --
375 Park Avenue, #2507
New York, NY 10152
Stephen A. Kaplan(7)............... 2,500 0.0 -- -- -- -- 2,618,773 92.5
c/o Oaktree Capital Management
333 S. Grand Avenue
Los Angeles, CA 90071
C. Everett Koop, M.D.(8)........... 2,500 0.0 -- -- -- -- -- --
Charles A. Sanders, M.D............ 2,500 0.0 -- -- 10,000 0.5 -- --
Edward E. Jacobs, Jr., M.D.(9)..... 20,500 0.2 -- -- -- -- -- --
Maria S. Gawryl, Ph.D.(10)......... 23,083 0.2 -- -- -- -- -- --
Dixie L. Esseltine, M.D.(11)....... 1,667 0.0 -- -- -- -- -- --
Brian A. Lajoie(12)................ 7,083.... 0.1 -- -- -- -- -- --
All Officers and Directors as a
Group(13)........................ 7,314,286 58.7 10,000 0.5 2,618,773 92.5
<CAPTION>
--------------------------------
PERCENT OF
PREFERRED STOCK
-----------------
SERIES D PRO FORMA
----------------- CLASS A
SHARES PERCENT COMMON STOCK
NAME AND ADDRESS OF BENEFICIAL OWNERS ------- ------- ------------
<S> <C> <C> <C>
Henry W. Kendall Revocable Trust... 166,666 7.5% 3.9%
c/o Faneuil Hall Associates
176 Federal Street, 2nd Floor
Boston, MA 02110
Zesiger Capital Group LLC.......... -- -- 2.9
320 Park Avenue, 30th Floor
New York, NY 10022
Providence Partnership II.......... -- -- 1.2
c/o Kinship Capital Corporation
400 Skokie Blvd, Suite 675
Northbrook, IL 60062
NEGF II, L.P. ..................... 83,333 3.8 1.2
c/o New England Partners
One Boston Place, Suite 2100
Boston, MA 02108
Schooner Capital LLC............... 191,666 8.7 1.1
745 Atlantic Avenue
Boston, MA 02111
KBC Insurance N.V. ................ 250,000 11.3 1.1
Wasistraat 6
B-3000 Leuven, Belgium
H & Q Capital Management Inc....... 208,333 8.0 0.8
50 Rowes Wharf
Boston, MA 02110
J.B. Partners...................... -- -- 0.4
645 Madison Avenue
New York, NY 10022
David N. Judelson(6)............... -- -- 8.4
375 Park Avenue, #2507
New York, NY 10152
Stephen A. Kaplan(7)............... 83,333 3.8 12.7
c/o Oaktree Capital Management
333 S. Grand Avenue
Los Angeles, CA 90071
C. Everett Koop, M.D.(8)........... -- -- --
Charles A. Sanders, M.D............ -- -- 0.1
Edward E. Jacobs, Jr., M.D.(9)..... -- -- 0.1
Maria S. Gawryl, Ph.D.(10)......... -- -- 0.1
Dixie L. Esseltine, M.D.(11)....... -- -- --
Brian A. Lajoie(12)................ -- -- --
All Officers and Directors as a
Group(13)........................ 113,433 5.1 49.1
</TABLE>
- ---------------
(1) Mr. Rausch's shares of class A common stock consist of: sole power to vote
and dispose of 2,704,195 shares owned by Biopure Associates Limited Partnership;
sole power to vote and dispose of 2,226,667 shares owned by Biopure Associates
Limited Partnership II; sole power to vote 171,833 shares held in a voting trust
of which he is the voting trustee; sole power to vote and dispose of 381,727
shares owned directly by Mr. Rausch, his family and family trusts; and options
exercisable 60 days from June 15, 1999 to purchase 20,833 shares.
(2) Biopure Associates Limited Partnership is a Massachusetts limited
partnership originally formed to hold shares owned primarily by our officers,
employees and consultants. Mr. Rausch, as the Managing General Partner, has sole
power to vote and dispose of these shares. Biopure Associates Limited
Partnership II was formed for a similar purpose. Mr. Rausch, as the sole General
Partner, has sole power to vote and dispose of these shares. The underlying
shares of class A common stock in the two partnerships owned indirectly by
directors and persons named in the compensation table are as follows: Mr. Rausch
1,396,597 shares; Mr. Judelson 333,333 shares; Dr. Koop 40,000 shares; Dr.
Jacobs 515,727 shares; Dr. Gawryl 36,667 shares; and Mr. Lajoie 90,000 shares.
(3) The ownership of B. Braun Melsungen AG consists solely of voting power.
Biopure will reacquire these shares after completion of this offering, as
described under "Certain Relationships and Related Transactions".
42
<PAGE> 44
(4) HTV Industries, Inc. may be deemed indirectly to have the sole power to
vote and dispose of the series D convertible preferred stock owned of record by
TVI Corp., a wholly owned subsidiary of HTV Industries, Inc.
(5) Includes all of the shares owned by Aspen Venture Partners, L.P. of which
Mr. Ferguson serves as Managing Partner, and all of the shares owned by Aspen
Investment Associates, L.P. of which Mr. Ferguson is a General Partner. Mr.
Ferguson has shared voting and investment power with respect to the shares owned
by these partnerships. Mr. Ferguson has sole voting and investment powers with
respect to 30,000 shares of series B convertible preferred stock, 10,000 shares
of series C convertible preferred stock and 4,167 shares of series D convertible
preferred stock owned by him. Mr. Ferguson disclaims beneficial ownership of the
shares held by Aspen Venture Partners, L.P. and Aspen Investment Associates,
L.P., except to the extent of his proportionate pecuniary interest in Aspen
Venture Partners, L.P. and Aspen Investment Associates, L.P.
(6) Mr. Judelson's shares consist of sole power to vote and dispose of
1,673,915 shares, include options exercisable 60 days from June 15, 1999 to
purchase 20,833 shares and do not include his 333,333 shares referenced above in
note 2.
(7) Mr. Kaplan's shares consist of shares owned of record by OCM Principal
Opportunities Fund, L.P., for which Mr. Kaplan has sole power to vote and
dispose and options exercisable 60 days from June 15, 1999 to purchase 2,500
shares.
(8) Dr. Koop's shares include options exercisable from June 15, 1999 to
purchase 2,500 shares and do not include his 60,000 shares referenced above in
note 2.
(9) Dr. Jacobs' ownership consists of sole power to vote and dispose of 18,000
shares and options exercisable 60 days from June 15, 1999 to purchase 2,500
shares and do not include his 515,727 shares referenced above in note 2.
(10) Dr. Gawryl's shares include options exercisable 60 days from June 15, 1999
to purchase 23,083 shares and do not include her 36,667 shares referenced above
in note 2.
(11) Dr. Esseltine's shares consist of options exercisable 60 days from June 15,
1999 to purchase 1,667 shares.
(12) Mr. Lajoie's shares include options exercisable 60 days from June 15, 1999
to purchase 7,083 shares and do not include his 90,000 shares referenced above
in note 2.
(13) Includes options exercisable 60 days from June 15, 1999 to purchase 134,850
shares.
43
<PAGE> 45
DESCRIPTION OF CAPITAL STOCK
Our authorized capital stock consists of 100,000,179 shares of common stock,
consisting of 100,000,000 shares of class A common stock, par value $.01 per
share, 179 shares of class B common stock, par value $1.00 per share, and
30,000,000 shares of preferred stock, par value $.01 per share.
CLASS A COMMON STOCK
The holders of our class A common stock are entitled to one vote per share on
all matters submitted to our stockholders. The holders of our class A common
stock are entitled to receive dividends as and when declared by our board of
directors.
Upon any liquidation, dissolution or winding up of Biopure, holders of class A
common stock are entitled to ratable distribution, with the holders of the class
B common stock, of the assets available for distribution to our stockholders,
after payment of the liquidation preferences due to the holders of our
convertible preferred stock.
Holders of class A common stock do not have preemptive rights or cumulative
voting rights.
CLASS B COMMON STOCK
Except as required by law, the holders of class B common stock have no voting
rights and have no right to receive dividends on their class B common stock.
The shares of class B common stock are convertible into class A common stock
after the receipt of FDA approval for the commercial sale of Hemopure for use as
an oxygen transport material in humans. The conversion ratio is based on a
valuation of Biopure at the time of conversion which cannot exceed $3.0 billion.
The maximum number of shares of class A common stock issuable upon conversion of
the class B common stock is 1,272,119 and the minimum is 646,667. We will not
issue any additional shares of class B common stock.
In the event of a liquidation, dissolution or winding up of Biopure, holders of
class B common stock are entitled to ratable distribution, with the holders of
the class A common stock, of the assets available for distribution to our
stockholders, after payment of the liquidation preferences due to the holders of
our convertible preferred stock.
SERIES A CONVERTIBLE PREFERRED STOCK
The holders of series A convertible preferred stock are entitled to receive
dividends and other distributions only as and when declared on our class A
common stock. These dividends and distributions are paid based on the number of
shares of class A common stock into which the series A convertible preferred
stock could be converted on the record date for the dividend or distribution.
Holders of series A convertible preferred stock are entitled to vote on all
matters submitted to the stockholders. The number of votes the holders can cast
is equal to the largest number of whole shares of class A common stock into
which the holders' shares of series A convertible preferred stock could be
converted on the record date for determining which stockholders can vote on the
matters. In addition, the affirmative vote of 66 2/3% of the outstanding shares
of series A convertible preferred stock is required to permit us to engage in
certain transactions, including:
- - redeeming or repurchasing our stock;
- - authorizing new issuances of stock;
- - the merger, consolidation or disposition of substantially all our assets, or
the assignment of our accounts receivable at a discount or with recourse;
- - amending our restated certificate of incorporation to change the relative
seniority rights of the series A convertible preferred stock, reduce the
amounts payable to holders of series A convertible preferred stock or change
the priority of the series A convertible preferred stock upon a liquidation,
dissolution or winding up;
- - authorizing any equity securities senior to or on a parity with the series A
convertible preferred stock;
- - cancelling or modifying the conversion rights of the series A convertible
preferred stock; and
- - otherwise adversely changing any of the rights, preferences, privileges or
limitations which are provided for the benefit of the holders of the series A
convertible preferred stock.
44
<PAGE> 46
Upon a liquidation, dissolution or winding up of Biopure, the holders of series
A convertible preferred stock will be entitled to receive the greater of:
- - a preferential liquidation payment of $3.75 per share, approximately
$1,300,000 in the aggregate, plus all declared but unpaid dividends thereon;
or
- - the amount the holders would have received had their shares of series A
convertible preferred stock been converted into class A common stock
immediately prior to the event of liquidation, dissolution or winding up.
Each share of series A convertible preferred stock may be converted into three
and one-third shares of class A common stock at the option of the holder and
will automatically be converted upon the completion of an initial public
offering of shares of class A common stock at a minimum public offering price of
$3.60 per share and gross proceeds to us of at least $5.0 million.
SERIES B CONVERTIBLE PREFERRED STOCK
The holders of series B convertible preferred stock are entitled to receive
dividends and other distributions only as and when declared on our class A
common stock or series A convertible preferred stock. These dividends and
distributions are paid based on the number of shares of class A common stock
into which such series B convertible preferred stock could be converted on the
record date for the dividend or distribution. The series B convertible preferred
stock dividends shall be paid prior to any payment of dividends on the class A
common stock.
Holders of series B convertible preferred stock are entitled to vote on all
matters submitted to the stockholders. The number of votes the holders can cast
is equal to the number of shares of class A common stock into which the shares
of series B convertible preferred stock could then be converted. In addition,
the affirmative vote of 75% of the outstanding shares of series B convertible
preferred stock is required to permit us to engage in certain transactions,
including:
- - reclassifying any class A common stock into shares having any preference or
priority as to dividends or assets superior to any such preference or priority
of the series B convertible preferred stock;
- - creating or issuing any other class or classes of stock or series of stock or
debt securities having any preference or priority as to dividends or assets
superior to any such preference or priority of the series B convertible
preferred stock;
- - creating or issuing any other class or classes of stock ranking on a parity as
to any preference or priority as to dividends or assets other than preferred
stock with an aggregate liquidation preference not to exceed $30.0 million and
having terms no more favorable to an investor than the terms of the series B
convertible preferred stock; and
- - amending or repealing any provisions of our restated certificate of
incorporation or by-laws to change the preferences, rights, privileges or
powers of, or the restrictions provided for the benefit of, the series B
convertible preferred stock generally or to increase the number of authorized
shares of the series B convertible preferred stock.
Holders of series B convertible preferred stock, voting as a class, are entitled
to elect one representative to our board of directors, which representative
shall be reasonably acceptable to us.
Each investor that owns five percent or more of the class A common stock
issuable upon conversion of the series B convertible preferred stock has a
"participation right" to purchase securities that Biopure sells in the future.
The participation right gives the existing shareholder of series B convertible
preferred stock the right to purchase a pro rata share of the securities being
sold. The participation right does not give shareholders of series B convertible
preferred stock the right to purchase, among other types of securities, any
security offered to the public under a registration statement filed with the
Securities and Exchange Commission.
Upon a liquidation, dissolution or winding up of Biopure, the holders of series
B convertible preferred stock will be entitled to receive a preferential
liquidation payment, subject to adjustment of stock splits, combinations,
reclassifications and similar events, equal to all declared but unpaid dividends
thereon, plus an amount per share equal to the greater of:
- - if such liquidation, dissolution or winding up occurs prior to the third
anniversary of the original issue date of the series B convertible preferred
stock, the series B return amount per share;
- - if such liquidation, dissolution or winding up occurs on or after the third
anniversary of the original issue date of the series B convertible preferred
stock, $21.73 per share; or
- - such amount per share of series B convertible preferred stock as would have
been payable had the shares of series B convertible preferred stock been
converted into class A common stock immediately prior to the liquidation,
dissolution or winding up, so long as the amount distributable per share of
class A common stock exceeds $47.70.
45
<PAGE> 47
The term "series B return amount" as of any date, means an amount equal to
$10.60 plus a 35% annualized rate of return on $10.60 from the original issue
date of the series B convertible preferred stock to such date.
Each share of series B convertible preferred stock may be converted into one
share of class A common stock at the option of the holder and automatically
converts upon:
- - the closing of an initial public offering of shares of class A common stock at
a minimum public offering price of $22.50 per share and net proceeds to us in
excess of $40.0 million; or
- - the written consent of the holders of 80% or more of the series B convertible
preferred stock then outstanding.
Holders of shares of series B convertible preferred stock have consented to the
conversion of all shares of series B convertible preferred stock upon completion
of this offering at a conversion ratio of 0.798 shares of class A common stock
for each share of series B convertible preferred stock.
SERIES C CONVERTIBLE PREFERRED STOCK
The holders of series C convertible preferred stock are entitled to receive
dividends and other distributions only as and when declared on our class A
common stock, series A convertible preferred stock, series B convertible
preferred stock or series D convertible preferred stock. These dividends and
distributions are based on the number of shares of class A common stock into
which the series C convertible preferred stock could be converted on the record
date for the dividend or distribution. The series C convertible preferred stock
dividends shall be paid prior to any payment of any dividends on any class A
common stock or series D convertible preferred stock.
Holders of series C convertible preferred stock are entitled to vote on all
matters submitted to the stockholders. The number of votes that the holders can
cast is equal to the number of shares of class A common stock into which the
shares of series C convertible preferred stock could then be converted. In
addition, the affirmative vote of two-thirds of the outstanding series C
convertible preferred stock is required to permit us to engage in certain
transactions, including:
- - creating, by reclassification or otherwise, any new class or series of stock
having rights, preferences or privileges senior to or on a parity with the
series C convertible preferred stock;
- - amending or repealing any provisions of our restated certificate of
incorporation or by-laws to change the rights, preferences or privileges of
the series C convertible preferred stock;
- - increasing or decreasing the number of authorized shares of the series C
convertible preferred stock;
- - engaging in a transaction that results in the redemption of any shares of
common stock (other than pursuant to employee agreements or in connection with
redemption of shares held by Braun); and
- - amending, restating or waiving any provision of our restated certificate of
incorporation or by-laws relative to the series C convertible preferred stock.
Holders of the series C convertible preferred stock, voting as a class, are
entitled to elect one representative to our board of directors, which
representative shall be reasonably acceptable to us.
Each shareholder of series C convertible preferred stock has a "participation
right" to purchase a pro rata share of securities that Biopure sells in the
future. The participation right gives each existing shareholder the right to
purchase a pro rata share of the securities being sold. The participation right
does not give shareholders of series C convertible preferred stock the right to
purchase, among other types of securities, any security offered to the public
under a registration statement filed with the Securities and Exchange
Commission.
Upon a liquidation, dissolution or winding up of Biopure, the holders of series
C convertible preferred stock will be entitled to receive a preferential
liquidation payment, subject to equitable adjustment for stock splits,
reclassifications, plus all declared but unpaid dividends thereon, an amount per
share equal to the greater of:
- - if such liquidation, dissolution or winding up occurs prior to the third
anniversary of the original issue date of the series C convertible preferred
stock, the series C return amount per share;
- - if such liquidation, dissolution or winding up occurs on or after the third
anniversary of the original issue date of the series C convertible preferred
stock, $21.73 per share; or
46
<PAGE> 48
- - such amount per share of series C convertible preferred stock as would have
been payable had the shares of series C convertible preferred stock been
converted into class A common stock immediately prior to such liquidation,
dissolution or winding up, so long as the amount distributable per share of
class A common stock exceeds $47.70.
The term "series C return amount" as of any date, means an amount equal to
$10.60 plus a 35% annualized rate of return on $10.60 from the original issue
date of the series C convertible preferred stock to such date.
Each share of series C convertible preferred stock may be converted into one
share of class A common stock at the option of the holder and automatically
converts upon:
- - the vote of the holders of at least two-thirds of the series C convertible
preferred stock; or
- - the closing of an initial public offering of shares of class A common stock at
a minimum public offering price of $34.50 as of the date of this prospectus
and minimum net proceeds to us of $40.0 million.
Holders of shares of series C convertible preferred stock have agreed to consent
to the conversion of all shares of series C convertible preferred stock upon
completion of this offering at a conversion ratio of 0.949 shares of class A
common stock for each share of series C convertible preferred stock.
SERIES D CONVERTIBLE PREFERRED STOCK
The holders of series D convertible preferred stock are entitled to receive
dividends and other distributions only as and when declared on our class A
common stock, series A convertible preferred stock, series B convertible
preferred stock or series C convertible preferred stock. These dividends and
distributions are based on the number of shares of class A common stock into
which the series D convertible preferred stock could be converted on the record
date for the dividend or distribution. Series D convertible preferred stock
dividends shall be paid prior to any payment of any dividends on any class A
common stock, series A convertible preferred stock, series B convertible
preferred stock or series C convertible preferred stock.
Holders of series D convertible preferred stock are entitled to vote on all
matters submitted to the stockholders. The number of votes that the holders can
cast is equal to the largest number of full shares of class A common stock into
which the series D convertible preferred stock held by them could then be
converted. In addition, the affirmative vote or written consent of two-thirds of
the outstanding series D convertible preferred stock is required to take any
action that:
- - alters, restates or changes the rights, preferences or privileges of the
series D convertible preferred stock;
- - increases or decreases the authorized number of shares of series D convertible
preferred stock;
- - creates (by reclassification or otherwise) any new class or series of shares
having rights, preferences or privileges senior to or on a parity with the
series D convertible preferred stock;
- - results in the redemption of any shares of class A common stock (other than
pursuant to employee agreements or in connection with redemption of certain
shares held by Braun); or
- - amends, restates or waives any provision of the restated certificate of
incorporation or by-laws relative to the series D convertible preferred stock.
Each shareholder of series D convertible preferred stock has a "participation
right" to purchase a pro rata share of securities that Biopure sells in the
future. The participation right does not give shareholders of series D
convertible preferred stock the right to purchase, among other types of
securities, any security offered to the public under a registration statement
filed with the Securities and Exchange Commission.
Upon a liquidation, dissolution or winding up, each holder of series D
convertible preferred stock shall be entitled to receive, prior and in
preference to any distribution of any of our assets or surplus funds to the
holders of class A common stock or class B common stock by reason of their
ownership thereof, an amount equal to any declared but unpaid dividends on such
share of series D convertible preferred stock to and including the date full
payment is so tendered to the holders of the series D convertible preferred
stock with respect to such liquidation, dissolution or winding up, plus an
amount equal to the greater of:
- - if such liquidation, dissolution or winding up occurs prior to the third
anniversary of the series D original issue date, the series D return amount
per share;
- - if such liquidation, dissolution or winding up occurs on or after the third
anniversary of the series D convertible preferred stock original issue date,
$24.60 per share; or
47
<PAGE> 49
- - such amount per share of series D convertible preferred stock as would have
been payable had each share of preferred stock been converted to class A
common stock immediately prior to such liquidation, dissolution or winding up,
so long as the amount distributable per share of class A common stock exceeds
$54.00.
The term "series D return amount" as of any date, means an amount equal to
$12.00 plus a 35% annualized rate of return on $12.00 from the issue date of the
series D convertible preferred stock to such date.
Each share of series D convertible preferred stock may be converted into a share
of class A common stock at the option of the holder and will be automatically
converted into class A common stock upon:
- - the vote of the holders of at least two-thirds of the series D convertible
preferred stock; or
- - the closing of this offering; provided that, if the initial price to the
public in this offering is less than $24.00 per share, such conversion ratio
will, if more favorable to the holders of the series D convertible preferred
stock, be adjusted proportionately so that the holders of the series D
convertible preferred stock will receive additional shares of class A common
stock which, valued at the price of this offering, will represent a 35%
annualized return from the date of original issue on the original issue price
of the series D convertible preferred stock and if the price of this offering
is less than $15.90, the adjustment shall be made as if the price were $15.90,
and no further adjustment will be made. If the price per share in this
offering is equal to or greater than $24.00, there will be no adjustment.
ANTI-TAKEOVER EFFECTS OF VARIOUS PROVISIONS OF DELAWARE LAW, BIOPURE'S RESTATED
CERTIFICATE OF INCORPORATION AND BY-LAWS AND A PROPOSED STOCKHOLDERS' RIGHTS
PLAN
We are subject to the provisions of Section 203 of the Delaware General
Corporation Law. Subject to various exceptions, Section 203 prohibits a publicly
held Delaware corporation from engaging in a "business combination" with an
"interested stockholder" for a period of three years after the date of the
transaction in which the person became an interested stockholder, unless the
interested stockholder attained that status with the approval of the board of
directors or unless the business combination is approved in a prescribed manner.
A "business combination" includes mergers, asset sales and other transactions
resulting in a financial benefit to the interested stockholder. Subject to
various exceptions, an "interested stockholder" is a person who, together with
affiliates and associates, owns, or within three years did own, fifteen percent
or more of the corporation's voting stock. This statute could prohibit or delay
the success of mergers or other takeover or change in control attempts with
respect to Biopure and, accordingly, may discourage attempts to acquire us.
In addition, various provisions of our restated certificate of incorporation and
our by-laws, which provisions will be in effect upon the completion of this
offering and are summarized in the following paragraphs, may be deemed to have
an anti-takeover effect and may delay, defer or prevent a tender offer or
takeover attempt that a stockholder might consider in its best interest,
including those attempts that might result in a premium over the market price
for the shares held by stockholders.
Classified Board of Directors
Following the completion of this offering, our board of directors will be
divided into three classes of directors serving staggered three-year terms. As a
result, approximately one-third of the board of directors will be elected each
year. These provisions, when coupled with the provision of the by-laws
authorizing the board of directors to fill vacant directorships or increase the
size of the board of directors, may deter a stockholder from voting to remove
incumbent directors and simultaneously gaining control of the board of directors
by filling the vacancies created by that removal with its own nominees.
Dr. Koop and Mr. Looney will be Class I directors, whose terms expire in 2000;
Mr. Harrington and Mr. Kaplan will be Class II directors, whose terms expire in
2001; and Mr. Rausch, Mr. Judelson and Dr. Sanders will be Class III directors,
whose terms expire in 2002.
Supermajority Voting Requirement for Mergers and Business Combinations
We are in the process of amending our restated certificate of incorporation to
require that two-thirds, rather than a majority, of the voting power of Biopure
approve any merger, consolidation or sale of "all or substantially all" of our
assets. This two-thirds vote will be necessary until July 31, 2003, after which
a majority of the voting power of Biopure will be able to approve these
transactions. By requiring a two-thirds rather than a majority vote, it will be
more difficult for an outside entity to successfully acquire our company.
Advance Notice Requirements for Stockholder Proposals and Director Nominations
The by-laws provide that stockholders who wish to bring business before an
annual meeting of stockholders, or to nominate candidates for election as
directors at an annual meeting of stockholders, must provide timely notice in
writing to the secretary of Biopure. To be timely, a stockholder's notice must
be delivered at our principal executive offices, not less than 90 days prior to
the
48
<PAGE> 50
first anniversary of the date of our previous year's annual meeting of
stockholders. However, if no annual meeting of stockholders was held in the
previous year or the date of the annual meeting of stockholders has been changed
to be more than 30 calendar days earlier than or 60 calendar days after the
anniversary, notice by the stockholder, to be timely, must be received by us not
later than the close of business on the later of the 90th day prior to such
annual meeting or the 10th day following the day on which the public
announcement of the date of such meeting is first made. The by-laws also provide
specific notice requirements applicable where the number of directors has been
increased. The by-laws specify various requirements as to the form and content
of a stockholder's notice. These provisions may preclude stockholders from
bringing matters for a vote before an annual meeting of stockholders or from
making nominations for directors at an annual meeting of stockholders.
Authorized But Unissued Shares
The authorized but unissued shares of common stock and preferred stock are
available for future issuance without further stockholder approval. These
additional shares may be used for a variety of corporate purposes, including
future public or private offerings to raise additional capital, corporate
acquisitions and employee benefit plans. The existence of authorized but
unissued and unreserved common stock and preferred stock could make more
difficult or discourage an attempt to obtain control of Biopure by means of a
proxy contest, tender offer, merger or otherwise.
The Delaware General Corporation Law generally provides that the affirmative
vote of a majority of the shares entitled to vote on any matter is required to
amend a corporation's certificate of incorporation or by-laws, unless a
corporation's certificate of incorporation or by-laws, as the case may be,
requires a greater percentage, or unless the by-law provision being amended was
originally adopted by the board of directors, in which case the amendment
requires only the affirmative vote of a majority of the members of the board of
directors or unless the certificate of incorporation provides that the board of
directors may amend the by-laws, in which case the amendment requires only the
affirmative vote of a majority of the members of the board of directors.
Stockholders' Rights Plan
Biopure's board of directors is considering the adoption of a stockholders'
rights plan. A stockholders' rights plan would have an anti-takeover effect.
Under this plan, a preferred stock purchase right would be distributed to each
holder of class A common stock. The plan is likely to discourage any person or
group that wishes to acquire more than a specified percentage of our class A
common stock from acquiring this stock prior to obtaining Biopure's agreement to
redeem the rights. If the rights are not redeemed, the exercise of the preferred
stock purchase rights following an acquisition will cause substantial dilution
to the acquiring person or group.
49
<PAGE> 51
SHARES ELIGIBLE FOR FUTURE SALE
Prior to this offering, there has been no public market for our class A common
stock, and we cannot predict the effect, if any, that sales of class A common
stock or the availability of class A common stock for sale will have on the
market price of the class A common stock. Nevertheless, sales of substantial
amounts of class A common stock in the public market, or the perception that
such sales could occur, could negatively affect the market price of our class A
common stock and impair our future ability to raise capital through the sale of
our equity securities.
Upon the completion of this offering, we will have an aggregate of 22,770,513
shares of class A common stock outstanding, assuming no exercise of the
underwriters' over-allotment option and no exercise of options or warrants
outstanding at May 1, 1999. Of the outstanding shares, the 4,500,000 shares sold
in this offering will be freely tradeable, except that any shares held by our
"affiliates", as that term is defined in Rule 144 promulgated under the
Securities Act, may be sold only in compliance with the limitations described
below. The remaining 18,270,513 shares of class A common stock will be deemed
"restricted securities" as defined under Rule 144 and may not be sold publicly
unless they are registered under the Securities Act or are sold pursuant to Rule
144 or another exemption from registration. Our directors, executive officers
and other stockholders, holding 16,215,883 shares in the aggregate after
conversion of our preferred stock, have agreed that they will not sell, directly
or indirectly, any shares of class A common stock without the prior written
consent of J.P. Morgan Securities Inc. for a period of 180 days from the date of
this prospectus. Subject to these lock-up agreements, the shares of class A
common stock outstanding upon the completion of this offering will be available
for sale in the public market as follows:
<TABLE>
<CAPTION>
APPROXIMATE
NUMBER OF SHARES DESCRIPTION
<S> <C>
5,309,621 After the date of this prospectus, freely tradeable shares
sold in this offering and shares saleable under Rule 144(k)
that are not subject to the 180-day lock-up
241,423 After 90 days from the date of this prospectus, additional
shares saleable under Rule 144 that are not subject to the
180-day lock-up
766,092 After December 23, 1999, shares saleable under Rule 144 that
are not subject to the 180-day lock-up
14,491,973 After 180 days from the date of this prospectus, the 180-day
lock-up is released and these additional shares are saleable
under Rule 144, subject, in some cases, to volume
limitations, Rule 144(k), or pursuant to a registration
statement to register for resale shares of class A common
stock issued upon the exercise of stock options
1,961,404 After 180 days from the date of this prospectus, restricted
securities that are not yet saleable under Rule 144
</TABLE>
In general, under Rule 144, as currently in effect, a person, or person whose
shares are required to be aggregated, including an affiliate, who has
beneficially owned shares for at least one year is entitled to sell, within any
three-month period commencing 90 days after the date of this prospectus, a
number of shares that does not exceed the greater of:
- - 1.0% of the then outstanding shares of class A common stock, approximately
227,705 shares immediately after this offering, or
- - the average weekly trading volume in the class A common stock during the four
calendar weeks preceding the date on which notice of such sale is filed,
subject to certain restrictions.
In addition, a person who is not deemed to have been an affiliate of Biopure at
any time during the 90 days preceding a sale and who has beneficially owned the
shares proposed to be sold for at least two years would be entitled to sell such
shares under Rule 144(k) without regard to the volume restrictions described
above. To the extent that shares were acquired from an affiliate, such person's
holding period for the purpose of effecting a sale under Rule 144 commences on
the date of transfer from the affiliate.
As of May 1, 1999, options and warrants to purchase a total 1,248,295 shares of
class A common stock were outstanding, of which 210,780 were exercisable.
We have agreed not to sell or otherwise dispose of any shares of class A common
stock during the 180-day period following the date of the prospectus, except
that we may issue, and grant options to purchase, shares of class A common stock
under our 1999 Omnibus Securities and Incentive Plan. In addition, we may issue
shares of class A common stock in connection with any acquisition of another
company if the terms of such issuance provide that the class A common stock so
issued shall not be resold prior to the expiration of the 180-day lock-up
period.
50
<PAGE> 52
Following this offering, under specified circumstances and subject to customary
conditions, holders of 15,003,250 shares of class A common stock will have
demand registration rights with respect to their shares of class A common stock,
subject to the 180-day lock-up arrangement described above, to require us to
register their shares of class A common stock under the Securities Act, and they
will have rights to participate in any future registration of securities by us.
51
<PAGE> 53
UNDERWRITING
Biopure and the underwriters named below have entered into an underwriting
agreement covering the class A common stock to be offered in this offering. J.P.
Morgan Securities Inc., Adams, Harkness & Hill, Inc. and Robert W. Baird & Co.
Incorporated are acting as representatives of the underwriters. Each underwriter
has agreed to purchase the number of shares of class A common stock set forth
opposite its name in the following table.
<TABLE>
<CAPTION>
-----------
NUMBER OF
SHARES
-----------
<S> <C>
UNDERWRITERS
J.P. Morgan Securities Inc..................................
Adams, Harkness & Hill, Inc.................................
Robert W. Baird & Co. Incorporated..........................
KBC Securities N.V..........................................
-----------
Total............................................. 4,500,000
===========
</TABLE>
The underwriting agreement provides that if the underwriters take any of the
shares set forth in the table above, then they must take all of these shares. No
underwriter is obligated to take any shares allocated to a defaulting
underwriter except under limited circumstances.
The underwriters are offering the shares of class A common stock, subject to the
prior sale of shares, and when, as and if such shares are delivered to and
accepted by them. The underwriters will initially offer to sell shares to the
public at the initial public offering price set forth on the cover page of this
prospectus. The underwriters may sell shares to securities dealers at a discount
of up to $ per share from the initial public offering price. Any such
securities dealers may resell shares to certain other brokers or dealers at a
discount of up to $ per share from the initial public offering price. After
the initial public offering, the underwriters may vary the public offering price
and other selling terms.
If the underwriters sell more shares than the total number set forth in the
table above, the underwriters have the option to buy up to an additional 675,000
shares of class A common stock from Biopure to cover such sales. They may
exercise this option during the 30-day period from the date of this prospectus.
If any shares are purchased with this option, the underwriters will purchase
shares in approximately the same proportion as set forth in the table above.
The following table shows the per share and total underwriting discounts that
Biopure will pay to the underwriters. These amounts are shown assuming both no
exercise and full exercise of the underwriters' option to purchase additional
shares.
<TABLE>
<CAPTION>
----------------------------
PAID BY BIOPURE
----------------------------
NO EXERCISE FULL EXERCISE
----------- -------------
<S> <C> <C>
Per share.............................................. $ $
----------- -----------
Total............................................. $ $
=========== ===========
</TABLE>
The underwriters may purchase and sell shares of class A common stock in the
open market in connection with this offering. These transactions may include
short sales, stabilizing transactions and purchases to cover positions created
by short sales. Short sales involve the sale by the underwriters of a greater
number of shares than they are required to purchase in the offering. Stabilizing
transactions consist of certain bids or purchases made for the purpose of
preventing or slowing a decline in the market price of the class A common stock
while the offering is in progress. The underwriters may also impose a penalty
bid, which means that an underwriter must repay to the other underwriters a
portion of the underwriting discount received by
52
<PAGE> 54
it. An underwriter may be subject to a penalty bid if the representatives of the
underwriters, while engaging in stabilizing or short covering transactions,
repurchase shares sold by or for the account of that underwriter. These
activities may stabilize, maintain or otherwise affect the market price of the
class A common stock. As a result, the price of the class A common stock may be
higher than the price that otherwise might exist in the open market. If the
underwriters commence these activities, they may discontinue them at any time.
The underwriters may carry out these transactions on the Nasdaq National Market,
in the over-the-counter market or otherwise.
We estimate that the total expenses of this offering, excluding underwriting
discounts and commissions, will be $1,172,500.
We have agreed to indemnify the underwriters against certain liabilities,
including liabilities under the Securities Act of 1933.
Biopure and our directors, officers and some of our other stockholders have
agreed with the underwriters not to transfer, dispose of or hedge any of our
class A common stock, or securities convertible into or exchangeable for shares
of class A common stock, for a period of 180 days after the date of this
prospectus, except with the prior written consent of J.P. Morgan Securities Inc.
This agreement does not apply to any of our employee benefit plans existing on
the date of this prospectus.
At our request, the underwriters have reserved shares of class A common stock
for sale to directors, officers, employees and retirees of Biopure who have
expressed an interest in participating in this offering. We expect these persons
to purchase no more than 5.0% of the class A common stock offered in the
offering. The number of shares available for sale to the general public will be
reduced to the extent such persons purchase such reserved shares.
We have applied to have our class A common stock listed on the Nasdaq National
Market under the symbol "BPUR".
The underwriters expect to deliver the shares of class A common stock to
investors on or about , 1999.
There has been no public market for the class A common stock prior to this
offering. We and the underwriters will negotiate the initial offering price. In
determining the price, we and the underwriters expect to consider a number of
factors in addition to prevailing market conditions, including:
- - the history of and prospects for the oxygen therapeutic industry;
- - an assessment of our management;
- - our present operations;
- - our historical results of operations; and
- - our earnings prospects.
We and the underwriters will consider these and other relevant factors in
relation to the price of similar securities of generally comparable companies.
Neither we nor the underwriters can assure investors that an active trading
market will develop for the class A common stock, or that the class A common
stock will trade in the public market at or above the initial offering price.
From time to time in the ordinary course of their respective businesses, certain
of the underwriters and their affiliates have in the past and may in the future
engage in commercial banking and/or investment banking transactions with Biopure
and our affiliates.
53
<PAGE> 55
LEGAL MATTERS
The validity of the class A common stock offered hereby will be passed upon for
us by LeBoeuf, Lamb, Greene & MacRae, L.L.P., a limited liability partnership
including professional corporations, New York, New York.
Legal matters in connection with the offering will be passed upon for the
underwriters by Cahill Gordon & Reindel, a partnership including a professional
corporation, New York, New York.
Legal matters in connection with our patents and intellectual property interests
will be passed upon for us by Hamilton, Brook, Smith & Reynolds, P.C.,
Lexington, Massachusetts.
Legal matters in connection with FDA regulation will be passed upon for us by
Hogan & Hartson, L.L.P., Washington, D.C.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our Consolidated Financial
Statements at October 31, 1997 and 1998, and for each of the three years in the
period ended October 31, 1998, as set forth in their report, which contains an
explanatory paragraph describing conditions that raise substantial doubt about
our ability to continue as a going concern as described in Note 2 to the
Consolidated Financial Statements. We have included our financial statements in
the prospectus and elsewhere in the Registration Statement in reliance on Ernst
& Young LLP's report, given on their authority as experts in accounting and
auditing.
AVAILABLE INFORMATION
We have not previously been subject to the reporting requirements of the
Securities Exchange Act of 1934. We have filed with the Securities and Exchange
Commission, or the Commission, a Registration Statement, which term shall
include all amendments, exhibits, schedules and supplements thereto, on Form S-1
under the Securities Act with respect to the class A common stock offered
hereby. This prospectus, which constitutes a part of the Registration Statement,
does not contain all the information set forth in the Registration Statement,
certain portions of which have been omitted as permitted by the rules and
regulations of the Commission. For further information with respect to Biopure
and the class A common stock offered hereby, reference is made to the
Registration Statement, copies of which may be examined without charge at the
Commission's principal office at 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549 and the regional offices of the Commission located at 7 World Trade
Center, New York, New York 10048 and 500 West Madison Street, 14th Floor,
Chicago, Illinois 60661. Copies of such materials may be obtained from the
Public Reference Section of the Commission, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, and at its public reference facilities in New
York, New York and Chicago, Illinois at prescribed rates, or on the internet at
http://www.sec.gov. Statements contained in this prospectus as to the contents
of any contract or other document are not necessarily complete, and in each
instance reference is made to the copy of such contract or other document filed
as an exhibit to the Registration Statement, each statement being qualified in
all respects by such reference. Copies of materials filed with the Commission
may also be inspected at the offices of the Nasdaq National Market located at
1735 K Street, N.W., Washington, D.C. 20006.
54
<PAGE> 56
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Report of Ernst & Young LLP, Independent Auditors........... F-2
Consolidated Balance Sheets at October 31, 1997, October 31,
1998 and May 1, 1999 (unaudited).......................... F-3
Consolidated Statements of Operations for the Years Ended
October 31, 1996, 1997 and 1998 and the Six Months Ended
May 2, 1998 (unaudited) and May 1, 1999 (unaudited)....... F-4
Consolidated Statements of Stockholders' Equity for the
Years Ended October 31, 1996, 1997 and 1998 and the Six
Months Ended May 1, 1999 (unaudited)...................... F-5
Consolidated Statements of Cash Flows for the Years Ended
October 31, 1996, 1997 and 1998 and the Six Months Ended
May 2, 1998 (unaudited) and May 1, 1999 (unaudited)....... F-6
Notes to Consolidated Financial Statements.................. F-7
</TABLE>
F-1
<PAGE> 57
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
Board of Directors
Biopure Corporation
We have audited the accompanying consolidated balance sheets of Biopure
Corporation (the Company) as of October 31, 1997 and 1998, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
each of the three years in the period ended October 31, 1998. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Biopure
Corporation at October 31, 1997 and 1998, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
October 31, 1998, in conformity with generally accepted accounting principles.
As discussed in Note 2 to the consolidated financial statements, the Company's
recurring losses from operations raise substantial doubt about its ability to
continue as a going concern. Management's plans as to these matters are
described in Note 2. The 1998 consolidated financial statements do not include
any adjustment that might result from the outcome of this uncertainty.
ERNST & YOUNG LLP
Boston, Massachusetts
December 11, 1998, except for
Note 14, as to which the date
is January 27, 1999
The foregoing report is in the form that will be signed upon the completion of
the reverse stock split described in Note 2 to the consolidated financial
statements.
ERNST & YOUNG LLP
Boston, Massachusetts
June 24, 1999
F-2
<PAGE> 58
BIOPURE CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
---------------------------------------------
OCTOBER 31, PRO FORMA
--------------------- MAY 1, MAY 1,
1997 1998 1999 1999
--------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C>
In thousands, except share and per share data
ASSETS:
Current assets:
Cash and cash equivalents................................. $ 13,527 $ 6,063 $ 13,541
Accounts receivable, less allowance of $28 and $55 at
October 31, 1998 and May 1, 1999, respectively.......... -- 346 605
Inventory, net............................................ -- 3,072 4,565
Current portion of restricted cash........................ 1,419 3,508 3,508
Other current assets...................................... 275 186 236
--------- --------- ---------
Total current assets............................... 15,221 13,175 22,455
Property and equipment:
Equipment................................................. 22,330 23,021 24,166
Leasehold improvements.................................... 13,214 13,330 13,520
Furniture and fixtures.................................... 813 1,078 1,100
Construction in progress.................................. 756 5,144 5,148
--------- --------- ---------
37,113 42,573 43,934
Accumulated depreciation and amortization................. (9,705) (12,967) (14,905)
--------- --------- ---------
Net property and equipment.................................. 27,408 29,606 29,029
Investment in affiliate..................................... 166 131 131
Other assets................................................ 1,259 1,936 1,856
--------- --------- ---------
Total assets....................................... $ 44,054 $ 44,848 $ 53,471
========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable.......................................... $ 431 $ 1,523 $ 552
Accrued expenses.......................................... 7,422 7,666 8,889
Current portion of long-term debt......................... 2,000 2,000 2,000
--------- --------- ---------
Total current liabilities.......................... 9,853 11,189 11,441
Long-term debt.............................................. 6,000 4,000 3,000
Deferred compensation....................................... 1,679 1,910 1,912
Commitments and contingencies............................... -- -- --
Common stock to be repurchased (2,013,956 shares of Class A
common stock at October 31, 1997 and 1998 and 1,694,273
shares of Class A common stock at May 1, 1999)............ 6,300 6,300 5,300
Stockholders' equity:
Convertible preferred stock, $0.01 par value, 9,000,000
shares authorized, 30,000,000 pro forma
Series A, 346,663 shares designated, issued and
outstanding (aggregate liquidation value of $1,300)
none pro forma......................................... 3 3 3 $ --
Series B, 2,358,490 shares designated; 2,127,251 shares
issued and outstanding (aggregate liquidation value of
$37,142) none pro forma................................ 22 22 22 --
Series C, 2,830,188 shares designated, issued and
outstanding at October 31, 1998 and May 1, 1999
(aggregate liquidation value of $45,028) none pro
forma.................................................. -- 28 28 --
Series D, 3,333,333 shares designated; 2,213,014 issued
and outstanding at May 1, 1999 (aggregate liquidation
value of $28,768) none pro forma....................... -- -- 22 --
Common stock:
Class A, $0.01 par value, 40,000,000 shares authorized,
100,000,000 pro forma, 10,599,295, 10,742,503,
10,556,342 and 17,964,279 shares issued, 10,396,016,
10,539,225, 10,556,342 and 17,964,279 shares
outstanding at October 31, 1997 and 1998 and May 1,
1999 actual and May 1, 1999 pro forma, respectively.... 106 107 106 180
Class B, $1.00 par value, 179 shares authorized, 117.7
shares issued and outstanding.......................... -- -- -- --
Capital in excess of par value............................ 166,069 197,495 221,573 221,574
Contributed capital....................................... 24,574 24,574 24,574 24,574
Notes receivable.......................................... (2,110) (2,291) (2,382) (2,382)
Treasury stock, at cost (203,278 shares of Class A common
stock at October 31, 1997 and 1998 and none at May 1,
1999)................................................... (1,583) (1,583) -- --
Accumulated deficit....................................... (166,859) (196,906) (212,128) (212,128)
--------- --------- --------- --------
Total stockholders' equity......................... 20,222 21,449 31,818 $ 31,818
--------- --------- --------- ========
Total liabilities and stockholders' equity......... $ 44,054 $ 44,848 $ 53,471
========= ========= =========
</TABLE>
See accompanying notes.
F-3
<PAGE> 59
BIOPURE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
-------------------------------------------------------------------
SIX MONTHS ENDED
YEAR ENDED OCTOBER 31, -------------------------
--------------------------------------- MAY 2, MAY 1,
1996 1997 1998 1998 1999
----------- ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
In thousands, except share and per share
data
Revenues:
Oxyglobin............................. $ -- $ -- $ 942 $ 124 $ 1,481
Other................................. 71 -- 189 90 64
----------- ----------- ----------- ----------- -----------
Total revenues.......................... 71 -- 1,131 214 1,545
Cost of revenues........................ -- -- 1,543 -- 3,229
----------- ----------- ----------- ----------- -----------
Gross profit (loss)..................... 71 -- (412) 214 (1,684)
Operating expenses:
Research and development.............. 18,924 23,494 22,950 12,085 9,871
Sales and marketing................... -- 694 2,444 1,069 1,512
General and administrative............ 3,506 2,920 4,660 2,019 2,414
----------- ----------- ----------- ----------- -----------
Total operating expenses...... 22,430 27,108 30,054 15,173 13,797
----------- ----------- ----------- ----------- -----------
Income (loss) from operations........... (22,359) (27,108) (30,466) (14,959) (15,481)
Other income (expense):
Interest income....................... 691 705 1,417 914 362
Interest expense...................... (839) (1,015) (799) (449) (303)
Other................................. 913 -- (199) -- 200
----------- ----------- ----------- ----------- -----------
Total other income
(expense)................... 765 (310) 419 465 259
----------- ----------- ----------- ----------- -----------
Net income (loss)....................... $ (21,594) $ (27,418) $ (30,047) $ (14,494) $ (15,222)
=========== =========== =========== =========== ===========
Historical:
Basic net income (loss) per common
share.............................. $ (1.77) $ (2.23) $ (2.41) $ (1.17) $ (1.23)
=========== =========== =========== =========== ===========
Weighted-average shares used in
computing basic net income (loss)
per common share................... 12,214,553 12,299,716 12,460,070 12,425,455 12,332,525
=========== =========== =========== =========== ===========
Pro forma (unaudited):
Pro forma basic net income (loss) per
common share....................... $ (1.68) $ (0.82) $ (0.81)
=========== =========== ===========
Weighted-average shares used in
computing pro forma basic net
income (loss) per common share..... 17,858,104 17,678,659 18,802,944
=========== =========== ===========
</TABLE>
See accompanying notes.
F-4
<PAGE> 60
BIOPURE CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------
COMMON STOCK
---------------------------------------- CAPITAL IN
PREFERRED STOCK CLASS A CLASS B EXCESS
------------------ ---------------------- --------------- OF PAR CONTRIBUTED
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT VALUE CAPITAL
--------- ------ ---------- ------ ------ ------ ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
In thousands, except share
and per share data
Balance at October 31, 1995....... 346,663 $ 3 12,409,479 $ 124 101.5 $ -- $131,989 $ 20,655
Exercise of stock options....... 23,130 26
Stock repurchases...............
Sale of common stock............ 13.0 13,000
Services contributed by
stockholder................... 3,590
Accrued interest................
Dividends declared ($.015 per
share)........................
Net loss........................
--------- ------ ---------- ------ ----- ------ -------- -----------
Balance at October 31, 1996....... 346,663 3 12,432,609 124 114.5 -- 145,015 24,245
Exercise of stock options....... 50,434 1 45
Sale of preferred stock......... 2,127,251 22 21,715
Sale of common stock............ 130,208 1 3.2 5,574
Common stock to be
repurchased................... (2,013,956) (20) (6,280)
Services contributed by
stockholder................... 329
Accrued interest................
Net loss........................
--------- ------ ---------- ------ ----- ------ -------- -----------
Balance at October 31, 1997....... 2,473,914 25 10,599,295 106 117.7 -- 166,069 24,574
Exercise of stock options....... 27,783 68
Sale of preferred stock......... 2,830,188 28 28,181
Sale of common stock............ 92,592 1 2,463
Common stock issued in exchange
for release of debt
obligation.................... 22,833 438
Equity compensation............. 276
Accrued interest................
Net loss........................
--------- ------ ---------- ------ ----- ------ -------- -----------
Balance at October 31, 1998....... 5,304,102 53 10,742,503 107 117.7 -- 197,495 24,574
Exercise of stock options
(unaudited)................... 17,117 88
Sale of preferred stock
(unaudited)................... 2,213,014 22 25,530
Retirement of treasury stock
(unaudited)................... (203,278) (1) (1,582)
Equity compensation
(unaudited)................... 42
Accrued interest (unaudited)....
Net loss (unaudited)............
--------- ------ ---------- ------ ----- ------ -------- -----------
Balance at May 1, 1999
(unaudited)..................... 7,517,116 $ 75 10,556,342 $ 106 117.7 $ -- $221,573 $ 24,574
========= ====== ========== ====== ===== ====== ======== ===========
<CAPTION>
---------------------------------------------------
TOTAL
NOTES TREASURY ACCUMULATED STOCKHOLDERS'
RECEIVABLE STOCK DEFICIT EQUITY
---------- -------- ----------- -------------
<S> <C> <C> <C> <C>
In thousands, except share
and per share data
Balance at October 31, 1995....... $ (1,787) $(1,568) $(117,541) $ 31,875
Exercise of stock options....... 26
Stock repurchases............... (15) (15)
Sale of common stock............ 13,000
Services contributed by
stockholder................... 3,590
Accrued interest................ (159) (159)
Dividends declared ($.015 per
share)........................ (306) (306)
Net loss........................ (21,594) (21,594)
---------- ------- --------- -------------
Balance at October 31, 1996....... (1,946) (1,583) (139,441) 26,417
Exercise of stock options....... 46
Sale of preferred stock......... 21,737
Sale of common stock............ 5,575
Common stock to be
repurchased................... (6,300)
Services contributed by
stockholder................... 329
Accrued interest................ (164) (164)
Net loss........................ (27,418) (27,418)
---------- ------- --------- -------------
Balance at October 31, 1997....... (2,110) (1,583) (166,859) 20,222
Exercise of stock options....... 68
Sale of preferred stock......... 28,209
Sale of common stock............ 2,464
Common stock issued in exchange
for release of debt
obligation.................... 438
Equity compensation............. 276
Accrued interest................ (181) (181)
Net loss........................ (30,047) (30,047)
---------- ------- --------- -------------
Balance at October 31, 1998....... (2,291) (1,583) (196,906) 21,449
Exercise of stock options
(unaudited)................... 88
Sale of preferred stock
(unaudited)................... 25,552
Retirement of treasury stock
(unaudited)................... 1,583 --
Equity compensation
(unaudited)................... 42
Accrued interest (unaudited).... (91) (91)
Net loss (unaudited)............ (15,222) (15,222)
---------- ------- --------- -------------
Balance at May 1, 1999
(unaudited)..................... $ (2,382) $ -- $(212,128) $ 31,818
========== ======= ========= =============
</TABLE>
See accompanying notes.
F-5
<PAGE> 61
BIOPURE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
--------------------------------------------------------------
YEAR ENDED OCTOBER 31, SIX MONTHS ENDED
-------------------------------- --------------------------
1996 1997 1998 MAY 2, 1998 MAY 1, 1999
-------- -------- -------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
In thousands
OPERATING ACTIVITIES:
Net income (loss)............................. $(21,594) $(27,418) $(30,047) $(14,494) $(15,222)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation................................ 1,483 3,090 3,262 1,632 1,937
Equity compensation......................... -- -- 276 276 42
Deferred compensation....................... 191 192 231 126 2
Accrued interest on stockholders' notes
receivable............................... (159) (164) (181) (89) (91)
Equity in affiliate's operations............ 100 59 35 -- --
Services contributed by stockholder......... 3,590 329 -- -- --
Provision for bad debts..................... (309) -- -- -- --
Accrued interest on settlement.............. 698 -- -- -- --
Gain from affiliate......................... (742) -- -- -- --
Changes in assets and liabilities:
Inventories.............................. -- -- (3,072) (1,037) (1,493)
Accounts receivable...................... -- -- (346) (64) (259)
Other receivable (affiliate)............. 205 654 -- -- --
Other current assets..................... 279 (65) 89 40 (50)
Accounts payable......................... 1,326 (769) 441 67 (971)
Accrued expenses......................... (940) 2,354 682 (245) 1,223
-------- -------- -------- -------- --------
Net cash used in operating
activities.......................... (15,872) (21,738) (28,630) (13,788) (14,882)
INVESTING ACTIVITIES:
Purchase of property and equipment............ (3,175) (1,350) (4,809) (1,675) (1,361)
Sales of short-term investments............... 1,490 -- -- -- --
Other assets.................................. 341 (78) (341) (236) 81
Restricted cash............................... 664 (2,437) (2,425) (2,373) --
-------- -------- -------- -------- --------
Net cash used in investing
activities.......................... (680) (3,865) (7,575) (4,284) (1,280)
FINANCING ACTIVITIES:
Net proceeds from sale of common stock........ 13,000 5,575 2,464 -- --
Net proceeds from sale of preferred stock..... -- 21,737 28,209 28,209 25,552
Proceeds from long-term debt.................. 9,000 -- -- -- --
Payment of long-term debt..................... -- (1,000) (2,000) (1,000) (1,000)
Repurchase of common stock.................... (15) -- -- -- (1,000)
Dividends paid................................ (611) -- -- -- --
Proceeds from exercise of stock options....... 26 46 68 68 88
-------- -------- -------- -------- --------
Net cash provided by financing
activities.......................... 21,400 26,358 28,741 27,277 23,640
-------- -------- -------- -------- --------
Increase (decrease) in cash and cash
equivalents................................. 4,848 755 (7,464) 9,205 7,478
Cash and cash equivalents at beginning of
period...................................... 7,924 12,772 13,527 13,527 6,063
-------- -------- -------- -------- --------
Cash and cash equivalents at end of period.... $ 12,772 $ 13,527 $ 6,063 $ 22,732 $ 13,541
======== ======== ======== ======== ========
Interest paid................................. $ -- $ 1,131 $ 693 $ 405 $ 225
======== ======== ======== ======== ========
</TABLE>
See accompanying notes.
F-6
<PAGE> 62
BIOPURE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. NATURE OF BUSINESS AND ORGANIZATION
Biopure Corporation (the Company) develops, manufactures and markets oxygen
therapeutics. Its products are Hemopure, for human use, and Oxyglobin, for
veterinary use. The Company is developing Hemopure as an alternative to red
blood cell transfusions as well as for use in the treatment of other critical
care conditions.
During 1998, the Company began selling Oxyglobin. Initially, sales were made on
a limited basis directly to emergency and specialty veterinary practices. In
October 1998, the Company began selling Oxyglobin nationwide through several
veterinary distributors, who purchase product for immediate and direct sale to
veterinary practices.
Costs of revenues include significant depreciation of production equipment and
other fixed and variable costs associated with the production of Oxyglobin. The
manufacturing process requires certain machinery to run on 24-hour cycles even
when production runs are not occurring. These costs are anticipated to be better
rationalized if demand and production increase.
Additionally, during 1998, the Company continued human clinical trials of its
Hemopure solution in the United States, Europe and South Africa. These clinical
trials are expensive and a significant cause of the Company's operating losses.
Although there cannot be any assurance that its Hemopure solution will be
approved by a country's regulatory authority, the trials to date have produced
satisfactory results, which have allowed the Company to continue clinical
progress.
2. SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The consolidated financial statements reflect the accounts of the Company and
its wholly-owned and majority-owned subsidiaries. All intercompany accounts and
transactions have been eliminated.
On June 24, 1999, the Board of Directors approved a two for three reverse stock
split of common shares to be effected in the form of a reverse stock dividend
prior to completion of the initial public offering, as contemplated herein. All
common share and per common share amounts included in the accompanying
consolidated financial statements and notes thereto have been retroactively
restated to give effect to this reverse stock split.
The consolidated financial statements of the Company have been presented on the
basis of a going concern, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. Because of its
continuing losses from operations, the Company will be required to obtain
additional capital to satisfy its ongoing capital needs and to continue its
operations. Biopure secured additional funding in 1999 through a private
placement of securities. Discretionary types of operational spending and capital
expenditures will be controlled during the year so that the funding from the
private placement of securities will be adequate for operations to the closing
of a successful initial public offering of stock. The Company believes that the
private placement funds, together with the proceeds from the initial public
offering, should be adequate to sustain the Company for more than twelve months.
In the event that the Company does not complete a successful initial public
offering, it plans to secure funding through additional private placements of
securities.
Unaudited Interim Financial Statements
The condensed consolidated financial statements as of and for the six months
ended May 2, 1998 and May 1, 1999 have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. The results of operations for the six months
ended May 1, 1999 are not necessarily indicative of the results that may be
expected for the full year.
Risks and Uncertainties
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Some of the Company's key materials used in production are obtained from sole
source suppliers. Although such materials are available from other suppliers,
the Company must test materials not previously used in order to assure the
materials meet the Company's requirements.
F-7
<PAGE> 63
BIOPURE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Cash and Cash Equivalents
The Company considers all liquid securities with original maturities of three
months or less to be cash equivalents.
Inventories
Inventories are stated at the lower of cost (determined using the first-in,
first-out method) or market. Inventories are reviewed periodically during the
year for slow-moving, obsolete or off-grade status based on sales activity, both
projected and historical. Appropriate reserves are established for any inventory
that falls into these categories.
Property and Equipment
Property and equipment are recorded at cost and depreciated over the estimated
useful lives of the assets using the straight-line method. The estimated useful
lives of these assets are as follows:
<TABLE>
<S> <C>
----------------
Leasehold improvements...................................... Life of the lease
Major equipment............................................. 12 years
Equipment................................................... 5-7 years
Furniture and fixtures...................................... 5 years
Computer equipment.......................................... 3 years
</TABLE>
Revenue Recognition
The Company recognizes revenue from product sales at the time of shipment. Other
revenues consist primarily of royalties from the sale of an enzyme material
previously licensed to a pharmaceutical company. The Company recognizes revenue
from royalties when earned upon sale of the licensed products.
Stock-Based Compensation
The Company grants stock options for a fixed number of shares, generally with an
exercise price equal to the market value of the shares at the date of grant, as
determined by the board of directors. The Company has elected to follow
Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to
Employees (APB 25), in accounting for its stock-based compensation plans, rather
than the alternative fair value accounting method provided for under Financial
Accounting Standards Board Statement No. 123, Accounting for Stock-Based
Compensation (Statement 123), as this alternative requires the use of option
valuation models that were not developed for use in valuing employee stock
options. Under APB 25, when the exercise price of options granted to employees
under these plans equals the market price of the underlying stock on the date of
grant, no compensation expense is required.
Net Income (Loss) Per Share
Historical basic net income (loss) per share is computed based on the
weighted-average number of common shares outstanding during the period. Diluted
net income (loss) per share is computed based upon the weighted-average number
of common shares outstanding during the year, adjusted for the dilutive effect
of shares issuable upon the conversion of preferred stock outstanding and the
exercise of common stock options and warrants determined based upon average
market price of common stock for the period. Diluted net income (loss) per share
are not presented in the accompanying consolidated financial statements because
the Company had losses for all periods presented.
Unaudited Pro Forma Net Income (Loss) Per Common Share
The unaudited pro forma basic net income (loss) per common share is computed
using the weighted-average number of outstanding common shares assuming
conversion of all convertible preferred shares into common shares (at date of
original issuance), which will occur upon completion of the initial public
offering, as contemplated herein.
F-8
<PAGE> 64
BIOPURE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Calculation of Net Loss Per Share
<TABLE>
<CAPTION>
-------------------------------------------- ----------------------------
YEAR ENDED OCTOBER 31, SIX MONTHS ENDED
-------------------------------------------- ----------------------------
MAY 2, MAY 1,
1996 1997 1998 1998 1999
In thousands, except share ------------ ------------ ------------ ------------ ------------
and per share data (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Historical:
Net income (loss)................ $ (21,594) $ (27,418) $ (30,047) $ (14,494) $ (15,222)
Preferred stock dividends........ (26) -- -- -- --
------------ ------------ ------------ ------------ ------------
Net income (loss) applicable
to common stockholders...... (21,620) (27,418) (30,047) (14,494) (15,222)
============ ============ ============ ============ ============
Weighted-average number of common
shares outstanding............ 12,214,553 12,299,716 12,460,070 12,425,455 12,332,525
============ ============ ============ ============ ============
Basic net income (loss) per common
share............................ $ (1.77) $ (2.23) $ (2.41) $ (1.17) $ (1.23)
============ ============ ============ ============ ============
Pro forma (unaudited):
Weighted-average number of common
shares:
Historical outstanding........ 12,460,070 12,425,455 12,332,525
Issued upon assumed conversion
of preferred stock.......... 5,398,034 5,253,204 6,470,419
------------ ------------ ------------
Total weighted-average
number of common shares
used in computing basic
pro forma net income
(loss) per common share.. 17,858,104 17,678,659 18,802,944
============ ============ ============
Basic pro forma net income (loss)
per common share.............. $ (1.68) $ (0.82) $ (0.81)
============ ============ ============
</TABLE>
Unaudited Pro Forma Balance Sheet
Upon an initial public offering of the Company's Class A Common Stock, each
outstanding share of Series A, B, C, and D Convertible Preferred Stock will be
converted into shares of Class A Common Stock as described in Notes 8 and 14.
This reclassification has been reflected in the accompanying unaudited pro forma
balance sheet as of May 1, 1999.
Recently Issued Accounting Standards
In June 1997, the Financial Accounting Standards Board issued Statement No. 131,
Disclosures About Segments of an Enterprise and Related Information (Statement
131), which establishes standards for public companies to report information
about operating segments in financial statements. Statement 131 supersedes
Statement No. 14, Financial Reporting for Segments of a Business Enterprise;
however, Statement 131 retains the requirements to report information about
major customers. The Company adopted this statement effective November 1, 1998.
Disclosures required in future periods under Statement 131 are not expected to
be significant.
In March 1998, the Accounting Standards Executive Committee (AcSEC) issued
Statement of Position (SOP) No. 98-1, Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use. The SOP provides guidance for
the capitalization of certain costs incurred to develop or obtain internal-use
software. SOP No. 98-1 is effective for the Company in fiscal 2000. The adoption
of this standard is not expected to have a material effect on the Company's
financial position or operating results.
3. TRANSACTIONS WITH RELATED PARTIES
At October 31, 1998, approximately 39% of the outstanding shares of Class A
Common Stock of Biopure were owned by two limited partnerships, Biopure
Associates Limited Partnership and Biopure Associates Limited Partnership II.
The primary purpose of these partnerships is to own shares of common stock of
the Company. The general partners of these partnerships
F-9
<PAGE> 65
BIOPURE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
are officers of the Company, and the limited partners include certain employees,
officers, directors and consultants to the Company.
During 1996, 1997 and 1998, the Company made payments of approximately $787,000,
$301,000 and $344,000, respectively, to directors and consultants who have
ownership interests in the Company. The Company also had a development and
license agreement with a stockholder, Pharmacia & Upjohn, Inc. (P&U), through
July 1996 (see Note 9).
In August 1990, the Company made loans to certain directors and officers to
allow them to purchase Class A Common Stock. The principal and interest, for all
loans except the loan made to Mr. Rausch, is due on July 31, 2000. The principal
and interest on Mr. Rausch's loan is due on July 31, 2003. The notes receivable
bear interest at the prime rate (8.0% at October 31, 1998) and are included in
stockholders' equity in the accompanying consolidated financial statements.
4. INVENTORIES
Inventories consisted of the following:
<TABLE>
<CAPTION>
---------------------
OCTOBER 31, MAY 1,
1998 1999
In thousands ----------- ------
<S> <C> <C>
Raw materials............................................... $ 935 $1,198
Work-in-process............................................. 542 805
Finished goods.............................................. 1,595 2,562
------ ------
$3,072 $4,565
------ ------
------ ------
</TABLE>
5. INVESTMENTS
The Company accounts for its investments in affiliated companies under the
equity method of accounting. In July 1994, the Company acquired a 50% general
partnership interest in Eleven Hurley Street Associates (EHSA), a real estate
partnership which owns the Company's principal office and research and
development facilities. The Company's lease with EHSA requires annual rental
payments of $239,000 through 2002 and $262,000 from 2003 through 2007. The
partnership's income was not significant for any of the periods presented. At
October 31, 1997 and 1998, the Company's proportionate share of EHSA's net
equity was approximately $166,000 and $131,000, respectively.
Prior to 1996, the Company had made equity investments, provided services and
guaranteed loans for its affiliate, Cephagen Corporation, a Taiwan-based
manufacturer of enzymes, in which the Company had a 33.0% ownership interest.
The Company had written off its investment, fully reserved its receivable and
recorded loan obligations it had assumed by the end of 1995 as a result of
Cephagen's recurring losses. In October 1996, Cephagen was merged with Taiwan
Biotech, whereupon the Company received a 1.6% ownership interest. As a result
of the merger, the Company received payment of its receivable, was relieved of
its loan obligations and, accordingly, recorded a gain of $1,013 in 1996.
6. LONG-TERM DEBT
Long-term debt consists of a loan from P&U in the original principal amount of
$9,000,000. Principal payments are made in equal quarterly installments of
$500,000 through October 1, 2001. Interest is paid quarterly on the unpaid
principal balance at the prime rate of interest. The prime rate at October 31,
1998 was 8.0%. The note is secured by a substantial portion of the Company's
assets and is required to be repaid on completion of a public offering of the
Company's equity securities or certain other financing events.
7. DEFERRED COMPENSATION
The Company has a deferred compensation agreement with an officer/stockholder
requiring a base payment of $700,000 plus accrued interest of $621,000 at
October 31, 1998. In June 1999 the payment date was extended to July 31, 2003,
subject to certain conditions.
F-10
<PAGE> 66
BIOPURE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The Company has an Incentive Compensation Plan for all employees which provides
for discretionary deferred bonus awards annually. Commencing three years after
grant, awards are paid ratably over a five-year period. Plan expenses were
$114,000, $130,000 and $160,000 in 1996, 1997 and 1998, respectively.
8. STOCKHOLDERS' EQUITY
Convertible Preferred Stock
Holders of convertible preferred stock are entitled to voting rights and
dividend rights on a per-share basis, computed as the number of equivalent
shares of common stock.
The Series A Convertible Preferred Stock may be converted into Class A Common
Stock on a three and one-third for one basis, adjusted for certain events. The
Series A shares automatically convert in the event of a public offering of
shares in which gross proceeds to the Company exceed $5,000,000 and shares are
offered at a minimum of $3.60 per share. The Series A shares are entitled to
priority in liquidation at $3.75 per share.
The Series B Convertible Preferred Stock may be converted into Class A Common
Stock on a two-thirds for one basis, adjusted for certain events. The Series B
shares automatically convert in the event of a public offering of shares in
which net proceeds to the Company exceed $40,000,000 and shares are offered at a
minimum of $22.50 per share. As of October 31, 1998, the Series B shares were
entitled to priority in liquidation of $14.31 per share. The priority in
liquidation of Series B increases to $15.37 per share in June 1999 (see Note 14
for subsequent event).
In November 1997, the Company sold 2,830,188 shares of Series C Convertible
Preferred Stock at $10.60 per share. The Series C Convertible Preferred Stock
may be converted into Class A Common Stock on a two-thirds for one basis,
adjusted for certain events. The Series C shares automatically convert in the
event of a public offering of shares in which net proceeds to the Company exceed
$40,000,000 and shares are offered at a price of $30.00 per share at the end of
the first year, pro-rated based upon the number of months elapsed during the
first year, increasing in monthly increments during the second and third years
following the original issue date, up to a maximum of $52.50 per share. The
Series C shares are entitled to priority in liquidation at $13.25 per share
during the first year following the original issue date, $14.31 per share during
the second year and $15.37 per share thereafter (see Note 14 for subsequent
event).
In May 1999, the holders of the Series B and Series C Convertible Preferred
Stock agreed to convert their shares at the time of the Company's initial public
offering on the condition that the holders of the Series B Convertible Preferred
Stock will receive an additional 280,000 shares in the aggregate upon conversion
and the holders of the Series C Convertible Preferred Stock will receive an
additional 800,000 shares in the aggregate upon conversion.
Common Stock
The Company has a right of first refusal on dispositions of substantially all of
the outstanding Class A Common Stock.
The Class B Common Stock is authorized for issuance only to P&U. The holder of
Class B Common Stock is not entitled to vote or receive dividends. The Class B
Common Stock is convertible into shares of Class A Common Stock according to a
formula that is based upon a future fair market value of the Class A Common
Stock and is dependent upon the Company achieving U.S. FDA approval for its
Hemopure solution.
Consistent with the P&U agreement, the number of shares of Class A Common Stock
to be issued in exchange for the Class B Common Stock will be determined based
upon an independent valuation of the Company, after FDA approval of the
Company's human oxygen therapeutic product, which valuation cannot exceed $3
billion. This valuation is then divided by 13,635,525 shares to arrive at a fair
value per share of Class A Common Stock. P&U's total investment in the Company,
$142.3 million, divided by such per share fair value of Class A Common Stock,
results in the number of shares of Class A Common Stock P&U will receive,
limited to a maximum of 1,272,119 shares.
Dividends
The terms of the Company's loan described in Note 6 prohibit the payment of
dividends prior to its repayment. Additionally, at this time, the Company does
not intend to pay dividends.
F-11
<PAGE> 67
BIOPURE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Stock Accumulation Plan
In August 1990, the Company issued 1,606,000 shares of Class A Common Stock to
certain employees, officers, consultants and directors for $1.35 per share,
which was $4.05 per share less than the then fair market value, as determined by
the Company's Board of Directors, of $5.40 per share. This $4.05 per share
market value differential is associated with a permanent nonlapse restriction on
the value of the stock. Upon the repurchase by the Company or other investors,
the future value will be equal to the then-current fair market value less the
permanent discount of $4.05 per share, adjusted for an annual interest factor.
Contributed Capital
In accordance with the P&U strategic alliance discussed in Note 9 below, the
Company recorded as contributed capital $3,590,000 and $329,000 of research and
development costs incurred by P&U on behalf of the Company in 1996 and 1997,
respectively. These costs are included in research and development expenses in
the accompanying consolidated statements of operations and were either incurred
by Biopure and reimbursed by P&U, or incurred directly by P&U. All such costs
incurred were clinical development costs specifically identified and
contractually agreed to by both parties. Upon conversion of the Class B Common
Stock, the cumulative amount of contributed capital will be treated as
consideration for the Class A Common Stock issued in the conversion.
Stock Options and Warrants
The Company has one active stock option plan under which key employees,
directors and consultants may be granted options to purchase Class A Common
Stock at a price determined by the Board of Directors at the date of grant.
Under this plan and a previous plan, substantially all options become
exercisable on a pro rata basis over a four-year period and expire ten years
from date of grant.
Presented below is a summary of transactions under the stock option plans during
1996, 1997 and 1998:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
------------------------------------------------------------------------------
1996 1997 1998
------------------------ ------------------------ ------------------------
WEIGHTED- WEIGHTED- WEIGHTED-
AVERAGE AVERAGE AVERAGE
SHARES EXERCISE PRICE SHARES EXERCISE PRICE SHARES EXERCISE PRICE
------- -------------- ------- -------------- ------- --------------
<S> <C> <C> <C> <C> <C> <C>
Options outstanding at beginning of year.... 235,930 $ 7.64 243,650 $12.02 133,217 $14.94
Granted..................................... 57,933 22.50 6,667 22.50 456,133 18.68
Exercised................................... (23,130) 1.14 (50,433) 1.02 (27,783) 2.42
Expired..................................... (26,666) 5.40 (18,667) 4.43 -- --
Forfeited................................... (417) 17.10 (48,000) 19.89 (14,933) 20.58
------- ------- -------
Options outstanding at end of year.......... 243,650 $12.02 133,217 $14.94 546,634 $18.54
======= ======= =======
Options exercisable......................... 143,217 83,383 89,350
======= ======= =======
</TABLE>
During 1998, the Company granted 20,000 options with an exercise price of $5.40
to certain consultants to replace options that had expired in March 1996. The
exercise price of the new options is the same as the exercise price of the
expired options, and the new options are fully vested. The Company used an
estimated fair market value of its stock as determined by its Board of Directors
in order to determine the related expense to be recorded as a result of issuing
options to nonemployees. The Company recorded expense and increased capital in
excess of par value by $276,000.
F-12
<PAGE> 68
BIOPURE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following table summarizes information about stock options outstanding at
October 31, 1998:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
-------------------------------------------------- --------------------------
WEIGHTED-AVERAGE WEIGHTED- WEIGHTED-
REMAINING CONTRACTUAL AVERAGE EXERCISE AVERAGE EXERCISE
EXERCISE PRICE SHARES LIFE (YRS.) PRICE SHARES PRICE
- -------------- ------- --------------------- ---------------- ------- ----------------
<S> <C> <C> <C> <C> <C>
$ 2.40-$ 5.40 30,167 3.0 $ 4.50 30,167 $ 4.50
$ 7.50-$13.50 19,933 3.9 13.10 19,933 13.10
$18.00-$22.50 496,533 8.8 19.61 39,250 21.50
------- -------
546,633 8.3 $18.54 89,350 $13.89
======= =======
</TABLE>
During 1998, the Company's 1988 stock option plan expired. In March 1998, the
Board of Directors approved the adoption of a 1998 stock option plan to provide
for the granting of options for up to 98,293 shares of Class A Common Stock, the
number of shares remaining in the expired 1988 plan. Options outstanding under
the Company's 1988 plan forfeited in future periods will be available for grant
under the new plan. At October 31, 1998, there were 66,293 shares available for
future grants under stock option plans.
In June 1999, the Company established the 1999 Omnibus Securities and Incentive
Plan (the 1999 Plan), which provides for the granting of incentive stock
options, non-qualified stock options, restricted stock awards, deferred stock
awards, unrestricted stock awards, performance share awards, distribution
equivalent rights, or any combination of the foregoing to key management,
employees and directors. The maximum number of shares of Class A Common Stock
reserved for issuance under the 1999 Plan is 1,866,666. Subject to the
completion of the Company's initial public offering, the Board of Directors has
approved the granting of options under the 1999 Plan to officers, directors and
employees for an aggregate of 1,259,668 shares, with an exercise price equal to
the initial price to the public in the initial public offering of the Company's
Class A Common Stock.
In December 1998 and February 1999, the Company issued to an officer options to
purchase 116,667 shares of Class A Common Stock at exercise prices of $10.00 and
$18.00 per share. With respect to the option to purchase 50,000 shares with an
exercise price of $10.00 per share and a deemed fair value of $18.00 per share
at the date of grant, the Company recorded an increase to capital in excess of
par value and a corresponding charge to deferred compensation in the amount of
$400,000 to recognize the aggregate difference between the deemed fair value for
accounting purposes of the stock options at the date of grant and the option
exercise price. The deferred compensation is being amortized over the option
vesting period of four years.
One of the Company's vendors holds an option to acquire 26,667 shares of Class A
Common Stock. The exercise price of $37.50 per share is payable by the
contribution of certain property, equipment and facilities rights. The option
expires in September 2000.
In connection with the sale of Series C Convertible Preferred Stock in November
1997, the Company issued to the placement agent warrants to purchase 66,667
shares of Common Stock at a price per share equal to the initial price to the
public in the Company's initial public offering. The warrants expire three years
from the date of the initial public offering.
Statement 123 Disclosures
The Company has adopted the disclosure provisions only of Statement 123. The
fair value of options granted was estimated at the date of grant using the
minimum value method with the following assumptions for 1996, 1997 and 1998:
risk-free interest rates ranging from 5.49% to 6.32%; dividend yield of 0% and a
seven-year expected life. If the compensation cost for options granted had been
determined based on the fair value of the options at the date of grant, the
Statement 123 pro forma net loss for 1996, 1997 and 1998 would have been
$21,665,000, $27,538,000 and $30,712,000, respectively. The Statement 123 pro
forma net loss per share for 1996, 1997 and 1998 would have been $(1.77),
$(2.24) and $(2.46), respectively. Compensation expense under Statement 123 for
1996, 1997 and 1998 is not representative of future expense, as it includes one,
two and three years of expense, respectively. In future years, the effect of
determining compensation cost using the fair value method will include
additional vesting and associated expense.
The weighted-average fair value per option of options granted during 1996, 1997
and 1998 was $7.44, $8.04 and $6.11, respectively.
F-13
<PAGE> 69
BIOPURE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Reserved Shares
At October 31, 1998, there were 6,593,041 shares of Class A Common Stock
reserved for issuance under the stock option plans, a stock option agreement and
warrants and upon conversion of Class B Common Stock and Convertible Preferred
Stock.
9. CONTRACTS
The Company had a strategic alliance with P&U beginning in 1990. Under the
alliance agreement, P&U purchased $117,700,000 of Class B Common Stock in
increments based generally on the achievement of mutually agreed-upon progress
points or goals. Additionally, in exchange for the future issuance of Class A
Common Stock, as described in Note 8 above, P&U funded clinical development
undertaken by the Company and P&U for the Company's oxygen therapeutic products.
The Company's agreement with P&U was terminated in accordance with its terms in
July 1996. Final payments from P&U were realized in 1997.
10. EMPLOYEE BENEFIT PLAN
The Company has a defined contribution plan, the Biopure Corporation Capital
Accumulation Plan, qualified under the provisions of Internal Revenue Code
section 401(k). Employees are eligible for enrollment upon becoming employed and
for discretionary matching after one year of service. The Company's
discretionary contribution vests after a period of four years from the date of
employment. In 1996, 1997 and 1998, the Company contributed $144,000, $158,000
and $163,000, respectively, to the plan.
11. INCOME TAXES
At October 31, 1998, the Company had available for the reduction of future
years' federal taxable income and income taxes net operating loss carryforwards
of approximately $140,000,000, expiring from the year ended October 31, 2004
through 2013, along with research and development and investment tax credits of
approximately $3,300,000, expiring from the year ended October 31, 1999 through
2013. Since the Company has incurred only losses since inception and due to the
degree of uncertainty with respect to future profitability, the Company believes
at this time that it is more likely than not that sufficient taxable income will
not be earned to allow for realization of the tax loss and credit carryforwards
and other deferred tax assets. Accordingly, the tax benefit of these items has
been fully reserved. Additionally, the future use of these carryforwards may be
subject to limitations pursuant to sections 382 and 383 of the Internal Revenue
Code.
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax assets and liabilities as of October 31, 1997 and
1998 were as follows:
<TABLE>
<CAPTION>
----------------------
1997 1998
--------- ---------
<S> <C> <C>
In thousands
Deferred tax assets:
Net operating loss carryforward........................... $ 42,659 $ 56,138
Capitalized research and development...................... 14,887 17,287
Accruals and reserves..................................... 3,614 2,364
Tax credit carryforwards.................................. 2,588 3,388
Depreciation.............................................. 444 --
--------- ---------
Total deferred tax assets................................... 64,192 79,177
Deferred tax liabilities:
Depreciation.............................................. -- 2,159
--------- ---------
Total deferred tax liabilities.............................. -- 2,159
--------- ---------
Net deferred tax assets..................................... 64,192 77,018
Valuation allowance for deferred tax assets................. (64,192) (77,018)
--------- ---------
Net deferred tax assets..................................... $ -- $ --
========= =========
</TABLE>
F-14
<PAGE> 70
BIOPURE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
12. COMMITMENTS
In 1997, the Company entered into an agreement with B. Braun Melsungen A.G.
(Braun) to repurchase 2,013,956 shares of the Company's common stock for
$6,300,000. The agreement requires the Company to place in escrow installment
payments of such purchase price equal to an annual amount of $1,000,000 plus
five percent of the Company's revenues from human product sales and license
fees, if any, in a certain European region. The Company received Braun's
agreement to delay the deposit of $1,000,000 due in August 1998 to February
1999. The aggregate repurchase amount of $6,300,000 must be funded by the year
2002. At any time, the stockholder may withdraw funds in escrow to complete the
repurchase in installments by simultaneous delivery out of escrow to the Company
of a pro rata portion of the stock (see Note 14 for subsequent event). At
October 31, 1998, the Company has $1,046,000 in escrow in connection with this
agreement and has included the restricted cash in other assets. The accompanying
consolidated balance sheet has reclassified the Class A Common Stock to be
repurchased from Braun from stockholders' equity to temporary equity and
included the unpaid purchase price and related shares in Common Stock to be
Repurchased.
The agreement also requires the Company to pay Braun a royalty of two percent of
the Company's revenues from human product sales and license fees in a certain
European region. Payments must be made on a quarterly basis until such amounts
aggregate $7,500,000. In exchange for this royalty commitment, the rights to
manufacture and market specified products in Braun's territory were reacquired
by the Company.
Future minimum lease payments under operating leases for the Company's various
office, laboratory, warehouse and processing facilities, with terms of more than
one year at October 31, 1998 are as follows:
<TABLE>
<CAPTION>
----------
<S> <C>
1999........................................................ $1,012,000
2000........................................................ 983,000
2001........................................................ 681,000
2002........................................................ 259,000
2003........................................................ 279,000
Thereafter.................................................. 1,316,000
----------
$4,530,000
==========
</TABLE>
Rent expense was approximately $599,000, $643,000 and $803,000 in 1996, 1997 and
1998, respectively.
13. LITIGATION
The Company is a party to litigation initially filed in 1990 arising from
certain joint venture agreements for development and distribution of product in
Central and South America. Summary judgments were entered against the two
plaintiffs in 1994. The plaintiffs each appealed the judgments; one of the
appeals was voluntarily dismissed. The other appeal was denied in part and
remanded to the trial court for further findings based on lack of jurisdiction.
It is anticipated that the trial court will make the requisite findings in the
calendar year 1999. In connection with the summary judgments, the Company agreed
to a settlement with a third-party intervenor with claims against one of the
plaintiffs. Final payment of the settlement is subject to the outcome of the
pending appeal; however, the Company has provided for such settlement in the
accompanying financial statements. At October 31, 1998, the Company had
$3,508,000 in escrow in connection with this settlement and included this amount
in other current assets. The settlement amount has been recorded as a current
obligation.
14. SUBSEQUENT EVENTS
In December 1998, Braun withdrew all funds from escrow to complete an
installment of the repurchase of 319,683 shares of Class A Common Stock as
described in Note 12 above. This repurchase reduces the number of outstanding
Class A Common Stock shares accordingly.
In December 1998, the Company increased its authorized capital to 40,000,000
shares of Class A Common Stock and 9,000,000 shares of preferred stock.
Concurrently, 3,333,333 shares of Series D Convertible Preferred Stock were
designated.
Each share of Series D Convertible Preferred Stock is convertible into
two-thirds of a share of Class A Common Stock. The Series D shares automatically
convert on a two-thirds-to-one basis in the event of a public offering of the
Company's Class A
F-15
<PAGE> 71
BIOPURE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Common Stock, but if the price to the public in an initial public offering is
less than $24.00 per share, the conversion ratio is increased so that the number
of shares of Class A Common Stock will provide a 35% annualized rate of return
on the Series D price per share of $12.00.
The Series D shares are entitled to priority in liquidation, as of any date, at
$12.00 per share plus a 35% annualized rate of return from their date of
original issuance plus participation with the Common Stock, but in the aggregate
limited to three times their original issue price. In connection with the
issuance of the Series D, the liquidation preferences of the Series B
Convertible Preferred Stock and the Series C Convertible Preferred Stock, as
described in Note 8 above, were adjusted to provide a 35% annualized rate of
return plus participation with the Common Stock, but in the aggregate limited to
three times their original issue price.
On December 23, 1998, the Company sold 1,489,498 units at $12.00 per unit, each
consisting of one share of Series D Preferred Stock plus a warrant to purchase
1/15th of a share of Class A Common Stock. In connection with the issuance of
the Series D, warrants were issued to the placement agents to purchase 30,667
shares of Class A Common Stock and warrants were issued to the holders of the
Series B and Series C Convertible Preferred Stock to purchase 1/15th of a share
of Class A Common Stock for each share of Series B and Series C Convertible
Preferred Stock held by them. Warrants issued to the placement agents have an
exercise price of $18.00 per share, and warrants issued to the stockholders will
have an exercise price equal to the offering price to the public in the
Company's initial public offering. Warrants issued to the placement agents and
the preferred stockholders expire three years and four years, respectively, from
the date of the initial public offering. Net cash proceeds, after deducting
approximately $930,000 in commissions and expenses associated with the offering,
were $16,946,000.
F-16
<PAGE> 72
[Picture of Biopure's manufacturing facility and its products with the caption
"Biopure uses a proprietary process and patented technology in the manufacture
of its oxygen therapeutics."]
<PAGE> 73
[Biopure Logo]
<PAGE> 74
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth various expenses payable in connection with the
offering of the shares being registered hereby, other than underwriting
discounts and commissions. All the amounts shown are estimates, except the
Securities and Exchange Commission registration fee and the NASD filing fee. We
are paying all of the expenses incurred with the offering.
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee......... $ 25,176
NASD Filing Fee............................................. 9,557
Nasdaq National Market Listing Fee.......................... 90,000
Blue Sky fees and expenses.................................. 10,000
Legal fees and expenses..................................... 450,000
Accounting fees and expenses................................ 175,000
Transfer Agent fees and expenses............................ 6,500
Printing, engraving and postage expenses.................... 315,000
Miscellaneous............................................... 91,267
----------
Total............................................. $1,172,500
==========
</TABLE>
ITEM 14. INDEMNIFICATION OF OFFICERS AND DIRECTORS
Our Restated Certificate of Incorporation provides that each of our directors
and officers shall be indemnified and held harmless by Biopure, to the fullest
extent authorized by the Delaware General Corporation Law, against all expense,
liability and loss (including attorneys' fees, judgments, fines, ERISA excise
taxes or penalties and amounts paid in settlement) reasonably incurred by reason
of the fact that he or she is a director or officer.
The Delaware General Corporation Law authorizes a corporation to indemnify its
directors and officers provided that the corporation shall not eliminate or
limit the liability of a director as follows:
- for any action brought by or in the right of a corporation where the
director or officer is adjudged to be liable to the corporation, except
where a court determines the director or officer is entitled to
indemnity,
- for acts or omissions not in good faith or which involve conduct that the
director or officer believes is not in the best interests of the
corporation,
- for knowing violations of the law,
- for any transaction from which the directors derived an improper personal
benefit, and
- for payment of dividends or approval of stock repurchases or redemptions
leading to liability under Section 174 of the Delaware General
Corporation Law.
The Delaware General Corporation Law requires a corporation to indemnify a
director or officer to the extent that the director or officer has been
successful, on the merits or otherwise, in defense of any action, suit or
proceeding for which indemnification is lawful.
Our Restated Certificate of Incorporation also provides directors and officers
with the right to be paid by Biopure for expenses (including attorneys' fees)
incurred in defending any proceeding in advance of the proceeding's final
disposition. If a claim is not promptly paid in full by Biopure, as further
described in our Restated Certificate of Incorporation, the director or officer
who is entitled to indemnification may bring suit against Biopure to recover the
unpaid amount of the claim. These rights of indemnification and advancement of
expenses conferred in our Restated Certificate of Incorporation are not
exclusive of any other right which may be acquired under any statute, by-law,
agreement or otherwise.
II-1
<PAGE> 75
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
Within the past three years, we have issued securities without registration
under the Securities Act as follows:
(a) Class A Common Stock
In June, July and August 1997, we issued 130,208 shares of class A common
stock to non-U.S. persons for an aggregate purchase price of $2,500,000. In
May and October 1998, we issued 92,592 shares of class A common stock to
non-U.S. persons for $2,500,000.
(b) Class B Common Stock
On January 22, 1997, we issued 3.2 shares of class B common stock pursuant
to an agreement with Pharmacia & Upjohn, Inc. for an aggregate purchase
price of $3,200,000.
(c) Series B Convertible Preferred Stock
Between June and October 1997, we issued 2,127,251 shares of series B
convertible preferred stock to "accredited investors" (as defined in
Regulation D of the Securities Act) for an aggregate purchase price of
$22,548,861.
(d) Series C Convertible Preferred Stock
On November 20, 1997, we issued 2,830,188 shares of series C convertible
preferred stock to "accredited investors" (as defined in Regulation D of
the Securities Act) for an aggregate purchase price of $30,000,000. In
connection with the issuance of the series C convertible preferred stock,
we issued compensatory warrants to purchase 66,667 class A common stock to
Shoreline Pacific Institutional Finance, which acted as placement agent in
connection with the offering.
(e) Series D Convertible Preferred Stock
Between December 23, 1998 and May 27, 1999, we issued 2,610,264 shares of
series D convertible preferred stock to "accredited investors" (as defined
in Regulation D of the Securities Act) for an aggregate purchase price of
$31,323,168. Each purchaser of series D convertible preferred stock
received warrants to purchase one share of class A common stock for every
ten shares of series D convertible preferred stock purchased. In addition,
all existing holders of series B and C convertible preferred stock received
warrants to purchase one share of class A common stock for every ten shares
of series B and C convertible preferred stock held. We also issued
compensatory warrants to purchase 33,480 shares of class A common stock to
Shoreline Pacific Institutional Finance and KBC Securities, each of whom
acted as a placement agent in connection with the offering.
(f) Exercises of Stock Options
Since January 1, 1996, Biopure's employees, directors and officers
exercised options to purchase 100,847 shares of class A common stock
pursuant to Biopure's 1987 and 1988 Stock Option Plans at an aggregate
purchase price of $137,000.
The securities issued in the transactions described in paragraphs (a)-(e)
above were issued in reliance on the exemption from registration under
Section 4(2) and Rule 506 of Regulation D of the Securities Act as
transactions not involving a public offering. All of the recipients in each
such case were "accredited investors" as determined by Biopure or its
placement agents. There was no general solicitation or advertising. All
investors represented their intentions to acquire the securities for
investment purposes only and not with a view for distribution thereof, and
appropriate restrictive legends were affixed to the securities issued in
each transaction. All recipients were furnished or had adequate access,
through employment or other relationships, to information about Biopure.
The stock options exercised since January 1, 1996 as described in paragraph
(f) above were issued in reliance on the exemption from registration under
Rule 701 of the Securities Act. Biopure's employees, directors and officers
who exercised stock options represented their intentions to acquire the
securities for investment purposes only and not with a view for
distribution thereof, and appropriate restrictive legends were affixed to
the shares of class A common stock issued pursuant to the exercise of stock
options.
II-2
<PAGE> 76
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
***1.1 Form of Underwriting Agreement
***3(i).1 Restated Certificate of Incorporation of Biopure
***3(i).2 Certificate of Amendment to the Restated Certificate of
Incorporation of Biopure dated May 6, 1999
***3(ii).1 By-laws of Biopure, as amended
***4.1 See Exhibits 3(i).1, 3(i).2 and 3(ii).1 for provisions of
the Restated Certificate of Incorporation of Biopure and By-
laws of Biopure, as amended, defining rights of security
holders of Biopure
***5.1 Opinion of LeBoeuf, Lamb, Greene & MacRae, L.L.P., regarding
the validity of the class A common stock of Biopure being
registered
*10.1 Promissory Note, dated October 8, 1996, from Biopure
Corporation ("Biopure") in favor of Pharmacia & Upjohn, Inc.
("Pharmacia")
*10.2 Security Agreement, dated October 8, 1996, between Biopure
and Pharmacia
*10.3 Trademark Security Agreement, dated October 8, 1996, between
Biopure and Pharmacia
*10.4 Patent Security Agreement, dated October 8, 1996, between
Biopure and Pharmacia
*10.5 Mortgage, dated October 8, 1996, between Biopure and
Pharmacia (Pennsylvania)
*10.6 Mortgage, dated October 8, 1996, between Biopure and
Pharmacia, Hurley Street (Massachusetts)
*10.7 Mortgage, dated October 8, 1996, between Biopure and
Pharmacia, Spring Street-Hurley Street (Massachusetts)
***10.8 Agreement of Settlement and Mutual General Release dated
December 19, 1996, between Biopure, Biopure Associates
Limited Partnership and Credit Francais International
*10.9 Agreement of License Termination, Stock Repurchase and
Mutual General Release, dated August 29, 1997, between
Biopure, Biopure Europe, Ltd. and B. Braun Melsungen AG
*10.10 Escrow Agreement between Biopure, B. Braun Melsungen and
State Street Bank and Trust Company, Escrow Agent dated
September 2, 1997
*10.11 Purchase Agreement between Biopure and INPACO Corporation,
dated August 28, 1997
*10.12 Agreement between Biopure and Moyer Packing Company dated
October 21, 1994
*10.13 Agency Agreement between Biopure and The Butler Company
dated March 29, 1999
*10.14 Promissory Note dated July 31, 1995, from Carl Rausch in
favor of Biopure in the amount of $1,009,772.01
*10.15 Promissory Note dated July 31, 1995, from Carl Rausch in
favor of Biopure in the amount of $216,033.05
*10.16 Promissory Note dated July 31, 1995, from Edward Jacobs, Jr.
in favor of Biopure in the amount of $262,120.10
*10.17 Promissory Note dated July 31, 1995, from Bing Wong in favor
of Biopure in the amount of $70,714.82
*10.18 Promissory Note dated July 31, 1995, from Maria Gawryl in
favor of Biopure in the amount of $12,601.93
*10.19 Promissory Note dated July 31, 1995, from Brian Lajoie in
favor of Biopure in the amount of $30,748.70
*10.20 Promissory Note dated July 31, 1995, from James Weston in
favor of Biopure in the amount of $10,333.58
*10.21 Promissory Note dated July 31, 1995, from Geoffrey Filbey in
favor of Biopure in the amount of $47,707.30
*10.22 Lease Agreement dated October 12, 1990, between Biopure and
Tarvis Realty Trust
***10.23 Lease Agreement dated May 23, 1997, between Biopure and
Karpowicz Family Trust
*10.24 Lease Agreement dated March 31, 1995, between Biopure and
New England Innovations, Corp.
*10.25 Lease Agreement dated August 29, 1994, between Biopure and
Eleven Hurley Street Associates
*10.26 Lease Agreement dated May 10, 1994, between Biopure and
Tarvis Realty Trust
*10.27 Lease Agreement dated August 23, 1994, between Biopure and
Tarvis Realty Trust
*10.28 Lease Agreement dated October 21, 1994, between Biopure and
Moyer Packing Company
*10.29 Deferred Compensation Agreement with Carl Rausch dated
August 8, 1990, as amended December 12, 1995
*10.30 1993 Incentive Compensation Plan
*10.31 1998 Stock Option Plan
***10.32 1999 Omnibus Securities and Incentive Plan
*10.33 Employment Agreement between Biopure and Daniel R. Davis
dated December 3, 1998 and as amended and restated as of
June 24, 1999
*10.34 Employment Agreement between Biopure Corporation and Paul A.
Looney dated as of June 9, 1999
*10.35 Employment Agreement Concerning Protection of Company
Property and the Arbitration of Legal Disputes
***10.36 1990 Incentive Compensation and Company Stock Purchase
Agreement
</TABLE>
II-3
<PAGE> 77
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
*23.1 Consent of Ernst & Young LLP
*23.2 Consent of Daniel P. Harrington
*23.3 Consent of Paul A. Looney
**24.1 Powers of Attorney
*27.1 Financial Data Schedule, as amended
</TABLE>
- ---------------
* Filed herewith.
** Previously filed.
*** To be filed by amendment.
ITEM 17. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes to provide to the underwriters
at the closing specified in the underwriting agreements, certificates in such
denominations and registered in such names as required by the underwriters to
permit prompt delivery to each purchaser.
(b) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
(c) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-4
<PAGE> 78
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-1 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York, State of New York, on June 30, 1999.
BIOPURE CORPORATION
By: /s/ DANIEL R. DAVIS
---------------------------------------
DANIEL R. DAVIS
Senior Vice President and Chief
Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
* Chairman, Chief Executive Officer and President June 30, 1999
- ---------------------------------------------------
Carl W. Rausch
* Vice Chairman June 30, 1999
- ---------------------------------------------------
David N. Judelson
* Director June 30, 1999
- ---------------------------------------------------
Stephen A. Kaplan
* Director June 30, 1999
- ---------------------------------------------------
C. Everett Koop, M.D.
* Director June 30, 1999
- ---------------------------------------------------
Charles A. Sanders, M.D.
/s/ DANIEL R. DAVIS Senior Vice President and Chief Financial June 30, 1999
- --------------------------------------------------- Officer
Daniel R. Davis
* Vice President, Controller June 30, 1999
- ---------------------------------------------------
Brian A. Lajoie
*By: /s/ DANIEL R. DAVIS
- --------------------------------------------------
Daniel R. Davis
Attorney-in-Fact
</TABLE>
II-5
<PAGE> 79
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S> <C>
***1.1 Form of Underwriting Agreement..............................
***3(i).1 Restated Certificate of Incorporation of Biopure............
***3(i).2 Certificate of Amendment to the Restated Certificate of
Incorporation of Biopure dated May 6, 1999..................
***3(ii).1 By-laws of Biopure, as amended..............................
***4.1 See Exhibits 3(i).1, 3(i).2 and 3(ii).1 for provisions of
the Restated Certificate of Incorporation of Biopure and
By-laws of Biopure, as amended, defining rights of security
holders of Biopure..........................................
***5.1 Opinion of LeBoeuf, Lamb, Greene & MacRae, L.L.P., regarding
the validity of the class A common stock of Biopure being
registered..................................................
*10.1 Promissory Note, dated October 8, 1996, from Biopure
Corporation ("Biopure") in favor of Pharmacia & Upjohn, Inc.
("Pharmacia")...............................................
*10.2 Security Agreement, dated October 8, 1996, between Biopure
and Pharmacia
*10.3 Trademark Security Agreement, dated October 8, 1996, between
Biopure and Pharmacia
*10.4 Patent Security Agreement, dated October 8, 1996, between
Biopure and Pharmacia
*10.5 Mortgage, dated October 8, 1996, between Biopure and
Pharmacia (Pennsylvania)
*10.6 Mortgage, dated October 8, 1996, between Biopure and
Pharmacia, Hurley Street (Massachusetts)
*10.7 Mortgage, dated October 8, 1996, between Biopure and
Pharmacia, Spring Street-Hurley Street (Massachusetts)
***10.8 Agreement of Settlement and Mutual General Release dated
December 19, 1996, between Biopure, Biopure Associates
Limited Partnership and Credit Francais International
*10.9 Agreement of License Termination, Stock Repurchase and
Mutual General Release, dated August 29, 1997, between
Biopure, Biopure Europe, Ltd. and B. Braun Melsungen AG
*10.10 Escrow Agreement between Biopure, B. Braun Melsungen and
State Street Bank and Trust Company, Escrow Agent dated
September 2, 1997
*10.11 Purchase Agreement between Biopure and INPACO Corporation,
dated August 28, 1997
*10.12 Agreement between Biopure and Moyer Packing Company dated
October 21, 1994
*10.13 Agency Agreement between Biopure and The Butler Company
dated March 29, 1999
*10.14 Promissory Note dated July 31, 1995, from Carl Rausch in
favor of Biopure in the amount of $1,009,772.01
*10.15 Promissory Note dated July 31, 1995, from Carl Rausch in
favor of Biopure in the amount of $216,033.05
*10.16 Promissory Note dated July 31, 1995, from Edward Jacobs, Jr.
in favor of Biopure in the amount of $262,120.10
*10.17 Promissory Note dated July 31, 1995, from Bing Wong in favor
of Biopure in the amount of $70,714.82
*10.18 Promissory Note dated July 31, 1995, from Maria Gawryl in
favor of Biopure in the amount of $12,601.93
*10.19 Promissory Note dated July 31, 1995, from Brian Lajoie in
favor of Biopure in the amount of $30,748.70
*10.20 Promissory Note dated July 31, 1995, from James Weston in
favor of Biopure in the amount of $10,333.58
*10.21 Promissory Note dated July 31, 1995, from Geoffrey Filbey in
favor of Biopure in the amount of $47,707.30
*10.22 Lease Agreement dated October 12, 1990, between Biopure and
Tarvis Realty Trust
***10.23 Lease Agreement dated May 23, 1997, between Biopure and
Karpowicz Family Trust
*10.24 Lease Agreement dated March 31, 1995, between Biopure and
New England Innovations, Corp.
*10.25 Lease Agreement dated August 29, 1994, between Biopure and
Eleven Hurley Street Associates
*10.26 Lease Agreement dated May 10, 1994, between Biopure and
Tarvis Realty Trust
*10.27 Lease Agreement dated August 23, 1994, between Biopure and
Tarvis Realty Trust
*10.28 Lease Agreement dated October 21, 1994, between Biopure and
Moyer Packing Company
*10.29 Deferred Compensation Agreement with Carl Rausch dated
August 8, 1990, as amended December 12, 1995
</TABLE>
<PAGE> 80
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S> <C>
*10.30 1993 Incentive Compensation Plan
*10.31 1998 Stock Option Plan
***10.32 1999 Omnibus Securities and Incentive Plan
*10.33 Employment Agreement between Biopure and Daniel R. Davis
dated December 3, 1998 and as amended and restated as of
June 24, 1999
*10.34 Employment Agreement between Biopure Corporation and Paul A.
Looney dated as of June 9, 1999
*10.35 Employment Agreement Concerning Protection of Company
Property and the Arbitration of Legal Disputes
***10.36 1990 Incentive Compensation and Company Stock Purchase
Agreement
*23.1 Consent of Ernst & Young LLP
*23.2 Consent of Daniel P. Harrington
*23.3 Consent of Paul A. Looney
**24.1 Powers of Attorney
*27.1 Financial Data Schedule, as amended
</TABLE>
- ---------------
* Filed herewith.
** Previously filed.
*** To be filed by amendment.
<PAGE> 1
EXHIBIT 10.1
<PAGE> 2
PROMISSORY NOTE
$9,000,000 October 8, 1996
FOR VALUE RECEIVED, BIOPURE CORPORATION, a Delaware corporation (the
"Debtor"), hereby promises to pay to the order of PHARMACIA & UPJOHN, INC., a
Delaware corporation (the "Creditor"), at the Creditor's principal office at
7000 Portage Road, Kalamazoo, Michigan 49001, or at such other place as the
holder hereof may designate, in immediately available funds in lawful money of
the United States of America, the amount of NINE MILLION DOLLARS ($9,000,000),
together with interest thereon at the prime rate of interest publicly announced
from time to time by The Chase Manhattan Bank, or its successor or survivor,
fluctuating and changing automatically as such prime rate does.
The principal amount of this Promissory Note (the "Note") shall be paid in
eighteen (18) consecutive equal quarterly installments of $500,000 each,
commencing on July 1, 1997 and continuing on the first day of each October,
January, April and July thereafter up to and including October 1, 2001 (the
"Maturity Date"). Interest on the unpaid principal amount hereof shall be paid
on the first day of each quarter, commencing on April 1, 1997 and continuing on
the first day of each July, October, January and April thereafter. Any remaining
unpaid principal balance of this Note, together with all accrued unpaid
interest, shall be due and payable in full on the Maturity Date.
From and after the occurrence of an Event of Default (defined below), the
unpaid principal amount hereof shall bear interest at a rate equal to two
percent (2%) in excess of the interest rate which otherwise would be applicable
under this Note (the "Default Rate").
The Debtor may prepay this Note in whole or in part at any time from time
to time without premium or penalty.
The Debtor shall be required to prepay this Note upon the occurrence of a
Mandatory Prepayment Event (defined below) in an amount equal to all proceeds
received by the Debtor in connection with the Mandatory Prepayment Event. For
purposes of this Note, "Mandatory Prepayment Event" shall mean each of the
following events:
(i) Debtor's receipt of any financing or additional capital in a
single or series of related transactions in excess of $50,000,000,
including but not limited to bank loans and any investments (in the form
of equity, debt or otherwise) made by any new or existing shareholder of
Debtor or by a new or existing investment, research or development
partner; or
<PAGE> 3
(ii) An initial public offering by Debtor.
Any partial prepayments of the Note shall be applied first to all accrued
but unpaid interest at the time of such partial prepayment, and then to
installments of principal in inverse order of their maturity.
The payment of the obligations of the Debtor hereunder is secured by
certain collateral (the "Collateral") as provided in (i) the Security Agreement
between the Debtor and the Creditor dated as of the date hereof (the "Security
Agreement") and (ii) certain Mortgages between the Debtor and the Creditor dated
as of the date hereof (the "Mortgages").
So long as this Note remains unpaid, the Debtor shall do all of the
following (collectively, the "Affirmative Covenants"):
(i) Deliver to the Creditor, within forty-five (45) days after the
end of each fiscal quarter, consolidated financial statements of the
Debtor certified as correct by the Debtor's Chief Financial Officer;
(ii) Deliver to the Creditor, within ninety (90) days after the end
of each fiscal year, audited consolidated financial statements of the
Debtor reported on by an independent certified public accounting firm of
recognized national standing;
(iii) Deliver to the Creditor, as soon as practicable after the end
of each calendar month and in any event within thirty (30) days
thereafter, unaudited consolidated financial statements of the Debtor
certified as correct by the Debtor's Chief Financial Officer;
(iv) Permit the Creditor or any person designated by the Creditor to
visit and inspect Debtor's properties and assets, to examine the books and
financial records of Debtor, and to discuss the affairs, finances and
accounts of Debtor with its executive officers all at such times and as
often as the Creditor may reasonably request;
(v) Comply in all material respects with all applicable laws, rules,
regulations and orders (including without limitation all federal, state
and local laws relating to pollution, reclamation or protection of the
environment), such compliance to include, without limitation, paying all
taxes, assessments and governmental charges imposed upon Debtor or
Debtor's assets or properties;
(vi) Preserve and keep in full force and effect its corporate
existence and such of its rights, franchises, licenses, patents,
trademarks and other intellectual property as are necessary to Debtor's
Hemopure business;
2
<PAGE> 4
(vii) Maintain casualty insurance coverage on its property and
assets and other insurance against other risks, including public
liability, in such amounts and such types as are ordinarily carried by
similar companies, or as may be required by the Security Agreement and the
Mortgages;
(viii) Keep complete and accurate books and records with respect to
its business;
(ix) Preserve, protect, keep and maintain all of its property and
assets in good operating condition, repair and working order and make all
necessary repairs thereto and replacement of parts thereof so that the
value and operating efficiency thereof shall at all times be maintained
and preserved;
(x) Comply with all agreements, indentures and mortgages to which it
is a party or by which any of its assets is bound;
(xi) Notify the Creditor of the institution by any person or entity
against the Debtor of any action, suit or proceeding or any governmental
investigation or any arbitration that could have a material adverse effect
on the Debtor promptly following Debtor's receipt of knowledge thereof;
and
(xii) Notify the Creditor of Debtor's receipt of any governmental
notice of a violation of any federal, state or local environmental law,
standard or regulation that could have a material adverse effect on the
Debtor promptly following Debtor's receipt of knowledge thereof;
So long as this Note remains unpaid, the Debtor shall not do any of the
following without the consent of the Creditor, which will not be unreasonably
withheld (collectively the "Negative Covenants"):
(i) Substantially change its business;
(ii) Pay any dividends or make any other distribution of capital;
(iii) Guarantee or otherwise in any way become or be responsible for
indebtedness or obligations of any other person, contingently or
otherwise;
(iv) Permit any of its assets to be subject to any judgments,
attachments or levies the aggregate amount of which exceeds $50,000;
(v) Create, establish or otherwise form any new employee benefit
plans or significantly revise any existing employee benefit plans;
3
<PAGE> 5
(vi) Purchase or otherwise acquire or hold any investments except
that the Debtor may make and own (a) investments in certificates of
deposit or time deposits having maturities in each case not exceeding one
year from the date of issuance thereof and issued by any FDIC-insured
commercial bank incorporated in the United States or any state thereof
having a combined capital and surplus of not less than $500,000,000; (b)
investments in marketable direct obligations issued or unconditionally
guaranteed by the United States of America or issued by any agency thereof
and backed by the full faith and credit of the United States of America,
in each case maturing within one year from the date of issuance or
acquisition thereof; (c) investments in commercial paper issued by a
corporation incorporated in the United States or any state thereof
maturing no more than one year from the date of issuance thereof and, at
the time of acquisition, having a rating of A-1 (or better) by Standard &
Poor's Corporation or P-1 (or better) by Moody's Investors Service, Inc.;
(d) investments in money market mutual funds all of the assets of which
are invested in cash or investments described in clauses (a), (b) and (c)
of this paragraph (vi) and (e) investments owned on the date hereof and
funding obligations, if any, in connection therewith;
(vii) Repurchase any securities issued by Debtor that are held by
existing shareholders;
(viii) Enter into any agreement or other contractual relationship
with (a) any person owning securities, directly or indirectly,
representing 5% of the voting power of the Debtor, (b) any affiliate of
the Debtor, (c) any officer, employee or director of the Debtor, or (d)
any other entity in which the Debtor maintains an equity interest, unless,
in each case, any such agreement or contractual relationship contains
terms that are no less favorable to Debtor than the terms Debtor could
obtain in a similar agreement between the Debtor and an unaffiliated third
party;
(ix) Increase the fiscal year 1997 and 1998 remuneration paid to
directors or the Chief Executive Officer of the Debtor above the
remuneration (excluding finder's fees and other extraordinary payments)
paid to such directors and Chief Executive Officer in the fiscal year
ended October 31, 1996; or
(x) Make any loans or other advances or pay any finders fees to any
of Debtor's officers, employees, directors, stockholders or affiliates or
any other entity in which the Debtor maintains an equity interest.
Upon an Event of Default (as defined below) hereunder, upon Debtor's
receipt of notice from the Creditor, the principal sum hereunder and all
interest then accrued shall be immediately due and payable; provided, however,
that upon an Event of Default described in subsections (v) through (vii) below,
the principal sum hereunder and all interest then accrued shall be immediately
due and payable without notice to or demand on Debtor. An "Event of Default"
shall mean:
4
<PAGE> 6
(i) the failure by Debtor to make any payment of principal or
interest when due hereunder;
(ii) the failure by Debtor to make any other payment, including a
mandatory prepayment, required hereby and such failure continues for
thirty (30) days;
(iii) the failure by Debtor to observe or perform as and when
required any of the terms, conditions or covenants in the Security
Agreement, in the Mortgages or in this Note (including but not limited to
the Affirmative Covenants and the Negative Covenants) and such failure
continues for thirty (30) days after Debtor's receipt of notice thereof;
(iv) any representation or warranty made by Debtor herein, in the
Security Agreement, in the Mortgages or in any exhibit, schedule, report
or certificate delivered pursuant hereto or thereto shall prove to have
been false, misleading or incorrect in any material respect when made;
(v) the admission in writing by Debtor of its inability to pay its
debts as they become due;
(vi) the making by Debtor of a general assignment for the benefit of
creditors;
(vii) the institution by or against Debtor of any proceedings
seeking the appointment of a trustee, receiver, custodian or liquidator
for itself, or for the Collateral or any part thereof, or for a
substantial part of its other property, or seeking its liquidation,
reorganization, dissolution or winding-up or the composition or
readjustment of its debts, or seeking similar relief under any law
relating to bankruptcy, insolvency, reorganization, winding-up or
composition or adjustment of debts; provided, however, if any such
proceedings are instituted against Debtor, such proceedings shall have
remained undismissed, or an order, judgment or decree approving or
ordering any of the foregoing shall be entered and continue unstayed and
in effect, for a period of 60 or more days; or
(viii) the failure by Debtor to pay when due any principal of or
interest on indebtedness, other than the debt evidenced by this Note,
aggregating $250,000 or more, or the occurrence of any event specified in
any note, agreement, indenture or other document evidencing or relating to
such debt, if the effect of such non-payment or event is to permit, with
the giving of notice or passage of time or both, the holders thereof to
terminate or suspend any commitment to lend money to Debtor or to cause or
declare any portion of any borrowings thereunder to become
5
<PAGE> 7
due and payable prior to the date on which it would otherwise become due
and payable.
This Note may be assigned by the Creditor at any time.
In addition to and not in limitation of the foregoing, Debtor further
agrees, subject only to any limitation imposed by applicable law, to pay all
expenses, including attorneys' fees and legal expenses, incurred by the holder
of this Note in endeavoring to collect any amounts payable hereunder which are
not paid when due.
Presentment for payment, demand, protest, dishonor and notice of dishonor
are hereby waived.
This Note shall be governed by and construed and enforced in accordance
with the laws of the State of New York.
BIOPURE CORPORATION
Attest:
/s/ Maria S. Gawryl By: /s/ Brian A. Lajoie
- ------------------------------------ -------------------------------
Title: V.P.-Research and Development Title: V.P.-Finance
6
<PAGE> 1
EXHIBIT 10.2
<PAGE> 2
SECURITY AGREEMENT
THIS SECURITY AGREEMENT, dated as of October 8, 1996, is between BIOPURE
CORPORATION, a Delaware corporation (the "Debtor"), and PHARMACIA & UPJOHN,
INC., a Delaware corporation (the "Secured Party").
WHEREAS, the Debtor has executed and delivered a Promissory Note, dated
the date hereof, in the principal amount of $9,000,000; and
WHEREAS, the parties hereto desire to secure the obligations of the Debtor
to the Secured Party under the Promissory Note.
NOW, THEREFORE, intending to be legally bound, the Debtor and the Secured
Party agree as follows:
1. Definitions.
Whenever used herein the following terms shall, unless the context
otherwise requires, have the following respective meanings:
(a) "Account" means any right to payment for goods sold or leased or for
services rendered which is not evidenced by an instrument or chattel paper.
(b) "Account Debtor" means the Person who is obligated on an Account or
Contract Right.
(c) "Collateral" means all of the following property of the Debtor,
whether now owned or hereafter acquired and whether now existing or hereafter
arising: (i) Inventory; (ii) Equipment; (iii) Fixtures, (iv) Leasehold
Improvements, (v) Documents of Title; (vi) Accounts and Contract Rights; (vii)
all guarantees of Accounts and Contract Rights and all other security held for
the payment or satisfaction thereof; (viii) the goods or the services the sale
or lease or performance of which give rise to any Account or Contract Right
including any returned goods; (ix) chattel paper and instruments; (x) General
Intangibles; (xi) any balance or share of any deposit, agency or other account
with any Person and any other amounts which may be owing from time to time by
any Person to the Debtor; (xii) all property of any nature whatsoever now or
hereafter in the possession of or assigned or pledged to any Person for any
purpose; and (xiii) all Proceeds of all of the foregoing.
<PAGE> 3
(d) "Contract Right" means any right to payment under a contract
(including, but not limited to, contracts for the sale or leasing of goods or
for the rendering of services) not yet earned by performance and not evidenced
by an instrument or chattel paper.
(e) "Document of Title" means a bill of lading, dock warrant, dock
receipt, warehouse receipt or order for the delivery of goods, and also any
other document which in the regular course of business or financing is treated
as adequately evidencing that the Person in possession of it is entitled to
receive, hold and dispose of the document and the goods it covers.
(f) "Equipment" means all goods (other than Inventory) used or brought for
use in business, including without limit equipment, machinery, furniture, tools
and motor vehicles and all accessions, parts, substitutions and replacements
with respect to each such item.
(g) "Fixtures" means goods that become so related to particular real
estate that an interest in them arises under real estate law.
(h) "General Intangibles" means things in actions, patents and patent
applications (including but not limited to those listed on Schedule 1 hereto),
copyrights, trademarks (including but not limited to those listed on Schedule 2
hereto), royalties, goodwill, literary rights and all other personal property
other than goods, Accounts, Contract Rights, Documents of Title, chattel paper,
instruments and money.
(i) "Interest Rate" means the rate of interest payable by the Debtor under
the Promissory Note.
(j) "Inventory" means tangible personal property held for sale or lease or
to be furnished under contracts of service, tangible personal property which has
been so leased or furnished, and raw materials, work in process and materials
used, produced or consumed in business, and shall include tangible personal
property sold on a sale or return basis, tangible personal property returned by
the purchaser following a sale thereof and tangible personal property
represented by Documents of Title. All equipment, accessories and parts at any
time attached or added to items of Inventory or used in connection therewith
shall be deemed to be part of the Inventory.
(k) "Leasehold Improvements" means all existing and future leasehold
improvements of the Debtor at the locations identified in Schedule 3 hereto.
2
<PAGE> 4
(l) "Liabilities" means all existing and future liabilities, whether
absolute or contingent, of the Debtor to the Secured Party of any nature
whatsoever arising hereunder or under the Promissory Note.
(m) "Person" means an individual, a corporation, a government or
governmental subdivision or agency or instrumentality, a business trust, an
estate, a trust, a partnership, a cooperative, an association, two or more
Persons having a joint or common interest, or any other legal or commercial
entity.
(n) "Proceeds" means whatever is received when Collateral or Proceeds of
Collateral is sold, exchanged, collected or otherwise disposed of and also
includes payments and rights to payment under any policies of insurance with
respect to any Collateral. The term also means the Account arising when the
right to payment is earned under a Contract Right.
(o) "Promissory Note" means the promissory note, dated the date hereof, in
the principal amount of $9,000,000, from the Debtor to the Secured Party.
2. Grant of Security.
To secure the payment, promptly when due, and the punctual performance of
all of the Liabilities, the Debtor hereby grants to the Secured Party a
continuing lien upon and security interest in all of the Collateral.
3. Records and Certifications.
(a) The Debtor shall faithfully keep complete and accurate books, records
and Equipment lists and make all necessary entries therein to reflect the
quantities, costs, current values and locations of its Inventory and Equipment
and the transactions and facts giving rise to its Accounts and Contract Rights,
including without limit the identity and address of all Account Debtors and all
payments, credits and adjustments to its Accounts and Contract Rights and the
Debtor shall keep the Secured Party fully and accurately informed as to the
locations of all such books, lists and records. The Debtor shall permit the
Secured Party's agents to have access to, and to copy, such books, lists and
records and to any other records pertaining to the Debtor's business.
3
<PAGE> 5
4. Maintenance of Equipment.
The Debtor shall care for all the Equipment and afford it suitable
preventative maintenance under a formal schedule of preventative maintenance
consistent with past practice and in a manner no less diligent than is normally
accepted in its industry. The Debtor will pay the cost of all repairs to or
maintenance of the Equipment and will not permit anything to be done that might
impair the value of any of the Equipment or any of the security intended to be
afforded by this Agreement. The Debtor will adopt and conscientiously adhere to
a well designed internal control system with respect to the Equipment capable of
permitting the Debtor and the Secured Party to identify readily at any time the
location and condition of each and every item of the Equipment.
5. Title, etc.
The Debtor has acquired absolute and exclusive title to each and every
item or unit of the Collateral free and clear of all liens, claims, security
interests and other encumbrances, except those created hereby in favor of the
Secured Party, and the Debtor will warrant and defend its title to the
Collateral, subject to the rights of the Secured Party, against the claims and
demands of all persons whomsoever. Without limiting the generality of the
foregoing, the Debtor will not pledge, assign or otherwise encumber, or permit
any liens or security interests to attach to, any of the Collateral, nor permit
any of the Collateral to be levied upon under any legal process, other than
those liens described above. Upon any breach of the foregoing covenant against
encumbrances, the Secured Party may, at its sole election but without obligation
to do so, discharge the encumbrance for the account of and without notice to the
Debtor, and all expenses incurred by the Secured Party in so doing, together
with interest thereon at the Interest Rate, shall be added to the Liabilities
and shall be payable by the Debtor on demand. Without the prior written consent
of the Secured Party in each case, the Debtor will not sell, exchange, lease,
lend, salvage, replace or otherwise dispose of any item or unit of the
Collateral or any of the Debtor's rights therein, except that so long as the
Debtor is not in default hereunder, the Debtor shall have the right in the
ordinary course of its business to process and sell its Inventory and to replace
worn or exhausted items or units of Equipment with new items or units of
Equipment of the same kind or character and having a market value equal to or
greater than the market value of the replaced items or units when new.
6. Taxes and Liens.
The Debtor will immediately notify the Secured Party in the event there
ever arises against any of the Collateral any lien, assessment or tax or other
liability, whether or not entitled to priority over the Secured Party's security
interest hereunder. In any such event, whether or not such notice is given, the
Secured Party shall (unless such lien, assessment,
4
<PAGE> 6
tax or other liability is the subject of an appeal by the Debtor and an
appropriate bond has been posted to stay the effect of any resulting lien) have
the right (but shall be under no obligation) to pay any tax or other liability
of the Debtor deemed by the Secured Party in good faith to affect the Secured
Party's interests hereunder. The Debtor shall repay to the Secured Party on
demand all sums which the Secured Party shall have paid under this section in
respect of taxes or other liabilities of the Debtor, with interest thereon at
the Interest Rate, and the Debtor's liability to the Secured Party for such
repayment with interest shall be included in the Liabilities. The Secured Party
shall be subrogated to the extent of any such payment by it to all the rights
and liens of the payee against the Debtor's assets. The Debtor shall furnish to
the Secured Party from time to time upon the Secured party's request proof
satisfactory to the Secured Party of the making of all payments or deposits
required by applicable law to be made with respect to amounts withheld by the
Debtor from wages and salaries of employees and amounts contributed by the
Debtor on account of federal, state or other income or wage taxes and amounts
due under the Federal Insurance Contributions Act or the Federal Unemployment
Tax Act or any similar legislation.
7. Insurance.
The Debtor shall bear all risk of loss, destruction and damage to any and
all of the Inventory and Equipment from any cause whatsoever at any time during
the term of this Agreement, and shall at its own cost and expense obtain and
keep in full force and effect, in kind and form reasonably satisfactory to the
Secured Party and with insurers of recognized standing in the financial
community or otherwise approved by the Secured Party, all risk of physical loss
or damage insurance covering the Inventory and Equipment wherever the same may
be, insuring against the risks of fire, explosion, theft and such other risks as
are customarily insured against by corporations engaged in the same business and
similarly situated with the Debtor (and specifically including vandalism,
malicious mischief coverage), in an amount or amounts usually carried by
corporations engaged in the same business and similarly situated with the
Debtor. All policies of such insurance shall be written for the benefit of the
Debtor and the Secured Party as the insureds, shall bear an endorsement in form
satisfactory to the Secured Party naming the Secured Party and the Debtor as
loss payees, as their respective interests may appear, and shall provide for at
least thirty (30) days' advance written notice to the Secured Party of any
cancellation. The Secured Party and the Debtor agree that all insurance proceeds
shall be payable to the Debtor if at the time of such payment no Event of
Default then exists and the Debtor delivers to the Secured Party a certificate
to such effect. If the Debtor fails to pay any premium on any such insurance,
the Secured Party shall have the right, but shall be under no obligation, to pay
such premium for the Debtor's account. The Debtor shall repay to the Secured
Party on demand all sums which the Secured Party shall have paid under this
section in respect of insurance premiums, with interest thereon at the Interest
Rate, and the
5
<PAGE> 7
Debtor's liability to the Secured Party for such repayment with interest shall
be included in the Liabilities. The Debtor hereby assigns to the Secured Party
any return of unearned premium which may be due upon the cancellation for any
reason whatsoever of any policy of insurance maintained in respect of the
Collateral and hereby directs the insurer to pay the Secured Party any amount so
due, except that the Secured Party shall have no right to any such amount unless
and until there exists an Event of Default. The Debtor's rights to receive
payment of any such return or unearned premium and the proceeds of any such
insurance shall constitute a part of the Collateral for all purposes hereof.
8. Control of and Access to Inventory and Equipment, Etc.
The Debtor shall maintain possession and control of its Inventory and
Equipment at all times, provided that upon the occurrence of an Event of Default
the Secured Party shall have the right to take possession of such Inventory and
Equipment or any portion thereof, and for the purpose of taking custody of the
Debtor's Inventory the Debtor agrees that upon request of the Secured Party it
will lease warehousing space in the Debtor's own premises to the Secured Party
and will erect such structures and post such signs as the Secured Party may
require in order to place such Inventory under the exclusive control of the
Secured Party. Notwithstanding any taking of possession by the Secured Party of
any Inventory or Equipment, the same shall remain at all times at the Debtor's
sole risk, and to the full extent permitted by law the Secured Party shall not
be responsible for any loss, damage or diminution in the value thereof. If any
of the Debtor's Inventory or Equipment is or becomes evidenced by a Document of
Title, the Secured Party may require the Debtor to promptly deliver the same to
the Secured Party appropriately endorsed to the order of the Secured Party. All
costs of transportation, packaging, custody, processing, storage, insurance and
salvage of any unit or item of the Debtor's Inventory or Equipment which may be
incurred by the Secured Party shall be promptly repaid to the Secured Party by
the Debtor together with interest thereon at the Interest Rate, and the Debtor's
liability to the Secured Party for such repayment with interest shall be
included in the Liabilities. If any item or unit of the Equipment is now or
hereafter the subject of a certificate of title or is required by law so to be,
upon request of the Secured Party the Debtor will take all steps necessary to
cause the Secured Party's lien or security interest therein to be noted on the
face of such certificate and shall thereafter deposit the original of such
certificate of title with the Secured Party. The Debtor will afford the Secured
Party's agents access to the Debtor's Inventory and to each item or unit of the
Debtor's Equipment from time to time upon request for purposes of examination,
inspection and appraisal and to verify the Debtor's records pertaining thereto.
6
<PAGE> 8
9. Notices of Loss, etc.
The Debtor will immediately notify the Secured Party of any of the
following: (i) any event causing any deterioration, loss or depreciation in
value of any material item, unit or portion of the Debtor's Equipment and of the
amount thereof; (ii) any event causing any material deterioration, loss or
depreciation in value of the Debtor's Inventory and the amount thereof; or (iii)
any material adverse change in the financial condition of any Account Debtor
whose total outstanding Accounts due the Debtor exceeds $25,000 or any material
adverse change in the collectibility of the Accounts taken as a whole.
10. Accounts and Contract Rights.
(a) The Secured Party hereby authorizes the Debtor to collect all Accounts
from the Account Debtors. The authority hereby given to the Debtor to collect
the Proceeds of Accounts may be terminated by the Secured Party at any time. The
Secured Party shall have the right at any time, acting if it so chooses in the
Debtor's name, to collect the Debtor's Accounts itself, to sell, assign,
compromise, discharge or extend the time for payment of any Account, to
institute legal action for the collection of any Account, and to do all acts and
things necessary or incidental thereto. The Debtor hereby ratifies all that the
Secured Party shall do by virtue hereof. The Secured Party may at any time,
without notice to the Debtor, notify any Account Debtor that the Account payable
by such Account Debtor has been assigned to the Secured Party and is to be paid
directly to the Secured Party. At the Secured Party's request the Debtor shall
so notify Account Debtors and shall indicate on all billings to Account Debtors
that payments thereon are to be made to the Secured Party. Without the written
consent of the Secured Party the Debtor shall not compromise, discharge, extend
the time for payment of or otherwise grant any indulgence or allowance with
respect to any Account.
(b) If any of the Debtor's Accounts or Contract Rights arises out of a
contract with the United States or any department, agency or instrumentality
thereof, the Debtor will immediately notify the Secured Party thereof in writing
and execute any instruments and take any steps required by the Secured Party in
order that the security interest of the Secured Party hereunder in the Debtor's
Contract Right under such contract and in all Accounts arising thereunder and in
the Proceeds thereof shall be perfected under the provisions of the Federal
Assignment of Claims Act.
(c) If any of the Debtor's Accounts is or becomes evidenced by a
promissory note, a trade acceptance or any other instrument for the payment of
money, the Debtor will promptly provide notice to the Secured Party of such
instrument and, upon the written request of the Secured Party, will promptly
deliver such instrument to the Secured Party appropriately endorsed to the order
of the Secured Party. Regardless of the form of such
7
<PAGE> 9
endorsement, the Debtor hereby waives presentment, demand, notice of dishonor,
protest and notice of protest and all other notices with respect thereto.
11. Significant Locations.
The Debtor represents and warrants to the Secured Party as follows: (i)
none of the Debtor's Equipment constitutes goods of a type normally used in more
than one jurisdiction for purposes of Section 9-103 of the Uniform Commercial
Code; (ii) the chief executive office of the Debtor is located at 11 Hurley
Street, Cambridge, Massachusetts, and such chief executive office, along with
the offices listed on Schedule 3 hereto, are the only locations where the Debtor
maintains a place of business and where the Debtor maintains the records with
respect to the Collateral; (iii) such locations are the only locations where the
Debtor stores or processes Inventory; and (iv) such locations are the only
locations where the Debtor keeps Equipment. The Debtor will notify the Secured
Party in writing prior to any change in the locations specified above and will
reimburse the Secured Party for the costs of any additional Uniform Commercial
Code filings requested by the Secured Party as a result thereof. If any of the
Collateral or any of the Debtor's records concerning any of the Collateral are
at any time to be located on premises leased by the Debtor, or any premises
owned by the Debtor subject to a mortgage or other lien, the Debtor will provide
notice of such intent to the Secured Party not less than 30 days prior to the
delivery of any such Collateral or records to such premises, and, upon the
written request of the Secured Party, the Debtor will promptly obtain and
deliver to the Secured Party an agreement in form satisfactory to the Secured
Party waiving the landlord's, mortgagee's or other lienholder's right to enforce
against the Debtor any claims for monies due under the lease, mortgage or other
lien by levy or distraint or other proceedings against the Collateral or the
Debtor's records concerning the same and assuring the Secured Party's access to
such Collateral and records to facilitate the Secured Party's exercise of its
rights to take possession thereof. The Debtor agrees to notify the Secured Party
promptly in the event of a change in the location of any place of business or
the establishment of any additional place of business of the Debtor.
12. Further Assurances.
The Debtor will execute and deliver to the Secured Party from time to time
all such other agreements, instruments and other documents (including without
limitation all requested financing and continuation statements) and do all such
other further acts and things as the Secured Party may reasonably request in
order to further evidence or carry out the intent of this Agreement or to
perfect the lien and security interest created hereby or intended so to be.
8
<PAGE> 10
13. Default and Remedies.
The Debtor shall be in default hereunder upon the occurrence of an "Event
of Default" as defined in the Promissory Note.
Upon the occurrence of any Event of Default which shall be continuing, (i)
unless the Secured Party shall elect otherwise, the entire unpaid amount of such
of the Liabilities as are not then otherwise due and payable shall become
immediately due and payable as provided in the Promissory Note and (ii) the
Secured Party may at its option exercise from time to time any and all rights
and remedies available to it under the Uniform Commercial Code or otherwise,
including the right to collect, assemble, receipt for, adjust, modify, repair,
refurnish or refurbish (but without any obligation to do so) or foreclose or
otherwise realize upon any of the Collateral and to dispose of any of the
Collateral at one or more public or private sales or other proceedings, and the
Debtor agrees that the Secured Party or its nominee may become the purchaser at
any such sale or sales. The Debtor agrees that thirty (30) days shall be
reasonable prior notice of the date of any public sale or other disposition of
all or any part of the Collateral, or of the date on or after which any private
sale or other disposition of the same may be made. All rights and remedies
granted the Secured Party hereunder or under any other agreement between the
Secured Party and the Debtor shall be deemed concurrent and cumulative and not
alternative, and the Secured Party may proceed with any number of remedies at
the same time or at different times until all the Liabilities are fully
satisfied. The exercise of any one right or remedy shall not be deemed a waiver
or release of or an election against any other right or remedy, and the Secured
Party may proceed against the Collateral and any other Collateral granted by the
Debtor to the Secured Party under any other agreement, all in any order and
through any available remedies. A waiver on any one occasion shall not be
construed as a waiver or bar on any future occasion. All property of any kind
held at any time by the Secured Party as Collateral shall stand as one general
continuing collateral security for all the Liabilities and may be retained by
the Secured Party as security until all the Liabilities are fully satisfied. The
Debtor will pay to the Secured Party on demand any and all expenses (including
attorneys' fees and legal expenses) which may have been incurred by the Secured
Party with interest at the Interest Rate (i) in the prosecution or defense of
any action growing out of or connected with the subject matter of this
Agreement, the Liabilities, the Collateral or any of the Secured Party's rights
therein or thereto; or (ii) in connection with the custody, preservation, use,
operation, preparation for sale or sale of any of the Collateral, the incurring
of all of which are hereby authorized to the extent the Secured Party deems the
same advisable. The Debtor's liability to the Secured Party for any such payment
with interest shall be included in the Liabilities. The enumeration of specific
Events of Default under the Promissory Note shall not compromise the demand
character of any Liability which by its terms is payable on demand and demand
may be made thereon at any time irrespective of the non-occurrence of any such
Event of Default, any provision hereof to the
9
<PAGE> 11
contrary notwithstanding. The Proceeds of any Collateral received by the Secured
Party at any time before or after default, whether from a sale or other
disposition of Collateral or otherwise, or the Collateral itself, may be applied
to the payment in full or in part of such of the Liabilities and in such order
and manner as the Secured Party may elect. The Debtor to the extent of its
rights in the Collateral waives and releases any right to require the Secured
Party to collect any of the Liabilities from any other of the Collateral or any
other collateral then held by the Secured Party under any theory of marshalling
of assets or otherwise.
14. Power of Attorney.
The Debtor hereby irrevocably appoints any officer, employee or agent of
the Secured Party as the Debtor's true and lawful attorney-in-fact with power,
upon the occurrence of an Event of Default, to (i) endorse the Debtor's name
upon any notes, checks, drafts, money orders, or other instruments of payment
that may come into the Secured Party's possession and which constitute proceeds
of any Collateral; (ii) sign and endorse the Debtor's name upon any documents of
title, invoices, freight or express bills, assignments, verifications and
notices in connection with any of the Collateral, and any instruments or
documents relating thereto or to the Debtor's rights therein; and (iii) execute
in the Debtor's name and file one or more financing statements covering the
Collateral. Any such attorney of the Debtor shall have full power to do any and
all things necessary to be done with respect to the above transactions as fully
and effectually as the Debtor might do, and the Debtor hereby ratifies all that
said attorney shall lawfully do or cause to be done by virtue hereof.
15. Miscellaneous.
(a) At no time during the past five years has the Debtor been known by or
used any name, including any trade or fictitious name, other than that set forth
in the premises of this Agreement.
(b) This Agreement shall commence on the date hereof and shall continue in
full force and effect so long as any of the Liabilities shall exist from time to
time. If after the discharge of all Liabilities the Debtor should subsequently
incur additional Liabilities, this Agreement shall automatically be revived and
thereafter continue in full force and effect until such time as the Debtor,
having no Liabilities then outstanding and not then being entitled to incur any
additional Liabilities, shall give written notice to the Secured Party of its
election to terminate this Agreement.
10
<PAGE> 12
(c) Statements of account rendered to the Debtor by the Secured Party
hereunder shall become final and be effective unless objection thereto is made
within fifteen (15) days after rendition.
(d) No modification or waiver of any provision hereof shall be effective
unless the same is in writing and signed by the party against whom its
enforcement is sought.
(e) This Agreement may be signed in any number of counterparts and by
different parties in separate counterparts, all with the same effect as if the
signatures were on the same counterpart, and all counterparts hereof, taken
together, shall constitute but one and the same Agreement.
(f) The covenants contained herein are all material and continuing, and
any breach of any of them shall constitute a material breach of this Agreement.
(g) Words of any gender shall include any other gender, and singular words
shall include the plural and vice versa, whenever the same is necessary to
produce a fair and meaningful construction.
(h) All the rights and remedies of the Secured Party hereunder shall be
cumulative with and not alternative to or in lieu of the Secured Party's rights
and remedies under any other agreement or agreements.
(i) This Agreement shall bind and inure to the benefit of the parties and
their respective successors and assigns, except that the Debtor shall not assign
any of its respective rights hereunder without the prior written consent of the
other party hereto.
(j) Captions in this Agreement are included for convenience of reference
only and shall not constitute a part of this Agreement for any other purpose.
(k) Any provision hereof which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without affecting the validity or
enforceability of the remainder of this Agreement or the validity or
enforceability of such provision in any other jurisdiction.
11
<PAGE> 13
(l) All issues arising hereunder shall be governed by the laws of the
State of New York.
IN WITNESS WHEREOF, this Agreement has been duly executed under due
authorization on the day and year first set forth above.
BIOPURE CORPORATION
By: /s/ Brian A. Lajoie
------------------------------
Title: V.P.-Finance
PHARMACIA & UPJOHN, INC.
By: /s/ Robert G. Kramer
----------------------------------
Title: Director Corporate Treasury
12
<PAGE> 14
SCHEDULE 1
Patents and Patent Applications
See Attached
<PAGE> 15
STATUS OF BIOPURE CORPORATION DISCLOSURES - U.S.
<TABLE>
<CAPTION>
====================================================================================================================================
Filing Date Application
Docket No./ or or Exp.
Attorney Inventor(s) Title Status Issue Date Patent Number Date
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
BP86-01 Rausch Extra Pure Semi-Synthetic Blood AB 11/10/86 06/928,345
(DEB) Feola Substitute
BP86-01A Rausch Extra Pure Semi-Synthetic Blood AB 10/13/87 07/107,421
(DEB) Feola Substitute
BP86-01AA Rausch Extra Pure Semi-Synthetic Blood P 01/28/92 5,084,558 01/28/09
(DEB) Feola Substitute
BP86-01AAA Rausch Extra Pure Semi-Synthetic Blood P 03/22/94 5,296,465 03/22/11
(NSP/DEB) Feola Substitute
BP86-01A4 Rausch Ultra Pure Hemoglobin Solutions F 03/11/94 08/209,949
(RTC/NSP/DEB) Feola and Blood Substitutes
(INCLUDES BP94-01)
BP86-01A5 Rausch Ultra Pure Hemoglobin Solutions AD
(RTC/NSP/DEB) Feola and Blood Substitutes
BP89-01 Wong Enzymatic Production of 7-Amino AB 04/04/89 07/333,546
(RWW/DEB) Shen Cephalosporanic Acid
BP89-01A Wong Enzymatic Production of 7-Amino I
(RWW/DEB) Shen Cephalosporanic Acid
BP89-01F Wong Enzymatic Production of 7-Amino AB 04/21/92 07/873,596
(RWW/DEB) Shen Cephalosporanic Acid
BP89-01F2 Wong Enzymatic Production of 7-Amino AB 01/21/94 08/184,773
(RWW/DEB) Shen Cephalosporanic Acid
BP89-01F3 Wong Enzymatic Production of 7-Amino F 11/02/94 08/333,623
(RWW/DEB) Shen Cephalosporanic Acid
BP89-02 Templeman Method for Culturing Cells Using AB 06/09/89 07/364,696
(RWW/DEB) Rausch Hemoglobin As A Cell Culture Medium
Lin Component
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
ATTORNEY CODE: STATUS CODE: DOCKET LETTER CODE:
<S> <C> <C> <C>
DEB = David E. Brook AB = Abandoned F = Filed and Pending
NSP = N. Scott Pierce AD = Active Disclosure H = Hold Z, X, Y = Divisional
RTC = Robert T. Conway AF = Approved for Filing I = Inactive
EWM = Elizabeth W. Mata AL = Allowed P = Patented A = Continuation or C-I-P
SMM = Steven M. Mills AS = Approved for Search S = Searched
RWW = Richard W. Wagner C = Combined with T = Transferred Prime (') = File Wrapper
DI = Draft in Preparation TBA = To be Abandoned Continuation
DP = Draft Prepared
F = File Wrapper
Continuation
</TABLE>
UPDATED: August 30, 1996 CONFIDENTIAL Page 1
- ------------------------
BP/DFCI.US
<PAGE> 16
STATUS OF BIOPURE CORPORATION DISCLOSURES - U.S.
<TABLE>
<CAPTION>
====================================================================================================================================
Filing Date Application
Docket No./ or or Exp.
Attorney Inventor(s) Title Status Issue Date Patent Number Date
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
BP89-02' Templeman Method for Culturing Cells Using AB 05/29/92 07/891,682
(RWW/DEB) Rausch Hemoglobin As A Cell Culture Medium
Lin Component
BP89-03 Templeman Balanced Parenteral Vehicle for Ex I
(RWW/DEB) Vivo Perfusion With Purified
Hemoglobin
BP89-04 Templeman Purified Hemoglobin Solution to I
(RWW/DEB) Wong Promote Microbial Growth
Shen
BP89-05 Filbey Sample Valve for Sterile Processing P 03/17/92 5,095,765 06/15/10
(NSP/DEB) Boulton
BP91-02 Rausch Static Mixer Reactor Utilized for I
(NSP/DEB) Laccetti Bovine Hemoglobin Polymerizations
Light
Gawryl
BP91-03 Light Method for Separating Unmodified F 06/07/95 08/477,916
(EWM/NSP/DEB) Gawry Hemoglobin From Cross-Linked
Laccetti Hemoglobin
Houtchens
BP91-04 Gawryl Method of Reducing Leucocyte I
(NSP/DEB) Activation in Blood Substitutes
BP91-05 Highly Cross-Linked Hemoglobin Blood I
(NSP/DEB) Substitute
BP91-06 Rausch Method of Manufacturing Blood I Filed as
(NSP/DEB) Gawryl Substitutes BP94-03A2 6/7/95
BP92-01 Houtchens Separation of Erythrocytes from I
(NSP/DEB) Bovine Whole Blood
BP92-02 Houtchens Separation of Carbonic Anhydrase from I Filed as
(NSP/DEB) Patrick BP94-03AD 6/7/95
Hemoglobin
BP92-03 Wong Simplified Process for Myelin Protein I
(EWM/NSP/DEB) Purification from Crude Calf Brain
Tissue
BP92-04 Wong Use of Celite I
(NSP/DEB) Shen
Baqai
Conlon
</TABLE>
UPDATED: August 30, 1996 CONFIDENTIAL Page 2
- ------------------------
BP/DFCI.US
<PAGE> 17
STATUS OF BIOPURE CORPORATION DISCLOSURES - U.S.
<TABLE>
<CAPTION>
====================================================================================================================================
Filing Date Application
Docket No./ or or Exp.
Attorney Inventor(s) Title Status Issue Date Patent Number Date
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
BP92-05 Wong Use of Amberlite IR-35 I
(NSP/DEB) Shen
Baqai
Conlon
BP93-01 Wong Chlorination of Cephalexin with F 12/20/94 08/360,143
(RWW/DEB) Shen Chloroperoxidase from Rathayibacter
Chen
BP93-02 Light Polymerized Hemoglobin Blood I (Filed as BP94-03AB)
(NSP/DEB) Laccetti Substitute Prepared by Glutaraldehyde
Gauryl Crosslinking Modified With N-Acetyl
Cysteine
BP93-03 Jacobs, Jr. Hemodilution Administration of I
(NSP/DEB) Hemoglobin Solutions
BP93-04 Jacobs Oxygen Conductance by Hemoglobin I
(NSP/DEB) Solutions
BP93-05 Jacobs Hemoglobin Blood Substitutes in AB 02/03/94 08/191,418
(NSP/DEB) Extended Preoperative Autologous
Blood Donation
BP93-06 Jacobs Use of Hemoglobin Blood Substitutes AD
(EWH/NSP/DEB) Lee as Hematinics
BP93-07 Jacobs Anti-Cholinergic Treatment for Blood I
(NSP/DEB) Substitute Side Effects
BP94-01 Mechanical Lysing of Erythrocytes I (Filed as BP86-01A4)
(NSP/DEB)
BP94-02 Foil Overwrapped Plastic Storage I (Filed as BP94-03AC)
(NSP/DEB) Containers for Hemoglobin Blood
Substitutes
BP94-03 Jacobs Method for Oxygenating Tissue Having F 03/23/95 08/409,337
(EWM/NSP/DEB) Rausch Reduced Red Blood Cell Flow
BP94-03A Rausch Method for Producing Ultrapure Stable F 06/02/95 08/458,916
(EWM/NSP/DEB) Gawryl Polymerized Hemoglobin Blood-
Houtchens Substitute
Laccetti
Light
</TABLE>
UPDATED: August 30, 1996 CONFIDENTIAL Page 3
- ------------------------
BP/DFCI.US
<PAGE> 18
STATUS OF BIOPURE CORPORATION DISCLOSURES - U.S.
<TABLE>
<CAPTION>
====================================================================================================================================
Filing Date Application
Docket No./ or or Exp.
Attorney Inventor(s) Title Status Issue Date Patent Number Date
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
BP94-03A2 Rausch Method for Producing A Stable F 06/07/95 08/484,775
(EWM/NSP/DEB) Gawryl Polymerized Hemoglobin Blood-
Houtchens Substitute
Laccetti (Includes BP91-06)
Light
BP94-03A2Z Rausch Method for Producing a Stable F 06/07/95 08/478,004
(EWM/NSP/DEB) Gawryl Polymerized Hemoglobin Blood-
Houtchens Substitute
Laccetti
Light
BP94-03AB Light Stable Polymerized Hemoglobin and Use F 06/07/95 08/487,288
(EWM/NSP/DEB) Gawryl Thereof
Laccetti (Includes BP93-02)
BP94-03ABA Light Stable Polymerized Hemoglobin and Use F 03/22/96 08/620,296
(EWM/NSP/DEB) Gawryl Thereof
Laccetti (Includes BP93-02)
Houtchens
BP94-03AC Gawryl Method for Preserving a Hemoglobin F 06/07/95 08/471,583
(EWM/NSP/DEB) Houtchens Blood Substitute
Light (Includes BP94-02)
BP94-03AD Houtchens Method for Separating Hemoglobin F 06/07/95 08/473,497
(EWM/NSP/DEB) (Includes BP92-02)
BP94-04 Wong Enzymatic Halogenation of Cephalexin F 12/20/94 08/360,149
(RWW/DEB) Shen to Produce Cefaclor and Other
Chen Halogenated Products
BP95-01 Wertz Separation of Polymerized From F 06/07/95 08/475,899
(RTC/NSP/DEB) Gawryl Unpolymerized Hemoglobin on
Hydroxyapatite Using HPLC
BP95-02 Dube Determination of Cyclohexanone I
(NSP/DEB) Wetz Derivatized With 2-4 Dinitiophenyl
Hydrazine and Separated by RPHPLC-UV
BP95-03 Paradis Comb Needle AD
(SMM/NSP)
BP95-04 Paradis Needle with Side Lumen AD
(SMM/NSP)
</TABLE>
UPDATED: August 30, 1996 CONFIDENTIAL Page 4
- ------------------------
BP/DFCI.US
<PAGE> 19
STATUS OF BIOPURE CORPORATION DISCLOSURES - U.S.
<TABLE>
<CAPTION>
====================================================================================================================================
Filing Date Application
Docket No./ or or Exp.
Attorney Inventor(s) Title Status Issue Date Patent Number Date
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
BP96-01 Gawryl A Method For Chromatographic Removal F 07/01/96 08/673,147
(DEB/NSP) Houtchens of Prions
Light
BP96-02 Jacobs, Jr. Method for Increasing Tissue Oxygen AD
(EWM/NSP) Consumption with Hemoglobin Solution
</TABLE>
UPDATED: August 30, 1996 CONFIDENTIAL Page 5
- ------------------------
BP/DFCI.US
<PAGE> 20
CASES LICENSED TO BIOPURE
<TABLE>
<CAPTION>
====================================================================================================================================
Filing Date Application
Docket No./ or or Exp.
Attorney Inventor(s) Title Status Issue Date Patent Number Date
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
DFCI-210 Teicher Improved Method for Treating a Tumor AB 05/14/91 07/699,769
(DEB) Rausch with a Chemotherapeutic Agent
Hopkins II
DFCI-210A Teicher Method for Treating a Tumor with a F 07/20/93 08/094,501
(EWM/NSP/DEB) Rausch Chemotherapeutic Agent
Hopkins II
DFCI-210A2 Teicher Method for Treating a Tumor with a F 06/07/95 08/477,110
(EWM/NSP/DEB) Rausch Chemotherapeutic Agent
Hopkins II
DFCI-212 Teicher Improved Method for Treating a Tumor P 03/22/94 5,295,944 05/14/11
(DEB) Rausch with Ionizing Radiation
Hopkins II
</TABLE>
UPDATED: August 30, 1996 CONFIDENTIAL Page 6
- ------------------------
BP/DFCI.US
<PAGE> 21
STATUS OF BIOPURE CORPORATION DISCLOSURES - FOREIGN
<TABLE>
<CAPTION>
================================================================================================================================
Docket Application/ Filing/ Stat- Patent Issued Exp.
No. Country Publication No. Pub Date Title us No. Date Date
================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BP86-01 PCT PCT/US87/02967 11/10/87 Extra Pure Semi- PC
Synthetic Blood
Substitute
(Designating: Australia, Brazil, Finland, Japan)
BP86-01A Australia 10,871/88 11/10/87 Extra Pure Semi- P 622,610 10/16/92 11/10/03
Synthetic Blood
Substitute
BP86-01A Canada 551,356 11/09/87 Extra Pure Semi- P 1,302,009 12/29/92 12/29/09
Synthetic Blood
Substitute
BP86-01A Japan 500779/88 11/10/87 Extra Pure Semi- A
Synthetic Blood
Substitute
BP86-01AA Austria 87116556.9 11/10/87 Extra Pure Semi- P 0277289 02/25/92 11/10/07
Synthetic Blood
Substitute
BP86-01AA Belgium 87116556.9 11/10/87 Extra Pure Semi- P 0277289 02/25/92 11/10/07
Synthetic Blood
Substitute
BP86-01AA EPO 87116556.9 11/10/87 Extra Pure Semi- P 0277289 02/25/92 11/10/07
Synthetic Blood
Substitute
(Designating: Austria, Belgium, France, Germany, Great Britain, Greece,
Italy, Luxembourg, Netherlands, Spain and Sweden,
Switzerland/Liechtenstein)
BP86-01AA France 87116556.9 11/10/87 Extra Pure Semi- P 0277289 02/25/92 11/10/07
Synthetic Blood
Substitute
BP86-01AA Germany 87116556.9 11/10/87 Extra Pure Semi- P 0277289 02/25/92 11/10/07
Synthetic Blood
Substitute
BP86-01AA Great Britain 87116556.9 11/10/87 Extra Pure Semi- P 0277289 02/25/92 11/10/07
Synthetic Blood
Substitute
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
A = Active AB = Abandoned P = Patented PC = Processing Complete
UPDATED: August 30, 1996 CONFIDENTIAL Page 7
- ------------------------
BP.FOR
<PAGE> 22
STATUS OF BIOPURE CORPORATION DISCLOSURES - FOREIGN
<TABLE>
<CAPTION>
================================================================================================================================
Docket Application/ Filing/ Stat- Patent Issued Exp.
No. Country Publication No. Pub Date Title us No. Date Date
================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BP86-01AA Greece 87116556.9 11/10/87 Extra Pure Semi- P 0277289 02/25/92 11/10/07
Synthetic Blood
Substitute
BP86-01AA Italy 87116556.9 11/10/87 Extra Pure Semi- P 0277289 02/25/92 11/10/07
Synthetic Blood
Substitute
BP86-01AA Luxembourg 87116556.9 11/10/87 Extra Pure Semi- P 0277289 02/25/92 11/10/07
Synthetic Blood
Substitute
BP86-01AA Mexico 923537 06/26/92 Extra Pure Semi- P 180196 11/22/95 06/26/12
Synthetic Blood
Substitute
BP86-01AA Netherlands 87116556.9 11/10/87 Extra Pure Semi- P 0277289 02/25/92 11/10/07
Synthetic Blood
Substitute
BP86-01AA Spain 87116556.9 11/10/87 Extra Pure Semi- P 0277289 02/25/92 11/10/07
Synthetic Blood
Substitute
BP86-01AA Sweden 87116556.9 11/10/87 Extra Pure Semi- P 0277289 02/25/92 11/10/07
Synthetic Blood
Substitute
BP86-01AA Switzerland/ 87116556.9 11/10/87 Extra Pure Semi- P 0277289 02/25/92 11/10/07
Liechtenstein Synthetic Blood
Substitute
BP89-01 PCT PCT/US90/01696 03/30/90 Enzymatic PC
WO 90/12110 10/18/90 Production of 7-
Amino
Cephalosporanic
Acid
BP89-01 Austria 90906671.4 03/30/90 Enzymatic P 0465600 06/07/95 03/30/10
Production of 7-
Amino
Cephalosporanic
Acid
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
A = Active AB = Abandoned P = Patented PC = Processing Complete
UPDATED: August 30, 1996 CONFIDENTIAL Page 8
- ------------------------
BP.FOR
<PAGE> 23
STATUS OF BIOPURE CORPORATION DISCLOSURES - FOREIGN
<TABLE>
<CAPTION>
================================================================================================================================
Docket Application/ Filing/ Stat- Patent Issued Exp.
No. Country Publication No. Pub Date Title us No. Date Date
================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BP89-01 Belgium 90906671.4 03/30/90 Enzymatic P 0465600 06/07/95 03/30/10
Production of 7-
Amino
Cephalosporanic
Acid
BP89-01 Canada 2,049,958.3 03/30/90 Enzymatic A
Production of 7-
Amino
Cephalosporanic
Acid
BP89-01 EPO 90906671.4 03/30/90 Enzymatic A 0465600 06/07/95 03/30/10
Production of 7-
Amino
Cephalosporanic
Acid
(Designating: Austria, Belgium, Denmark, France, Germany, Great Britain,
Italy, Luxembourg, Netherlands, and Sweden, Switzerland/Liechtenstein)
BP89-01 France 90906671.4 03/30/90 Enzymatic P 0465600 06/07/95 03/30/10
Production of 7-
Amino
Cephalosporanic
Acid
BP89-01 Germany 90906671.4 03/30/90 Enzymatic P 0465600 06/07/95 03/30/10
Production of 7-
Amino
Cephalosporanic
Acid
BP89-01 Great Britain 90906671.4 03/30/90 Enzymatic P 0465600 06/07/95 03/30/10
Production of 7-
Amino
Cephalosporanic
Acid
BP89-01 Japan 506422/90 03/30/90 Enzymatic A
Production of 7-
Amino
Cephalosporanic
Acid
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
A = Active AB = Abandoned P = Patented PC = Processing Complete
UPDATED: August 30, 1996 CONFIDENTIAL Page 9
- ------------------------
BP.FOR
<PAGE> 24
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BP89-01 Netherlands 90906671.4 03/30/90 Enzymatic P 0465600 06/07/95 03/30/10
Production of 7-
Amino
Cephalosporanic
Acid
BP89-01 S. Korea 701280/91 03/30/90 Enzymatic A
Production of 7-
Amino
Cephalosporanic
Acid
BP89-01 Switzerland 90906671.4 03/30/90 Enzymatic P 0465600 06/07/95 03/30/10
Production of 7-
Amino
Cephalosporanic
Acid
BP89-01 Taiwan 79102661 04/04/90 Enzymatic P 45786 07/11/91 03/11/06
Production of 7-
Amino
Cephalosporanic
Acid
BP91-03 PCT PCT/US96/09251 06/05/96 Separating A
Unmodified
Hemoglobin from
Cross-Linked
Hemoglobin
(Designating: All but U.S.)
BP94-03M PCT PCT/US96/04030 03/22/96 Stable A
Polymerized
Hemoglobin
Blood-Substitute
(Designating: EP, Australia, Canada, Japan, New
Zealand)
BP94-04 PCT PCT/US95/16547 12/19/95 Enzymatic A
WO 96/19569 06/27/96 Production of
Halogenated
Cephalosporin
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
A = Active AB = Abandoned P = Patented PC = Processing Complete
UPDATED: August 30, 1996 CONFIDENTIAL Page 4
- ------------------------
BP.FOR
A = Active AB = Abandoned P = Patented PC = Processing Complete
UPDATED: August 30, 1996 CONFIDENTIAL Page [ILLEGIBLE]
- ------------------------
BP.FOR
<PAGE> 25
SCHEDULE 2
Trademarks
<TABLE>
<CAPTION>
Mark Reg. No. Reg. Date
- ---- -------- ---------
<S> <C> <C>
Biopure 1,362,777 October 1, 1985
Hemopure 1,509,885 October 25, 1988
Oxyglobin 1,507,754 October 11, 1988
Oxypure 1,572,797 December 26, 1989
</TABLE>
<PAGE> 26
SCHEDULE 3
Significant Locations
Biopure Corporation
674 Souder Road
Soudertown, Pennsylvania 18964
Biopure Corporation
4 Progress Drive
Dover, New Hampshire 03820
Biopure Corporation
11 Hurley Street
Cambridge, Massachusetts 02141
Biopure Corporation
31-35 Hurley Street
Cambridge, Massachusetts 02141
Biopure Corporation
37-39 Hurley Street
Cambridge, Massachusetts 02141
Biopure Corporation
16-22 & 26 Spring Street
Cambridge, Massachusetts 02141
<PAGE> 1
EXHIBIT 10.3
<PAGE> 2
TRADEMARK SECURITY AGREEMENT
This TRADEMARK SECURITY AGREEMENT ("Agreement") is made this 8th day of
October, 1996, by and between Biopure Corporation, a Delaware corporation,
having its principal office at 11 Hurley Street, Cambridge, Massachusetts 02141
("Grantor"), and Pharmacia & Upjohn, Inc., a Delaware corporation, having its
principal office at 7000 Portage Road, Kalamazoo, Michigan 49001 ("Grantee").
WHEREAS, Grantor is the owner of the U.S. trademark registrations
listed on the attached Schedule A (collectively the "Marks");
WHEREAS, Grantee has extended a loan to Grantor pursuant to the
terms and conditions of that certain Promissory Note dated the date hereof
("Note") made by Grantor in favor of Grantee;
WHEREAS, under a Security Agreement dated the date hereof ("Security
Agreement") between Grantor and Grantee, Grantor has granted to Grantee a
security interest in certain of its assets (including the Marks and the goodwill
associated therewith) to secure the performance of the obligations of Grantor
under the Note; and
WHEREAS, Grantor and Grantee by this instrument seek to confirm and
make a record of the grant of a security interest in the Marks and the goodwill
associated therewith;
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Grantor does hereby acknowledge that
it has granted to Grantee a security interest in all of Grantor's right, title
and interest in, to, and under the Marks and the goodwill associated therewith.
Grantor also acknowledges and confirms that the rights and remedies of Grantee
with respect to the security interests in the Marks granted hereby are more
fully set forth in the Note and the Security Agreement, the terms and provisions
of which are incorporated herein by reference.
BIOPURE CORPORATION PHARMACIA & UPJOHN, INC.
By: /s/ Brian A. Lajoie By: /s/ Robert G. Kramer
-------------------------- --------------------------
Name: Brian A. Lajoie Name:
Title: V.P.-Finance Title:
STATE OF Massachusetts )
------------- ) SS:
COUNTY OF Middlesex )
---------
Subscribed and sworn to this 7th day of October, 1996.
/s/ Hazel V. Forney
- ----------------------------
Notary Public
My Commission Expires: Jan 4, 2002
<PAGE> 3
SCHEDULE A
Federal Trademark Registrations
<TABLE>
<CAPTION>
MARK REG. NO. REG. DATE
- ---- -------- ---------
<S> <C> <C>
BIOPURE 1,362,777 October 1, 1985
HEMOPURE 1,509,885 October 25, 1988
OXYGLOBIN 1,507,754 October 11, 1988
OXYPURE 1,572,797 December 26, 1989
</TABLE>
-2-
<PAGE> 1
EXHIBIT 10.4
<PAGE> 2
PATENT SECURITY AGREEMENT
This PATENT SECURITY AGREEMENT ("Agreement") is made this 8th day of
October, 1996, by and between Biopure Corporation, a Delaware corporation,
having its principal office at 11 Hurley Street, Cambridge, Massachusetts 02141
("Grantor"), and Pharmacia & Upjohn, Inc., a Delaware corporation, having its
principal office at 7000 Portage Road, Kalamazoo, Michigan 49001 ("Grantee").
WHEREAS, Grantor is the owner of the U.S. patents and patent
applications listed on the attached Schedule A (collectively the "Patents");
WHEREAS, Grantee has extended a loan to Grantor pursuant to the
terms and conditions of that certain Promissory Note dated the date hereof
("Note") made by Grantor in favor of Grantee;
WHEREAS, under a Security Agreement dated the date hereof ("Security
Agreement") between Grantor and Grantee, Grantor has granted to Grantee a
security interest in certain of its assets (including the Patents) to secure the
performance of the obligations of Grantor under the Note; and
WHEREAS, Grantor and Grantee by this instrument seek to confirm and
make a record of the grant of a security interest in the Patents.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Grantor does hereby acknowledge that
it has granted to Grantee a security interest in all of Grantor's right, title
and interest in, to, and under the Patents. Grantor also acknowledges and
confirms that the rights and remedies of Grantee with respect to the security
interests in the Patents granted hereby are more fully set forth in the Note and
the Security Agreement, the terms and provisions of which are incorporated
herein by reference.
BIOPURE CORPORATION PHARMACIA & UPJOHN, INC.
By: /s/ Brian A. Lajoie By: /s/ Robert G. Kramer
---------------------- ---------------------
Name: Brian A. Lajoie Name:
Title: V.P. - Finance Title:
STATE OF Massachussets )
) SS:
COUNTY OF Middlesex )
Subscribed and sworn to this 7th day of October, 1996.
/s/ Hazel V. Forney
- ------------------------
Notary Public
My Commission Expires: Jan 4, 2002
<PAGE> 3
SCHEDULE A
U.S. Patents and U.S. Patent Applications
<TABLE>
<CAPTION>
Patent No. Title Issue Date
- ---------- ----- ----------
<S> <C> <C>
5,084,558 Extra Pure Semi-Synthetic 01/28/92
Blood Substitute
5,296,465 Extra Pure Semi-Synthetic 03/22/94
Blood Substitute
5,095,765 Sample Valve for Sterile 03/17/92
Processing
5,295,944 Improved Method for Treating a 03/22/94
Tumor with Ionizing Radiation
<CAPTION>
Patent Application No. Title Filing Date
- ---------------------- ----- -----------
<S> <C> <C>
08/209,949 Ultra Pure Hemoglobin 03/11/94
Solutions and Blood
Substitutes
08/333,623 Enzymatic Production of 11/02/94
7-Amino Cephalosporanic Acid
08/477,916 Method for Separating 06/07/95
Unmodified Hemoglobin from
Cross-Linked Hemoglobin
08/360,143 Chlorination of Cephalexin 12/20/94
with Chioroperoxidase from
Rathayibacter
08/409,337 Method for Oxygenating Tissue 03/23/95
Having Reduced Red Blood Cell
Flow
08/458,916 Method for Producing Ultrapure 06/02/95
Stable Polymerized Hemoglobin
Blood-Substitute
08/484,775 Method for Producing a Stable 06/07/95
Polymerized Hemoglobin Blood-
Substitute
</TABLE>
-2-
<PAGE> 4
<TABLE>
<CAPTION>
Patent Application No. Title Filing Date
- ---------------------- ----- -----------
<S> <C> <C>
08/478,004 Method for Producing a Stable 06/07/95
Polymerized Hemoglobin Blood-
Substitute
08/487,288 Stable Polymerized Hemoglobin 06/07/95
and Use Thereof
08/620,296 Stable Polymerized Hemoglobin 03/22/96
and Use Thereof
08/471,583 Method for Preserving a 06/07/95
Hemoglobin Blood Substitute
08/473,497 Method for Separating 06/07/95
Hemoglobin
08/360,149 Enzymatic Halogenation of 12/20/94
Cephalexin to Produce Cefaclor
and Other Halogenated Products
08/475,899 Separation of Polymerized from 06/07/95
Unpolymerized Hemoglobin on
Hydroxyapatite Using HPLC
08/673,147 A Method for Chromatographic 07/01/96
Removal of Prions
08/094,501 Method for Treating a Tumor 07/20/93
with a Chemotherapeutic Agent
08/477,110 Method for Treating a Tumor 06/07/95
with a Chemotherapeutic Agent
</TABLE>
-3-
<PAGE> 5
================================================================================
FORM PTO-1595 U.S. DEPARTMENT OF COMMERCE
(Rev. 6-93) Patent and Trademark Office
RECORDATION FORM COVER SHEET
PATENTS ONLY
Attorney Docket No.: 014877-0000
- --------------------------------------------------------------------------------
To the Commissioner of Patents and Trademarks:
Please record the attached original documents
or copy thereof. ATTN: BOX ASSIGNMENT
- --------------------------------------------------------------------------------
1. Name of conveying party(ies):
Biopure Corporation
Additional name(s) of conveying party(ies) attached?
|_| Yes |X| No
- --------------------------------------------------------------------------------
2. Name and address of receiving party(ies):
Name: Pharmacia & Upjohn, Inc.
Internal Address:
Street Address: 7000 Portage Road,
City: Kalamazoo
State: Michigan Zip: 49001
Additional name(s) & address(es) attached?
|_| Yes |X| No
- --------------------------------------------------------------------------------
3. Nature of conveyance:
|_| Assignment |_| Merger
|X| Security Agreement |_| Change of Name
|_| Other
Execution Date: October 7, 1996
- --------------------------------------------------------------------------------
4. Application number(s) or patent number(s):
If this document is being filed together with a new application the execution
date of the application is:
A. Patent Application No.(s) 08/209,949, 08/333,623, 08/477,916, 08/360,143,
08/409,337, 08/458,916, 08/484,775, 08/478,004,
08/487,288, 08/620,296, 08/471,583, 08/473,497,
08/360,149, 08/475,899, 08/673,147, 08/094,501
and 08/477,110
B. Patent No.(s) 5,084,558, 5,296,465, 5,095,765 and 5,295,944
Additional numbers attached: |_| Yes |X| No
- --------------------------------------------------------------------------------
5. Name and address of party to whom correspondence
concerning document should be mailed:
Name: Mr. Matthew T. Bailey
Internal Address: Morgan, Lewis & Bockius LLP
Street Address: 1800 M Street, N.W.
City: Washington State: D.C. Zip: 20036
- --------------------------------------------------------------------------------
6. Total number of applications and patents involved: 21
- --------------------------------------------------------------------------------
7. Total fee (37 C.F.R ss.3.41): $840.00
|X| Enclosed
|_| Authorized to be charged to deposit account 13-4520
- --------------------------------------------------------------------------------
8. Deposit account number: 13-4520
Attach duplicate of page if paying by deposit account
================================================================================
9. Statement and Signature
To the best of my knowledge and belief, the foregoing information is true
and correct and any attached copy is a true copy of the original document.
Matthew T. Bailey /s/ Matthew T. Bailey October 11, 1996
- -------------------------------- --------------------- ----------------
Name of Person Signing Signature Date
Total number of pages including cover sheet, attachments and documents: 4
================================================================================
<PAGE> 1
EXHIBIT 10.5
<PAGE> 2
MORTGAGE
THIS MORTGAGE ("Mortgage") is made October 8, 1996, between BIOPURE
CORPORATION, a Delaware corporation with offices at 11 Hurley Street, Cambridge,
Massachusetts 02141 ("Mortgagor"), and PHARMACIA & UPJOHN, INC., a Delaware
corporation with offices at 7000 Portage Road, Kalamazoo, Michigan 49001
("Mortgagee").
WHEREAS, Mortgagor by its certain Promissory Note of even date
herewith ("Note") has evidenced its obligation to pay to Mortgagee the principal
sum of $9,000,000, with interest and certain other sums, all as more fully
therein provided;
NOW THEREFORE, to secure the payment of all principal, interest and
other sums due or to become due under the Note, the Security Agreement dated the
date hereof between Mortgagor and Mortgagee (the "Security Agreement") or this
Mortgage (collectively, "Debt"), Mortgagor hereby grants, bargains, sells,
conveys, aliens, enfeoffs, confirms, releases, assigns, transfers, pledges and
mortgages unto Mortgagee, all and singular Mortgagor's rights, titles and
interests in and to the following (collectively, "Mortgaged Property"):
ALL THAT CERTAIN leasehold estate ("Leasehold") with respect to that
certain real property located in Montgomery County, Pennsylvania, more
particularly described in Exhibit "A" attached hereto and made a part hereof
("Land"), which Leasehold was created pursuant to that certain Ground Lease
Agreement dated as of October 21, 1994 between Moyer Packing Company and the
Mortgagor ("Base Lease") which, or a memorandum of which, was recorded on
November 16, 1994 with the Montgomery County Recorder of Deeds in Deed Book
5097, page 1518, together with all Mortgagor's rights, credits, deposits,
options, privileges and interests under or pertaining to the Base Lease or the
Land;
TOGETHER WITH any and all (a) buildings, structures, fixtures and
improvements now or hereafter located or erected on the Land ("Improvements";
the Leasehold, Land and Improvements are sometimes herein collectively referred
to as "Real Estate"), (b) passages, ways, water courses, easements, rights,
estates, interests, liberties, privileges, tenements, issues, proceeds,
products, profits, condemnation damages, proceeds of insurance, hereditaments
and appurtenances of every type and nature whatsoever to the Real Estate
belonging or appertaining, and claims or demands of any nature whatsoever of
Mortgagor either at law or in equity, in possession or expectancy, of, in and to
the Real Estate, (c) leases, subleases, contracts to lease and other agreements
relating to the use or occupancy of all or any part of the Real Estate now or
hereafter entered into by Mortgagor as landlord or sublandlord (collectively,
"Leases") and the rents, security deposits, issues and profits arising or
issuing therefrom ("Rents"), and (d) building materials, furniture, fixtures,
<PAGE> 3
furnishings, fittings, apparatus, appliances, machinery, equipment, supplies,
inventory and personal property of every kind and nature whatsoever, now or
hereafter attached to, placed, installed or located upon, or used or useful in
any way with respect to, the Real Estate and all replacements thereof and
modifications and additions thereto and the proceeds and products thereof (all
of the things mentioned in this clause (d) being sometimes herein collectively
called "Personalty");
TO HAVE AND TO HOLD the Mortgaged Property unto Mortgagee forever,
provided that if Mortgagor shall pay Mortgagee the Debt, and shall otherwise
perform all Mortgagor's covenants, agreements and obligations hereunder and
under the Note, then this Mortgage and the estate and interests hereby granted,
shall cease and be void; otherwise this Mortgage shall remain in full force and
effect.
AND Mortgagor covenants and agrees with Mortgagee as follows:
1. Payment of Debt. Mortgagor shall pay when due the Debt in the
manner provided in the Note, the Security Agreement and this Mortgage. The Debt
and each part thereof, if not paid when due, shall bear interest at the Default
Rate specified in the Note ("Default Rate") from the due date until paid in
full.
2. Performance of Covenants. Mortgagor shall observe and perform
faithfully when due each and every obligation, covenant and agreement on
Mortgagor's part to be observed or performed under this Mortgage, the Security
Agreement or the Note.
3. Title. Mortgagor represents and warrants to Mortgagee that: (a)
Mortgagor is and shall at all times remain the legal and beneficial owner of
good and marketable indefeasible title to all of the Mortgaged Property,
including without limitation the Leasehold, (b) there is no limitation on the
right of Mortgagor to encumber the Mortgaged Property, and (c) this Mortgage is
a good and valid first lien on the Mortgaged Property, subject to no other
mortgage, lien, pledge, security interest or encumbrance. Mortgagor covenants to
keep this Mortgage a good and valid first lien on the Mortgaged Property at all
times, and shall warrant and forever defend the title to the Mortgaged Property
unto the Mortgagee against every person claiming or to claim the same or any
part thereof.
4. Base Lease. The Mortgagor shall not sell, assign, modify, amend,
supplement, encumber or surrender the Base Lease without the prior written
consent of Mortgagee in each instance. Mortgagor shall promptly and fully keep,
perform and comply with all the terms, provisions, covenants, conditions and
agreements imposed upon or assumed by the Mortgagor as lessee under the Base
Lease and shall not do, or permit anything to be done, or omit from doing
anything, which will give the landlord under the Base Lease a right to terminate
the Base Lease. If the Mortgagor shall, in any manner, fail in this agreement,
Mortgagee may (but shall not be obligated to) take any action Mortgagee deems
necessary or desirable to prevent or cure any default by Mortgagor in the
performance of or compliance
2
<PAGE> 4
with any of Mortgagor's covenants or obligations under the Base Lease. Mortgagee
may rely on any notice of default received from said landlord and may act
thereon as herein provided even though the existence of such default or the
nature thereof may be questioned or denied by Mortgagor or any party acting on
behalf of Mortgagor, and such notice of default shall be conclusive evidence
that a default exists for the purpose of this Section. Mortgagee shall have the
right to enter upon the demised premises and any other property owned or
controlled by Mortgagor which is affected by any of the terms, conditions,
provisions, covenants and agreements of the Base Lease to such extent and as
often as Mortgagee, in its sole discretion, deems necessary or desirable in
order to prevent or cure and such default by Mortgagor. Mortgagee may expend
such sums of money as Mortgagee, in its sole discretion deems necessary for any
such purpose, and all sums so expended shall be deemed part of the debt and
shall be secured by this Mortgage.
5. Fee Title. Mortgagor covenants that so long as any of the Debt
remains unpaid, the Leasehold shall not merge in or with the fee title or in or
with any other estate or interest in the Real Estate, but always shall be
complete, separate and distinct notwithstanding the occurrence of any event or
events by which the Leasehold may become vested in the same person in whom said
fee title is vested.
6. Enforceability of Base Lease. Mortgagor represents and warrants
to Mortgagee that: (a) the Base Lease is valid, subsisting and all the terms
thereof are enforceable, (b) the rents and charges reserved in the Base Lease by
the landlord thereunder, to the extent now or heretofore payable, have been
fully paid and Mortgagor has no knowledge of any default thereunder by either
party thereto and (c) no delinquency exists in respect to the payment of any
tax, assessment, water or sewer rent or charge, or other governmental imposition
of any kind levied or assessed upon the Mortgaged Property.
7. Security Agreement. (A) Without limiting any of the provisions of
this Mortgage, Mortgagor, as debtor, expressly grants to the Mortgagee, as
secured party, a security interest under the Pennsylvania Uniform Commercial
Code ("UCC") in all and singular the Personalty and in any portion of the
balance of the Mortgaged Property which does not constitute real estate
(collectively, "Collateral").
(B) In addition to and cumulative of other remedies granted in the
Loan Documents, Mortgagee may, upon the occurrence of any default by Mortgagor
hereunder, proceed under the UCC as to all or any part (as Mortgagee may elect)
of the Collateral, and shall have and may exercise with respect to the
Collateral all the rights, remedies and powers of a secured party under the UCC,
including, without limitation, the right to sell at public or private sale or
sales, or otherwise dispose of, lease or utilize the Collateral and any and all
parts thereof in any manner permitted under the UCC after default by a debtor,
and to apply the proceeds thereof toward payment of any costs and expenses
thereby incurred by Mortgagee, and toward payment of the Debt, in such order and
manner as Mortgagee may elect.
3
<PAGE> 5
(C) Among the rights of Mortgagee following a default by Mortgagor
hereunder, and without limitation thereto, Mortgagee shall have the right to
take possession of the Collateral and to enter upon any premises where same may
be situated for such purpose without being deemed guilty of trespass and without
liability for damages thereby occasioned, and to take any action deemed
necessary, appropriate or desirable by Mortgagee, to repair, refurbish or
otherwise prepare the Collateral for sale, lease or other use or disposition as
herein authorized.
(D) To the extent permitted by law, Mortgagor expressly waives any
notice of sale or other disposition of the Collateral, and all other rights and
remedies of a debtor or procedures or formalities prescribed by law relative to
the sale or disposition of the Collateral or the exercise of any other right or
remedy of Mortgagee existing after a default by Mortgagor hereunder.
(E) Mortgagee, upon a default by Mortgagor hereunder, is expressly
granted the right, at its option, to transfer at any time to itself or to its
nominee the Collateral, or any part or parts thereof, as Mortgagee may elect,
and to receive the monies, income, proceeds and benefits attributable or
accruing thereto, and to hold the same as security for the Debt or to apply it
in payment of the Debt, in such order or manner as Mortgagee may elect.
(F) Should Mortgagee elect to exercise its rights under the
provisions of this Section as to part of the Collateral, such election shall not
preclude Mortgagee from exercising the rights and remedies granted by the other
provisions of this Mortgage or by law as to the remaining Collateral.
(G) Mortgagee may, at its election, at any time after delivery of
this Mortgage, use and file executed counterparts hereof as financing statements
under the UCC.
(H) So long as any of the Debt remains unpaid, Mortgagor shall not
execute and there shall not be filed in any public office any financing
statement or statements affecting the Collateral other than financing statements
in favor of Mortgagee hereunder.
(I) Financing statements have been executed by the parties
simultaneously with the execution and delivery hereof, and are intended to be
forthwith filed and recorded in all appropriate filing and recording offices.
Mortgagee is authorized to file and record additional financing statements and
continuations thereof in each jurisdiction where Mortgagee deems it necessary or
desirable, and, at the request of Mortgagee, Mortgagor shall join Mortgagee in
executing one or more additional financing statements in form satisfactory to
Mortgagee, and will pay the cost of filing or recording such financing
statements or executed counterparts of this Mortgage, as financing statements,
in all public offices at any time and from time to time whenever such filing or
recording is deemed by Mortgagee to be necessary or desirable. Mortgagor shall
also pay the cost of filing or recording all such continuation statements deemed
by Mortgagee to be necessary or desirable.
4
<PAGE> 6
8. Insurance. (A) Mortgagor shall at all times keep the Mortgaged
Property insured for the protection of Mortgagee against such risks, and with
such coverages, as Mortgagee shall from time to time require, including without
limitation, broad form, comprehensive fire and extended coverage insurance, with
coverage for theft, vandalism and malicious mischief, for the full replacement
value of the Improvements, and rent insurance with respect to the Rents payable
for the one year period following the occurrence of a casualty. All insurance
policies required by this paragraph shall contain: (i) a "New York" or
"Massachusetts" form noncontributory mortgagee clause providing, among other
things, that any payment occasioned by loss thereunder shall be payable to the
holder of this Mortgage alone, and that Mortgagee shall not be subject to
defenses otherwise available to the insurer against the insured thereunder, (ii)
a waiver of subrogation as to Mortgagee's interest, (iii) a waiver of
co-insurance as to Mortgagee, and (iv) if requested by Mortgagee from time to
time, an "owner not in control" endorsement.
(B) Mortgagor shall at all times maintain comprehensive general
public liability insurance, worker's compensation insurance and such other
liability insurance incident to the ownership of the Mortgaged Property as
Mortgagee may from time to time require. All insurance policies required by this
paragraph shall, at Mortgagee's election, name Mortgagee as a co-insured party.
(C) If, at any time or from time to time, the Real Estate is located
in a designated "flood prone" area pursuant to the Flood Disaster Protection Act
of 1973, or any amendment or supplement thereto, then Mortgagor shall obtain
flood insurance and shall take such other action as may be necessary to comply
fully with the National Flood Insurance Program set forth in said Act. Mortgagor
shall comply fully with the National Flood Insurance Act of 1968, as the same
may be amended from time to time, and all other laws, orders, rules, ordinances
and regulations concerning flood insurance, to the extent applicable to the
Mortgaged Property.
(D) Without limitation to the foregoing, the following provisions
shall apply to each and every policy of insurance which Mortgagor is hereby
required to carry: (i) the form, amount and coverage of each policy, and the
insurer under each policy, shall be subject to Mortgagee's approval, (ii)
Mortgagor shall cause each carrier thereof to deliver its certificate of
insurance to Mortgagee, certifying the applicable insurance provisions herein
required, (iii) within five days after Mortgagee's request, Mortgagor shall
deliver to Mortgagee an original copy of each policy, (iv) each policy shall
state that it has been prepaid by Mortgagor (or in lieu of such statement,
Mortgagor shall provide Mortgagee with evidence of such prepayment), and shall
require thirty (30) days' written notice by the carrier to Mortgagee prior to
any cancellation, expiration, amendment or lapse thereof, (v) no policy shall
name a loss payee or beneficiary other than Mortgagor and Mortgagee or any party
named as a loss payee or beneficiary on the date hereof, (vi) at least thirty
(30) days prior to the expiration of each policy, Mortgagor shall provide
Mortgagee with certificates (or copies of policies, if required by Mortgagee as
aforesaid) of renewal or replacement policies, (vii)
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<PAGE> 7
each policy shall be issued by a carrier duly licensed in the state in which the
Real Estate is located, (viii) in the event of loss, or an event which would
constitute loss, under any policy, Mortgagor shall give immediate notice thereof
to Mortgagee shall promptly make proper proof of loss with the appropriate
insurance carriers and shall provide Mortgagee with copies of same, and
Mortgagee may at its election make proofs of loss if not made promptly by
Mortgagor, and (ix) Mortgagee shall have the right to retain and apply the
proceeds of all insurance to restoration or repair of the property damaged.
(E) If the Mortgaged Property, or any part thereof, is destroyed or
damaged by any cause, Mortgagor shall as soon as possible, at Mortgagor's
expense and regardless of whether insurance proceeds shall be made available for
such purpose, restore, repair, replace and rebuild the Mortgaged Property as
nearly as possible to its value, condition and character immediately prior to
such damage, loss or destruction.
9. Taxes. Mortgagor shall pay, before the same become delinquent,
all taxes, assessments and charges of every nature and by whomever assessed that
may now or hereafter be levied or assessed against, or that by reason of
nonpayment may become a lien upon, the Mortgaged Property, and Mortgagor shall
submit to Mortgagee evidence of the due and punctual payment thereof.
10. Payment of Liens. Mortgagor shall pay at or prior to maturity
thereof, and in strict accordance with the terms thereof, any and all: (a)
claims, liens, encumbrances and sums which are or shall hereafter become or
appear to be an encumbrance, whether senior or subordinate hereto, upon the
Mortgaged Property or any part thereof or interest therein, including but
without limiting the generality of the foregoing, any and all claims for work or
labor performed, or materials or services supplied in connection with any work
upon the Mortgaged Property, and (b) claims, charges and sums, the non-payment
of which could result in a lien, claim or encumbrance on the Mortgaged Property
or which could confer upon a tenant of any part of the Mortgaged Property a
right to recover such claim, charge or sum as prepaid rent or as a credit or
offset against future rent. Mortgagor shall promptly furnish to Mortgagee
receipts evidencing all of the aforementioned payments.
11. Condemnation. All awards made by any public or quasi-public
authority to the owners of the Mortgaged Property by virtue of an exercise of
the right of eminent domain are hereby mortgaged and assigned to Mortgagee, and
Mortgagee is hereby authorized, directed and empowered, at its option, to
collect and receive the proceeds of all such awards from the authorities making
the same and to give proper receipts and acquittances therefor. Mortgagee may,
at its election: (a) apply the net proceeds (i.e., after deducting Mortgagee's
costs of recovering same) of any such award to the discharge of the Debt whether
or not then due and payable, in whatever order and manner Mortgagee elects, or
(b) pay or make available to Mortgagor such net proceeds, upon such terms and
conditions as Mortgagee may elect.
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<PAGE> 8
12. Collection of Rents. Mortgagor hereby irrevocably assigns the
Leases and Rents to Mortgagee and grants to Mortgagee the present and continuing
right, coupled with an interest, to collect the Rents and to enforce the Leases
and to enter and possess the Mortgaged Property for such purposes. However,
Mortgagee hereby conditionally waives such right, and grants to Mortgagor the
revocable license to collect and to enforce the same, provided, however, that
said waiver and license may, after a default by Mortgagor hereunder, be revoked
by Mortgagee at any time by giving notice of such revocation to Mortgagor. All
Rents collected by Mortgagor after a default shall have occurred hereunder shall
be held by Mortgagor as a trust fund for Mortgagee. Following such notice of
revocation, Mortgagee may retain and apply the Rents towards payment of the Debt
in such order and manner as Mortgagee may elect.
13. Condition of Mortgaged Property. Mortgagor shall keep the
Mortgaged Property, and each part thereof, in good order and repair and in good,
safe, first class operating condition. Mortgagor shall make promptly when needed
all necessary repairs, renewals, replacements, additions and improvements to the
Mortgaged Property, and shall not allow the Mortgaged Property, or any part
thereof, to be abandoned, vacated, misused, abused or wasted, or to deteriorate.
Mortgagor shall not, without in each instance the prior consent of Mortgagee,
remove from the Mortgaged Property any fixture, machinery or equipment except
that which is replaced immediately by Mortgagor as part of routine maintenance,
or make any structural or other material alteration to the Mortgaged Property
without in each instance the prior consent of Mortgagee.
14. Compliance with Laws. Mortgagor shall comply with all laws,
orders, ordinances, regulations, restrictions and requirements of all
governmental authorities affecting the Mortgaged Property and the use thereof.
15. No Impairment of Security. Mortgagor shall not do or suffer any
act or forbearance which would impair the security for the Debt or the lien of
this Mortgage on the Mortgaged Property.
16. No Transfers. Mortgagor shall not assign, convey, mortgage,
pledge, transfer, encumber, grant a security interest with respect to or
hypothecate all or any part of the Mortgaged Property or any interest therein.
Any transfer by operation of law of the Mortgaged Property, or any part thereof
or interest therein, shall constitute a default hereunder. If Mortgagor is a
corporation or partnership, any transfer, sale, pledge or other disposition
(whether in a single transaction or a series of transactions) of 50% or more of
the stock of Mortgagor as of the date hereof (if Mortgagor is a corporation) or
of the partnership interests in Mortgagor as of the date hereof (if Mortgagor is
a partnership) shall constitute a default hereunder.
17. Notices. All notices, demands, requests, consents, approvals and
other communications hereunder shall be in writing, and shall be mailed United
States registered or
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<PAGE> 9
certified mail, postage prepaid, or personally delivered, to the parties at
their respective addresses first above noted, or to such other address as a
party may designate by notice to the other party.
18. Mortgage Tax. If any law or ordinance now or hereafter imposes a
tax (including, without limitation, a document or revenue stamp tax) either
directly or indirectly on this Mortgage, Mortgagor shall pay such tax within the
time same is payable to the relevant taxing authority without penalty.
19. Entry. Mortgagee, and its agents, employees, contractors and
representatives, shall have the right to enter upon and to inspect the Mortgaged
Property at all times.
20. Default. The Mortgagor shall be in default hereunder upon the
occurrence of an "Event of Default" as defined in the Note.
21. Acceleration. The unpaid principal indebtedness of the Note,
plus all other sums secured by this Mortgage and the Security Agreement, and all
accrued interest thereon, shall become due and payable immediately, without
notice or demand upon the occurrence of any default hereunder.
22. Remedies. Upon the occurrence of any default by Mortgagor
hereunder, Mortgagee may forthwith exercise, separately, concurrently,
successively or otherwise, any and all rights and remedies available to
Mortgagee pursuant to this Mortgage, the Note, the Security Agreement or
available by law, equity or otherwise, including without limitation (a)
enforcement of payment of the Note, (b) foreclosure of this Mortgage, (c)
institution of action or actions for specific performance of the agreements and
obligations of Mortgagor hereunder, and Mortgagor agrees that all agreements and
obligations of Mortgagor hereunder shall be specifically enforceable by
injunction or any other appropriate equitable remedy, and (d) with or without
taking physical possession of the Mortgaged Property, the collection and receipt
of all income, rents, issues and profits from the Mortgaged Property, including
without limitation the Rents, and after deducting the costs of alterations,
improvements, repairs, operation and leasing, including without limitation
counsel fees, incurred by Mortgagee in doing any of the foregoing or in taking
any of the steps set forth in the immediately following Section hereof, the
application of the net income therefrom to the Debt in such order and manner as
Mortgagee may elect. The Mortgagor and Mortgagee acknowledge and agree to comply
with all applicable provisions of the Base Lease.
23. Possession. Upon any default by Mortgagor hereunder, and in
addition to all other rights and remedies available to it, Mortgagee shall have
the right, with or without judicial process, to enter upon and take possession
of the Mortgaged Property, breaking open doors and locks if it deems necessary
for such purpose without civil or criminal liability for trespass, damages,
forcible entry and detainer or otherwise, and, upon so doing, Mortgagee
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<PAGE> 10
may, in its discretion and in addition to all other rights, as mortgagee in
possession, alter, improve, repair, complete, change or add to the Mortgaged
Property or any part thereof, and, in the name of Mortgagor or Mortgagee (as
Mortgagee may elect), operate and lease the Mortgaged Property or any part
thereof upon such terms and conditions as Mortgagee shall elect. In doing any of
the foregoing, Mortgagee shall have the right to expend such amounts as
Mortgagee shall deem proper, all of which expenditures, with interest thereon
from the dates of such expenditures until repaid at the Default Rate specified
in the Note, shall be payable on demand of Mortgagee.
24. Action for Possession. The provisions of this Section shall
apply whenever and as often as Mortgagee shall have the right to take possession
of the Mortgaged Property. Mortgagor irrevocably appoints, authorizes and
empowers any attorney of any court of competent jurisdiction to appear as
attorney, and, in addition, as attorney-in-fact (which appointment shall be
deemed coupled with an interest), for Mortgagor, as well as for all persons
claiming under, by or through Mortgagor, to sign an agreement for entering in
any such court an amicable action in ejectment for possession of the Mortgaged
Property, without the necessity of filing any bond and without any stay of
execution or appeal, against Mortgagor and all persons claiming under, by or
through Mortgagor, and/or, as Mortgagee may elect, confess judgment in ejectment
for the recovery by Mortgagee of possession of the Mortgaged Property. For all
such action this instrument, or a copy thereof verified by affidavit of
Mortgagee or anyone on behalf of Mortgagee, shall be a sufficient warrant. Upon
entry of such agreement or judgment, a writ of possession or other appropriate
process to obtain possession of the Mortgaged Property may be issued forthwith,
without any prior writ or proceeding whatsoever, Mortgagor hereby releasing and
agreeing to release Mortgagee and said attorneys from all errors and defects
whatsoever in entering such agreement or judgment or in causing such writ or
process to be issued or in any proceeding thereon or concerning the same,
provided that Mortgagee shall have filed in such action an affidavit made by
someone on Mortgagee's behalf setting forth the facts necessary to authorize the
entry of such agreement or judgment according to the terms of this Mortgage, of
which facts such affidavit shall be conclusive evidence. If for any reason after
any such action has been commenced, the same shall be discontinued, marked
satisfied of record or be terminated, or possession of the Mortgaged Property
remain in or be restored to Mortgagor or anyone claiming under, by or through
Mortgagor, Mortgagee may, whenever and as often as Mortgagee shall have the
right to take possession again of the Mortgaged Property, bring one or more
further amicable actions in the manner herein before set forth to recover
possession of the Mortgaged Property and to enter one or more confessed
judgments as hereinabove provided, and the authority and power above given to
any such attorney shall extend to all such further amicable actions and
judgments. Mortgagee shall have the right to bring such amicable action in
ejectment and confess judgment therein as hereinabove provided whether before or
after an action of mortgage foreclosure is brought or foreclosure or other
proceedings are instituted or concluded upon this Mortgage or the Note.
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<PAGE> 11
25. Appointment of Receiver. Upon any default by Mortgagor,
Mortgagee, as a matter of right and without notice, and without regard to the
then value of the Mortgaged Property or the interest of Mortgagor therein, shall
have the right to apply to any court having jurisdiction to appoint a receiver
or sequestrator of the Mortgaged Property, and the Mortgagor hereby irrevocably
consents to such appointment and waives notice of any application therefor.
26. Sale. If this Mortgage is foreclosed, or if judgment is entered
against Mortgagor under the Note, the Mortgaged Property may, at the discretion
of Mortgagee, be sold as a whole or in parts or lots, or in several interests or
portions and in any order or manner.
27. Attorneys' Fees. In the event Mortgagee consults attorneys for
the collection of any of the Debt or the enforcement of any of the terms,
covenants or conditions hereof or of the Note, Mortgagor shall pay on demand all
fees, costs and expenses of such attorneys.
28. Mortgagee's Right to Perform Obligations. If Mortgagor shall
default in the performance of any of its agreements or obligations hereunder or
under the Note or the Base Lease, then Mortgagee shall have the right, but not
the obligation, to perform same for Mortgagor and to make all advances of funds
in connection therewith as Mortgagee deems appropriate, in which case all costs
and expenses so incurred by Mortgagor (including without limitation attorneys'
fees) shall be paid by Mortgagor on demand, together with interest at the
Default Rate from the date of incurrence until the date of payment. If Mortgagee
shall elect to perform any such agreement or obligation, then Mortgagee shall be
subrogated to all the rights and remedies of all other persons intended to be or
in fact benefited by the performance of such agreement or obligation. No such
performance by Mortgagee shall be deemed to relieve Mortgagor from any default
hereunder or impair any right or remedy consequent thereon, and the exercise of
the right of performance granted in this Section shall be optional with
Mortgagee and not obligatory, and Mortgagee shall not in any case be liable to
Mortgagor for a failure or refusal (a) to exercise any such right, or (b) to
continue to exercise such right after having commenced such exercise.
29. Waivers. Mortgagor hereby waives and relinquishes the benefits
of any present or future laws: (a) exempting the Mortgaged Property, or any part
thereof, or any other property whatsoever, or of the proceeds arising from any
sale thereof, from attachment, levy, sale or execution, (b) staying of execution
or other process, or (c) requiring valuation or appraisement of the Mortgaged
Property or of any other property levied or sold in execution on any judgment
for the Debt. Mortgagor, so far as permitted by law, waives and will waive the
right to a trial by jury in connection with all suits, actions or proceedings
instituted by the Mortgagee.
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<PAGE> 12
30. Cumulative Remedies. All rights and remedies of Mortgagee
hereunder and under the Note and any other security now or hereafter given with
respect to the Debt are separate, distinct and cumulative and in addition to the
rights and remedies provided by law. The failure of Mortgagee to insist upon
strict performance of any term or provision hereof shall not be deemed to be a
waiver of such term or provision, or of any right or remedy of Mortgagee.
31. Further Assurances. Mortgagor shall, promptly following the
request of Mortgagee, execute, acknowledge, deliver and record or file such
further documents and do such further acts as Mortgagee may deem necessary,
desirable or proper to carry out more effectively the purposes of this Mortgage
or to protect the lien or the security interest granted herein against the
rights or interests of third persons, and Mortgagor shall pay on demand all
costs connected with any of the foregoing.
32. Estoppel Certificates. Mortgagor, within five days following the
request of Mortgagee from time to time, shall furnish a duly acknowledged
written statement to Mortgagee and to any other person designated by Mortgagee,
setting forth the amount of the Debt secured by this Mortgage and stating either
that no offset or defense exists against the Debt, or if any such offset or
defense is alleged to exist, stating the nature and amount thereof.
33. Invalidity. If any term, provision, or condition of this
Mortgage, the Note or any other security now or hereafter given with respect to
the Debt, or the application thereof to any person or circumstance, shall be
invalid, illegal or unenforceable in any respect, the remainder of this
Mortgage, the Note and such other security shall be construed without such
provision and the application of such term or provision to persons or
circumstances other than those as to which it is held invalid, illegal or
unenforceable, as the case may be, shall not be affected thereby, and each term
and provision of this Mortgage, the Note and such other security shall be valid
and enforced to the fullest extent permitted by law.
34. Headings; Pronouns. The headings of the sections of this
Mortgage are for convenience only and have no meaning with respect to this
Mortgage or the rights or obligations of Mortgagor or Mortgagee. Unless the
context clearly indicates a contrary intent or unless otherwise specifically
provided herein: words used in this Mortgage are used interchangeably in
singular or plural form; "person", as used herein, includes an individual,
corporation, partnership, trust, unincorporated association, government,
governmental authority, or other entity; "Mortgaged Property" includes all and
singular each and every portion of the Mortgaged Property and estate or interest
therein; "holder" means any holder from time to time of the Note; "hereof",
"herein" and "hereunder" and other words of similar import refer to this
Mortgage as a whole; "Mortgage" includes these presents as supplemented or
amended from time to time by written instrument(s) entered into by Mortgagor and
Mortgagee; "Note" includes all written supplements or amendments to the Note
from time to time entered into by Mortgagor and Mortgagee; "Mortgagor" includes
Mortgagor's trustees, successors and permitted assigns; and "Mortgagee" includes
Mortgagee's trustees, successors and assigns. Whenever the context may require,
all pronouns used herein shall include the
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<PAGE> 13
corresponding masculine, feminine or neuter forms, and the singular form of
pronouns or nouns shall include the plural and vice versa.
35. Amendments. This Mortgage can be changed only by a written
instrument executed by Mortgagor and Mortgagee.
36. Governing Law. This Mortgage and all issues arising hereunder
shall be governed by the laws of the state in which the Real Estate is located.
37. Counterparts. This Mortgage may be executed in any number of
counterparts, each of which shall constitute an original instrument.
IN WITNESS WHEREOF, Mortgagor has executed this Mortgage as of the
date first above written.
(CORPORATE SEAL) BIOPURE CORPORATION, as Mortgagor
Attest:
/s/ Maria S. Gawryl By: /s/ Brian A. Lajoie
- ------------------------------ ------------------------------
Name: Maria S. Gawryl Name: Brian A. Lajoie
Title: V.P. - Research and Title: V.P. - Finance
Development
PHARMACIA & UPJOHN, INC., as
Mortgagee
By: /s/ Robert G. Kramer
------------------------------
Name: Robert G. Kramer
Title: Director Corporate Treasury
12
<PAGE> 14
CONSENT:
Moyer Packing Company, as lessor under the Base Lease, hereby consents to the
making of this Mortgage between the Mortgagor and the Mortgagee.
MOYER PACKING COMPANY
By: /s/ William G. Morral
--------------------------------
Name: William G. Morral
Title: SRVP & CFO
13
<PAGE> 15
STATE OF :
: SS
COUNTY OF :
On this, the 7th day of October, 1996, before me, a notary public,
the undersigned officer, personally appeared Brian A. Lajoie, who acknowledged
himself to be the VP - Finance of Biopure Corporation, a Delaware corporation,
and that he as such officer, being authorized to do so, executed the foregoing
instrument for the purposes therein contained by signing the name of the
corporation by himself as such officer.
In witness whereof, I hereunto set my hand and official seal.
(Notarial Seal)
/s/ Hazel V. Forney
----------------------------------
Notary Public
My Commission Expires: Jan 4, 2002
STATE OF :
: SS
COUNTY OF :
On this, the _______ day of ______________, 1996, before me, a
notary public, the undersigned officer, personally appeared
____________________________, who acknowledged himself to be the
__________________ of Pharmacia & Upjohn, Inc., a Delaware corporation, and that
he as such officer, being authorized to do so, executed the foregoing instrument
for the purposes therein contained by signing the name of the corporation by
himself as such officer.
In witness whereof, I hereunto set my hand and official seal.
(Notarial Seal)
----------------------------------
Notary Public
My Commission Expires:
<PAGE> 16
STATE OF :
: SS
COUNTY OF :
On this, the _____ day of ______, 1996, before me, a notary public,
the undersigned officer, personally appeared _____________________, who
acknowledged himself to be the __________________ of Biopure Corporation, a
Delaware corporation, and that he as such officer, being authorized to do so,
executed the foregoing instrument for the purposes therein contained by signing
the name of the corporation by himself as such officer.
In witness whereof, I hereunto set my hand and official seal.
(Notarial Seal)
----------------------------------
Notary Public
My Commission Expires:
STATE OF :
Michigan : SS
COUNTY OF :
Kalamazoo
On this, the 7th day of October, 1996, before me, a notary public,
the undersigned officer, personally appeared Robert G. Kramer, who acknowledged
himself to be the Director Corporate Treasury of Pharmacia & Upjohn, Inc., a
Delaware corporation, and that he as such officer, being authorized to do so,
executed the foregoing instrument for the purposes therein contained by signing
the name of the corporation by himself as such officer.
In witness whereof, I hereunto set my hand and official seal.
(Notarial Seal)
/s/ Carolyn S. Vandermolen
----------------------------------
Notary Public
My Commission Expires:
17 January 2001
<PAGE> 17
EXHIBIT "A"
DESCRIPTION OF THE LAND
See Attached
<PAGE> 18
RECEIVED OCT 14 1994
[LETTERHEAD OF URWILER & WALTER, INC]
October 10, 1994
Description of Lot #2.
ALL THAT CERTAIN tract of land situate in the Township of Franconia, County of
Montgomery, Commonwealth of Pennsylvania, as shown on Mopac Plan of Subdivision
(Sheet 1 of 1), prepared for Mopac by Urwiler & Walter, Inc. dated August 24,
1994, bounded and described as follows, to wit:
BEGINNING at a point on the Southeast ultimate right-of-way line of Souder Road
(30 feet wide half width), said point being in the line of lands of Lot #2 and
the lands of Terry L. Kiser, said point being also located the following two (2)
dimensions from a point marking the intersection the centerline of Souder Road
S.R. 1005 and the centerline of Allentown Road S.R. 1001 (33 feet legal
right-of-way):
(1) in a Southwesterly direction 370.00 plus or minus feet to a point
(2) South 41 degrees 12 minutes 40 seconds East 27.77 feet to a point;
THENCE from said beginning point and extending along the said dividing line and
on and thru a 30 feet wide drainage easement South 41 degrees 12 minutes 40
seconds East 234.04 feet to a point, said point being the Northwest corner of
lands of Kenneth R. Schumann;
THENCE along said Schumann lands and the lands of James R. Depermentier South 39
degrees 55 minutes 22 seconds East 79.02 feet to a point, said point being the
Northwest corner of Lot #1, said point being also in and along a proposed 20
feet wide utility easement;
THENCE along the line dividing the lands of Lot #1 and #2 South 27 degrees 43
minutes 00 seconds West 241.96 feet to a point, said point being in the
Northeast line of lands of Dale L. & M. Aldine Frankenfield;
CIVIL ENGINEERING o SITE PLANNING o MUNICIPAL ENGINEERING o TRAFFIC ANALYSIS
o SURVEYING
<PAGE> 19
URWILER & WALTER, INC./Mopac/Lot #2/October 10, 1994/Page 2
THENCE along said Frankenfield lands South 44 degrees 31 minutes 22 seconds West
359.58 feet to a point, said point being in the Northeast corner of lands of Lot
#3;
THENCE along Lot #3 and crossing a 20 feet wide utility easement North 45
degrees 32 minutes 52 seconds West 381.24 feet to a point, said point being on
the Southeast ultimate right-of-way of Souder Road aforesaid;
THENCE along the Southeast ultimate right-of-way of Souder Road North 44 degrees
27 minutes 08 seconds East 616.74 feet to the POINT AND PLACE OF BEGINNING.
CONTAINING: 5.090 acres of land more or less.
<PAGE> 1
EXHIBIT 10.6
<PAGE> 2
MORTGAGE
THIS MORTGAGE ("Mortgage") is made October 8, 1996, between BIOPURE
CORPORATION, a Delaware corporation with offices at 11 Hurley Street, Cambridge,
Massachusetts 02141 ("Mortgagor"), and PHARMACIA & UPJOHN, INC., a Delaware
corporation with offices at 7000 Portage Road, Kalamazoo, Michigan 49001
("Mortgagee").
WHEREAS, Mortgagor by its certain Promissory Note of even date
herewith ("Note") has evidenced its obligation to pay to Mortgagee the principal
sum of $9,000,000, with interest and certain other sums, all as more fully
therein provided;
NOW THEREFORE, to secure the payment of all principal, interest and
other sums due or to become due under the Note, the Security Agreement dated the
date hereof between Mortgagor and Mortgagee (the "Security Agreement") or this
Mortgage (collectively, "Debt"), Mortgagor hereby grants, bargains, sells,
conveys, aliens, enfeoffs, confirms, releases, assigns, transfers, pledges and
mortgages unto Mortgagee, all and singular Mortgagor's rights, titles and
interests in and to the following (collectively, "Mortgaged Property"):
ALL THAT CERTAIN leasehold estate ("Leasehold") with respect to that
certain real property located in Middlesex County, Massachusetts, more
particularly described in Exhibit "A" attached hereto and made a part hereof
("Land"), which Leasehold was created pursuant to that certain Commercial Lease
Agreement dated as of August 29, 1994, as amended, between Eleven Hurley Street
Associates and the Mortgagor ("Base Lease") which, or a notice of which, is
recorded with the Middlesex South County Registry of Deeds in Deed Book 24917,
page 436, together with all Mortgagor's rights, credits, deposits, options,
privileges and interests under or pertaining to the Base Lease or the Land;
TOGETHER WITH any and all (a) buildings, structures, fixtures and
improvements now or hereafter located or erected on the Land ("Improvements";
the Leasehold, Land and Improvements are sometimes herein collectively referred
to as "Real Estate"), (b) passages, ways, water courses, easements, rights,
estates, interests, liberties, privileges, tenements, issues, proceeds,
products, profits, condemnation damages, proceeds of insurance, hereditaments
and appurtenances of every type and nature whatsoever to the Real Estate
belonging or appertaining, and claims or demands of any nature whatsoever of
Mortgagor either at law or in equity, in possession or expectancy, of, in and to
the Real Estate, (c) leases, subleases, contracts to lease and other agreements
relating to the use or occupancy of all or any part of the Real Estate now or
hereafter entered into by Mortgagor as landlord or sublandlord (collectively,
"Leases") and the rents, security deposits, issues and profits arising or
issuing therefrom ("Rents"), and (d) building materials, furniture, fixtures,
furnishings, fittings, apparatus, appliances, machinery, equipment, supplies,
inventory and
<PAGE> 3
personal property of every kind and nature whatsoever, now or hereafter attached
to, placed, installed or located upon, or used or useful in any way with respect
to, the Real Estate and all replacements thereof and modifications and additions
thereto and the proceeds and products thereof (all of the things mentioned in
this clause (d) being sometimes herein collectively called "Personalty");
TO HAVE AND TO HOLD the Mortgaged Property unto Mortgagee forever,
provided that if Mortgagor shall pay Mortgagee the Debt, and shall otherwise
perform all Mortgagor's covenants, agreements and obligations hereunder and
under the Note, then this Mortgage and the estate and interests hereby granted,
shall cease and be void; otherwise this Mortgage shall remain in full force and
effect.
AND Mortgagor covenants and agrees with Mortgagee as follows:
1. Payment of Debt. Mortgagor shall pay when due the Debt in the
manner provided in the Note, the Security Agreement and this Mortgage. The Debt
and each part thereof, if not paid when due, shall bear interest at the Default
Rate specified in the Note ("Default Rate") from the due date until paid in
full.
2. Performance of Covenants. Mortgagor shall observe and perform
faithfully when due each and every obligation, covenant and agreement on
Mortgagor's part to be observed or performed under this Mortgage, the Security
Agreement or the Note.
3. Title. Mortgagor represents and warrants to Mortgagee that: (a)
Mortgagor is and shall at all times remain the legal and beneficial owner of
good and marketable indefeasible title to all of the Mortgaged Property,
including without limitation the Leasehold, (b) there is no limitation on the
right of Mortgagor to encumber the Mortgaged Property, and (c) this Mortgage is
a good and valid first lien on the Mortgaged Property, subject to no other
mortgage, lien, pledge, security interest or encumbrance. Mortgagor covenants to
keep this Mortgage a good and valid first lien on the Mortgaged Property at all
times, and shall warrant and forever defend the title to the Mortgaged Property
unto the Mortgagee against every person claiming or to claim the same or any
part thereof.
4. Base Lease. The Mortgagor shall not sell, assign, modify, amend,
supplement, encumber or surrender the Base Lease without the prior written
consent of Mortgagee in each instance. Mortgagor shall promptly and fully keep,
perform and comply with all the terms, provisions, covenants, conditions and
agreements imposed upon or assumed by the Mortgagor as lessee under the Base
Lease and shall not do, or permit anything to be done, or omit from doing
anything, which will give the landlord under the Base Lease a right to terminate
the Base Lease. If the Mortgagor shall, in any manner, fail in this agreement,
Mortgagee may (but shall not be obligated to) take any action Mortgagee deems
necessary or desirable to prevent or cure any default by Mortgagor in the
performance of or compliance with any of Mortgagor's covenants or obligations
under the Base Lease. Mortgagee may rely
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<PAGE> 4
on any notice of default received from said landlord and may act thereon as
herein provided even though the existence of such default or the nature thereof
may be questioned or denied by Mortgagor or any party acting on behalf of
Mortgagor, and such notice of default shall be conclusive evidence that a
default exists for the purpose of this Section. Mortgagee shall have the right
to enter upon the demised premises and any other property owned or controlled by
Mortgagor which is affected by any of the terms, conditions, provisions,
covenants and agreements of the Base Lease to such extent and as often as
Mortgagee, in its sole discretion, deems necessary or desirable in order to
prevent or cure and such default by Mortgagor. Mortgagee may expend such sums of
money as Mortgagee, in its sole discretion deems necessary for any such purpose,
and all sums so expended shall be deemed part of the debt and shall be secured
by this Mortgage.
5. Fee Title. Mortgagor covenants that so long as any of the Debt
remains unpaid, the Leasehold shall not merge in or with the fee title or in or
with any other estate or interest in the Real Estate, but always shall be
complete, separate and distinct notwithstanding the occurrence of any event or
events by which the Leasehold may become vested in the same person in whom said
fee title is vested.
6. Enforceability of Base Lease. Mortgagor represents and warrants
to Mortgagee that: (a) the Base Lease is valid, subsisting and all the terms
thereof are enforceable, (b) the rents and charges reserved in the Base Lease by
the landlord thereunder, to the extent now or heretofore payable, have been
fully paid and Mortgagor has no knowledge of any default thereunder by either
party thereto and (c) no delinquency exists in respect to the payment of any
tax, assessment, water or sewer rent or charge, or other governmental imposition
of any kind levied or assessed upon the Mortgaged Property.
7. Security Agreement. (A) Without limiting any of the provisions of
this Mortgage, Mortgagor, as debtor, expressly grants to the Mortgagee, as
secured party, a security interest under the Massachusetts Uniform Commercial
Code ("UCC") in all and singular the Personalty and in any portion of the
balance of the Mortgaged Property which does not constitute real estate
(collectively, "Collateral").
(B) In addition to and cumulative of other remedies granted in the
Loan Documents, Mortgagee may, upon the occurrence of any default by Mortgagor
hereunder, proceed under the UCC as to all or any part (as Mortgagee may elect)
of the Collateral, and shall have and may exercise with respect to the
Collateral all the rights, remedies and powers of a secured party under the UCC,
including, without limitation, the right to sell at public or private sale or
sales, or otherwise dispose of, lease or utilize the Collateral and any and all
parts thereof in any manner permitted under the UCC after default by a debtor,
and to apply the proceeds thereof toward payment of any costs and expenses
thereby incurred by Mortgagee, and toward payment of the Debt, in such order and
manner as Mortgagee may elect.
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<PAGE> 5
(C) Among the rights of Mortgagee following a default by Mortgagor
hereunder, and without limitation thereto, Mortgagee shall have the right to
take possession of the Collateral and to enter upon any premises where same may
be situated for such purpose without being deemed guilty of trespass and without
liability for damages thereby occasioned, and to take any action deemed
necessary, appropriate or desirable by Mortgagee, to repair, refurbish or
otherwise prepare the Collateral for sale, lease or other use or disposition as
herein authorized.
(D) To the extent permitted by law, Mortgagor expressly waives any
notice of sale or other disposition of the Collateral, and all other rights and
remedies of a debtor or procedures or formalities prescribed by law relative to
the sale or disposition of the Collateral or the exercise of any other right or
remedy of Mortgagee existing after a default by Mortgagor hereunder.
(E) Mortgagee, upon a default by Mortgagor hereunder, is expressly
granted the right, at its option, to transfer at any time to itself or to its
nominee the Collateral, or any part or parts thereof, as Mortgagee may elect,
and to receive the monies, income, proceeds and benefits attributable or
accruing thereto, and to hold the same as security for the Debt or to apply it
in payment of the Debt, in such order or manner as Mortgagee may elect.
(F) Should Mortgagee elect to exercise its rights under the
provisions of this Section as to part of the Collateral, such election shall not
preclude Mortgagee from exercising the rights and remedies granted by the other
provisions of this Mortgage or by law as to the remaining Collateral.
(G) Mortgagee may, at its election, at any time after delivery of
this Mortgage, use and file executed counterparts hereof as financing statements
under the UCC.
(H) So long as any of the Debt remains unpaid, Mortgagor shall not
execute and there shall not be filed in any public office any financing
statement or statements affecting the Collateral other than financing statements
in favor of Mortgagee hereunder.
(I) Financing statements have been executed by the parties
simultaneously with the execution and delivery hereof, and are intended to be
forthwith filed and recorded in all appropriate filing and recording offices.
Mortgagee is authorized to file and record additional financing statements and
continuations thereof in each jurisdiction where Mortgagee deems it necessary or
desirable, and, at the request of Mortgagee, Mortgagor shall join Mortgagee in
executing one or more additional financing statements in form satisfactory to
Mortgagee, and will pay the cost of filing or recording such financing
statements or executed counterparts of this Mortgage, as financing statements,
in all public offices at any time and from time to time whenever such filing or
recording is deemed by Mortgagee to be necessary or desirable. Mortgagor shall
also pay the cost of filing or recording all such continuation statements deemed
by Mortgagee to be necessary or desirable.
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<PAGE> 6
8. Insurance. (A) Mortgagor shall at all times keep the Mortgaged
Property insured for the protection of Mortgagee against such risks, and with
such coverages, as Mortgagee shall from time to time require, including without
limitation, broad form, comprehensive fire and extended coverage insurance, with
coverage for theft, vandalism and malicious mischief, for the full replacement
value of the Improvements, and rent insurance with respect to the Rents payable
for the one year period following the occurrence of a casualty. All insurance
policies required by this paragraph shall contain: (i) a "New York" or
"Massachusetts" form noncontributory mortgagee clause providing, among other
things, that any payment occasioned by loss thereunder shall be payable to the
holder of this Mortgage alone, and that Mortgagee shall not be subject to
defenses otherwise available to the insurer against the insured thereunder, (ii)
a waiver of subrogation as to Mortgagee's interest, (iii) a waiver of
co-insurance as to Mortgagee, and (iv) if requested by Mortgagee from time to
time, an "owner not in control" endorsement.
(B) Mortgagor shall at all times maintain comprehensive general
public liability insurance, worker's compensation insurance and such other
liability insurance incident to the ownership of the Mortgaged Property as
Mortgagee may from time to time require. All insurance policies required by this
paragraph shall, at Mortgagee's election, name Mortgagee as a co-insured party.
(C) If, at any time or from time to time, the Real Estate is located
in a designated "flood prone" area pursuant to the Flood Disaster Protection Act
of 1973, or any amendment or supplement thereto, then Mortgagor shall obtain
flood insurance and shall take such other action as may be necessary to comply
fully with the National Flood Insurance Program set forth in said Act. Mortgagor
shall comply fully with the National Flood Insurance Act of 1968, as the same
may be amended from time to time, and all other laws, orders, rules, ordinances
and regulations concerning flood insurance, to the extent applicable to the
Mortgaged Property.
(D) Without limitation to the foregoing, the following provisions
shall apply to each and every policy of insurance which Mortgagor is hereby
required to carry: (i) the form, amount and coverage of each policy, and the
insurer under each policy, shall be subject to Mortgagee's approval, (ii)
Mortgagor shall cause each carrier thereof to deliver its certificate of
insurance to Mortgagee, certifying the applicable insurance provisions herein
required, (iii) within five days after Mortgagee's request, Mortgagor shall
deliver to Mortgagee an original copy of each policy, (iv) each policy shall
state that it has been prepaid by Mortgagor (or in lieu of such statement,
Mortgagor shall provide Mortgagee with evidence of such prepayment), and shall
require thirty (30) days' written notice by the carrier to Mortgagee prior to
any cancellation, expiration, amendment or lapse thereof, (v) no policy shall
name a loss payee or beneficiary other than Mortgagor and Mortgagee or any party
named as a loss payee or beneficiary on the date hereof, (vi) at least thirty
(30) days prior to the expiration of each policy, Mortgagor shall provide
Mortgagee with certificates (or copies of policies, if required by Mortgagee as
aforesaid) of renewal or replacement policies, (vii)
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<PAGE> 7
each policy shall be issued by a carrier duly licensed in the state in which the
Real Estate is located, (viii) in the event of loss, or an event which would
constitute loss, under any policy, Mortgagor shall give immediate notice thereof
to Mortgagee, shall promptly make proper proof of loss with the appropriate
insurance carriers and shall provide Mortgagee with copies of same, and
Mortgagee may at its election make proofs of loss if not made promptly by
Mortgagor, and (ix) Mortgagee shall have the right to retain and apply the
proceeds of all insurance to restoration or repair of the property damaged.
(E) If the Mortgaged Property, or any part thereof, is destroyed or
damaged by any cause, Mortgagor shall as soon as possible, at Mortgagor's
expense and regardless of whether insurance proceeds shall be made available for
such purpose, restore, repair, replace and rebuild the Mortgaged Property as
nearly as possible to its value, condition and character immediately prior to
such damage, loss or destruction.
9. Taxes. Mortgagor shall pay, before the same become delinquent,
all taxes, assessments and charges of every nature and by whomever assessed that
may now or hereafter be levied or assessed against, or that by reason of
nonpayment may become a lien upon, the Mortgaged Property, and Mortgagor shall
submit to Mortgagee evidence of the due and punctual payment thereof.
10. Payment of Liens. Mortgagor shall pay at or prior to maturity
thereof, and in strict accordance with the terms thereof, any and all: (a)
claims, liens, encumbrances and sums which are or shall hereafter become or
appear to be an encumbrance, whether senior or subordinate hereto, upon the
Mortgaged Property or any part thereof or interest therein, including but
without limiting the generality of the foregoing, any and all claims for work or
labor performed, or materials or services supplied in connection with any work
upon the Mortgaged Property, and (b) claims, charges and sums, the non-payment
of which could result in a lien, claim or encumbrance on the Mortgaged Property
or which could confer upon a tenant of any part of the Mortgaged Property a
right to recover such claim, charge or sum as prepaid rent or as a credit or
offset against future rent. Mortgagor shall promptly furnish to Mortgagee
receipts evidencing all of the aforementioned payments.
11. Condemnation. All awards made by any public or quasi-public
authority to the owners of the Mortgaged Property by virtue of an exercise of
the right of eminent domain are hereby mortgaged and assigned to Mortgagee, and
Mortgagee is hereby authorized, directed and empowered, at its option, to
collect and receive the proceeds of all such awards from the authorities making
the same and to give proper receipts and acquittances therefor. Mortgagee may,
at its election: (a) apply the net proceeds (i.e., after deducting Mortgagee's
costs of recovering same) of any such award to the discharge of the Debt whether
or not then due and payable, in whatever order and manner Mortgagee elects, or
(b) pay or make available to Mortgagor such net proceeds, upon such terms and
conditions as Mortgagee may elect.
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<PAGE> 8
12. Collection of Rents. Mortgagor hereby irrevocably assigns the
Leases and Rents to Mortgagee and grants to Mortgagee the present and continuing
right, coupled with an interest, to collect the Rents and to enforce the Leases
and to enter and possess the Mortgaged Property for such purposes. However,
Mortgagee hereby conditionally waives such right, and grants to Mortgagor the
revocable license to collect and to enforce the same, provided, however, that
said waiver and license may, after a default by Mortgagor hereunder, be revoked
by Mortgagee at any time by giving notice of such revocation to Mortgagor. All
Rents collected by Mortgagor after a default shall have occurred hereunder shall
be held by Mortgagor as a trust fund for Mortgagee. Following such notice of
revocation, Mortgagee may retain and apply the Rents towards payment of the Debt
in such order and manner as Mortgagee may elect.
13. Condition of Mortgaged Property. Mortgagor shall keep the
Mortgaged Property, and each part thereof, in good order and repair and in good,
safe, first class operating condition. Mortgagor shall make promptly when needed
all necessary repairs, renewals, replacements, additions and improvements to the
Mortgaged Property, and shall not allow the Mortgaged Property, or any part
thereof, to be abandoned, vacated, misused, abused or wasted, or to deteriorate.
Mortgagor shall not, without in each instance the prior consent of Mortgagee,
remove from the Mortgaged Property any fixture, machinery or equipment except
that which is replaced immediately by Mortgagor as part of routine maintenance,
or make any structural or other material alteration to the Mortgaged Property
without in each instance the prior consent of Mortgagee.
14. Compliance with Laws. Mortgagor shall comply with all laws,
orders, ordinances, regulations, restrictions and requirements of all
governmental authorities affecting the Mortgaged Property and the use thereof.
15. No Impairment of Security. Mortgagor shall not do or suffer any
act or forbearance which would impair the security for the Debt or the lien of
this Mortgage on the Mortgaged Property.
16. No Transfers. Mortgagor shall not assign, convey, mortgage,
pledge, transfer, encumber, grant a security interest with respect to or
hypothecate all or any part of the Mortgaged Property or any interest therein.
Any transfer by operation of law of the Mortgaged Property, or any part thereof
or interest therein, shall constitute a default hereunder. If Mortgagor is a
corporation or partnership, any transfer, sale, pledge or other disposition
(whether in a single transaction or a series of transactions) of 50% or more of
the stock of Mortgagor as of the date hereof (if Mortgagor is a corporation) or
of the partnership interests in Mortgagor as of the date hereof (if Mortgagor is
a partnership) shall constitute a default hereunder.
17. Notices. All notices, demands, requests, consents, approvals and
other communications hereunder shall be in writing, and shall be mailed United
States registered or
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<PAGE> 9
certified mail, postage prepaid, or personally delivered, to the parties at
their respective addresses first above noted, or to such other address as a
party may designate by notice to the other party.
18. Mortgage Tax. If any law or ordinance now or hereafter imposes a
tax (including, without limitation, a document or revenue stamp tax) either
directly or indirectly on this Mortgage, Mortgagor shall pay such tax within the
time same is payable to the relevant taxing authority without penalty.
19. Entry. Mortgagee, and its agents, employees, contractors and
representatives, shall have the right to enter upon and to inspect the Mortgaged
Property at all times.
20. Default. The Mortgagor shall be in default hereunder upon the
occurrence of an "Event of Default" as defined in the Note.
21. Acceleration. The unpaid principal indebtedness of the Note,
plus all other sums secured by this Mortgage and the Security Agreement, and all
accrued interest thereon, shall become due and payable immediately, without
notice or demand upon the occurrence of any default hereunder.
22. Remedies. Upon the occurrence of any default by Mortgagor
hereunder, Mortgagee may forthwith exercise, separately, concurrently,
successively or otherwise, any and all rights and remedies available to
Mortgagee pursuant to this Mortgage, the Note, the Security Agreement or
available by law, equity or otherwise, including without limitation (a)
enforcement of payment of the Note, (b) foreclosure of this Mortgage, (c)
institution of action or actions for specific performance of the agreements and
obligations of Mortgagor hereunder, and Mortgagor agrees that all agreements and
obligations of Mortgagor hereunder shall be specifically enforceable by
injunction or any other appropriate equitable remedy, and (d) with or without
taking physical possession of the Mortgaged Property, the collection and receipt
of all income, rents, issues and profits from the Mortgaged Property, including
without limitation the Rents, and after deducting the costs of alterations,
improvements, repairs, operation and leasing, including without limitation
counsel fees, incurred by Mortgagee in doing any of the foregoing or in taking
any of the steps set forth in the immediately following Section hereof, the
application of the net income therefrom to the Debt in such order and manner as
Mortgagee may elect.
23. Possession. Upon any default by Mortgagor hereunder, and in
addition to all other rights and remedies available to it, Mortgagee shall have
the right, with or without judicial process, to enter upon and take possession
of the Mortgaged Property, breaking open doors and locks if it deems necessary
for such purpose without civil or criminal liability for trespass, damages,
forcible entry and detainer or otherwise, and, upon so doing, Mortgagee may, in
its discretion and in addition to all other rights, as mortgagee in possession,
alter,
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<PAGE> 10
improve, repair, complete, change or add to the Mortgaged Property or any part
thereof, and, in the name of Mortgagor or Mortgagee (as Mortgagee may elect),
operate and lease the Mortgaged Property or any part thereof upon such terms and
conditions as Mortgagee shall elect. In doing any of the foregoing, Mortgagee
shall have the right to expend such amounts as Mortgagee shall deem proper, all
of which expenditures, with interest thereon from the dates of such expenditures
until repaid at the Default Rate specified in the Note, shall be payable on
demand of Mortgagee.
24. Action for Possession. The provisions of this Section shall
apply whenever and as often as Mortgagee shall have the right to take possession
of the Mortgaged Property. Mortgagor irrevocably appoints, authorizes and
empowers any attorney of any court of competent jurisdiction to appear as
attorney, and, in addition, as attorney-in-fact (which appointment shall be
deemed coupled with an interest), for Mortgagor, as well as for all persons
claiming under, by or through Mortgagor, to sign an agreement for entering in
any such court an amicable action in ejectment for possession of the Mortgaged
Property, without the necessity of filing any bond and without any stay of
execution or appeal, against Mortgagor and all persons claiming under, by or
through Mortgagor, and/or, as Mortgagee may elect, confess judgment in ejectment
for the recovery by Mortgagee of possession of the Mortgaged Property. For all
such action this instrument, or a copy thereof verified by affidavit of
Mortgagee or anyone on behalf of Mortgagee, shall be a sufficient warrant. Upon
entry of such agreement or judgment, a writ of possession or other appropriate
process to obtain possession of the Mortgaged Property may be issued forthwith,
without any prior writ or proceeding whatsoever, Mortgagor hereby releasing and
agreeing to release Mortgagee and said attorneys from all errors and defects
whatsoever in entering such agreement or judgment or in causing such writ or
process to be issued or in any proceeding thereon or concerning the same,
provided that Mortgagee shall have filed in such action an affidavit made by
someone on Mortgagee's behalf setting forth the facts necessary to authorize the
entry of such agreement or judgment according to the terms of this Mortgage, of
which facts such affidavit shall be conclusive evidence. If for any reason after
any such action has been commenced, the same shall be discontinued, marked
satisfied of record or be terminated, or possession of the Mortgaged Property
remain in or be restored to Mortgagor or anyone claiming under, by or through
Mortgagor, Mortgagee may, whenever and as often as Mortgagee shall have the
right to take possession again of the Mortgaged Property, bring one or more
further amicable actions in the manner herein before set forth to recover
possession of the Mortgaged Property and to enter one or more confessed
judgments as hereinabove provided, and the authority and power above given to
any such attorney shall extend to all such further amicable actions and
judgments. Mortgagee shall have the right to bring such amicable action in
ejectment and confess judgment therein as hereinabove provided whether before or
after an action of mortgage foreclosure is brought or foreclosure or other
proceedings are instituted or concluded upon this Mortgage or the Note.
25. Appointment of Receiver. Upon any default by Mortgagor,
Mortgagee, as a matter of right and without notice, and without regard to the
then value of the Mortgaged
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<PAGE> 11
Property or the interest of Mortgagor therein, shall have the right to apply to
any court having jurisdiction to appoint a receiver or sequestrator of the
Mortgaged Property, and the Mortgagor hereby irrevocably consents to such
appointment and waives notice of any application therefor.
26. Sale. If this Mortgage is foreclosed, or if judgment is entered
against Mortgagor under the Note, the Mortgaged Property may, at the discretion
of Mortgagee, be sold as a whole or in parts or lots, or in several interests or
portions and in any order or manner.
27. Attorneys' Fees. In the event Mortgagee consults attorneys for
the collection of any of the Debt or the enforcement of any of the terms,
covenants or conditions hereof or of the Note, Mortgagor shall pay on demand all
fees, costs and expenses of such attorneys.
28. Mortgagee's Right to Perform Obligations. If Mortgagor shall
default in the performance of any of its agreements or obligations hereunder or
under the Note or the Base Lease, then Mortgagee shall have the right, but not
the obligation, to perform same for Mortgagor and to make all advances of funds
in connection therewith as Mortgagee deems appropriate, in which case all costs
and expenses so incurred by Mortgagor (including without limitation attorneys'
fees) shall be paid by Mortgagor on demand, together with interest at the
Default Rate from the date of incurrence until the date of payment. If Mortgagee
shall elect to perform any such agreement or obligation, then Mortgagee shall be
subrogated to all the rights and remedies of all other persons intended to be or
in fact benefited by the performance of such agreement or obligation. No such
performance by Mortgagee shall be deemed to relieve Mortgagor from any default
hereunder or impair any right or remedy consequent thereon, and the exercise of
the right of performance granted in this Section shall be optional with
Mortgagee and not obligatory, and Mortgagee shall not in any case be liable to
Mortgagor for a failure or refusal (a) to exercise any such right, or (b) to
continue to exercise such right after having commenced such exercise.
29. Waivers. Mortgagor hereby waives and relinquishes the benefits
of any present or future laws: (a) exempting the Mortgaged Property, or any part
thereof, or any other property whatsoever, or of the proceeds arising from any
sale thereof, from attachment, levy, sale or execution, (b) staying of execution
or other process, or (c) requiring valuation or appraisement of the Mortgaged
Property or of any other property levied or sold in execution on any judgment
for the Debt. Mortgagor, so far as permitted by law, waives and will waive the
right to a trial by jury in connection with all suits, actions or proceedings
instituted by the Mortgagee.
30. Cumulative Remedies. All rights and remedies of Mortgagee
hereunder and under the Note and any other security now or hereafter given with
respect to the Debt are separate, distinct and cumulative and in addition to the
rights and remedies provided by law.
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<PAGE> 12
The failure of Mortgagee to insist upon strict performance of any term or
provision hereof shall not be deemed to be a waiver of such term or provision,
or of any right or remedy of Mortgagee.
31. Further Assurances. Mortgagor shall, promptly following the
request of Mortgagee, execute, acknowledge, deliver and record or file such
further documents and do such further acts as Mortgagee may deem necessary,
desirable or proper to carry out more effectively the purposes of this Mortgage
or to protect the lien or the security interest granted herein against the
rights or interests of third persons, and Mortgagor shall pay on demand all
costs connected with any of the foregoing.
32. Estoppel Certificates. Mortgagor, within five days following the
request of Mortgagee from time to time, shall furnish a duly acknowledged
written statement to Mortgagee and to any other person designated by Mortgagee,
setting forth the amount of the Debt secured by this Mortgage and stating either
that no offset or defense exists against the Debt, or if any such offset or
defense is alleged to exist, stating the nature and amount thereof.
33. Invalidity. If any term, provision, or condition of this
Mortgage, the Note or any other security now or hereafter given with respect to
the Debt, or the application thereof to any person or circumstance, shall be
invalid, illegal or unenforceable in any respect, the remainder of this
Mortgage, the Note and such other security shall be construed without such
provision and the application of such term or provision to persons or
circumstances other than those as to which it is held invalid, illegal or
unenforceable, as the case may be, shall not be affected thereby, and each term
and provision of this Mortgage, the Note and such other security shall be valid
and enforced to the fullest extent permitted by law.
34. Headings; Pronouns. The headings of the sections of this
Mortgage are for convenience only and have no meaning with respect to this
Mortgage or the rights or obligations of Mortgagor or Mortgagee. Unless the
context clearly indicates a contrary intent or unless otherwise specifically
provided herein: words used in this Mortgage are used interchangeably in
singular or plural form; "person", as used herein, includes an individual,
corporation, partnership, trust, unincorporated association, government,
governmental authority, or other entity; "Mortgaged Property" includes all and
singular each and every portion of the Mortgaged Property and estate or interest
therein; "holder" means any holder from time to time of the Note; "hereof",
"herein" and "hereunder" and other words of similar import refer to this
Mortgage as a whole; "Mortgage" includes these presents as supplemented or
amended from time to time by written instrument(s) entered into by Mortgagor and
Mortgagee; "Note" includes all written supplements or amendments to the Note
from time to time entered into by Mortgagor and Mortgagee; "Mortgagor" includes
Mortgagor's trustees, successors and permitted assigns; and "Mortgagee" includes
Mortgagee's trustees, successors and assigns. Whenever the context may require,
all pronouns used herein shall include the corresponding masculine, feminine or
neuter forms, and the singular form of pronouns or nouns shall include the
plural and vice versa.
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<PAGE> 13
35. Amendments. This Mortgage can be changed only by a written
instrument executed by Mortgagor and Mortgagee.
36. Governing Law. This Mortgage and all issues arising hereunder
shall be governed by the laws of the state in which the Real Estate is located.
37. Counterparts. This Mortgage may be executed in any number of
counterparts, each of which shall constitute an original instrument.
IN WITNESS WHEREOF, Mortgagor has executed this Mortgage as of the
date first above written.
(CORPORATE SEAL) BIOPURE CORPORATION, as Mortgagor
Attest:
/s/ Maria S. Gawryl By: /s/ Brian A. Lajoie
- ------------------------------ -----------------------------
Name: Maria S. Gawryl Name: Brian A. Lajoie
Title: V.P. - R&D Title:
PHARMACIA & UPJOHN, INC., as
Mortgagee
By: /s/ Robert G. Kramer
-----------------------------
Name: Robert G. Kramer
Title: Director Corporate Treasury
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<PAGE> 14
STATE OF :
: SS
COUNTY OF :
On this, the 7th day of October, 1996, before me, a notary public,
the undersigned officer, personally appeared Brian A. Lajoie, who acknowledged
himself to be the VP - Finance of Biopure Corporation, a Delaware corporation,
and that he as such officer, being authorized to do so, executed the foregoing
instrument for the purposes therein contained by signing the name of the
corporation by himself as such officer.
In witness whereof, I hereunto set my hand and official seal.
(Notarial Seal)
/s/ Hazel V. Forney
----------------------------
Notary Public
My Commission Expires: Jan 4, 2002
STATE OF :
: SS
COUNTY OF :
On this, the _____ day of__________ 1996, before me, a notary
public, the undersigned officer, personally appeared
____________________________, who acknowledged himself to be the
__________________ of Pharmacia & Upjohn, Inc., a Delaware corporation, and that
he as such officer, being authorized to do so, executed the foregoing instrument
for the purposes therein contained by signing the name of the corporation by
himself as such officer.
In witness whereof, I hereunto set my hand and official seal.
(Notarial Seal)
----------------------------
Notary Public
My Commission Expires:
<PAGE> 15
STATE OF :
: SS
COUNTY OF :
On this, the _____ day of__________ 1996, before me, a notary
public, the undersigned officer, personally appeared
____________________________, who acknowledged himself to be the _______________
of Biopure Corporation, a Delaware corporation, and that he as such officer,
being authorized to do so, executed the foregoing instrument for the purposes
therein contained by signing the name of the corporation by himself as such
officer.
In witness whereof, I hereunto set my hand and official seal.
(Notarial Seal)
----------------------------
Notary Public
My Commission Expires:
STATE OF :
Michigan : SS
COUNTY OF :
Kalamazoo
On this, the 7th day of October, 1996, before me, a notary public,
the undersigned officer, personally appeared Robert G. Kramer, who acknowledged
himself to be the Director Corporate Treasury of Pharmacia & Upjohn, Inc., a
Delaware corporation, and that he as such officer, being authorized to do so,
executed the foregoing instrument for the purposes therein contained by signing
the name of the corporation by himself as such officer.
In witness whereof, I hereunto set my hand and official seal.
(Notarial Seal)
/s/ Carolyn S. Vandermolen
----------------------------
Notary Public
My Commission Expires:
17 January 2001
<PAGE> 16
EXHIBIT "A"
DESCRIPTION OF THE LAND
See Attached
<PAGE> 17
Exhibit A
A certain parcel of land with the buildings thereon situated in Cambridge,
Middlesex County, Massachusetts, being shown as Lot B on a plan entitled "Plan
of Land in Cambridge", dated August 8, 1941, made by M. Waters, C.E., recorded
with the Middlesex South District Registry of Deeds in Book 6546, Page 208,
bounded and described as follows:
NORTHEASTERLY by Spring Street, one hundred ten (110) feet;
SOUTHEASTERLY by Lot A as shown on said plan, two hundred (200) feet;
SOUTHWESTERLY by Hurley Street as shown on said plan, one hundred ten (110)
feet; and
NORTHWESTERLY by Lot C and an unnumbered lot, two hundred (200) feet.
Containing 22,000 square feet according to said plan.
Being the same premises conveyed to Russell H. Peck, Hugh R. Price, M.
Wyllis Bibbins and John L. Davis, Trustees of Early Spring Realty Trust, from F.
S. Willey Co., Inc. by Quitclaim Deed, dated February 1, 1979, recorded with the
Middlesex South District Registry of Deeds in Book 13536, Page 580.
For title reference, see Confirmatory Deed recorded at Middlesex South
Registry of Deeds in Book 25019, Page 024.
<PAGE> 18
CONSENT OF LESSOR
Eleven Hurley Street Associates, being the lessor with respect to that
certain leasehold agreement dated August 19, 1994, and concerning the property
known and numbered as 11 Hurley Street, Cambridge, Massachusetts, hereby
consents to the grant of a security interest in and to said leasehold agreement
by the lessee thereof, Biopure Corporation, to Pharmacia & Upjohn, Inc. to
secure payments of principal and interest on a promissory note in the amount of
$9,000,000.00 and certain other sums, subject to each of the terms, covenants
and conditions set forth in said leasehold agreement. To the extent that there
may be any inconsistency between the terms, covenants and conditions of said
leasehold agreement and the provisions of any and all security agreements that
may be executed by the lessee, the terms, covenants and conditions of said
leasehold agreement shall control. The lessor also acknowledges that said
leasehold agreement is in effect and that there are no defaults of the lessee
existing thereunder.
Executed as an instrument under seal this 7th day of October, 1996
Eleven Hurley Street Associates, Lessor
/s/ Carl W. Rausch
--------------------------------------------
Carl W. Rausch, General Partner
/s/ Varney Hintlian
--------------------------------------------
Varney Hintlian, General Partner
<PAGE> 1
EXHIBIT 10.7
<PAGE> 2
MORTGAGE
THIS MORTGAGE ("Mortgage") is made October 8, 1996, between BIOPURE
CORPORATION, a Delaware corporation with offices at 11 Hurley Street, Cambridge,
Massachusetts 02141 ("Mortgagor"), and PHARMACIA & UPJOHN, INC., a Delaware
corporation with offices at 7000 Portage Road, Kalamazoo, Michigan 49001
("Mortgagee").
WHEREAS, Mortgagor by its certain Promissory Note of even date
herewith ("Note") has evidenced its obligation to pay to Mortgagee the principal
sum of $9,000,000, with interest and certain other sums, all as more fully
therein provided;
NOW THEREFORE, to secure the payment of all principal, interest and
other sums due or to become due under the Note, the Security Agreement dated the
date hereof between Mortgagor and Mortgagee (the "Security Agreement") or this
Mortgage (collectively, "Debt"), Mortgagor hereby grants, bargains, sells,
conveys, aliens, enfeoffs, confirms, releases, assigns, transfers, pledges and
mortgages unto Mortgagee, all and singular Mortgagor's rights, titles and
interests in and to the following (collectively, "Mortgaged Property"):
ALL THOSE CERTAIN leasehold estates (collectively, the "Leasehold")
with respect to (1) that certain real property located in Middlesex County,
Massachusetts, more particularly described in Exhibit "A" attached hereto and
made a part hereof ("Spring Street Land"), which leasehold was created pursuant
to that certain Commercial Lease Agreement dated as of October 12, 1990, as
amended, between Tarvis Realty Trust and the Mortgagor ("Spring Street Lease")
which, or a notice of which, is recorded with the Middlesex South County
Registry of Deeds in Deed Book 20910, page 184, together with all Mortgagor's
rights, credits, deposits, options, privileges and interests under or pertaining
to the Spring Street Lease or the Spring Street Land; (2) that certain real
property located in Middlesex County, Massachusetts, more particularly described
in Exhibit "A" attached hereto and made a part hereof ("37-39 Hurley Street
Land"), which leasehold was created pursuant to that certain Commercial Lease
Agreement dated as of August 23, 1994, as amended, between Tarvis Realty Trust
and the Mortgagor ("37-39 Hurley Street Lease") which, or a notice of which, is
recorded with the Middlesex South County Registry of Deeds in Deed Book 24974,
page 599, together with all Mortgagor's rights, credits, deposits, options,
privileges and interests under or pertaining to the 37-39 Street Lease or the
37-39 Hurley Street Land; and (3) that certain real property located in
Middlesex County, Massachusetts, more particularly described in Exhibit "A"
attached hereto and made a part hereof ("31-35 Hurley Street Land" and together
with the Spring Street Land and the 37-39 Hurley Street Land, the "Land"), which
leasehold was created pursuant to that certain Ground Lease Agreement dated as
of May 10, 1994, as amended, between Tarvis Realty Trust and the Mortgagor
("31-35 Hurley Street Lease" and together with the Spring Street Lease and the
37-39 Hurley Street
<PAGE> 3
Lease, the "Base Lease") which, or a notice of which, is recorded with the
Middlesex South County Registry of Deeds in Deed Book , page , together
with all Mortgagor's rights, credits, deposits, options, privileges and
interests under or pertaining to the 31-35 Street Lease or the 31-35 Hurley
Street Land;
TOGETHER WITH any and all (a) buildings, structures, fixtures and
improvements now or hereafter located or erected on the Land ("Improvements";
the Leasehold, Land and Improvements are sometimes herein collectively referred
to as "Real Estate"), (b) passages, ways, water courses, easements, rights,
estates, interests, liberties, privileges, tenements, issues, proceeds,
products, profits, condemnation damages, proceeds of insurance, hereditaments
and appurtenances of every type and nature whatsoever to the Real Estate
belonging or appertaining, and claims or demands of any nature whatsoever of
Mortgagor either at law or in equity, in possession or expectancy, of, in and to
the Real Estate, (c) leases, subleases, contracts to lease and other agreements
relating to the use or occupancy of all or any part of the Real Estate now or
hereafter entered into by Mortgagor as landlord or sublandlord (collectively,
"Leases") and the rents, security deposits, issues and profits arising or
issuing therefrom ("Rents"), and (d) building materials, furniture, fixtures,
furnishings, fittings, apparatus, appliances, machinery, equipment, supplies,
inventory and personal property of every kind and nature whatsoever, now or
hereafter attached to, placed, installed or located upon, or used or useful in
any way with respect to, the Real Estate and all replacements thereof and
modifications and additions thereto and the proceeds and products thereof (all
of the things mentioned in this clause (d) being sometimes herein collectively
called "Personalty");
TO HAVE AND TO HOLD the Mortgaged Property unto Mortgagee forever,
provided that if Mortgagor shall pay Mortgagee the Debt, and shall otherwise
perform all Mortgagor's covenants, agreements and obligations hereunder and
under the Note, then this Mortgage and the estate and interests hereby granted,
shall cease and be void; otherwise this Mortgage shall remain in full force and
effect.
AND Mortgagor covenants and agrees with Mortgagee as follows:
1. Payment of Debt. Mortgagor shall pay when due the Debt in the
manner provided in the Note, the Security Agreement and this Mortgage. The Debt
and each part thereof, if not paid when due, shall bear interest at the Default
Rate specified in the Note ("Default Rate") from the due date until paid in
full.
2. Performance of Covenants. Mortgagor shall observe and perform
faithfully when due each and every obligation, covenant and agreement on
Mortgagor's part to be observed or performed under this Mortgage, the Security
Agreement or the Note.
3. Title. Mortgagor represents and warrants to Mortgagee that: (a)
Mortgagor is and shall at all times remain the legal and beneficial owner of
good and
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<PAGE> 4
marketable indefeasible title to all of the Mortgaged Property, including
without limitation the Leasehold, (b) there is no limitation on the right of
Mortgagor to encumber the Mortgaged Property, and (c) this Mortgage is a good
and valid first lien on the Mortgaged Property, subject to no other mortgage,
lien, pledge, security interest or encumbrance. Mortgagor covenants to keep this
Mortgage a good and valid first lien on the Mortgaged Property at all times, and
shall warrant and forever defend the title to the Mortgaged Property unto the
Mortgagee against every person claiming or to claim the same or any part
thereof.
4. Base Lease. The Mortgagor shall not sell, assign, modify, amend,
supplement, encumber or surrender the Base Lease without the prior written
consent of Mortgagee in each instance. Mortgagor shall promptly and fully keep,
perform and comply with all the terms, provisions, covenants, conditions and
agreements imposed upon or assumed by the Mortgagor as lessee under the Base
Lease and shall not do, or permit anything to be done, or omit from doing
anything, which will give the landlord under the Base Lease a right to terminate
the Base Lease. If the Mortgagor shall, in any manner, fail in this agreement,
Mortgagee may (but shall not be obligated to) take any action Mortgagee deems
necessary or desirable to prevent or cure any default by Mortgagor in the
performance of or compliance with any of Mortgagor's covenants or obligations
under the Base Lease. Mortgagee may rely on any notice of default received from
said landlord and may act thereon as herein provided even though the existence
of such default or the nature thereof may be questioned or denied by Mortgagor
or any party acting on behalf of Mortgagor, and such notice of default shall be
conclusive evidence that a default exists for the purpose of this Section.
Mortgagee shall have the right to enter upon the demised premises and any other
property owned or controlled by Mortgagor which is affected by any of the terms,
conditions, provisions, covenants and agreements of the Base Lease to such
extent and as often as Mortgagee, in its sole discretion, deems necessary or
desirable in order to prevent or cure and such default by Mortgagor. Mortgagee
may expend such sums of money as Mortgagee, in its sole discretion deems
necessary for any such purpose, and all sums so expended shall be deemed part of
the debt and shall be secured by this Mortgage.
5. Fee Title. Mortgagor covenants that so long as any of the Debt
remains unpaid, the Leasehold shall not merge in or with the fee title or in or
with any other estate or interest in the Real Estate, but always shall be
complete, separate and distinct notwithstanding the occurrence of any event or
events by which the Leasehold may become vested in the same person in whom said
fee title is vested.
6. Enforceability of Base Lease. Mortgagor represents and warrants
to Mortgagee that: (a) the Base Lease is valid, subsisting and all the terms
thereof are enforceable, (b) the rents and charges reserved in the Base Lease by
the landlord thereunder, to the extent now or heretofore payable, have been
fully paid and Mortgagor has no knowledge of any default thereunder by either
party thereto and (c) no delinquency exists in respect to the payment of any
tax, assessment, water or sewer rent or charge, or other governmental imposition
of any kind levied or assessed upon the Mortgaged Property.
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<PAGE> 5
7. Security Agreement. (A) Without limiting any of the provisions of
this Mortgage, Mortgagor, as debtor, expressly grants to the Mortgagee, as
secured party, a security interest under the Massachusetts Uniform Commercial
Code ("UCC") in all and singular the Personalty and in any portion of the
balance of the Mortgaged Property which does not constitute real estate
(collectively, "Collateral").
(B) In addition to and cumulative of other remedies granted in the
Loan Documents, Mortgagee may, upon the occurrence of any default by Mortgagor
hereunder, proceed under the UCC as to all or any part (as Mortgagee may elect)
of the Collateral, and shall have and may exercise with respect to the
Collateral all the rights, remedies and powers of a secured party under the UCC,
including, without limitation, the right to sell at public or private sale or
sales, or otherwise dispose of, lease or utilize the Collateral and any and all
parts thereof in any manner permitted under the UCC after default by a debtor,
and to apply the proceeds thereof toward payment of any costs and expenses
thereby incurred by Mortgagee, and toward payment of the Debt, in such order and
manner as Mortgagee may elect.
(C) Among the rights of Mortgagee following a default by Mortgagor
hereunder, and without limitation thereto, Mortgagee shall have the right to
take possession of the Collateral and to enter upon any premises where same may
be situated for such purpose without being deemed guilty of trespass and without
liability for damages thereby occasioned, and to take any action deemed
necessary, appropriate or desirable by Mortgagee, to repair, refurbish or
otherwise prepare the Collateral for sale, lease or other use or disposition as
herein authorized.
(D) To the extent permitted by law, Mortgagor expressly waives any
notice of sale or other disposition of the Collateral, and all other rights and
remedies of a debtor or procedures or formalities prescribed by law relative to
the sale or disposition of the Collateral or the exercise of any other right or
remedy of Mortgagee existing after a default by Mortgagor hereunder.
(E) Mortgagee, upon a default by Mortgagor hereunder, is expressly
granted the right, at its option, to transfer at any time to itself or to its
nominee the Collateral, or any part or parts thereof, as Mortgagee may elect,
and to receive the monies, income, proceeds and benefits attributable or
accruing thereto, and to hold the same as security for the Debt or to apply it
in payment of the Debt, in such order or manner as Mortgagee may elect.
(F) Should Mortgagee elect to exercise its rights under the
provisions of this Section as to part of the Collateral, such election shall not
preclude Mortgagee from exercising the rights and remedies granted by the other
provisions of this Mortgage or by law as to the remaining Collateral.
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<PAGE> 6
(G) Mortgagee may, at its election, at any time after delivery of
this Mortgage, use and file executed counterparts hereof as financing statements
under the UCC.
(H) So long as any of the Debt remains unpaid, Mortgagor shall not
execute and there shall not be filed in any public office any financing
statement or statements affecting the Collateral other than financing statements
in favor of Mortgagee hereunder.
(I) Financing statements have been executed by the parties
simultaneously with the execution and delivery hereof, and are intended to be
forthwith filed and recorded in all appropriate filing and recording offices.
Mortgagee is authorized to file and record additional financing statements and
continuations thereof in each jurisdiction where Mortgagee deems it necessary or
desirable, and, at the request of Mortgagee, Mortgagor shall join Mortgagee in
executing one or more additional financing statements in form satisfactory to
Mortgagee, and will pay the cost of filing or recording such financing
statements or executed counterparts of this Mortgage, as financing statements,
in all public offices at any time and from time to time whenever such filing or
recording is deemed by Mortgagee to be necessary or desirable. Mortgagor shall
also pay the cost of filing or recording all such continuation statements deemed
by Mortgagee to be necessary or desirable.
8. Insurance. (A) Mortgagor shall at all times keep the Mortgaged
Property insured for the protection of Mortgagee against such risks, and with
such coverages, as Mortgagee shall from time to time require, including without
limitation, broad form, comprehensive fire and extended coverage insurance, with
coverage for theft, vandalism and malicious mischief, for the full replacement
value of the Improvements, and rent insurance with respect to the Rents payable
for the one year period following the occurrence of a casualty. All insurance
policies required by this paragraph shall contain: (i) a "New York" or
"Massachusetts" form noncontributory mortgagee clause providing, among other
things, that any payment occasioned by loss thereunder shall be payable to the
holder of this Mortgage alone, and that Mortgagee shall not be subject to
defenses otherwise available to the insurer against the insured thereunder, (ii)
a waiver of subrogation as to Mortgagee's interest, (iii) a waiver of
co-insurance as to Mortgagee, and (iv) if requested by Mortgagee from time to
time, an "owner not in control" endorsement.
(B) Mortgagor shall at all times maintain comprehensive general
public liability insurance, worker's compensation insurance and such other
liability insurance incident to the ownership of the Mortgaged Property as
Mortgagee may from time to time require. All insurance policies required by this
paragraph shall, at Mortgagee's election, name Mortgagee as a co-insured party.
(C) If, at any time or from time to time, the Real Estate is located
in a designated "flood prone" area pursuant to the Flood Disaster Protection Act
of 1973, or any amendment or supplement thereto, then Mortgagor shall obtain
flood insurance and shall take such other action as may be necessary to comply
fully with the National Flood Insurance
5
<PAGE> 7
Program set forth in said Act. Mortgagor shall comply fully with the National
Flood Insurance Act of 1968, as the same may be amended from time to time, and
all other laws, orders, rules, ordinances and regulations concerning flood
insurance, to the extent applicable to the Mortgaged Property.
(D) Without limitation to the foregoing, the following provisions
shall apply to each and every policy of insurance which Mortgagor is hereby
required to carry: (i) the form, amount and coverage of each policy, and the
insurer under each policy, shall be subject to Mortgagee's approval, (ii)
Mortgagor shall cause each carrier thereof to deliver its certificate of
insurance to Mortgagee, certifying the applicable insurance provisions herein
required, (iii) within five days after Mortgagee's request, Mortgagor shall
deliver to Mortgagee an original copy of each policy, (iv) each policy shall
state that it has been prepaid by Mortgagor (or in lieu of such statement,
Mortgagor shall provide Mortgagee with evidence of such prepayment), and shall
require thirty (30) days' written notice by the carrier to Mortgagee prior to
any cancellation, expiration, amendment or lapse thereof, (v) no policy shall
name a loss payee or beneficiary other than Mortgagor and Mortgagee or any party
named as a loss payee or beneficiary on the date hereof, (vi) at least thirty
(30) days prior to the expiration of each policy, Mortgagor shall provide
Mortgagee with certificates (or copies of policies, if required by Mortgagee as
aforesaid) of renewal or replacement policies, (vii) each policy shall be issued
by a carrier duly licensed in the state in which the Real Estate is located,
(viii) in the event of loss, or an event which would constitute loss, under any
policy, Mortgagor shall give immediate notice thereof to Mortgagee, shall
promptly make proper proof of loss with the appropriate insurance carriers and
shall provide Mortgagee with copies of same, and Mortgagee may at its election
make proofs of loss if not made promptly by Mortgagor, and (ix) Mortgagee shall
have the right to retain and apply the proceeds of all insurance to restoration
or repair of the property damaged.
(E) If the Mortgaged Property, or any part thereof, is destroyed or
damaged by any cause, Mortgagor shall as soon as possible, at Mortgagor's
expense and regardless of whether insurance proceeds shall be made available for
such purpose, restore, repair, replace and rebuild the Mortgaged Property as
nearly as possible to its value, condition and character immediately prior to
such damage, loss or destruction.
9. Taxes. Mortgagor shall pay, before the same become delinquent,
all taxes, assessments and charges of every nature and by whomever assessed that
may now or hereafter be levied or assessed against, or that by reason of
nonpayment may become a lien upon, the Mortgaged Property, and Mortgagor shall
submit to Mortgagee evidence of the due and punctual payment thereof.
10. Payment of Liens. Mortgagor shall pay at or prior to maturity
thereof, and in strict accordance with the terms thereof, any and all: (a)
claims, liens, encumbrances and sums which are or shall hereafter become or
appear to be an encumbrance, whether senior or subordinate hereto, upon the
Mortgaged Property or any part thereof or interest therein,
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<PAGE> 8
including but without limiting the generality of the foregoing, any and all
claims for work or labor performed, or materials or services supplied in
connection with any work upon the Mortgaged Property, and (b) claims, charges
and sums, the non-payment of which could result in a lien, claim or encumbrance
on the Mortgaged Property or which could confer upon a tenant of any part of the
Mortgaged Property a right to recover such claim, charge or sum as prepaid rent
or as a credit or offset against future rent. Mortgagor shall promptly furnish
to Mortgagee receipts evidencing all of the aforementioned payments.
11. Condemnation. All awards made by any public or quasi-public
authority to the owners of the Mortgaged Property by virtue of an exercise of
the right of eminent domain are hereby mortgaged and assigned to Mortgagee, and
Mortgagee is hereby authorized, directed and empowered, at its option, to
collect and receive the proceeds of all such awards from the authorities making
the same and to give proper receipts and acquittances therefor. Mortgagee may,
at its election: (a) apply the net proceeds (i.e., after deducting Mortgagee's
costs of recovering same) of any such award to the discharge of the Debt whether
or not then due and payable, in whatever order and manner Mortgagee elects, or
(b) pay or make available to Mortgagor such net proceeds, upon such terms and
conditions as Mortgagee may elect.
12. Collection of Rents. Mortgagor hereby irrevocably assigns the
Leases and Rents to Mortgagee and grants to Mortgagee the present and continuing
right, coupled with an interest, to collect the Rents and to enforce the Leases
and to enter and possess the Mortgaged Property for such purposes. However,
Mortgagee hereby conditionally waives such right, and grants to Mortgagor the
revocable license to collect and to enforce the same, provided, however, that
said waiver and license may, after a default by Mortgagor hereunder, be revoked
by Mortgagee at any time by giving notice of such revocation to Mortgagor. All
Rents collected by Mortgagor after a default shall have occurred hereunder shall
be held by Mortgagor as a trust fund for Mortgagee. Following such notice of
revocation, Mortgagee may retain and apply the Rents towards payment of the Debt
in such order and manner as Mortgagee may elect.
13. Condition of Mortgaged Property. Mortgagor shall keep the
Mortgaged Property, and each part thereof, in good order and repair and in good,
safe, first class operating condition. Mortgagor shall make promptly when needed
all necessary repairs, renewals, replacements, additions and improvements to the
Mortgaged Property, and shall not allow the Mortgaged Property, or any part
thereof, to be abandoned, vacated, misused, abused or wasted, or to deteriorate.
Mortgagor shall not, without in each instance the prior consent of Mortgagee,
remove from the Mortgaged Property any fixture, machinery or equipment except
that which is replaced immediately by Mortgagor as part of routine maintenance,
or make any structural or other material alteration to the Mortgaged Property
without in each instance the prior consent of Mortgagee.
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<PAGE> 9
14. Compliance with Laws. Mortgagor shall comply with all laws,
orders, ordinances, regulations, restrictions and requirements of all
governmental authorities affecting the Mortgaged Property and the use thereof.
15. No Impairment of Security. Mortgagor shall not do or suffer any
act or forbearance which would impair the security for the Debt or the lien of
this Mortgage on the Mortgaged Property.
16. No Transfers. Mortgagor shall not assign, convey, mortgage,
pledge, transfer, encumber, grant a security interest with respect to or
hypothecate all or any part of the Mortgaged Property or any interest therein.
Any transfer by operation of law of the Mortgaged Property, or any part thereof
or interest therein, shall constitute a default hereunder. If Mortgagor is a
corporation or partnership, any transfer, sale, pledge or other disposition
(whether in a single transaction or a series of transactions) of 50% or more of
the stock of Mortgagor as of the date hereof (if Mortgagor is a corporation) or
of the partnership interests in Mortgagor as of the date hereof (if Mortgagor is
a partnership) shall constitute a default hereunder.
17. Notices. All notices, demands, requests, consents, approvals and
other communications hereunder shall be in writing, and shall be mailed United
States registered or certified mail, postage prepaid, or personally delivered,
to the parties at their respective addresses first above noted, or to such other
address as a party may designate by notice to the other party.
18. Mortgage Tax. If any law or ordinance now or hereafter imposes a
tax (including, without limitation, a document or revenue stamp tax) either
directly or indirectly on this Mortgage, Mortgagor shall pay such tax within the
time same is payable to the relevant taxing authority without penalty.
19. Entry. Mortgagee, and its agents, employees, contractors and
representatives, shall have the right to enter upon and to inspect the Mortgaged
Property at all times.
20. Default. The Mortgagor shall be in default hereunder upon the
occurrence of an "Event of Default" as defined in the Note.
21. Acceleration. The unpaid principal indebtedness of the Note,
plus all other sums secured by this Mortgage and the Security Agreement, and all
accrued interest thereon, shall become due and payable immediately, without
notice or demand upon the occurrence of any default hereunder.
22. Remedies. Upon the occurrence of any default by Mortgagor
hereunder, Mortgagee may forthwith exercise, separately, concurrently,
successively or otherwise, any
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<PAGE> 10
and all rights and remedies available to Mortgagee pursuant to this Mortgage,
the Note, the Security Agreement or available by law, equity or otherwise,
including without limitation (a) enforcement of payment of the Note, (b)
foreclosure of this Mortgage, (c) institution of action or actions for specific
performance of the agreements and obligations of Mortgagor hereunder, and
Mortgagor agrees that all agreements and obligations of Mortgagor hereunder
shall be specifically enforceable by injunction or any other appropriate
equitable remedy, and (d) with or without taking physical possession of the
Mortgaged Property, the collection and receipt of all income, rents, issues and
profits from the Mortgaged Property, including without limitation the Rents, and
after deducting the costs of alterations, improvements, repairs, operation and
leasing, including without limitation counsel fees, incurred by Mortgagee in
doing any of the foregoing or in taking any of the steps set forth in the
immediately following Section hereof, the application of the net income
therefrom to the Debt in such order and manner as Mortgagee may elect.
23. Possession. Upon any default by Mortgagor hereunder, and in
addition to all other rights and remedies available to it, Mortgagee shall have
the right, with or without judicial process, to enter upon and take possession
of the Mortgaged Property, breaking open doors and locks if it deems necessary
for such purpose without civil or criminal liability for trespass, damages,
forcible entry and detainer or otherwise, and, upon so doing, Mortgagee may, in
its discretion and in addition to all other rights, as mortgagee in possession,
alter, improve, repair, complete, change or add to the Mortgaged Property or any
part thereof, and, in the name of Mortgagor or Mortgagee (as Mortgagee may
elect), operate and lease the Mortgaged Property or any part thereof upon such
terms and conditions as Mortgagee shall elect. In doing any of the foregoing,
Mortgagee shall have the right to expend such amounts as Mortgagee shall deem
proper, all of which expenditures, with interest thereon from the dates of such
expenditures until repaid at the Default Rate specified in the Note, shall be
payable on demand of Mortgagee.
24. Action for Possession. The provisions of this Section shall
apply whenever and as often as Mortgagee shall have the right to take possession
of the Mortgaged Property. Mortgagor irrevocably appoints, authorizes and
empowers any attorney of any court of competent jurisdiction to appear as
attorney, and, in addition, as attorney-in-fact (which appointment shall be
deemed coupled with an interest), for Mortgagor, as well as for all persons
claiming under, by or through Mortgagor, to sign an agreement for entering in
any such court an amicable action in ejectment for possession of the Mortgaged
Property, without the necessity of filing any bond and without any stay of
execution or appeal, against Mortgagor and all persons claiming under, by or
through Mortgagor, and/or, as Mortgagee may elect, confess judgment in ejectment
for the recovery by Mortgagee of possession of the Mortgaged Property. For all
such action this instrument, or a copy thereof verified by affidavit of
Mortgagee or anyone on behalf of Mortgagee, shall be a sufficient warrant. Upon
entry of such agreement or judgment, a writ of possession or other appropriate
process to obtain possession of the Mortgaged Property may be issued forthwith,
without any prior writ or proceeding whatsoever, Mortgagor hereby releasing and
agreeing to release Mortgagee and
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<PAGE> 11
said attorneys from all errors and defects whatsoever in entering such agreement
or judgment or in causing such writ or process to be issued or in any proceeding
thereon or concerning the same, provided that Mortgagee shall have filed in such
action an affidavit made by someone on Mortgagee's behalf setting forth the
facts necessary to authorize the entry of such agreement or judgment according
to the terms of this Mortgage, of which facts such affidavit shall be conclusive
evidence. If for any reason after any such action has been commenced, the same
shall be discontinued, marked satisfied of record or be terminated, or
possession of the Mortgaged Property remain in or be restored to Mortgagor or
anyone claiming under, by or through Mortgagor, Mortgagee may, whenever and as
often as Mortgagee shall have the right to take possession again of the
Mortgaged Property, bring one or more further amicable actions in the manner
herein before set forth to recover possession of the Mortgaged Property and to
enter one or more confessed judgments as hereinabove provided, and the authority
and power above given to any such attorney shall extend to all such further
amicable actions and judgments. Mortgagee shall have the right to bring such
amicable action in ejectment and confess judgment therein as hereinabove
provided whether before or after an action of mortgage foreclosure is brought or
foreclosure or other proceedings are instituted or concluded upon this Mortgage
or the Note.
25. Appointment of Receiver. Upon any default by Mortgagor,
Mortgagee, as a matter of right and without notice, and without regard to the
then value of the Mortgaged Property or the interest of Mortgagor therein, shall
have the right to apply to any court having jurisdiction to appoint a receiver
or sequestrator of the Mortgaged Property, and the Mortgagor hereby irrevocably
consents to such appointment and waives notice of any application therefor.
26. Sale. If this Mortgage is foreclosed, or if judgment is entered
against Mortgagor under the Note, the Mortgaged Property may, at the discretion
of Mortgagee, be sold as a whole or in parts or lots, or in several interests or
portions and in any order or manner.
27. Attorneys' Fees. In the event Mortgagee consults attorneys for
the collection of any of the Debt or the enforcement of any of the terms,
covenants or conditions hereof or of the Note, Mortgagor shall pay on demand all
fees, costs and expenses of such attorneys.
28. Mortgagee's Right to Perform Obligations. If Mortgagor shall
default in the performance of any of its agreements or obligations hereunder or
under the Note or the Base Lease, then Mortgagee shall have the right, but not
the obligation, to perform same for Mortgagor and to make all advances of funds
in connection therewith as Mortgagee deems appropriate, in which case all costs
and expenses so incurred by Mortgagor (including without limitation attorneys'
fees) shall be paid by Mortgagor on demand, together with interest at the
Default Rate from the date of incurrence until the date of payment. If Mortgagee
shall elect to perform any such agreement or obligation, then Mortgagee shall be
subrogated to all the rights
10
<PAGE> 12
and remedies of all other persons intended to be or in fact benefited by the
performance of such agreement or obligation. No such performance by Mortgagee
shall be deemed to relieve Mortgagor from any default hereunder or impair any
right or remedy consequent thereon and the exercise of the right of performance
granted in this Section shall be optional with Mortgagee and not obligatory, and
Mortgagee shall not in any case be liable to Mortgagor for a failure or refusal
(a) to exercise any such right, or (b) to continue to exercise such right after
having commenced such exercise.
29. Waivers. Mortgagor hereby waives and relinquishes the benefits
of any present or future laws: (a) exempting the Mortgaged Property, or any part
thereof, or any other property whatsoever, or of the proceeds arising from any
sale thereof, from attachment, levy, sale or execution, (b) staying of execution
or other process, or (c) requiring valuation or appraisement of the Mortgaged
Property or of any other property levied or sold in execution on any judgment
for the Debt. Mortgagor, so far as permitted by law, waives and will waive the
right to a trial by jury in connection with all suits, actions or proceedings
instituted by the Mortgagee.
30. Cumulative Remedies. All rights and remedies of Mortgagee
hereunder and under the Note and any other security now or hereafter given with
respect to the Debt are separate, distinct and cumulative and in addition to the
rights and remedies provided by law. The failure of Mortgagee to insist upon
strict performance of any term or provision hereof shall not be deemed to be a
waiver of such term or provision, or of any right or remedy of Mortgagee.
31. Further Assurances. Mortgagor shall, promptly following the
request of Mortgagee, execute, acknowledge, deliver and record or file such
further documents and do such further acts as Mortgagee may deem necessary,
desirable or proper to carry out more effectively the purposes of this Mortgage
or to protect the lien or the security interest granted herein against the
rights or interests of third persons, and Mortgagor shall pay on demand all
costs connected with any of the foregoing.
32. Estoppel Certificates. Mortgagor, within five days following the
request of Mortgagee from time to time, shall furnish a duly acknowledged
written statement to Mortgagee and to any other person designated by Mortgagee,
setting forth the amount of the Debt secured by this Mortgage and stating either
that no offset or defense exists against the Debt, or if any such offset or
defense is alleged to exist, stating the nature and amount thereof.
33. Invalidity. If any term, provision, or condition of this
Mortgage, the Note or any other security now or hereafter given with respect to
the Debt, or the application thereof to any person or circumstance, shall be
invalid, illegal or unenforceable in any respect, the remainder of this
Mortgage, the Note and such other security shall be construed without such
provision and the application of such term or provision to persons or
circumstances other than those as to which it is held invalid, illegal or
unenforceable, as the case may be, shall not
11
<PAGE> 13
be affected thereby, and each term and provision of this Mortgage, the Note and
such other security shall be valid and enforced to the fullest extent permitted
by law.
34. Headings; Pronouns. The headings of the sections of this
Mortgage are for convenience only and have no meaning with respect to this
Mortgage or the rights or obligations of Mortgagor or Mortgagee. Unless the
context clearly indicates a contrary intent or unless otherwise specifically
provided herein: words used in this Mortgage are used interchangeably in
singular or plural form; "person", as used herein, includes an individual,
corporation, partnership, trust, unincorporated association, government,
governmental authority, or other entity; "Mortgaged Property" includes all and
singular each and every portion of the Mortgaged Property and estate or interest
therein; "holder" means any holder from time to time of the Note; "hereof",
"herein" and "hereunder" and other words of similar import refer to this
Mortgage as a whole; "Mortgage" includes these presents as supplemented or
amended from time to time by written instrument(s) entered into by Mortgagor and
Mortgagee; "Note" includes all written supplements or amendments to the Note
from time to time entered into by Mortgagor and Mortgagee; "Mortgagor" includes
Mortgagor's trustees, successors and permitted assigns; and "Mortgagee" includes
Mortgagee's trustees, successors and assigns. Whenever the context may require,
all pronouns used herein shall include the corresponding masculine, feminine or
neuter forms, and the singular form of pronouns or nouns shall include the
plural and vice versa.
35. Amendments. This Mortgage can be changed only by a written
instrument executed by Mortgagor and Mortgagee.
36. Governing Law. This Mortgage and all issues arising hereunder
shall be governed by the laws of the state in which the Real Estate is located.
37. Counterparts. This Mortgage may be executed in any number of
counterparts, each of which shall constitute an original instrument.
IN WITNESS WHEREOF, Mortgagor has executed this Mortgage as of the
date first above written.
(CORPORATE SEAL) BIOPURE CORPORATION, as Mortgagor
Attest:
By: /s/ Brian A. Lajoie
/s/ Maria S. Gawryl ------------------------------------
- ------------------------- Name: Brian A. Lajoie
Name: Maria S. Gawryl Title: V.P. - Finance
Title: V.P.-R&D
PHARMACIA & UPJOHN, INC., as
Mortgagee
By: /s/ Robert G. Kramer
------------------------------------
Name: Robert G. Kramer
Title: Director Corporate Treasury
12
<PAGE> 14
STATE OF :
: SS
COUNTY OF :
On this, the 7th day of October, 1996, before me, a notary public,
the undersigned officer, personally appeared Brian A. Lajoie, who acknowledged
himself to be the VP-Finance of Biopure Corporation, a Delaware corporation, and
that he as such officer, being authorized to do so, executed the foregoing
instrument for the purposes therein contained by signing the name of the
corporation by himself as such officer.
In witness whereof, I hereunto set my hand and official seal.
(Notarial Seal)
/s/ Hazel V. Forney
----------------------------------------
Notary Public
My Commission Expires: Jan 4, 2002
STATE OF :
: SS
COUNTY OF :
On this, the ________ day of _______________, 1996, before me, a
notary public, the undersigned officer, personally appeared __________________,
who acknowledged himself to be the ___________________ of Pharmacia & Upjohn,
Inc., a Delaware corporation, and that he as such officer, being authorized to
do so, executed the foregoing instrument for the purposes therein contained by
signing the name of the corporation by himself as such officer.
In witness whereof, I hereunto set my hand and official seal.
(Notarial Seal)
----------------------------------------
Notary Public
My Commission Expires:
<PAGE> 15
STATE OF :
: SS
COUNTY OF :
On this, the ________ day of _______________, 1996, before me, a
notary public, the undersigned officer, personally appeared __________________,
who acknowledged himself to be the ___________________ of Biopure Corporation, a
Delaware corporation, and that he as such officer, being authorized to do so,
executed the foregoing instrument for the purposes therein contained by signing
the name of the corporation by himself as such officer.
In witness whereof, I hereunto set my hand and official seal.
(Notarial Seal)
----------------------------------------
Notary Public
My Commission Expires:
STATE OF Michigan :
: SS
COUNTY OF Kalamazoo :
On this, the 7th day of October, 1996, before me, a notary public,
the undersigned officer, personally appeared Robert G. Kramer, who acknowledged
himself to be the Director Corporate Treasury of Pharmacia & Upjohn, Inc., a
Delaware corporation, and that he as such officer, being authorized to do so,
executed the foregoing instrument for the purposes therein contained by signing
the name of the corporation by himself as such officer.
In witness whereof, I hereunto set my hand and official seal.
(Notarial Seal)
/s/ Carolyn S. Vandermolen
----------------------------------------
Notary Public
My Commission Expires:
17 January 2001
<PAGE> 16
Exhibit "A"
DESCRIPTION OF THE LAND
See Attached
<PAGE> 17
EXHIBIT A
Spring Street Land:
Certain parcels of land with the building thereon, situated in Cambridge,
Middlesex County, Massachusetts, bounded and described as follows:
Parcel I
Beginning at a point on the southerly side of Spring Street, distant one
hundred (100) feet easterly from Second Street, thence turning and running
EASTERLY: bounded northerly, by Spring Street, sixty (60) feet;
thence turning at right angles and running
SOUTHERLY: bounded easterly, by land now or late of Franklin Wilkins,
one hundred (100) feet; thence turning and running
WESTERLY: bounded southerly, by land now or late of Simonds, sixty
(60) feet; and thence turning and running
NORTHERLY: bounded westerly, by land now or late of John P. Squire,
one hundred (100) feet to the point of beginning.
Containing 6000 square feet of land.
Said premises are commonly known as and numbered 16-18 Spring Street.
Parcel II
The land situated on Spring Street, shown as Lot B on Plan of Lands
belonging to John P. Squire Est., East Cambridge, Mass. Dec. 1909 by James
Adams C.E. recorded in Middlesex Plan Book 182, Page 40, bounded:
NORTHERLY: by Spring Street seventy-three and 60/100 (73.60) feet:
EASTERLY: by land now or formerly of Sousa one hundred one and
52/100 (101.52) feet;
SOUTHERLY: by Lot C on said plan fifty (50) feet;
WESTERLY: by Lot C on land now or late of McCarthy as shown on said
plan thirty-seven and 75/100 (37.75) feet;
(continued)
<PAGE> 18
EXHIBIT A (cont.)
Spring Street Land (cont.)
SOUTHERLY: again by land now or late of McCarthy twenty-three and
50/100 (23.50) feet;
WESTERLY: again by Lot A on said plan sixty-three and 85/100
(63.85) feet.
Containing six thousand five hundred seventy-nine (6,579) square feet
according to said plan.
Said premises are commonly known as and numbered 20-22 Spring Street.
Parcel III
A certain parcel of land together with the buildings thereon situated at 26
Spring Street, Cambridge, Middlesex County, Massachusetts and being shown as Lot
"A" on a plan entitled "Plan of Land belonging to John P. Squire Estate, East
Cambridge, Massachusetts", dated December 1909, drawn by James Adam, C.E., and
duly recorded with Middlesex South District Deeds in Plan Book 182, Plan 40 and
being further bounded and described as follows:
NORTHERLY by Spring Street twenty-six and 50/100 (26.50) feet;
WESTERLY by Second Street sixty-three and 85/100 (63.85) feet;
SOUTHERLY by land now or formerly of Charles J. McCarthy twenty-six
and 50/100 (26.50) feet; and
EASTERLY by Lot B as shown on said plan sixty-three and 85/100 (63.85)
feet.
Containing 1692 square feet of land, more or less.
(continued)
<PAGE> 19
EXHIBIT A (cont.)
37-39 Hurley Street Land:
Parcel One A certain parcel of land being at present numbered
90-96 inclusive, Second Street, Cambridge, being shown
as Lots A and B on a plan entitled "Subdivision Plan of
Land in Cambridge, Mass.," dated September 7, 1946 by
Ray L. Coolidge, Eng., recorded with Middlesex South
District Deeds in Book 7062, Page 243, together bounded
and described as follows:
WESTERLY by Second Street, one hundred six and
83/100 (106.83) feet;
NORTHERLY by land of owners unknown (formerly of
Charles J. McCarthy), forty-five (45)
feet;
EASTERLY By Lot C on said plan, one hundred six
and 79/100 (106.79) feet;
SOUTHERLY by Hurley Street, forty-five (45) feet.
Containing according to said plan 4806 square feet of
land be all measurements more or less or however
otherwise bounded or described. Said premises constitute
the greater portion of Lots 1 and 2 on a plan recorded
with said deeds at the end of record book 4996.
Parcel Two A certain parcel of land with the buildings thereon
situated on Hurley Street, Cambridge, Middlesex
County, and being shown as Lot C on said Plan
entitled "Subdivision Plan of Land in Cambridge,
Mass.," dated September 7, 1946 by Ray L. Coolidge,
Eng., recorded with Middlesex South District Deeds
in Book 7062, Page 243, bounded and described as
follows:
SOUTHERLY by said Hurley Street, 55 feet;
WESTERLY by Lot A and by Lot B as shown on said plan,
one hundred six and 79/100 (106.79) feet;
NORTHERLY by land now or formerly of owners
unknown, five (5) feet;
(continued)
<PAGE> 20
EXHIBIT A (cont.)
37-39 Hurley Street Land (cont.)
NORTH-
EASTERLY by land now or formerly of owners
unknown, seven and 75/100 (7.75) feet,
more or less;
NORTHERLY by land now or formerly of owners
unknown, fifty (50) feet; and
EASTERLY by land now or formerly of owners unknown,
ninety-nine (99) feet.
Containing 5485 square feet of land more or less as
shown on said plan.
(continued)
<PAGE> 21
EXHIBIT A (cont.)
31-35 Hurley Street Land:
A certain parcel of land with the buildings thereon, shown as Lot C on a
Plan of Land in Cambridge, M. Walters, C.E., dated August 8, 1941, and recorded
with the Middlesex South District Registry of Deeds in Book 6546, Page 207, and
bounded and described as follows:
SOUTHWESTERLY: by Hurley Street, sixty (60) feet;
NORTHWESTERLY: by land of owners unknown, one hundred (100) feet;
NORTHEASTERLY: by land of owners unknown, sixty (60) feet;
SOUTHEASTERLY: by Lot B on said plan, one hundred (100)
feet.
Containing 6,000 square feet of land according to said plan.
<PAGE> 22
CONSENT OF LESSOR
Tarvis Realty Trust, being the lessor with respect to that certain
leasehold agreements dated October 12, 1990, August 23, 1994, May 10, 1994
respectively, and concerning the properties known and numbered as 22 Spring
Street, 37-39 Hurley Street, 31-35 Hurley Street respectively, Cambridge,
Massachusetts, hereby consents to the grant of a security interest in and to
said leasehold agreements by the lessee thereof, Biopure Corporation, to
Pharmacia & Upjohn, Inc. to secure payments of principal and interest on a
promissory note in the amount of $9,000,000.00 and certain other sums, subject
to each of the terms, covenants and conditions set forth in said leasehold
agreements. To the extent that there may be any inconsistency between the terms,
covenants and conditions of said leasehold agreements and the provisions of any
and all security agreements that may be executed by the lessee, the terms,
covenants and conditions of said leasehold agreements shall control. The lessor
also acknowledges that said leasehold agreements is in effect and that there are
no defaults of the lessee existing thereunder.
Executed as an instrument under seal this 7th day of October, 1996
Tarvis Realty Trust, Lessor
/s/ Varney J. Hintlian
--------------------------------
TRUSTEE
<PAGE> 1
EXHIBIT 10.9
<PAGE> 2
AGREEMENT OF LICENSE TERMINATION,
STOCK REPURCHASE AND MUTUAL GENERAL RELEASE
This Agreement is made as of the 29th day of August, 1997, by and between,
on the one hand, Biopure Corporation ("Biopure"), a Delaware corporation, and
Biopure Europe Ltd. ("Licensor"), a Delaware corporation (collectively called
the "Biopure Parties" herein), and, on the other hand, B. Braun Melsungen AG, a
German corporation ("Braun").
RECITALS
A. Reference is made to the following agreements: the License Agreement
dated January 29, 1990 between Licensor and Braun, as amended (the "License
Agreement"), the Investment Agreement dated January 29, 1990 between Biopure,
Braun and other parties thereto, as amended (the "Investment Agreement"), the
Technical Assistance and Supply Agreement dated January 29, 1990 between Biopure
and Braun, as amended (the "Technical Assistance Agreement") and the Amendment
and Rights Agreement dated May 26, 1988 between Biopure, Braun and other parties
thereto (the "Rights Agreement"). All such agreements are herein referred to as
the "B&B Agreements".
B. Pursuant to the License Agreement, Braun obtained an exclusive license
to make, sell and use "Royalty Products" (as defined in the License Agreement)
in the "Territory" (as defined in the License Agreement). Pursuant to the
Investment Agreement and its predecessor agreement dated August 7, 1987 and
other miscellaneous transactions, Braun acquired 3,020,934 shares of Biopure
Class A Common Stock, par value $.01 per share (the "Shares").
C. Since 1987, Dr. Joachim Schnell has served on the Board of Directors of
Biopure as a nominee of Braun.
D. Except as expressly provided herein, the parties hereto have agreed to
terminate, as between Braun and the Biopure Parties, their respective rights,
duties and obligations under the B&B Agreements.
E. The parties hereto wish by the execution, delivery and performance of
this Agreement to compromise and settle all differences between and among them.
TERMS AND CONDITIONS
Now therefore, on the terms and subject to the conditions hereinafter set
forth, the Biopure Parties and Braun hereby agree as follows:
1. Termination of License & Technical Assistance Agreement.
Effective upon the execution and delivery of this Agreement, Braun and the
Biopure Parties hereby terminate the License Agreement and the Technical
Assistance Agreement and the same shall thereafter have no further force and
effect except with respect to Section 9 of the License Agreement and Section 4
of the Technical Assistance Agreement (collectively, the "Confidentiality
Requirements"), both of which sections shall remain in full force and effect.
<PAGE> 3
2. Return/Destruction of Information. Within thirty (30) days
following the execution and delivery of this Agreement:
(a) Braun shall provide to Biopure the information listed in
Attachment 1;
(b) to the extent that any such information described in Attachment
I consists of copies delivered to Braun by Biopure or if Braun has other
confidential or proprietary information related to Biopure or its products,
Braun shall either return or destroy such copies or information and certify
their destruction to Biopure; and
(c) in the event that after the execution and delivery of this
Agreement Braun discovers in its possession additional materials described in
Subparagraphs 2(a) or 2(b) herein, Braun will promptly deliver to Biopure, or
destroy, as applicable, such additional materials.
Notwithstanding the foregoing, Braun may retain such originals or copies of the
foregoing as may be necessary or appropriate but all such information shall be
maintained by Braun as confidential information pursuant to the Confidentiality
Requirements.
3. Termination of Rights and Duties Under Other Agreements. Braun
hereby relinquishes all rights under the Investment Agreement and the Rights
Agreement and Braun and Biopure hereby release each other from each of their
respective duties and obligations owed to such other party pursuant to the
Investment Agreement and Rights Agreement effective upon the execution and
delivery of this Agreement. However so long as Braun is a shareholder of
Biopure, Biopure shall provide to Braun monthly, quarterly and annual financial
statements (in the form provided to Biopure's directors) at the same time it
provides such information to its directors.
4. Royalties.
(a) For purposes of this Agreement, the following definitions
shall apply:
i) European Royalty. The term "European Royalty" shall
mean an amount equal to two percent (2%) of Net Sales and, without
duplication, two percent (2%) of all license or other fees received by
Biopure or any of its affiliates for any license to make, use or sell the
Royalty Products or Oxypure.
ii) Hemopure. The term "Hemopure" shall have the same
meaning as contained in the License Agreement and is known, in its current
form, as HBOC-201.
iii) Net Sales. The term "Net Sales" shall mean, without
duplication, the gross sales price of the Royalty Products or Oxypure sold
for use in the Territory, as invoiced by Biopure or any of its affiliates
or licensees (except for Royalty Products sold by Biopure for resale to
such licensees), less all cash or trade discounts, allowances, credits for
returns of defective merchandise or otherwise, any tax or other
-2-
<PAGE> 4
charge imposed directly on sales (including without limitation value added
taxes), and all charges which are customarily separately stated for
packing and transportation, insurance premiums, customs duties and all
other charges which are customarily separately stated. In the event of
sales by either Biopure or a licensee to an affiliate of such seller, the
term Net Sales shall be deemed to be the price at which Biopure or a
licensee is then selling to an unaffiliated person.
iv) Oxypure. The term "Oxypure" shall have the same
meaning as contained in the License Agreement.
v) Royalty Products. The term "Royalty Products" shall
have the same meaning as contained in the License Agreement.
vi) Stock Royalty. The term "Stock Royalty" shall mean
an amount equal to five percent (5%) of Net Sales and, without
duplication, five percent (5%) of all license or other fees not comprising
a royalty or other payment, however denominated, calculated on the basis
of actual sales, received by Biopure or any of its affiliates for any
license to make, use or sell the Royalty Products or Oxypure.
vii) Territory. The term "Territory" shall mean have the
same meaning as contained in the License Agreement; i.e., the following
countries: Andorra, Austria, Belgium, Denmark, Finland, France, Germany,
Greece, Ireland, Italy, Liechtenstein, Luxembourg, Monaco, Netherlands,
Norway, Poland, Portugal, Spain, Sweden, Switzerland, Turkey, and the
United Kingdom.
(b) The European Royalty shall be paid to Braun until aggregate
European Royalties paid equal $7,500,000 and shall be paid quarterly in arrears
in U.S. dollars within forty-five (45) days following the end of each calendar
quarter.
(c) The Stock Royalty payment shall be deposited into the Escrow
Account and held subject to the terms of the Escrow Agreement and this
Agreement, and the European Royalty shall be paid by check mailed, or by wire
transfer, to Braun, at Braun's election.
(d) Within thirty (30) days following the end of each calendar
quarter, Biopure shall provide to Braun a royalty statement, certified as true
and correct by an officer of Biopure, setting forth, with respect to the
preceding calendar quarter, the amount of Net Sales, identified by each seller
of the Royalty Products and Oxypure, and all license and other fees received by
Biopure or its Affiliates upon which the Stock Royalty or the European Royalty
is calculated.
(e) Biopure shall permit a reputable international firm of public
accountants selected by Braun to inspect, examine and audit its books and
accounts at such times as Braun may reasonably request (but not more frequently
than once each calendar year) for the purpose of verifying Net Sales, the
royalty statements and determining the correctness of royalty payments
hereunder. The cost of all inspections, examinations and audits shall be borne
by Braun, except that the cost of any audit will be borne by Biopure if the
audit reveals an
-3-
<PAGE> 5
underpayment of royalty payments for any period in question of more than five
percent (5%) and any additional royalty payments shall be paid with five (5)
days of their determination plus interest at ten percent (10%) per annum.
5. Escrow Agreement. Simultaneously with the execution and delivery
of this Agreement, an "Escrow" shall be established by both Biopure and Braun by
executing and delivering to the escrow agent (the "Escrow Agent") the escrow
agreement in the form of Exhibit A (the "Escrow Agreement").
(a) Concurrently therewith,
i) Braun shall deliver to Escrow the certificates
representing the Shares together with signed, undated stock powers for
each certificate representing the Shares; and
ii) Biopure shall deliver to Escrow a cashier's check
for One Million Dollars ($1,000,000) and the Escrow Agent shall maintain
such funds, in trust for the benefit of Braun, in an interest bearing
account (the "Escrow Account").
(b) Effective with each delivery by Biopure of funds to the
Escrow Agent for deposit into the Escrow Account, Biopure grants Braun a
security interest in such funds and in the Escrow Account to secure Biopure's
purchase obligations pursuant to this Agreement. Biopure shall execute any
further documents necessary or appropriate to perfect Braun's security interest
in such funds.
(c) Braun shall be entitled to vote, and shall receive all
dividends related to, those Shares being held by the Escrow Agent until their
delivery to Biopure.
6. Sale and Purchase of the Shares. Biopure agrees to purchase the
Shares pursuant to this Agreement and in compliance with the procedures set
forth in the Escrow Agreement and to pay to Braun the sum of six million three
hundred thousand dollars ($6,300,000) payable as hereinafter set forth (the
"Stock Price"). In addition, Braun shall be entitled to all earnings which are
earned with respect to the funds deposited into the Escrow (the "Earnings").
(a) Biopure shall deliver to the Escrow Agent for deposit into
the Escrow Account not less than one million dollars ($1,000,000) upon each
anniversary of the date of this Agreement, and, within forty-five (45) days
following each calendar quarter, an amount equal to the Stock Royalty until the
aggregate of such amounts deposited into the escrow, exclusive of all Earnings,
equal the Stock Price. In any event, the total amount of the Stock Price shall
be delivered by Biopure to the Escrow Agent for deposit into the Escrow Account
not later than the fifth anniversary of the date of this Agreement. Biopure
shall have the right at any time to make additional payments to the Escrow and
to accelerate the purchase of the Shares upon the deposit with the Escrow of the
entire unpaid Stock Price.
(b) Braun shall have the right, at any time and from time to
time, to complete the sale of a portion of the Shares in Escrow at a price per
share equal to $2.0854 in
-4-
<PAGE> 6
accordance with Section 3(b) of the Escrow Agreement.
(c) When the amount on deposit in the Escrow Account equals
$6,300,000 (or $6,3000,000 less $2.0854 times each Share previously delivered
to, and paid for by, Biopure) exclusive of any Earnings, the sale of the all of
the Shares (or the balance of the Shares if any have been previously delivered
to Biopure) shall be deemed to have been consummated.
(d) When the sale of any of the Shares is consummated
hereunder, the certificates for such Shares and the related stock powers shall
be delivered by the Escrow Agent to Biopure, and all right, title and interest
in and to the Shares shall thereafter vest in Biopure and the purchase price and
all Earnings shall be paid by the Escrow Agent to Braun.
7. Taxation Indemnity.
(a) If Braun provides Biopure and the escrow agent with an
executed ownership certificate (U.S. Internal Revenue Service Form 1001), then
(i) neither Biopure nor the escrow agent shall withhold any tax pursuant to
Section 1441 of the Internal Revenue Code (the "Code") from any payment to be
made to Braun pursuant to Section 6 herein and the Escrow Agreement; and (ii)
Biopure shall indemnify and hold harmless Braun from and against any liability
or claim for income tax that may be asserted by the Internal Revenue Service
against Braun by reason of said payments whether such claim is based upon
Sections 881 (with respect to interest income only), 483, 1273 or 1274, as the
same now exists or may hereinafter be amended, or any corresponding or successor
provision.
(b) This covenant shall terminate if Braun: (i) assigns its
beneficial ownership interest in the Purchase Agreement or (ii) fails to qualify
for a withholding exemption under the U.S.-German tax treaty or (iii) fails to
renew the ownership certificate upon its expiration.
8. Representations and Warranties. The parties represent and
covenant as follows:
(a) Braun represents and acknowledges that it has been a
shareholder of Biopure since 1987, that in such capacity and through
representation on the Biopure Board of Directors it has been furnished with the
information made available by Biopure to its shareholders and directors and that
it has had the opportunity to obtain from Biopure or from other sources
sufficient information to enable it to evaluate the terms of this Agreement.
Braun further acknowledges the non-public character of certain of the foregoing
information and shall maintain the confidentiality of any such information
except to the extent it is made publicly available.
(b) Braun hereby represents that the Shares constitute all of
the shares of stock of Biopure held or beneficially owned by Braun.
(c) Braun hereby represents and warrants that the signatory of
this Agreement on behalf of Braun is duly authorized to execute and deliver this
Agreement on
-5-
<PAGE> 7
behalf of Braun and that the execution, delivery and performance by Braun of
this Agreement have been duly authorized by all necessary corporate action on
the part of Braun. The Biopure Parties hereby represent and warrant that the
signatory of this Agreement on their behalf is duly authorized to execute and
deliver this Agreement on behalf of Biopure and the Licensor and that the
execution, delivery and performance by Biopure and the Licensor of this
Agreement have been duly authorized by all necessary corporate action on the
part of Biopure and the Licensor.
(d) Upon the date of each delivery of funds to the Escrow
Agent for deposit into the Escrow Account, the Biopure Parties, and each of them
jointly and severally, represent and warrant that:
i) Biopure is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation and
is solvent, able to meet its debts as they mature and is able under law to
redeem the Shares hereunder; and
ii) This Agreement and the Escrow Agreement have been
duly authorized and validly executed and delivered and the consummation of
the transactions contemplated hereunder and under the Escrow Agreement do
not violate either Biopure Party's charter, or any agreement to which
either is a party or constitute a violation of any law, regulation or
directive to which they are subject.
9. Opinion of Counsel. Biopure shall cause counsel, reasonably
acceptable to Braun, to provide its opinion to Braun that Biopure has duly
authorized, executed and delivered this Agreement, that the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby will not violate or conflict with any law, statute, regulation or order.
10. Mutual Release. The Biopure Parties, on their own respective
behalf and on behalf of their respective executors, administrators, legal or
personal representatives, affiliates, successors or assigns, on the one hand,
and Braun, on its own behalf, and on behalf of its affiliates, successors and
assigns, on the other hand, do hereby mutually and reciprocally remise, release
and forever discharge each other and the respective administrators, executors,
legal or personal representatives, successors and assigns of each other, of and
from all, and all manner of, actions, causes of action, suits, debts, dues, sums
of money, accounts, reckonings, covenants, contracts, controversies, agreements,
promises, commissions, damages, judgments, executions, claims, third-party
claims and demands whatsoever in law or in equity that they or either of them
ever had, now has, or that they or their administrators, executors, legal or
personal representatives, successors and assigns hereafter can or may have, by
reason of any act, omission, matter, cause or thing whatsoever occurring at any
time prior to the execution of these presents, whether known or unknown,
suspected or unsuspected, foreseen or unforeseen, liquidated or unliquidated,
matured or unmatured. This release does not affect any rights or relationships
between the Biopure Parties inter se. Notwithstanding anything in this Agreement
to the contrary, the provisions of this Section shall not apply to the rights
and duties of the parties hereto which are contained in this Agreement or the
Escrow Agreement or limit the respective rights of the parties hereto to enforce
the terms of this
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<PAGE> 8
Agreement or the Escrow Agreement.
11. No Third Party Beneficiaries. Except as provided in Section 9,
no person other than the parties signatory to this Agreement shall be deemed a
beneficiary of this Agreement.
12. Governing Law. This Agreement shall be construed in accordance
with the laws of the Commonwealth of Massachusetts applicable to agreements made
in and wholly to be performed within the Commonwealth of Massachusetts.
13. Entire Agreement. This Agreement together with Exhibit A hereto
and the Escrow Agreement represent the entire agreement of the parties with
regard to the subject matter hereof and thereof, and may not be altered or
amended except by a writing signed by the parties hereto or their duly
authorized representatives. There are no representations, promises,
understandings or agreements made by or to any of the parties regarding the
subject matter of this Agreement and the Escrow Agreement which are not
expressly set forth herein or therein. Each party has sought and obtained the
advice of its respective counsel and is not relying upon any promises,
representations or advice of the opposing party or their counsel in entering
into this Agreement.
14. Subject Headings. The subject headings of the paragraphs of this
Agreement are included solely for purposes of convenience and reference only,
and shall not be deemed to explain, modify, limit, amplify or aid in the
meaning, construction or interpretation of any of the provisions of this
Agreement.
15. Notices. All written notices or other written communications
required under this Agreement shall be deemed properly given when provided to
the parties entitled thereto by personal delivery (including delivery by
services such as messengers and airfreight forwarders), by electronic means
(such as by electronic mail, telex or facsimile transmission) or by mail sent
registered or certified mail, postage prepaid at the following addresses (or to
such other address of a party designated in writing by such party to the
others):
Any Biopure Party:
c/o Carl W. Rausch
Biopure Corporation
11 Hurley Street
Cambridge, Massachusetts 02141
Telefax No. (617) 234-6505
Braun:
B. Braun Melsungen AG
Carl-Braun-StraBe 1
D-34212 Melsungen, Germany
Attn: Hr. Klaus Hofer,
General Counsel
Telefax No. 011-49-5661-71-1551
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<PAGE> 9
All notices given by electronic means shall be confirmed by delivering to the
party entitled thereto a copy of said notice by certified or registered mail,
postage prepaid, return receipt requested. All written notices shall be deemed
delivered and properly received five (5) days after mailing the notice, in the
case of written notice given by mail, or upon the earlier of two (2) days after
the mailing of the confirmation notice or upon actual receipt of the notice
provided by personal delivery or electronic means
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by persons authorized as of the date first set forth
above.,
B. BRAUN MELSUNGEN AG
/s/ Caroll H. Neubauer /s/ Joachim Schnell
- ---------------------------- ----------------------------
by Caroll H. Neubauer, by Joachim Schnell,
Member of the Board Member of the Board
BIOPURE CORPORATION BIOPURE EUROPE LTD.
/s/ Carl W. Rausch /s/ Carl W. Rausch
- ---------------------------- ----------------------------
by Carl W. Rausch, President by Carl W. Rausch, President
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<PAGE> 10
Attachment I
B. BRAUN DOCUMENTATION
The information required from B. Braun falls into two categories: (1) existing
documentation which based upon review of our files, must be transferred to
Biopure to complete the dossiers on all three German trials (i.e.,
BR-0049-BBM-PH-H-0144/Koln/Buzello, -0149/Hamburg/Schultr am Esch, and
- -0153/Jena/Reinhart); and (2) machine-readable data sets, analyses, and/or
reports, which may be in various stages of completion.
Existing Documentation.
1. Original Case Report Forms ("CRFs") from the high-dose Koln group
(1.2g/kg), expected numbers 1301-1312.
2. Original versions or copies of all existing site correspondence (all
trials).
3. Original versions or copies of all existing Ethics Committee
correspondence (trial-0153 only).
4. Original version or copies of all monitoring reports (all trials).
5. Drug accountability records (all trials).
6. If available, clinical laboratory validation documentation (all trials).
NOTE: With the exception of the CRFs, these documents are almost certainly
written in German. Although it would be nice to have, there is no reason
to demand translation prior to transfer.
Analyses and Reports. To the extent they exist, we need all these items for all
trial; if not all are available for a given trial, we need all that are complete
at present:
1. SAS-readable data sets, along with annotated CRFs, database structure,
dictionaries, audit trail, and other details of quality assurance level.
2. Individual patient listings and PROC UNIVARIATE distributions.
3. Summary data tables, plus English version of the statistical analysis
plan.
4. Graphical displays.
5. Draft Final Study Report, in English.
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<PAGE> 11
The following information should be provided by or returned by B. Braun or
documented that copies provided to them have been confidentially destroyed:
1. All copies of U.S. IND submissions/presentations/communications
(BB-IND-2935) provided.
2. All copies, documentation, CRFs, data tables and reports for clinical
studies using HBOC-201 in Europe under B. Braun's direction.
3. All correspondence and/or submissions regarding HBOC-201 with any
regulatory authority, agency or government.
4. All correspondence and/or submissions to any institutional review board
(or equivalent) regarding HBOC-201.
5. All documents, data, or reports regarding any preclinical study conducted
by or under the direction of B. Braun including studies done by
independent investigators.
6. All publications or pending publications regarding the product resulting
from work sponsored by or known to B. Braun.
7. All reports or documentation regarding manufacturing, importation, or use
of the product in Germany, including reports/documentation/communications
regarding use of Cambridge manufactured product.
8. Information regarding the manufacturing and testing or product provided to
B. Braun by Biopure
Houtchens - B. Braun Requested Documents
1. BSE- Notification of the "BfArM" dated 28.03.96: Hemopure (HBOC-201)
Classification of the Risk Relevant Characteristics"
2. Other communications with the BfArM concerning viral or prior safety
issues.
3. Letter and attached data concerning Oxyglobin stability, addressed from
Robert Houtchens to Johannes Bottrich, dated July 22, 1996.
4. Procedure for bovine IgG ELISA assay, sent form Robert Houtchens to
Johannes Bottrich, dated September 25, 1991.
5. Research and Development report #RDR-005, "Get Permeation Chromatography
of Hemopure coupled with Laser Light Scattering or intrinsic Viscosity
Detection for Determination of Protein Molecular Weight," sent from
Christina Poulos to Johannes Bottrich, dated July 11, 1991.
Biopure Reports:
1. "Validation of Clearance of Scrapie Agent in HBOC Production Process,"
Melissa Melde, Robert A Houtchens, W. Richard Light, RDR-0113, 1-22
(1996).
2. "Determination of Viral Clearance of Polymerized Bovine Hemoglobin
Production Process," Melissa Melde, Robert A. Houtchens, W. Richard Light,
RDR-087, 1-60 (1996).
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<PAGE> 1
EXHIBIT 10.10
<PAGE> 2
ESCROW AGREEMENT
ESCROW AGREEMENT, made and entered into as of the 2nd day of
September, 1997, among B. Braun Melsungen AG (hereinafter referred to as
"Seller"), Biopure Corporation (hereinafter referred to as "Purchaser"), and
State Street Bank and Trust Company (hereinafter referred to as the "Escrow
Agent").
WHEREAS, Seller has entered into an Agreement of License
Termination, Stock Repurchase and Mutual General Release dated as of the date
hereof (the "Purchase Agreement") with Purchaser providing among other things
for the sale by Seller and the purchase by Purchaser of 3,020,934 shares of
Common Stock of Purchaser upon the terms and subject to the conditions set forth
or referred to in the Purchase Agreement; and
WHEREAS, Seller has agreed to place in escrow the shares of Common
Stock to be purchased by Purchaser, and Purchaser has agreed to place in escrow
the purchase price for such shares; and
WHEREAS, the Escrow Agent is willing to act as escrow agent on the
terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises, the mutual
covenants and agreements contained herein, and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged,
Seller, Purchaser and the Escrow Agent agree as follows:
1. Designation of Escrow Agent and Amount of Escrow Account. The
Escrow Agent is hereby appointed escrow agent to hold and dispose of the
escrowed funds and escrow shares provided for herein, in accordance with the
terms and conditions set forth in this Agreement, and the Escrow Agent accepts
such designation and agrees to hold and dispose of such escrowed funds and
escrow shares in accordance with the provisions of this Agreement.
Contemporaneously with the execution of this Agreement, Seller has deposited
with the Escrow Agent certificates for 3,020,934 shares representing the number
of shares of Common Stock purchased by Purchaser pursuant to the Purchase
Agreement, together with an undated, signed assignment in blank for each
certificate deposited (such certificates and assignments are collectively
referred to herein as the "Escrow Shares"). Purchaser will deposit with the
Escrow Agent from time to time the cash purchase price for such shares (the
"Escrow Account"). The Escrow Agent hereby acknowledges receipt of the Escrow
Shares and $1,000,000 as the first deposit in the Escrow Account.
2. Investment Authority.
(a) Subject to the provisions of this Section 2 and Section 3 of
this Agreement, the Escrow Agent and the Purchaser hereby acknowledge that
Seller shall have a security interest in the funds deposited by Purchaser and
all earnings thereon to secure payment of the amounts payable to Seller
hereunder (collectively, the "escrowed funds"). Escrow Agent shall invest all
such funds according to the written instructions of Seller; absent any written
instructions from
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<PAGE> 3
Seller, such funds shall be invested and reinvested in United States Treasury
bills having maturities of approximately 30 days selected by it in its sole
discretion. Escrow Agent shall treat the Escrow Account as a trust fund in
accordance with the terms hereof.
(b) The Escrow Agent shall not be responsible for any loss on any
investment made in accordance herewith.
(c) Any liquidation of any investment made hereunder prior to its
maturity shall be executed by the Escrow Agent only in accordance with the
written instructions of Seller or in connection with the payment to Seller of
the purchase price pursuant to Section 3(c) or 3(d) herein.
(d) All earnings realized on the escrowed funds (whether by way of
interest received or realized appreciation on any investment--collectively the
"Earnings") shall be for the benefit of Seller and the entire Earnings under the
control of the Escrow Agent shall be distributed to Seller concurrently with the
payment to Seller of the purchase price for the shares purchased by Purchaser.
3. Escrow Disbursement Procedures.
(a) Purchaser shall be purchasing the Escrow Shares through the
Escrow at a price of $2.0854 per Escrow Share.
(b) Upon written notice given by Seller to the Escrow Agent, Seller
shall have the right, at any time and from time to time to consummate the sale
of not less than that number of whole Escrow Shares in the Escrow Account which
may be purchased by the aggregate amount on deposit in the Escrow Account
exclusive of Earnings at a price per Escrow Share equal to $2.0854. Upon receipt
from the Seller of a notice in the form of Attachment A hereto, with blanks
completed, accompanied by an assignment in blank (such notice and assignment are
collectively referred to herein as a "Seller Notice"), the Escrow Agent shall
within five business days (i) deliver to Biopure Corporation, at its offices set
forth at Section 7, for transfer, certificates accompanied by signed assignments
filled in with the name of the Purchaser for the number of shares to which the
Seller Notice pertains (with instructions to the Purchaser's transfer agent to
return to the Escrow Agent a certificate for shares, if any, not paid for
pursuant to the Seller Notice), and (ii) pay to Seller the purchase price for
the shares being purchased plus all Earnings on the escrowed funds liquidating,
as necessary, any investments.
(c) When the deposits made to the Escrow Account equal, exclusive of
Earnings, $6,300,000 (or $6,300,000 less $2.0854 times each Escrow Share
previously delivered to, and paid for by, Purchaser), the Escrow Agent shall
deliver any remaining certificates together with assignments thereof to the
Purchaser and the balance of the purchase price and all Earnings shall be paid
to Seller. Purchaser shall not be responsible for any loss on any investment.
(d) If on the anniversary date of this Agreement, 2002 there remain
in the Escrow Account any funds or Escrow Shares, all funds in the Escrow
Account shall be paid to Purchaser and all of the Escrow Shares shall be
returned to Seller.
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<PAGE> 4
(e) Upon distribution of the Escrow Account and Escrow Shares
pursuant to this Section 3, this Agreement and the escrow created hereunder
shall terminate, excepting the provisions of Section 6.
4. Escrow Agent's Disclaimers. The obligations of the Escrow Agent
under this Agreement are subject to the following terms and conditions:
(a) Except for this Agreement and the security interest granted to
Seller pursuant to the Purchase Agreement, the Escrow Agent is not a party to
and is not bound by any other agreement between Seller and Purchaser. The duties
and obligations of the Escrow Agent shall be determined solely by the express
provisions of this Agreement and the Escrow Agent shall not be liable except for
the performance of such duties and obligations as are specifically set forth in
this Agreement.
(b) The Escrow Agent acts hereunder as a depository only and is not
responsible for or liable in any manner whatsoever for the sufficiency,
correctness, genuineness or validity of any funds, documents or other materials
deposited with it. The Escrow Agent shall not be required to defend any legal
proceeding which may be instituted against it with respect to the subject matter
of this Agreement unless it is requested to do so by one of the parties and is
indemnified by such requesting party to the Escrow Agent's satisfaction against
the cost and expenses including attorneys' fees of such defense, unless arising
from the Escrow Agent's bad faith or willful misconduct. The Escrow Agent shall
not be required to institute legal proceedings of any kind. The Escrow Agent
shall not be required to perform any acts which will violate any law or
applicable rules of any governmental agency.
(c) The Escrow Agent shall not in any way be bound or affected by
any notice of modification or cancellation of this Agreement unless in writing
signed by Seller and Purchaser, nor shall the Escrow Agent be bound by any
modification hereof unless the same shall be reasonably satisfactory to it. The
Escrow Agent shall be entitled to rely upon any notice, certification, demand or
other writing delivered to it hereunder by Seller or Purchaser without being
required to determine the authenticity or the correctness or any fact stated
therein, the propriety or validity of the service thereof, or the jurisdiction
of the court issuing any judgment.
(d) The Escrow Agent may consult counsel, including its in-house
counsel, and act in reliance upon any signature reasonably believed by it to be
genuine, and may assume that any person purporting to give any notice or
receipt, or make any statements, in connection with the provisions hereof has
been duly authorized to do so.
(e) The Escrow Agent may consult counsel, including its in-house
counsel, and act relative hereto in reliance upon advice of counsel in reference
to any matter connected herewith, and neither it, its directors, officers or
employees shall be liable for any mistake of fact or error of judgment, or for
any acts or omissions of any kind, unless caused by its willful misconduct or
gross negligence.
(f) Seller and Purchaser, jointly and severally, covenant and agree
to indemnify the Escrow Agent and hold it harmless without limitation from and
against any loss, liability or
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<PAGE> 5
expense of any nature incurred by the Escrow Agent arising out of or in
connection with this Agreement or with the administration of its duties
hereunder, including but not limited to legal fees and other costs and expenses
of defending or preparing to defend against any claim or liability in the
premises, unless such loss, liability or expense shall be caused by the Escrow
Agent's gross negligence, bad faith, or willful misconduct. In no event shall
the Escrow Agent be liable for indirect, punitive, special or consequential
damages.
5. Resignation of Escrow Agent. The Escrow Agent may resign and be
discharged of its duties as Escrow Agent hereunder upon thirty days' written
notice to Seller and Purchaser. Such resignation shall take effect thirty days
after the giving of such notice, or upon receipt by the Escrow Agent of an
instrument of acceptance executed by a successor escrow agent and upon delivery
by the Escrow Agent to such successor of the Escrow Account and the Escrow
Shares.
6. Escrow Agent's Fee. The Escrow Agent shall be entitled to
reasonable compensation for its services to be paid 50% by Seller and 50% by
Purchaser. Seller and Purchaser, jointly and severally, agree to pay or
reimburse the Escrow Agent for legal fees incurred in connection with the
preparation of this Agreement and to pay the Escrow Agent's reasonable
compensation for its normal services hereunder in accordance with the attached
fee schedule, which may be subject to change hereafter on an annual basis. The
Escrow Agent shall be entitled to reimbursement on demand for all expenses
incurred in connection with the administration of this Agreement or the escrow
created hereby which are in excess of its compensation for normal services
hereunder, including without limitation, payment of any legal fees and expenses
incurred by the Escrow Agent in connection with resolution of any claim by any
party hereunder. The Escrow Agent is hereby granted a lien on the Escrow Account
and the Escrow Shares to protect, indemnify and reimburse itself for all fees,
costs, expenses and liabilities arising out of this Agreement and the
performance of its duties hereunder.
7. Notice. Any notice, direction, request, instruction, legal
process or other instruments to be given or served hereunder by any party to
another shall be in writing, shall be delivered personally or sent by certified
mail or overnight courier, return receipt requested, to the respective party or
parties at the following addresses, and shall be deemed to have been given when
received.
If to Seller: B. Braun Melsungen AG
1 Carl-Braun-Strasse
D-34212 Melsungen, Germany
Attn: Hr. Klaus Hofer (General Counsel)
Telefax No. 011-49-5661-71-1551
If to Purchaser: Biopure Corporation
11 Hurley Street
Cambridge, MA 02141
Attn: Chairman
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<PAGE> 6
If to the Escrow Agent
State Street Bank and Trust Company
Two International Place
Boston, Massachusetts 02110
Corporate Trust Department, Fifth Floor
Attention: Braun Escrow Agreement
Fax: 617-664-5365
Any party may change its address by written notice to each of the
other parties.
8. Governing Law. This agreement shall be governed by and
interpreted in accordance with the laws of the State of New York and shall be
binding on the successors and assigns of the parties hereto.
9. Definitions. Terms used as defined terms and not defined herein
shall have the meanings given such terms in the Purchase Agreement.
10. Tax Reporting. The parties hereto agree that, for tax reporting
purposes, all interest or other income earned from the investment of the Escrow
Account shall be allocable to Seller. Seller shall furnish the Escrow Agent with
Seller's completed IRS Form 1001 and such other information as the Escrow Agent
may require for purposes of tax reporting.
11. Dispute Resolution. It is understood and agreed that should any
dispute arise with respect to the delivery, ownership, right of possession,
and/or disposition of the Escrow Account, or should any claim be made upon such
Account by a third party, the Escrow Agent upon receipt of written notice of
such dispute or claim by the parties hereto or by a third party, is authorized
and directed to retain in its possession without liability to anyone, all or any
of said Fund until such dispute shall have been settled either by the mutual
written agreement of the parties involved or by a final order, decree or
judgment of a Court in the United States of America, the time for perfection of
an appeal of such order, decree or judgment having expired. The Escrow Agent
may, but shall be under no duty whatsoever to, institute or defend any legal
proceedings which relate to the Escrow Account.
12. Consent to Jurisdiction and Service. Seller and Purchaser hereby
absolutely and irrevocably consent and submit to the jurisdiction of the courts
in the Commonwealth of Massachusetts and of any Federal court located in said
Commonwealth in connection with any actions or proceedings brought against them
or either of them by the Escrow Agent arising out of or relating to this Escrow
Agreement. In any such action or proceeding, said parties hereby absolutely and
irrevocably waive personal service of any summons, complaint, declaration or
other process and hereby absolutely and irrevocably agree that the service
thereof may be made by certified or registered first-class mail directed to them
or either of them at their respective addresses in accordance with Section 7
hereof.
13. Force Majeure. Neither Seller nor Purchaser nor Escrow Agent
shall be responsible for delays or failures in performance resulting from acts
beyond its control. Such acts
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<PAGE> 7
may be made by certified or registered first-class mail directed to them or
either of them at their respective addresses in accordance with Section 7
hereof.
13. Force Majeure. Neither Seller nor Purchaser nor Escrow Agent
shall be responsible for delays or failures in performance resulting from acts
beyond its control. Such acts shall include but not be limited to acts of God,
strikes, lockouts, riots, acts of war, epidemics, governmental regulations
superimposed after the fact, fire, communication time failures, computer
viruses, power failures, earthquakes or other disasters.
IN WITNESS WHEREOF, Seller, Purchaser and the Escrow Agent have
executed this Agreement as of the date set forth in the first paragraph.
B. BRAUN MELSUNGEN AG
By: /s/ Joachim Schnell
--------------------------
/s/ Caroll H. Neubauer
BIOPURE CORPORATION
By: /s/ Carl W. Rausch
--------------------------
STATE STREET
BANK AND TRUST COMPANY
By: /s/ Arthur J. MacDonald
--------------------------
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<PAGE> 1
EXHIBIT 10.11
<PAGE> 2
PURCHASE AGREEMENT
THIS AGREEMENT effective August 28, 1997 between Biopure Corporation, 11
Hurley St., Cambridge, MA 02141 (hereafter "Biopure") and INPACO Corporation,
1690 E. Race Street, Allentown, Pennsylvania 18103 (hereafter "INPACO").
WITNESSETH:
WHEREAS, INPACO has developed and owns certain intellectual property,
trade secrets, engineering designs, manufacturing processes and operating
information and know-how relating to the design, use and manufacture of the
packaging of fluids in polymeric films together with the dispensing fitment
devices used to extract the fluidic contents (hereafter the "Technology").
WHEREAS, INPACO has and may hereafter obtain patent rights on inventions
made by INPACO (hereafter the "Patent Rights") related to the Equipment to be
licensed to Biopure;
WHEREAS, Biopure desires to (1) purchase from INPACO the Equipment; (2) to
obtain a nonexclusive license for the use of the Technology and the Patent
Rights; and (3) have access to additional Technology as may be available after
the execution of this Agreement arising from a continuing relationship between
the parties.
NOW THEREFORE, the parties agree as follows:
1. Defined Terms shall have the meaning set forth in Schedule A, attached
hereto and incorporated herein by reference.
2. INPACO shall sell to Biopure the Equipment for which Biopure shall make
payment as follows:
2.1. Upon execution of this Agreement, Biopure shall pay INPACO the
sum of $441,940 with the order; $441,940 when one-half of the Equipment is
completed (When the main drive motor is installed); $441,940 prior to shipment
of the Equipment; and $147,314 upon installation and start-up of the Equipment.
If installation and start-up is delayed by Biopure, final payment will be paid
90 day after the equipment is shipped from Inpaco.
Page 1 of 7
<PAGE> 3
2.2. In addition to the payments required under Section 2.1 above,
Biopure shall pay INPACO a Royalty equal to $0.80 per MSI of film Packaging
Materials and $0.025 per fitment, for bags produced by Biopure for sale. Should
Biopure decide to purchase the Packaging Materials from INPACO, then the Royalty
shall be included in the purchase price of the Packaging Materials.
2.3. Biopure will remit Royalties to INPACO quarterly, no later than
30 days after the close of each calendar quarter, together with an accurate
report of the number of units produced and the value of each such unit
determined as set forth in Section 2.2 above. Any Royalty not paid by the
thirtieth (30th) day following the close of any calendar quarter shall bear
interest at the annual rate of five percent (5%) above the prime rate published
by the Wall Street Journal, Midwestern Division, on the next business day
following the date on which the Royalty was initially due. Royalties shall be
paid in U.S. dollars at conversion rates as reported by the Wall Street Journal,
Midwestern Division, prevailing on the last business day of each calendar
quarter.
2.4. Biopure's obligation to pay the Royalty to INPACO under this
Section 2 of this Agreement shall continue for so long as there are unexpired
Patent Rights or Biopure continues to use the Technology.
2.5. Biopure shall provide each year a statement prepared by its
accounting personnel, no later then January 30 of each year, certifying to the
accuracy of the Royalty paid to INPACO during the previous year.
2.6. Biopure will permit INPACO or INPACO's representatives to
audit, inspect and otherwise examine all relevant production records of Biopure
to determine the number of units produced for sale at times mutually convenient
to both parties. Biopure shall maintain all such records for a period of five
(5) years following the dates on which such production records are created. If
as a result of INPACO's audit, inspection or examination of Biopure's records it
is determined that the Royalty owed to INPACO during any calendar quarter has
been understated by more than two percent (2%), Biopure shall within ten day of
demand pay such amount of understated Royalty to INPACO with interest as set
forth in Section 2.3 above. In addition thereto, Biopure shall reimburse INPACO
the cost of such audit, inspection or examination.
3. INPACO hereby grants to Biopure, subject to the terms and
conditions hereinafter set forth, the right and license to use Equipment, the
Technology and the Patent Rights (the "License"). The License is nonexclusive.
The License is assignable by Biopure with prior written approval by INPACO.
INPACO may withhold written approval if the assignment is to a direct competitor
of INPACO or INPACO may withhold approval if the assignee does not assume all
commercial conditions of this agreement
Page 2 of 7
<PAGE> 4
3.1 INPACO warrants that it is the owner of the Technology and
Patent Rights and that it has the right to enter into this Agreement INPACO
shall indemnify and hold harmless Biopure from any claim made by a third party
against Biopure based upon or arising out of the infringement or alleged
infringement of any patent or other intellectual property rights of any other
person relating to the Equipment, the Technology or the Patent Rights, provided,
however, that Biopure shall not be entitled to any indemnification provided for
under this provision unless Biopure has made all payments due to INPACO under
the terms hereof.
4. Any and all inventions and ideas relating to the Technology conceived
by INPACO, whether or not such inventions and ideas are patentable shall be
deemed to be developed and owned solely by INPACO. Any such inventions or ideas
shall be the property of INPACO and shall be included under the license.
5. All information disclosed by INPACO to Biopure concerning the subject
matter of this Agreement, whether disclosed verbally, by samples, or in writing,
shall be considered confidential information. Biopure agrees that said
confidential information shall be retained in secret during the term of this
Agreement and for a period of five (5) years following any termination of this
Agreement and shall not be used for Biopure's own purposes or those of any other
person, or disclosed to others, except as otherwise permitted under this
agreement, unless the information received:
a. Was known to Biopure prior to its receipt from INPACO as evidenced
by a written document;
b. was publicly available at the time it was disclosed to Biopure
pursuant to the Agreement;
c. subsequently becomes publicly available through no fault of Biopure;
d. is rightfully acquired by Biopure, subsequent to disclosure to it by
INPACO, from a third party who is not in breach of a confidentiality
obligation regarding such information; or
e. required to be disclosed to the FDA or equivalent foreign
organization pursuant to Biopure's Business or is the subject of a
court order or subpoena requiring disclosure.
5.1 Biopure agrees that a breach of any provision of this Section 5 by
Biopure will result in irreparable injury to INPACO. Accordingly, Biopure agrees
that INPACO shall be entitled to an immediate accounting and to payment of all
proceeds realized by Biopure as a result of such breach and to injunctive relief
in any court of competent jurisdiction.
Page 3 of 7
<PAGE> 5
6. Unless otherwise terminated, this Agreement shall continue for a period
of ten (10) years from the date the Equipment is delivered to Biopure and shall
be automatically extended for additional three (3) year periods.
During the term of this Agreement and for a period of one (1) year
following any termination of this Agreement, Biopure shall refrain from the sale
of the vertical aseptic pillow type machine of the same design as the Equipment
manufactured by a third party.
Upon the expiration of the term of this Agreement or any termination
hereof, the License shall be revoked, become void and be of no further effect.
7. INPACO warrants the Equipment against defects in material and
workmanship under the normal use and service for which it was designed, for a
period of one year after date of start-up providing Equipment is stored in
accordance with INPACO's recommendations at Biopure' plant. If there is a delay
in installation and commissioning of the Equipment, the warranty will be for a
maximum of two years from original time of shipment on INPACO manufactured parts
only. INPACO's obligation under this warranty being limited to the repair or
replacement of material or the correction of material or workmanship of the
Equipment shown to INPACO's satisfaction to be defective provided Biopure shall
have notified INPACO in writing within 90 days of the discovery of any and all
such defects This warranty does not extend to components not manufactured by
INPACO. Warranties for component or device manufacturer's standard warranty,
INPACO's liability shall be limited to passing through the manufacturer supplied
with its product. INPACO hereby disclaims all other express and/or implied
warranties. It is further understood that in no event shall INPACO be liable for
any punitive, exemplary or consequential damages such as lost profits, lost
product, etc., INPACO's total liability being as stated above. INPACO hereby
disclaims all other warranties, express or implied including the warranty of
merchantability and fitness for a particular purpose, except as specifically set
forth above.
Biopure agrees to and will be responsible for operating the Equipment in the
manner and configuration for which it is sold and intended. Further Biopure, as
the sole manufacturer of the finished product produced by the Equipment, is
responsible for and agrees to integrate and operate the Equipment within a total
processing, packaging and distribution system which meets all of the laws,
regulations and requirements of local, state and federal government which apply
to the production of its products.
Page 4 of 7
<PAGE> 6
8. The License shall be subject to termination by INPACO, in accordance
with the following provisions:
a. In case any breach or default shall be made in observance or
performance of any one or more of the conditions herein contained, or if
Biopure shall become insolvent, then and in each such case INPACO shall
have the right by notice in writing to Biopure, to terminate the License.
b. In case Biopure becomes insolvent or bankrupt, or proceeding for the
appointment of a receiver against it, or makes or executes any bill of
sale, deed of trust or assignment for the benefits of creditors, the
license hereby shall thereupon cease and terminate unless INPACO shall
upon notice thereof elect otherwise.
9. If at any time either party should waive its rights due to any breach
or default by the other with respect to any of the provisions of this Agreement,
such waiver shall not be construed as a continuing waiver of other breaches or
defaults with respect to or in any manner affect the same or other provision of
this Agreement.
10. INPACO shall not be liable for failure to fulfill any of its
obligations under this Agreement, insofar and so long as such failure is caused
by strike, lockout, riot, sabotage, accident, trade dispute, war, fire,
explosion, flood, power shortage, confiscation, Act of God, or act of any
government.
11. This Agreement contains the entire Agreement between the parties. It
may not be changed orally but only by Agreement in writing signed by the party
against whom enforcement of any waiver, change, modification or discharge is
sought.
12. All the provisions of this Agreement are severable, and in the event
any of them shall be held to be invalid in any competent court, this Agreement
shall be interpreted as if such invalid portion were not contained herein. In
addition thereto, Section 5 and 13 of this Agreement shall survive any
termination of this Agreement.
13. Any and all disputes between the parties relating to or arising under
the terms and conditions of this Agreement shall be resolved by final and
binding arbitration pursuant to the rules of the American Arbitration
Association nearest INPACO. The decision by the arbitrator(s) shall be final and
binding upon the parties. In no event shall the arbitrator(s) be authorized to
award consequential, direct or indirect, punitive and/or exemplary damages.
Page 5 of 7
<PAGE> 7
14. Biopure and INPACO stipulate that this Agreement shall be governed by
and construed under and in accordance with the laws of the State of Ohio,
without regard to principles of conflict of laws.
INPACO Corporation Biopure
/s/ Joseph Premchus /s/ Geoffrey J. Filbey
- ------------------- ----------------------
Name Name
V.P. Sales V.P. Engineering
- ------------------- ----------------------
Title Title
9-04-97 28th Aug '97
- ------------------- ----------------------
Date Date
Page 6 of 7
<PAGE> 8
SCHEDULE A
Customer: Biopure Corporation
Address: 11 Hurley Street
Cambridge, MA
"Technology" means intellectual property, trade secrets, engineering designs,
patents, pending patent applications, unfiled patent applications, manufacturing
processes, operating information and know-how now and hereafter owned by INPACO
relating to the design, manufacture and operation of INPACO's packaging system
for the packaging of fluids in polymeric film containers including dispensing
fitment and metering devices used to extract fluidic contents.
"Equipment" means Mark II A-FA-Proposal P-578 attached hereto.
"Packaging Materials" means the fitment and film used on the Equipment.
"Patent Rights" means those valid, issued patents owned, licensed to or
controlled by INPACO which are listed below and any after acquired and/or issued
patents owned, licensed to be controlled by INPACO:
3,894,381 4,246,062 , 4,452,378 , 4,767,478 , 4,779,397 , 4,695,337 ,
- --------- --------- --------- --------- --------- ---------
4,512,136
- ---------
Page 7 of 7
<PAGE> 1
EXHIBIT 10.12
<PAGE> 2
AGREEMENT
This Agreement is made the 21st day of October, 1994, by and between
Moyer Packing Company, a Pennsylvania corporation ("MOPAC"), and BIOPURE
CORPORATION, a Delaware corporation ("Biopure").
RECITALS
Biopure is in the business of developing oxygen carrying substances
derived from bovine hemoglobin for in vivo use in humans and animals. Such
substances, as currently being tested and as may hereafter be approved for
commercial sale, together with modifications and improvements, are hereinafter
referred to as "Product." MOPAC is in the business, among other things, of beef
packing. MOPAC and Biopure have previously cooperated in the procurement for
Biopure's use of a source of supply of bovine hemoglobin, i.e., blood (the
"Material") for the Product.
The parties wish to enter into arrangements on the terms and subject
to the conditions set forth in this Agreement to provide
o A spur facility at which Material can be obtained from U.S.
Department of Agriculture ("USDA") passed and approved cattle; and
o A separation facility wherein Biopure can carry out the initial
(separation) steps in the manufacture of Product from Material
supplied by MOPAC; and
<PAGE> 3
o Introducing Biopure to MOPAC's herd sources, so that Biopure may
endeavor to directly contract with such sources for Material; and
o At the option of MOPAC, an investment by MOPAC in Biopure.
NOW, THEREFORE, in consideration of the mutual covenants and
promises herein contained, MOPAC and Biopure agree as follows:
ARTICLE I
SUPPLY OF MATERIAL
I.1 Requirements Supply. MOPAC agrees to use its best efforts to
supply to Biopure and Biopure agrees to purchase from MOPAC all of Biopure's
requirements for Material at the "Separation Facility," as defined in Section
II.1, on the terms and subject to the conditions hereinafter set forth.
I.2 Sources. MOPAC owns and operates a slaughterhouse located at
Souderton, Pennsylvania (the "MOPAC Plant"). All Material purchased and sold
hereunder shall be sourced from the MOPAC Plant, as follows:
(a) Beginning promptly following the execution and delivery of this
Agreement, MOPAC shall build at MOPAC's expense a segregated "spur" area (the
"Spur Facility") from which all Material purchased and sold hereby will be
sourced. The Spur Facility shall be a segregated portion of the MOPAC Plant off
the main kill line in which cattle supplied by Producers (as hereinafter
defined) participating in the Program (as hereinafter de-
-2-
<PAGE> 4
fined) are set aside from other cattle to be processed in the MOPAC Plant.
Biopure's operations at the Spur Facility will not interfere with the operations
of MOPAC within the remainder of the MOPAC Plant. The Spur Facility will be in
accordance with the plans and specifications attached hereto as Exhibit I.2.
Biopure shall provide all technical support to assure the compliance of the Spur
Facility with such plans and specifications and with applicable laws, rules,
regulations or other governmental requirements ("Requirements of Law"). The
parties agree that MOPAC's total expenditures for materials and services of
third parties for the Spur Facility shall not exceed $250,000; Biopure shall
promptly pay or reimburse MOPAC for the payment of any excess over $250,000. It
is understood that MOPAC shall not include in establishing MOPAC's cost, for
purposes of this maximum and for the "Asset Agreement," as defined in Article
IV, any costs for MOPAC's personnel (other than design, engineering and
maintenance personnel) or any allocation of other MOPAC operating, selling,
general or administrative or other costs or expenses.
(b) MOPAC shall use its best efforts to maintain in effect, during
the term of this Agreement, arrangements with cattle producers ("Producers") who
will participate in Biopure's herd management program (Program). For purposes of
the previous sentence, MOPAC's best efforts shall consist of MOPAC seeking out
Producers who will negotiate with Biopure for participation in the Program; and
introducing Biopure to such Producers; but MOPAC shall have no further
obligations with respect thereto. MOPAC
-3-
<PAGE> 5
shall have no obligation whatsoever with regard to feeding, inoculating or
otherwise caring for the cattle in the Program, attending to the condition of
such cattle or maintaining any medical records or feeding records with respect
to such cattle; and Biopure shall contract directly with, and pay all
compensation to, such Producers with respect to participation in the Program.
MOPAC will assist Biopure's personnel in maintaining segregation of cattle
received from Producers, identified as acceptable by Biopure, within the MOPAC
Plant so that Materials will be derived only from cattle processed in the Spur
Facility; and Biopure shall maintain sufficient personnel at the MOPAC Plant to
so identify and segregate such cattle. Such personnel shall be employees or
contractors of Biopure.
I.3 Quantities; Price.
(a) Biopure shall pay for the Materials the prices set forth in
Exhibit I.3 hereto within 14 days of receipt of any invoice. All payments owed
by Biopure to Producers shall be made directly by Biopure to such Producers; and
MOPAC shall have no liability or responsibility with respect thereto or
obligation therefor or under the agreements between Biopure and such Producers,
in general.
(b) Biopure will provide annual estimates in advance for its
Material needs for each 12-month period this Agreement is in effect and revise
the annual estimates approximately quarterly for the unexpired portion of the
year. The beginning of "Year 1" as shown on Exhibit I.3 will be January 1, 1995.
Biopure shall not be obligated to purchase any minimum quantity of Material,
-4-
<PAGE> 6
except as set forth on Exhibit I.3 (for years 1 through 4). This Agreement does
not constitute authorization to deliver any Material; provided, however, that
Biopure shall make the minimum payments to MOPAC set forth on Exhibit I.3 on a
"take-or-pay" basis, regardless of quantities actually delivered in the
respective years indicated. Biopure shall purchase Material hereunder by issuing
a purchase order specifying quantity and delivery dates. MOPAC shall use its
best efforts to produce and deliver to Biopure Material ordered by Biopure
pursuant to such purchase orders.
(c) In the event of MOPAC's failure to supply timely all
requirements ordered by Biopure, for any reason, Biopure shall have the right to
purchase Material from other sources.
I.4 Force Majeure. In the event either party is rendered unable,
wholly or in part, by force majeure to carry out its obligations under this
Article I, other than the obligation to make payment of amounts due hereunder,
then the obligations of such party, so far as they are affected by such force
majeure, shall be suspended during the continuance of any such event of force
majeure. However, the party claiming the existence of force majeure shall use
all reasonable efforts to remedy any situation which may interfere with the
performance of its obligations hereunder. The term "force majeure" as used
herein, and as applied to either party hereto, shall mean acts of the law,
including the order and/or judgment of any federal, state or local court,
administrative agency or authority or governmental body, acts of God, strikes,
lockouts, or other labor distur-
-5-
<PAGE> 7
bances, acts of the public enemy, war, blockades, insurrections, riots,
epidemics, fires, floods, washouts, arrests, and restraint of rulers and people,
civil disturbances, explosions, breakage or accidents to machinery, or any other
cause, whether of the kind herein enumerated, or otherwise, not reasonably
within the control of the party claiming suspension. It is understood that
settlement of strikes, lockouts, or labor disturbances shall be entirely within
the discretion of the party having the difficulty and that the above requirement
that any force majeure shall be remedied with all reasonable dispatch shall not
require the settlement of strikes, lockouts, or labor disturbances by acceding
to the demands of an opposing party when such course is inadvisable in the
discretion or judgment of the party having the difficulty.
I.5 Royalty. MOPAC agrees that the herd management program and
processes to be employed at the Spur Facility and other know how relating to the
Material and the Product (collectively, the "Intellectual Property"), are
proprietary to Biopure, and no rights in any Intellectual Property are conveyed
or licensed hereby from Biopure to MOPAC except the right to construct and
operate the Spur Facility and supply Material pursuant to this Agreement.
Nevertheless, if MOPAC shall sell the Material or other body parts from animals
in the herds in the Program at a price higher than the Material or other body
parts would sell for had they come from animals not in the Program, then MOPAC
shall pay Biopure a royalty equal to 10% of "sales". For this purpose, "sales"
shall mean the difference in price received
-6-
<PAGE> 8
by MOPAC attributable to the Program. MOPAC shall not in any event sell Material
from animals in the herds in the Program to any third party engaged in the
pharmaceutical or "biotech" business without the prior consent of Biopure, which
shall not be unreasonably delayed, withheld or conditioned. Royalties will be
remitted to Biopure no less often than quarterly with sufficient supporting
information so that Biopure can confirm the accuracy of the amount paid.
I.6 Assignment and Binding Effect. MOPAC agrees that if it sells the
MOPAC plant while the Agreement in this Article I is in effect, MOPAC will
assign this Agreement to the purchaser and require the purchaser to assume the
obligations of MOPAC hereunder. Biopure shall have the right to assign this
Agreement to any subsequent owner or operator of the Separation Facility as part
of any sale permitted by Section II.2 hereof.
I.7 Term of Article I. The term of this Article I shall be equal to
the term of the Lease of even date herewith between MOPAC and Biopure.
ARTICLE II
LAND AND SPUR FACILITY
II.1 Lease of Land. The Land is a parcel (which will be subdivided
and deeded to MOPAC as a separate parcel), as more fully described in the Lease
(as hereinafter defined). Concurrently with the execution and delivery of this
Agreement the parties will execute and deliver a lease of the land in the form
of Exhibit II.1A (the "Lease").
-7-
<PAGE> 9
II.2 Construction of Separation Facility. Biopure shall have the
right, and intends, to build a plant on the Land to function as a separation
facility (the "Separation Facility") for stage 1 of the processing of Materials
into Product. The design and construction of the Separation Facility shall be
solely Biopure's responsibility and MOPAC shall have no obligations, duties or
rights in or with respect to the Separation Facility, other than a right of
first refusal to purchase the Separation Facility at fair market value if
Biopure decides to sell the Separation Facility, provided that MOPAC shall have
no right of first refusal in the event of a proposed sale by Biopure of the
Separation Facility as part of a sale (including a conveyance by operation of
law) of all or substantially all of Biopure's business of manufacturing Product.
Any such purchaser from Biopure shall take under and subject to MOPAC's right of
first refusal set forth in this Subsection. The provisions of Article III
regarding process waste disposal will not apply to domestic human waste from the
Separation Facility, it being understood that Biopure will cause the Separation
Facility to be connected to the municipal sewage system in order to handle same.
ARTICLE III
WASTE DISPOSAL AGREEMENTS
III. 1 Waste Disposal for Separation Facility.
(a) MOPAC will supply the process waste disposal requirements of the
Separation Facility through the waste disposal system (the "System") currently
in existence and used by the
-8-
<PAGE> 10
MOPAC Plant. It is estimated on the basis of information available to MOPAC and
disclosed to Biopure that the System has the capacity as now constructed to
treat 1,000,000 gallons of sewage per day, that the current use is 600,000
gallons per day, and that the permit for operation of the System permits the
treatment of 1,000,000 gallons of sewage per day. MOPAC and Biopure will
cooperate in causing an orderly connection of the Separation Facility with the
System. Biopure shall take all steps necessary and required in order to assure
that the Separation Facility and the material to be discharged therefrom meet
the requirements of all Requirements of Law and otherwise complies with the
specifications, requirements and procedures of the System. In addition to and
not in limitation of the foregoing, Biopure agrees that the Separation
Facility's discharge into the System shall not exceed the following limits:
<TABLE>
<S> <C>
BOD 8,000 PPM
Suspended Solids 1,000 PPM
Ammonia 250 PPM
Phosphorus 100 PPM
Total Dissolved Solids 3,000 PPM
</TABLE>
(b) Biopure will pay for its usage of the System an amount equal to
115% of Biopure's pro rata share of MOPAC's total "Operating Costs," based on
actual usage by Biopure (which shall be separately metered). Operating Costs
shall be determined in accordance with a formula established, from time to time,
by MOPAC to allocate costs of wastewater treatment among MOPAC's operating
divisions.
(c) If at any time the System requires a capacity increase, the
party determining the need shall give the other party
-9-
<PAGE> 11
written notice, and the parties will refer the matter to the Engineer selected
in accordance with Section III.2 hereof, who shall advise the parties of any
modifications, alterations or improvements to the System which may be required
so that the System is capable of providing the total capacity required by MOPAC
and Biopure and of the estimated Capital Costs (as hereinafter defined). The
parties shall agree as to any alterations, modifications, or capital
improvements which must be made to the System. If the parties cannot agree, the
matter shall be resolved under Section III.2. As used herein, "Capital Costs"
shall mean all costs reasonably incurred in connection with increasing System
capacity through alteration, addition, modification or improvement to the System
or with the construction of any additional sewage and waste water treatment
facility required in order to make treatment capacity available to MOPAC and
Biopure hereunder. Such costs shall include, but not be limited to, the cost of
capital improvements, feasibility studies, engineering and other professional
services and all costs associated with acquiring necessary government approvals.
If Biopure's relative usage of the System prior to any such incurrence of
Capital Costs (based on average usage during the most recent six-month period in
which Biopure used the System) is 10% or less of total capacity of the System,
then Biopure shall pay the pro rata portion of the Capital Costs, and if
Biopure's usage, determined as aforesaid, exceeds 10%, the allocation of payment
of Capital Costs between Biopure and MOPAC shall be negotiated. Notwithstanding
the previous sentence, Biopure shall bear 100% of the Capital Costs
-10-
<PAGE> 12
to be incurred in connection with the construction of any additional sewage and
wastewater treatment facility(ies) primarily due to the type, make-up,
characteristics and/or composition of the material discharged by (and peculiar
to) the Separation Facility into the System. At such time as Biopure shall
commence using capacity of the System, MOPAC shall install such metering devices
as are reasonably necessary for accurately measuring the capacity of the System
being used by Biopure.
III.2 Dispute Resolution. Any determination of the manner in which
the System must be modified or altered to permit increased use pursuant to
Section III.1(c) hereof, and any determination of the respective shares of
Capital Costs or Operating Costs to be paid by MOPAC or Biopure pursuant to
Sections III.1(b) and III.1(c) hereof and any dispute between the parties as to
any technical matter shall be made or resolved as follows: In the event such a
determination is required, MOPAC and Biopure shall mutually select a registered
professional engineer experienced in the operation of biological waste-water
treatment plants whose determination on such matter shall be conclusive and
binding on the parties. If MOPAC and Biopure shall be unable to agree on such an
engineer within 15 days from the date of written notices described in Subsection
IV.1(c), then they each, shall within 15 days after the end of the first such 15
day period, select a registered professional engineer experienced in the
operation of biological wastewater treatment plants and the two such engineers
so selected shall together select a third such engineer within 15 days
thereafter. Any determination to be made
-11-
<PAGE> 13
shall then be made by majority decision of the three engineers so selected and
such determination (or the determination of the sole engineer if only one is
selected) shall be conclusive and binding on the parties hereto. The engineer or
engineers selected to make any determination as above provided are referred to
herein as the "Engineer." The parties shall share all cost of such proceedings
equally.
III.3 Operation of System. The operation and maintenance of the
System shall be in accordance with all applicable Requirements of Law and shall
be the responsibility of MOPAC except that Biopure shall pay its share of the
costs of operating the System as provided above. MOPAC shall not be liable to
Biopure for consequential damages arising out of System shutdown caused by any
event of force majeure.
III.4 Term. The agreements in this Article III shall remain in
effect so long as the Lease, and any extensions thereof, remains in effect. In
addition, upon the acquisition of the Waste Treatment Rights (as defined in
Article IV) by Biopure pursuant to the exercise of the Option granted in Article
IV, or Biopure's option in Article Twelve of the Lease, the agreements in this
Article III shall remain in effect for the balance of the term of the Lease and
any extensions thereof, and so long thereafter as MOPAC or its successor or
assign shall operate the System and sell Material to Biopure or Biopure's
successor or assign, and Biopure or Biopure's successor or assign shall purchase
its requirements for Material in accordance with Section I.1.
-12-
<PAGE> 14
ARTICLE IV
STOCK OPTION
IV.1 Grant of Stock Option.
(a) Biopure hereby grants to MOPAC, its successors and assigns, the
irrevocable right and option to purchase (the "Option"), in whole but not in
part, the number of shares (the "Optioned Shares") of Common Stock, par value
$.01 per share, of Biopure ("Shares"), determined as hereinafter set forth. The
Option hereby granted may be exercised by MOPAC at any time after the third
anniversary of the date hereof, but not later than 12:00 midnight, Eastern Time,
five years from the commencement of operations at the Separation Facility, by
the payment of the exercise price for the Optioned Shares. Any exercise of this
Option will be deemed to have been made irrevocably, if written notice of
exercise is given to Biopure, stating the decision to exercise and stating a
closing date (the "Option Closing").
(b) The number of Optioned Shares shall be equal to the "Asset
Amount" divided by $25.00 (it being understood that Biopure makes no
representation whatsoever about the current or future market value of the
Shares).
(c) The aggregate exercise price for the Optioned Shares is good and
marketable title to the following property and rights (collectively, the
"Assets"): (A) the continued license to use the Spur Facility as an outside
contractor; (B) the Land (subject to the Lease); and (C) the "Waste Disposal
Rights," which shall mean and include the fully paid right to the System for the
term described in Section III.4 above.
-13-
<PAGE> 15
(d) The "Asset Amount" shall mean (i) an amount equal to MOPAC's
total cost (as described and defined in Section I.2) of the construction of the
Spur Facility (but in no event more than $250,000); plus (ii) $50,000 per acre
for the Land, plus (iii) $500,000 for the Waste Disposal Rights.
IV.2 Compliance with Law. The Option shall not be exercisable if
such exercise would violate:
(a) Any applicable state securities law;
(b) Any applicable registration or other requirements under the
Securities Act of 1933, as amended;
(c) Any Requirement of Law.
Furthermore, if a registration statement with respect to the Shares to be issued
upon the exercise of the Option is not in effect, or if counsel for Biopure
deems it necessary or desirable in order to avoid possible violation of the
Securities Act of 1933, as amended (the "Act"), Biopure may require, as a
condition to its issuance and delivery of certificates for the Optioned Shares,
the delivery to Biopure of a commitment in writing by the person exercising the
Option that at the time of such exercise it is such person's intention to
acquire the Shares for its own account for investment only and not with a view
to, or for resale in connection with, the distribution thereof; that such person
understands the Optioned Shares may be "restricted securities" as defined in
Rule 144 of the Securities and Exchange Commission; and that any resale,
transfer or other disposition of said Optioned Shares will be accomplished only
in compliance with the Act and any available exemptions from the registration
require-
-14-
<PAGE> 16
ments of the Act. Biopure may place on the certificates evidencing the Optioned
Shares appropriate legends reflecting the aforesaid commitment and may refuse to
permit transfer of such certificates until it has been furnished evidence
satisfactory to it that no violation of the Act or the rules and regulations
thereunder would be involved in such transfer.
IV.3 Adjustments.
(a) In the event that at any time prior to the expiration of the
Option each of the outstanding Shares (except Shares held by dissenting
shareholders) shall be converted into or exchanged for a different number or
kind of shares of stock or other securities of Biopure, or exchanged for other
property, whether through reorganization, recapitalization, stock split-up,
combination of shares, merger or consolidation, then for all purposes of the
Option there shall be substituted for each Optioned Share purchasable thereunder
the number and kind of shares of stock or other securities into which each such
Share shall be so changed, or for which each such Share shall be so exchanged,
and the shares or securities so substituted for each such Share shall be subject
to purchase at the aggregate exercise price, as above provided. In the event
that Biopure shall issue a stock dividend in Shares with respect to the Shares,
the number of Optioned Shares shall be adjusted by adding to each such Optioned
Share the number of Shares which would have been distributed as a stock dividend
thereon had such Optioned Share been outstanding on the record date for payment
of the stock dividend, and the Optioned Shares together with said additional
Shares shall be purchasable
-15-
<PAGE> 17
at the aggregate exercise price, as above provided. In the event that there
shall be any other change in the number or kind of outstanding Shares or other
securities of Biopure, or of any shares of stock or other securities into which
Shares shall have been changed or for which they shall have been exchanged, then
the Board of Directors of Biopure shall make such adjustment in the number or
kind of shares of stock or other securities subject to purchase at the aggregate
exercise price, as above provided, as the Board in its sole discretion may
determine is equitably required by such change, and such adjustment so made
shall be effective and binding for all purposes of this Option. Anything to the
contrary herein notwithstanding, MOPAC shall not be entitled to purchase a
fraction of a Share under the Option.
(b) Notwithstanding paragraph (a) above, if Biopure shall liquidate
or dissolve, or shall be a party to a merger or consolidation with respect to
which Biopure shall not be the surviving corporation, Biopure shall give written
notice thereof to the Optionee at least thirty days prior to the effective date
of the liquidation, dissolution, merger or consolidation, as the case may be, it
being contemplated that such 30-day time frame shall be sufficient time for
MOPAC to exercise the option. To the extent that the Option shall not have been
exercised on or prior to the effective date of such liquidation, dissolution,
merger or consolidation, the Option shall terminate on such effective date.
IV.4 Option Closing.
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<PAGE> 18
(a) The Option Closing will occur at the time set forth in MOPAC's
notice of exercise of the Option, which date shall be not later than 60 days
after the date of such notice. The Option Closing shall take place at the
corporate headquarters of Biopure or at such other place as the parties may
agree upon.
(b) Biopure's obligation to deliver the Optioned Shares at the
closing will be subject to the following conditions:
(i) There shall be no default or event that with notice or
passage of time would constitute a default by MOPAC
under this Agreement or the Lease;
(ii) The Assets will be in good and usable conditions and
repair, subject to ordinary wear and tear;
(iii) MOPAC will have and convey good and marketable title to
each of the Assets, free and clear of liens and
encumbrances of any nature whatsoever, unless
specifically agreed to by Biopure; and
(iv) MOPAC or the person in whose name the Optioned Shares
are to be registered will have executed and delivered to
Biopure an agreement in the form of agreement attached
hereto as Exhibit IV.4.
(c) MOPAC's obligation to convey the Assets at the closing will be
subject to the condition that between the date of notice of exercise of the
Option and the Option Closing there shall not have occurred a material adverse
change in the properties or business of Biopure and that Biopure shall have
executed and delivered an agreement in the form of Exhibit IV.4.
(d) At the Option Closing Biopure will deliver to MOPAC one or more
certificates for the Optioned Shares, which
-17-
<PAGE> 19
shall, upon payment therefor as hereinabove provided, be duly authorized and
issued, fully paid and nonassessable.
(e) At the Option Closing, MOPAC shall deliver to Biopure:
(i) A special warranty deed conveying the Land;
(ii) One or more deeds, assignments or other appropriate
instruments of conveyance and/or license of the Spur
Facility and the Waste Disposal Rights;
(iii) Written representations and warranties concerning the
person exercising the Option establishing such person's
sophistication in investment matters and other customary
representations of investors in restricted stock,
including without limitation an understanding of the
risks of the investment, its lack of liquidity and lack
of readily available or public information about
Biopure; and
(iv) Such other deliveries, certificates, instruments and
assignments as may be reasonably required to vest
ownership and possession of the assets in Biopure.
(f) At the Option Closing Biopure and MOPAC will execute and deliver
an agreement in the form of Exhibit IV.4 which, among other things, will grant
registration and other rights to MOPAC and impose restrictions on the transfer
of the Optioned Shares.
-18-
<PAGE> 20
ARTICLE V
GENERAL PROVISIONS
V.1 Entire Agreement. This Agreement, including the Exhibits and the
agreements incorporated by reference, contains the entire agreement of the
parties respecting the matters contained herein and may not be amended or
modified except by a writing signed by both parties.
V.2 Notices. Except as otherwise provided in this Agreement, all
notices, demands, requests, consents, approvals or other communications (for the
purpose of this Section V.2 collectively called "Notices") which are required or
permitted to be given under this Agreement or which either party desires to give
with respect to this Agreement shall be in writing and shall be sent by hand
delivery, courier (including overnight delivery service), cable, telegram,
registered or certified mail or facsimile transmission, in all cases return
receipt requested, fees and postage prepaid, addressed to the party to be
notified as follows (or to such other address as such party shall designate by
notice to the other):
If to MOPAC:
Moyer Packing Company
P.O. Box 395
Souderton, PA 18964-0395
Telephone: (215) 723-5555
FAX (215) 723-2190
ATTN: William G. Morral, Vice President-Finance
-19-
<PAGE> 21
with a copy to:
William R. Wanger, Esquire
Pearlstine/Salkin Associates
1250 South Broad Street
Lansdale, PA 19446
Telephone: (215) 699-6000
(215) 699-0231
-20-
<PAGE> 22
If to Biopure:
68 Harrison Avenue
Boston, MA
Attn: James O'Shea, President
Telephone: (617) 350-7800
FAX: (617) 350-6614
V.3 Miscellaneous. (a) This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original and enforceable
against the parties actually executing such counterpart, and all of which
together shall constitute one instrument.
(b) This Agreement will be governed by and construed in accordance
with the laws of the Commonwealth of Pennsylvania. The parties consent to the
jurisdiction of the Pennsylvania courts and the Federal court sitting in
Philadelphia, Pennsylvania as the sole and exclusive forum for the adjudication
of disputes and submit to the jurisdiction of said courts.
(c) This Agreement shall be binding upon and inure to the benefit of
the parties and their respective successors and permitted assigns.
(d) The parties will keep the terms and conditions of their
relationship confidential except as required by law or subpoena. Reference is
made to the Agreement Regarding Non-Disclosure of Source and Sale of Blood
Products dated July 30, 1991 by and between Biopure and MOPAC, which Agreement
is hereby incorporated herein by reference.
(e) Reference is made to the Indemnification Agreement and Waiver of
Warranties dated January 30, 1991 by and between Biopure and MOPAC, which is
hereby incorporated herein by refer-
-21-
<PAGE> 23
ence. In addition, Biopure will cause MOPAC to be named as an additional insured
under Biopure's product liability insurance policies, providing at least $5
million of coverage.
V.4 Biopure Representations. The execution, delivery and performance
by Biopure of this Agreement and the issuance of the Option do not violate or
conflict with the certificate of incorporation or by-laws of Biopure or conflict
with or cause a default (or constitute an event that with notice or the passage
of time would be a default) under any agreement to which Biopure is a party or
by which any of its assets are bound or violate any Requirement of Law, provided
that Biopure makes no representation about Requirements of Law applicable to
MOPAC's properties or operations.
Executed effective as of the date first set forth above.
MOYER PACKING COMPANY
By: /s/ Michael Silverberg
--------------------------------
Vice President - Beef Division
BIOPURE CORPORATION
By: /s/ Jim O'Shea
--------------------------------
President
-22-
<PAGE> 24
EXHIBIT I.2
[PLANS AND SPECIFICATIONS OF SPUR FACILITY]
<PAGE> 25
EXHIBIT I.3
<TABLE>
<CAPTION>
Actual Actual
Estimated Price Per Annual Mini-
Estimated Estimated Estimated Annual No. Head to mum Payment
Year Cattle/Day Days/Week Hours/Days of Head be Paid* to be Made**
- ---- ---------- --------- ---------- ------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
1 35 0.83 2 595 $ 28.00 $ 25,000
2 70 1.00 2 3,500 23.00 50,000
3 70 5.00 2 17,500 20.00 75,000
4 140 5.00 4 35,000 18.00 100,000
5 280 5.00 8 70,000 16.00 Thereafter,
6 420 5.00 12 105,000 13.00 no minimum
7 and 420 5.00 12 105,000 13.00
thereafter
</TABLE>
This chart represents a rough estimate of cattle requirements in the near
future. Assume year 1 begins in 1995. Based upon regulatory progress demand
could be much larger or smaller. The timing is also primarily a function of our
regulatory progress in both the veterinary and human clinical trials. The jump
up from year 4 could be much more aggressive.
* Each and every price (other than prices for previous years) shall be CPI-U
Adjusted on January 1 of each year using the standards set forth in Section 3.02
of a Lease of even date herewith between MOPAC and Biopure.
** These are minimum purchase amounts, and in the event Biopure purchases less
in a year, the difference will be paid to MOPAC not later than 30 days after the
end of the applicable year.
<PAGE> 26
EXHIBIT IV.4
AMENDMENT AND RIGHTS AGREEMENT
Amendment and Rights Agreement dated as of May 26, 1988, by and among
BIOPURE Corporation, a Delaware corporation (the "Company"), those persons and
parties listed on Schedule 1 hereto (collectively, the "First Investors"),
BIOPURE Associates Limited Partnership ("BALP"), those persons and parties
listed on Schedule 2 hereto (collectively, the "Second Investors"), B. Braun
Melsungen AG ("Braun"), and each Subsequent Investor (as defined below) who
shall, subsequent to the date hereof join in and become a party to this
Agreement by executing and delivering to the Company an Instrument of Adherence
in the form of Exhibit A hereto (the First Investors, BALP, the Second Investors
and the Subsequent Investors who become parties hereto being collectively
referred to herein as the "Investors").
WHEREAS, Hemopure Corporation, a predecessor corporation to the Company
("Hemopure"), and the First Investors are parties to a certain Agreement (the
"Hemopure Agreement") dated as of November 26, 1984, pursuant to which the First
Investors were granted certain registration rights with respect to shares of
Hemopure's common stock acquired by the First Investors;
WHEREAS, the Company, then known as BIOPURE Fine Chemicals, Inc., IPT
Partners ("IPT") and BALP are parties to (i) a certain Stockholder Agreement
("Stockholder Agreement") dated as of January 1, 1985, pursuant to which IPT and
BALP granted to the Company a certain right of first refusal on dispositions by
IPT and BALP of shares of the Company's common stock acquired by them and (ii) a
certain Registration Agreement ("Registration Agreement") dated as of June 10,
1985, pursuant to which IPT and BALP were granted certain registration rights
with respect to shares of the Company's common stock acquired by them;
WHEREAS, IPT has transferred its shares of the Company's common stock to
the general partners of IPT, HTV Industries, Inc. ("HTV") and David N. Judelson
("Judelson"), and, in accordance with the Shareholders Agreement, HTV and
Judelson each have agreed to be bound by and comply with the provisions of the
Stockholder Agreement;
<PAGE> 27
-2-
WHEREAS, the Company and the Second Investors are parties to a certain
Debenture Purchase Agreement (the "Debenture Purchase Agreement") dated as of
March 23, 1987, as amended, pursuant to which the Second Investors purchased an
aggregate of $1,300,000 principal amount of the Company's 10% Convertible
Debentures, which Debentures have been converted by the Second Investors into
346,663 shares of the Company's convertible preferred stock ("Convertible
Preferred Stock"), par value $.01 per share;
WHEREAS, the Company and Braun are parties to a certain Investment
Agreement (the "Braun Agreement") dated August 7, 1987, pursuant to which Braun
purchased from the Company 240,225 shares of the Company's common stock ("Common
Stock"), par value $.01 per share;
WHEREAS, the Company and 3i Securities Corporation, then known as
Investors in Industry Securities Corporation ("3i"), are parties to a certain
Stock Purchase Agreement (the "3i Agreement") dated as of August 21, 1987,
pursuant to which 3i purchased from the Company 64,061 shares of Common Stock;
WHEREAS, the Company and the Second Investors, Braun and BALP
(collectively, the "Third Investors") are parties to a certain Investment
Agreement (the "Investment Agreement", and together with the Hemopure Agreement,
the Stockholder Agreement, the Registration Agreement, the Debenture Purchase
Agreement, the Braun Agreement and the 3i Agreement, the "Agreements") dated the
date hereof, pursuant to which the Third Investors purchased an aggregate of
315,500 shares of Common Stock;
WHEREAS, the Company and the Investors desire to amend and consolidate
into a single agreement certain registration rights and rights of first refusal
in a future offering granted to the Investors under the Agreements and the
rights of first refusal on dispositions by the Investors granted to the Company
in the Agreements;
WHEREAS, it is a condition precedent to the obligations of the Company and
the Third Investors under the Investment Agreement that this Agreement be
executed and delivered by the parties hereto; and
WHEREAS, it is contemplated that certain investors (the "Subsequent
Investors") shall purchase additional shares of Common Stock within 90 days from
the date hereof.
<PAGE> 28
-3-
NOW, THEREFORE, in consideration of the mutual covenants and premises
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. TERMINATION OR AMENDMENT OF AGREEMENTS.
1.1. Hemopure Agreement. The Hemopure Agreement is hereby
terminated.
1.2. Stockholder Agreement. The Stockholder Agreement is hereby
amended by deleting therefrom Sections 2, 3, 4 and 5.
1.3. Registration Agreement. The Registration Agreement is hereby
terminated.
1.4 Debenture Purchase Agreement. The Debenture Purchase Agreement
is hereby amended by deleting therefrom Sections 9, 10 and 11.
1.5 Braun Agreement. The Braun Agreement is hereby amended by
deleting therefrom Sections 7, 8 and 9.
1.6 3i Agreement. The 3i Agreement is hereby amended by deleting
therefrom Sections 4, 5 and 7.
2. REGISTRATION OF COMMON STOCK.
2.1 Definitions. For the purposes of this Section 2, the following terms
shall have the meanings hereinafter set forth:
(a) the term "Special Shares" means, collectively, the Common Stock
(i) now owned of record by the Investors or (ii) issuable upon conversion
of the Convertible Preferred Stock now owned of record by the Second
Investors or (iii) acquired from the Company within 90 days from the date
hereof by Subsequent Investors who become parties to this Agreement, and
(b) the term "Purchasers" means (i) the Investors and (ii) any
transferee of any of the Special Shares.
2.2 Demand Registration Rights.
2.2.1 Upon the written request of Purchasers holding at least that
number of Special Shares equal to
<PAGE> 29
-4-
one-half of the Special Shares to have any or all of their Special Shares
registered, the Company will give written notice of such request promptly to all
other Purchasers and thereafter diligently prepare, file with the Securities and
Exchange Commission (the "SEC") and process to effectiveness a registration
statement under the Securities Act of 1933, as amended (the "1933 Act"), and any
amendments or supplements required to make such registration effective, to
permit the Purchasers, or any of them, to offer and sell to the public the
number of Special Shares requested to be registered. The Company shall file the
aforesaid registration statement as soon as reasonably practicable, provided,
however, the Company shall not be required to cause its financial statements for
any period ending on a date other than the last day of its fiscal year to be
audited. The Company shall use its best efforts to cause said registration
statement to become effective. Any such filing, subject only to the availability
of such financial statements, shall in any event be made within 90 days after
such notification is received by the Company.
2.2.2 At any time which shall be more than six months subsequent to
the effective date of the registration statement filed by the Company pursuant
to Section 2.2.1 hereof, upon written request of Purchasers holding at least
one-half of the Special Shares remaining after giving affect to the provisions
of Section 2.2.1, the Company will give written notice of such request promptly
to all other Purchasers and thereafter file with the SEC and process to
effectiveness a registration statement under the 1933 Act, and any amendments or
supplements required to make such registration effective, to permit the
Purchasers, or any of them, to offer and sell to the public the number of
Special Shares requested to be registered. The Company shall file the aforesaid
registration statement as soon as reasonably practicable; provided, however, the
Company shall not be required to cause its financial statements for any period
ending on a date other than the last day of its fiscal year to be audited. Any
such filing, subject only to the availability of such financial statements,
shall in any event be made within 90 days after such notification is received by
the Company.
2.2.3 If the Purchasers propose that their offering under Section
2.2.1 or Section 2.2.2 hereof be made through an underwriter, the Board of
Directors of the Company, by vote of a majority thereof, shall have the right to
designate the lead underwriter, such designation to be made within 45 days of
the date at which the Purchasers shall
<PAGE> 30
-5-
have requested a registration statement pursuant to this Section 2.2, and such
designation shall be subject to the approval of the majority in interest of such
Purchasers, which approval shall not be unreasonably withheld. The Company shall
file any amendments of or supplements to any registration statement and
otherwise use its best efforts to insure that such registration statement
remains in effect under the 1933 Act until the earlier of the sale of all of the
Special Shares included in the registration or the expiration of 90 days from
the effective date thereof. Except as may be modified by this Section 2, the
Company shall be obligated to register the Special Shares under the 1933 Act by
reason of this Section 2.2 on two occasions only, provided such registration
statements have become effective under the 1933 Act. In the event the
underwriter selected by the Company for such offering and sale advises that the
number of shares proposed to be sold by any person (including the Company) other
than the Purchasers, and the Purchasers, is greater than the number of shares
which the underwriter believes feasible to sell at that time, then the number of
shares which the underwriter believes may be sold shall be allocated in
proportion to the number of shares proposed for inclusion in the registration
statement in the following order: (i) the Purchasers, and (ii) any remaining
balance among such persons (including the Company) who desire to have such
shares registered.
2.2.4 Notwithstanding the foregoing, if the Company has never sold
any of its shares in a public offering, and if Purchasers have exercised
"demand" registration rights pursuant to this Section 2.2, then the Company may
elect to register its shares for its own account and to take priority over all
other persons who wish to have their shares registered pursuant to the exercise
of "demand" registration rights. In that event, the exercise by the Purchasers
of "demand" registration rights will be deemed to have been rescinded and
restored to the Purchasers, the Purchasers shall continue to have the right to
exercise such "demand" registration rights in the future; and the Purchasers, at
their option, may continue to have their Special Shares included in the
registration statement in accordance with and subject to Section 2.3 hereof.
2.2.5 Notwithstanding the foregoing, if the preparation of a
registration statement has commenced pursuant to a request under Sections 2.2.1
or 2.2.2 and any or all of the Purchasers requesting such registration
thereafter elects to postpone effecting or not to effect such registration, the
Company shall only be required to
<PAGE> 31
-6-
proceed (i) if the remaining Purchasers who had requested registration still
hold not less than one-half of the number of shares required to request a
registration or (ii) within 30 days of election by one or more Purchasers to
postpone effecting, or not to effect, such registration, but not more than 60
days from the date the Company shall have first received such request, other
persons who shall be holders of the Common Stock of the Company (whether or not
such persons shall be Purchasers) who had not been parties to the original
request, then request or theretofore have requested such registration, provided
that such persons who had requested registration and whose request had not been
withdrawn together hold not less than one-half or said number of Special Shares
required to request a registration.
2.2.6 Limitation on Demand Registration Rights. The registration
rights granted pursuant to this Section 2 shall not be exercisable until August
7, 1992, or until such earlier date as any other holder of Common Stock shall
have similar entitlements to demand registration.
2.3 Piggy-Back Registration. On each occasion, if any, at which the
Company contemplates filing with the SEC a registration statement under the 1933
Act for the sale of Common Stock of the Company by it or by any holders of
shares of its Common Stock other than the Purchasers (such shares being herein
referred to as "Company Shares"), except in the case of a registration statement
in connection with any stock option, stock purchase, savings or similar employee
benefit plan or an acquisition, merger or exchange of stock, the Company will so
notify the Purchasers in writing at least 30 days prior to the filing of each
such registration statement of its intention to do so. Each Purchaser who gives
written notice to the Company, within 21 days of receipt of the Company's
notice, of its desire to have any Special Shares included in said registration
statement shall have such Special Shares so included in any registration
statement so filed; provided, however, that if the underwriter for such offering
and sale advises that the number of shares proposed to be sold is greater than
the number of shares which the underwriter believes feasible to see at that
time, at the price and upon the terms approved by the Company, then the number
of shares which the underwriter believes may be sold shall be allocated in
proportion to the number of shares proposed for inclusion in the registration
statement in the following order: (i) the Company, (ii) the balance, if any, pro
rata among the Purchasers who have requested registration pursuant to this
Section 2.3 and (iii) any remaining balance among such other
<PAGE> 32
-7-
holders of Common Stock who desire to have such shares registered. Subject to
the provisions of the next succeeding sentence, the Company shall file
amendments or supplements to any such registration statement under this Section
2.3 and otherwise use its best efforts to insure that such registration
statement will remain in effect under the 1933 Act (including the filing of any
amendment or supplement which may be necessary for the purpose) until the
earlier of the sale of all of the Special Shares included therein or the
expiration of 90 days from the date on which the Purchasers were first able to
sell the Special Shares pursuant to such registration statement. If the
underwriter shall so request, each Purchaser whose Special Shares are so
included shall agree in writing not to sell any of his or its Special Shares for
a period specified by the Company but not exceeding 90 days from the effective
date of such registration statement; provided that, in the event of any such
postponement, the Company will keep effective any registration statement which
shall include any of the Special Shares registered for sale by any Purchaser for
a period (in addition to that hereinbefore set forth) equal to the period during
which sales by a Purchaser have been deferred pursuant to an underwriter's
request.
Notwithstanding anything contained in this Section 2.3 to the contrary,
the Company shall not be obligated to include the Special Shares in such
registration statement if the Company has not received notices from the
Purchasers requesting the inclusion of that amount of Special Shares the value
of which in the aggregate equals or exceeds the lesser of (i) five percent of
the value of the Company Shares to be registered, or (ii) $200,000.
2.4 Expenses. In the case of a registration under Section 2.2 or 2.3 of
this Agreement, the Company shall bear all costs and expenses of the
registration statement (and all amendments and supplements thereto) relating to
the registration of the securities in question, including printing, legal and
accounting expenses, and SEC filing fees and blue sky fees and expenses and the
reasonable fees and disbursements of counsel retained by the Purchasers in
connection with the registration of their Special Shares, but the Company shall
have no obligation to pay or otherwise bear (i) any portion of the fees or
disbursements of more than one such counsel for the Purchasers, (ii) any portion
of the transfer taxes and fees resulting from the offer and sale of the Special
Shares, and (ii) any portion of the underwriter's commission, discounts and
expenses attributable to the Special Shares being offered and sold by the
Purchasers.
<PAGE> 33
-8-
2.5 Delivery of Documents--Blue Sky Provisions. In connection with any and
all filings made by the Company under the 1933 Act in accordance with Section
2.2 or 2.3 of this Agreement, the Company shall at its expense furnish each
Purchaser whose Special Shares are included in a registration statement with a
copy of such registration statement and each amendment thereof or supplement
thereto, together with a reasonable number of copies of any preliminary and
final prospectus, any amendment thereof and supplement thereto, and any other
document forming a part of or related to such registration statement, and the
Company will use its best efforts to cause any of the Special Shares included in
a registration statement to be qualified under the laws of such reasonable
number of jurisdictions as the Purchasers may designate, at the Company's
expense, and the Company will continue such qualifications in effect so long as
may be necessary to comply with all applicable laws regulating sales of
securities; provided that the Company shall not be required to qualify to do
business as a foreign corporation, or submit generally to service of process, in
any jurisdiction in which it would not otherwise be required to do so by reason
of its business operations.
2.6 Indemnification.
(a) With respect to the registration statements described in Section
2.2 and 2.3 of this Agreement, the Company hereby agrees to indemnify, hold
harmless and defend the Purchasers and each person, if any, who is deemed a
controlling person of any Purchaser within the meaning of the 1933 Act, against
any and all losses, claims, damages or liabilities (including legal and other
expenses incurred in investigating and defending against the same), to which
they, or any of them, may become subject under the 1933 Act or other statute or
common law, arising out of or based upon (i) any alleged untrue statement of a
material fact contained in any such registration statement, preliminary
prospectus or prospectus included therein, or any amendment thereof or
supplement thereto, or (ii) the alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements contained
therein not misleading; provided, however, that the indemnity contained in this
Section 2.6 (a) shall not apply to any such alleged untrue statement or omission
made in reliance upon and in conformity with information furnished in writing to
the Company by or on behalf of Purchasers whose Special Shares are covered by
such registration statement. The Purchasers agree as soon as practicable after
the receipt of notice of any claim or action against
<PAGE> 34
-9-
them in respect of which indemnity may be sought from the Company hereunder, to
notify the Company thereof in writing, and the Company shall assume the defense
of such claim or action, including the employment of counsel which shall be
reasonably satisfactory to the Purchasers, and the payment of expenses relating
thereto, insofar as such claim or action shall relate to any alleged liability
in respect of which indemnity may be sought from the Company hereunder.
(b) Each Purchaser, severally but not jointly, hereby agrees to
indemnify, hold harmless and defend the Company, its directors and officers,
each person who controls the Company within the meaning of the 1933 Act and each
other Purchaser against any and all losses, claims, damages or liabilities,
including legal or other expenses incurred in investigating and defending
against the same, to which the Company or any such director, officer, or
controlling person may become subject under the 1933 Act or other statute or
common law, arising out of or based upon (i) any alleged untrue statement of a
material fact contained in any such registration statement, or prospectus or
preliminary prospectus included therein, or any amendment thereof or supplement
thereto, or (ii) the alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements contained therein not
misleading; provided, however, that the indemnity contained in this Section
2.6(b) shall apply in each case to the extent, but only to the extent, such
statement or omission was made in reliance upon and in conformity with written
information furnished to the Company by or on behalf of such Purchaser for use
with reference to such Purchaser in the preparation of the registration
statement. The Company agrees as soon as practicable after the receipt of notice
of any claim or action against the Company, any officer, director or controlling
person thereof, in respect to which indemnity may be sought from any Purchaser
or Purchasers hereunder, to notify such Purchaser or Purchasers in writing, and
such Purchaser or Purchasers shall assume the defense of any such claim or
action, including the employment of counsel and the payment of expenses relating
thereto insofar as such claim or action shall relate to any alleged liability in
respect to which indemnity may be sought from the Purchasers hereunder.
(c) Notwithstanding the foregoing, an indemnified party may, at its
own expense, participate in such defense by counsel chosen by it or by him,
without impairing the indemnifying party's control of the defense.
<PAGE> 35
-10-
Notwithstanding anything contained in this Section 2.6 to the contrary,
any indemnified party shall have the right to employ counsel to represent such
indemnified party who may be subject to liability arising out of any claim in
respect to which indemnity may be sought by such indemnified party against the
indemnifying party under this Section 2.6 if, in the reasonable judgment of such
indemnified party, it is necessary for such indemnified party to be represented
be separate counsel in order to avoid an actual or potential conflict of
interest, and in that event the reasonable fees and expenses of such separate
counsel shall be paid by the indemnifying party.
2.7 Information. The Purchasers whose Special Shares are included in any
registration statement under Section 2.2 or Section 2.3 hereof agree to furnish
the Company with all information which may be required under the 1933 Act from
them for the purpose of preparing and filing such registration statement.
2.8 Advising the Purchasers. In connection with any registration statement
filed pursuant to this Section 2 which includes any of the Special Shares, the
Company will promptly advise each Purchaser registering any of such Special
Shares (herein sometimes referred to as the "Selling Purchaser") and confirm
such advice in writing (i) when the registration statement has become effective,
(ii) when any post-effective amendment to the registration statement becomes
effective, and (iii) of any request by the SEC for any amendment or supplement
to the registration statement or prospectus or for additional information. If at
any time the SEC should institute or threaten to institute any proceeding for
the purpose of issuing, or should issue, a stop order suspending the
effectiveness of the registration statement, the Company will promptly notify
the Selling Purchaser and will use its best efforts to prevent the issuance of
any such stop order or to obtain the withdrawal thereof as soon as possible; and
the Company will advise the Selling Purchaser promptly of any order or
communication of any public board or body addressed to the Company suspending or
threatening to suspend the qualification of any shares or the Common Stock of
the Company for sale in any jurisdiction.
2.9 Transfer of Registration Rights. In the event that any Investor
transfers his or its Special Shares, such transfer shall include all of such
Investor's registration rights provided in this Section 2 relating to the
securities being transferred; provided, however, that any such transferee shall
first sign an instrument (in form
<PAGE> 36
-11-
reasonably satisfactory to the Company and the Investors) in which such
transferee agrees to be bound by this Section 2.
2.10 Right to Compel Registration. The Company recognizes and agrees that
the Purchasers will not have an adequate remedy at law if the Company fails to
comply with its obligations under this Section 2 and that in the event of such
failure the amount of damages will not be readily ascertainable. Consequently,
the Company agrees that, in addition to any remedies which may be available at
law, the Purchasers shall be entitled to equitable relief in the event of such
failure.
3. RIGHT OF FIRST REFUSAL IN FUTURE OFFERING. The Investors shall have a
right of first refusal to purchase a portion of the securities offered for sale
by the Company in its next Private Offering (defined herein as a non-public
offering of equity securities of the Company or securities convertible into
equity securities without agreements or undertakings attendant thereto which
relate to substantial services or other contributions to the business of the
Company and which is not an issuance of securities in connection with the
acquisition of a business or of property, but excluding (i) the offering of
Common Stock to the Third Investors pursuant to the Investment Agreement and
(ii) any offering of Common Stock to the Subsequent Investors within 90 days
from the date hereof), if any, occurring after the date hereof. Upon the
initiation of such Private Offering, the Company shall give each Investor
written notice thereof (the "Offering Notice"), containing a complete
description of the offering together with such disclosure as would be required
to be made to the Investors. Each Investor shall have 60 days from the date of
receipt of the Offering Notice to subscribe for all or any portion of its
Applicable Share (defined below) of the securities to be sold in such Private
Offering. Any Investor wishing to subscribe shall give written notice to the
Company describing the amount of securities to be purchased by such Investor. If
any Investor subscribes for less than his or its Applicable Share, his or its
right of first refusal shall lapse with respect to those securities for which it
has not subscribed. If the Company shall materially amend the offering, the
Investors' right of first refusal shall be reinstated with respect thereto as if
the amended offering were the applicable Private Offering. In the event that the
Company does not conclude such Private Offering within six months from the date
of the Offering Notice, the right of first refusal described herein shall be
reinstated as to each Investor. If an Investor participates
<PAGE> 37
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to the full extent permitted hereunder in the next Private Offering, he or it
shall be accorded a right of first refusal to participate in the Company's next
subsequent Private Offering, which right shall be substantially similar to the
right contained in this Section 3, including the foregoing provision for rights
in future offerings. The provisions of this Section 3 shall apply to all Private
Offerings, except that the rights granted herein shall terminate (i) as to any
Investor if he or it does not exercise his or its right of first refusal in full
in any Private Offering, and (ii) as to all Investors at the time of a Public
Offering as described in Section 6.3 of the Debenture Purchase Agreement.
Anything in this Section 3 to the contrary notwithstanding, the Company shall
not be required to offer or sell any securities to whom the offer or sale of
securities by the Company under the circumstances contemplated by the Company
would require (in the sole judgment of the Company) any registration,
qualification or filing under any federal or state securities laws (other than
the filing of a notice on Form D pursuant to Regulation 503 (17 CFR ss.230.503)
of the SEC). For purposes of this Section 3, the term "Applicable Share" means,
in relation to any Investor, the fraction having as its numerator the number of
shares of Common Stock (on a fully diluted and converted basis) owned by the
Investor and as its denominator the aggregate number of shares of Common Stock
(on a fully diluted and converted basis) owned by all of the Investors.
4. RIGHTS OF FIRST REFUSAL ON DISPOSITIONS BY INVESTORS. If any Investor
desires to sell, assign, transfer or otherwise dispose of any shares of Common
Stock or shares of Convertible Preferred Stock (herein referred to as
"Securities") to any person, such Investor (the "Offering Investor") agrees that
he or it will notify (the "Notification") the Company in writing of his or its
intention to do so, specifying the amount of Securities proposed to be
transferred (the "Offered Securities"), the name of the person or persons to
whom he or it proposes to transfer the Offered Securities (or if no particular
purchaser is identified, then the general class of persons to whom he or it
proposes to transfer the Offered Securities), and a price per share which shall
be the minimum price at which he or it proposes to effect the transfer (the
"Minimum Price"). The Notification shall contain an affirmation by the Offering
Investor that he or it has a reasonable expectation of being able to effect a
transfer at the Minimum Price and to such person or persons (or class of
persons), and shall recite the basis for such
<PAGE> 38
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expectation. The Notification shall offer to sell to the Company and/or its
designees the Offered Securities, free and clear of any liens or encumbrances in
favor of third persons, at the Minimum Price and on such other terms and
conditions, if any, not less favorable to the Company and its designees as those
proposed to be offered to such other person or persons (or class of persons). In
the event all or any part of the consideration shall consist of other than cash
the Minimum Price shall mean the fair value of such consideration, including the
fair value of any promissory notes of the prospective purchaser.
The Company and its designees shall have the right to purchase the Offered
Securities. The Company shall act upon the offer of the Offering Investor as
soon as practicable after receipt of the Notification and in all events within
30 days after such receipt. If the Company fails to accept the offer of the
Offered Securities in its entirety, the Offering Investor shall be free to
proceed to sell all but not less than all of the Offered Securities to the
person or persons (or class of persons) specified in the Notification at not
less than the Minimum Price. If the Offering Investor fails to complete its
proposed sale within a period of three months after the later to occur of the
date of rejection of the offer contained in the Notification or the expiration
of the period within which such offer could have been accepted, then the Offered
Securities shall once again be subject to the requirements of a prior offer
pursuant to the provisions of this Section 4.
In the event the Company and its designees shall elect to purchase or
acquire all of the Offered Securities, written notice to the Offering Investor
of such election to purchase or so acquire all of the Offered Securities shall,
when taken in conjunction with the Notification, be deemed to constitute a valid
and legally binding purchase and sale agreement.
The closing of a purchase and sale of Offered Securities pursuant hereto
shall take place at the principal executive offices of the Company on the 30th
day following the expiration of the period within which the offer to purchase
could have been accepted (unless another time is mutually agreed upon), at which
time the Offering Investor shall deliver the stock certificate or certificates
representing the Offered Securities so sold (duly endorsed or accompanied by a
duly executed stock power or assignment to effect transfer of ownership to the
purchaser or purchasers on the records of the Company) against the Offering
Investor's
<PAGE> 39
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receipt of payment of the Minimum Price in cash (by certified check, bank
cashiers check or wire transfer).
The provisions of this Section 4 shall not apply to the transfer of
Securities by an Investor to:
(i) the heirs, executors or legal representatives of an Investor;
(ii) the members of the immediate family of an Investor or the
trustees of an inter vivos or testamentary trust for the benefit of
members of the immediate family of an Investor or any charitable
organization;
(iii) any bona fide pledge by an Investor as collateral for a loan
to such Investor from a bank or other recognized financial institution
which loan is in connection with a valid business or personal transaction
and not for the purpose of circumventing the provisions of this Section 4;
(iv) among any of the stockholders or the partners of an Investor
for their own account and not for the purpose of circumventing the
provisions of this Agreement;
(v) the partners of an Investor upon termination or dissolution of
such partnership, or upon the withdrawal of any such partner from such
Investor;
(vi) any entity which an Investor controls, which is controlled by
or which is under common control with such Investor; and
(vii) persons to whom Judelson and HTV granted, prior to the date
hereof, options for shares of the Company's common stock in an aggregate
amount not to exceed 31,250 shares as to Judelson and 4,250 shares as to
HTV, such amounts to be adjusted to reflect stock dividends, stock splits,
mergers or changes in capitalization of Hemopure or the Company;
provided that in each instance specified in clauses (i) through (vii) above the
transferee or pledgee shall agree to execute an agreement, in form and substance
satisfactory to the Company, pursuant to which such transferee or pledgee agrees
to be bound by and comply with the provisions of this Agreement. The provisions
of this Section 4 shall not apply
<PAGE> 40
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to any proposed sale of shares of Common Stock pursuant to a registration
statement filed by the Company pursuant to the 1933 Act or to sales made
pursuant to Rule 144 promulgated under the 1933 Act, provided that in the case
of any such sale pursuant to Rule 144, such sale is made after the Company has
affected a public offering of its Shares registered under the 1933 Act.
Anything contained in this Section 4 to the contrary notwithstanding, the
provisions hereof shall cease and be of no further force or effect upon a Public
Offering as described in Section 6.3 of the Debenture Purchase Agreement.
5. WAIVER BY CONVERTIBLE PREFERRED STOCKHOLDERS. Pursuant to Section
6(a)(i) of the Certificate of Stock Designation of the Company filed with the
Office of the Secretary of State of Delaware on March 25, 1987, the Second
Investors hereby consent to any issuance of the Company's capital stock so long
as such issuance is approved by a majority of the members of the Company's Board
of Directors.
6. STOCK LEGEND. Certificates evidencing Securities subject to this
Agreement shall bear an appropriate legend providing notice of the existence of
the restrictions set forth herein.
7. AMENDMENT; WAIVER. This Agreement may be amended or any provision of
this Agreement may be waived with the written consent of the Company and
Investors (which term, for purposes of this Section 7 shall include any
successor, transferee or assignee of an Investor but not the Company) holding a
majority of the aggregate number of Special Shares (as defined in Section 2
hereof) held by the Investors.
8. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts.
9. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
10. BINDING EFFECT. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors in title, assigns,
heirs, executors, administrators and other legal representatives.
<PAGE> 41
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the date first written above.
BIOPURE Corporation
<PAGE> 1
EXHIBIT 10.13
<PAGE> 2
BIOPURE CORPORATION
AGENCY AGREEMENT
This "Agency" Agreement is made as of March 29, 1999, by and between
Biopure Corporation, a Delaware corporation (the "Company") and the Agent named
on the signature page hereof (the "Agent").
WHEREAS, the Company is preparing to manufacture and sell Oxyglobin(R)
brand veterinary products ("Products") enumerated on the Company's veterinary
products agency price list (Exhibit A)(as such list may be changed by the
Company from time to time, the "Price List"); and
WHEREAS, the Agent and the Company wish to enter into an arrangement
wherein the Agent would promote, sell, and collect payment for, such Products
for the Company as a representative ("Agent") of the Company within the United
States of America to duly licensed veterinarians (the "Customers") on the terms
provided herein;
NOW, THEREFORE, in consideration of the premises and of the mutual
promises and covenants contained herein, the parties hereby agree as follows:
1. APPOINTMENT AND ACCEPTANCE.
1.1. Appointment. Subject to the terms and conditions of this Agreement,
the Company hereby appoints the Agent, and the Agent hereby accepts appointment,
as an authorized distributor agent within the Territory, (Territory as outlined
in section 1.2), for the promotion, sale and collection of payment for, the
Products to Customers. The Company has appointed a limited number of Agents;
however, the Company retains the right to itself, and/or appoint others to,
promote, sell, and collect payment for, and distribute, the Products to
Customers in the Territory.
1.2. Territory. The Territory is defined as that geographical area in
which said Agent is represented by a full time field sales representative, and
of which assigned Distributor agrees to be responsible for mutually agreed upon
quarterly and annual sales objectives as described in the "Business Plan".
Compensation by the Company to the Agent will be limited to the area stated as
follows:
The 48 Continental United States (including DC) plus Alaska
<PAGE> 3
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No compensation will be earned by the Agent for sales generated from customers
in geographical areas not indicated in this section 1.2.
1.3. Business Plan. The Company and the Agent will jointly develop a
written business plan for the promotion, distribution and sale of the Products
to Customers in the Territory for each year (Nov 1 - Oct 31) during the term of
this Agreement (a "Contract Year") and, on a nonbinding preliminary basis, for
the next succeeding Contract Year (a "Business Plan"). Each Business Plan will
include, among other things, sales and marketing strategies, advertising and
promotion plans, financial projections (including projected sales, expenses and
other customary items) and Agent performance criteria (including, but not
limited to, market penetration, sales promotion execution, Product
availability/accessibility and trade support). In the event of any conflict
between this Agreement and a Business Plan, this Agreement will govern. The
Business Plan relating to Contract Year ending Oct 31, 1999 will be agreed upon
at least thirty (30) days after the Agent Launch Date (as defined below) or at a
mutually agreed upon date and location. The Business Plan relating to all
Contract Years thereafter will be agreed upon not less than sixty (60) days (or
at a mutually agreed upon date and location) prior to the start of the Contract
Year to which it relates. The Company and the Agent will negotiate the terms and
conditions of each Business Plan in good faith, using their respective best
efforts to agree upon such terms and conditions. The parties will review each
then-current Business Plan quarterly and update such Business Plan from time to
time as may be mutually agreed upon in writing. For purposes of this Agreement,
"Agent Launch Date" means the date specified by the Company to the Agent in
writing upon which the Agent is to begin promotion, sale, and collection of
payment for, the Products to Customers in the Territory (which date is currently
anticipated to be March 29, 1999).
1.4. Agent Obligations. Except as otherwise expressly provided in the
Business Plan, the Agent will at its sole expense:
(a) meet the Agent's performance criteria set forth in the Business
Plan;
(b) use its reasonable best efforts to market and promote the sale
of the Products to Customers throughout those portions of the Territory in
which the Agent has field sales representatives on and after the Agent
Launch Date, through direct sales calls, advertising and other appropriate
means (all such marketing and promotional activities to be in accordance
with the Business Plan or as otherwise expressly proposed by the Agent and
approved in writing by the Company);
<PAGE> 4
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(c) immediately forward to the Company's Technical Service
Department for response, in accordance with any procedures described in
the Business Plan and in a mutually agreed upon format, (i) all complaints
and inquiries relating to the Products (including, but not limited to,
Product safety, quality and packaging, Customer satisfaction and Customer
services) received by the Agent from Customers and consumers within the
Territory except inquiries relating solely to Product availability,
pricing, billing and/or delivery and (ii) all other inquiries relating to
the Products received by the Agent from outside the Territory;
(d) maintain a suitable staff in the Territory to enable the Agent
for the proper promotion, sale, and merchandising of the Products and for
seeking to assure Customer and consumer satisfaction with the Products;
(e) not solicit or accept orders for the Products other than from
Customers within the Territory after the Agent Launch Date; and not
knowingly, or knowingly permit others to, distribute or resell Products
outside the Territory or for end use by other than duly licensed
veterinarians;
(f) meet with the Company at least once each quarter (starting with
the quarter in which the Agent Launch Date occurs), at a mutually
agreeable time and place to discuss and review the Agent's activities
hereunder, at which meeting the Agent will make available to the Company
information concerning the Agent's sale and marketing of the Products in
the Territory during the quarter and year-to-date, such information to
include details of sales efforts, Product sales volume and such other
information as may be mutually agreed upon in each Business Plan;
(g) at least thirty (30) days prior to use or distribution of any
sales, promotion or training materials relating to the Products (other
than materials provided to the Agent by the Company for such purpose),
submit such materials to the Company for review, give due consideration to
any comments received from the Company with respect to such materials, and
not use or distribute any such materials without the express prior written
consent of the Company (which consent will not be unreasonably withheld or
delayed); and
(h) make all field sales personnel of the Agent available for at
least four (4) hours, and telesales personnel available for at least one
(1) hour, of initial Products sales and marketing training by the Company,
and for such supplemental training by the Company as the Company may deem
appropriate from time to time, in each case, at such times and locations
as may be mutually agreed upon by the Company and the Agent.
<PAGE> 5
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(i) make all field sales representatives of the Agent available to
work with field sales representatives of the Company at least two (2) full
business days per agreement year.
(j) maintain sales and promotion of the Company's Products so as to
meet or exceed the previous years annual sales within the same competitive
environment.
(k) cooperate and participate in any national or area promotional
program offered by the company for any Products covered by this agreement.
(l) follow the Company's credit policy (See Paragraph 2.3 Payment
Terms) or program terms promptly in payment of goods shipped to the
Customer. Product(s) shipped to the Customer will be billed to the Agent
at the price stated on a current price list or according to the current
price program minus a ten (10) percent discount as outlined in Paragraph
1.5(d). It is the responsibility of the Agent to evaluate the credit
worthiness of the Customer. Upon transmitting an order for shipment to the
Company, the Agent accepts full responsibility for payment of the product
from the Customer.
(m) transmit all orders, taken from the Customer for Product(s), a
minimum of once daily basis, by either fax, electronic mail, or other
agreed upon means of transmission so as to afford the Company time to
process and ship said orders in an expediant manner.
(n) sell products only at the Company's current stated list or
promotional price.
1.5 Company Obligations. Except as otherwise expressly provided in the
Business Plan, the Company will at its sole expense:
(a) use its reasonable best efforts to fill and ship all accepted
orders for Products received from the Agent on a daily basis so as to be
shipped no later than the next business day. Orders received on Fridays or
the day before holidays will not be shipped until the next business day
unless special arrangements have been made at the customers expense. The
Company will supply a list confirming such order shipments to the Agent by
the end of the next business day. If orders exceed the available inventory
levels, the Company will use reasonable efforts to inform the Agent and
ship the remaining inventory in a manner that the Company deems as being
fair and equitable. If product becomes available during a backorder, the
Company will ship orders on a first-come, first-serve basis, but can, at
its
<PAGE> 6
-5-
own discretion, give partial shipments to large orders. In no event will
the Company be obligated to provide Products to the Agent in excess of one
hundred and twenty percent (120%) of any maximum quantity specified in the
applicable Business Plan;
(b) provide to the Agent's field sales personnel at least four (4)
hours of initial Products sales and marketing training, and Agent
telesales personnel at least one (1) hour of initial Product sales and
marketing training, and such supplemental training, if any, as the Company
may deem appropriate, in each case, at such times and locations as may be
mutually agreed upon by the Company and the Agent.
(c) supply such literature, ad reprints and other promotional aids
and furnish Agent with other information that in the opinion of the
Company may be helpful in the sale of listed Product(s).
(d) compensate the Agent through a discount of eight (8) percent off
of the current price of the Product times the total monthly units shipped
at that price to the Customer in the Agent's Territory excluding any
taxes, and/or shipping and handling charges incurred by the Company. The
Company will compensate the Agent an additional two (2) percent through a
discount off of the current price or promotional price of the Product
times the total monthly units shipped at that price to the Customer
excluding any taxes, and/or shipping and handling charges incurred by the
Company, so as to compensate the Agent's sales representatives. Therefore,
a total of ten (10) percent discount off of the current price list or
promotional price times the total monthly units shipped at that price to
the Customer will be applied as payment for services from the Agent
including, but not limited to, the promotion, sales, and collection of
payment from the Customer for Product shipped by the Company. In addition
the Company will compensate the Agent quarterly an additional two (2)
percent commission (incentive), exclusive of taxes, and /or shipping and
handling charges incurred by the Company, based upon the attainment of
mutually agreed upon quarterly goals. One (1) percent of this incentive is
additional compensation for the Agent, and one (1) percent is for
additional compensation of the Agency sales force. In the event the Agent
fails to achieve these goals during any given quarter yet is able to
achieve the overall annual goals, then the Agent will receive the
incentive commission for that quarter at the conclusion of the fiscal
year. These goals are outlined in exhibit B.
(e) will replace, any unit of Product to the Customer which has
outdated (provided the Product is not outdated more than ninety (90) days)
with equal Product.
<PAGE> 7
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2. PRODUCTS PURCHASE AND SALE.
2.1. Orders. Each order for Products taken by the Agent from the Customer
will be subject to acceptance by the Company and will not be binding upon the
Company unless and until so accepted. The Company reserves the right, in its
sole discretion, to accept or reject, in whole or in part, any Product order.
All orders will be shipped to the Customer in minimum quantities of one box (two
(2) bags).
2.2. Prices. Prices for the Products will be as set forth on the Price
List. The current Price List is attached hereto as Exhibit A. Any deviation from
current pricing as indicated by the Company is a violation of this contract. All
prices are F.O.B. the Customer's facility and are exclusive of any federal,
state or local sales, use, privilege, excise or similar taxes or duties levied
upon any party. The Company will give the Agent at least ten (10) days prior
written notice of any price change. In the event of a price change, orders will
be invoiced at the prices in effect at the time of the Company's receipt of the
order.
2.3. Payment Terms. Terms of payment by the Agent to the Company for
Products shipped to the Customer will be net thirty (30) days from the date of
statement unless the Agent chooses to pay the Company via electronic funds
transfer in which case the terms of payment will be net forty-five (45) days.
All payments will be made in United States Dollars without set-off or
counterclaim, free and clear of (and without deduction for) any taxes, duties,
charges, withholdings, restrictions or conditions of any nature imposed or
levied by any political, taxing or other authority.
2.4. Taxes. The Customer will bear all taxes and duties which may be
levied with respect to the purchase of the Products by the Agent (excluding any
taxes on the Company's income therefrom), and the Company will bear all taxes
and duties which shall be levied upon any of the Products if incidental to the
Company's production of such Product or any component thereof. The Company will
supply the Agent with such reasonable and necessary documents as may be required
to carry out these provisions.
2.5. Claims. Any claim for shortage in Product delivery must be made
within ten (10) business days after the Customer's receipt of shipment. See
attachment "C", "General Information", for specific sales, shipping, and return
policies.
2.6. Warranty. The Company hereby warrants that all Products sold to the
Customer hereunder, at the time of shipment to the Customer, (a) will be
merchantable and of generally commercially salable quality; and (b) will have a
then remaining shelf life of at least twelve (12) months. The Company further
<PAGE> 8
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warrants that the Products have been manufactured, labeled and packaged, and
when in the Company's possession or under its control, have been handled, stored
and shipped, in compliance with all applicable federal, state and local laws.
The Customer's exclusive remedy for a breach of any of the foregoing warranties
will be the replacement, at the delivery point thereof, freight prepaid, of any
Product furnished hereunder that fails to meet the foregoing standards. In no
event will the Company be liable for incidental or consequential damages. All
claims by the Customer and/or Agent under this Paragraph 2.6 must be submitted
in accordance with the Company's published bulletins concerning such claims, as
such bulletins may be amended by the Company from time to time and furnished to
the Agent.
THE COMPANY MAKES NO WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE OR ANY OTHER WARRANTIES RELATING TO THE PRODUCTS, WHETHER
EXPRESS OR IMPLIED, OTHER THAN THE WARRANTIES EXPRESSED IN THIS PARAGRAPH 2.6.
ANY STATEMENTS MADE BY REPRESENTATIVES OF THE COMPANY WITH RESPECT TO THE
PRODUCTS DO NOT CONSTITUTE WARRANTIES AND SHOULD NOT BE RELIED UPON BY THE
AGENT.
<PAGE> 9
-8-
3. COVENANTS.
3.1. Purchaser Guarantees, Instructions. The Agent will not furnish to any
purchaser or user of the Products, or to any other third party, any guarantee or
warranty with respect to the Products or any instructions for their use or
maintenance, except as expressly approved in writing by the Company or as
expressly stated on the Products' labeling and/or in materials provided by the
Company to the Agent for such purpose.
3.2. Trademarks. The Agent will promote and sell the Products to Customers
in the Territory only under such trademarks, copyrights, brand names and product
names as the Company may have registered, or as the Company has otherwise
requested be used on or in respect of Products sold within the Territory
(together, the "Trademarks"). The Agent will use the Trademarks only in such
fashion as has been expressly authorized by the Company in writing. Such use
will not give the Agent any interest in the Trademarks, except the right to
display the Trademarks as expressly provided herein. The Agent will not use any
Trademark in connection with any products other than the Products. Upon the
expiration or any termination of this Agreement, the Agent will immediately
cease all use of the Trademarks.
3.3. Insurance. The Company and the Agent will each maintain, at their own
expense, insurance with reputable insurers, such insurance to be in such form
and amounts as are customary in the case of entities of established reputation
engaged in the same or similar businesses and similarly situated, provided that
such insurance will in any event include commercial general liability and
umbrella liability insurance (including product liability coverage) for property
damage, bodily injury and personal injury in an amount not less than Five
Million Dollars ($5,000,000) combined single amount per occurrence and in the
aggregate. Each such liability insurance policy of the Agent will name the
Company (as its interest may appear) as an additional insured under the policy
and provide for at least thirty (30) days prior written notice to the Company of
any cancellation, modification or amendment of the policy. Each product
liability insurance policy of the Company will name the Agent (as its interest
may appear) as an additional insured under the policy and provide for at least
thirty (30) days prior written notice to the Agent of any cancellation,
modification, or amendment of this policy. Each party will furnish to the other
upon request a Certificate of Insurance or other documentation reasonably
satisfactory to the other evidencing compliance with this Paragraph 3.3.
<PAGE> 10
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3.4. Notice of Certain Events. The Agent will promptly notify the Company
in the event the Agent becomes aware of any of the following events: alleged
infringement of the Trademarks by any third party; alleged infringement of the
trademark or proprietary rights of others in connection with actions taken
hereunder; liability claims relating to the Products and any other event that
may reasonably be expected to have a material adverse effect upon the sale or
distribution of the Products in the Territory.
3.5. Indemnification.
(a) Subject to Subparagraph (c) below, the Agent will indemnify the
Company (and its officers, directors, employees, agents and affiliates)
and hold it (and them) harmless from and against all loss, damage,
liability, cost or expense of any nature whatsoever, including, without
limitation, any and all reasonable attorneys fees and court costs
(together, a "Loss"), arising out of or in connection with (i) the
inaccuracy or breach of any representation, warranty or obligation of the
Agent hereunder and/or (ii) the activities of the Agent in connection with
the promotion, sale or collection of payment of the Products in violation
of this Agreement, law or any other duty or obligation of the Agent. In no
way should the Agent be liable for incidental or consequential damages.
(b) Subject to Subparagraph (c) below, the Company will indemnify
the Agent (and its officers, directors, employees, agents and affiliates)
and hold it (and them) harmless from and against any Loss arising out of
or in connection with the inaccuracy or breach of any representation,
warranty or obligation of the Company hereunder.
(c) Each party (the "Notifying Party") will promptly notify the
other party (the "Indemnifying Party") of the existence of any third party
claim, demand or other action giving rise to a claim for indemnification
under this Paragraph 3.5 (a "Third Party Claim") and will give the
Indemnifying Party a reasonable opportunity to defend the same at its own
expense and with its own counsel provided that the Notifying Party will at
all times have the right to participate in such defense at its own
expense. If, within thirty (30) days after receipt of a notice of a Third
Party Claim the Indemnifying Party fails to undertake to so defend, the
Notifying Party will have the right, but not the obligation, to defend and
to compromise or settle (exercising reasonable business judgment) the
Third Party Claim for the account and at the risk and expense of the
Indemnifying Party subject to the Indemnifying Party's prior written
approval (such approval not to be unreasonably withheld or delayed). Each
party will make available to the other, at the other's reasonable expense,
such information and assistance as
<PAGE> 11
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the other may reasonably request in connection with the defense of a Third
Party Claim.
3.6. Assistance with Claims. Subject to Paragraph 3.5 hereof, each party
will, at the request and expense of the other, furnish such reasonable
assistance as may be required to enable the other party to defend itself against
third party claims threatened or filed in connection with the manufacture,
distribution, sale or use of the Products.
3.7. Confidential Information and Publicity. From time to time during the
term of this Agreement either party may disclose or make available to the other
Confidential Information (as defined below) in connection with activities
contemplated hereunder. Except as may be required by law or as may be reasonably
necessary to enforce rights hereunder, each party agrees that during the term of
this Agreement and thereafter (a) it will use Confidential Information belonging
to the other solely for the purpose(s) of this Agreement and (b) it will not
disclose Confidential Information belonging to the other to any third party
(other than its employees and/or consultants reasonably requiring such
Confidential Information for purposes of this Agreement who are bound by
obligations of nondisclosure and limited use at least as stringent as those
contained herein) without the express prior written consent of the disclosing
party. Each party further agrees that except as reasonably necessary for
performance hereunder or otherwise expressly required by law, it will not
publicly announce or otherwise disclose any of the terms and conditions of this
Agreement without the express prior written consent of the other. Except as may
be otherwise expressly provided in the Business Plan, or as may be required by
law or reasonably necessary to enforce rights hereunder, neither party will use
the name of the other in any advertising, promotional or sales materials
relating to the Products, in any press release, or in any other manner
whatsoever without the express prior written consent of the other. Each party
will promptly return to the other upon request any Confidential Information of
the other party then in its possession or under its control. The provisions of
this Paragraph 3.7 will survive the expiration or any termination of this
Agreement. For purposes of this Agreement, "Confidential Information" means,
with respect to either party, any and all information (including, but not
limited to, financial data and information concerning products, customers and
business operations) in any form belonging to such party except information
which at the relevant time is (a) known to the public through no act or omission
in violation of this Agreement, (b) furnished to the receiving party by a third
party having the lawful right to do so, (c) known to the receiving party prior
to disclosure hereunder (as established by written documentation thereof) or (d)
independently developed by the receiving party without reference to the
Confidential Information.
<PAGE> 12
-11-
4. TERM AND TERMINATION.
4.1. Term. This Agreement will become effective as of the date first
written above and will continue in effect thereafter until terminated pursuant
to Paragraph 4.2 below.
4.2. Termination. This Agreement may be terminated as follows:
(a) In the event that either party fails in any material respect to
observe or perform any of its obligations under this Agreement (with
respect to the Agent, including but not limited to Agent performance
criteria set forth in each Business Plan), which failure is not remedied
within thirty (30) days (or, in the case of payments due, within five (5)
business days), after receipt of written notice from the other party
specifying such failure, this Agreement shall automatically terminate.
(b) In the event of any material change in the organization,
ownership, management or control of the business of the Agent, the Company
may, at its option, terminate this Agreement upon giving written notice of
termination to the Agent. The Agent will promptly advise the Company in
writing of any event described in this Paragraph 4.2(b).
(c) Either party may, at its option, terminate this Agreement
without cause, effective at any time after January 31, 1999, upon giving
at least ninety (90) days prior written notice of such termination to the
other party.
(d) If after exercise of good faith efforts, the parties fail to
timely agree upon a Business Plan for any Contract Year before the start
of such year (with respect to the Business Plan for Contract Year ending
October 31, 1999, at least thirty (30) days or on a mutually agreed upon
date after the Agent Launch Date), this Agreement may be terminated by
either party upon giving at least thirty (30) days prior written notice of
such termination to the other party.
(e) In the event of any publicity concerning the Agent which the
Company reasonably believes to have a material adverse affect upon the
status or reputation of the Agent and/or the Products, the Company may, at
its option, terminate this Agreement upon giving at least five (5) days
prior written notice of such termination to the Agent.
(f) In the event the Company terminates, sells or otherwise
transfers its veterinary products business in its entirety, the Company
may
<PAGE> 13
-12-
terminate this Agreement upon giving at least ninety (90) days prior
written notice of such termination to the Agent.
4.3. Effect of Termination. Upon the termination of this Agreement for any
reason:
(a) the Agent will immediately discontinue making any
representations regarding its status as an agent for the Company and will
immediately cease conducting any activities with respect to the promotion,
sale or distribution of the Products;
(b) all amounts owed by either party to the other will become
immediately due and payable as indicated in section 2.3;
(c) any then unfulfilled Product orders hereunder may be completed
by the Company or transferred to another Agent in the Company's
discretion. Any termination of this Agreement will be without prejudice to
the settlement of the rights created and obligations incurred hereunder
prior to the time of such termination. In no event will either party be
liable for special or consequential damages arising out of the breach or
the termination of this Agreement. The provisions of this Paragraph 4.3
and of Paragraphs 3.5, 3.6, and 3.7 will survive the termination of this
Agreement.
5. MISCELLANEOUS.
5.1. Notices. All notices and other communications between the parties
given pursuant to this Agreement will be deemed to have been sufficiently given
when delivered by personal service or sent by recognized overnight courier
service, telecommunication or registered U.S. Mail to the recipient at the
address indicated on the signature page hereof. All such communications will be
deemed effective on the earlier of (a) actual receipt or (b) if sent by courier
service, on the next business day following the date delivered to the courier
service (the courier service's receipt being evidence of the date of such
delivery), or (c) if sent by telecommunication on the next business date
(subject to confirmation of receipt in complete readable form), or (d) if sent
by registered U.S. Mail, five (5) business days after delivery to the U.S.
Postal Service, postage prepaid. Either party may give to the other written
notice of change of address, in which event any communication will thereafter be
given to such party at such changed address.
5.2. Assignment. This Agreement will be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns.
<PAGE> 14
-13-
Neither party will not assign or otherwise transfer any of its rights or
obligations under this Agreement without the express prior written consent of
the other party.
5.3. Waivers. Any waiver by either party of any rights arising from a
breach of any covenants or conditions of this Agreement must be in writing and
will not be construed as a continuing waiver of other breaches of the same
nature or other covenants or conditions of this Agreement.
5.4. Relationship of Parties This Agreement is not intended to create, nor
should it be construed as creating, a joint venture, partnership or similar
relationship between the parties. The Agent will act solely as an independent
agent and will have no right to bind the Company in any way or to represent that
the Company is in any way responsible for any acts or omissions of the Agent.
5.5. Force Majeure. Notwithstanding any other provision of this Agreement,
if either the Company or the Agent is delayed in or prevented from fulfilling
any of its obligations hereunder by reason of any cause beyond its reasonable
control (including, but not limited to acts of God, fire, third party strike,
flood, delay of transportation or inability to obtain necessary raw materials
through normal commercial channels), then that party will not be liable under
this Agreement for damages resulting from such delay or failure. Each party will
promptly notify the other upon becoming aware of the occurrence of any such
cause and will use its reasonable best efforts to minimize any resulting delay
in or interference with the performance of its obligations hereunder.
5.6. Governing Law; Jurisdiction. This Agreement and all related business
transactions will be governed by the laws of the Commonwealth of Massachusetts
(without reference to principles of conflicts or choice of law which would cause
the application of the internal laws of any other jurisdiction). The courts of
or in the Commonwealth of Massachusetts will have nonexclusive jurisdiction over
any disputes hereunder. Service of any action or proceeding in any such courts
by either party may be made upon the other by registered mail, return receipt
requested, at its address given herein.
5.7. Amendments. Neither this Agreement nor any provision hereof may be
amended except by a writing duly signed on behalf of each party.
5.8. Remedies. All remedies available to either party for breach of this
Agreement are cumulative and may be exercised concurrently or separately. The
exercise of one remedy will not be deemed an election of such remedy to the
exclusion of other remedies.
5.9. Severability. In the event any provision of this Agreement, in whole
or in part, is invalid, unenforceable or in conflict with the applicable laws or
<PAGE> 15
-14-
regulations of any jurisdiction, such provision will be replaced, to the extent
possible, with a provision which accomplishes the original business purposes of
the provision in a valid and enforceable manner, and the remainder of this
Agreement will remain unaffected and in full force provided, however, that if
without such invalid or unenforceable provision the fundamental mutual
objectives of the parties cannot be achieved, either party may terminate this
Agreement without penalty by written notice to the other.
5.10. Interest. Any overdue amounts payable hereunder will bear interest,
payable on demand (whether before or after judgment), from due date to date of
payment, at an annual rate of two percent (2%) above the prime rate of Citibank,
N.A. in effect on the due date or, if lower, the maximum rate permitted by
applicable law.
5.11. Miscellaneous. Each party will bear its own expenses in connection
with the negotiation, preparation and execution of this Agreement. The headings
of the paragraphs and subparagraphs of this Agreement have been added for the
convenience of the parties and are not be deemed a part hereof. This Agreement
may be executed in any number of counterparts, all of which together constitute
a single agreement. In proving this Agreement, it will not be necessary to
produce or account for more than one counterpart signed by the party with
respect to which proof is sought. This Agreement is the sole understanding and
agreement of the parties with respect to its subject matter and supersedes all
other such prior or contemporaneous oral and written agreements and
understandings.
Signed, sealed and delivered by a duly authorized representative of each
party hereto as of the date first written above.
THE BUTLER COMPANY BIOPURE CORPORATION
By: By:
-------------------------------- --------------------------------
Andrew W. Wright,
Title: Vice President, Veterinary
----------------------------- Products
Address: Address: 11 Hurley Street
--------------------------- Cambridge, MA 02141
Telecopy No.: (617) 234-6507
---------------------------
---------------------------
<PAGE> 16
EXHIBIT A
BIOPURE CORPORATION
Oxyglobin(R) Brand Products Price List
(Introductory Promotional Pricing*)
Each Box contains two 125 ml bags of Oxyglobin(R) Brand Veterinary Product.
<TABLE>
<CAPTION>
Retail Price Retail Price Per Bag
------------ --------------------
<S> <C> <C>
1 Box of 2 Bags $279.90 $139.95
2 Boxes of 2 Bags $499.80 $124.95
3 Boxes of 2 Bags $749.70 $124.95
4 Boxes of 2 Bags $999.60 $124.95
5 Boxes of 2 Bags $1099.50 $109.95
</TABLE>
- ----------
*May be changed with 30 days written notice.
Effective Date:
January 5, 1999
<PAGE> 17
EXHIBIT B
OXYGLOBIN(R) BUSINESS PLAN
FISCAL YEAR 1999
(Nov 1, 1998 through Oct 31, 1999)
AGENT: THE BUTLER COMPANY FY: 1999
QUARTERLY GOALS
<TABLE>
<S> <C>
1st Quarter (Nov 1 - Jan 31): N/A units
2nd Quarter (Feb 1 - Apr 30): 3,500 units
3rd Quarter (May 1 - Jul 31): 7,000 units
4th Quarter (Aug 1 - Oct 31): 8,400 units
Fiscal Year Total: 18,900 units
</TABLE>
Unit = 1 Bag of Oxyglobin Solution 125 ml
PROMOTIONAL ACTIVITIES
Sales Meetings: Anticipated Dates ______________________________________________
________________________________________________________________________________
________________________________________________________________________________
Ride Withs (# Per Quarter) 1st Qtr ____________
2nd Qtr ____________
3rd Qtr ____________
4th Qtr ____________
Total for Year ____________
<PAGE> 18
Conferences with Display of Biopure Product:____________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Agent Monthly Flyer, Catalog, Other ____________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Other Activities (Dinner Meeting Support, Advertising, Mailings, etc)___________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
THE BUTLER COMPANY: BIOPURE CORPORATION:
- ---------------------------- ----------------------------
Name Name
- ---------------------------- ----------------------------
Title Title
- ---------------------------- ----------------------------
Date Date
<PAGE> 1
EXHIBIT 10.14
<PAGE> 2
PROMISSORY NOTE
$1,009,772.01 July 31, 1995
FOR VALUE RECEIVED, the undersigned, Carl W. Rausch, an individual
residing at 124 Sagamore Avenue, Medford, MA 02155 (the "Obligor"), hereby
absolutely and unconditionally promises to pay to the order of BIOPURE
Corporation, a Delaware corporation ("BIOPURE"), at the office of BIOPURE
located at 11 Hurley Street, Cambridge, MA 02141, on or before July 31, 2000,
the principal sum of One Million Nine Thousand Seven Hundred Seventy-two Dollars
and One Cent ($1,009,772.01), with interest thereon, or on such part thereof as
shall from time to time remain unpaid, at the Prescribed Rate, compounded
annually as of December 31 of each year.
The Obligor has the absolute right to prepay in whole or in part the
principal of this Note and any accrued interest without penalty.
The "Prescribed Rate" shall be, for each full or partial calendar year
during which interest shall accrue hereunder, the rate per annum equal to the
rate of interest announced by Fleet Bank of Massachusetts, N.A. as its base rate
(the "Base Rate") as in effect on January 1 of such calendar year.
Notwithstanding the previous sentence, if Fleet Bank of Massachusetts N.A. shall
announce, at any time during any such calendar year, a Base Rate that is more
than 2% higher of lower than the Base Rate in effect on January 1 of such year,
the Prescribed Rate shall be, for the remainder of such calendar year, the Base
Rate as announced from time to time during the remainder of such calendar year.
Upon the occurrence of any default by the Obligor in the payment or
performance of any of his obligations under this Note, or upon the death or
termination, whether voluntary or involuntary, with cause or without cause, for
any reason, including but not limited to disability or retirement, of the
Obligor's employment, directorial or advisory relationship with BIOPURE,
thereupon or at any time thereafter, at the option of the holder, all
obligations of the Obligor shall become immediately due and payable without
notice or demand and the holder of this Note shall then have in any jurisdiction
where enforcement hereof is sought, in addition to all other rights and
remedies, the rights and remedies of a secured party under the Uniform
Commercial Code of Massachusetts.
The Obligor will pay on demand all costs of collection and attorneys fees
paid or incurred by the holder hereof in enforcing the obligations of the
Obligor.
The Obligor and all endorsers, guarantors and pledgors hereby waive
presentment, demand, notice of dishonor, protest and all other demands and
notices, in connection with the delivery, acceptance, performance, default or
enforcement of this Note, assent to any extension or postponement of the time of
payment or any other indulgence, to any substitution, exchange or release of
collateral and to the addition of release of any other party or person primarily
or secondarily liable.
<PAGE> 3
THIS NOTE SHALL BE DEEMED TO TAKE EFFECT AS A SEALED INSTRUMENT IN
ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS AND FOR ALL
PURPOSES SHALL BE GOVERNED BY AND INTERPRETED AND DETERMINED IN ACCORDANCE WITH
SUCH LAWS.
This Note replaces a promissory note of like tenor dated August 8, 1990,
in the original principal amount of $700,000.00.
IN WITNESS WHEREOF, the undersigned has executed this Note as of the day
and the year first above written.
/s/ Carl W. Rausch
------------------
Carl W. Rausch
<PAGE> 1
EXHIBIT 10.15
<PAGE> 2
PROMISSORY NOTE
$216,033.05 July 31, 1995
FOR VALUE RECEIVED, the undersigned, Carl W. Rausch, an individual
residing at 124 Sagamore Avenue, Medford, MA 02155 (the "Obligor"), hereby
absolutely and unconditionally promises to pay to the order of BIOPURE
Corporation, a Delaware corporation ("BIOPURE"), at the office of BIOPURE
located at 11 Hurley Street, Cambridge, MA 02141, on or before July 31, 2000,
the principal sum of Two Hundred Sixteen Thousand Thirty-three Dollars and Five
Cents ($216,033.05), with interest thereon, or on such part thereof as shall
from time to time remain unpaid, at the Prescribed Rate, compounded annually as
of December 31 of each year.
The Obligor has the absolute right to prepay in whole or in part the
principal of this Note and any accrued interest without penalty.
The "Prescribed Rate" shall be, for each full or partial calendar year
during which interest shall accrue hereunder, the rate per annum equal to the
rate of interest announced by Fleet Bank of Massachusetts, N.A. as its base rate
(the "Base Rate") as in effect on January 1 of such calendar year.
Notwithstanding the previous sentence, if Fleet Bank of Massachusetts N.A. shall
announce, at any time during any such calendar year, a Base Rate that is more
than 2% higher of lower than the Base Rate in effect on January 1 of such year,
the Prescribed Rate shall be, for the remainder of such calendar year, the Base
Rate as announced from time to time during the remainder of such calendar year.
The Obligor hereby concurrently pledges, assigns, transfers and delivers
to BIOPURE as collateral for payment and performance of all obligations under
this Note, the Obligor's interest in Biopure Associates Limited Partnership II,
a Massachusetts limited partnership representing indirect ownership of 1,262,500
shares of the common stock, $.0l par value, of BIOPURE, together with any
applicable assignments appropriately executed in blank. Such shares of BIOPURE
common stock and all other property of the Obligor which is now or may hereafter
be in the possession or control of BIOPURE for any purpose, together with all
additions, replacements, substitutions or proceeds thereof (all of the foregoing
being hereinafter called the "Collateral"), shall constitute continuing security
for any and all of the obligations under this Note. The holder of this Note may
at its option, whether or not this Note is due, demand, sue for, collect or make
any compromise or settlement it deems desirable with reference to any
Collateral.
Upon the occurrence of any default by the Obligor in the payment or
performance of any of his obligations under this Note, or upon the death or
termination, whether voluntary or involuntary, with cause or without cause, for
any reason, including but not limited to disability or retirement, of the
Obligor's employment, directorial or advisory relationship with BIOPURE,
thereupon or at any time thereafter, at the option of the holder, all
obligations of the Obligor shall become immediately due and payable without
notice or demand and the
<PAGE> 3
holder of this Note shall then have in any jurisdiction where enforcement hereof
is sought, in addition to all other rights and remedies, the rights and remedies
of a secured party under the Uniform Commercial Code of Massachusetts.
The Obligor will pay on demand all costs of collection and attorneys fees
paid or incurred by the holder hereof in enforcing the obligations of the
Obligor.
The Obligor and all endorsers, guarantors and pledgors hereby waive
presentment, demand, notice of dishonor, protest and all other demands and
notices, in connection with the delivery, acceptance, performance, default or
enforcement of this Note, assent to any extension or postponement of the time of
payment or any other indulgence, to any substitution, exchange or release of
collateral and to the addition of release of any other party or person primarily
or secondarily liable.
THIS NOTE SHALL BE DEEMED TO TAKE EFFECT AS A SEALED INSTRUMENT IN
ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS AND FOR ALL
PURPOSES SHALL BE GOVERNED BY AND INTERPRETED AND DETERMINED IN ACCORDANCE WITH
SUCH LAWS.
This Note replaces a promissory note of like tenor dated August 14, 1990,
in the original principal amount of $150,000.00.
IN WITNESS WHEREOF, the undersigned has executed this Note as of the day
and the year first above written.
/s/ Carl W. Rausch
------------------
Carl W. Rausch
<PAGE> 1
EXHIBIT 10.16
<PAGE> 2
PROMISSORY NOTE
$262,120.10 July 31, 1995
FOR VALUE RECEIVED, the undersigned, Edward E. Jacobs, Jr., an individual
residing at 20 Meriam Street, Lexington, MA 02173 (the "Obligor"), hereby
absolutely and unconditionally promises to pay to the order of BIOPURE
Corporation, a Delaware corporation ("BIOPURE"), at the office of BIOPURE
located at 11 Hurley Street, Cambridge, MA 02141, on or before July 31, 2000,
the principal sum of Two Hundred Sixty-two Thousand One Hundred Twenty Dollars
and Ten Cents ($262,120.10), with interest thereon, or on such part thereof as
shall from time to time remain unpaid, at the Prescribed Rate, compounded
annually as of December 31 of each year.
The Obligor has the absolute right to prepay in whole or in part the
principal of this Note and any accrued interest without penalty.
The "Prescribed Rate" shall be, for each full or partial calendar year
during which interest shall accrue hereunder, the rate per annum equal to the
rate of interest announced by Fleet Bank of Massachusetts, N.A. as its base rate
(the "Base Rate") as in effect on January 1 of such calendar year.
Notwithstanding the previous sentence, if Fleet Bank of Massachusetts N.A. shall
announce, at any time during any such calendar year, a Base Rate that is more
than 2% higher of lower than the Base Rate in effect on January 1 of such year,
the Prescribed Rate shall be, for the remainder of such calendar year, the Base
Rate as announced from time to time during the remainder of such calendar year.
The Obligor hereby concurrently pledges, assigns, transfers and delivers
to BIOPURE as collateral for payment and performance of all obligations under
this Note, the Obligor's interest in Biopure Associates Limited Partnership II,
a Massachusetts limited partnership representing indirect ownership of 570,000
shares of the common stock, $.0l par value, of BIOPURE, together with any
applicable assignments appropriately executed in blank. Such shares of BIOPURE
common stock and all other property of the Obligor which is now or may hereafter
be in the possession or control of BIOPURE for any purpose, together with all
additions, replacements, substitutions or proceeds thereof (all of the foregoing
being hereinafter called the "Collateral"), shall constitute continuing security
for any and all of the obligations under this Note. The holder of this Note may
at its option, whether or not this Note is due, demand, sue for, collect or make
any compromise or settlement it deems desirable with reference to any
Collateral.
Upon the occurrence of any default by the Obligor in the payment or
performance of any of his obligations under this Note, or upon the death or
termination, whether voluntary or involuntary, with cause or without cause, for
any reason, including but not limited to disability or retirement, of the
Obligor's employment, directorial or advisory relationship with BIOPURE,
thereupon or at any time thereafter, at the option of the holder, all
obligations of the Obligor shall become immediately due and payable without
notice or demand and the
<PAGE> 3
holder of this Note shall then have in any jurisdiction where enforcement hereof
is sought, in addition to all other rights and remedies, the rights and remedies
of a secured party under the Uniform Commercial Code of Massachusetts.
The Obligor will pay on demand all costs of collection and attorneys fees
paid or incurred by the holder hereof in enforcing the obligations of the
Obligor.
The Obligor and all endorsers, guarantors and pledgors hereby waive
presentment, demand, notice of dishonor, protest and all other demands and
notices, in connection with the delivery, acceptance, performance, default or
enforcement of this Note, assent to any extension or postponement of the time of
payment or any other indulgence, to any substitution, exchange or release of
collateral and to the addition of release of any other party or person primarily
or secondarily liable.
THIS NOTE SHALL BE DEEMED TO TAKE EFFECT AS A SEALED INSTRUMENT IN
ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS AND FOR ALL
PURPOSES SHALL BE GOVERNED BY AND INTERPRETED AND DETERMINED IN ACCORDANCE WITH
SUCH LAWS.
This Note replaces a promissory note of like tenor dated August 14, 1990,
in the original principal amount of $182,000.00.
IN WITNESS WHEREOF, the undersigned has executed this Note as of the day
and the year first above written.
/s/ Edard E. Jacobs, Jr.
------------------------
Edard E. Jacobs, Jr.
<PAGE> 1
EXHIBIT 10.17
<PAGE> 2
PROMISSORY NOTE
$70,714.82 July 31, 1995
FOR VALUE RECEIVED, the undersigned, Bing L. Wong, an individual residing
at 5 Cedar Point Road, Durham, NH 03824 (the "Obligor"), hereby absolutely and
unconditionally promises to pay to the order of BIOPURE Corporation, a Delaware
corporation ("BIOPURE"), at the office of BIOPURE located at 11 Hurley Street,
Cambridge, MA 02141, on or before July 31, 2000, the principal sum of Seventy
Thousand Seven Hundred Fourteen Dollars and Eighty-two cents ($70,714.82), with
interest thereon, or on such part thereof as shall from time to time remain
unpaid, at the Prescribed Rate, compounded annually as of December 31 of each
year.
The Obligor has the absolute right to prepay in whole or in part the
principal of this Note and any accrued interest without penalty.
The "Prescribed Rate" shall be, for each full or partial calendar year
during which interest shall accrue hereunder, the rate per annum equal to the
rate of interest announced by Fleet Bank of Massachusetts, N.A. as its base rate
(the "Base Rate") as in effect on January 1 of such calendar year.
Notwithstanding the previous sentence, if Fleet Bank of Massachusetts N.A. shall
announce, at any time during any such calendar year, a Base Rate that is more
than 2% higher of lower than the Base Rate in effect on January 1 of such year,
the Prescribed Rate shall be, for the remainder of such calendar year, the Base
Rate as announced from time to time during the remainder of such calendar year.
The Obligor hereby concurrently pledges, assigns, transfers and delivers
to BIOPURE as collateral for payment and performance of all obligations under
this Note, the Obligor's interest in Biopure Associates Limited Partnership II,
a Massachusetts limited partnership representing indirect ownership of 147,000
shares of the common stock, $.0l par value, of BIOPURE, together with any
applicable assignments appropriately executed in blank. Such shares of BIOPURE
common stock and all other property of the Obligor which is now or may hereafter
be in the possession or control of BIOPURE for any purpose, together with all
additions, replacements, substitutions or proceeds thereof (all of the foregoing
being hereinafter called the "Collateral"), shall constitute continuing security
for any and all of the obligations under this Note. The holder of this Note may
at its option, whether or not this Note is due, demand, sue for, collect or make
any compromise or settlement it deems desirable with reference to any
Collateral.
Upon the occurrence of any default by the Obligor in the payment or
performance of any of his obligations under this Note, or upon the death or
termination, whether voluntary or involuntary, with cause or without cause, for
any reason, including but not limited to disability or retirement, of the
Obligor's employment, directorial or advisory relationship with BIOPURE,
thereupon or at any time thereafter, at the option of the holder, all
obligations of the Obligor shall become immediately due and payable without
notice or demand and the
<PAGE> 3
holder of this Note shall then have in any jurisdiction where enforcement hereof
is sought, in addition to all other rights and remedies, the rights and remedies
of a secured party under the Uniform Commercial Code of Massachusetts.
The Obligor will pay on demand all costs of collection and attorneys fees
paid or incurred by the holder hereof in enforcing the obligations of the
Obligor.
The Obligor and all endorsers, guarantors and pledgors hereby waive
presentment, demand, notice of dishonor, protest and all other demands and
notices, in connection with the delivery, acceptance, performance, default or
enforcement of this Note, assent to any extension or postponement of the time of
payment or any other indulgence, to any substitution, exchange or release of
collateral and to the addition of release of any other party or person primarily
or secondarily liable.
THIS NOTE SHALL BE DEEMED TO TAKE EFFECT AS A SEALED INSTRUMENT IN
ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS AND FOR ALL
PURPOSES SHALL BE GOVERNED BY AND INTERPRETED AND DETERMINED IN ACCORDANCE WITH
SUCH LAWS.
This Note replaces a promissory note of like tenor dated August 14, 1990,
in the original principal amount of $49,100.00.
IN WITNESS WHEREOF, the undersigned has executed this Note as of the day
and the year first above written.
/s/ Bing L. Wong
------------------------
Bing L. Wong
<PAGE> 1
EXHIBIT 10.18
<PAGE> 2
PROMISSORY NOTE
$12,601.93 July 31, 1995
FOR VALUE RECEIVED, the undersigned, Maria S. Gawryl, an individual
residing at 28 Constitution Road, Charlestown, MA 02129 (the "Obligor"), hereby
absolutely and unconditionally promises to pay to the order of BIOPURE
Corporation, a Delaware corporation ("BIOPURE"), at the office of BIOPURE
located at 11 Hurley Street, Cambridge, MA 02141, on or before July 31, 2000,
the principal sum of Twelve Thousand Six Hundred One Dollars and Ninety-three
Cents ($12,601.93), with interest thereon, or on such part thereof as shall from
time to time remain unpaid, at the Prescribed Rate, compounded annually as of
December 31 of each year.
The Obligor has the absolute right to prepay in whole or in part the
principal of this Note and any accrued interest without penalty.
The "Prescribed Rate" shall be, for each full or partial calendar year
during which interest shall accrue hereunder, the rate per annum equal to the
rate of interest announced by Fleet Bank of Massachusetts, N.A. as its base rate
(the "Base Rate") as in effect on January 1 of such calendar year.
Notwithstanding the previous sentence, if Fleet Bank of Massachusetts N.A. shall
announce, at any time during any such calendar year, a Base Rate that is more
than 2% higher of lower than the Base Rate in effect on January 1 of such year,
the Prescribed Rate shall be, for the remainder of such calendar year, the Base
Rate as announced from time to time during the remainder of such calendar year.
The Obligor hereby concurrently pledges, assigns, transfers and delivers
to BIOPURE as collateral for payment and performance of all obligations under
this Note, the Obligor's interest in Biopure Associates Limited Partnership II,
a Massachusetts limited partnership representing indirect ownership of 55,000
shares of the common stock, $.0l par value, of BIOPURE, together with any
applicable assignments appropriately executed in blank. Such shares of BIOPURE
common stock and all other property of the Obligor which is now or may hereafter
be in the possession or control of BIOPURE for any purpose, together with all
additions, replacements, substitutions or proceeds thereof (all of the foregoing
being hereinafter called the "Collateral"), shall constitute continuing security
for any and all of the obligations under this Note. The holder of this Note may
at its option, whether or not this Note is due, demand, sue for, collect or make
any compromise or settlement it deems desirable with reference to any
Collateral.
Upon the occurrence of any default by the Obligor in the payment or
performance of any of his obligations under this Note, or upon the death or
termination, whether voluntary or involuntary, with cause or without cause, for
any reason, including but not limited to disability or retirement, of the
Obligor's employment, directorial or advisory relationship with BIOPURE,
thereupon or at any time thereafter, at the option of the holder, all
obligations of the Obligor shall become immediately due and payable without
notice or demand and the
<PAGE> 3
holder of this Note shall then have in any jurisdiction where enforcement hereof
is sought, in addition to all other rights and remedies, the rights and remedies
of a secured party under the Uniform Commercial Code of Massachusetts.
The Obligor will pay on demand all costs of collection and attorneys fees
paid or incurred by the holder hereof in enforcing the obligations of the
Obligor.
The Obligor and all endorsers, guarantors and pledgors hereby waive
presentment, demand, notice of dishonor, protest and all other demands and
notices, in connection with the delivery, acceptance, performance, default or
enforcement of this Note, assent to any extension or postponement of the time of
payment or any other indulgence, to any substitution, exchange or release of
collateral and to the addition of release of any other party or person primarily
or secondarily liable.
THIS NOTE SHALL BE DEEMED TO TAKE EFFECT AS A SEALED INSTRUMENT IN
ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS AND FOR ALL
PURPOSES SHALL BE GOVERNED BY AND INTERPRETED AND DETERMINED IN ACCORDANCE WITH
SUCH LAWS.
This Note replaces a promissory note of like tenor dated August 14, 1990,
in the original principal amount of $8,750.00.
IN WITNESS WHEREOF, the undersigned has executed this Note as of the day
and the year first above written.
/s/ Maria S. Gawryl
-------------------
Maria S. Gawryl
<PAGE> 1
EXHIBIT 10.19
<PAGE> 2
PROMISSORY NOTE
$30,748.70 July 31, 1995
FOR VALUE RECEIVED, the undersigned, Brian A. Lajoie an individual
residing at 6 Crestview Drive, Millis, MA 02054 (the "Obligor"), hereby
absolutely and unconditionally promises to pay to the order of BIOPURE
Corporation, a Delaware corporation ("BIOPURE"), at the office of BIOPURE
located at 11 Hurley Street, Cambridge, MA 02141, on or before July 31, 2000,
the principal sum of Thirty Thousand Seven Hundred Forty-eight Dollars and
Seventy Cents ($30,748.70), with interest thereon, or on such part thereof as
shall from time to time remain unpaid, at the Prescribed Rate, compounded
annually as of December 31 of each year.
The Obligor has the absolute right to prepay in whole or in part the
principal of this Note and any accrued interest without penalty.
The "Prescribed Rate" shall be, for each full or partial calendar year
during which interest shall accrue hereunder, the rate per annum equal to the
rate of interest announced by Fleet Bank of Massachusetts, N.A. as its base rate
(the "Base Rate") as in effect on January 1 of such calendar year.
Notwithstanding the previous sentence, if Fleet Bank of Massachusetts N.A. shall
announce, at any time during any such calendar year, a Base Rate that is more
than 2% higher of lower than the Base Rate in effect on January 1 of such year,
the Prescribed Rate shall be, for the remainder of such calendar year, the Base
Rate as announced from time to time during the remainder of such calendar year.
The Obligor hereby concurrently pledges, assigns, transfers and delivers
to BIOPURE as collateral for payment and performance of all obligations under
this Note, the Obligor's interest in Biopure Associates Limited Partnership II,
a Massachusetts limited partnership representing indirect ownership of 135,000
shares of the common stock, $.0l par value, of BIOPURE, together with any
applicable assignments appropriately executed in blank. Such shares of BIOPURE
common stock and all other property of the Obligor which is now or may hereafter
be in the possession or control of BIOPURE for any purpose, together with all
additions, replacements, substitutions or proceeds thereof (all of the foregoing
being hereinafter called the "Collateral"), shall constitute continuing security
for any and all of the obligations under this Note. The holder of this Note may
at its option, whether or not this Note is due, demand, sue for, collect or make
any compromise or settlement it deems desirable with reference to any
Collateral.
Upon the occurrence of any default by the Obligor in the payment or
performance of any of his obligations under this Note, or upon the death or
termination, whether voluntary or involuntary, with cause or without cause, for
any reason, including but not limited to disability or retirement, of the
Obligor's employment, directorial or advisory relationship with BIOPURE,
thereupon or at any time thereafter, at the option of the holder, all
obligations of the Obligor shall become immediately due and payable without
notice or demand and the
<PAGE> 3
holder of this Note shall then have in any jurisdiction where enforcement hereof
is sought, in addition to all other rights and remedies, the rights and remedies
of a secured party under the Uniform Commercial Code of Massachusetts.
The Obligor will pay on demand all costs of collection and attorneys fees
paid or incurred by the holder hereof in enforcing the obligations of the
Obligor.
The Obligor and all endorsers, guarantors and pledgors hereby waive
presentment, demand, notice of dishonor, protest and all other demands and
notices, in connection with the delivery, acceptance, performance, default or
enforcement of this Note, assent to any extension or postponement of the time of
payment or any other indulgence, to any substitution, exchange or release of
collateral and to the addition of release of any other party or person primarily
or secondarily liable.
THIS NOTE SHALL BE DEEMED TO TAKE EFFECT AS A SEALED INSTRUMENT IN
ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS AND FOR ALL
PURPOSES SHALL BE GOVERNED BY AND INTERPRETED AND DETERMINED IN ACCORDANCE WITH
SUCH LAWS.
This Note replaces a promissory note of like tenor dated August 14, 1990,
in the original principal amount of $21,350.00.
IN WITNESS WHEREOF, the undersigned has executed this Note as of the day
and the year first above written.
/s/ Brian Lajoie
----------------
Brian Lajoie
<PAGE> 1
EXHIBIT 10.20
<PAGE> 2
PROMISSORY NOTE
$10,333.58 July 31, 1995
FOR VALUE RECEIVED, the undersigned, James R. Weston, an individual
residing at 4 Lantern Lane, Bedford, MA 01730 (the "Obligor"), hereby absolutely
and unconditionally promises to pay to the order of BIOPURE Corporation, a
Delaware corporation ("BIOPURE"), at the office of BIOPURE located at 11 Hurley
Street, Cambridge, MA 02141, on or before July 31, 2000, the principal sum of
Ten Thousand Three Hundred Thirty-three Dollars and Fifty-eight Cents
($10,333.58), with interest thereon, or on such part thereof as shall from time
to time remain unpaid, at the Prescribed Rate, compounded annually as of
December 31 of each year.
The Obligor has the absolute right to prepay in whole or in part the
principal of this Note and any accrued interest without penalty.
The "Prescribed Rate" shall be, for each full or partial calendar year
during which interest shall accrue hereunder, the rate per annum equal to the
rate of interest announced by Fleet Bank of Massachusetts, N.A. as its base rate
(the "Base Rate") as in effect on January 1 of such calendar year.
Notwithstanding the previous sentence, if Fleet Bank of Massachusetts N.A. shall
announce, at any time during any such calendar year, a Base Rate that is more
than 2% higher of lower than the Base Rate in effect on January 1 of such year,
the Prescribed Rate shall be, for the remainder of such calendar year, the Base
Rate as announced from time to time during the remainder of such calendar year.
The Obligor hereby concurrently pledges, assigns, transfers and delivers
to BIOPURE as collateral for payment and performance of all obligations under
this Note, the Obligor's interest in Biopure Associates Limited Partnership II,
a Massachusetts limited partnership representing indirect ownership of 45,000
shares of the common stock, $.01 par value, of BIOPURE, together with any
applicable assignments appropriately executed in blank. Such shares of BIOPURE
common stock and all other property of the Obligor which is now or may hereafter
be in the possession or control of BIOPURE for any purpose, together with all
additions, replacements, substitutions or proceeds thereof (all of the foregoing
being hereinafter called the "Collateral"), shall constitute continuing security
for any and all of the obligations under this Note. The holder of this Note may
at its option, whether or not this Note is due, demand, sue for, collect or make
any compromise or settlement it deems desirable with reference to any
Collateral.
Upon the occurrence of any default by the Obligor in the payment or
performance of any of his obligations under this Note, or upon the death or
termination, whether voluntary or involuntary, with cause or without cause, for
any reason, including but not limited to disability or retirement, of the
Obligor's employment, directorial or advisory relationship with BIOPURE,
thereupon or at any time thereafter, at the option of the holder, all
obligations of the Obligor shall become immediately due and payable without
notice or demand and the
<PAGE> 3
holder of this Note shall then have in any jurisdiction where enforcement hereof
is sought, in addition to all other rights and remedies, the rights and remedies
of a secured party under the Uniform Commercial Code of Massachusetts.
The Obligor will pay on demand all costs of collection and attorneys fees
paid or incurred by the holder hereof in enforcing the obligations of the
Obligor.
The Obligor and all endorsers, guarantors and pledgors hereby waive
presentment, demand, notice of dishonor, protest and all other demands and
notices, in connection with the delivery, acceptance, performance, default or
enforcement of this Note, assent to any extension or postponement of the time of
payment or any other indulgence, to any substitution, exchange or release of
collateral and to the addition of release of any other party or person primarily
or secondarily liable.
THIS NOTE SHALL BE DEEMED TO TAKE EFFECT AS A SEALED INSTRUMENT IN
ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS AND FOR ALL
PURPOSES SHALL BE GOVERNED BY AND INTERPRETED AND DETERMINED IN ACCORDANCE WITH
SUCH LAWS.
This Note replaces a promissory note of like tenor dated August 14, 1990,
in the original principal amount of $7,175.00.
IN WITNESS WHEREOF, the undersigned has executed this Note as of the day
and the year first above written.
/s/ James R. Weston
-------------------------
James R. Weston
<PAGE> 1
EXHIBIT 10.21
<PAGE> 2
PROMISSORY NOTE
$47,707.30 July 31, 1995
FOR VALUE RECEIVED, the undersigned, Geoffrey Filbey, an individual
residing at 51 Broad Reach M15A, North Weymouth, MA 02190 (the "Obligor"),
hereby absolutely and unconditionally promises to pay to the order of BIOPURE
Corporation, a Delaware corporation ("BIOPURE"), at the office of BIOPURE
located at 11 Hurley Street, Cambridge, MA 02141, on or before July 31, 2000,
the principal sum of Forty-seven Thousand Seven Hundred Seven Dollars and Thirty
Cents ($47,707.30), with interest thereon, or on such part thereof as shall from
time to time remain unpaid, at the Prescribed Rate, compounded annually as of
December 31 of each year.
The Obligor has the absolute right to prepay in whole or in part the
principal of this Note and any accrued interest without penalty.
The "Prescribed Rate" shall be, for each full or partial calendar year
during which interest shall accrue hereunder, the rate per annum equal to the
rate of interest announced by Fleet Bank of Massachusetts, N.A. as its base rate
(the "Base Rate") as in effect on January 1 of such calendar year.
Notwithstanding the previous sentence, if Fleet Bank of Massachusetts N.A. shall
announce, at any time during any such calendar year, a Base Rate that is more
than 2% higher or lower than the Base Rate in effect on January 1 of such year,
the Prescribed Rate shall be, for the remainder of such calendar year, the Base
Rate as announced from time to time during the remainder of such calendar year.
The Obligor hereby concurrently pledges, assigns, transfers and delivers
to BIOPURE as collateral for payment and performance of all obligations under
this Note, the Obligor's interest in Biopure Associates Limited Partnership II,
a Massachusetts limited partnership representing indirect ownership of 125,500
shares of the common stock, $.01 par value, of BIOPURE, together with any
applicable assignments appropriately executed in blank. Such shares of BIOPURE
common stock and all other property of the Obligor which is now or may hereafter
be in the possession or control of BIOPURE for any purpose, together with all
additions, replacements, substitutions or proceeds thereof (all of the foregoing
being hereinafter called the "Collateral"), shall constitute continuing security
for any and all of the obligations under this Note. The holder of this Note may
at its option, whether or not this Note is due, demand, sue for, collect or make
any compromise or settlement it deems desirable with reference to any
Collateral.
Upon the occurrence of any default by the Obligor in the payment or
performance of any of his obligations under this Note, or upon the death or
termination, whether voluntary or involuntary, with cause or without cause, for
any reason, including but not limited to disability or retirement, of the
Obligor's employment, directorial or advisory relationship with BIOPURE,
thereupon or at any time thereafter, at the option of the holder, all
obligations of the Obligor shall become immediately due and payable without
notice or demand and the
<PAGE> 3
holder of this Note shall then have in any jurisdiction where enforcement hereof
is sought, in addition to all other rights and remedies, the rights and remedies
of a secured party under the Uniform Commercial Code of Massachusetts.
The Obligor will pay on demand all costs of collection and attorneys fees
paid or incurred by the holder hereof in enforcing the obligations of the
Obligor.
The Obligor and all endorsers, guarantors and pledgors hereby waive
presentment, demand, notice of dishonor, protest and all other demands and
notices, in connection with the delivery, acceptance, performance, default or
enforcement of this Note, assent to any extension or postponement of the time of
payment or any other indulgence, to any substitution, exchange or release of
collateral and to the addition of release of any other party or person primarily
or secondarily liable.
THIS NOTE SHALL BE DEEMED TO TAKE EFFECT AS A SEALED INSTRUMENT IN
ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS AND FOR ALL
PURPOSES SHALL BE GOVERNED BY AND INTERPRETED AND DETERMINED IN ACCORDANCE WITH
SUCH LAWS.
This Note replaces a promissory note of like tenor dated August 14, 1990,
in the original principal amount of $33,125.00.
IN WITNESS WHEREOF, the undersigned has executed this Note as of the day
and the year first above written.
/s/ Geoffrey Filbey
--------------------------------
Geoffrey Filbey
<PAGE> 4
51 Broad Reach M15A
North Weymouth, MA 02190
December 8, 1995
Biopure Associates Limited Partnership II
and Biopure Corporation
11 Hurley Street
Cambridge, MA 02141
Gentlemen:
Delivered herewith to Biopure Corporation is a restated Promissory
Note dated as of July 31, 1995, given in exchange for the note of the
undersigned dated August 8, 1990 (the "Original Note"). The undersigned has been
offered the opportunity either (1) to pay the Original Note in full and receive
a distribution from Biopure Associates Limited Partnership II ("BALP II") of
Biopure Corporation Common Stock ("Shares") contributed to BALP II and
indirectly securing payment of the Original Note or (2) to extend the obligation
of the undersigned by executing and delivering the enclosed replacement note and
agreeing to an amendment to the BALP II limited partnership agreement in the
form attached hereto, with the effect that the Shares will remain in BALP II for
an additional five years.
The undersigned hereby agrees to the Amendment of the Agreement of
Limited Partnership of BALP II in the form attached to this letter and
authorizes Brian Lajoie and Carl Rausch, or either of them, to execute and
deliver such Amendment as attorney-in-fact for the undersigned.
Very truly yours,
/s/ Geoffrey Filbey
Geoffrey Filbey
Attachment
<PAGE> 1
EXHIBIT 10.22
<PAGE> 2
COMMERCIAL LEASE
PREMISES 22 Spring Street
Cambridge, Massachusetts
LESSOR Tarvis Realty Trust
LESSEE Biopure Corporation
TERM 5 years and two months commencing
on October 1, 1990 and expiring
on November 30, 1995
<PAGE> 3
COMMERCIAL LEASE
1. PARTIES AND PREMISES
Varney J. Hintlian, Frederick J. Hintlian and Tarvis Hintlian, Trustees of
Tarvis Realty Trust u/d/t dated March 24, 1977 filed as Document No. 553974 with
Middlesex South District of the Land Court and noted on the Certificate of Title
No. 151269 filed in Registration Book 886, Page 119, as LESSOR, which expression
shall include their successors and assigns where the context so admits, does
hereby lease to Biopure Corporation, a Delaware corporation having a usual place
of business at 68 Harrison Avenue, Boston, Massachusetts, as LESSEE, which
expression shall include its successors and assigns where the context so admits,
and the LESSEE hereby leases the following described premises: the land
described in Exhibit A attached hereto, together with the buildings (the
"Building") and parking area thereon located at and known as 16-22 Spring
Street, Cambridge, Middlesex County, Massachusetts consisting of approximately
13,179 square feet of building area, including a mezzanine office, in their "as
is" condition (the "Premises").
2. TERM
The term of this Lease shall be for five (5) years and two months commencing on
October 1, 1990 and ending on November 30, 1995. Said latter date is hereinafter
referred to as the Termination Date. The LESSEE shall have the option to extend
the term of this lease for one (1) period of five years.
3. RENT
A. The Premises are leased to the LESSEE on an absolute net basis. The term
absolute net shall mean that the LESSEE shall, in addition to the monthly rental
payments to the LESSOR, be responsible for payment of real estate taxes,
insurance premiums, utilities and normal maintenance to the building operating
systems and equipment including, but not limited to, the heating plant and air
conditioning systems.
The LESSEE will pay to the LESSOR in advance in equal monthly installments the
following rental payments, provided, however, that the base rent shall not
commence to accrue until December 1, 1990 (the "Rent Commencement Date").
<PAGE> 4
<TABLE>
<CAPTION>
YEAR RENT PER SF ANNUAL RENT
---- ----------- -----------
<S> <C> <C>
1 6.50 S.F. $85,663.50
2 6.75 S.F. $88,958.25
3 7.00 S.F. $92,253.00
4 7.25 S.F. $95,547.75
5 7.50 S.F. $98,842.50
</TABLE>
In the event the Rent Commencement Date is not on the first day of the month,
then the rent for that month will be pro-rated.
In the event the rent is not paid by the 10th day of the month for which it is
due, LESSEE agrees to pay a penalty charge of three (3%) percent of the rent
due. This shall also apply for any dishonored check which results in the failure
of LESSOR to receive rent by the 10th day of the month for which rent is due. In
the event that LESSEE makes three (3) or more consecutive late payments of rent
during the term, LESSOR may deem such action a default under Paragraph 19
hereof. If, because of LESSEE'S default under any covenant of this lease,
including the non-payment of rent, LESSOR institutes an action for summary
proceedings against Lessee and obtains a judgment against LESSEE, LESSEE agrees
to reimburse the LESSOR for the expense of reasonable attorney's fees plus costs
and disbursements and the same shall be included in such judgment as additional
rent.
B. The LESSOR grants to the LESSEE the option to extend the term of this lease
for one (1) period of five years commencing on December 1, 1995 and ending on
November 30, 2000. Said option may be exercised by the LESSEE by giving written
notice thereof to the LESSOR on or before June 1, 1995. The annual rent during
the extended term will be the prior five year average absolute net rent of $7.00
PSF increased by ninety percent (90%) of the cumulative average consumer price
index for Boston-All Items as published by the United States Department of
Labor, Bureau of Labor Statistics for the prior five year period (October 1995
index/October 1990 index x 90% x $7.00 PSF absolute net rent). In the event this
price index is not then published, then the parties shall agree to the use of a
substitute index that reasonably
-2-
<PAGE> 5
reflects price increases for the Boston area. It is specifically understood and
agreed, however, that the minimum annual rent established hereunder for the
extension term will in no event be less than $8.10 PSF, absolute net. All other
lease terms and conditions will remain in full force and effect during the
extension term.
4. SECURITY DEPOSIT
Upon the execution of this lease, the LESSEE shall pay to the LESSOR the amount
of seven thousand one hundred thirty-eight and 62/100 dollars ($7,138.62), which
shall be held as a security for the LESSEE'S performance of its obligations as
herein provided and refunded to the LESSEE at the end of the term of this lease
subject to the LESSEE'S satisfactory compliance with the conditions hereof. Six
percent (6%) interest per annum shall be paid on said security deposit by the
LESSOR to the LESSEE on an annual basis within thirty (30) days after the end of
each twelve month petiod of the term and shall be refunded, subject to the terms
hereof, within twenty (20) days after the end of the term.
5. UTILITIES
The LESSOR shall provide all equipment and utilities, including electricity,
heating and plumbing, smoke detectors and fire alarms as required by law, water
(general and sprinkler use) and sewer; all subject to interruption due to any
accident, to the making of repairs, alterations or improvements, to labor
difficulties, to trouble in obtaining fuel, electricity, service or supplies
from the sources from which they are usually obtained for the Premises, or to
any cause beyond the LESSOR'S control. The LESSEE shall be solely responsible
for the payment of any and all charges and expenses related to the provision of
the foregoing services, however, any such charges and expenses billed directly
to the LESSOR shall be forwarded immediately to the LESSEE for payment so as to
avoid interruption of service and/or penalties.
6. USE OF LEASED PREMISES
The LESSEE shall use the Premises only for the purposes of researching,
developing, processing and manufacturing bio-medical products and related uses.
-3-
<PAGE> 6
7. COMPLIANCE WITH LAWS
The LESSEE acknowledges that no trade or occupation shall be conducted in the
Premises or use made thereof which will be unlawful, improper, noisy or
offensive, or contrary to any law or any municipal by-law or ordinance in force
in the city or town in which the premises are situated.
8. FIRE INSURANCE
The LESSEE shall not permit any use of the Premises which will make voidable any
insurance on the Premises or on the contents of the Building or which shall be
contrary to any law or regulation from time to time established by the New
England Fire Insurance Rating Association, or any similar body succeeding to its
powers. The payment of all premiums related to any coverage required under this
lease shall be the sole responsibility of LESSEE. *
9. MAINTENANCE OF PREMISES
The LESSEE agrees to maintain the interior of the Building (other than walls,
foundations, roofs and other structural elements which are the Lessor's
responsibility) in the same condition as they are at the commencement of the
term or as they may be put in during the term of this lease, reasonable wear and
tear, damage by fire and other casualty only excepted, and, whenever necessary,
to replace plate glass and other glass therein, acknowledging that the Building
is now in good order and the glass whole. Further, LESSEE shall be responsible
for normal routine maintenance and repairs to the heating, air conditioning and
ventilation systems in the interior of the Buildings, except when LESSEE is
negligent in properly maintaining the building systems in which event the LESSEE
shall repair or replace, if necessary, said heating, air conditioning or
ventilation system. The LESSEE shall not permit the Premises to be overloaded,
damaged, stripped, or defaced, nor suffer any waste. LESSEE shall obtain written
consent of LESSOR before erecting any sign on the Premises. The LESSOR will not
reasonably withhold consent to erect any sign which conforms with the Cambridge
Zoning Ordinance and which does not diminish the structural integrity of the
building. The LESSEE shall be responsible for the removal of snow and ice from
the
* Each policy shall name the LESSOR and the LESSEE as insured parties, as
their interests may appear, and the holder(s) of any outstanding mortgage(s) as
the mortgagee on said policy(ies).
-4-
<PAGE> 7
sidewalks bordering upon the Premises.
10. ALTERATIONS ADDITIONS
The LESSEE may not make structural and non-structural alterations or additions
to the Premises without the prior written consent of the LESSOR, which consent
shall not be unreasonably withheld or delayed. At lease termination, the LESSEE
may remove all additions, equipment and/or fixtures that it installed,
including, without limitation, all utility upgrades and pipes, ducts, wires and
appurtenant facilities thereof, but in no case will their removal affect the
structural integrity of the building. All such allowed alterations shall be at
LESSEE'S expense and shall be in quality at least equal to the present
construction. LESSEE shall not permit any mechanics' liens, or similar liens, to
remain upon the Premises for labor and material furnished to LESSEE or claimed
to have been furnished to LESSEE in connection with work of any character
performed or claimed to have been performed at the direction of LESSEE and shall
cause any such lien to be released of record forthwith without cost to LESSOR.
Any structural alterations or additions made by the LESSEE shall become the
property of the LESSOR at the termination of occupancy as provided herein.
Anything to the contrary not withstanding, the LESSOR reserves the right to
require the LESSEE to remove any or all LESSEE installed improvements which the
LESSOR determines will inhibit the leasing of the Premises at the termination of
this Lease.
11. ASSIGNMENT SUBLEASING
The LESSEE shall not assign or sublet the whole or any part of the Premises
without LESSOR'S prior written consent, which consent shall not be unreasonably
withheld or delayed. Notwithstanding such consent, LESSEE shall remain liable to
LESSOR for the payment of all rent and for the full performance of the covenants
and conditions of this lease. Prior to requesting the approval of Lessor to an
assignment or subletting as hereinbefore provided, Lessee shall, by notice as
provided herein, advise the Lessor of all the terms, covenants and conditions of
the Lessee's proposed sublease or assignment.
-5-
<PAGE> 8
12. SUBORDINATION AND NON-DISTURBANCE AND ATTORNMENT
LESSEE agrees at the request of LESSOR to subject and subordinate this Lease to
any mortgage(s), or other instruments(s) in the nature of a mortgage, provided
that the holder(s) of such mortgage(s) enters into a non-disturbance and
attornment agreement with the LESSEE, binding upon the successors and assigns of
the parties thereto, by the terms of which such holder(s) agrees (i) not to
disburb the possession or other rights of the LESSEE under this lease so long as
LESSEE continues to perform its obligations hereunder and (ii) in the event of
acquisition of title by such holder(s) or any other person by or through
foreclosure proceedings or otherwise, to accept the LESSEE as lessee of the
Premises under the terms and conditions of this lease and to perform the
LESSOR'S obligations hereunder and (iii) an agreement by the LESSEE to attorn to
any such holder(s) or successor(s). The LESSOR represents and warrants that the
only mortgage on the Premises is held by First National Bank of Boston and a
Non-Disturbance and Attornment Agreement by and between LESSEE and the First
National Bank of Boston shall be executed within ten (10) business days hereof.
13. LESSOR'S ACCESS
The LESSOR or agents or guests of the LESSOR may, at reasonable times, upon the
giving of two (2) business days written notice to LESSEE, enter to view the
Premises and may remove placards and signs not approved and affixed as herein
provided, and make repairs and alterations as LESSOR should elect to do and may
show the Premises to others, and at any time within nine (9) months before the
expiration of the term may affix to any suitable part of the Premises a notice
for letting or selling the Premises or property of which the Premises are a part
and keep the same so affixed without hindrance or molestation. It is agreed in
making any such entry upon or inspection of the Premises, the LESSOR and his
agents or guests shall adhere to all security measures of the LESSEE designed to
protect and keep confidential all proprietary rights and information of the
LESSEE.
-6-
<PAGE> 9
14. PROPERTY LOSS DAMAGE REIMBURSEMENT
(A) Lessor or its agents shall not be liable for any damage to property of
LESSEE or others entrusted to the employees of the building, nor for the loss of
or damage to any property of LESSEE by theft or otherwise unless caused by
negligence or misconduct attributable to LESSOR. LESSOR or its agents shall not
be liable for any injury or damage to persons or property resulting from fire,
explosion, falling plaster, steam, gas, electricity, electrical disturbance,
water, rain or snow or leaks from any part of the building or from the pipes,
appliances or plumbing works or from the roof, street or subsurface or from any
other place or by dampness or by any other cause of whatsoever nature, unless
caused by or due to the negligence or misconduct of LESSOR, its agents, servants
or employees or the LESSOR'S failure to observe its obligations hereunder; nor
shall LESSOR or its agents be liable for any such damage caused by other tenants
or persons in the building or caused by operations in construction of any
private, public or quasi-public work. If at any time any windows of the Premises
are temporarily (up to twenty-four hours) closed or darkened incident to or for
the purpose of repairs, replacements, maintenance and/or cleaning in, on, to or
about the building or any part or parts thereof, LESSOR shall not be liable for
any damages LESSEE may sustain thereby and LESSEE shall not be entitled to any
compensation therefor nor abatement of rent nor shall the same release LESSEE
from its obligations hereunder nor constitute an eviction. LESSOR and LESSEE
shall reimburse and compensate each other as the case may be for all reasonable
expenditures made by or damages or fines sustained by either party due to the
non-performance or non-compliance with or breach or failure to observe any term,
covenant or conditions of this Lease upon their respective part to be kept,
observed, performed or complied with. Either party shall give immediate notice
to the other after knowledge thereof in case of fire or accident in the Premises
or in the building or of defects therein or in any fixtures or equipment of
which they have knowledge.
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<PAGE> 10
B. Lessee shall indemnify and save harmless LESSOR against and from any and all
claims by and on behalf of any person or persons, firm or firms, corporation or
corporations arising from the conduct or management of or from any work or thing
whatsoever done (other than by LESSOR or its contractors or the agents or
employees of either) in and on the Premises during the term of this lease and
during the period of time, if any, prior to the Term Commencement Date that
LESSEE may have been given access to the Premises for the purpose of making
installations, and will further indemnify and save harmless LESSOR against and
from any and all claims arising from any condition of the Premises due to or
arising from any act or omission or negligence of LESSEE or any of its agents,
contractors, servants, employees, licensees or invitees, and against and from
all costs, expenses and liabilities incurred in connection with any such claim
or claims or action or proceeding brought thereon; and in case any action or
proceeding be brought against LESSOR by reason of any such claim, LESSOR shall
give LESSEE prompt notice thereof and LESSEE, upon notice from LESSOR, agrees
that LESSEE, at LESSEE'S expense, will resist or defend such action or
proceeding and will employ counsel therefor reasonably satisfactory to LESSOR.
LESSEE'S liability under this lease extends to the acts and omissions of any
subtenant, and any agent, contractor, employee, invitee and licensee of any
subtenant.
C. LESSOR shall indemnify and save harmless LESSEE against and from any and all
claims by and on behalf of any persons or persons, firm or firms, corporation or
corporations arising from the conduct or management of or from any work or thing
whatsoever done (other than by LESSEE or its contractors or the agents or
employees of either) in and on the PREMISES during the term of this Lease and
during the period of time, if any, prior to the Term Commencement Date that
LESSOR may have been given access to the Premises for the purpose of making
installations, and will further indemnify and save harmless LESSEE against and
from any and all claims arising from any condition of the Premises due to or
arising from any act or omission or negligence of
-8-
<PAGE> 11
LESSOR or any of its agents, contractors, servants, employees, licensees or
invitees, and against and from all costs, expenses and liabilities incurred in
connection with any such claim or claims or action or proceeding brought
thereon; and in case any action or proceeding be brought against LESSEE by
reason of any such claim, LESSOR upon notice from LESSEE, agrees that LESSOR, at
LESSOR'S expense, will resist or defend such action or proceeding and will
employ counsel therefor reasonably satisfactory to LESSEE. LESSOR'S liability
under this lease extends to the acts and omissions of any of its agents,
contractors, employees and invitees.
15. NON-LIABILITY OF LESSOR
If LESSOR or a successor in interest is an individual (which term as used herein
includes aggregates of individuals, such as joint ventures, general or limited
partnerships or associations) such individual shall be under no personal
liability with respect to any of the provisions of this Lease, it being the
intention hereof that if the LESSOR hereto is in breach or default with respect
to its obligations under this Lease, LESSEE shall look solely to the equity of
such LESSOR in the land and building of which the Premises form a part of and
the rent stream arising therefrom for the satisfaction of LESSEE'S remedies for
the collection of a judgment requiring the payment of money by the LESSOR, and
no other property or assets of LESSOR shall be subject to levy, execution or
other enforcement procedure for the satisfaction of LESSEE'S remedies under or
with respect to either this lease, the relationship of LESSOR or LESSEE
hereunder or LESSEE'S use and occupancy of the Premises.
16. LESSEE'S LIABILITY INSURANCE
The LESSEE shall maintain with respect to the Premises comprehensive public
liability insurance in the amount of $1,000,000.00 with responsible companies
qualified to do business in Massachusetts and in good standing therein insuring
the LESSOR as well as LESSEE against injury to persons or damage to property.
The LESSEE shall deposit with the LESSOR certificates for such insurance at or
prior to the commencement of the term, and thereafter within thirty (30) days
prior to
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<PAGE> 12
the expiration of any such policies. All such insurance certificates shall
provide that such policies shall not be cancelled or materially altered without
at least thirty (30) days prior written notice to each insured named therein.
17. CASUALTY INSURANCE
A. The LESSEE, at its expense, shall procure for the benefit of LESSOR and
LESSEE, and shall maintain in full force and effect at all times during the term
of this Lease, "all risks" property insurance in an amount not less than the
full replacement value of the Building (to be determined annually by LESSEE and
LESSOR) and having a deductible of not greater than $5,000 from a loss payable
for a single casualty and containing a so-called "replacement costs coverage
endorsement" and an "agreed amount endorsement." Initially said insurance shall
be in the amount of $750,000.00. Promptly following the execution of this Lease,
LESSOR, at its expense, shall cause an independent appraisal to be performed by
a qualified professional familiar with the requirements of property insurance
firms doing business in the Commonwealth of Massachusetts, which appraisal shall
determine the full replacement value of the Building at the beginning of the
term (the "Original Replacement Value"). Upon determination of the Original
Replacement Value, the LESSOR shall notify LESSEE and the LESSEE shall arrange
to have the policy amended to be in an amount not less than the Original
Replacement Value. Following completion of the improvements, additions and
installations to the Building to be made by LESSEE in order to adapt the
Building so as to serve the Permitted Uses, LESSEE shall cause the same
appraiser to perform an independent appraisal of the Building as so improved to
determine the then full replacement value of the Building (the "Enhanced
Replacement Value") and shall arrange to have the amount of the policy increased
to the Enhanced Replacement Value. If the Building is damaged by fire or other
casualty insured against under the policy, LESSEE and LESSOR shall fully
cooperate with one another in processing any claims related thereto.
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<PAGE> 13
B. If during the term of this Lease the Building is damaged or destroyed by fire
or other casualty insured against, and such damage is not substantial, this
Lease shall remain in full force and effect and LESSEE shall be responsible for
effecting any necessary repair or restoration of the Building to the extent of
available insurance proceeds and shall be responsible for the payment of any
deductible related thereto. All insurance proceeds shall be applied to the
payment of costs and expenses incurred in effecting any such repair or
restoration.
C. If during the term of this Lease the Building is substantially damaged or
destroyed by fire or other casualty insured against, LESSEE may elect to
terminate this Lease by giving written notice thereof to LESSOR within thirty
(30) days of the date of such fire or other casualty. If LESSEE does not elect
to terminate this Lease, then this Lease shall remain in full force and effect
and LESSOR shall, to the extent of available insurance proceeds, promptly
repair, restore and replace the Building to the same condition the Building was
in immediately prior to such fire or other casualty or such other condition as
LESSEE shall approve in writing. If LESSEE elects to terminate this Lease, the
insurance proceeds payable with respect to such fire or other casualty shall be
divided between LESSOR and LESSEE and LESSOR shall receive that percentage of
such amount, less fees, costs and expenses related to the collection thereof, as
equal to the same percentage that the Original Replacement Value was of the
Enhanced Replacement Value, and the LESSEE shall receive the balance.
D. If during the term of this Lease the Building is partially or substantially
damaged or destroyed by casualty not insured against, or if the available
insurance proceeds will not be sufficient to repair, restore and replace the
Building to the same condition the Building was in immediately prior to such
casualty, LESSEE may elect to terminate this Lease by giving written notice to
LESSOR within thirty (30) days after making such determination. If LESSEE elects
to terminate this Lease, any insurance
-11-
<PAGE> 14
proceeds payable with respect to such casualty shall be divided between LESSEE
and LESSOR in the manner hereinbefore provided. If LESSEE does not elect to
terminate this Lease, LESSEE shall at its sole cost and expense repair, restore
and replace the Building to the same condition the Building was in immediately
prior to such casualty.
E. If the LESSOR is obligated to repair, restore and replace the Building
pursuant to this Paragraph 17, and fails to complete such repair, restoration
and replacement within ninety (90) days of the date of such damage, LESSEE shall
have the right to terminate this Lease by giving written notice to LESSOR, and
upon such termination LESSOR shall pay to LESSEE any insurance proceeds to which
LESSEE is entitled under (C) above.
F. If the Premises are rendered unsuitable for their intended use by reason of
any damage or destruction, a just and proportionate abatement of the rent and
other charges payable by LESSEE under this Lease shall be made until the
Premises are fully repaired, restored and replaced.
G. For the purposes of this Paragraph (17), "substantially damaged" or
"substantial damage" means damage of such a character that the same cannot, in
the ordinary course, reasonably expected to be repaired within thirty (30) days
from the time the repair work would commence.
18. EMINENT DOMAIN
A. If during the term of this Lease the Premises are totally taken by
condemnation, this Lease shall terminate on the date of the taking.
B. If during the term of this Lease any portion of the Premises is taken by
condemnation, LESSEE may elect to terminate this Lease by giving written notice
to LESSOR within thirty (30) days after the nature and extent of the taking have
been finally determined. If LESSEE does not elect to terminate this Lease, this
Lease shall remain in full force and effect and a just and proportionate
abatement of the rent and other
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<PAGE> 15
charges payable by LESSEE under this Lease shall be made.
C. If there is a partial taking of the Premises and this Lease remains in full
force and effect, LESSOR at its cost shall restore promptly what remains of the
Building to a complete architectural unit as close as possible to the condition
of the Building immediately prior to such taking to the extent permitted by the
taking award less the reasonable expenses of LESSOR in connection with the
collection of same and subject to then applicable legal requirements.
D. If this Lease terminates as a result of a taking pursuant to either (A) or
(B) above, LESSEE shall be entitled to share in the taking award attributable to
the Building to the extent of, but in no event more than, the then unamortized
value of the improvements that LESSEE has made to the Building. For the purposes
hereof, the value of LESSEE's improvements shall be equal to the difference
between the Original Replacement Value and the Enhanced Replacement Value,
amortized on a direct reduction basis over a ten (10) year period commencing on
December 1, 1990. A fair and reasonable percentage of any and all reasonable
fees incurred by LESSOR in collecting the taking award shall be deducted from
such amount. LESSEE shall also be entitled to receive any taking award
attributable to LESSEE's equipment, fixtures and relocation costs. If this Lease
does not terminate as a result of a taking of the Premises the entire award
(less any portion attributable to LESSEE's equipment, fixtures and relocation
expenses) shall be paid to LESSOR and shall be used to effect the repair,
restoration and replacement of the Premises.
19. DEFAULT AND BANKRUPTCY
In the event that:
(a) the LESSEE shall default in the payment of any installment of rent or other
sum herein specified and such default shall continue for ten (10) days after
written notice thereof; or
(b) The LESSEE shall default in the observance or performance of any other
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<PAGE> 16
of the LESSEE'S covenants, agreements, or obligations hereunder and such default
shall not be corrected within thirty (30) days after written notice thereof
provided that if such default is not susceptible of being cured within such
period of thirty (30) days, the LESSEE shall have such additional period of time
to cure as may be reasonably required to effect such cure so long as the LESSEE
seasonably commences the curative action and continually and diligently pursues
the same; or
(c) The LESSEE shall be declared bankrupt or insolvent according to law, or, if
any assignment shall be made of LESSEE'S property for the benefit of creditors;
then the LESSOR shall have the right thereafter, while such default continues,
to re-enter and take Complete possession of the leased premises; to declare the
term of this lease ended; and remove the LESSEE'S effects, without prejudice to
any remedies which might be otherwise used for arrears of rent or other
reasonable default. The LESSEE shall indemnify the LESSOR against all loss of
rent and other reasonable payments which the LESSOR may incur by reason of such
termination during the residue of the term. If the LESSEE shall default, after
reasonable notice thereof, in the observance or performance of any conditions or
covenants on LESSEE'S part to be observed or performed under or by virtue of any
of the provisions in any article of this lease, the LESSOR, without being under
any obligation to do so and without thereby waiving such default, may remedy
such default for the account and at the expense of the LESSEE. If the LESSOR
makes any reasonable and necessary expenditures or incurs any reasonable and
necessary obligations for the payment of money in connection therewith,
including but not limited to, reasonable attorney's fees in instituting,
prosecuting or defending any action or proceeding, such sums
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<PAGE> 17
paid or obligations insured, with interest at the rate of ten (10) percent per
annum and costs, shall be paid to the LESSOR by the LESSEE as additional rent.
The LESSOR specifically recognizes the obligation to minimize damages and will
use commercially reasonable efforts to relet the Premises.
20. NOTICE
Any notice from the LESSOR to the LESSEE relating to the leased premises or to
the occupancy thereof, shall be deemed duly served, registered or certified
mail, return receipt requested, postage prepaid, addressed to the LESSEE or
delivered by Constable at the following address: Biopure Corporation, 68
Harrison Place, Boston, MA 02111, Att: Brian Lajoie. Any notice from the LESSEE
to the LESSOR relating to the leased premises or to the occupancy thereof, shall
be deemed duly served, if mailed to the LESSOR by registered or certified mail,
return receipt requested, postage prepaid, addressed to the LESSOR at such
address as the LESSOR may from time to time advise in writing. All rent and
notices shall be paid and sent to the LESSOR at 20 New Street, East Boston,
Massachusetts 02128.
21. SURRENDER
The LESSEE shall at the expiration or other termination of this lease remove all
LESSEE'S goods and effects from the Premises, (including without hereby limiting
the generality of the foregoing, all signs and lettering affixed or painted by
the LESSEE, either inside or outside the leased premises). LESSEE shall deliver
to the LESSOR the Premises and all keys, locks thereto, and all structural
alterations and additions made to or upon the Premises, in the same condition as
they were at the commencement of the term, or as they were put in during the
term hereof, reasonable wear and tear and damage by fire or other casualty only
excepted. In the event of the LESSEE'S failure to remove any of LESSEE'S
property from the premises, LESSOR is hereby authorized, without liability to
LESSEE for loss or damage thereto, and at the sole risk of LESSEE, to remove and
store any of the property at LESSEE'S expense, or to retain
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<PAGE> 18
same under LESSOR'S control or to sell at public or private sale, without notice
any or all of the property not so removed and to apply the net proceeds of such
sale to the payment of any sum due hereunder, or to destroy such property.
22. LESSOR'S REPRESENTATIONS AND WARRANTIES
The LESSOR warrants and covenants that the Premises comply with all applicable
zoning and building laws without variance, special permit, or non-conforming use
exception, and that use of the Premises for the Permitted Uses will not violate
any of the above-mentioned rules and regulations; that the Leased Premises are
not in a flood zone; and that LESSOR has not unlawfully released or caused an
unlawful threat of release of any hazardous materials or oils (as such terms are
defined in the Massachusetts Oil and Hazardous Material Release Prevention and
Response Act, Chapter 21E of the Massachusetts General Laws) on the Premises.
LESSOR covenants and warrants to LESSEE that it has full right and lawful
authority to enter into this Lease for the term of this Lease, or any renewal,
extension or option hereof; that LESSOR is lawfully seized of the Premises and
has good and marketable title thereto, free and clear of all tenancies, liens,
encumbrances, encroachments, restrictions, conditions, reservations and
easements, except real estate taxes due but not yet payable, and that the LESSEE
shall and may peacefully and quietly hold and enjoy the Premises throughout the
term hereof without hindrance By the LESSOR or any other person claiming through
or under the LESSOR.
The LESSOR will keep the floors, foundations, external walls, structural
members, roofs, plumbing, electric wires and all utility conduits and
appurtenances thereto located in the Building in good working order, condition
and repair reasonable wear and tear excepted and make major repairs to the
boiler and the heat, ventilation and air conditioning system; and provided,
further, that notwithstanding anything to the contrary set forth in this Lease,
LESSOR agrees, at its cost and expense, to make any repairs or
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<PAGE> 19
maintenance required to the Premises or any systems or facilities thereof, as to
which LESSEE notifies LESSOR within 30 days of the date hereof.
23. BROKERAGE
LESSEE represents that this lease was brought about by Codman Associates, as
procurring broker, and Hunneman Commercial Company, as exclusive broker, and all
negotiations with respect to this lease were conducted exclusively through said
brokers. LESSEE agrees that if any claim is made for commissions by any broker
other than said brokers, by, through or on account of acts of LESSEE, LESSEE
will hold LESSOR free and harmless from any and all liabilities and expenses in
connection therewith, including LESSOR'S reasonable attorney's fees. The LESSOR
will pay said brokers their brokerage commission per separate agreement.
24. SELF-HELP
If LESSOR shall default in the performance or observance of any agreement or
condition in this lease contained on its part to be performed or observed, or
shall default in the payment of any tax or other charge which shall be a lien
upon the Premises; and if LESSOR shall not cure such default within thirty (30)
days after notice from LESSEE specifying the default (or shall not within said
period commence to cure such default and thereafter prosecute the curing of such
default to completion with due diligence), LESSEE, may, at its option, without
waiving any claim for damages, at any time thereafter cure such default for the
account of LESSOR, LESSEE in so doing shall be deemed paid or incurred for the
account of LESSOR and LESSOR agrees to reimburse LESSEE therefor or save LESSEE
harmless therefrom, provided that LESSEE may cure any such default as aforesaid
prior to the expiration of said waiting period (but after said notice to LESSOR)
if the curing of such default prior to the expiration of said waiting period is
reasonably necessary to protect the Building or the Premises or LESSEE'S
interest therein or to prevent injury or damage to persons or property. If
LESSOR shall fail to reimburse LESSEE upon demand for any amount paid for the
account of LESSOR hereunder, LESSEE shall have the right to commence an action
against the LESSOR for said amount and/or to set-off
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<PAGE> 20
and apply said amount, after notice of an intent to do so, against the
installments of rent or any other amounts due or to become due to LESSOR from
LESSEE under this Lease.
25. NOTICE OF LEASE
The Parties shall execute and cause to be recorded a Notice of Lease in
accordance with the requirements of G.L. c.183, ss.4 within five (5) days
hereof.
26. RIGHT TO TERMINATE
The LESSEE reserves the right to terminate this Lease by written notice thereof
if:
(a.) A Notice of Lease is not duly executed and recorded; or
(b.) The non-disturbance and attornment agreement referred to in Section 12 is
not timely executed; or
(c.) The LESSEE is not able to obtain the issuance of such building or occupancy
permits or any other licenses or permits as are necessary to authorize the
LESSEE to construct the improvements and to use the Premises for the Permitted
Uses so long as the LESSEE duly files applications for any and all such permits
and diligently pursues their issuance and further provided that this right to
terminate must be exercised by LESSEE within six (6) months of the date hereof.
27. ENTIRE AGREEMENT
This lease contains the entire agreement between the parties and all prior
negotiations and agreements are merged herein. Neither LESSOR nor LESSOR'S agent
or representative has made any representation, or statement, or promise upon
which LESSEE has relied regarding any matter or thing relating to the building,
the land allocated to it, (including the parking area) or the Premises, or any
other matter whatsoever, except as is expressly set forth in this Lease,
including, but without limiting the generality of the foregoing, any statement,
representation or promise as to the fitness of the Premises for any particular
use, the services to be rendered to the Premises or the prospective amount of
any item of additional rent. No rights, easements or licenses are or shall be
acquired by LESSEE by implication or otherwise unless expressly set forth in
this Lease. This Lease may not be changed, modified or discharged, in whole or
in part,
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<PAGE> 21
orally, and no executory agreement shall be effective to change, modify or
discharge, in whole or in part, this lease or any obligations under this lease,
unless such agreement is set forth in a written instrument executed by LESSOR
and LESSEE.
IN WITNESS WHEREOF, the LESSOR and LESSEE have hereunto set their hands
and common seals this 12 day of October, 1990.
Tarvis Realty Trust, LESSOR
By /s/ Varney J. Hintlian
-------------------------------------
Varney J. Hintlian, Trustee
By /s/ Frederick J. Hintlian
-------------------------------------
Frederick J. Hintlian, Trustee
By /s/ Tarvis Hintlian
-------------------------------------
Tarvis Hintlian, Trustee
Biopure Corporation, LESSEE
By /s/ Carl W. Rausch
-------------------------------------
its president and treasurer,
thereunto duly authorized.
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<PAGE> 22
EXHIBIT A
Three (3) certain parcels of land with the buildings thereon, situated in
Cambridge, Middlesex County, Massachusetts, bounded and described as follows:
Parcel I
Beginning at a point on the southerly side of Spring Street, distant one
hundred (100) feet easterly from Second Street; thence turning and running
EASTERLY: bounded northerly, by Spring Street, sixty (60) feet;
thence turning at right angles and running
SOUTHERLY: bounded easterly, by land now or late of Franklin Wilkins,
one hundred (100) feet; thence turning and running
WESTERLY: bounded southerly, by land now or late of Simonds, sixty
(60) feet; and thence turning and running
NORTHERLY: bounded westerly, by land now or late of John P. Squire,
one hundred (100) feet to the point of beginning.
Containing 6000 square feet of land.
Said premises are commonly known as and numbered 16-18 Spring Street.
Parcel II
The land situated on Spring Street, shown as Lot B on Plan of Lands
belonging to John P. Squire Est., East Cambridge, Mass. Dec. 1909 by James Adams
C.E. recorded in Middlesex Plan Book 182, Page 40, bounded:
NORTHERLY: by Spring Street seventy-three and 60/100 (73.60) feet;
EASTERLY: by land now or formerly of Sousa one hundred one and 52/100
(101.52) feet;
SOUTHERLY: by Lot C on said plan fifty (50) feet;
WESTERLY: by Lot C on land now or late of McCarthy as shown on said
plan thirty-seven and 75/100 (37.75) feet;
SOUTHERLY: again by land now or late of McCarthy twenty-three and
50/100 (23.50) feet;
WESTERLY: again by Lot A on said plan sixty-three and 85/100 (63.85)
feet.
Containing six thousand five hundred seventy-nine (6,579) square feet
according to said plan.
Said premises are commonly known as and numbered [ILLEGIBLE]
<PAGE> 1
EXHIBIT 10.24
<PAGE> 2
LEASE AGREEMENT
AGREEMENT made this 31st day of March 1995 by and between New England
Innovations, Corp., a New Hampshire corporation with a place of business at 4
Progress Drive, in Dover, New Hampshire, hereinafter "Landlord" and Biopure
Corp. a Delaware corporation with a principal place of business at 68 Harrison
Avenue, Boston, Massachusetts, hereinafter "Tenant".
WHEREAS, Landlord owns a factory building at 4 Progress Drive, Dover,
Strafford County New Hampshire (hereinafter "the factory"); and,
WHEREAS, the Landlord has leased and is now leasing a portion of the
factory to the Tenant; and,
WHEREAS, the Tenant during its occupancy of such portion of the factory
has made substantial improvements thereto, including but not limited to walls,
fixtures, etc. which are highlighted in blue on Exhibit A hereto (hereinafter
called "the improvements"); and,
WHEREAS, the Landlord and Tenant have previously dealt with each other
with respect to the leased premises on an oral basis, but now wish to enter into
a written agreement concerning the leased premises;
1
<PAGE> 3
NOW THEREFORE in consideration of the premises and other valuable
consideration, the parties hereto mutually stipulate, covenant and agree as
follows:
1. PROPERTY LEASED. Landlord hereby leases to the Tenant a portion of the
factory, the said portion containing 8,580 square feet, more or less, as shown
by green highlighting on Exhibit A hereto. Additionally, consistent with the
parties existing practice, the Tenant shall have the right to place and store
equipment in a shed containing 1,587 square feet, and a trailer outside of the
factory and on the Landlord's premises. Further, the Tenant shall have the right
to use 68% of the existing parking lot associated with the premises.
2. PURPOSE OF LEASE. Tenant may use the leased premises for manufacturing
purposes, consistent with its existing use of the premises, and in other lawful
purpose. Landlord represents that manufacturing is a permitted use under Zoning
of City of Dover.
3. TERM OF LEASE. This lease shall commence the 1st day of April 1995 and
shall continue for five (5) years from said date (the initial term). Tenant may
renew the initial term of this lease for an additional period of five (5) years
subject to revision of the amount of the rental. As used herein, "the rental
year" shall refer to the year from April 1st through March 31st
2
<PAGE> 4
Tenant shall notify Landlord in writing not less than thirty (30) days
prior to the expiration of the initial term of this Lease of his intention to
extend the same.
4. BASE RENT. The Tenant shall pay to Landlord Base Rent, at the rate
described in this paragraph. For the first year of the lease, the Base Rent will
be Thirty-Seven Thousand, Seven Hundred Dollars ($37,700.00), payable in twelve
equal monthly payments of Three Thousand One Hundred Forty-One Dollars and
Sixty-Six Cents ($3,141.66), payable on the 1st of each month, in advance.
The Landlord grants to the Tenant the option to extend the term of this
Lease for one (1) period of five (5) years, commencing on April 1, 2000 and
ending on March 31, 2005. Said option may be exercised by the Tenant by giving
written notice thereof to the Landlord on or before March 1, 2000. The annual
rent during the extended term will be recalculated by the Landlord and Tenant
each obtaining appraisals by certified appraisers for industrial park properties
comparable to the factory in Dover, New Hampshire. This rate averaged together
will be the basis for the new five (5) year Lease. It is specifically understood
and agreed, however, that the minimum annual rent established hereunder for the
extension term will in no event be less than $3.60 PSF, absolute net. All other
Lease terms and conditions will remain in full force and effect during the
extension term.
3
<PAGE> 5
5. ADDITIONAL RENT. In addition to the Base Rent described in ss. 4,
above, the Tenant shall pay to the Landlord or the person providing the service,
as specified below, a proportionate share of the following expenses associated
with occupancy of the leased premises. The parties agree that under the terms of
this lease the Tenant occupies 68% of the factory, and that unless expressly
indicated otherwise in this lease, the Tenant shall pay 68% of each of the
following expenses.
<TABLE>
<CAPTION>
Expense Category Tenant's % Due Date of Payment
<S> <C> <C>
Property Taxes 68% 12/1 and 6/1 to City of Dover
Insurance 68% Tenant to bill Landlord for 32% of
total bill
Grass Mowing, etc. 68% Estimate $285.00 for Summer, 1995;
$198.00 due 10/1/95
Snow Removal 68% Estimate of $100 per storm; $68 due
each storm
Water & Sewer 95% Due each month; Tenant
</TABLE>
4
<PAGE> 6
<TABLE>
<S> <C> <C>
to bill Landlord for 5% of year's
total
Rubbish Removal(1) 100% Tenant to pay Cate's Rubbish each
month
Electrical Service(2) 100% for Tenant to pay each month
leased
premises
only
</TABLE>
6. DEFAULT. In the event of default in the payment of any rent installment
within thirty (30) days of the due date and in the event of default of any other
covenants contained in this Lease and such default continues for thirty (30)
days after Landlord has/have notified Tenant in writing of the same, then in
that case Landlord shall have the right to peaceably re-enter the leased
premises and terminate this Lease. Tenant shall be liable for all rent and other
charges due to the date of such termination and for Landlord's costs and
attorney's fees in the event eviction proceedings are necessary. Waiver of any
default by Landlords shall not be construed as a waiver of any succeeding
default.
- ----------
(1) In consideration of the Tenant paying 100% of the Landlord's cost of
rubbish removal, the Tenant shall be allowed the use of the Landlord's forklift
truck, consistent with the past and existing practice.
(2) The Tenant shall install, at its expense, all meters necessary to
obtain a separate billing, to it, for all electricity it consumes at the
factory.
5
<PAGE> 7
7. COVENANTS BY TENANT. Tenant covenants, stipulates and agrees as
follows:
(a) Tenant shall not sublet the premises without the express written
consent of Landlord, which consent shall not be unreasonably withheld or
delayed.
(b) In his use of the leased premises, Tenant shall comply with all
federal, state, and local statutes, ordinances and regulations applicable
to the use of the leased premises. Provided that Tenant shall not be
required to make or pay for any structural changes required to bring the
leased premises into compliance with such statutes, ordinances and
regulations.
(c) Tenant shall not injure or deface the leased premises nor occupy or
use, or permit or suffer the leased premises or any part thereof to be
occupied or used, for any unlawful or illegal business, use or purposes,
nor for any business, use or purposes which is disreputable or
extra-hazardous, nor in such manner as to constitute a nuisance of any
kind. Tenant shall immediately upon discovery of any such unlawful,
illegal, disreputable or extra-hazardous use, take all necessary steps,
legal and equitable, to compel the discontinuance of such use and to oust
and remove sublessees, occupants or other persons guilty of such unlawful,
illegal, disreputable or extra-hazardous use.
(d) With respect to the leased premises, Tenant shall procure any licenses
and permits required by its use of the leased
6
<PAGE> 8
premises.
(e) Tenant shall pay for all its heat and utilities including lights and
telephone with respect to the leased premises.
(f) Tenant shall maintain the leased premises in a reasonable and safe
condition and shall allow no waste of any nature whatsoever to occur
thereon and shall return the leased premises at the end of the term in the
same condition as in the beginning excepting reasonable wear and tear
thereon and casualty loss.
(g) Tenant shall provide liability insurance for the leased premises in an
amount not less than $5O,000/$100,000 per person, per occurrence naming
Landlord as additional insured thereon. Said insurance shall not be
cancelable until after ten (10) days written notice to Landlord of
intention to cancel.
8. PREPARATION OF PREMISES FOR TENANT'S USE. The leased premises are
leased to Tenant AS IS, and without warranty, and Tenant agrees, at its expense,
maintenance of the existing heating and air conditioning systems, to repair and
maintain the leased premises for his/their general use. Landlord is responsible
for maintenance and repair of factory, all structural items, and
- ---------------
RECEIVED
APR 28 1995
By Phil Sidmore
- ---------------
7
<PAGE> 9
building systems, and also for common areas.
9. IMPROVEMENTS BY TENANT. Tenant may make such alterations, additions or
improvements to the leased premises as he shall deem necessary or desirable, but
Tenant shall not, without first obtaining the written consent of Landlord, make
any alteration or improvement which would affect or change the structural
character of the leased premises.
10. REMOVAL OF IMPROVEMENTS. Within ten days of the expiration or
termination of this Lease for any cause, the Landlord shall instruct the Tenant
as to whether the Tenant is to remove any alterations, additions and
improvements to the leased premises made by him/them during its occupancy of the
leased premises, both before and after the effective date of this Lease. If the
Landlord instructs the Tenant to remove the improvements, then the Tenant shall
do so and shall restore the leased premises to its condition as at the beginning
of the Tenant's occupancy of the premises, reasonable wear and tear, taking by
eminent domain and damage insurable under the standard New Hampshire fire
insurance policy with extended coverage excepted. If the Landlord instructs the
Tenant to not remove the improvements, or if the Landlord gives the Tenant no
instruction on this point within ten (10) days of the expiration or termination
of the lease, then the Tenant shall not do so, and shall restore the leased
premises to its condition as at the beginning of the term hereof, reasonable
wear and tear, taking
8
<PAGE> 10
by eminent domain and damage insurable under the standard New Hampshire fire
insurance policy with extended coverage excepted.
11. ACCESS TO PREMISES. Landlord or his/their representatives shall have
free access to the leased premises at reasonable times after notice to tenant
during normal business hours for the purpose of inspection and for the purpose
of making repairs.
12. SIGNS. Tenant shall not place any signs on the exterior of the leased
premises, unless same shall comply with the Dover Zoning Ordinance.
13. HOLDING OVER. In the event Tenant shall hold over after the expiration
of the term hereof or any renewal, such holding over shall not extend the terms
of this Lease but shall create a month to month tenancy upon all the terms and
conditions of this Lease.
14. EMINENT DOMAIN. In the event that the leased premises shall be
lawfully condemned or taken by any public authority in their entirety, this
Lease shall automatically terminate without further act of either party hereto
on the date when possession of the leased premises shall be taken by such public
authority, and each party hereto shall be relieved of any further obligation to
the other except that Tenant shall be liable for and shall promptly pay to
Landlord any rent then in arrears, or Landlord shall promptly rebate to Tenant a
pro rata portion of any rent paid in
9
<PAGE> 11
advance. In the event a portion of the leased premises is so condemned or taken,
Tenant shall have the option of terminating this Lease. If Tenant does not
exercise its option to terminate Lease, this Lease shall continue in effect in
accordance with its terms, and a portion of the rent shall abate equal to the
proportion of the rental value of the leased premises so condemned or taken. In
either of the above events, the award for the property so condemned or taken
shall be apportioned between Landlord and Tenant so that Landlord shall first
receive the then value of their reversionary interest in the leased premises
plus the then value of the future rents due under the terms of this Lease if
such taking had not occurred, and Tenant shall thereafter receive the then value
of his/their leasehold interest including the then value of any machinery,
equipment and appurtenances, if any, constructed or installed by Tenant after
the beginning of the term hereof.
15. DESTRUCTION TO PREMISES: In the event that the leased premises shall
be totally destroyed by fire or other casualty insured against, this Lease shall
automatically terminate without further obligation to the other except for the
rights and obligations of the parties under Paragraphs 7 and 8 hereof, and
except that Tenant shall be liable for and shall promptly pay Landlord any rent
then in arrears or Landlord shall promptly rebate to Tenant a pro rata portion
of any rent paid in advance. In the event the leased premises shall be partially
destroyed, Tenant
10
<PAGE> 12
shall have the option of terminating this Lease. If Tenant does not exercise its
option to terminate this Lease, Landlord shall accomplish repairs and
restoration as promptly as practicable from the date of such occurrence; such
repairs and restoration shall, unless otherwise agreed by Landlord and Tenant,
be performed as closely as practicable to the original specifications (utilizing
therefor the proceeds of the insurance applicable thereto without any
apportionment there for damages to the leasehold interest created by this
Lease); and until such repairs and restoration have been accomplished, a portion
of the rent shall abate equal to the proportion of the leased premises rendered
unusable by the damage.
16. REPOSSESSION BY LANDLORD. At the expiration of this Lease or upon the
earlier termination of this Lease for any cause herein provided for, Tenant
shall peaceably and quietly quit the leased premises and deliver possession of
the same to Landlord, together with all alterations, additions and improvements
thereto in good condition excepting only reasonable wear and tear, casualty loss
and eminent domain. Tenant covenants and agrees that at the time of delivery of
possession to Landlord at the expiration of this Lease, any and all alterations,
additions, appurtenances, and improvements constructed or installed on or in the
leased premises at his/their expense after the beginning of the term hereof
shall become the property of Landlord, free and clear of any mortgage, lien,
pledge or other encumbrance or charge.
11
<PAGE> 13
17. NOTICES. Any written notice, request or demand required or permitted
by this Lease shall, until either party shall notify the other in writing of a
different address, be properly given if sent by certified or registered first
class mail, postage-prepaid and addressed as follows:
If to Landlord: New England Innovations Corp.
4 Progress Drive
Dover, N.H. 03820
If to Tenant: Biopure Corp.
11 Hurley Street
Cambridge, MA 02141
18. SUCCESSION. This Lease shall be binding upon and inure to the benefit
of the heirs, administrators, successors and assigns of the parties hereto.
19. WAIVER. Any consent, express or implied, by Landlord to any breach by
Tenant of any covenant or condition of this Lease, shall not constitute a waiver
by Landlord of any prior or succeeding breach by Tenant of the same or any other
covenant or condition of the Lease. Acceptance by Landlord of rent or other
payment with knowledge of a breach of or default under any term hereof by
Tenant, shall not constitute a waiver by Landlord of such breach or default.
12
<PAGE> 14
20. SITUS. This Lease shall be construed and interpreted in accordance
with the Laws of the State of New Hampshire.
21. COUNTERPARTS. This Agreement may be executed in counterparts, all of
which when taken together shall be deemed one original document.
IN WITNESS WHEREOF, the parties have hereunto set their hands the day and
year first above written.
/s/ Brenda J. Finnegan /s/ Phil Sidmore
- --------------------------- ------------------------------
Witness New England Innovations, Inc.,
Landlord
/s/ Jean M. Willis /s/ Brian A. Lajoie
- --------------------------- ------------------------------
Witness Biopure Corp., Tenant
13
<PAGE> 1
EXHIBIT 10.25
<PAGE> 2
COMMERCIAL LEASE
PREMISES 11 Hurley Street
Cambridge, Massachusetts
LESSOR Eleven Hurley Street Associates
LESSEE Biopure Corporation
TERM 7 years commencing on March 1, 1995
and expiring on February 28, 2002.
AUGUST 29, 1994
<PAGE> 3
TABLE OF CONTENTS
PAGE
----
1. PARTIES AND PREMISES 1
2. TERM 1
3. RENT 1
4. CONSTRUCTION 3
5. UTILITIES 6
6. USE OF LEASED PREMISES 7
7. COMPLIANCE WITH LAWS 7
8. FIRE INSURANCE 7
9. MAINTENANCE OF PREMISES 8
10. ALTERATIONS ADDITIONS 8
11. ASSIGNMENT SUBLEASING 9
12. SUBORDINATION AND NON-DISTURBANCE AND ATTORNMENT 10
13. LESSOR'S ACCESS 11
14. PROPERTY LOSS DAMAGE REIMBURSEMENT 11
15. NON-LIABILITY OF LESSOR 15
16. LESSEE'S LIABILITY INSURANCE 15
17. CASUALTY INSURANCE 16
18. EMINENT DOMAIN 19
19. DEFAULT AND BANKRUPTCY 20
20. NOTICE 22
21. SURRENDER 22
22. LESSOR'S REPRESENTATIONS AND WARRANTIES 23
23. BROKERAGE 25
24. SELF-HELP 25
25. NOTICE OF LEASE 26
26. ENTIRE AGREEMENT 26
<PAGE> 4
COMMERCIAL LEASE
1. PARTIES AND PREMISES
Eleven Hurley Street Associates, a Massachusetts general partnership having a
principal place of business at 68 Harrison Avenue, Boston, Massachusetts, as
LESSOR, which expression shall include its successors and assigns where the
context so admits, does hereby lease to Biopure Corporation, a Delaware
corporation having a usual place of business at 68 Harrison Avenue, Boston,
Massachusetts, as LESSEE, which expression shall include its successors and
assigns where the context so admits, and the LESSEE hereby leases the following
described premises: the land described in Exhibit A attached hereto, together
with the building (the "Building") to contain approximately 23,850 square feet
of gross floor area and parking area to be constructed thereon located at and
known as 11 Hurley Street, Cambridge, Middlesex County, Massachusetts,
consisting of approximately 22,000 square feet of land (the "Premises").
2. TERM
The term of this Lease shall be for eighty-four (84) months following the Rent
Commencement Date, as the same is defined in Section 4 (plus the partial month,
if any, immediately following said date. The end of term is hereinafter referred
to as the Termination Date. The LESSEE shall have the options to extend the term
of this Lease for two (2) periods of five years each.
3. RENT
A. The Premises are leased to the LESSEE on an absolute net basis. The term
absolute net shall mean that the LESSEE shall, in addition
<PAGE> 5
to the monthly rental payments to the LESSOR, be responsible for payment of real
estate taxes, insurance premiums, utilities and normal maintenance to the
building operating systems and equipment including, but not limited to, the
heating plant and air conditioning systems.
The LESSEE will pay to the LESSOR, in advance in equal monthly installments,
rental payments at the annual rate of $9.25 per square foot of gross floor area
of the Building or $220,612.50, whichever is lesser, provided, however, that the
base rent shall not commence to accrue until the Rent Commencement Date as
defined in Section 4. In the event the Rent Commencement Date is not on the
first day of the month, then the rent for that month will be pro-rated. In the
event the rent is not paid by the 10th day of the month for which it is due,
LESSEE agrees to pay a penalty charge of three (3%) percent of the rent due.
This shall also apply for any dishonored check which results in the failure of
LESSOR to receive rent by the 10th day of the month for which rent is due. In
the event that LESSEE makes three (3) or more consecutive late payments of rent
during the term, LESSOR may deem such action a default under Paragraph 19
hereof. If, because of LESSEE'S default under any covenant of this lease,
including the nonpayment of rent, LESSOR institutes an action for summary
proceedings against Lessee and obtains a judgment against LESSEE, LESSEE agrees
to reimburse the LESSOR for the expense of reasonable attorney's fees plus
2
<PAGE> 6
costs and disbursements and the same shall be included in such judgment as
additional rent.
B. The LESSOR grants to the LESSEE the option to extend the term of this Lease
for two (2) periods of five years each. Said option may be exercised by the
LESSEE by giving written notice thereof to the LESSOR six (6) months prior to
the expiration of the original and/or the extended term. The annual rent during
the extended term(s) will be the prior term's annual rent increased by ninety
percent (90%) of the percentage of increase in the cumulative average consumer
price index for Boston, Mass.-All Items (1982-84=100) as published by the
United States Department of Labor, Bureau of Labor Statistics during the prior
term. In the event this price index is not then published, then the parties
shall agree to the use of a substitute index that reasonably reflects price
increases for the Boston area. All other lease terms and conditions will remain
in full force and effect during the extension term(s).
4. CONSTRUCTION
The Premises shall be improved by the Lessor in accordance with the Approved
Construction Plans set forth on Exhibit B. All costs for architectural services
related to the preparation of these plans, the inspections of the work to be
performed pursuant thereto (the "Work") and the certifications thereof shall be
part of all of the hard and soft costs related to acquisition of the Premises by
the Lessor and the improvement thereof. Hard and
3
<PAGE> 7
soft costs shall include, without limiting the generality of the foregoing, land
costs, professional fees, closing costs, testings, interest charges, real estate
taxes, permits, insurance and construction. Any expenditures for such costs in
excess of first mortgage proceeds plus four hundred and fifty thousand dollars
($450,000.00) shall be the sole responsibility of the Lessee.
The parties shall use good faith and best efforts to meet the following schedule
for construction and occupancy:
July 30 Contract Negotiation and Award
August 15 Commencement of Construction
March 1, 1995 Occupancy (the "Estimated Rent Commencement Date").
Subject to the remainder of this Section, Lessor agrees to substantially
complete the Work on the Premises, as determined by Sutphin Associates
Architects, by the Estimated Rent Commencement Date, in accordance with the
Approved Construction Plans. Lessor shall not be required to install any
improvements which are not in conformity with or which are not described or
shown on the Approved Construction Plans. In case of delays due to governmental
regulation, unusual scarcity of or inability to obtain labor or materials,
labor, strikes, lockouts, shutdowns, or inability to obtain materials, casualty
or other causes reasonably beyond Landlords control, the aforesaid Estimated
Rent Commencement Date shall be extended for the period or periods of such
delays. The Premises shall be deemed ready for occupancy
4
<PAGE> 8
and substantially completed on the date on which the work described in the
Approved Construction Plans, together with common facilities for access and
service to the Premises, has been certified by the Lessor's architects, Sutphin
Associates, to be complete and ready for occupancy except for items of work and
adjustment of equipment and fixtures which can be completed after occupancy has
been taken without causing substantial interference with Lessee's use of the
Premises (i.e. so-called "punch list" items) (the "Rent Commencement Date").
Lessee may install furnishings and equipment within the Premises after receipt
of the notice of the same being ready for occupancy. Lessor shall complete as
soon as conditions practically permit all punch list items in such manner as
will not increase the cost of completion. Lessor shall permit Lessee access for
installing furnishings in portions of the Premises when it can be done without
material interference with remaining work.
Lessee agrees that no delay by it, or anyone employed by it in performing work
to prepare the Premises for occupancy, shall delay commencement of the term or
the obligation to pay rent, regardless of the reason for such delay or whether
or not it is within the control of Lessee or any such employee.
The Lessee shall be responsible for that portion of the hard and soft costs for
the Work that exceeds first mortgage proceeds plus four hundred and fifty
thousand ($450,000.00) dollars and the same shall be due and payable,
5
<PAGE> 9
however, any such charges and expenses billed directly to the LESSOR shall be
forwarded immediately to the LESSEE for payment so as to avoid interruption of
service and/or penalties.
6. USE OF LEASED PREMISES
The LESSEE shall use the Premises only for the purposes of general office and
researching, developing, processing and manufacturing bio-medical products and
related uses.
7. COMPLIANCE WITH LAWS
The LESSEE acknowledges that no trade or occupation shall be conducted in the
Premises or use made thereof which will be unlawful, improper, noisy or
offensive, or contrary to any law or any municipal by-law or ordinance in force
in the city or town in which the premises are situated.
8. FIRE INSURANCE
The LESSEE shall not permit any use of the Premises which will make voidable any
insurance on the Premises or on the contents of the Building or which shall be
contrary to any law or regulation from time to time established by the New
England Fire Insurance Rating Association, or any similar body succeeding to its
powers. The payment of all premiums related to any coverage required under this
lease shall be the sole responsibility of LESSEE. Each policy shall name the
LESSOR and the LESSEE as insured parties, as their interests may appear, and the
holder(s) of any outstanding mortgage(s) as the mortgagee on said policy(ies).
7
<PAGE> 10
Premises without the prior written consent of the LESSOR, which consent shall
not be unreasonably withheld or delayed. At lease termination, the LESSEE may
remove all additions, equipment and/or fixtures that it installed, including,
without limitation, all utility upgrades and pipes, ducts, wires and appurtenant
facilities thereof, but in no case will their removal affect the structural
integrity of the Building. All such allowed alterations shall be at LESSEE'S
expense and shall be in quality at least equal to that of the Approved
Construction. LESSEE shall not permit any mechanics' liens, or similar liens, to
remain upon the Premises for labor and material furnished to LESSEE or claimed
to have been furnished to LESSEE in connection with work of any character
performed or claimed to have been performed at the direction of LESSEE and shall
cause any such lien to be released of record forthwith without cost to LESSOR.
Any structural alterations or additions made by the LESSEE shall become the
property of the LESSOR at the termination of occupancy as provided herein.
Anything to the contrary not withstanding, the LESSOR reserves the right to
require the LESSEE to remove any or all LESSEE installed improvements which the
LESSOR determines will inhibit the leasing of the Premises at the termination of
this Lease.
11. ASSIGNMENT SUBLEASING
The LESSEE shall not assign or sublet the whole or any part of the Premises
without
9
<PAGE> 11
LESSOR'S prior written consent, which consent shall not be unreasonably withheld
or delayed. Notwithstanding such consent, LESSEE shall remain liable to LESSOR
for the payment of all rent and for the full performance of the covenants and
conditions of this Lease unless otherwise agreed to in writing by Lessor. Prior
to requesting the approval of LESSOR to an assignment or subletting as
hereinbefore provided, LESSEE shall, by notice as provided herein, advise the
Lessor of all the terms, covenants and conditions of the LESSEE's proposed
sublease or assignment.
12. SUBORDINATION AND NON-DISTURBANCE AND ATTORNMENT
LESSEE agrees at the request of LESSOR to subject and subordinate this Lease to
any mortgage(s), or other instruments(s) in the nature of a mortgage, provided
that the holder(s) of such mortgage(s) enters into a non-disturbance and
attornment agreement with the LESSEE, binding upon the successors and assigns of
the parties thereto, by the terms of which such holder(s) agrees (i) not to
disturb the possession or other rights of the LESSEE under this Lease so long as
LESSEE continues to perform its obligations hereunder and (ii) in the event of
acquisition of title by such holder(s) or any other person by or through
foreclosure proceedings or otherwise, to accept the LESSEE as lessee of the
Premises under the terms and conditions of this Lease and to perform the
LESSOR'S obligations hereunder, and (iii) an agreement by the LESSEE to attorn
to any such holder(s) or
10
<PAGE> 12
successor(s). The LESSOR represents and warrants that the only mortgage on the
Premises is held by The First National Bank of Boston and a Non-Disturbance and
Attornment Agreement by and between LESSEE and the First National Bank of Boston
shall be executed within ten (10) business days hereof.
13. LESSOR'S ACCESS
The LESSOR or agents of the LESSOR may, at reasonable times, upon the giving of
two (2) business days written notice to LESSEE, enter to view the Premises and
may remove placards and signs not approved and affixed as herein provided, and
make repairs and alterations as LESSOR should elect to do and may show the
Premises to others, and at any time within nine (9) months before the expiration
of the term may affix to any suitable part of the Premises a notice for letting
or selling the Premises or property of which the Premises are a part and keep
the same so affixed without hindrance or molestation. It is agreed in making any
such entry upon or inspection of the Premises, the LESSOR and his agents shall
adhere to all security measures of the LESSEE designed to protect and keep
confidential all proprietary rights and information of the LESSEE.
14. PROPERTY LOSS DAMAGE REIMBURSEMENT
(A) Lessor or its agents shall not be liable for any damage to property of
LESSEE or others entrusted to the employees of the Building, nor for the loss of
or damage to any property of LESSEE by theft or otherwise
11
<PAGE> 13
unless caused by negligence or misconduct attributable to LESSOR. LESSOR or its
agents shall not be liable for any injury or damage to persons or property
resulting from fire, explosion, falling plaster, steam, gas, electricity,
electrical disturbance, water, rain or snow or leaks from any part of the
building or from the pipes, appliances or plumbing works or from the roof,
street or subsurface or from any other place or by dampness or by any other
cause of whatsoever nature, unless caused by or due to the negligence or
misconduct of LESSOR, its agents, servants or employees or the LESSOR'S failure
to observe its obligations hereunder; nor shall LESSOR or its agents be liable
for any such damage caused by operations in construction of any private, public
or quasi-public work. If at any time any windows of the Premises are temporarily
(up to twenty-four hours) closed or darkened incident to or for the purpose of
repairs, replacements, maintenance and/or cleaning in, on, to or about the
Building or any part or parts thereof, LESSOR shall not be liable for any
damages LESSEE may sustain thereby and LESSEE shall not be entitled to any
compensation therefor nor abatement of rent nor shall the same release LESSEE
from its obligations hereunder nor constitute an eviction. LESSOR and LESSEE
shall reimburse and compensate each other as the case may be for all reasonable
expenditures made by or damages or fines sustained by either party due to the
non-performance or non-compliance
12
<PAGE> 14
with or breach or failure to observe any term, covenant or conditions of this
Lease upon their respective part to be kept, observed, performed or complied
with. Either party shall give immediate notice to the other after knowledge
thereof in case of fire or accident in the Premises or in the Building or of
defects therein or in any fixtures or equipment of which they have knowledge.
B. LESSEE shall indemnify and save harmless LESSOR against and from any and all
claims by and on behalf of any person or persons, firm or firms, corporation or
corporations arising from the conduct or management of or from any work or thing
whatsoever done (other than by LESSOR or its contractors or the agents or
employees of either) in and on the Premises during the term of this lease and
during the period of time, if any, prior to the Rent Commencement Date that
LESSEE may have been given access to the Premises for the purpose of making
installations, and will further indemnify and save harmless LESSOR against and
from any and all claims arising from any condition of the Premises due to or
arising from any act or omission or negligence of LESSEE or any of its agents,
contractors, servants, employees, licensees or invitees, and against and from
all costs, expenses and liabilities incurred in connection with any such claim
or claims or action or proceeding brought thereon; and in case any action or
proceeding be brought against LESSOR by
13
<PAGE> 15
reason of any such claim, LESSOR shall give LESSEE prompt notice thereof and
LESSEE, upon notice from LESSOR, agrees that LESSEE, at LESSEE'S expense, will
resist or defend such action or proceeding and will employ counsel therefor
reasonably satisfactory to LESSOR. LESSEE'S liability under this Lease extends
to the acts and omissions of any subtenant, and any agent, contractor, employee,
invitee and licensee of any subtenant.
C. LESSOR shall indemnify and save harmless LESSEE against and from any and all
claims by and on behalf of any persons or persons, firm or firms, corporation or
corporations arising from the conduct or management of or from any work or thing
whatsoever done (other than by LESSEE or its contractors or the agents or
employees of either) in and on the PREMISES during the term of this Lease and
during the period of time, if any, prior to the Rent Commencement Date that
LESSOR may have been given access to the Premises for the purpose of making
installations, and will further indemnify and save harmless LESSEE against and
from any and all claims arising from any condition of the Premises due to or
arising from any act or omission or negligence of LESSOR or any of its agents,
contractors, servants, employees, licensees or invitees, and against and from
all costs, expenses and liabilities incurred in connection with any such claim
or claims or action or proceeding brought thereon; and in case any action or
proceeding be brought against LESSEE by
14
<PAGE> 16
reason of any such claim, LESSOR upon notice from LESSEE, agrees that LESSOR, at
LESSOR'S expense, will resist or defend such action or proceeding and will
employ counsel therefor reasonably satisfactory to LESSEE. LESSOR'S liability
under this lease extends to the acts and omissions of any of its agents,
contractors, employees and invitees.
15. NON-LIABILITY OF LESSOR
If LESSOR or a successor in interest is an individual (which term as used herein
includes aggregates of individuals, such as joint ventures, general or limited
partnerships or associations) such individual shall be under no personal
liability with respect to any of the provisions of this Lease, it being the
intention hereof that if the LESSOR hereto is in breach or default with respect
to its obligations under this Lease, LESSEE shall look solely to the equity of
such LESSOR in the land and building of which the Premises form a part of and
the rent stream arising therefrom for the satisfaction of LESSEE'S remedies for
the collection of a judgment requiring the payment of money by the LESSOR, and
no other property or assets of LESSOR shall be subject to levy, execution or
other enforcement procedure for the satisfaction of LESSEE'S remedies under or
with respect to either this lease, the relationship of LESSOR or LESSEE
hereunder or LESSEE'S use and occupancy of the Premises.
16. LESSEE'S LIABILITY INSURANCE
The LESSEE shall maintain with respect to the
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Premises commercial general liability insurance with a general aggregate limit
of not less than $1,000,000.00, with responsible companies qualified to do
business in Massachusetts and in good standing therein insuring the LESSOR as
well as LESSEE against injury to persons or damage to property. The LESSEE shall
deposit with the LESSOR certificates for such insurance at or prior to the
commencement of the term, and thereafter within thirty (30) days prior to the
expiration of any such policies. All such insurance certificates shall provide
that such policies shall not be cancelled or materially altered without at least
thirty (30) days prior written notice to each insured named therein.
17. CASUALTY INSURANCE
A. The LESSEE, at its expense, shall procure for the benefit of LESSOR and
LESSEE, and shall maintain in full force and effect at all times during the term
of this Lease, "all risks" property insurance in an amount not less than the
full replacement value of the Building (to be determined annually by LESSEE and
LESSOR) and having a deductible of not greater than $5,000 from a loss payable
for a single casualty and containing a so-called "replacement costs coverage
endorsement" and an "agreed amount endorsement." Upon the Rent Commencement
Date, said insurance shall be in the minimum amount of $1,500,000.00. If the
Building is damaged by fire or other casualty insured against under the policy,
LESSEE and LESSOR shall fully cooperate with one another in processing any
claims related thereto.
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<PAGE> 18
B. If during the term of this Lease the Building is damaged or destroyed by fire
or other casualty insured against, and such damage is not substantial, this
Lease shall remain in full force and effect and LESSEE shall be responsible for
effecting any necessary repair or restoration of the Building to the extent of
available insurance proceeds and shall be responsible for the payment of any
deductible related thereto. All insurance proceeds shall be applied to the
payment of costs and expenses incurred in effecting any such repair or
restoration.
C. If during the term of this Lease the Building is substantially damaged or
destroyed by fire or other casualty insured against, LESSEE may elect to
terminate this Lease by giving written notice thereof to LESSOR within thirty
(30) days of the date of such fire or other casualty. If LESSEE does not elect
to terminate this Lease, then this Lease shall remain in full force and effect
and LESSOR shall, to the extent of available insurance proceeds, promptly
repair, restore and replace the Building to the same condition the Building was
in immediately prior to such fire or other casualty or such other condition as
LESSEE shall approve in writing.
D. If during the term of this Lease the Building is partially or substantially
damaged or destroyed by casualty not insured against, or if the available
insurance
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proceeds will not be sufficient to repair, restore and replace the Building to
the same condition the Building was in immediately prior to such casualty,
LESSEE may elect to terminate this Lease by giving written notice to LESSOR
within thirty (30) days after making such determination.
If LESSEE does not elect to terminate this Lease, LESSEE shall at its sole cost
and expense repair, restore and replace the Building to the same condition the
Building was in immediately prior to such casualty.
E. If the LESSOR is obligated to repair, restore and replace the Building
pursuant to this Paragraph 17, and fails to complete such repair, restoration
and replacement within ninety (90) days of the date of such damage, LESSEE shall
have the right to terminate this Lease by giving written notice to LESSOR.
F. If the Premises are rendered unsuitable for their intended use by reason of
any damage or destruction, a just and proportionate abatement of the rent and
other charges payable by LESSEE under this Lease shall be made until the
Premises are fully repaired, restored and replaced.
G. For the purposes of this Paragraph (17), "substantially damaged" or
"substantial damage" means damage of such a character that the same cannot, in
the ordinary course, reasonably expected to be repaired within thirty (30) days
from the time the repair work would commence.
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18. EMINENT DOMAIN
A. If during the term of this Lease the Premises are totally taken by
condemnation, this Lease shall terminate on the date of the taking.
B. If during the term of this Lease any portion of the Premises is taken by
condemnation, LESSEE may elect to terminate this Lease by giving written notice
to LESSOR within thirty (30) days after the nature and extent of the taking have
been finally determined. If LESSEE does not elect to terminate this Lease, this
Lease shall remain in full force and effect and a just and proportionate
abatement of the rent and other charges payable by LESSEE under this Lease shall
be made.
C. If there is a partial taking of the Premises and this Lease remains in full
force and effect, LESSOR at its cost shall restore promptly what remains of the
Building to a complete architectural unit as close as possible to the condition
of the Building immediately prior to such taking to the extent permitted by the
taking award less the reasonable expenses of LESSOR in connection with the
collection of same and subject to then applicable legal requirements.
D. If this Lease terminates as a result of a taking pursuant to either (A) or
(B) above, LESSEE shall be entitled to receive any taking award attributable to
LESSEE's equipment,
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fixtures and relocation costs. If this Lease does not terminate as a result of a
taking of the Premises, the entire award (less any portion attributable to
LESSEE's equipment, fixtures and relocation expenses) shall be paid to LESSOR
and shall be used to effect the repair, restoration and replacement of the
Premises.
19. DEFAULT AND BANKRUPTCY
In the event that:
(a) the LESSEE shall default in the payment of any installment of rent or
other sum herein specified and such default shall continue for ten (10)
days after written notice thereof; or
(b) The LESSEE shall default in the observance or performance of any other of
the LESSEE'S covenants, agreements, or obligations hereunder and such
default shall not be corrected within thirty (30) days after written
notice thereof provided that if such default is not susceptible of being
cured within such period of thirty (30) days, the LESSEE shall have such
additional period of time to cure as may be reasonably required to effect
such cure so long as the LESSEE seasonably commences the curative action
and continually and diligently pursues the same; or
(c) The LESSEE shall be declared bankrupt or insolvent according to law, or,
if any assignment shall be made of LESSEE'S property for the benefit of
20
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creditors; then the LESSOR shall have the right thereafter, while such
default continues, to re-enter and take complete possession of the leased
Premises; to declare the term of this Lease ended; and to remove the
LESSEE'S effects, without prejudice to any remedies which might be
otherwise used for arrears of rent or other reasonable default. The LESSEE
shall indemnify the LESSOR against all loss of rent and other reasonable
payments which the LESSOR may incur by reason of such termination during
the residue of the term. If the LESSEE shall default, after reasonable
notice thereof, in the observance or performance of any conditions or
covenants on LESSEE'S part to be observed or performed under or by virtue
of any of the provisions in any article of this Lease, the LESSOR, without
being under any obligation to do so and without thereby waiving such
default, may remedy such default for the account and at the expense of the
LESSEE. If the LESSOR makes any reasonable and necessary expenditures or
incurs any reasonable and necessary obligations for the payment of money
in connection therewith, including but not limited to, reasonable
attorney's fees in instituting, prosecuting or defending any action or
proceeding, such sums paid or obligations insured, with
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interest at the rate of ten (10) percent per annum and costs, shall be
paid to the LESSOR by the LESSEE as additional rent. The LESSOR
specifically recognizes the obligation to minimize damages and will use
commercially reasonable efforts to relet the Premises.
20. NOTICE
Any notice from the LESSOR to the LESSEE relating to the leased Premises or to
the occupancy thereof, shall be deemed duly served, if mailed to the LESSEE by
registered or certified mail, return receipt requested, postage prepaid, or
delivered by Constable or sent to the LESSEE by federal express or express mail
at the following address: Biopure Corporation, 11 Hurley Street, Cambridge, MA
02141, Att: Brian Lajoie. Any notice from the LESSEE to the LESSOR relating to
the leased Premises or to the occupancy thereof, shall be deemed duly served, if
mailed to the LESSOR by registered or certified mail, return receipt requested,
postage prepaid, or sent to LESSOR by federal express or express mail, addressed
to the LESSOR at such address as the LESSOR may from time to time advise in
writing. All rent and notices shall be paid and sent to the LESSOR at 11 Hurley
Street, Cambridge, Massachusetts 02141.
21. SURRENDER
The LESSEE shall at the expiration or other termination of this Lease remove all
LESSEE'S goods and effects from the Premises, (including without hereby limiting
the
22
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generality of the foregoing, all signs and lettering affixed or
painted by the LESSEE, either inside or outside the Premises). LESSEE shall
deliver to the LESSOR the Premises and all keys, locks thereto, and all
structural alterations and additions made to or upon the Premises, in the same
condition as they were at the commencement of the term, or as they were put in
during the term hereof, reasonable wear and tear and damage by fire or other
casualty only excepted. In the event of the LESSEE'S failure to remove any of
LESSEE'S property from the Premises, LESSOR is hereby authorized, without
liability to LESSEE for loss or damage thereto, and at the sole risk of LESSEE,
to remove and store any of the property at LESSEE'S expense, or to retain same
under LESSOR'S control or to sell at public or private sale, without notice any
or all of the property not so removed and to apply the net proceeds of such sale
to the payment of any sum due hereunder, or to destroy such property.
22. LESSOR'S REPRESENTATIONS AND WARRANTIES
The LESSOR warrants and covenants that the Premises following the completion of
the construction of the Building, will comply with all applicable zoning and
building laws without further variance or special permit or non-conforming use
exception, that the Premises are not in a flood zone; and that LESSOR has not
unlawfully released or caused an unlawful threat of release of any hazardous
materials or oils (as such terms are defined in the Massachusetts Oil and
Hazardous Material
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Release Prevention and Response Act, Chapter 21E of the Massachusetts General
Laws) on the Premises.
LESSOR covenants and warrants to LESSEE that it has full right and lawful
authority to enter into this Lease for the term of this Lease, or any renewal,
extension or option hereof; that LESSOR is or has the legal right to become
lawfully seized of the Premises and has or will have good and marketable title
thereto, free and clear of all tenancies, liens, encumbrances, encroachments,
restrictions, conditions, reservations and easements, except real estate taxes
due but not yet payable, and that the LESSEE shall and may peacefully and
quietly hold and enjoy the Premises throughout the term hereof without hindrance
By the LESSOR or any other person claiming through or under the LESSOR, except
for mortgages of record.
The LESSOR will keep the floors, foundations, external walls, structural
members, roofs, non-laboratory plumbing, electric wires and all utility conduits
and appurtenances thereto located in the Building in good working order,
condition and repair, reasonable wear and tear excepted, and will make all
repairs to the boiler and the heat, ventilation and air conditioning system; and
provided, further, that notwithstanding anything to the contrary set forth in
this Lease, LESSOR agrees, at its cost and expense, to make any repairs or
maintenance required to the Premises or any
24
<PAGE> 26
systems or facilities thereof, as to which LESSEE notifies LESSOR within 6
months following the Rent Commencement Date.
23. BROKERAGE
LESSOR and LESSEE represent that neither was introduced to this Lease
opportunity by any broker.
24. SELF-HELP
If LESSOR shall default in the performance or observance of any agreement or
condition in this Lease contained on its part to be performed or observed, or
shall default in the payment of any tax or other charge which shall be a lien
upon the Premises; and if LESSOR shall not cure such default within thirty (30)
days after notice from LESSEE specifying the default (or shall not within said
period commence to cure such default and thereafter prosecute the curing of such
default to completion with due diligence), LESSEE, may, at its option, without
waiving any claim for damages, at any time thereafter cure such default for the
account of LESSOR, LESSEE in so doing shall be deemed paid or incurred for the
account of LESSOR and LESSOR agrees to reimburse LESSEE therefor or save LESSEE
harmless therefrom, provided that LESSEE may cure any such default as aforesaid
prior to the expiration of said waiting period (but after said notice to LESSOR)
if the curing of such default prior to the expiration of said waiting period is
reasonably necessary to protect the Building or the Premises or LESSEE'S
interest therein or to prevent injury or damage to persons or
25
<PAGE> 27
property. If LESSOR shall fail to reimburse LESSEE upon demand for any amount
paid for the account of LESSOR hereunder, LESSEE shall have the right to
commence an action against the LESSOR for said amount and/or to set-off and
apply said amount, after notice of an intent to do so, against the installments
of rent or any other amounts due or to become due to LESSOR from LESSEE under
this Lease.
25. NOTICE OF LEASE
The parties shall execute and cause to be recorded a Notice of Lease in
accordance with the requirements of G.L. c.183, ss.4.
26. ENTIRE AGREEMENT
This Lease contains the entire agreement between the parties and all prior
negotiations and agreements are merged herein. Neither LESSOR nor LESSOR'S agent
or representative has made any representation, or statement, or promise upon
which LESSEE has relied regarding any matter or thing relating to the Building,
the land allocated to it, (including the parking area) or the Premises, or any
other matter whatsoever, except as is expressly set forth in this Lease,
including, but without limiting the generality of the foregoing, any statement,
representation or promise as to the fitness of the Premises for any particular
use, the services to be rendered to the Premises or the prospective amount of
any item of additional rent. No rights, easements or licenses are or shall be
acquired by LESSEE by implication or otherwise unless expressly set forth in
this Lease. This Lease may not be changed,
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<PAGE> 28
modified or discharged, in whole or in part, orally, and no executory
agreement shall be effective to change, modify or discharge, in whole or
in part, this Lease or any obligations under this Lease, unless such agreement
is set forth in a written instrument executed by LESSOR and LESSEE.
IN WITNESS WHEREOF, the LESSOR and LESSEE have hereunto set their hands
and common seals this 29th day of August, 1994.
Eleven Hurley Street Associates, LESSOR
By /s/ Varney J. Hintlian
----------------------------------------
Varney J. Hintlian, General Partner
By /s/ Frederick J. Hintlian
----------------------------------------
Frederick J. Hintlian, General Partner
Biopure Corporation, General Partner
By /s/ Carl W. Rausch
----------------------------------------
Carl W. Rausch, Chairman
Biopure Corporation, LESSEE
By /s/ Brian A. Lajoie
----------------------------------------
Brian A. Lajoie, Vice President, Finance
27
<PAGE> 1
EXHIBIT 10.26
<PAGE> 2
GROUND LEASE
THIS GROUND LEASE, made as of this 10th day of May, 1994. by and between
Varney J. Hintlian, Frederick J. Hintlian, and Tarvis Hintlian, Trustees of
Tarvis Realty Trust under a Declaration of Trust dated March 24, 1977 and filed
as Document No. 553974 with the Middlesex South District of the Land Court and
noted on Certificate of Title No. 151269 ("Landlord"), and Biopure Corporation,
a Delaware corporation ("Tenant")
ARTICLE I
DEMISE
Landlord does hereby demise, lease and let unto Tenant and Tenant does
hereby take and lease from Landlord, for the term and upon the rents, conditions
and provisions herein contained that certain real property known as and numbered
31-35 Hurley Street located in Cambridge, Middlesex County, Massachusetts and
described in Exhibit A attached hereto, together with any and all rights,
privileges, easements, appurtenances and rights of access to and egress from the
Demised Premises, in any way benefiting, belonging or pertaining thereto, and
all rights, title and interests, if any, of Landlord in, to and with respect to
any land lying in the bed of any street, road, avenue or way, open or proposed,
in front of or adjoining the Demised Premises, to the center thereof, and all
strips and gores adjacent to and abutting or used in connection with the Demised
Premises. All of the foregoing are hereinafter referred to as the "Demised
Premises."
ARTICLE II
USE OF PREMISES
Tenant shall have the right to use the Demised Premises for the purposes
of general office and researching, developing, processing and manufacturing
bio-medical products and related uses. With the prior written consent of
Landlord, which consent shall not be unreasonably withheld or delayed, Tenant
shall have the right to use the Demised Premises for any other lawful purpose.
ARTICLE III
TERM
(a) The term of this Lease shall commence on the date hereof (the "Term
Commencement Date") and shall expire at the end of the day on November 30, 2000.
<PAGE> 3
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(b) Tenant shall have the option to extend the term of this Lease for a
five (5) year period commencing on December 1, 2000 and expiring on November 30,
2005 (the "Extended Term"), provided that Tenant shall give notice to Landlord
of its exercise of such option on or before June 1, 2000. All of the terms and
provisions of this Lease shall be applicable during the Extended Term except
that (i) Tenant shall have no option to extend the term of this Lease beyond the
Extended Term and (ii) the rent for the Extended Term shall be as provided in
Article IV.
ARTICLE IV
RENT
(a) During the original term, Tenant agrees to pay to Landlord fixed
annual rent at the rate of $36,000.00 per year, payable in advance in monthly
installments of $3,000.00.
(b) In the event Tenant shall exercise the option to extend the original
term, the fixed annual rent for the Extended Term shall be adjusted in the
following manner. The Consumer Price Index for Urban Wage Earners and Clerical
Workers, Boston, Mass., All Items (1982-84=100) (hereinafter referred to as the
"Index") which is published by the Bureau of Labor Statistics of the United
States Department of Labor for the month of June 1994 (the "Beginning Index")
shall be compared with the Index published for the month of October 2000 (the
"Extension Index"). If the Extension Index has increased over the Beginning
Index, the fixed annual rent during the Extended Term shall be $36,000.00 plus
the amount obtained by multiplying $36,000.00 by ninety percent (90%) of the
percentage of increase between the Beginning Index and the Extension Index. If
the Extension Index has not increased over the Beginning Index, the fixed annual
rent during the Extended Term shall be $36,000.00.
(c) The fixed annual rent (the "Fixed Rent") payable by Tenant hereunder
shall be paid in advance in equal monthly installments on the first day of each
calendar month and shall be paid to Landlord at such place as Landlord shall
from time to time designate in writing.
ARTICLE V
TAXES AND ASSESSMENTS
(a) Tenant shall pay to Landlord as additional rent, within fifteen (15)
days after Landlord shall bill Tenant therefor (such billing to be accompanied
by such reasonable supporting information as Tenant shall request), as the same
become due and payable, all real estate taxes, special and general assessments
and other governmental charges of any kind and nature whatsoever, ordinary or
extraordinary, which shall be assessed, levied or imposed upon or become due and
payable in connection with, or a lien upon, the Demised Premises or any part
thereof (all of such taxes, assessments and other governmental charges are
hereinafter referred to as "Impositions").
<PAGE> 4
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Landlord shall pay all Impositions on or before the due date thereof and
shall provide Tenant with evidence of such payment. If Landlord shall not pay
any Imposition (including any Imposition on a larger parcel of which the Demised
Premises are a part) and such failure shall continue for fifteen (15) days after
Tenant shall have given Landlord notice thereof, Tenant may pay such Imposition
and may deduct the amount thereof allocable to all portions of such larger
parcel other than the Demised Premises (and, if Tenant shall have previously
paid to Landlord the Impositions allocable to the Demised Premises, the amount
of all such Impositions) from any rent or other sums payable under this Lease at
any time thereafter.
If the Demised Premises are separately assessed and if Landlord or Tenant
so elects, Landlord will deliver all bills for Impositions to Tenant, and Tenant
shall be responsible for the payment thereof directly to the taxing authority.
In no event shall Tenant be liable for any payment until after fifteen (15) days
after Landlord shall have delivered the bill therefor to Tenant, and if any
penalty or interest shall accrue because Landlord shall not have timely
delivered any such bill to Tenant, Landlord shall pay such penalty or interest.
(b) If by law, any Imposition is payable, or may at the option of the
taxpayer be paid, in installments (whether or not any interest shall accrue on
the unpaid balance of such Imposition), unless Tenant shall otherwise direct,
Landlord shall elect to pay the same in installments, and Tenant shall pay the
same, together with any accrued interest on the unpaid balance of such
Imposition, in installments as the same respectively become due and payable, and
Tenant's liability shall be limited to installments which are payable during the
term of this Lease.
(c) All Impositions payable by Tenant for the year in which the Term
Commencement Date shall occur and for the year in which the Lease term shall
expire or otherwise terminate shall be prorated. In determining the amount of
payments to be made by Tenant pursuant to this Article V, there shall be
appropriate adjustments for all abatements, credits and refunds relating to
Impositions for such year, after there shall have been first deducted therefrom
all reasonable expenses incurred in obtaining such abatement, credit or refund.
(d) In the event that Tenant shall be entitled to any credits, refunds or
rebates on account of any Impositions, such credit, refund or rebate shall
belong to Tenant, subject, however to paragraph (c) of this Article V. Any such
credits, refunds or rebates received by Landlord shall be deemed trust funds and
as such shall be received by Landlord in trust and paid to Tenant forthwith
after receipt thereof, provided, however, that if any past due rent shall be
payable to Landlord, Landlord shall be entitled to deduct such past due rent
from any sums otherwise payable to Tenant hereunder. Landlord will, upon the
request of Tenant, execute and deliver any receipts which may be necessary to
secure the payment of any such credit, refund or rebate.
(e) Tenant shall not be required to pay any tax on the rent paid to
Landlord or any inheritance, estate, succession or transfer taxes under any
existing or future law which may
<PAGE> 5
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be payable by reason of the devolution by descent or testamentary disposition of
the Landlord's estate in the Demised Premises, and Tenant shall not be required
to pay any income, gift or capital levy or excess profits tax that may be
payable by Landlord under any existing or future law.
(f) In the event the Demised Premises shall not be separately assessed for
the purpose of any Impositions which Tenant is required to pay under this Lease,
the same shall be allocated between the Demised Premises and the balance of the
property with which the Demised Premises shall be assessed as follows:
(i) Impositions relating to land shall be multiplied by a fraction
the numerator of which shall be the land area included in the Demised Premises
and the denominator of which shall be the total land area of the Demised
Premises and such other property with which the Demised Premises shall be
assessed, and the result shall be allocated to the Demised Premises; and
(ii) Impositions relating to buildings and other improvements shall
be allocated to the Demised Premises according to the records of the municipal
assessors. To the extent such records shall not provide for such allocation,
Landlord shall make an appropriate allocation between the Demised Premises and
the balance of the property with which the Demised Premises shall be assessed,
provided, however, that Tenant shall have the right to object to any such
allocation made by Landlord within thirty (30) days after Landlord shall have
notified Tenant thereof, and in the event Tenant shall object, such matter shall
be submitted to arbitration.
ARTICLE VI
IMPROVEMENTS
(a) Tenant shall have the right, at any time and from time to time during
the term of this Lease, at its own cost and expense, to demolish the
improvements existing on the Demised Premises as of the date of this Lease and
to construct on the Demised Premises a one-story building containing
approximately 6,000 square feet of floor area (the "Building") and such other
structures, parking areas, driveways, walks and other improvements of any nature
(including excavation, earthmoving, paving, installation of utilities and all
other development activities) pertaining thereto as Tenant in Tenant's sole
discretion shall consider appropriate.
(b) All improvements which may be constructed on the Demised Premises by
Tenant shall be the property of Tenant during the term hereof and may be changed
or altered and any such improvements remaining upon the Demised Premises at the
expiration or sooner termination of this Lease shall become a part of the realty
and shall be the property of Landlord without any payment therefor to Tenant
other than as provided in Article VI(d) below. Tenant need not restore the
Demised Premises to its former condition following any such demolition,
construction, change or alteration.
<PAGE> 6
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(c) Tenant shall cause to be discharged all mechanics or materialmen's
liens placed on the Demised Premises on account of the construction of such
improvements. Tenant shall require its contractors to carry liability insurance
in such amounts and with such coverages as Tenant shall determine, naming
Landlord and Tenant as additional insureds. All improvements (if any) which
shall exist on the Demised Premises at any time shall be maintained in
reasonably good condition, subject to fire and casualty and subject in any event
to Article VI(a) and (b).
(d) If Tenant constructs the Building on the Demised Premises, then upon
the expiration of this Lease or its earlier termination for any reason other
than pursuant to the provisions of Article XIII (the "Termination Date") and, so
long as the Building is in good order, condition and repair (except for
reasonable wear and tear) on the Termination Date, Landlord shall pay to Tenant
as full and complete consideration for the Building the sum of $300,000.00,
payable as follows:
(i) $25,000,00 upon the Termination Date;
(ii) $75,000.00 on the first anniversary of the Termination Date;
(iii) $100,000.00 on the second anniversary of the Termination Date;
and
(iv) $100,000.00 on the third anniversary of the Termination Date.
The obligation of Landlord to pay the amounts set forth in clauses (ii), (iii)
and (iv) above shall be evidenced by a promissory note of Landlord in the
principal amount of $275,000.00 made payable to the order of Tenant. The amounts
outstanding under the promissory note shall bear interest at an annual rate
equal to the "base rate" of The First National Bank of Boston plus two percent
(2%), payable monthly in arrears, provided that interest shall not commence to
accrue until eighteen months following the Termination Date. All amounts
outstanding under the promissory note shall become immediately due and payable
in full upon the sale or transfer of the Demised Premises or the grant of any
mortgage of the Demised Premises.
ARTICLE VII
SIGNS
Tenant shall have the right to install, maintain and replace on the
Demised Premises such lawful signs and advertising matter as Tenant may desire.
Tenant shall comply with all applicable laws and ordinances and shall obtain any
necessary permits for such purposes.
<PAGE> 7
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ARTICLE VIII
INSURANCE; WAIVER OF SUBROGATION
Tenant shall maintain commercial general liability insurance with limits
of at least $1,000,000 naming Landlord as an additional insured. Tenant shall
maintain such property insurance on the improvements on the Demised Premises
with such coverages and in such amounts (and with such self-insurance and
deductibles) as Tenant shall determine from time to time. Tenant shall furnish
certificates of such insurance to Landlord upon reasonable request from time to
time. Such certificates shall provide that such insurance shall not be canceled
except upon at least ten (10) days' prior written notice to Landlord.
Each party hereby waives all liability of, and all rights to recovery and
subrogation against, and agrees that neither it nor its insurers will sue, the
other party for any loss of or damage to property arising out of fire or
casualty to the extent insured, and each party agrees that all insurance
policies relating to the Demised Premises will contain waivers by the insurer of
such liability, recovery, subrogation and suit.
ARTICLE IX
LANDLORD MORTGAGES
Landlord shall have the right, without any consent or approval by Tenant,
to mortgage the fee interest in the Demised Premises at any time and from time
to time, provided, however, that in no event shall the outstanding amount of any
indebtedness secured by such mortgage exceed $500,000. The covenant of Landlord
set forth in the immediately preceding sentence shall survive the Termination
Date and shall remain in full force and effect until Landlord has paid all
amounts due and payable to Tenant under the promissory note provided for in
Article VI(d). Any mortgage by Landlord affecting the fee interest in the
Demised Premises shall always be subject and subordinate to this Lease.
ARTICLE X
ENVIRONMENTAL INDEMNIFICATION
Tenant shall defend, with counsel reasonably approved by Landlord, all
actions against Landlord with respect to, and pay, protect, indemnify and save
harmless, to the extent permitted by law, Landlord from and against any and all
Costs and Expenses arising out of, or claimed to be arising out of any
"Environmental Conditions" (as defined hereinafter). Without limiting the
foregoing, the term Costs and Expenses as used in this Article X shall include
remedial or response costs, experts consultant fees and expenses, and bodily
injury or property damage. Tenant and Landlord agree that "response costs," as
defined in the "Environmental Laws" (as defined hereinafter), shall not be
deemed consequential damages.
<PAGE> 8
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For purposes of this Article X, "Environmental Laws" shall mean any
federal, state and/or local statute, ordinance, bylaw, code, rule and/or
regulation, now or hereafter enacted, pertaining to any aspect of the
environment or human health, including, without limitation, Chapter 21C.
Chapter 21D, and Chapter 21E of the General Laws of Massachusetts and the
regulations promulgated by the Massachusetts Department of Environmental
Protection ("DEP"), the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, 42 U.S.C. ss.9601 et seq., the Resource Conservation and
Recovery Act of 1976, 42 U.S.C. ss.6901 et seq., the Federal Water Pollution
Control Act and the Federal Clean Air Act.
For purposes of this Article X, "Hazardous Substances" shall mean any
"oil," "hazardous material," "hazardous waste," or "hazardous substance"
(collectively referred to herein as "Hazardous Substances"), as the foregoing
terms (in quotations) are defined in the Environmental Laws.
For purposes of this Article X, "Environmental Conditions" shall mean any
"disposal," "release" or "threat of release" of Hazardous Substances on from or
about the Demised Premises or storage of Hazardous Substances on, from or about
the Demised Premises, other than in compliance with the Environmental Laws.
Notwithstanding anything in this Lease to the contrary, Landlord agrees
that Tenant shall not be responsible for Environmental Conditions to the extent
that such Environmental Conditions (a) exist as of the commencement of the term
of this Lease or (b) result from (i) the actions or omissions of Landlord either
before the commencement of this Lease, during the term hereof or after the
termination of this Lease or (ii) the actions or omissions of any preceding or
succeeding tenant or owner of the Premises. Landlord further agrees that Tenant
shall have no obligation to Landlord under this Lease for Environmental
Conditions arising from the actions or omissions of any person or entity who or
which is not an agent, employee, invitee or subtenant of Tenant.
Landlord shall defend, with counsel reasonable approved by Tenant, all
actions against Tenant, with respect to, and pay, protect, indemnify and save
harmless, to the extent permitted by law, Tenant from and against any and all
Costs and Expenses of any nature arising out of, or claimed to be arising out
of, any Environmental Conditions to the extent that such Environmental
Conditions (a) exist as of the commencement of the term of this Lease or (b)
result from (i) the actions or omissions of Landlord either before the
commencement of this Lease, during the term hereof or after the termination of
this Lease or (ii) the actions or omissions of any preceding or succeeding
tenant or owner of the Premises. Tenant agrees that Landlord shall not be
responsible for any Environmental Conditions to the extent that such
Environmental Conditions result from the actions or omissions of Tenant, or
Tenant's agents, employees, invitees or subtenants. Tenant further agrees that
Landlord shall have no obligation to Tenant under this Lease for Environmental
Conditions arising during the term of this Lease from the actions or omissions
of any person or entity who or which is not an agent, employee or invitee of
Landlord.
<PAGE> 9
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ARTICLE XI
CONDEMNATION
(a) In the event of a taking of or damage to all or any part of the
Demised Premises by any public or quasi-public authority under any statute or by
exercise of the power of eminent domain, whether by condemnation proceedings or
otherwise, or any transfer of all or any part of the Demised Premises made in
anticipation of an exercise of the power of eminent domain (all of the foregoing
being hereinafter referred to as an "Appropriation") during the term of this
Lease, the rights and obligations of Landlord and Tenant with regard to such
Appropriation, including rights to the award therefrom, shall be governed by
this Article.
(b) If the whole of the Demised Premises shall be so taken, this Lease
shall automatically terminate as of the date possession is taken. In the event
that less than the whole, but more than twenty-five percent (25%), of the ground
floor area of the buildings on the Demised Premises or more than twenty-five
percent (25%) of the land comprising the Demised Premises shall be taken by
public or quasi-public authority, Tenant shall have the option to terminate this
Lease as of the date Tenant shall be dispossessed from the buildings or land so
taken. Such option to terminate shall be exercisable by Tenant at any time
subsequent to the filing of the condemnation action and prior to the expiration
of one hundred twenty (120) days after the date of such dispossession by giving
notice thereof to Landlord.
(c) In the event of an Appropriation, Landlord shall be entitled to
receive the entire award paid for the land included in the Demised Premises so
taken and for Landlord's reversionary interest in the improvements thereon,
considering, however, that the land is subject to this Lease at the Fixed Rent,
additional rent and other payments herein set forth, and Tenant shall be
entitled to receive the remainder of the award paid for the taking of or damage
to all buildings and improvements on the Demised Premises as well as any award
to which it may become entitled, if this Lease is terminated, by virtue of the
earlier termination of its leasehold estate or, if this Lease is not terminated,
by virtue of damage to its leasehold estate and any other payments made on
account of the taking of personal property or fixtures belonging to Tenant or
any of its subtenants or for interruption of or damage to Tenant's or any such
subtenant's business. Each party shall pay its own legal and other fees, costs
and expenses incurred in the event of an Appropriation.
(d) Nothing in this Article shall be construed to prevent Tenant from
making its claim against the condemning authorities for any other damage or
damages suffered by Tenant provided the same shall not adversely affect the
compensation to which Landlord is entitled pursuant to the provisions of this
Article.
(e) Landlord hereby agrees to give Tenant notice of any pending
condemnation proceedings and full opportunity to participate in all negotiations
concerning settlement. Landlord will not, without the prior written consent of
Tenant, settle any condemnation
<PAGE> 10
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proceedings affecting the Demised Premises.
(f) In the event of a taking hereunder, the Fixed Rent payable by Tenant
pursuant to Article IV of this Lease shall be reduced, effective as of the
taking of possession by the condemning authority, in the proportion which the
area of the land comprising that portion of the Demised Premises appropriated
shall bear to the total land area of the Demised Premises.
ARTICLE XII
ASSIGNMENT; SUBLETTING
Tenant shall have the right to sublet all or any portion of the Demised
Premises or to assign this Lease with the consent of Landlord, Landlord hereby
agreeing that such consent shall not be unreasonably withheld or delayed and to
be deemed given if not denied within fifteen (15) days after request therefor.
In the event of an assignment, Tenant shall remain liable to Landlord for the
payment of rent and for the full performance of the covenants and conditions of
this Lease unless otherwise agreed to in writing by Landlord.
ARTICLE XIII
DEFAULTS; REMEDIES
(a) If Tenant shall default in the payment of any installment of rent or
other sum of money due hereunder and such default shall continue for a period of
ten (10) days after notice thereof by Landlord, or if Tenant shall default in
the performance or observance of any other provision of this Lease to be
performed or observed by Tenant and such default shall continue for a period of
thirty (30) days after notice thereof by Landlord without being waived, or its
effect cured, or the cure thereof commenced and diligently prosecuted
thereafter, or if Tenant shall default in the payment, performance or observance
of any provision of any other lease between Landlord and Tenant for real
property located on Spring Street or Hurley Street in Cambridge, Massachusetts,
and such default shall continue beyond any applicable notice or cure periods
provided for in such lease, Landlord may, at Landlord's option, in addition to
any other remedies available under law, serve upon Tenant a notice of
termination which shall provide that the term of this Lease shall expire and
terminate as fully and with like effect as if the entire term of this Lease had
lapsed.
(b) Neither bankruptcy, insolvency nor an assignment for the benefit of
creditors nor the appointment of a receiver shall affect this Lease or permit
its termination so long as the covenants on the part of Tenant to be performed
shall be performed by Tenant or someone claiming under Tenant.
(c) No notice of default or notice of termination given hereunder shall be
effective unless it shall specify in detail the claimed default.
<PAGE> 11
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(d) In the event that this Lease shall be terminated under any of the
provisions contained in this Article XIII, Tenant shall pay punctually to
Landlord all the sums and shall perform all the obligations which Tenant
covenants in this Lease to pay and shall perform in the same manner and to the
same extent and at the same time as if this Lease had not been terminated. In
calculating the amounts to be paid by Tenant pursuant to the preceding sentence,
Tenant shall be credited with the net proceeds of any rent obtained by Landlord
by reletting the Demised Premises, after deducting all Landlord's reasonable
expenses in connection with such reletting, including, without limitation, all
repossession costs, brokerage commissions, fees for legal services and expenses
of preparing the Demised Premises for such reletting, it being agreed by Tenant
that Landlord may (i) relet the Demised Premises or any part or parts thereof
for a term or terms which may at Landlord's option be equal to or less than or
exceed the period which would otherwise have constituted the balance of the term
hereof and may grant such concessions and free rent as Landlord in its
reasonable judgment considers advisable or necessary to relet the same and (ii)
make such alterations, repairs and decorations in the Demised Premises as
Landlord in its reasonable judgment considers advisable or necessary to relet
the same, and no action of Landlord in accordance with the foregoing or failure
to relet or to collect rent under reletting shall operate or be construed to
release or reduce Tenant's liability as aforesaid. Notwithstanding the
foregoing, Landlord specifically recognizes its obligation to minimize damages
and will use commercially reasonable efforts to relet the Demised Premises.
ARTICLE XIV
END OF TERM
Upon the expiration of this Lease or upon its earlier termination for any
reason whatsoever, Tenant shall surrender and deliver up the Demised Premises,
all improvements thereon (except movable trade fixtures and personal property of
Tenant or its subtenants) in good order, condition and repair except for
reasonable wear and tear and except for damage caused by fire, casualty,
Appropriation or Landlord's negligence or default, subject in any event to
Article VI hereof, provided, however, that in the event that the Building shall
have been destroyed by fire or other casualty during the term of this Lease and
Tenant shall not have restored the same, Tenant shall surrender and deliver up
the Demised Premises with the Building demolished to grade.
ARTICLE XV
QUIET ENJOYMENT
Tenant, upon paying the Fixed Rent and all additional rent and other
payments provided for herein and observing and performing all of the provisions
of this Lease to be observed and performed by Tenant within applicable grace
periods, shall quietly hold, occupy and enjoy the Demised Premises and all of
the rights relating thereto during the term, without hindrance or molestation by
Landlord or any party claiming by, under or through
<PAGE> 12
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Landlord.
ARTICLE XVI
PERFORMANCE Of TENANT'S OBLIGATIONS
Whenever in this Lease Tenant is obligated to perform any act, such act
shall be deemed performed by Tenant if it causes the due performance thereof by
another party.
ARTICLE XVII
ESTOPPEL CERTIFICATE
Each of the parties shall at any time and from time to time upon not less
than ten (10) days' prior written notice by the other, execute, acknowledge and
deliver to such other party or to any entity designated by such party a
statement in writing certifying that this Lease is unmodified and is in full
force and effect (or there shall have been modifications, that Lease is in full
force and effect as modified and stating the modifications), and the dates to
which the Fixed Rent, additional rent and other payments due hereunder have been
paid, and stating whether or not to the best knowledge of the signer of such
certificate such other party is in default in performing, fulfilling or
observing any of the provisions of this Lease, and if in default, specifying
each such default of which the signer may have knowledge, it being intended that
any such statement may be relied upon by the party requesting it or by any
prospective mortgagee or encumbrancer, purchaser, assignee or subtenant, and the
contents of such statement shall be binding upon the party executing same.
ARTICLE XVIII
PAYMENTS; NOTICE
All Fixed Rent, additional rent or other payments due hereunder shall be
paid by mailing on or before the due date a check by regular mail, postage
prepaid, and all notices and other communications shall be in writing and shall
be deemed given and delivered, if mailed, three (3) days after mailed by
registered or certified mail, postage and registration or certification charges
prepaid or if sent by a national overnight courier which maintains delivery
records, the next business day following delivery to such courier, addressed, in
the case of Tenant, to Tenant at 68 Harrison Avenue, Boston, MA 02111 Attn:
Brian Lajoie and addressed, in the case of Landlord, to Landlord at 20 New
Street, East Boston, MA 02128, except that either party may by written notice to
the other designate another address which shall thereupon become the effective
address of such party for the purposes of this Article.
<PAGE> 13
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ARTICLE XIX
NOTICE OF LEASE
Landlord and Tenant agree that neither will record this Lease. Landlord
and Tenant, on the request of either, will execute, deliver and record a notice
of lease in form reasonably acceptable to Tenant.
ARTICLE XX
LIMITATION OF OBLIGATIONS
No partner, trustee, stockholder, officer, director or beneficiary of
Landlord shall be personally liable under this Lease. Tenant shall look solely
to Landlord's interest in the Demised Premises in pursuit of its remedies upon
an event of default hereunder, and the general assets of Landlord and its
partners, trustees, stockholders, officers or beneficiaries shall not be subject
to levy, execution or other enforcement procedure for the satisfaction of the
remedies of Tenant.
ARTICLE XXI
DISPUTES
If at any time a dispute shall arise as to any amount or sum of money to
be paid by one party to the other under any provision of this Lease, the party
against whom the obligation to pay the money is asserted shall have the right to
make payment "under protest," and such payment shall not be deemed to be a
voluntary payment, and all rights of such party shall survive such payment and
shall not be deemed waived or released thereby. If at any lime a dispute shall
arise between the parties as to any work to be performed by either party under
the provisions of this Lease, the party against whom the obligation to perform
the work is asserted may perform such work and pay the cost thereof "under
protest," and such performance and payment shall not be deemed to be a voluntary
performance, and all rights of such party shall survive such performance and
payment and shall not be deemed waived or released thereby.
ARTICLE XXII
DEFINITION OF LANDLORD
As used herein, "Landlord" shall mean the owner for the time being of the
Landlord's estate in the Demised Premises and if such estate shall be sold or
transferred, the seller or assignor shall thereupon be relieved of all
obligations and liabilities hereunder thereafter arising or accruing, and the
purchaser or assignee shall thereupon be deemed to have assumed and agreed to
perform and observe all obligations and liabilities of Landlord hereunder.
<PAGE> 14
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ARTICLE XXIII
PERMITTED CONTEST
Tenant shall have the right to contest or review the amount or validity of
all Impositions and any repairs and improvements required by any law, rule,
regulation or requirement of any public authority and the effect on the Demised
Premises or Tenant's use thereof of any laws, rules, regulations and
requirements of any public authority by legal proceedings, or in such other
manner as it may deem suitable (which, if instituted, Tenant shall conduct, if
necessary or appropriate, in the name of and with the cooperation of Landlord).
Landlord shall execute all documents necessary or appropriate to comply with the
foregoing, and Landlord hereby irrevocably constitutes and appoints Tenant as
its agent and attorney-in-fact to execute and deliver any such documents which
Tenant deems necessary or appropriate to carry out the intent and purposes of
this Article, such appointment being a power coupled with an interest. Pending
any such proceeding Landlord shall have the right to pay any Imposition in the
minimum amount (but not in excess thereof) required by law in order to maintain
such proceeding. Notwithstanding the foregoing, however, Tenant shall promptly
pay all Impositions if at any time the Demised Premises or any part thereof
shall then be immediately subject to forfeiture or if Landlord shall be subject
to any criminal liability arising out of the nonpayment thereof.
ARTICLE XXIV
COOPERATION
Landlord will promptly sign any application for governmental permits or
approvals reasonably requested by Tenant from time to time.
ARTICLE XXV
SEPARABILITY
If any term or provision of this Lease or the application thereof to any
person, property or circumstance shall to any extent be invalid or
unenforceable, the remainder of this Lease, or the application of such term or
provision to persons, properties and circumstances other than those as to which
it is invalid or unenforceable, shall not be affected thereby, and each term and
provision of this Lease shall be valid and enforced to the fullest extent
permitted by law.
ARTICLE XXVI
WAIVER AND AMENDMENT
All rights and remedies of both parties shall be cumulative and not
alternative, in addition to and not exclusive of any other right or remedy to
which such party may be lawfully entitled in case of any breach or threatened
breach of any term or provision herein.
<PAGE> 15
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The rights and remedies of both parties shall be continuing and not exhausted by
any one or more uses thereof and may be exercised at any time or from time to
time and as often as may be expedient. Any option or election to enforce any
such right or remedy may be exercised or changed at any time or from time to
time. This Lease sets forth the entire agreement by the parties, and no custom,
act, forbearance, or words or silence at any time, gratuitous or otherwise,
shall impose any additional obligation or liability upon either party or waive
or release either party from any default in the performance, fulfillment or
observance of any obligation or liability or operate as against either party as
a supplement, alteration, amendment or change of any term or provision set forth
herein, including this sentence, unless set forth in a written instrument duty
executed by such party expressly stating that it is intended to impose such an
additional obligation or liability or to constitute such a waiver or release or
that it is intended to operate as such a supplement, alteration, amendment or
change.
ARTICLE XXVII
HEIRS AND ASSIGNS
Each of the terms covenants and conditions of this Lease shall extend to
and be binding on and inure to the benefit of not only Landlord and Tenant, but
each of their respective heirs, representatives, administrators, successors and
assigns. Whenever in this Lease reference is made to either Landlord or Tenant,
the reference shall be deemed to include, wherever applicable, the heirs, legal
representatives, assigns and such parties the same as if in every case
expressed.
ARTICLE XXVIII
NUMBER AND GENDER
Whenever the singular number is used in this Lease and when required by
the context, the same shall include the plural, and the masculine gender shall
include the feminine and neuter genders, and the word person shall include
corporation, firm or association.
ARTICLE XXIX
PARAGRAPH HEADINGS
The titles to the paragraphs of this Lease are not a part of this Lease
and shall have no effect upon the construction or interpretation of any part
hereof.
<PAGE> 16
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ARTICLE XXX
GOVERNING LAW
This Lease and the performance thereof shall be governed, interpreted,
construed and regulated by the laws of the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the parties have caused this Lease to be duly executed
as a sealed instrument as of the day and year first above written.
LANDLORD: TARVIS REALTY TRUST
By: /s/ Varney J. Hintlian
------------------------------
Varney J. Hintlian, Trustee
By: /s/ Frederick J. Hintlian
------------------------------
Frederick J. Hintlian, Trustee
By: /s/ Tarvis Hintlian
------------------------------
Tarvis Hintlian, Trustee
TENANT: BIOPURE CORPORATION
By: /s/ Brian Lajoie
------------------------------
Brian Lajoie
Vice President, Finance
<PAGE> 17
Exhibit A
A certain parcel of land with the buildings thereon, shown as Lot C on a
Plan of Land in Cambridge, M. Walters, C. E., dated August 8, 1941, and recorded
with the Middlesex South District Registry of Deeds in Book 6546, Page 207, and
bounded and described as follows:
SOUTHWESTERLY: by Hurley Street, sixty (60) feet;
NORTHWESTERLY: by land of owners unknown, one hundred (100)
feet;
NORTHEASTERLY: by land of owners unknown, sixty (60) feet;
SOUTHEASTERLY: by Lot B on said plan, one hundred (100) feet.
Containing 6,000 square feet of land according to said plan.
<PAGE> 1
EXHIBIT 10.27
<PAGE> 2
COMMERCIAL LEASE
PREMISES 37-39 Hurley Street
Cambridge, Massachusetts
LESSOR Tarvis Realty Trust
LESSEE Biopure Corporation
TERM November 1, 1994 through
November 30, 2000
<PAGE> 3
COMMERCIAL LEASE
1. PARTIES AND PREMISES
Varney J. Hintlian, Frederick J. Hintlian and Tarvis Hintlian, Trustees of
Tarvis Realty Trust u/d/t dated March 24, 1977 filed as Document No. 553974 with
Middlesex South District of the Land Court and noted on the Certificate of Title
No. 151269 filed in Registration Book 886, Page 119, as LESSOR, which expression
shall include their successors and assigns where the context so admits, does
hereby lease to Biopure Corporation, a Delaware corporation having a usual place
of business at 68 Harrison Avenue, Boston, Massachusetts, as LESSEE, which
expression shall include its successors and assigns where the context so admits,
and the LESSEE hereby leases the following described premises: the land
described in Exhibit A attached hereto, together with the building (the
"Building") and parking area thereon located at and known as 37-39 Hurley
Street, Cambridge, Middlesex County, Massachusetts, consisting of approximately
10,970 square feet of gross building area, in their "as is" condition (the
"Premises").
2. TERM
The term of this Lease shall commence on November 1, 1994 and end on November
30, 2000. Said latter date is hereinafter referred to as the Termination Date.
The LESSEE shall have the option to extend the term of this Lease for one (1)
period of five years.
3. RENT
A. The Premises are leased to the LESSEE on an absolute net basis. The term
absolute net
2
<PAGE> 4
shall mean that the LESSEE shall, in addition to the monthly rental payments to
the LESSOR, be responsible for payment of real estate taxes, insurance premiums,
utilities and normal maintenance to the building operating systems and equipment
including, but not limited to, the heating plant and air conditioning systems.
The LESSEE will pay to the LESSOR in advance in equal monthly installments the
following rental payments:
<TABLE>
<CAPTION>
YEARS RENT PER SF ANNUAL RENT
<S> <C> <C>
1-2 8.00 $87,760.00
3-4 8.25 $90,502.50
5-6 8.50 $93,245.00
</TABLE>
In the event the rent is not paid by the 10th day of the month for which it is
due, LESSEE agrees to pay a penalty charge of three (3%) percent of the rent
due. This shall also apply for any dishonored check which results in the failure
of LESSOR to receive rent by the 10th day of the month for which rent is due. In
the event that LESSEE makes three (3) or more consecutive late payments of rent
during the term, LESSOR may deem such action a default under Paragraph 18
hereof. If, because of LESSEE'S default under any covenant of this Lease,
including the nonpayment of rent, LESSOR institutes an action for summary
proceedings against Lessee and obtains a judgment against LESSEE, LESSEE agrees
to reimburse the LESSOR for the
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<PAGE> 5
expense of reasonable attorney's fees plus costs and disbursements and the same
shall be included in such judgment as additional rent.
B. The LESSOR grants to the LESSEE the option to extend the term of this Lease
for one (1) period of five years commencing on December 1, 2000 and ending on
November 30, 2005. Said option may be exercised by the LESSEE by giving written
notice thereof to the LESSOR on or before June 1, 2000. The annual rent during
the extended term will be the prior five year average absolute net rent
increased by ninety percent (90%) of the percentage increase in the cumulative
average consumer price index for Boston, Mass.-All Items (1982-84=100) as
published by the United States Department of Labor, Bureau of Labor Statistics
for the prior five year period (October 2000 index/October 1995 index less one x
90% x $8.25 PSF absolute net rent). In the event this price index is not then
published, then the parties shall agree to the use of a substitute index that
reasonably reflects price increases for the Boston area. It is specifically
understood and agreed, however, that the minimum annual rent established
hereunder for the extension term will in no event be less than $8.50 PSF,
absolute net. All other lease terms and conditions will remain in full force and
effect during the extension term.
4. UTILITIES
The LESSOR shall provide all equipment and utilities, including electricity,
heating and plumbing, smoke detectors and fire alarms as
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<PAGE> 6
required by law, water (general and sprinkler use) and sewer; all subject to
interruption due to any accident, to the making of repairs, alterations or
improvements, to labor difficulties, to trouble in obtaining fuel, electricity,
service or supplies from the sources from which they are usually obtained for
the Premises, or to any cause beyond the LESSOR'S control. The LESSEE shall be
solely responsible for the payment of any and all charges and expenses related
to the provision of the foregoing services, however, any such charges and
expenses billed directly to the LESSOR shall be forwarded immediately to the
LESSEE for payment so as to avoid interruption of service and/or penalties.
5. USE OF LEASED PREMISES
The LESSEE shall use the Premises only for the purposes of researching,
developing, processing and manufacturing bio-medical products and related uses.
6. COMPLIANCE WITH LAWS
The LESSEE acknowledges that no trade or occupation shall be conducted in the
Premises or use made thereof which will be unlawful, improper, noisy or
offensive, or contrary to any law or any municipal by-law or ordinance in force
in the city or town in which the premises are situated.
7. FIRE INSURANCE
The LESSEE shall not permit any use of the Premises which will make voidable any
insurance on the Premises or on the contents of the Building or which shall be
contrary to any law or regulation from time to time
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<PAGE> 7
established by the New England Fire Insurance Rating Association, or any similar
body succeeding to its powers. The payment of all premiums related to any
coverage required under this Lease shall be the sole responsibility of LESSEE.
Each policy shall name the LESSOR and the LESSEE as insured parties, as their
interests may appear, and the holder(s) of any outstanding mortgage(s) as the
mortgagee on said policy(ies).
8. MAINTENANCE OF PREMISES
The LESSEE agrees to maintain the interior of the Building (other than walls,
foundations, roofs and other structural elements which are the Lessor's
responsibility) in the same condition as they are at the commencement of the
term or as they may be put in during the term of this Lease, reasonable wear and
tear, damage by fire and other casualty only excepted, and, whenever necessary,
to replace plate glass and other glass therein, acknowledging that the Building
is now in good order and the glass whole. Further, LESSEE shall be responsible
for normal routine maintenance and repairs to the heating, air conditioning and
ventilation systems in the interior of the Building, except when LESSEE is
negligent in properly maintaining the building systems in which event the LESSEE
shall repair or replace, if necessary, said heating, air conditioning or
ventilation system. The LESSEE shall not permit the Premises to be overloaded,
damaged, stripped, or defaced, nor suffer any waste. LESSEE
6
<PAGE> 8
shall obtain written consent of LESSOR before erecting any sign on the Premises.
The LESSOR will not unreasonably withhold consent to erect any sign which
conforms with the Cambridge Zoning Ordinance and which does not diminish the
structural integrity of the Building. The LESSEE shall be responsible for the
removal of snow and ice from the sidewalks bordering upon the Premises.
9. ALTERATIONS ADDITIONS
The LESSEE may not make structural and non-structural alterations or additions
to the Premises without the prior written consent of the LESSOR, which consent
shall not be unreasonably withheld or delayed. At lease termination, the LESSEE
may remove all additions, equipment and/or fixtures that it installed,
including, without limitation, all utility upgrades and pipes, ducts, wires and
appurtenant facilities thereof, but in no case will their removal affect the
structural integrity of the Building. All such allowed alterations shall be at
LESSEE'S expense and shall be in quality at least equal to the present
construction. LESSEE shall not permit any mechanics' liens, or similar liens, to
remain upon the Premises for labor and material furnished to LESSEE or claimed
to have been furnished to LESSEE in connection with work of any character
performed or claimed to have been performed at the direction of LESSEE and shall
cause any such lien to be released of record forthwith without cost to LESSOR.
Any structural alterations or additions made by
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<PAGE> 9
the LESSEE shall become the property of the LESSOR at the termination of
occupancy as provided herein. Anything to the contrary not withstanding, the
LESSOR reserves the right to require the LESSEE to remove any or all LESSEE
installed improvements which the LESSOR determines will inhibit the leasing of
the Premises at the termination of this Lease.
10. ASSIGNMENT SUBLEASING
The LESSEE shall not assign or sublet the whole or any part of the Premises
without LESSOR'S prior written consent, which consent shall not be unreasonably
withheld or delayed. Notwithstanding such consent, LESSEE shall remain liable to
LESSOR for the payment of all rent and for the full performance of the covenants
and conditions of this Lease. Prior to requesting the approval of LESSOR to an
assignment or subletting as hereinbefore provided, LESSEE shall, by notice as
provided herein, advise the LESSOR of all the terms, covenants and conditions of
the LESSEE's proposed sublease or assignment. It is specifically agreed that the
LESSOR may consider the implications of any applicable environmental laws and/or
liabilities when exercising its right to consent to an assignment or subletting.
11. SUBORDINATION AND NON-DISTURBANCE AND ATTORNMENT
LESSEE agrees at the request of LESSOR to subject and subordinate this Lease to
any mortgage(s), or other instruments(s) in the nature of a mortgage, provided
that the holder(s) of such mortgage(s) enters into a non-disturbance and
attornment agreement with
8
<PAGE> 10
the LESSOR, binding upon the successors and assigns of the parties thereto, by
the terms of which such holder(s) agrees (i) not to disturb the possession or
other rights of the LESSEE under this Lease so long as LESSEE continues to
perform its obligations hereunder and (ii) in the event of acquisition of title
by such holder(s) or any other person by or through foreclosure proceedings or
otherwise, to accept the LESSEE as lessee of the Premises under the terms and
conditions of this Lease and to perform the LESSOR'S obligations hereunder and
(iii) an agreement by the LESSEE to attorn to any such holder(s) or
successor(s). The LESSOR represents and warrants that the only mortgage on the
Premises is held by The First National Bank of Boston and a Non-Disturbance and
Attornment Agreement by and between LESSEE and the First National Bank of Boston
shall be executed at least ten (10) business days prior to the Commencement of
the term.
12. LESSOR'S ACCESS
The LESSOR or agents or guests of the LESSOR may, at reasonable times, upon the
giving of two (2) business days written notice to LESSEE, enter to view the
Premises and may remove placards and signs not approved and affixed as herein
provided, and make repairs and alterations as LESSOR should elect to do and may
show the Premises to others, and at any time within six (6) months before the
expiration of the term may affix to any suitable part of the Premises a notice
for letting or selling the Premises or property
9
<PAGE> 11
of which the Premises are a part and keep the same so affixed without hindrance
or molestation. It is agreed in making any such entry upon or inspection of the
Premises, the LESSOR and his agents or guests shall adhere to all security
measures of the LESSEE designed to protect and keep confidential all proprietary
rights and information of the LESSEE.
13. PROPERTY LOSS DAMAGE REIMBURSEMENT
(A) Lessor or its agents shall not be liable for any damage to property of
LESSEE or others entrusted to the employees of the Building, nor for the loss of
or damage to any property of LESSEE by theft or otherwise unless caused by
negligence or misconduct attributable to LESSOR. LESSOR or its agents shall not
be liable for any injury or damage to persons or property resulting from fire,
explosion, falling plaster, steam, gas, electricity, electrical disturbance,
water, rain or snow or leaks from any part of the Building or from the pipes,
appliances or plumbing works or from the roof, street or subsurface or from any
other place or by dampness or by any other cause of whatsoever nature, unless
caused by or due to the negligence or misconduct of LESSOR, its agents, servants
or employees or the LESSOR'S failure to observe its obligations hereunder; nor
shall LESSOR or its agents be liable for any such damage caused by other tenants
or persons in the Building or caused by operations in construction of any
private,
10
<PAGE> 12
public or quasi-public work. If at any time any windows of the Building are
temporarily (up to twenty-four hours) closed or darkened incident to or for the
purpose of repairs, replacements, maintenance and/or cleaning in, on, to or
about the Building or any part or parts thereof, LESSOR shall not be liable for
any damages LESSEE may sustain thereby and LESSEE shall not be entitled to any
compensation therefor nor abatement of rent nor shall the same release LESSEE
from its obligations hereunder nor constitute an eviction. LESSOR and LESSEE
shall reimburse and compensate each other as the case may be for all reasonable
expenditures made by or damages or fines sustained by either party due to the
non-performance or non-compliance with or breach or failure to observe any term,
covenant or conditions of this Lease upon their respective part to be kept,
observed, performed or complied with. Either party shall give immediate notice
to the other after knowledge thereof in case of fire or accident in the Premises
or in the Building or of defects therein or in any fixtures or equipment of
which they have knowledge.
B. LESSEE shall indemnify and save harmless LESSOR against and from any and all
claims by and on behalf of any person or persons, firm or firms, corporation or
corporations arising from the conduct or management of or from any work or thing
whatsoever done (other than by LESSOR or its contractors or the agents or
11
<PAGE> 13
employees of either) in and on the Premises during the term of this Lease and
during the period of time, if any, prior to the Commencement of the term that
LESSEE may have been given access to the Premises for the purpose of making
installations, and will further indemnify and save harmless LESSOR against and
from any and all claims arising from any condition of the Premises due to or
arising from any act or omission or negligence of LESSEE or any of its agents,
contractors, servants, employees, licensees or invitees, and against and from
all costs, expenses and liabilities incurred in connection with any such claim
or claims or action or proceeding brought thereon; and in case any action or
proceeding be brought against LESSOR by reason of any such claim, LESSOR shall
give LESSEE prompt notice thereof and LESSEE, upon notice from LESSOR, agrees
that LESSEE, at LESSEE'S expense, will resist or defend such action or
proceeding and will employ counsel therefor reasonably satisfactory to LESSOR.
LESSEE'S liability under this Lease extends to the acts and omissions of any
subtenant, and any agent, contractor, employee, invitee and licensee of any
subtenant.
C. LESSOR shall indemnify and save harmless LESSEE against and from any and all
claims by and on behalf of any persons or persons, firm or firms, corporation or
corporations arising from the conduct or management of or from any work or thing
whatsoever done (other than by LESSEE or its contractors or the agents or
12
<PAGE> 14
employees of either) in and on the PREMISES during the term of this Lease and
will further indemnify and save harmless LESSEE against and from any and all
claims arising from any condition of the Premises due to or arising from any act
or omission or negligence of LESSOR or any of its agents, contractors, servants,
employees, licensees or invitees, and against and from all costs, expenses and
liabilities incurred in connection with any such claim or claims or action or
proceeding brought thereon; and in case any action or proceeding be brought
against LESSEE by reason of any such claim, LESSOR upon notice from LESSEE,
agrees that LESSOR, at LESSOR'S expense, will resist or defend such action or
proceeding and will employ counsel therefor reasonably satisfactory to LESSEE.
LESSOR'S liability under this Lease extends to the acts and omissions of any of
its agents, contractors, employees and invitees.
14. NON-LIABILITY OF LESSOR
If LESSOR or a successor in interest is an individual (which term as used herein
includes aggregates of individuals, such as joint ventures, general or limited
partnerships or associations) such individual shall be under no personal
liability with respect to any of the provisions of this Lease, it being the
intention hereof that if the LESSOR hereto is in breach or default with respect
to its obligations under this Lease, LESSEE shall look solely to the equity of
such LESSOR in the land and Building of which the Premises form a part of and
the
13
<PAGE> 15
rent stream arising therefrom for the satisfaction of LESSEE'S remedies for the
collection of a judgment requiring the payment of money by the LESSOR, and no
other property or assets of LESSOR shall be subject to levy, execution or other
enforcement procedure for the satisfaction of LESSEE'S remedies under or with
respect to either this Lease, the relationship of LESSOR or LESSEE hereunder or
LESSEE'S use and occupancy of the Premises.
15. LESSEE'S LIABILITY INSURANCE
The LESSEE shall maintain with respect to the Premises commercial general
liability insurance with a general aggregate limit of not less than
$1,000,000.00 with responsible companies qualified to do business in
Massachusetts and in good standing therein insuring the LESSOR as well as LESSEE
against injury to persons or damage to property. The LESSEE shall deposit with
the LESSOR certificates for such insurance at or prior to the commencement of
the term, and thereafter within thirty (30) days prior to the expiration of any
such policies. All such insurance certificates shall provide that such policies
shall not be cancelled or materially altered without at least thirty (30) days
prior written notice to each insured named therein.
16. CASUALTY INSURANCE
A. The LESSEE, at its expense, shall procure for the benefit of LESSOR and
LESSEE, and shall maintain in full force and effect at all times during the term
of this Lease, "all risks" property insurance in an amount not
14
<PAGE> 16
less than the full replacement value of the Building (to be determined annually
by LESSEE and LESSOR) and having a deductible of not greater than $5,000 from a
loss payable for a single casualty and containing a so-called "replacement
costs coverage endorsement" and an "agreed amount endorsement." If the Building
is damaged by fire or other casualty insured against under the policy, LESSEE
and LESSOR shall fully cooperate with one another in processing any claims
related thereto.
B. If during the term of this Lease the Building is damaged or destroyed by fire
or other casualty insured against, and such damage is not substantial, this
Lease shall remain in full force and effect and LESSEE shall be responsible for
effecting any necessary repair or restoration of the Building to the extent of
available insurance proceeds and shall be responsible for the payment of any
deductible related thereto. All insurance proceeds shall be applied to the
payment of costs and expenses incurred in effecting any such repair or
restoration.
C. If during the term of this Lease the Building is substantially damaged or
destroyed by fire or other casualty insured against, LESSEE may elect to
terminate this Lease by giving written notice thereof to LESSOR within thirty
(30) days of the date of such fire or other casualty. If LESSEE does not elect
to terminate this Lease, then this Lease shall remain in full force and effect
15
<PAGE> 17
and LESSOR shall, to the extent of available insurance proceeds, promptly
repair, restore and replace the Building to the same condition the Building was
in immediately prior to such fire or other casualty or such other condition as
LESSEE shall approve in writing. If LESSEE elects to terminate this Lease, the
insurance proceeds payable with respect to such fire or other casualty shall be
payable to LESSOR.
D. If during the term of this Lease the Building is partially or substantially
damaged or destroyed by casualty not insured against, or if the available
insurance proceeds will not be sufficient to repair, restore and replace the
Building to the same condition the Building was in immediately prior to such
casualty, LESSEE may elect to terminate this Lease by giving written notice to
LESSOR within thirty (30) days after making such determination. If LESSEE elects
to terminate this Lease, any insurance proceeds payable with respect to such
casualty shall be payable to the LESSOR. If LESSEE does not elect to terminate
this Lease, LESSEE shall at its sole cost and expense, less available insurance
proceeds, repair, restore and replace the Building to the same condition the
Building was in immediately prior to such casualty.
E. If the LESSOR is obligated to repair, restore and replace the Building
pursuant to this Paragraph 16, and fails to complete such
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<PAGE> 18
repair, restoration and replacement within ninety (90) days of the date of such
damage, LESSEE shall have the right to terminate this Lease by giving written
notice to LESSOR.
F. If the Premises are rendered unsuitable for their intended use by reason of
any damage or destruction, a just and proportionate abatement of the rent and
other charges payable by LESSEE under this Lease shall be made until the
Premises are fully repaired, restored and replaced.
G. For the purposes of this Paragraph 16, "substantially damaged" or
"substantial damage" means damage of such a character that the same cannot, in
the ordinary course, reasonably expected to be repaired within thirty (30) days
from the time the repair work would commence.
17. EMINENT DOMAIN
A. If during the term of this Lease the Premises are totally taken by
condemnation, this Lease shall terminate on the date of the taking.
B. If during the term of this Lease any portion of the Premises is taken by
condemnation, LESSEE may elect to terminate this Lease by giving written notice
to LESSOR within thirty (30) days after the nature and extent of the taking have
been finally determined. If LESSEE does not elect to terminate this Lease, this
Lease shall remain in full force and effect and a just and
17
<PAGE> 19
proportionate abatement of the rent and other charges payable by LESSEE under
this Lease shall be made.
C. If there is a partial taking of the Premises and this Lease remains in full
force and effect, LESSOR at its cost shall restore promptly what remains of the
Building to a complete architectural unit as close as possible to the condition
of the Building immediately prior to such taking to the extent permitted by the
taking award less the reasonable expenses of LESSOR in connection with the
collection of same and subject to then applicable legal requirements.
D. If this Lease terminates as a result of a taking pursuant to either (A) or
(B) above, LESSEE shall be entitled to receive any taking award attributable to
LESSEE's equipment, fixtures and relocation costs. If this Lease does not
terminate as a result of a taking of the Premises the entire award (less any
portion attributable to LESSEE's equipment, fixtures and relocation expenses)
shall be paid to LESSOR and shall be used to effect the repair, restoration and
replacement of the Premises.
18. DEFAULT AND BANKRUPTCY
In the event that:
(a) the LESSEE shall default in the payment of any installment of rent or
other sum herein specified and such default shall continue for ten (10)
days after written notice thereof; or
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<PAGE> 20
(b) the LESSEE shall be in default of its obligations to the LESSOR under the
terms of either or both of those certain leases between the parties
concerning the premises known and numbered as 22 Spring Street or 31-35
Hurley Street, Cambridge, and such default shall continue beyond any
applicable notice or cure periods provided for in such lease; or
(c) The LESSEE shall default in the observance or performance of any other of
the LESSEE'S covenants, agreements, or obligations hereunder and such
default shall not be corrected within thirty (30) days after written
notice thereof provided that if such default is not susceptible of being
cured within such period of thirty (30) days, the LESSEE shall have such
additional period of time to cure as may be reasonably required to effect
such cure so long as the LESSEE seasonably commences the curative action
and continually and diligently pursues the same; or
(d) The LESSEE shall be declared bankrupt or insolvent according to law, or,
if any assignment shall be made of LESSEE'S property for the benefit of
creditors;
Then the LESSOR shall have the right thereafter, while such default
continues, to re-enter and take
19
<PAGE> 21
complete possession of the leased premises; to declare the term of this
Lease ended; and remove the LESSEE'S effects, without prejudice to any
remedies which might be otherwise used for arrears of rent or other
reasonable default. The LESSEE shall indemnify the LESSOR against all loss
of rent and other reasonable payments which the LESSOR may incur by reason
of such termination during the residue of the term. If the LESSEE shall
default, after reasonable notice thereof, in the observance or performance
of any conditions or covenants on LESSEE'S part to be observed or
performed under or by virtue of any of the provisions in any article of
this lease, the LESSOR, without being under any obligation to do so and
without thereby waiving such default, may remedy such default for the
account and at the expense of the LESSEE. If the LESSOR makes any
reasonable and necessary expenditures or incurs any reasonable and
necessary obligations for the payment of money in connection therewith,
including but not limited to, reasonable attorney's fees in instituting,
prosecuting or defending any action or proceeding, such sums paid or
obligations incurred, with interest at the rate of ten (10) percent per
annum and costs, shall be paid to the LESSOR by the LESSEE as
20
<PAGE> 22
additional rent. The LESSOR specifically recognizes the obligation to
minimize damages and will use commercially reasonable efforts to relet the
Premises.
19. NOTICE
Any notice from the LESSOR to the LESSEE relating to the Premises or to the
occupancy thereof, shall be deemed duly served, registered or certified mail,
return receipt requested, postage prepaid, addressed to the LESSEE or delivered
by Constable at the following address: Biopure Corporation, 68 Harrison Place,
Boston, MA 02111, Att: Brian Lajoie. Any notice from the LESSEE to the LESSOR
relating to the leased premises or to the occupancy thereof, shall be deemed
duly served, if mailed to the LESSOR by registered or certified mail, return
receipt requested, postage prepaid, addressed to the LESSOR at such address as
the LESSOR may from time to time advise in writing. All rent and notices shall
be paid and sent to the LESSOR at 20 New Street, East Boston, Massachusetts
02128.
20. SURRENDER
The LESSEE shall at the expiration or other termination of this Lease remove all
LESSEE'S goods and effects from the Premises, (including without hereby limiting
the generality of the foregoing, all signs and lettering affixed or painted by
the LESSEE, either inside or outside the Premises). LESSEE shall deliver to the
LESSOR the Premises and all keys, locks thereto, and all structural
21
<PAGE> 23
alterations and additions made to or upon the Premises, in the same condition as
they were at the commencement of the term, or as they were put in during the
term hereof, reasonable wear and tear and damage by fire or other casualty only
excepted. In the event of the LESSEE'S failure to remove any of LESSEE'S
property from the Premises, LESSOR is hereby authorized, without liability to
LESSEE for loss or damage thereto, and at the sole risk of LESSEE, to remove and
store any of the property at LESSEE'S expense, or to retain same under LESSOR'S
control or to sell at public or private sale, without notice any or all of the
property not so removed and to apply the net proceeds of such sale to the
payment of any sum due hereunder, or to destroy such property.
21. LESSOR'S REPRESENTATIONS AND WARRANTIES
The LESSOR warrants and covenants that the Premises comply with all applicable
zoning and building laws without variance, special permit, or non-conforming
use exception, and that use of the Premises for the Permitted Uses will not
violate any of the above-mentioned rules and regulations; that the Premises are
not in a flood zone; and that LESSOR has not unlawfully released or caused an
unlawful threat of release of any hazardous materials or oils (as such terms are
defined in the Massachusetts Oil and Hazardous Material Release Prevention and
Response Act, Chapter 21E of the Massachusetts General Laws) on the Premises.
22
<PAGE> 24
LESSOR covenants and warrants to LESSEE that it has full right and lawful
authority to enter into this Lease for the term of this Lease, or any renewal,
extension or option hereof; that LESSOR is lawfully seized of the Premises and
has good and marketable title thereto, free and clear of all tenancies, liens,
encumbrances, encroachments, restrictions, conditions, reservations and
easements, except real estate taxes due but not yet payable, and that the LESSEE
shall and may peacefully and quietly hold and enjoy the Premises throughout the
term hereof without hindrance by the LESSOR or any other person claiming through
or under the LESSOR.
The LESSOR will keep the floors, foundations, external walls, structural
members, roofs, plumbing, electric wires and all utility conduits and
appurtenances thereto located in the Building in good working order, condition
and repair reasonable wear and tear excepted and make major repairs to the
boiler and the heat, ventilation and air conditioning system; and provided,
further, that notwithstanding anything to the contrary set forth in this Lease,
LESSOR agrees, at its cost and expense, to make any repairs or maintenance
required to the Premises or any systems or facilities thereof, as to which
LESSEE notifies LESSOR within 30 days of the commencement of the term.
22. SELF-HELP
If LESSOR shall default in the performance or
23
<PAGE> 25
observance of any agreement or condition in this Lease contained on its part to
be performed or observed, or shall default in the payment of any tax or other
charge which shall be a lien upon the Premises; and if LESSOR shall not cure
such default within thirty (30) days after notice from LESSEE specifying the
default (or shall not within said period commence to cure such default and
thereafter prosecute the curing of such default to completion with due
diligence), LESSEE may, at its option, without waiving any claim for damages, at
any time thereafter cure such default for the account of LESSOR. LESSEE in so
doing shall be deemed paid or incurred for the account of LESSOR and LESSOR
agrees to reimburse LESSEE therefor or save LESSEE harmless therefrom, provided
that LESSEE may cure any such default as aforesaid prior to the expiration of
said waiting period (but after said notice to LESSOR) if the curing of such
default prior to the expiration of said waiting period is reasonably necessary
to protect the Building or the Premises or LESSEE'S interest therein or to
prevent injury or damage to persons or property. If LESSOR shall fail to
reimburse LESSEE upon demand for any amount paid for the account of LESSOR
hereunder, LESSEE shall have the right to commence an action against the LESSOR
for said amount and/or to set-off and apply said amount, after notice of an
intent to do so, against the installments of rent or any other amounts due or to
become due to LESSOR from LESSEE under this Lease.
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23. NOTICE OF LEASE
The parties shall execute and cause to be recorded a Notice of Lease in
accordance with the requirements of G.L. c.183, ss.4 within five (5) days
hereof.
24. ENTIRE AGREEMENT
This Lease contains the entire agreement between the parties and all prior
negotiations and agreements are merged herein. Neither LESSOR nor LESSOR'S agent
or representative has made any representation, or statement, or promise upon
which LESSEE has relied regarding any matter or thing relating to the Building,
the land allocated to it, (including the parking area) or the Premises, or any
other matter whatsoever, except as is expressly set forth in this Lease,
including, but without limiting the generality of the foregoing, any statement,
representation or promise as to the fitness of the Premises for any particular
use, the services to be rendered to the Premises or the prospective amount of
any item of additional rent. No rights, easements or licenses are or shall be
acquired by LESSEE by implication or otherwise unless expressly set forth in
this Lease. This Lease may not be changed, modified or discharged, in whole or
in part, orally, and no executory agreement shall be effective to change, modify
or discharge, in whole or in part, this Lease or any obligations under this
Lease, unless such agreement is set forth in a written instrument executed by
LESSOR and LESSEE.
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<PAGE> 27
IN WITNESS WHEREOF, the LESSOR and LESSEE have hereunto set
their hands and seals this 23rd day of August, 1994.
Tarvis Realty Trust, LESSOR
By /s/ Varney J. Hintlian, Trustee
Varney J. Hintlian, Trustee
By /s/ Frederic J. Hintlian, Trustee
Frederic J. Hintlian, Trustee
By /s/ Tarvis Hintlian, Trustee
Tarvis Hintlian, Trustee
Biopure Corporation, LESSEE
By /s/ Brian Lajoie
-------------------------------------------
Brian Lajoie, Vice President, Finance
26
<PAGE> 1
EXHIBIT 10.28
<PAGE> 2
GROUND LEASE AGREEMENT
By and Between
MOYER PACKING COMPANY, Lessor
and
BIOPURE CORPORATION, Lessee
<PAGE> 3
TABLE OF CONTENTS
Page
----
ARTICLE ONE: LEASE OF PROPERTY - TERMS OF LEASE ........................ 1
Section 1.01. LEASE OF PREMISES ......................................... 1
Section 1.02. HABENDUM .................................................. 1
Section 1.03. TERM ...................................................... 1
Section 1.04. WARRANTY OF PEACEFUL POSSESSION ........................... 1
ARTICLE TWO: DEFINITIONS ............................................... 2
Section 2.01. DEFINITIONS ............................................... 2
"Affiliate" ............................................................... 2
"Applicable Laws" ......................................................... 2
"Award" ................................................................... 2
"Blood Supply Agreement" .................................................. 2
"Business Day" ............................................................ 2
"Commencement of Construction" ............................................ 2
"Commencement of the Term" ................................................ 2
"Date of Opening" ......................................................... 2
"Event of Default" ........................................................ 3
"Expiration Date" ......................................................... 3
"Facilities" .............................................................. 3
"Facility Equipment" ...................................................... 3
"Force Majeure" ........................................................... 3
"Foreclosure" ............................................................. 3
"Governmental Authority" .................................................. 3
"Hazardous Materials" ..................................................... 3
"Holiday" ................................................................. 4
"Interest" ................................................................ 4
"Lessor's Interest" ....................................................... 4
"Lessor's Representative" ................................................. 4
"Notice of First Offer" ................................................... 4
"Offer"/"Offeror" ......................................................... 4
"Permitted Assignee" ...................................................... 4
"Person" .................................................................. 4
"Premises" ................................................................ 4
"Purchase Price" .......................................................... 4
"Qualified Broker" ........................................................ 4
"Rent" .................................................................... 4
"System" .................................................................. 4
"Taking" .................................................................. 4
"Term" .................................................................... 4
(i)
<PAGE> 4
ARTICLE THREE: RENT .................................................... 4
Section 3.01. RENT .................................................... 4
Section 3.02. CPI ADJUSTMENT .......................................... 5
Section 3.03. ADDITIONAL RENT ......................................... 5
ARTICLE FOUR: PURPOSE OF LEASE ........................................ 5
Section 4.01. PURPOSE OF LEASE ........................................ 5
Section 4.02. CHANGED USE ............................................. 6
Section 4.03. REDUCTION IN VALUE; NUISANCE ............................ 6
Section 4.04. COMPLIANCE WITH GOVERNMENTAL REGULATIONS ................ 6
Section 4.05. NO RESPONSIBILITY OF LESSOR ............................. 7
Section 4.06. ACCEPTANCE "AS IS" ...................................... 7
ARTICLE FIVE: CONSTRUCTION ............................................ 7
Section 5.01. LESSEE TO PAY COSTS ..................................... 7
Section 5.02. PERSONAL PROPERTY ....................................... 8
Section 5.03. ACCESS .................................................. 9
Section 5.04. CONDITIONS TO CONSTRUCTION
OF THE FACILITIES .................................. 9
ARTICLE SIX: ENCUMBRANCES ............................................ 11
Section 6.01. MORTGAGE OF LEASEHOLD ................................... 11
Section 6.02. LESSOR'S AGREEMENTS ..................................... 11
Section 6.03. LIMITED RIGHTS IN THE SYSTEM ............................ 15
ARTICLE SEVEN: MAINTENANCE AND REPAIR .................................. 16
Section 7.01. UTILITIES ............................................... 16
Section 7.02. REPAIRS ................................................. 16
Section 7.03. RENOVATION OF IMPROVEMENTS .............................. 16
Section 7.04. REQUIREMENTS OF GOVERNMENTAL
AUTHORITIES ............................................. 16
ARTICLE EIGHT: CERTAIN LIENS PROHIBITED ................................ 17
Section 8.01. NO MECHANICS' LIENS ..................................... 17
Section 8.02. RELEASE OF RECORDED LIENS ............................... 17
Section 8.03. MEMORANDUM OF RECITALS .................................. 17
ARTICLE NINE: LESSOR REPRESENTATIONS AND WARRANTIES ................... 18
Section 9.01. LESSOR REPRESENTATIONS AND WARRANTIES ................... 18
(ii)
<PAGE> 5
ARTICLE TEN: INSURANCE AND INDEMNIFICATION ........................... 20
Section 10.01. INDEMNIFICATION BY LESSEE ............................... 20
Section 10.02. LESSOR NOT LIABLE ....................................... 20
Section 10.03. INSURANCE ............................................... 20
Section 10.04. LESSOR ADDITIONAL INSURED ............................... 21
Section 10.05. BLANKET POLICIES ........................................ 21
Section 10.06. INDEMNIFICATION BY LESSOR ............................... 21
Section 10.07. CONTRIBUTORY ACTS ....................................... 22
ARTICLE ELEVEN: TERMINATION, DEFAULT AND REMEDIES ....................... 22
Section 11.01. EVENTS OF DEFAULT ....................................... 22
Section 11.02. RIGHT TO EXPEL .......................................... 23
Section 11.03. LESSOR'S RIGHTS UPON DEFAULT ............................ 23
Section 11.04. SURRENDER OF LIEN-FREE TITLE ............................ 24
Section 11.05. FAILURE TO SURRENDER .................................... 24
Section 11.06. HOLDING OVER NOT PERMITTED .............................. 24
ARTICLE TWELVE: LESSEE'S OPTION TO PURCHASE; LESSOR'S
RIGHT OF FIRST REFUSAL .............................. 24
Section 12.01. LESSEE'S OPTION TO PURCHASE THE LAND .................... 24
Section 12.02. LESSOR'S RIGHT OF FIRST REFUSAL ......................... 25
Section 12.03. APPRAISAL PROCEDURE ..................................... 26
Section 12.04. NO MERGER ............................................... 26
ARTICLE THIRTEEN: EXTENSION OPTIONS ....................................... 26
Section 13.01. EXTENSION OPTIONS ....................................... 26
ARTICLE FOURTEEN: DEFAULT BY LESSOR ....................................... 27
Section 14.01. LESSOR DEFAULTS ......................................... 27
ARTICLE FIFTEEN: CONDEMNATION ............................................ 27
Section 15.01. CONDEMNATION OF ENTIRE PREMISES ......................... 27
Section 15.02. PARTIAL CONDEMNATION .................................... 27
Section 15.03. PAYMENT OF AWARDS ....................................... 27
Section 15.04. REPAIR AFTER CONDEMNATION ............................... 28
ARTICLE SIXTEEN: ASSIGNMENT, SUBLETTING, AND TRANSFERS OF
LESSEE'S INTEREST ................................... 28
Section 16.01. SALE, ASSIGNMENT AND SUBLETTING BY
LESSEE .............................................. 28
Section 16.02. APPLICATION TO LEASEHOLD MORTGAGES ...................... 29
Section 16.03. TRANSFERS OR MORTGAGES OF LESSOR'S
INTEREST ............................................ 29
(iii)
<PAGE> 6
ARTICLE SEVENTEEN: COMPLIANCE CERTIFICATES ................................ 29
Section 17.01. LESSOR COMPLIANCE ....................................... 29
Section 17.02. LESSEE COMPLIANCE ....................................... 29
ARTICLE EIGHTEEN: TAXES AND LICENSES ...................................... 30
Section 18.01. PAYMENT OF TAXES ........................................ 30
Section 18.02. CONTESTED TAX PAYMENTS .................................. 30
Section 18.03. REAL ESTATE TRANSFER TAX ................................ 31
Section 18.04. ASSESSMENTS ............................................. 31
ARTICLE NINETEEN: FORCE MAJEURE ........................................... 31
Section 19.01. DISCONTINUANCE DURING FORCE MAJEURE ..................... 31
Section 19.02. OBLIGATIONS NOT EXCUSED ................................. 31
ARTICLE TWENTY: MISCELLANEOUS ........................................... 32
Section 20.01. NOTICES ................................................. 32
Section 20.02. RELATIONSHIP OF PARTIES ................................. 33
Section 20.03. MEMORANDUM OF LEASE ..................................... 33
Section 20.04. ATTORNEYS' FEES ......................................... 33
Section 20.05. APPROVALS ............................................... 33
Section 20.06. PENNSYLVANIA LAW TO APPLY ............................... 33
Section 20.07. APPROVAL OF ANCILLARY AGREEMENTS ........................ 34
Section 20.08. RIGHTS CUMULATIVE ....................................... 34
Section 20.09. NONWAIVER ............................................... 34
Section 20.10. TERMINOLOGY ............................................. 34
Section 20.11. COUNTERPARTS ............................................ 35
Section 20.12. SEVERABILITY ............................................ 35
Section 20.13. ENTIRE AGREEMENT ........................................ 35
Section 20.14. AMENDMENT ............................................... 35
Section 20.15. SUCCESSORS AND ASSIGNS .................................. 35
Section 20.16. INTERPRETATION .......................................... 35
Section 20.17. HAZARDOUS MATERIALS ..................................... 35
EXHIBITS .................................................................. 37
(iv)
<PAGE> 7
GROUND LEASE AGREEMENT
This Ground Lease Agreement (this "Lease" or "Agreement") is made and
entered into as of the date set forth on the signature page of this Lease by and
between MOYER PACKING COMPANY ("Lessor"), and BIOPURE CORPORATION ("Lessee").
WHEREAS, Lessor and Lessee have determined to enter into this Lease
whereby Lessor will lease a tract of approximately five (5) acres of land to
Lessee, and Lessee will develop, construct and operate a Separation Facility on
such land as set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants, conditions and
agreements which follow, the parties hereby agree as follows:
ARTICLE ONE
LEASE OF PROPERTY - TERMS OF LEASE
Section 1.01. LEASE OF PREMISES. Lessor does hereby let, demise, and rent
exclusively unto Lessee, and Lessee does hereby rent and lease from Lessor, the
real property (the "Land") more particularly described on EXHIBIT "A" attached
hereto, together with the right to use on a non-exclusive basis, in accordance
with the terms and conditions hereof), the System (as defined in that certain
Agreement (the "Blood Supply Agreement") dated as of the date hereof between
Lessor and Lessee) which services the Land, and the right of access to and use
of the streets and roads now or hereafter adjoining the Land. Lessee, by
execution of this Lease, accepts the leasehold estate herein demised subject
only to the matters described on EXHIBIT "B" attached hereto.
Section 1.02. HABENDUM. LESSEE SHALL HAVE AND HOLD the Premises, together
with all and singular the rights, privileges, and appurtenances thereto
attaching or otherwise belonging, exclusively unto Lessee, its successors and
assigns, for the term set forth in Section 1.03, subject to the covenants,
agreements, terms, provisions, and limitations set forth in Section 1.01 above
and otherwise as set forth in this Lease.
Section 1.03. TERM. Unless sooner terminated as herein provided, this
Lease shall continue and remain in full force and effect for a term ("Term") of
twenty (20) years commencing on the date hereof and ending at midnight on
October 20, 2014.
Section 1.04. WARRANTY OF PEACEFUL POSSESSION. Lessor covenants that
Lessee, on paying the Rent and performing and observing all of the covenants and
agreements herein contained and provided to be performed by Lessee, shall and
may peaceably and quietly have, hold, occupy, use, and enjoy the Premises during
the Term, and may exercise all of its rights hereunder; and Lessor
<PAGE> 8
agrees to defend Lessee's right to such occupancy, use, and enjoyment of the
Premises against the claims of any and all Persons whomsoever, subject only to
the provisions of this Lease and the matters listed on EXHIBIT "B" hereto.
Lessor covenants that it shall not grant any new mortgage or lien on or in
respect of its fee interest in the Premises unless same is subject and
subordinate to this Lease and any new lease entered into pursuant to Section
6.02.F.
ARTICLE TWO
DEFINITIONS
Section 2.01. DEFINITIONS. In addition to such other defined terms as may
be set forth in this Lease, the following terms shall have the following
meanings:
"Affiliate" - with respect to a designated Person, any other Person that,
directly or indirectly, controls, is controlled by, or is under common control
with such designated Person. For purposes of this definition, the term "control"
(including the correlative meanings of the terms "controlled by" and "under
common control with"), as used with respect to any Person, means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management policies of such Person, whether through ownership of voting
securities or by contract or otherwise.
"Applicable Laws" - all present and future statutes, regulations,
ordinances, resolutions and orders of any Governmental Authority.
"Award" - any payment or other compensation received or receivable as a
consequence of a Taking from or on behalf of any Governmental Authority or any
other Person vested with the power of eminent domain.
"Blood Supply Agreement" - as defined in Section 1.01.
"Business Day" - a day excluding Saturday, Sunday, and any Holiday.
"Commencement of Construction" - the date on which labor and other work is
begun on and/or materials are furnished to the Land for the construction of the
Facilities.
"Commencement of the Term" - the date of this Lease, being the date set
forth on the signature page of this Lease.
"Date of Opening" - the date the Facilities are opened for occupancy or
use.
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"Event of Default" - any matter identified as an event of default under
Section 11.01.
"Expiration Date" - the expiration date of this Lease.
"Facilities" - the Separation Facility (as defined in the Blood Supply
Agreement).
"Facility Equipment" - the furniture, furnishings, equipment, machinery,
and other personal property owned by Lessee and used in connection with the
operation of the Premises.
"Force Majeure" - any (a) act of God, landslide, lightning, earthquake,
hurricane, tornado, blizzard and other adverse and inclement weather, fire,
explosion, flood, act of a public enemy, war, blockade, insurrection, riot, or
civil disturbance; (b) labor dispute, strike, work slowdown, or work stoppage;
(c) order or judgment of any Governmental Authority, if not the result of
willful or negligent action of Lessee; (d) adoption of or change in any
Applicable Laws after the date of execution of this Lease; (e) any actions by
Lessor which may cause unreasonable delay; or (f) any other similar cause or
similar event beyond the reasonable control of Lessee.
"Foreclosure" - a foreclosure or conveyance in lieu of foreclosure.
"Governmental Authority" - any and all jurisdictions, entities, courts,
boards, agencies, commissions, offices, divisions, subdivisions, departments,
bodies or authorities of any nature whatsoever of any governmental unit
(federal, state, county, township, district, municipality, city or otherwise)
whether now or hereafter in existence.
"Hazardous Materials" - (a) any "hazardous waste" as defined by the
Resource Conservation and Recovery Act of 1976 (42 U.S.C. Section 6091 et seq.),
as amended from time to time, and regulations promulgated thereunder; (b) any
"hazardous substance" as defined by the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (42 U.S.C. Section 6091 et seq.), as
amended from time to time, and regulations promulgated thereunder; (c)
polychlorinated biphenyls; (d) underground storage tanks, whether empty, filled
or partially filled with any substance; (e) any substance the presence of which
on the Land is prohibited by any governmental requirements; and (f) any other
substance which by any governmental requirements requires special handling or
notification of any federal, state or local governmental entity in its
collection, storage, treatment, or disposal.
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<PAGE> 10
"Holiday" - any day which shall be a legal holiday in the Commonwealth of
Pennsylvania or a day on which banking institutions in the Commonwealth of
Pennsylvania are authorized or required by law to close.
"Interest" - the rate of interest designated as the prime rate of interest
of Union National Bank and Trust Company of Souderton, Pennsylvania, as adjusted
from time to time.
"Lessor's Interest" - the fee simple title to the Land and Lessor's
reversionary interest in the Facilities.
"Lessor's Representative" - as defined in Section 5.01.D.
"Notice of First Offer" - as defined in Section 12.02.
"Permitted Assignee" - (a) any Permitted Mortgagee, any purchaser at a
Foreclosure, any Affiliate of a Permitted Mortgagee, or any other Person
selected by a Permitted Mortgagee (or its successors or assigns) subsequent to a
Foreclosure of a Permitted Mortgage or (b) any Affiliate of Lessee.
"Person" - an individual; a trust; an estate; a Governmental Authority; or
a partnership, joint venture, corporation, company, firm or any other entity
whatsoever.
"Premises" - the Land and the Facilities.
"Purchase Price" - as defined in Section 12.01.
"Qualified Broker" - as defined in Section 12.03.
"Rent" - as defined in Article 3.
"System" - as defined in Section 1.01.
"Taking" - the actual or constructive condemnation, or the actual or
constructive acquisition by condemnation, eminent domain or similar proceeding
by or at the direction of any Governmental Authority or other Person with the
power of eminent domain.
"Term" - as defined in Section 1.03.
ARTICLE THREE
RENT
Section 3.01. RENT. Commencing November 1, 1994 and continuing on the same
day of each month throughout the Term, Lessee shall pay to Lessor, as annual
base rent ("Base Rent") NINETEEN THOUSAND TWO HUNDRED DOLLARS ($19,200.00), in
equal monthly installments of ONE THOUSAND SIX HUNDRED DOLLARS ($1,600.00), in
advance.
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<PAGE> 11
Section 3.02. CPI ADJUSTMENT. Each year during the Term, including any
extension option periods, the Base Rent shall be increased for the ensuing year
in the same proportion that the BLS Consumer Price Index for All Urban Consumers
(CPI-U) (1982-84 = 100), published by the United States Department of Labor, for
Philadelphia, Pennsylvania, for the last month of the just expired year shall
have increased over the said index figure for the same month of the year
previous to the just expired year. If at any time said Index shall cease to be
published, there shall be substituted therefor the most similar economic
indicator then published, if any.
Section 3.03. ADDITIONAL RENT. Wherever it is provided in this Lease that
Lessee is required to make any payment to Lessor, such payment shall be deemed
to be additional rent ("Additional Rent"). Base Rent and Additional Rent shall
be referred to in this Lease collectively as "Rent". All remedies applicable to
the non-payment of Rent shall be applicable to Base Rent and/or Additional Rent.
Lessee shall pay Lessor Additional Rent as is hereby provided for under this
Lease in the manner and at the times provided for Base Rent herein, or to the
extent not specified, on demand. All and any sums due and owing by Lessee to
Lessor shall bear Interest from and after the due date until payment thereof.
ARTICLE FOUR
PURPOSE OF LEASE
Section 4.01. PURPOSE OF LEASE. Lessee enters into this Lease for the
purpose of developing and constructing the Facilities in accordance with the
Plans and Specifications (as hereinafter defined), and operating the Facilities
in accordance with the Blood Supply Agreement, and except as otherwise provided
herein, the Premises are to be used for no other purpose by Lessee. Lessee's
plans for any and all buildings to be constructed upon the Land and any other
improvement to the Land, as well as the design and use of all Facility Equipment
to be placed in the Facilities and/or otherwise upon the Land (collectively, the
"Plans and Specifications"), shall first be submitted to Lessor for Lessor's
review and approval, which will not unreasonably be withheld. The Plans and
Specifications shall be in compliance with all Applicable Laws and all work to
be performed on the Land by or on behalf of Lessee shall be so performed in a
good and workmanlike fashion and in accordance with the Plans and
Specifications. Lessee contemplates that construction of the Facilities shall be
substantially completed on or before December 31, 1995. In the event that Lessor
fails to object to the Plans and Specifications within seven (7) days after
delivery thereof, the same shall be deemed satisfactory to Lessor.
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<PAGE> 12
Section 4.02. CHANGED USE. Should the use of the Premises materially
change at any time during the Lease Term from that contemplated by Section 4.01
hereof, and should such change not be approved in writing by Lessor, such change
in use shall constitute a material breach of this Lease.
Section 4.03. REDUCTION IN VALUE; NUISANCE. Lessee shall not use the
Premises or permit any other Person to use the Premises or any part thereof, nor
allow any Person access to the Premises for any use which constitutes or causes
disrepair, destruction, deterioration, abuse, mismanagement and/or nuisance to
the Land or an unreasonable annoyance to Lessor. Lessee at all times during the
Lease Term, at its sole cost and expense, shall do all things necessary to
maintain the Premises in a clean and sanitary condition. Notwithstanding
anything herein contained to the contrary, Lessee shall not use, treat, store or
dispose of on the Premises, any toxic or Hazardous Materials, chemicals or
substances, or materials, chemicals or substances, the use, treatment, storage
or disposal of which is hazardous, including without limitation any such
materials, chemicals or substances the use, treatment or disposal of which is
prescribed, restricted or deemed hazardous by any Governmental Authority or by
Applicable Laws, other than is as usual and customary in Lessee's business and
in all events in compliance with all Applicable Laws. Lessee shall take all
reasonable steps necessary to control all odors, fumes and the like generated at
or emanating from the Facilities.
Section 4.04. COMPLIANCE WITH GOVERNMENTAL REGULATIONS. Lessee shall, at
its sole cost and expense, at all times during the Lease Term, conform to, and
cause all Persons using or occupying any part of the Premises to comply with,
all Applicable Laws from time to time pertaining thereto, including, without
limitation, any and all traffic, odor, fire, health, anti-pollution and safety
Applicable Laws. Lessee shall have the right to contest, in good faith, the
application of any such Applicable Laws to its business conducted at the
Facilities by ordinary and proper procedures; provided, however, that, under no
circumstances, shall such challenge adversely affect, in any respect, Lessor
and/or Lessor's Interest. Lessee covenants and agrees to indemnify, defend and
save Lessor harmless from any penalties, damages, or charges imposed for any
violation of Applicable Laws applicable to the construction of the Facilities
and to the use and occupancy of the Premises whether occasioned by neglect,
omission, or wilful act of Lessee or by any Person using the Premises by license
or invitation of Lessee or holding or occupying the same or any part thereof
under or by right of Lessee, unless occasioned by Lessor's negligent or willful
and wanton misconduct. Lessee covenants and agrees that it shall not operate the
Facilities without the necessary permits and licenses so required by Applicable
Laws to operate the Facilities. Lessee shall deliver to Lessor, upon request and
at Lessee's sole cost and expense, copies of documents
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<PAGE> 13
and such other evidences as are normally and customarily issued by or to
Governmental Authorities to demonstrate proof of compliance with all Applicable
Laws relating to the Facilities generally and specifically pertaining to permits
and authorizations with regard to the construction and operation of the
Facilities.
Section 4.05. NO RESPONSIBILITY OF LESSOR. Nothing in this Article or in
this Lease generally shall impose any obligation or liability of any kind or
character upon Lessor with respect to the planning, designing, financing,
construction, testing, acceptance and/or operation of the Facilities. Lessor
shall have no obligation or liability of any kind or character for the payment
of labor, materials or otherwise in connection with the construction, operation
or maintenance of the Facilities or for the carrying out of any construction
contract with respect to the construction of the Facilities. No reviews,
comments, approvals or inspections, rights to perform Lessee's obligations or
similar actions, required or permitted by, of or to Lessor under this Lease or
otherwise, or actions or omissions of Lessor's employees or agents, or
information provided by Lessor or any of such Persons, or other circumstances,
shall give or be deemed to impose on Lessor any responsibility or obligation for
the planning, designing, financing, construction or operation of the Facilities,
nor shall any such approval, actions, information or circumstances relieve or be
deemed to relieve Lessee of its sole and exclusive obligation and responsibility
for the planning, designing, financing, construction, testing, acceptance and
operation of the Facilities.
Section 4.06. ACCEPTANCE "AS IS". Lessee hereby accepts the Land "as is",
and acknowledges that the Land is in satisfactory condition. Lessor makes no
representation or warranty as to the suitability of the Land for the proposed
uses by Lessee and/or respecting the condition of the soil, subsoil or any other
condition of the Land.
ARTICLE FIVE
CONSTRUCTION
Section 5.01. LESSEE TO PAY COSTS. Lessee will develop and construct the
Facilities on the Land at its own cost and expense and shall have title to the
Facilities during the Term of this Lease including any extension thereof. Lessor
shall not have any financial obligation or other obligation of any kind under
this Lease except as specifically set forth herein.
A. Lessee shall furnish all supervision, tools, implements, machinery,
labor, materials and accessories such as are necessary and proper
for the construction of the Facilities, shall pay all permit and
license fees, and shall construct, build, and complete the
Facilities in
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<PAGE> 14
a good, substantial and workmanlike manner all in accordance with
this Lease, the Plans and Specifications, and all documents executed
pursuant hereto and thereto.
B. Lessee shall have sole control of the selection of construction
professionals, construction design (subject to the provisions of
Section 4.01 hereof), means and methods and the final decision
regarding operation of the Facilities. All construction, alteration,
renovation or additions to the Premises undertaken by the Lessee
shall be in conformance with all Applicable Laws. Lessee shall have
the right to contest any such codes for reasonable grounds by
ordinary and proper procedures.
C. Lessee shall, upon written request of Lessor, make, in such detail
as may reasonably be required, and forward to Lessor, reports in
writing as to the actual progress of the construction of the
Facilities.
D. Before erecting or placing any sign upon the Premises, Lessee shall
submit the design and specifications of such sign to Lessor's
Representative for approval, which approval shall not be withheld if
such signage is consistent with Lessor's current signage policy or
such signage was included in the Plans and Specifications. For
purposes of this Lease, "Lessor's Representative" shall be deemed to
be William G. Morral, Vice President-Finance of Lessor or such
Person as shall be designated, from time to time, by Lessor.
Section 5.02. PERSONAL PROPERTY. All Facility Equipment to the extent it
is and remains personal property shall be and remain the property of Lessee.
Notwithstanding anything contained to the contrary in this Lease, Lessor does
hereby expressly waive and relinquish any lien or claim for lien, whether
granted by constitution, statute, rule of law, or contract relating to the
Facility Equipment, whether located in or about the Premises or otherwise, for
any purpose whatsoever, including to secure the payment of Rent, to the extent a
security interest in such Facility Equipment has been granted to Lessee's
construction lender and/or equipment provider in connection with the
construction and/or purchase of such Facility Equipment only. At the expiration
of the Lease Term, including any extension terms, provided Lessee is not then in
default hereunder, Lessee shall have a maximum of ninety (90) days to remove any
or all Facility Equipment from the Facilities, provided that all resultant
damage to the Facilities is completely remedied and Lessee takes reasonable
steps necessary to preserve the functioning and appearance of the Facilities.
Any Facility Equipment which is not removed within said time frame shall be and
become the property of Lessor without any payment by Lessor, unless Lessor
elects otherwise. In addition, Lessee shall
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<PAGE> 15
repair any damage to the Premises and Lessee shall surrender the Premises to
Lessor in a clean and neat condition.
Section 5.03. ACCESS. Lessee shall permit Lessor's agents,
representatives, or employees to enter on the Premises at reasonable times on
reasonable advance notice for the purposes of review and inspection as provided
in this Lease, to determine whether Lessee is in compliance with the terms of
this Lease, or for other reasonable purposes. Subject to the rights of Lessor to
observe, Lessor, its agents, representatives, and employees shall not disturb
construction on the Land. Entry onto the Premises by Lessor or Lessor's agents,
representatives, or employees shall be at their sole risk and Lessee shall not
have any liability to Lessor for any damage or injury to Lessor, its agents,
representatives, or employees resulting from their entry onto the Premises,
unless caused by the negligence of Lessee, its employees or agents.
Section 5.04. CONDITIONS TO CONSTRUCTION OF THE FACILITIES. The following
are conditions, either precedent or concurrent, to the conduct of construction
activity with respect to the Facilities by Lessee which conditions Lessee
expressly covenants to observe and perform:
A. No work shall be undertaken until Lessee shall have obtained and
paid for all permits and authorizations from any and all
Governmental Authorities having jurisdiction over the work and the
Facilities, necessary to be obtained by Lessee prior to commencement
of the work. Lessor will cooperate with Lessee to obtain such
permits and authorizations upon reasonable request by Lessee
therefor.
B. At least seven (7) days prior to the Commencement of Construction
and/or other work on or about the Land for which a lien could be
filed, Lessee shall have its mechanics, materialmen, contractors and
subcontractors, execute a Waiver of Liens in the form of EXHIBIT "E"
hereto and otherwise in form and content satisfactory to Lessee.
Lessee shall provide Lessor with an original copy of said Waiver of
Liens, and Lessee shall cause a fully executed copy of said Waiver
of Liens to be filed and recorded in the office of the Prothonotary
of Montgomery County, Pennsylvania, all at the sole cost and expense
of Lessee, before the Commencement of Construction.
C. Workers' Compensation insurance as required by Applicable Laws
covering all Persons employed in connection with the work shall be
procured before any work is begun and shall be maintained at
Lessee's sole cost and expense at all
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times when work is in progress. Lessee shall furnish evidence of
such insurance required hereunder prior to the beginning of such
work.
D. At all times during the Lease Term, Lessee shall keep the
Facilities, including each part thereof, and the Land, free and
clear of all liens and claims for labor, services, materials,
supplies, equipment and for environmental impairment, in connection
with work performed on or furnished to or operations at the
Facilities and the Premises generally. If Lessee is served with a
claim or lien, it shall immediately notify Lessor thereof. Should
Lessee fail to pay, or post a security bond or cash deposit equal
to, the amount of a claim or lien within thirty (30) days after
service on Lessee, then, on written notice from Lessor, Lessor may
pay, adjust, compromise and discharge any such lien or claim on such
terms and in such manner as Lessor may deem appropriate. In such
event, Lessee shall, on or before the first day of the next calendar
month following any such payment by Lessor, reimburse Lessor for the
full amount paid by Lessor in connection with such lien or claim,
including any attorneys' fees or costs, and other costs and expenses
expended by Lessor, together with Interest from the date of payment
by Lessor to the date of repayment by Lessee.
E. Lessee shall protect Lessor, the Facilities and the Land against
damage resulting from the performance of all work, and shall
indemnify, defend and hold Lessor harmless from and against all
liens or liability in any way arising out of the performance of work
or the furnishing of labor, services, materials, supplies, equipment
or power in connection therewith, unless occasioned by Lessor's
negligent or willful and wanton misconduct.
F. All work shall be completed at the sole cost and expense of Lessee
and shall be designed, constructed and performed in a good and
workmanlike manner and in compliance with all Applicable Laws.
G. Lessor shall not be deemed to have incurred or assumed any
obligation or responsibility in connection with any work performed
on the Land. Nothing in this Lease nor any act or failure to act on
the part of Lessor shall be construed as a waiver of a claim by
Lessor for any defect or deficiency with respect thereto.
H. Lessor shall have the right, but shall not be required or obligated
to, inspect Lessee's, its contractors',
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subcontractors' and suppliers' work on the Premises whether it is in
preparation or progress at all reasonable times.
I. Within sixty (60) days after demand by Lessor to Lessee, after
completion of construction of the Facilities, Lessee shall deliver
to Lessor evidence, satisfactory to Lessor: (i) of completion of the
work in compliance with the terms of this Lease; and (ii) of payment
of all costs, expenses, liabilities and charges arising out of or in
any way connected with such construction unless Lessee is contesting
said items in good faith; provided that: (x) such contest operates
to prevent a lien upon the Premises; and (y) Lessee, within not less
than five (5) days before such contest is instituted, shall give
notice to Lessor of its intention to contest same.
ARTICLE SIX
ENCUMBRANCES; LIMITATIONS RE USE OF THE SYSTEM
Section 6.01. MORTGAGE OF LEASEHOLD. At any time and from time to time,
Lessee may, subject to the terms and conditions of this Lease, mortgage, grant a
lien upon, and a security interest in (and assign as collateral) Lessee's
leasehold estate in the Premises without the prior consent of Lessor, by the
creation or execution of contractual liens, deeds of trusts, mortgages,
assignments or similar instruments (individually, a "Permitted Mortgage" and,
collectively, the "Permitted Mortgages"). Lessor recognizes and agrees that the
mortgages or deeds of trust described in EXHIBIT "C" shall constitute Permitted
Mortgages and the beneficiaries under such Permitted Mortgages (and such
beneficiaries' successors and assigns) shall constitute Permitted Mortgagees.
Section 6.02. LESSOR'S AGREEMENTS. Lessor hereby agrees to the following
for the benefit of any holder or beneficiary (individually, a "Permitted
Mortgagee" and collectively, the "Permitted Mortgagees") of a Permitted Mortgage
of which Lessee has been given specific notice in writing:
A. Lessor shall not terminate this Lease (or Lessee's rights hereunder)
for any Event of Default without first advising such Permitted
Mortgagee, in writing, of such Event of Default and permitting such
Permitted Mortgagee to cure such Event of Default on behalf of
Lessee within thirty (30) days after Lessor has given notice to such
Permitted Mortgagee. If, during such thirty (30) day period, the
Permitted Mortgagee takes action to cure such Event of Default but
is unable, by reason of the nature of the default involved, to cure
such failure within such
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period and continues to attempt to cure such Event of Default
diligently and without unnecessary delays, Lessor shall not
terminate this Lease; provided, however, that if the Permitted
Mortgagee has not cured such Event of Default within one hundred
twenty (120) days after Lessor has given such notice, Lessor may
terminate this Lease and shall have all other rights hereunder
applicable in the event of an Event of Default. Further, if any
Event of Default is not cured within such thirty (30) day period, or
such longer period as provided in the immediately preceding
sentence, and (1) the Permitted Mortgagee shall have given the
notices necessary to commence Foreclosure of the liens of its
Permitted Mortgage prior to the expiration of the final such period
(unless the Permitted Mortgagee is enjoined or stayed from giving
such notices or exercising its right of Foreclosure, in which event
such thirty (30) day period shall be extended by the period of such
injunction or stay), and (2) the purchaser or assignee at the
Foreclosure fully cures any Event of Default reasonably susceptible
of being cured by the purchaser or assignee at the Foreclosure
within thirty (30) days after completion of such Foreclosure, then
Lessor will not terminate this Lease (or Lessee's rights hereunder)
because of the occurrence of such Event of Default provided that
Foreclosure is diligently prosecuted; provided, however, that any
such Event of Default shall, in all cases, be cured within one
hundred twenty (120) days after Lessor has given notice of such
Event of Default; and in the absence of same, Lessor may terminate
this Lease and exercise any and all other rights available to Lessor
upon the occurrence of an Event of Default. Lessor shall accept
amounts paid or actions taken by or on behalf of any Permitted
Mortgagee to cure any Event of Default. Nothing under this Section
6.02.A shall be construed to obligate a Permitted Mortgagee to
either cure any Events of Default or Foreclose the liens and
security interests under its Permitted Mortgage as a consequence of
an Event of Default regardless of whether such Event of Default is
subsequently cured. If the Permitted Mortgagee or the purchaser or
the assignee at Foreclosure cures all defaults reasonably
susceptible of being cured by such Permitted Mortgagee, purchaser or
assignee, then all other defaults shall no longer be deemed to be
Events of Default hereunder with respect to the Permitted Mortgagee
or the purchaser or the assignee at Foreclosure; provided, however,
that nothing herein shall affect the obligation of Lessee for such
Events of Default.
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B. Those Events of Default, which by their very nature, may not be
cured by the Permitted Mortgagee (as, for example, the bankruptcy of
Lessee) shall not constitute grounds of enforcement of rights,
recourses or remedies hereunder by Lessor including termination of
this Lease against a Permitted Mortgagee, if such Permitted
Mortgagee either before or after a Foreclosure of its Permitted
Mortgage (1) makes all payments and performs all obligations
hereunder capable of being performed by the Permitted Mortgagee and
(2) thereafter continues to comply with those provisions of this
Lease with which, by their very nature, the Permitted Mortgagee may
comply. Notwithstanding anything to the contrary contained in this
Lease, the Permitted Mortgagee shall not be responsible for or
obligated to cure any Event of Default for which the Permitted
Mortgagee did not receive written notice within ninety (90) days
from the occurrence of such Event of Default.
C. If a Permitted Mortgagee enforces the rights and remedies pursuant
to the terms of its Permitted Mortgage (including Foreclosure of any
liens or security interests encumbering the estates and rights of
Lessee under this Lease) such enforcement shall not constitute an
Event of Default by Lessee hereunder.
D. If a Permitted Mortgagee should foreclose the liens and security
interests of its Permitted Mortgage and should it, as a result of
such Foreclosure, succeed to the rights of Lessee hereunder, then
such Permitted Mortgagee shall be subject to all the terms and
conditions of this Lease and shall be entitled to all the rights and
benefits of this Lease; provided, however, that (1) such Permitted
Mortgagee shall not be liable for any act or omission of Lessee so
long as such Permitted Mortgagee shall have cured any Event of
Default hereunder susceptible of being performed by such Permitted
Mortgagee; (2) such Permitted Mortgagee shall not be subject to any
offsets or defenses which Lessor has or might have against Lessee so
long as such Permitted Mortgagee shall have cured any Event of
Default hereunder susceptible of being performed by such Permitted
Mortgagee; (3) such Permitted Mortgagee shall not be bound by any
amendment, modification, alteration, approval, consent, surrender,
or waiver of or under the terms of this Lease made without the prior
written consent of such Permitted Mortgagee; (4) such Permitted
Mortgagee shall be entitled to assign (subject to the provisions of
Article Twelve hereof) this Lease, with the prior written consent of
Lessor, which shall not be unreasonably withheld, conditioned or
delayed; and
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(5) upon the written request of such Permitted Mortgagee, Lessor
shall reaffirm, in writing, the validity of this Lease, and that
this Lease is in full force and effect. Nothing in this Article Six
shall affect, in any manner, the limitations on Lessee, Permitted
Mortgagee and their respective successors and assigns with respect
to the System as otherwise set forth in this Article. Lessor
acknowledges and agrees for itself and its successors and assigns
that this Lease does not constitute a waiver by any such Permitted
Mortgagee of any of its rights under any Permitted Mortgage or in
any way release Lessee from its obligations to comply with the
terms, provisions, conditions, representations, warranties,
agreements, or clauses of such Permitted Mortgage or any other
security interest.
E. Lessor will not agree to a modification, alteration, amendment or
the release or surrender of this Lease before expiration of the Term
without the prior written consent of any Permitted Mortgagees.
F. In the event of the termination of this Lease prior to the
Expiration Date, except by a Taking pursuant to Article Fifteen
hereof, Lessor will serve upon any Permitted Mortgagees written
notice that this Lease has been terminated together with a statement
of any and all sums which would have at that time been due under
this Lease but for such termination and of all other Events of
Default, if any, under this Lease then known to Lessor whereupon the
Permitted Mortgagee holding the most senior Permitted Mortgage shall
have the option to obtain a new lease of the Premises by giving
notice to Lessor to such effect within sixty (60) days after receipt
by such Permitted Mortgagee of notice of such termination, which new
lease shall be (1) effective as of the date of termination of this
Lease, (2) for the remainder of the Term, and (3) at the same Rent
and upon all of the agreements, terms, covenants and conditions
hereof. Upon the execution of such new lease, the lessee named
therein (which shall be subject to Lessor's prior written consent,
which shall not be unreasonably withheld, conditioned or delayed)
shall pay any and all sums which at the time of the execution
thereof would be due under this Lease but for such termination, and
shall be responsible for curing any and all Events of Default under
this Lease susceptible of being cured by such lessee, and any and
all expenses of Lessor, including, without limitation, reasonable
attorney's fees, court costs and disbursements incurred by Lessor in
connection with the Event of Default and such termination, the
recovery of possession of the Premises and the
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preparation, execution and delivery of such new lease. The
limitations on the Permitted Mortgagee's responsibility to cure
Events of Default imposed by Section 6.02.B shall apply to this
Section 6.02.F, subject only to such Permitted Mortgagee's
responsibility to cure all monetary and non-monetary Events of
Default susceptible to such cure by the Permitted Mortgagee.
G. All notices given hereunder by Lessor to Lessee shall also be given
concurrently to each Permitted Mortgagee who has previously
designated its address in writing to Lessor or whose address is
listed on EXHIBIT "C" hereto.
H. The liability of the Permitted Mortgagee under this Lease shall be
limited to the period during which the Permitted Mortgagee may own
the interest of the Lessee hereunder. Upon the Permitted Mortgagee's
assignment or transfer of its rights and interests in and to this
Lease to a third party, the Permitted Mortgagee shall have no
further liability for any obligations arising with respect to
periods after such transfer date, which liability shall be borne by
the assignee or transferee.
Section 6.03. LIMITED RIGHTS IN THE SYSTEM. Anything contained in this
Lease to the contrary notwithstanding, it is understood and agreed that Lessee's
right to the non-exclusive use of the System is limited, in all respects, by the
terms and conditions of (i) the Blood Supply Agreement and (ii) this Lease. In
particular, it is understood and agreed that Lessee's right to use the System is
subject to (x) Lessee's continued use of the Facilities in accordance with
Article Four of this Lease; (y) Lessee's payment of Rent in accordance with
Article Three of this Lease; and (ii) Lessee's compliance with the provisions of
the Blood Supply Agreement, in general and in particular, Lessee's obligation to
purchase its entire requirement of Material (as defined in the Blood Supply
Agreement) from Lessor in accordance with the provisions of Article One of the
Blood Supply Agreement. No Permitted Mortgagees shall have any rights or be
entitled to any benefits under this Lease insofar as they may relate to the
System greater than Lessee would have under this Lease and/or the Blood Supply
Agreement. In the event that the use of the Facilities shall change from that
contemplated by Section 4.01 of this Lease and Lessor elects, nevertheless, to
permit Lessee, its Permitted Mortgagees and/or any of their respective
assignee(s) to remain as a lessee under this Lease, Lessee, such Permitted
Mortgagees and/or their respective assignees, as applicable, shall have no
right, whatsoever, to the use of the System under this Lease and/or under the
Blood Supply Agreement. Lessee, its Permitted Mortgagees and/or their respective
assignees, as the case may be, shall then obtain sewer service and rights from
the applicable sewer authority
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at their respective sole cost and expense. It is understood and agreed that
Lessee's right to use the System under this Lease (and under the Blood Supply
Agreement) shall not include the right to discharge domestic/human waste; and
Lessee covenants and agrees, for such purpose, to tie in to the sewage and waste
water system operated by the applicable sewer authority at Lessee's sole cost
and expense in connection with construction of the Facilities. It is further
understood and agreed that Lessor shall not permit any third party to use the
System (with the exception of Lessor's Affiliates) if such usage by such third
party would adversely affect the System's available capacity with respect to
Lessee in accordance with this Lease and/or the Blood Supply Agreement.
ARTICLE SEVEN
MAINTENANCE AND REPAIR
Section 7.01. UTILITIES. Lessee shall pay or cause to be paid all charges,
including any connection fees, for water, gas, electricity, sewer and any other
utilities used on the Premises throughout the Term. Lessee shall construct or
shall arrange for the construction or interconnection of all utilities at and
servicing the Facilities at Lessee's sole cost and expense. Lessee shall not
enter into any contract or agreement with any private party or Governmental
Authority with reference to water lines, street improvements, street lighting,
utility connections, lines or easements and the like, without the prior written
consent of Lessor, which consent shall not be unreasonably withheld. Copies of
any such contracts or agreements which Lessee may enter into shall be provided
to Lessor prior to execution of such contracts or agreements. Nothing in this
Lease shall be deemed to give Lessee the right to drill one or more wells for
water upon the Land, without the prior written consent of Lessor.
Section 7.02. REPAIRS. Lessee shall keep and maintain, or cause to be kept
and maintained, the Premises in a good state of repair.
Section 7.03. RENOVATION OF IMPROVEMENTS. Lessee shall do such major or
minor alterations, renovation or repair work to any portion of the Facilities as
Lessee determines is reasonably necessary in order to comply with the
requirements of this Lease and otherwise keep the Premises in a good state of
repair.
Section 7.04. REQUIREMENTS OF GOVERNMENTAL AUTHORITIES. At all times
during the Lease Term, Lessee shall, at Lessee's sole cost and expense, (i) make
all alterations, additions, repairs and renovations to the Facilities, the Land
and every part or parts thereof, required by Applicable Laws now or hereafter in
effect; and (ii) indemnify, defend and hold Lessor and the Premises and every
part thereof, harmless from any and all liability, loss,
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damages, fines, penalties, claims and actions resulting from Lessee's failure to
comply with the provisions of this Article.
ARTICLE EIGHT
CERTAIN LIENS PROHIBITED
Section 8.01. NO MECHANICS' LIENS. Except as permitted in Section 8.02
hereof, Lessee shall not suffer or permit any mechanics' liens or other liens to
be enforced against Lessor's Interest nor against Lessee's leasehold interest in
the Premises by reason of a failure to pay for any work, labor, services, or
materials supplied or claimed to have been supplied to Lessee or to anyone
holding the Premises or any part thereof through or under Lessee. In addition,
upon the completion of work by all such mechanics, materialmen, contractors,
subcontractors and the like, Lessee shall obtain a release of liens therefrom.
Section 8.02. RELEASE OF RECORDED LIENS. If any such mechanics' liens or
materialmen's liens shall be recorded against the Premises, Lessee shall cause
the same to be forthwith released of record or, in the alternative, if Lessee in
good faith desires to contest the same, Lessee shall be privileged to do so, but
in such case Lessee hereby agrees to indemnify and save Lessor harmless from all
liability for damages occasioned thereby and shall, in the event of a judgment
of foreclosure on said mechanics' lien, cause the same to be discharged and
released prior to the execution of such judgment. In the event Lessor reasonably
should consider Lessor's Interest endangered by any such liens and should so
notify Lessee and each Permitted Mortgagee and Lessee or any Permitted Mortgagee
should fail to provide adequate security for the payment of such liens, in the
form of a surety bond, cash deposit or cash equivalent, or indemnity agreement
reasonably satisfactory to Lessor within thirty (30) days after such notice,
then Lessor, at Lessor's sole discretion, may discharge such liens and recover
from Lessee immediately as Additional Rent under this Lease the amounts to be
paid, with Interest thereon from the date paid by Lessor until repaid by Lessee.
Section 8.03. MEMORANDUM OF RECITALS. The memorandum of Lease to be filed
pursuant to Section 20.03 of this Lease shall state that any third party
entering into a contract or agreement with Lessee for improvements to be located
on the Land, or any other party claiming under said third party, shall be on
notice that Lessor shall have no liability for satisfaction of any claims of any
nature in any way arising out of a contract or agreement with Lessee.
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ARTICLE NINE
LESSOR REPRESENTATIONS AND WARRANTIES
Section 9.01. LESSOR REPRESENTATIONS AND WARRANTIES. Lessor represents and
warrants to Lessee as of the date hereof that:
A. Lessor is sole owner of all of the right, title and interest in and
to the Land and has good, marketable, insurable and indefeasible fee
simple title thereto, free and clear of violations of law and free
and clear of any lien, encumbrance or exception, other than as
listed on EXHIBIT "B" hereto;
B. there is no pending eminent domain, condemnation or similar
proceeding affecting the Land, and Lessor has not received any
notice and has no knowledge that any such proceeding is
contemplated; Lessor has not received any notice and has no
knowledge of any plan, study, effort or moratorium (actual or
proposed) by any governmental authority or agency or by any
non-governmental person or entity which may, in any way, negatively
affect the development of the Land;
C. the Land is zoned light industrial "LI". To the knowledge of Lessor,
there are no violations of any Applicable Laws affecting any portion
of the Land, and Lessor has received no written notice of any such
violations from any Governmental Authorities;
D. there is no action, suit, proceeding or claim affecting the Land or
affecting Lessor and relating to or arising out of the ownership,
operation, use or occupancy of the Land pending or being prosecuted
in any court or by or before any federal, state, county, or
municipal department, commission, board, bureau or agency or other
Governmental Authority nor, to the knowledge of Lessor, is any such
action, suit, proceeding or claim threatened or being asserted.
There is no proceeding pending or presently being prosecuted for the
reduction of the assessed valuation or taxes or other impositions
payable in respect of any portion of the Land and Lessor has not
received notice and has no knowledge of any contemplated increase in
the assessed valuation of the Land;
E. except as set forth on EXHIBIT "B", the Land is free and clear of
all liens, mortgages, or encumbrances of any nature, except as
expressly permitted in this Lease, and no work has been performed or
is in the progress by Lessor, and no materials have been furnished
to the Land or any portion thereof by, or on behalf, of Lessor,
which
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might give rise to mechanic's, materialman's or other liens against
the Land;
F. except as listed on EXHIBIT "B", there is no adverse parties in
possession of the Land or of any part thereof and no parties in
occupancy or in possession of all or any part thereof except Lessor,
and no party has been granted any license, lease, or other right
relating to the use or possession of the Land;
G. there is no contract or other obligations in effect with respect to
the Land, including, without limitation, contracts for the sale,
exchange or transfer of the Land or any portion thereof, or for the
construction of any additional improvements on the Land and there
are no persons employed by Lessor at the Land;
H. there are no attachments, execution, assignments for the benefit of
creditors, receiverships, conservatorships or voluntary or
involuntary proceedings in bankruptcy or pursuant to any other
debtor relief laws contemplated or filed by Lessor or pending
against Lessor or the Land;
I. except as listed on EXHIBIT "B", Lessor is not prohibited from
consummating the transactions contemplated in this Lease by any law,
regulation, agreement, instrument, restriction, order, decree, writ,
injunction or judgment and there is no required consent, release or
permission of third parties necessary for the consummation of such
transactions;
J. except as listed on EXHIBIT "B", the Land is not subject to
assessment or collection of additional taxes for prior years based
upon a change in the land usage or ownership;
K. the Land or any part is not located in a flood plain or flood hazard
area or in any conservation or historic district;
L. except as listed on EXHIBIT "B", no covenants or restrictions to
which the Land is subject have been violated and will not be
violated by the Facilities or Lessee's use thereof;
M. except as listed on EXHIBIT "B", the Land has not been the subject
of any subdivision process, nor is any such subdivision process
pending;
N. except as listed on EXHIBIT "B", Lessor has not used nor caused to
be used nor are there any Hazardous Materials contained within or
affecting the Land which in any
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manner violates or may violate federal, state or local laws,
ordinances, rules and regulations, or policies governing the use,
storage, treatment, transportation, manufacture, refinement,
handling, production or disposal of Hazardous Materials, and the
Land is in full compliance with all federal, state and local laws,
regulations and standards relating to the use, occupancy,
production, storage, sale, disposal or transportation of any
Hazardous Materials; and
O. there have been no Assessments (as defined in Section 18.04 hereof)
relating to the use or possession of the Land.
ARTICLE TEN
INSURANCE AND INDEMNIFICATION
Section 10.01. INDEMNIFICATION BY LESSEE. Excluding the acts or omissions
of Lessor, its employees, agents or contractors, Lessee shall indemnify, defend
and save harmless Lessor, its agents, officers, and employees, from and against
any and all liability claims, demands, damages, expenses, fees, fines,
penalties, suits, proceedings, actions, and causes of action of any and every
kind and nature arising or growing out of or in any way connected with Lessee's
use, occupancy, management, operation or control of the Premises. This
obligation to indemnify shall include legal counsel whose fees must be
reasonable and third-party investigation costs and all other reasonable costs,
expenses, and liabilities from the first notice that any claim or demand has
been made; however, Lessee and Lessor shall use the same counsel if such counsel
is approved by Lessor, which approval shall not be unreasonably withheld or
delayed. If Lessor does not approve such counsel, then Lessor may retain
independent counsel at Lessor's sole cost and expense. It is expressly
understood and agreed that Lessee is and shall be deemed to be an independent
contractor and operator responsible to all parties for its respective acts or
omissions and that Lessor shall in no way be responsible therefor.
Section 10.02. LESSOR NOT LIABLE. Lessor shall not be liable for any
damage to either Persons or property sustained by Lessee or other Persons and
caused by any act or omission of any occupant of the Facilities, except to the
extent such damage is caused by Lessor's negligent or willful and wanton
misconduct.
Section 10.03. INSURANCE. Lessee shall at all appropriate times maintain,
with respect to the Premises, for the duration of this Lease and any extensions
thereof, comprehensive general liability insurance issued by a company or
companies qualified, permitted or admitted to do business in the Commonwealth of
Pennsylvania in an amount or amounts aggregating $5,000,000
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($1,000,000 per occurrence/$2,000,000 annual aggregate, with a $4,000,000
umbrella).
Section 10.04. LESSOR ADDITIONAL INSURED. Lessee agrees that with respect
to the above required insurance, Lessor shall:
A. Be named on the Comprehensive General Liability Policy as additional
insured, as its interest may appear. Lessor agrees to promptly
endorse insurance checks or otherwise release Insurance proceeds,
provided no Event of Default is continuing hereunder. Lessor shall,
regardless of the existence of an Event of Default, promptly endorse
insurance checks or otherwise release insurance proceeds payable to
(or to be held by) a Permitted Mortgagee if such Permitted
Mortgagee's Permitted Mortgage so requires and such Permitted
Mortgagee has undertaken cure of any such Event of Default
susceptible to such cure by the Permitted Mortgagee.
B. Be provided with thirty (30) days advance notice, in writing, of
cancellation or material change in coverage. If any insurance policy
provides that the insurer will give such notice, then Lessee shall
not be obligated to do so with respect to such policy.
C. Be provided with a certificate evidencing the above required
insurance at the time the policies are required to be obtained and
thereafter with certificates evidencing renewals or replacements of
said policies of insurance at least thirty (30) days prior to the
expiration or cancellation of any such policies.
Section 10.05. BLANKET POLICIES. If any blanket general insurance policy
of Lessee complies with the requirements of this Article Ten, such insurance
shall fulfill the requirements set forth herein. At the request of Lessee, any
Permitted Mortgagee may be named as an insured or an additional insured on any
policies as its interest may appear.
Section 10.06. INDEMNIFICATION BY LESSOR. Excluding the acts or omissions
of Lessee, its employees, agents or contractors, Lessor shall indemnify, defend
and save harmless Lessee, its agents, officers, and employees, from and against
any and all liability claims, demands, damages, expenses, fees, fines,
penalties, suits, proceedings, actions, and causes of action of any and every
kind and nature arising or growing out of or in any way connected with Lessor's
fee simple estate in the Land and/or Lessor's use, occupancy, management,
operation or control of any property adjacent to the Premises. This obligation
to indemnify shall include legal counsel whose fees must be reasonable and
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third-party investigation costs and all other reasonable costs, expenses, and
liabilities from the first notice that any claim or demand has been made;
however, Lessor and Lessee shall use the same counsel if such counsel is
approved by Lessee, which approval shall not be unreasonably withheld or
delayed. If Lessee does not approve such counsel, then Lessee may retain
independent counsel at Lessee's sole cost and expense. It is expressly
understood and agreed that Lessor is and shall be deemed to be an independent
contractor and operator responsible to all parties for its respective acts or
omissions and that Lessee shall in no way be responsible therefor.
Section 10.07. CONTRIBUTORY ACTS. Whenever in this Lease any party is
obligated to pay an amount or perform an act because of its negligence or
willful misconduct (or that of its agents, employees, contractors, guests, or
invitees), such obligations shall be mitigated to the extent of any contributory
negligence or willful misconduct of the other party (or that of its agents,
employees, contractors, guests, or invitees), and in any disputes damages shall
be apportioned based on the relative amounts of such negligence or willful
misconduct.
ARTICLE ELEVEN
TERMINATION, DEFAULT AND REMEDIES
Section 11.01. EVENTS OF DEFAULT. Any one of the following events shall be
deemed to be an "Event of Default" by Lessee under this Lease:
A. Lessee shall fail to pay any sum required to be paid to Lessor under
the terms and provisions of this Lease.
B. The taking by execution of Lessee's leasehold estate for the benefit
of any Person other than a Permitted Mortgagee or purchaser at a
Foreclosure.
C. Lessee shall fail to perform any other covenant or agreement, other
than the payment of money, to be performed by Lessee under the terms
and provisions of this Lease and such failure shall not be cured
within thirty (30) days after receipt of written notice from Lessor
of such failure; provided that if, during such thirty (30) day
period, Lessee takes action to cure such failure but is unable, by
reason of the nature of the work involved, to cure such failure
within such period and continues such work thereafter diligently and
without unnecessary delays, such failure shall not constitute an
Event of Default hereunder so long as such Event of Default is cured
within one hundred twenty (120) days after receipt of such notice
from Lessor.
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D. A court having jurisdiction over the Premises shall enter an order
for relief in any involuntary case commenced against Lessee, as
debtor, under the Federal Bankruptcy Code, as now or hereafter
constituted, or the entry of a decree or order by a court having
jurisdiction over the Premises appointing a custodian, receiver,
liquidator, assignee, trustee, sequestrator, or other similar
official of or for Lessee or any substantial part of the properties
of Lessee or ordering the winding up or liquidation of the affairs
of Lessee, and the continuance of any such decree or order unstayed
and in effect for a period of thirty (30) consecutive days.
E. The commencement by Lessee of a voluntary case under the Federal
Bankruptcy Code, as now or hereafter constituted, or the consent or
acquiescence by Lessee to the commencement of a case under such Code
or to the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee, sequestrator, or other
similar official of or for Lessee or any substantial part of the
properties of the Lessee.
Section 11.02. RIGHT TO EXPEL. The Permitted Mortgagee shall have the
right to expel Lessee upon the occurrence of an Event of Default and assume the
position of Lessee with all rights and duties under this Lease.
Section 11.03. LESSOR'S RIGHTS UPON DEFAULT. Subject to the rights of the
Permitted Mortgagees under Article Six and Section 11.02 upon the occurrence and
during the continuance of an Event of Default, upon the occurrence of an Event
of Default under this Lease: (i) Lessee may elect, in writing, to purchase
Lessor's fee simple estate in the Land, so long as no item of Rent remains
unpaid under this Lease and Lessee has reimbursed Lessor for all and any costs
and expenses incurred in connection with any Events of Default, with Interest;
or (ii) if Lessee does not so elect to purchase Lessor's fee simple estate in
the Land, Lessor may elect to purchase the Facilities in accordance with the
provisions of Article Twelve hereof, with full right of offset for reimbursement
for all and any items of Rent that remain unpaid and all and any costs and
expenses incurred in connection with any Events of Default, with Interest; and
(iii) if Lessee does not so elect to purchase Lessor's fee simple estate in the
Land, Lessor may declare all items of Rent for the entire balance of the Term to
be immediately due and payable, together with all and any costs and expenses
incurred in connection with any Events of Default, with Interest (subject to
Lessor's obligation to mitigate damages); and (iv) Lessor shall have the right
to exercise all and any other of its rights and/or remedies resulting from any
Event of Default under this Lease.
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Section 11.04. SURRENDER OF LIEN-FREE TITLE. Upon the expiration or early
termination of the Term of this Lease (other than pursuant to Subsection
11.03(i) above), Lessee shall immediately deliver possession of the Premises,
with the exception of the items of Facility Equipment specified, subject to the
terms contained in this Lease, to Lessor, shall cure all Events of Default, and
shall, subject to the provisions of this Lease regarding demolition and the
right of Lessee to remove Facility Equipment, quit-claim all right, title and
interest in the Premises, and every part thereof, free and clear of all liens
and encumbrances whatsoever other than (i) those existing on the date of this
Lease, (ii) those created by Lessor and (iii) those approved in writing by
Lessor. This obligation includes the discharge of all liens and encumbrances
which may exist upon early termination of this Lease.
Section 11.05. FAILURE TO SURRENDER. If Lessee fails to surrender the
Premises, or any part thereof, as required hereunder, at the expiration or
sooner termination of the Term of this Lease, Lessee will indemnify, defend and
hold Lessor harmless from all liability and expense resulting from the delay or
failure to so surrender, founded on or resulting from Lessee's failure to so
surrender, and any direct or indirect or consequential damages which Lessor may
incur, with Interest, unless caused by Lessor's negligent or willful and wanton
misconduct.
Section 11.06. HOLDING OVER NOT PERMITTED. This Lease shall, unless
earlier terminated, terminate without further notice at the expiration of the
Lease Term (subject to extension as set forth herein) and no holding over shall
be permitted without the express prior written consent of Lessor. Any holding
over by Lessee after expiration or earlier termination of the Term of this Lease
shall not constitute a renewal or extension or give Lessee any rights in or to
the Premises, or any part thereof.
ARTICLE TWELVE
LESSEE'S OPTION TO PURCHASE; LESSOR'S RIGHT OF FIRST REFUSAL
Section 12.01. LESSEE'S OPTION TO PURCHASE THE LAND. Commencing on the
fifth anniversary of the Commencement of the Term, Lessee shall have the right
to purchase Lessor's fee simple estate in the Land, at a purchase price equal to
FIFTY THOUSAND DOLLARS ($50,000.00) per acre of the Land (for the Land) plus
FIVE HUNDRED THOUSAND DOLLARS ($500,000.00) (for the rights described in the
last two sentences of this Section 12.01) (collectively, the "Purchase Price").
Lessee shall exercise this right by notifying Lessor within the three (3) month
period immediately following the fifth anniversary of the Commencement of the
Term. Lessor shall convey the Premises to Lessee at a closing to be held within
ninety
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(90) days after delivery to Lessor of the notice contemplated by this Section.
The conveyance of the Land by Lessor to Lessee shall be subject to substantially
the same representations and warranties of Lessor as described in Section 9.01
of this Lease. Subject to Section 12.04, the Term of this Lease shall end when
title to the Land is conveyed to Lessee. In the event that Lessee exercises its
right to purchase the Land in accordance with the provisions of this Section,
Lessee shall have the right to continue to use the System subject to the
provisions of Section 6.03 hereof and Article Three of the Blood Supply
Agreement. Lessee understands and acknowledges, in particular, that even though
Lessee may exercise its right to purchase the Land in accordance with the terms
and conditions of this Section, Lessee shall, nevertheless, continue to pay for
its usage of the System in accordance with the provisions of Article III of the
Blood Supply Agreement.
Section 12.02. LESSOR'S RIGHT OF FIRST REFUSAL. If, during the Term,
Lessee receives an offer to purchase the Facilities or any part thereof, and
desires to accept said offer, Lessee shall give Lessor not less than ninety (90)
days prior written notice of the proposed sale date, setting forth the name and
address of the proposed purchaser, the amount of the proposed purchase price,
and all other terms and conditions of such transaction; it being understood and
agreed, however, that Lessor's right of first refusal hereunder shall not be
applicable in connection with a sale (i) to a Permitted Assignee or (ii) in
connection with a sale of all or a substantial portion of Lessee's assets or
business or ((iii) in connection with a merger, consolidation or other
combination of Lessee. Lessor shall, within thirty (30) days after it receives
the aforesaid notice from Lessee (the "Notice of First Offer") notify Lessee
whether or not it wishes to purchase the Facilities at the same price and on the
same terms of any such offer, it being understood that in the event Lessor does
not give notice of its intention to exercise said option to purchase within said
time frame, Lessee shall be free to sell the Facilities in accordance with the
terms and conditions of such offer without any restriction, and Lessor shall
have no further right to purchase the Facilities in accordance with such offer.
Anything contained in this Section 12.02 to the contrary notwithstanding, under
no circumstances may Lessee sell the Facilities to a third party unless (i) such
third party will use the Facilities in the same manner provided in Section 4.01
hereof, or (ii) Lessee has already purchased (previously or as part of the same
transaction) the Land and sells the Facilities and the Land as a package thereby
terminating its leasehold estate in the Land upon consummation of such
transaction, it being understood and agreed that under no circumstances may
Lessee sell the Facilities under and subject to the terms of this Lease unless
such purchaser is a Person who uses the Facilities in the same manner provided
in Section 4.01 hereof.
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Section 12.03. APPRAISAL PROCEDURE. In the event Lessor exercises its
right of first refusal in accordance with the provisions of Section 12.02 above,
the purchase price to be paid by Lessor for the Facilities shall not exceed in
any event the fair market value of the Facilities (with no portion of such
purchase price being allocated to this Lease and/or Lessee's leasehold estate in
the Land). The fair market value of the Facilities shall be free of liens and
encumbrances other than such as would not adversely affect the marketability of
title. Fair Market Value of the Facilities shall be determined as though this
Lease were not in effect. Lessor and Lessee shall try to agree upon one licensed
real estate broker specializing in the sale and/or leasing of commercial
property comparable to the Land in Montgomery County, Pennsylvania, having not
less than ten (10) years of experience and recognized as ethical and reputable
in the industry (a "Qualified Broker"), to make the appraisal to determine fair
market value. If Lessor and Lessee cannot agree on one (1) Qualified Broker,
within ten (10) days after the date either Lessor or Lessee notifies the other
of the need for an appraisal, then Lessor and Lessee shall each select a
Qualified Broker within five (5) days after the date they determine they cannot
agree on one (1) Qualified Broker. The two (2) Qualified Brokers shall meet
within ten (10) days after the date the last Qualified Broker is selected, to
attempt to agree on the appraisal. If the two Qualified Brokers are unable to
agree on the appraisal within five (5) days after their first meeting, they
shall both select a third Qualified Broker within five (5) days after they
determine they cannot agree. The three (3) Qualified Brokers shall meet within
five (5) days after the date the third Qualified Broker is selected. If the
three (3) Qualified Brokers are unable to reach agreement within ten (10) days
after the date the third Qualified Broker is selected, each shall submit his
written appraisal to Lessor and Lessee. The amount of the appraisal shall be the
mean average of the two (2) closest appraisal amounts. Lessor and Lessee shall
equally share the cost of the services of all Qualified Brokers.
Section 12.04. NO MERGER. There shall be no merger of the leasehold estate
created by this Lease with the fee estate in the Premises by reason of the same
Person owning or holding both the leasehold estate and any interest in the fee
estate, unless Lessor and all other Persons, including all Permitted Mortgagees,
having any interest in the leasehold estate created by this Lease and the fee
estate in the Premises shall execute an instrument in recordable form effecting
such merger.
ARTICLE THIRTEEN
EXTENSION OPTIONS
Section 13.01. EXTENSION OPTIONS. Lessee may extend the Term for one (1)
addition term of nine (9) years, on the same terms and
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conditions as are contained in this Lease (including without limitation, the
payment of the same Rent), by so notifying Lessor not less than six (6) months
prior to the date that the Term would otherwise expire. Lessee's right to extend
the Term shall only be applicable in the event that Lessee is otherwise in
compliance with all of the terms and conditions of, and its obligations under,
this Lease.
ARTICLE FOURTEEN
DEFAULT BY LESSOR
Section 14.01. LESSOR DEFAULTS. If Lessor fails to perform any of its
respective obligations or covenants under this Lease, then Lessee shall be
entitled to enforce any one or more of the following rights and remedies:
A. Lessee shall be entitled to require Lessor to specifically perform
its obligations under this Lease or restrain or enjoin Lessor from
continuing the activities that constitute the default of Lessor; and
B. Lessee shall be entitled to exercise all other rights and remedies
available to Lessee under this Lease or otherwise available to
Lessee at law or in equity as a consequence of the Lessor's default.
ARTICLE FIFTEEN
CONDEMNATION
Section 15.01. CONDEMNATION OF ENTIRE PREMISES. Upon the permanent Taking
of the entire Premises, this Lease shall terminate and expire as of the date of
such Taking, and both Lessee and Lessor shall thereupon be released from any
liability thereafter accruing hereunder. Lessee and the Permitted Mortgagee
shall each receive notice of any proceedings relating to a Taking and shall each
have the right to participate therein.
Section 15.02. PARTIAL CONDEMNATION. Upon a temporary Taking or a Taking
of less than all of the Premises, Lessee, at its election, may terminate this
Lease by giving Lessor notice of its election to terminate at least sixty (60)
days prior to the date of such termination if Lessee reasonably determines that
the Premises cannot be economically and feasibly used by Lessee for its intended
purposes. Upon any such termination, the Rent accrued and unpaid hereunder shall
be apportioned to the date of termination.
Section 15.03. PAYMENT OF AWARDS. Upon the Taking of all or any portion of
the Premises (a) Lessee shall be entitled (free of any claim by Lessor) to the
Award for the value of its interest in
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the Premises and its rights under this Lease and damages to any of its other
property, together with any other compensation or benefits paid as a consequence
of the interruption of Lessee's business; and (b) Lessor shall be entitled (free
of any claim by Lessee) to the Award for the value of Lessor's Interest (such
value to be determined as if this Lease were in effect and continuing to
encumber Lessor's Interest).
Section 15.04. REPAIR AFTER CONDEMNATION. Should a Taking occur that does
not result in termination as provided by Sections 15.01 or 15.02, Lessee, at its
expense, shall commence and proceed with reasonable diligence to repair or
reconstruct the Facilities. Any and all such repairs or reconstruction shall be
subject to prior reasonable approval of Lessor. Notwithstanding the foregoing
provisions of this Section 15.04, if the Award payable as a consequence of a
Taking (after payment of all or any portion of such Award towards amounts owed
under any Permitted Mortgage) is insufficient, in the reasonable judgment of
Lessee, to permit such restoration, then Lessee, with the prior written approval
of the Permitted Mortgagee (a copy of which approval must be delivered to
Lessor), may terminate this Lease by written notice to Lessor in which event, at
the request of Lessor, Lessee shall demolish the Facilities, at Lessee's sole
cost and expense, and shall restore the Land to substantially the same condition
as it existed on the date of this Lease. All or any portion of the Award payable
to Lessee as a consequence of a Taking affecting the Premises shall be deposited
with and disbursed by the Permitted Mortgagee (holding the Permitted Mortgage
with the most senior lien priority) pending the completion of the restoration of
the Premises. In the event of termination under this Section 15.04, this Lease
shall terminate ten (10) days after the date of such notice with the same force
and effect as if such date were the date herein fixed for the expiration of the
Term, and the Rent shall be apportioned and paid at the time of such
termination.
ARTICLE SIXTEEN
ASSIGNMENT, SUBLETTING, AND TRANSFERS OF LESSEE'S INTEREST
Section 16.01. SALE, ASSIGNMENT AND SUBLETTING BY LESSEE. At any time
after the Date of Opening, Lessee may sell, assign or sublet Lessee's leasehold
estate created by this Lease and the other rights of Lessee hereunder without
the consent of Lessor, so long as no Event of Default has occurred and such
sale, assignment or subletting shall be to a Person who uses the Facilities in
the same manner provided in Section 4.01 hereof. No other sale, assignment or
subletting by Lessee shall be permitted hereunder unless in connection with such
sale, assignment or subletting of Lessee's leasehold estate created by this
Lease, Lessee also, as part of the same transaction or contemporaneously
therewith, exercises its right to purchase the Land in accordance with Section
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12.01 hereof and consummates the purchase of the Land and sale, assignment or
subletting of Lessee's leasehold estate created by this Lease at the same time.
Section 16.02. APPLICATION TO LEASEHOLD MORTGAGES. Nothing contained in
this Article Sixteen shall be construed to apply to or otherwise limit the
rights of Lessee to mortgage (or assign for collateral) its leasehold estate
under this Lease to a Permitted Mortgagee, as to which Article Six shall govern.
Section 16.03. TRANSFERS OR MORTGAGES OF LESSOR'S INTEREST. Other than as
listed on EXHIBIT "B" hereto, any and all mortgages, deeds of trust, or liens
placed or suffered by Lessor encumbering Lessor's Interest shall be expressly
subject and subordinate to this Lease, to all obligations of Lessor hereunder,
and to all of the rights, titles, interests and estates of Lessee created or
arising hereunder. Other than as listed on EXHIBIT "B" hereto, the obligations
of Lessor under this Lease shall survive any conveyance, Foreclosure or other
transfer of Lessor's Interest, and Lessor shall not be relieved of such
obligations as a consequence of such conveyance, Foreclosure or other transfer.
Furthermore, other than as listed on EXHIBIT "B" hereto, any Person succeeding
to Lessor's Interest as a consequence of any such conveyance, Foreclosure or
other transfer shall succeed to all of the obligations of Lessor hereunder.
ARTICLE SEVENTEEN
COMPLIANCE CERTIFICATES
Section 17.01. LESSOR COMPLIANCE. Lessee agrees, at any time and from time
to time upon not less than thirty (30) days prior written notice by Lessor, to
execute, acknowledge and deliver to Lessor or to such other party as Lessor
shall request, a statement in writing certifying (a) that this Lease is
unmodified and in full force and effect (or if there have been modifications,
that the same is in full force and effect as modified and stating the
modifications), (b) to the best of its knowledge, whether or not there are then
existing any offsets or defenses against the enforcement of any of the terms,
covenants or conditions hereof upon the part of Lessee to be performed (and if
so specifying the same), (c) the dates to which the Rent and other charges have
been paid, and (d) the dates of commencement and expiration of the Term, it
being intended that any such statement delivered pursuant to this Section may be
relied upon by any prospective purchaser of the Lessor's Interest.
Section 17.02. LESSEE COMPLIANCE. Lessor agrees, at any time and from time
to time, upon not less than thirty (30) days prior written notice by Lessee, to
execute, acknowledge and deliver to Lessee a statement in writing, addressed to
Lessee or to such other
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party as Lessee shall request, certifying (a) that this Lease is unmodified and
in full force and effect (or if there have been modifications that the same is
in full force and effect as modified and stating the modifications); (b) the
dates to which the Rent and other charges have been paid; (c) whether an Event
of Default has occurred and is continuing hereunder (and stating the nature of
any such Event of Default); (d) whether an event has occurred which, after
giving of notice or the passage of time (or both) would result in an Event of
Default (and stating the nature of any such event); and (e) the dates of
commencement and expiration of the Term. Any such statement delivered pursuant
to this Section may be relied upon by any prospective assignee, sublessee or
Permitted Mortgagee of this Lease or by any assignee or prospective assignee of
any Permitted Mortgage or by any undertenant or prospective undertenant of the
whole or any part of the Premises.
ARTICLE EIGHTEEN
TAXES AND LICENSES
Section 18.01. PAYMENT OF TAXES. Lessee shall pay and, upon request by
Lessor, shall provide evidence of payment to the appropriate collecting
authorities, any and all federal, state and local real property, personal
property and other taxes and fees, assessments and charges, whether general or
special, ordinary or extraordinary, which are now or may hereafter be, levied
upon the Premises, Lessee's interest in the Premises, Lessee, the business
conducted on the Premises, and/or any of Lessee's property used in connection
therewith. Lessee shall maintain in current status all federal, state and local
licenses and permits required for the operation of the business conducted by
Lessee. Lessor shall pay, and, upon request by Lessee or a Permitted Mortgagee,
shall provide evidence of payment to the appropriate collecting authorities, all
federal, state and local taxes and fees, which are now or may hereafter be,
levied upon Lessor (other than with respect to Lessor's Interest). Lessee and
Lessor may pay any of the above items in installments if payment may be so made
without penalty other than the payment of interest. The obligations of Lessor
and Lessee to pay taxes and fees under this Section 18.01 shall apply only to
the extent that Lessor or Lessee are not exempt from paying such taxes and fees
and to the extent that such taxes and fees are not otherwise abated.
Section 18.02. CONTESTED TAX PAYMENTS. Lessee shall not be required to
pay, discharge or remove any such taxes or assessments so long as Lessee is
contesting the amount or validity thereof by appropriate proceeding which shall
operate to prevent or stay the collection of the amount so contested. Lessee
hereby agrees to indemnify, defend and save Lessor harmless from all liability
for damages occasioned thereby and shall, in the event of a judgment of
foreclosure on any lien arising in respect to such contested
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amounts, cause the same to be discharged and removed prior to the execution of
such judgment. Lessor shall cooperate with Lessee in completing such contest and
Lessor (subject to the last sentence of this Section) shall have no right to pay
the amount contested during the contest. Upon the termination of such
proceeding, Lessee shall deliver to Lessor proof of the amount due as finally
determined and proof of payment thereof. Lessor, at Lessee's expense, shall join
in any such proceeding if any law shall so require. Lessee shall, if reasonably
requested by Lessor to do so in order to protect Lessor from any sale or
foreclosure against the Land or any part or parts thereof, provide a good and
sufficient surety bond or other security deemed appropriate by Lessor in the
amount of any taxes and/or Assessments being contested by Lessee plus estimated
Interest and penalties which may be imposed.
Section 18.03. REAL ESTATE TRANSFER TAX. In addition to and not in
limitation of the other provisions of this Article, Lessee shall pay and shall
be solely responsible for any and all real estate transfer taxes which may be
levied, assessed, charged or imposed in connection with this Lease, whether
imposed on the value of the Land, the Facilities, or the Premises, or otherwise.
Section 18.04. ASSESSMENTS. Specifically, and without in any way limiting
the generality of the foregoing, Lessee shall pay any and all special
assessments, levies or charges made by any Governmental Authority for local
improvements ("Assessments"), before they shall become delinquent (and furnish
written proof of payment to Lessor within ten (10) days thereafter) and as
required by Applicable Laws and proceedings under which any such Assessments are
made by any Governmental Authorities. If the right is given to pay any such
Assessments in one sum or in installments, Lessee may elect either mode of
payment.
ARTICLE NINETEEN
FORCE MAJEURE
Section 19.01. DISCONTINUANCE DURING FORCE MAJEURE. Whenever a period of
time is herein prescribed for action to be taken by Lessee or a Permitted
Mortgagee, there shall be excluded from the computation for any such period of
time, any delays due to Force Majeure. Lessor shall not be obligated to
recognize any delay caused by Force Majeure unless Lessee or such Permitted
Mortgagee shall, within ten (10) days after Lessee or such Permitted Mortgagee
is aware of the existence of an event of Force Majeure, shall notify Lessor
thereof. The foregoing notwithstanding, if any such delay is caused by Lessor,
Lessee or such Permitted Mortgagee shall not be required to give notice to
Lessor of such delay.
Section 19.02. OBLIGATIONS NOT EXCUSED. Anything contained in this Article
19 to the contrary not withstanding, it is
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understood and agreed that no event of Force Majeure shall excuse Lessee's
obligation under this Lease to pay Rent.
ARTICLE TWENTY
MISCELLANEOUS
Section 20.01. NOTICES. Notices or communications to Lessor or Lessee
required or appropriate under this Lease shall be in writing, sent by (a)
personal delivery, or (b) expedited delivery service with proof of delivery, or
(c) registered or certified United States mail, postage prepaid, or (d) prepaid
telecopy if confirmed by expedited delivery service or by mail in the manner
previously described, addressed as follows:
if to Lessor: Moyer Packing Company
249 Allentown Road
P. O. Box 395
Souderton, Pennsylvania 18964-0395
Attention: Mr. William G. Morral,
Vice President-Finance
Telecopy No. 215-723-2190
with a copy at the same time to:
William R. Wanger, Esquire
Pearlstine/Salkin Associates
1250 South Broad Street, Suite 1000
P. 0. Box 431
Lansdale, PA 19446-0431
Telecopy No. 215-699-0231
if to Lessee: Biopure Corporation
68 Harrison Avenue
Boston, Massachusetts 02111
Attention: Mr. Brian Lajoie
Vice President-Finance
Telecopy No. 617-350-6614
with a copy at the same time to:
LeBoeuf, Lamb, Greene & MacRae
125 West 55th Street
New York, New York 10019-5389
Attention: Jane Kober, Esq.
Telecopy No. 212-424-8500
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or to such other address or to the attention of such other person as hereafter
shall be designated in writing by such party. Any such notice or communication
shall be deemed to have been given either at the time of personal delivery or,
in the case of delivery service, or mail, upon receipt. The notices provided to
Lessee under this Lease shall not be effective against any Permitted Mortgagee,
unless such notices are sent to the Permitted Mortgagee pursuant to Section 6.02
and at the address set forth in EXHIBIT "C" or as otherwise provided.
Section 20.02. RELATIONSHIP OF PARTIES. Nothing contained herein shall be
deemed or construed by the parties hereto, or by any third party, as creating
the relationship of principal and agent, partners, joint venturers, or any other
similar such relationship, between the parties hereto. It is understood and
agreed that no provision contained herein nor any acts of the parties hereto
creates a relationship other than the relationship of Lessor and Lessee.
Section 20.03. MEMORANDUM OF LEASE. Neither Lessor nor Lessee shall file
this Lease for record in the Office of the County Clerk of Montgomery County,
Pennsylvania, or in any public place without the written consent of the other.
In lieu thereof, Lessor and Lessee agree to execute in recordable form a
memorandum of this Lease in the form of EXHIBIT "D" attached hereto. Such
memorandum shall be filed for record in the Office of the Recorder of Deeds of
Montgomery County, Pennsylvania.
Section 20.04. ATTORNEYS' FEES. If either party is required to commence
legal proceedings relating to this Lease, the prevailing party shall be entitled
to receive reimbursement for its reasonable attorneys' fees and costs of suit.
Section 20.05. APPROVALS. Whenever approvals are required of either party
hereunder, if no objection is made to a written proposal or request for approval
within the time period specified for response herein, such approval shall be
deemed to have been given. If no time period is specified for a response to a
proposal or request for approval, a reasonable time not to exceed ten (10) days
from the date of such proposal or request shall apply unless the parties
otherwise agree in writing.
Section 20.06. PENNSYLVANIA LAW TO APPLY. This Lease shall be construed
under and in accordance with the laws of the Commonwealth of Pennsylvania, and
all obligations of the parties created hereunder are performable in Montgomery
County, Pennsylvania. The parties hereto consent to the jurisdiction of the
Montgomery County, Pennsylvania courts and the federal courts sitting in
Philadelphia, Pennsylvania as the sole and exclusive
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forum for the adjudication of disputes and submit to the jurisdiction of said
courts.
Section 20.07. APPROVAL OF ANCILLARY AGREEMENTS. Lessor agrees that in the
event it becomes necessary or desirable for Lessor to approve in writing any
ancillary agreements or documents concerning the Premises or concerning the
construction, operation or maintenance of the Facilities or to alter or amend
any such ancillary agreements between Lessor and Lessee or to give any approval
or consent of Lessor required under the terms of this Lease, Lessor hereby
authorizes, designates and empowers Lessor Representative to execute any such
agreement, approvals or consents necessary or desirable.
Section 20.08. RIGHTS CUMULATIVE. All rights, options, and remedies of
Lessor and Lessee contained in this Lease shall be construed and held to be
cumulative and no one of them shall be exclusive of the other. Lessor and Lessee
shall each have the right to pursue any one or all of such remedies or any other
remedy or relief which may be provided by law or in equity whether or not stated
in this Lease.
Section 20.09. NON-WAIVER. No waiver by Lessor or Lessee of a breach of
any of the covenants, conditions, or restrictions of this Lease shall constitute
a waiver of any subsequent breach of any of the covenants, conditions or
restrictions of this Lease. The failure of Lessor or Lessee to insist in any one
or more cases upon the strict performance of any of the covenants of the Lease,
or to exercise any option herein contained, shall not be construed as a waiver
or relinquishment for the future of such covenant or option. A receipt by Lessor
or acceptance of payment by Lessor of Rent with knowledge of the breach of any
covenant hereof shall not be deemed a waiver of such breach. No waiver, change,
modification or discharge by Lessor or Lessee of any provision of this Lease
shall be deemed to have been made or shall be effective unless expressed in
writing and signed by the party to be charged.
Section 20.10. TERMINOLOGY. Unless the context of this Lease clearly
requires otherwise, (a) pronouns, wherever used herein, and of whatever gender,
shall include natural persons and corporations and associations of every kind
and character; (b) the singular shall include the plural wherever and as often
as may be appropriate; (c) the word "includes" or "including" shall mean
"including without limitation"; (d) the word "or" shall have the inclusive
meaning represented by the phrase "and/or"; (e) the words "hereof," "herein,"
"hereunder," and similar terms in this Lease shall refer to this Lease as a
whole and not to any particular section or article in which such words appear.
The section, article and other headings in this Lease and the Table of Contents
to this Lease are for reference purposes and shall not control or affect the
construction of this Lease or the interpretation hereof
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in any respect. Article, section and subsection and exhibit references are to
this Lease unless otherwise specified. All exhibits attached to this Lease
constitute a part of this Lease and are incorporated herein. All references to a
specific time of day in this Lease shall be based upon Eastern Standard Time (or
the other standard of measuring time recognized in Montgomery County,
Pennsylvania).
Section 20.11. COUNTERPARTS. This Lease may be executed in multiple
counterparts, each of which shall be declared an original.
Section 20.12. SEVERABILITY. If any clause or provision of this Lease is
illegal, invalid or unenforceable under present or future laws effective during
the Term of this Lease, then and in that event, it is the intention of the
parties hereto that the remainder of this Lease shall not be affected thereby.
Section 20.13. ENTIRE AGREEMENT. This Lease, together with the exhibits
attached hereto, contains the final and entire agreement between the parties
hereto and contains all of the terms and conditions agreed upon, and no other
agreements, oral or otherwise, regarding the subject matter of this Lease shall
be deemed to exist or to bind the parties hereto; it being the intent of the
parties that neither shall be bound by any term, condition, or representations
not herein written.
Section 20.14. AMENDMENT. No amendment, modification, or alteration of
this Lease shall be binding unless the same be in writing, dated on or
subsequent to the date hereof and duly executed by the parties hereto. No such
amendment, modification, or alteration, and no termination of this Lease, shall
be effective without the prior written consent of each Permitted Mortgagee.
Section 20.15. SUCCESSORS AND ASSIGNS. All of the covenants, agreements,
terms and conditions to be observed and performed by the parties hereto shall be
applicable to and binding upon the parties hereto and their respective
successors and permitted assigns including any successor by merger or
consolidation of Lessor.
Section 20.16. INTERPRETATION. This Lease shall be interpreted and
construed without regard to customary principles of interpretation and
construction of legal instruments which construe ambiguities against the party
causing an instrument to be drafted.
Section 20.17. HAZARDOUS MATERIALS. Notwithstanding anything contained in
this Lease to the contrary, if Lessee finds any Hazardous Materials on the Land
prior to October 31, 1994, then Lessee shall have the right to terminate this
Lease by delivering written notice thereof to Lessor no later than November 15,
1994.
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If Lessee terminates this Lease as a result of finding Hazardous Materials on
the Land, then neither party hereto shall have any further rights, duties, or
obligations hereunder.
EXECUTED as of the 21st day of October, 1994, intending to be legally
bound hereby.
"Lessor" MOYER PACKING COMPANY
By: /s/ William G. Morral
-------------------------------------
Name: William G. Morral
Title: Vice President-Finance
"Lessee" BIOPURE CORPORATION
By: /s/ Jim O'Shea
-------------------------------------
Name: Jim O'Shea
Title: President
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<PAGE> 43
EXHIBITS
REFERENCE TITLE
- --------- -----
EXHIBIT "A" THE LAND
EXHIBIT "B" LIENS AND ENCUMBRANCES AFFECTING
THE LAND
EXHIBIT "C" PERMITTED MORTGAGES
EXHIBIT "D" FORM OF MEMORANDUM OF LEASE
EXHIBIT "E" FORM OF WAIVER OF LIENS
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<PAGE> 44
[LETTERHEAD OF URWILER & WALTER, INC.]
October 10, 1994
Description of Lot #2.
ALL THAT CERTAIN tract of land situate in the Township of Franconia, County of
Montgomery, Commonwealth of Pennsylvania, as shown on Mopac Plan of Subdivision
(Sheet 1 of 1), prepared for Mopac by Urwiler & Walter, Inc. dated August 24,
1994, bounded and described as follows, to wit:
BEGINNING at a point on the Southeast ultimate right-of-way line of Souder Road
(30 feet wide half width), said point being in the line of lands of Lot #2 and
the lands of Terry L. Kiser, said point being also located the following two (2)
dimensions from a point marking the intersection the centerline of Souder Road
S.R. 1005 and the centerline of Allentown Road S.R. 1001 (33 feet legal
right-of-way):
(1) in a Southwesterly direction 370.00 plus or minus feet to a point
(2) South 41 degrees 12 minutes 40 seconds East 27.77 feet to a point;
THENCE from said beginning point and extending along the said dividing line and
on and thru a 30 feet wide drainage easement South 41 degrees 12 minutes 40
seconds East 234.04 feet to a point, said point being the Northwest corner of
lands of Kenneth R. Schumann;
THENCE along said Schumann lands and the lands of James R. Depermentier South 39
degrees 55 minutes 22 seconds East 79.02 feet to a point, said point being the
Northwest corner of Lot #1, said point being also in and along a proposed 20
feet wide utility easement;
THENCE along the line dividing the lands of Lot #1 and #2 South 27 degrees 43
minutes 00 seconds West 241.96 feet to a point, said point being in the
Northeast line of lands of Dale L. & M. Aldine Frankenfield;
<PAGE> 45
URWILER & WALTER, INC./Mopac/Lot #2/October 10, 1994/Page 2
THENCE along said Frankenfield lands South 44 degrees 31 minutes 22 seconds West
359.58 feet to a point, said point being in the Northeast corner of lands of Lot
#3;
THENCE along Lot #3 and crossing a 20 feet wide utility easement North 45
degrees 32 minutes 52 seconds West 381.24 feet to a point, said point being on
the Southeast ultimate right-of-way of Souder Road aforesaid;
THENCE along the Southeast ultimate right-of-way of Souder Road North 44 degrees
27 minutes 08 seconds East 616.74 feet to the POINT AND PLACE OF BEGINNING.
CONTAINING: 5.090 acres of land more or less.
<PAGE> 46
EXHIBIT B
1. Discrepancies or conflicts in boundary lines, easements,
encroachments, or area content which a satisfactory survey would disclose.
2. Possible additional tax assessments for new construction and/or
major improvements by Tenant.
3. Title to that portion of the Land in the bed of Souder Road is
subject to public and private rights therein.
4. Resolution No. 92-10-10-08 recorded at Book 5019 Page 424 in the
Montgomery County Commissioners Registry.
<PAGE> 47
MEMORANDUM OF GROUND LEASE AGREEMENT
THIS MEMORANDUM made as of this ____ day of ______________, 1994, by and
between MOYER PACKING COMPANY, a Pennsylvania corporation having its principal
office at 249 Allentown Road, P.O. Box 395, Souderton, Pennsylvania 18964-0395
("Lessor"); and BIOPURE CORPORATION, a Delaware corporation, having its
principal office at 68 Harrison Avenue, Boston, Massachusetts 02111 ("Lessee").
W I T N E S S E T H:
1. Lessor and Lessee have entered into a certain Ground Lease
Agreement (the "Lease") dated as of the _____ day of _____________, 1994, for
that certain tract of land situate in the Township of Franconia, County of
Montgomery, Commonwealth of Pennsylvania, as more fully described in Schedule 1,
attached hereto and made a part hereof.
2. The initial term of the Lease commenced on the ____ day of
_____________, 1994 and extends for an initial term of twenty (20) years, with
one (1) nine (9) year extension option.
3. This Memorandum is intended for recording purposes only and does
not supersede, diminish, add to or change the terms and conditions of the Lease.
IN WITNESS WHEREOF, the parties hereto have caused this Memorandum to be
executed as of the date first above written.
LESSOR:
MOYER PACKING COMPANY
Attest:______________________ By:__________________________
Secretary President
(CORPORATE SEAL)
LESSEE:
BIOPURE CORPORATION
Attest:______________________ By:__________________________
Secretary President
(CORPORATE SEAL)
<PAGE> 48
[LETTERHEAD OF URWILER & WALTER, INC.]
October 10, 1994
Description of Lot #2.
ALL THAT CERTAIN tract of land situate in the Township of Franconia, County of
Montgomery, Commonwealth of Pennsylvania, as shown on Mopac Plan of Subdivision
(Sheet 1 of 1), prepared for Mopac by Urwiler & Walter, Inc. dated August 24,
1994, bounded and described as follows, to wit:
BEGINNING at a point on the Southeast ultimate right-of-way line of Souder Road
(30 feet wide half width), said point being in the line of lands of Lot #2 and
the lands of Terry L. Kiser, said point being also located the following two (2)
dimensions from a point marking the intersection the centerline of Souder Road
S.R. 1005 and the centerline of Allentown Road S.R. 1001 (33 feet legal
right-of-way):
(1) in a Southwesterly direction 370.00 plus or minus feet to a point
(2) South 41 degrees 12 minutes 40 seconds East 27.77 feet to a point;
THENCE from said beginning point and extending along the said dividing line and
on and thru a 30 feet wide drainage easement South 41 degrees 12 minutes 40
seconds East 234.04 feet to a point, said point being the Northwest corner of
lands of Kenneth R. Schumann;
THENCE along said Schumann lands and the lands of James R. Depermentier South 39
degrees 55 minutes 22 seconds East 79.02 feet to a point, said point being the
Northwest corner of Lot #1, said point being also in and along a proposed 20
feet wide utility easement;
THENCE along the line dividing the lands of Lot #1 and #2 South 27 degrees 43
minutes 00 seconds West 241.96 feet to a point, said point being in the
Northeast line of lands of Dale L. & M. Aldine Frankenfield;
SCHEDULE 1
<PAGE> 49
URWILER & WALTER, INC./Mopac/Lot #2/October 10, 1994/Page 2
THENCE along said Frankenfield lands South 44 degrees 31 minutes 22 seconds West
359.58 feet to a point, said point being in the Northeast corner of lands of Lot
#3;
THENCE along Lot #3 and crossing a 20 feet wide utility easement North 45
degrees 32 minutes 52 seconds West 381.24 feet to a point, said point being on
the Southeast ultimate right-of-way of Souder Road aforesaid;
THENCE along the Southeast ultimate right-of-way of Souder Road North 44 degrees
27 minutes 08 seconds East 616.74 feet to the POINT AND PLACE OF BEGINNING.
CONTAINING: 5.090 acres of land more or less.
<PAGE> 50
COMMONWEALTH OF PENNSYLVANIA :
SS
COUNTY OF _________________ :
On this _____ day of ___________________, 1994, before me, a Notary Public
in and for the above County and Commonwealth, personally appeared
__________________, who acknowledged himself to be the _________________ of
MOYER PACKING COMPANY, and that he, as such officer, being authorized to do so,
executed the within instrument for the purposes therein contained by signing the
name of the Corporation by himself as such officer.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal.
________________________________
NOTARY PUBLIC
<PAGE> 51
STATE OF ___________________ :
SS
COUNTY OF __________________ :
On this ___ day of ____________________, 1994, before me, a Notary Public
in and for the above County and State, personally appeared _________________,
who acknowledged himself to be the _________________ of BIOPURE CORPORATION, and
that he, as such officer, being authorized to do so, executed the within
instrument for the purposes therein contained by signing the name of the
Corporation by himself as such officer.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal.
________________________________
NOTARY PUBLIC
<PAGE> 52
WAIVER OF LIENS
THIS AGREEMENT made and concluded this 21st day of October, 1994, between
MOYER PACKING COMPANY, a Pennsylvania corporation, of 249 Allentown Road,
Souderton, PA 18964-0395, party of the first part (hereinafter called Owner.)
AND
BIOPURE CORPORATION, a Delaware corporation, party of the second part
(hereinafter called Contractor).
WHEREAS, the said parties have by a duly executed Agreement under seal,
bearing even date herewith, entered into a written contract for the erection,
construction and completion of a Separation Facility for the processing of
bovine blood to be erected on all that certain tract of land situated in the
Township of Franconia, County of Montgomery, Commonwealth of Pennsylvania, as
shown on that certain Plan of Subdivision (Sheet 1 of 1), prepared for Moyer
Packing Company ("Mopac") by Urwiler & Walter, Inc., dated August 24, 1994, as
more fully described in Exhibit "A", attached hereto and made a part hereof.
<PAGE> 53
WHEREAS by the terms of the contract aforesaid the Contractor covenanted,
promised and agreed that no mechanics' lien or claims would be entered and filed
against the said building or buildings or any part thereof, or the curtilage or
curtilages appurtenant thereto, either by himself or anyone else for any work,
labor and materials supplied in the performance of the said contract, or under
any supplemental contract or for extra work, in the erection, construction or
completion of the said building or buildings or any of the curtilages
appurtenant thereto.
NOW THIS AGREEMENT WITNESSETH: That the Contractor for and in
consideration of the contract aforesaid and the considerations mentioned
thereunder, as well as the further consideration of One ($1.00) Dollar to him in
hand paid by the Owner at or before the sealing and delivery of these presents,
the receipt whereof is hereby acknowledged, does hereby covenant, promise and
agree that no mechanics' lien or claim or other lien or claim of any kind
whatsoever shall be filed or maintained against the said building or buildings
or the curtilage or curtilages appurtenant thereto, by Contractor or by any
sub-contractor, materialmen or laborers for work done or materials furnished
under said contract or by any other party acting through or under them or any of
them for and about said building or buildings or any part thereof, or on credit
thereof, and that all sub-contractors, materialmen, and laborers on said work
shall look to and hold Contractor personally liable for all sub-contracts,
materials furnished and work and labor done, so that there shall not be any
legal or lawful claim of any kind whatever against Owner for any work done or
labor or materials furnished under said Contract for and about the erection,
construction and completion of said buildings as aforesaid, or under any
contract for extra work, or for work supplemental thereto, or otherwise.
AND this Agreement waiving the right of liens shall be an independent
covenant and shall operate and be effective as well as with respect to work done
and materials furnished under any supplemental contract for extra work in the
erection, construction and completion of the said building or buildings as to
any work and labor done and materials furnished under the contract aforesaid.
AND, in order to give the Owner full power and authority to protect
himself and the lot or lots of ground against any and all claims filed by the
Contractor or anyone acting under or through him or it in violation of the
foregoing covenant, the said Contractor for himself, themselves, itself, hereby
irrevocably authorizes and empowers any Attorney of any Court of Common Pleas of
the Commonwealth of Pennsylvania, to appear for him, them, it or any of them, in
any of the said Courts of Common Pleas as
-2-
<PAGE> 54
Attorney for him, them, for it and in his, their, its name, marked satisfied of
record at the cost and expense of the Contractor or of any subcontractor or
materialman or materialmen, any and all claims or claim, lien or liens, filed by
or for the contractor, or any subcontractor or materialman, or in his or their
name against said building or buildings, lot or lots of ground or any part
thereof and for such act or acts this shall be good and sufficient warrant and
authority and a reference to the Court, Term, and Number in which and where this
Agreement shall have been filed shall be a sufficient exhibit of the authority
herein contained to warrant such action, and the Contractor for himself,
themselves, itself, do hereby remise, release and quit-claim all rights and all
manner of errors, defects and imperfections whatsoever in entering such
satisfaction or in anywise touching or concerning the same.
IN WITNESS WHEREOF, the said parties have hereunto set their hands and
seals dated the day and year first above written.
WITNESSES PRESENT: OWNERS:
MOYER PACKING COMPANY
/s/ Ruth Hinkle
By: /s/ William G. Morral
-------------------------------------
Title: V.P. - President-Finance
CONTRACTOR:
BIOPURE CORPORATION
By: /s/ James O'Shea
-------------------------------------
Title: President
-3-
<PAGE> 55
[LETTERHEAD OF URWILER & WALTER, INC.]
October 10, 1994
Description of Lot #2.
ALL THAT CERTAIN tract of land situate in the Township of Franconia, County of
Montgomery, Commonwealth of Pennsylvania, as shown on Mopac Plan of Subdivision
(Sheet 1 of 1), prepared for Mopac by Urwiler & Walter, Inc. dated August 24,
1994, bounded and described as follows, to wit:
BEGINNING at a point on the Southeast ultimate right-of-way line of Souder Road
(30 feet wide half width), said point being in the line of lands of Lot #2 and
the lands of Terry L. Kiser, said point being also located the following two (2)
dimensions from a point marking the intersection the centerline of Souder Road
S.R. 1005 and the centerline of Allentown Road S.R. 1001 (33 feet legal
right-of-way):
(1) in a Southwesterly direction 370.00 plus or minus feet to a point
(2) South 41 degrees 12 minutes 40 seconds East 27.77 feet to a point;
THENCE from said beginning point and extending along the said dividing line and
on and thru a 30 feet wide drainage easement South 41 degrees 12 minutes 40
seconds East 234.04 feet to a point, said point being the Northwest corner of
lands of Kenneth R. Schumann;
THENCE along said Schumann lands and the lands of James R. Depermentier South 39
degrees 55 minutes 22 seconds East 79.02 feet to a point, said point being the
Northwest corner of Lot #1, said point being also in and along a proposed 20
feet wide utility easement;
THENCE along the line dividing the lands of Lot #1 and #2 South 27 degrees 43
minutes 00 seconds West 241.96 feet to a point, said point being in the
Northeast line of lands of Dale L. & M. Aldine Frankenfield;
EXHIBIT "A" - Page 1 of 2
<PAGE> 56
URWILER & WALTER, INC./Mopac/Lot #2/October 10, 1994/Page 2
THENCE along said Frankenfield lands South 44 degrees 31 minutes 22 seconds West
359.58 feet to a point, said point being in the Northeast corner of lands of Lot
#3;
THENCE along Lot #3 and crossing a 20 feet wide utility easement North 45
degrees 32 minutes 52 seconds West 381.24 feet to a point, said point being on
the Southeast ultimate right-of-way of Souder Road aforesaid;
THENCE along the Southeast ultimate right-of-way of Souder Road North 44 degrees
27 minutes 08 seconds East 616.74 feet to the POINT AND PLACE OF BEGINNING.
CONTAINING: 5.090 acres of land more or less.
EXHIBIT "A" - Page 2 of 2
<PAGE> 57
WAIVER OF LIENS
THIS AGREEMENT made and concluded this 21st day of October, 1994 between
BIOPURE CORPORATION, a Delaware Corporation of 68 Harrison Avenue, Boston, MA
02111 party of the first part (hereinafter called Owner.)
AND
The Richmond Group, Inc., a Massachusetts corporation party of the second part
(hereinafter called Contractor).
WHEREAS, the said parties have by a duly executed Agreement under seal,
bearing even date herewith, entered into a written contract for the erection,
construction and completion of a Separation Facility for the processing of
bovine blood to be erected on all that certain tract of land situated in the
Township of Franconia, County of Montgomery, Commonwealth of Pennsylvania, as
shown on that certain Plan of Subdivision (Sheet 1 of 1), prepared for Moyer
Packing Company ("Mopac") by Urwiler & Walter, Inc., dated August 24, 1994, as
more fully described in Exhibit "A", attached hereto and made a part hereof.
<PAGE> 58
WHEREAS by the terms of the contract aforesaid the Contractor covenanted,
promised and agreed that no mechanics' lien or claims would be entered and filed
against the said building or buildings or any part thereof, or the curtilage or
curtilages appurtenant thereto, either by himself or anyone else for any work,
labor and materials supplied in the performance of the said contract, or under
any supplemental contract or for extra work, in the erection, construction or
completion of the said building or buildings or any of the curtilages
appurtenant thereto.
NOW THIS AGREEMENT WITNESSETH: That the Contractor for and in
consideration of the contract aforesaid and the considerations mentioned
thereunder, as well as the further consideration of one ($1.00) Dollar to him in
hand paid by the Owner at or before the sealing and delivery of these presents,
the receipt whereof is hereby acknowledged, does hereby covenant, promise and
agree that no mechanics' lien or claim or other lien or claim of any kind
whatsoever shall be filed or maintained against the said building or buildings
or the curtilage or curtilages appurtenant thereto, by Contractor or by any
sub-contractor, materialmen or laborers for work done or materials furnished
under said contract or by any other party acting through or under them or any of
them for and about said building or buildings or any part thereof, or on credit
thereof, and that all sub-contractors, materialmen, and laborers on said work
shall look to and hold Contractor solely liable for all sub-contracts, materials
furnished and work and labor done, so that there shall not be any legal or
lawful claim of any kind whatever against Owner for any work done or labor or
materials furnished under said Contract for and about the erection, construction
and completion of said buildings as aforesaid, or under any contract for extra
work, or for work supplemental thereto, or otherwise.
AND this Agreement waiving the right of liens shall be on independent
covenant and shall operate and be effective as well as with respect to work done
and materials furnished under any supplemental contract for extra work in the
erection, construction and completion of the said building or buildings as to
any work and labor done and materials furnished under the contract aforesaid.
AND, unless Contractor shall promptly remove or cause to be removed all
manner of lien of itself, its subcontractors or materialmen, with Counsel of its
choosing upon notice by Owner, then in order to give the Owner full power and
authority to protect himself and the lot or lots of ground against any and all
claims filed by the Contractor or anyone acting under of through him or it in
violation of the foregoing covenant, the said Contractor for himself,
themselves, itself, hereby irrevocably authorizes and empowers any Attorney of
any Court of Common Pleas of the
-2-
<PAGE> 59
Commonwealth of Pennsylvania, to appear for him, them, it or any of them, in any
of the said Courts of Common Pleas as Attorney for him, them, for it and in his,
their, its name, marked satisfied of record at the cost and expense of the
Contractor or of any subcontractor or materialman or materialmen, any and all
claims or claim, lien or liens, filed by or for the Contractor, or any
subcontractor or materialman, or in his or their name against said building or
buildings, lot or lots of ground or any part thereof and for such act or acts
this shall be good and sufficient warrant and authority and a reference to the
Court, Term, and Number in which and where this Agreement shall have been filed
shall be a sufficient exhibit of the authority herein contained to warrant such
action, and the Contractor for himself, themselves, itself, do hereby remise,
release and quit-claim all rights and all manner of errors, defects and
imperfections whatsoever in entering such satisfaction of in anywise touching or
concerning the same.
IN WITNESS WHEREOF, the said parties have hereunto set their hands and
seals dated the day and year first above written.
WITNESS PRESENT: OWNERS:
BIOPURE CORPORATION
By: /s/ James O'Shea
---------------------------------
Title: President
CONTRACTOR:
The Richmond Group, Inc.
By: /s/ Peter V. Markadian, President
---------------------------------
Peter V. Markadian
President
-3-
<PAGE> 60
[LETTERHEAD OF URWILER & WALTER, INC.]
October 10, 1994
Description of Lot #2.
ALL THAT CERTAIN tract of land situate in the Township of Franconia, County of
Montgomery, Commonwealth of Pennsylvania, as shown on Mopac Plan of Subdivision
(Sheet 1 of 1), prepared for Mopac by Urwiler & Walter, Inc. dated August 24,
1994, bounded and described as follows, to wit:
BEGINNING at a point on the Southeast ultimate right-of-way line of Souder Road
(30 feet wide half width), said point being in the line of lands of Lot #2 and
the lands of Terry L. Kiser, said point being also located the following two (2)
dimensions from a point marking the intersection the centerline of Souder Road
S.R. 1005 and the centerline of Allentown Road S.R. 1001 (33 feet legal
right-of-way):
(1) in a Southwesterly direction 370.00 plus or minus feet to a point
(2) South 41 degrees 12 minutes 40 seconds East 27.77 feet to a point;
THENCE from said beginning point and extending along the said dividing line and
on and thru a 30 feet wide drainage easement South 41 degrees 12 minutes 40
seconds East 234.04 feet to a point, said point being the Northwest corner of
lands of Kenneth R. Schumann;
THENCE along said Schumann lands and the lands of James R. Depermentier South 39
degrees 55 minutes 22 seconds East 79.02 feet to a point, said point being the
Northwest corner of Lot #1, said point being also in and along a proposed 20
feet wide utility easement;
THENCE along the line dividing the lands of Lot #1 and #2 South 27 degrees 43
minutes 00 seconds West 241.96 feet to a point, said point being in the
Northeast line of lands of Dale L. & M. Aldine Frankenfield;
EXHIBIT "A" - Page 1 of 2
<PAGE> 61
URWILER & WALTER, INC./Mopac/Lot #2/October 10, 1994/Page 2
THENCE along said Frankenfield lands South 44 degrees 31 minutes 22 seconds West
359.58 feet to a point, said point being in the Northeast corner of lands of Lot
#3;
THENCE along Lot #3 and crossing a 20 feet wide utility easement North 45
degrees 32 minutes 52 seconds West 381.24 feet to a point, said point being on
the Southeast ultimate right-of-way of Souder Road aforesaid;
THENCE along the Southeast ultimate right-of-way of Souder Road North 44 degrees
27 minutes 08 seconds East 616.74 feet to the POINT AND PLACE OF BEGINNING.
CONTAINING: 5.090 acres of land more or less.
EXHIBIT "A" - Page 2 of 2
<PAGE> 1
EXHIBIT 10.29
<PAGE> 2
1957E
DEFERRED COMPENSATION AGREEMENT
AGREEMENT dated as of August 8, 1990, between BIOPURE Corporation, a
Delaware corporation (the "Company"), and Carl W. Rausch, an individual residing
at 1416 Mystic Valley Parkway, Medford, MA 02155 (the "Executive").
WHEREAS, the Executive is Chairman of the Board and Chief Executive
Officer of the Company and has performed valuable services for the Company as
such, for which the Company desires to pay the Executive incentive compensation
additional to all compensation previously agreed upon; and
WHEREAS, the Executive agrees to defer receipt of such incentive
compensation for a period of up to five years from the date of this Agreement;
NOW THEREFORE, in consideration of the premises and the covenants,
promises and agreements hereinafter set forth, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, it
is hereby agreed as follows:
1. Compensation. The Company hereby agrees to pay to the Executive as
incentive compensation in respect of services performed by the Executive for the
Company as Chairman of the Board and Chief Executive Officer of the Company, in
addition to all other compensation which it has agreed to pay to the Executive
heretofore, an amount of $700,000.00 (the "Compensation").
2. Deferment. The Compensation, plus interest thereon at the Prescribed
Rate (as defined below), shall be payable by the Company to the Executive in a
lump sum on the earlier to occur of (a) the date 30 days following the death or
termination, whether voluntary or involuntary, for cause or without cause, for
any reason, including but not limited to disability or retirement, of the
Executive's employment relationship with the Company, or (b) August 8, 1995.
3. Prescribed Rate. The "Prescribed Rate" shall be, for each full or
partial calendar year during which interest shall accrue hereunder, the rate per
annum equal to the rate of interest announced by Bank of New England N.A. as its
base rate (the "Base Rate") as in effect on January 1 of such calendar year (in
the case of the 1990 calendar year, as in effect on August 8, 1990).
Notwithstanding the previous sentence, if Bank of New England N.A. shall
announce, at any time during any such calendar year, a Base Rate that is more
than 2% higher or lower than the Base Rate in effect on January 1 of such year
(or August 8, for 1990), the Prescribed Rate shall be, for the remainder of such
calendar year, the Base Rate as announced from time to time during the remainder
of such calendar year.
<PAGE> 3
- 2 -
4. Amendment. This Agreement may be amended only by a written instrument
executed and delivered by the Company and the Purchaser.
5. Counterparts. This Agreement may be executed in one or more
counterparts, each of which when executed shall be deemed an original and all of
which, taken together, shall constitute one and the same instrument. In making
proof of this Agreement, 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 and
enforced in accordance with the laws of the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, this Agreement has been executed by or on behalf of
the parties hereto, as an instrument under seal, as of the date first above
written.
BIOPURE CORPORATION
By: /s/ Brian Lajoie
-----------------------------
Title: Vice President-Finance
/s/ Carl W. Rausch
--------------------------------
Carl W. Rausch
<PAGE> 4
AMENDMENT NO. 1 TO DEFERRED COMPENSATION AGREEMENT
This Amendment dated as of December 12, 1995 is between Biopure
Corporation, a Delaware corporation (the "Company") and Carl W. Rausch, an
individual residing at 124 Sagamore Avenue, Medford, MA 02155 (the "Executive").
RECITALS
The Executive is Chairman of the Board and Chief Executive Officer
of the Company. The Executive and the Company entered into a Deferred
Compensation Agreement dated as of August 8, 1990 (the "Original Agreement"),
pursuant to which an amount of $700,000 was deferred. It was understood at the
time the Original Agreement was executed and delivered that the deferment date
of August 8, 1995 set forth in Section 2 of the original Agreement was subject
to the timely payment by the Executive of a promissory note to the Company in
the principal amount of [$700,000] (together with interest, the "Obligation").
The Original Agreement was deficient in not containing this qualification. The
Obligation has not been paid, and the Company has amended the promissory note
evidencing the Obligation to provide for a maturity date of July 31, 2000.
NOW, THEREFORE, in consideration of the premises and the covenants,
promises and agreements hereinafter set forth, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, it
is hereby agreed as follows:
1. The Original Agreement is hereby amended so that Section 2
thereof shall read in its entirety as follows:
"2. Deferment. The Compensation, plus interest thereon at the
Prescribed Rate (as defined below), shall be payable by the Company to the
Executive in a lump sum on the earlier to occur of (a) the date 30 days
following the death or termination, whether voluntary or involuntary, for
cause or without cause, for any reason, including but not limited to
disability or retirement, of the Executive's employment relationship with
the Company, or (b) July 31, 2000, provided that prior to or
simultaneously with payment hereunder to the Executive, the Executive
shall have paid the Obligation in full."
IN WITNESS WHEREOF, this Amendment has been executed by or on behalf
of the parties hereto, as an instrument under seal, as of the date first above
written.
BIOPURE CORPORATION
By: /s/ Brian Lajoie
-----------------------------
/s/ Carl W. Rausch
--------------------------------
Carl W. Rausch
<PAGE> 1
EXHIBIT 10.30
<PAGE> 2
BIOPURE CORPORATION
INCENTIVE COMPENSATION PLAN
I. PURPOSE - The Incentive Compensation Plan (the "Plan") is designed to
attract and retain the services of qualified employees by furnishing incentives
to those who contribute significantly to the successful operation of the
business and property of Biopure Corporation.
II. DEFINITIONS - For the purposes of this Plan, the following terms shall
have the following meanings:
A. Company. Biopure Corporation ("Biopure") and its subsidiaries.
B. Compensation Committee. A committee (the Committee) to administer
this Plan, which shall consist of not less than three members appointed
from time to time by the Board of Directors of Biopure. The vote of a
majority of the Committee shall constitute action by the Committee. Action
by the Committee may be taken at any meeting of the Committee or by a
statement in writing signed by the members of the Committee, which may be
in counterparts.
C. Deferred Bonus Account. The Account described in Section III.
D. Determined Plan Amount. The aggregate amount to be awarded for a
Plan Year, subject to vesting, determined by the Board of Directors of
Biopure after the end of the Plan Year based on a review of economic
conditions in business and the nation, changes, if any, in the capital
structure of
<PAGE> 3
the Company, and other pertinent factors. The Determined Plan Amount may
be zero.
E. Employee. An individual who is on the active full-time salaried
or hourly payroll of the Company at the end of the fiscal year for which
he or she is a Participant.
F. Interest Increment. The annual interest on the Deferred Bonus
Account described in Section III.
G. Participant. An Employee who has been selected by the Committee
to receive incentive compensation awards for a Plan Year under this Plan.
No Employee shall have any right to be a Participant except in the
absolute discretion of the Committee. In making the selection, the
Committee shall give such consideration as the Committee may deem
advisable to the contribution of the Employee during the fiscal year to
the Company's success, his or her ability, efficiency and loyalty, the
prospects of his or her being promoted to a more important position in the
Company and such other matters as it shall deem desirable.
H. Plan Year. The fiscal year ended October 31.
I. Subsidiary. A corporation or other legal entity, more than 50% of
the voting stock of which is owned or controlled, directly or indirectly,
by Biopure.
III. INCENTIVE COMPENSATION DEFERRED BONUS - A. As soon as possible after the
close of the Plan Year, but in no event later than the March 15 following the
end of the Plan Year, the Company shall credit to an account (the "Deferred
Bonus Account") estab-
-2-
<PAGE> 4
lished on its books an amount equal to the Determined Plan Amount plus interest
on the pre-existing Deferred Bonus Account at an annual rate of 6 percent (the
"Interest Increment"). The Company shall, concurrently, notify each Participant
of the portion of the Determined Plan Amount that has been allocated to such
Participant. Notwithstanding the foregoing, the Determined Plan Amount for
fiscal 1992 may be established and awarded at any time prior to October 31,
1993, effective March 15, 1993.
B. Except in the case of a Participant's prior disability, retirement or
termination of employment, no portion of any award for a Plan Year will be paid
to the Participant until the April following the third anniversary of the date
on which the award was credited to his or her account. As early as practicable
in April and annually in each April thereafter (until the death, disability,
retirement or termination of employment of the Participant) there shall be
distributed to him or her in cash one-fifth of the amount credited for such Plan
Year and of undistributed earnings thereon through the immediately preceding
March 31, subject to applicable withholding and payroll tax requirements;
provided that the fifth payment in respect of the bonus for any Plan Year shall
consist of the remaining balance for such Plan Year with earnings through the
immediately preceding March 31.
C. The general funds of the Company shall be the sole source of payment
under the Plan, and the Company shall not have any obligation to establish any
separate fund or trust or other segregation of assets to provide for payments
under the Plan.
-3-
<PAGE> 5
Nothing contained in this Plan, and no action taken pursuant to its provisions,
shall create or be construed to create a trust of any kind, or a fiduciary
relationship, between the Company and a Participant or any other person. To the
extent any person acquires any rights to receive payments from the Company, such
rights shall be no greater than that of an unsecured creditor in bankruptcy.
IV. TERMINATION OF EMPLOYMENT - A. If employment is terminated for any
reason other than death, permanent disability, or retirement, then the
Participant shall forfeit all of his or her interest in the Deferred Bonus
Account and the Deferred Bonus Account shall be reduced by the amount of such
interest.
B. If a subsidiary of the Company ceases to be a subsidiary
otherwise than by merger into or consolidation with the Company, the employment
of a Participant employed by such subsidiary shall be deemed to have terminated
upon the occurrence of such event.
C. If employment is terminated as a result of a permanent disability
as determined by the Committee or retirement on normal retirement date, or on an
early retirement date with the approval of the Committee, the full amount in the
Deferred Bonus Account allocated to the Participant as of the close of business
on the March 31 following such termination shall become vested to the
ex-Participant and shall be distributed 20% in each of the next five years, each
installment to be paid as soon as practi-
-4-
<PAGE> 6
cable after March 31 of each year, together with prorated Interest Increments.
D. If an active Participant, or a disabled or retired Participant
who still has an interest in the Deferred Bonus Account, dies, the amount
allocated to such Participant as of the close of business on March 31 following
the Participant's death shall be paid to the Participant's legal representatives
as soon as practicable after said March 31. In the case of a disabled or retired
Participant, the amount in his or her account shall include the Interest
Increment to said March 31 as provided in the preceding paragraph.
V. EFFECTIVE DATE - This Plan is effective as of June 30, 1993, and the
first Plan Year is the year ended October 31, 1992.
VI. INTERPRETATIONS AND AMENDMENTS TO THE PLAN - The Board of Directors of
the Company shall have the right to modify this Plan from time to time or to
repeal this Plan entirely or to direct the discontinuance of awards, provided,
however, that in the event of discontinuance of the Plan, amounts previously
credited to the Deferred Bonus Account will continue to be distributed in
accordance with the Plan. The decision of the Committee with respect to any
questions as to the individuals selected to be Participants, and the
administration, operation and interpretation of this Plan shall be final,
conclusive and binding.
VII. MISCELLANEOUS - A. By acceptance of any compensation under this Plan,
the Participant agrees that it is special in-
-5-
<PAGE> 7
centive compensation and that it will not be taken into account in determining
the amount of any pension under any pension or retirement plan of the Company.
The Participant also agrees that any such award will not affect the amount of
any life insurance coverage available to his or her beneficiary under any
Company group life insurance plan.
B. Each person who is or shall have been a member of the Committee
or a member of the Board of Directors shall be indemnified and held harmless by
the Company against and from any and all loss, cost, liability or expenses that
may be imposed upon or reasonably incurred by him or her in connection with or
resulting from any claim, action, suit or proceeding to which he or she may be a
party or in which he or she may be involved by reason of any action taken or
failure to act under this Plan and against and from any and all amounts paid by
him or her in settlement thereof (with the Company's written approval) or paid
by him or her in satisfaction of a judgment in any such action, suit or
proceeding, except a judgment in favor of the Company based upon a finding of
his or her bad faith, subject, however, to the condition that upon the
institution of any claim, action, suit or proceeding against him or her, he or
she shall in writing give the Company an opportunity at its own expense, to
handle and defend the same before he or she undertakes to handle and defend it
on his or her own behalf. The foregoing right of indemnification shall not be
exclusive of any other right to which such person may be entitled under the
Company's Certificate of Incorporation
-6-
<PAGE> 8
or By-Laws, as a matter of law, or otherwise, or any power that the Company may
have to indemnify or hold harmless such person.
C. Each member of the Committee, each member of the Board of
Directors, and each officer and employee of the Company shall be fully justified
in relying or acting upon any report made by the Company's independent
accountants and upon any other information furnished in connection with this
Plan by any person or persons other than himself or herself. In no event shall
any person who is or shall have been a member of the Committee, a member of the
Board of Directors, or an officer or employee of the Company be liable for any
determination made or other action taken or any omission to act in reliance upon
any such report or information, or for any action (including the furnishing of
information) taken or any failure to act, if in good faith.
D. All calculations under this Plan shall be made to the nearest
dollar or to the nearest one-hundredth of a percent, as the case may be.
E. No Participant shall have any right to assign, transfer or pledge
all or any part of his or her interest in the Plan and any attempt to do so will
not be recognized by the Company. THE RIGHTS UNDER THE PLAN OF A PARTICIPANT OR
HIS OR HER ESTATE SHALL BE ONLY THOSE OF A GENERAL UNSECURED CREDITOR, AND MAY
NOT BE PAID IN FULL IF THE COMPANY HAS INSUFFICIENT FUNDS THEREFOR.
F. If an active Participant dies, or his or her employment is
terminated as a result of permanent disability, retirement on his or her normal
date, or on an early retirement
-7-
<PAGE> 9
date with the approval of the Committee and such event falls on a date between
November 1 and April 30, both inclusive, he or she shall not be entitled to an
incentive compensation bonus for the Plan Year then in progress, but if such
event falls on a date between May 1 and October 31 he or she shall be entitled
to a pro rata incentive compensation bonus for such Plan Year.
G. Nothing in this Plan shall confer upon any employee any right to
continue in the employ of the Company or interfere in any way with the right of
the Company to terminate his or her employment at any time. No entitlement to
payment under the Plan shall be deemed salary or compensation for the purpose of
computing benefits under any employee benefit plan or other arrangement of the
Company or its affiliates for the benefit of its employees. No Participant shall
have any claim to any payment until it is actually due to the Participant under
the Plan.
H. Captions preceding the sections hereof are inserted solely as a
matter of convenience and in no way define or limit the scope or intent of any
provision hereof.
-8-
<PAGE> 1
EXHIBIT 10.31
<PAGE> 2
BIOPURE(R) Corporation
1998 Stock Option Plan
1. Definitions. As used in this 1998 Stock Option Plan of BIOPURE
Corporation, the following terms shall have the following meanings:
1.1. Board means the Company's Board of Directors.
1.2. Code means the federal Internal Revenue Code of 1986, as
amended.
1.3. Committee means the Board of Directors of the Company or, if
appointed by the Board, a committee comprised of two or more directors of
the Company responsible for the administration of the Plan, as provided in
Section 5 of the Plan.
1.4. Company means BIOPURE Corporation, a Delaware corporation.
1.5. Fair Market Value means the value of a share of Stock of the
Company on any date as determined by the Board.
1.6. Grant Date means the date as of which an Option is granted.
1.7. Incentive Option means an Option intended to satisfy the
requirements of Section 422 of the Code.
1.8. Nonstatutory Option means an Option that is not an Incentive
Option.
1.9. Option means an option to purchase shares of the Stock granted
under the Plan.
1.10. Option Agreement means an agreement between the Company and an
Optionee, setting forth the terms and conditions of an Option.
1.11. Option Price means the price paid by an Optionee for a share
of Stock upon exercise of an Option.
1.12. Optionee means a person eligible to receive an Option, as
provided in Section 6, to whom an Option shall have been granted under the
Plan.
1.13. Plan means this 1998 Stock Option Plan of the Company, as
amended from time to time.
1.14. Stock means Common Stock, par value $.0l per share, of the
Company.
<PAGE> 3
1.15. Stock Purchase Agreement means an agreement between the
Company and one or more Optionees, setting forth certain restrictions upon
the transfer of shares of Stock purchased by an Optionee upon exercise of
an Option. A Stock Purchase Agreement may be a part of any other
agreement, including an employment agreement.
1.16. Ten Percent Owner means a person who is deemed, within the
meaning of Section 422(b) (6) of the Code, to own stock possessing more
than 10% of the total combined voting power of all classes of stock of the
Company (or its parent or any subsidiary corporation).
1.17. Vesting Year for any portion of any Incentive Option means the
calendar year in which that portion of the Option first becomes
exercisable.
2. Purpose. This 1998 Stock Option Plan is intended to encourage ownership
of the Stock by employees and consultants of the Company and its subsidiaries
and to provide additional incentive for them to promote the success of the
Company's business. The Plan is intended to be an incentive stock option plan
within the meaning of Section 422 of the Code but not all Options granted
hereunder are required to be Incentive Options.
3. Term of the Plan. Options under the Plan may be granted on or after
March 13, 1998, but not later than March 13, 2008.
4. Stock Subject to the Plan. At no time shall the number of shares of the
Stock then outstanding which are attributable to the exercise of Options granted
under the Plan, plus the number of shares then issuable upon exercise of
outstanding Options granted under the Plan exceed the "Share Limit", subject,
however, to the provisions of Section 17 of the Plan. Shares to be issued upon
the exercise of Options granted under the Plan may be either authorized but
unissued shares or shares held by the Company in its treasury. If any Option
expires or terminates for any reason without having been exercised in full, the
shares not purchased thereunder shall again be available for Options thereafter
to be granted. The "Share Limit" shall mean One Hundred Forty-Seven Thousand
Four Hundred Forty (147,440) plus the number of shares, if any, not purchased
under options granted under the 1988 Stock Option Plan of Biopure Corporation,
outstanding on March 13, 1998 but which expire or terminate for any reason
without having been exercised in full.
5. Administration. The Plan shall be administered by the Committee.
Subject to the provisions of the Plan, the Committee shall have complete
authority, in its discretion, to make or to select the manner of making the
following determinations with respect to each Option to be granted by the
Company: (a) the employee or consultant to receive the Option; (b) whether the
Option (if granted to an employee) will be an Incentive Option or Nonstatutory
Option; (c) the time of granting the Option; (d) the
<PAGE> 4
number of shares subject to the Option; (e) the Option Price; and (f) the Option
period. In making such determinations, the Committee may take into account the
nature of the services rendered by the respective employees and consultants,
their present and potential contributions to the success of the Company and its
subsidiaries, and such other factors as the Committee in its discretion shall
deem relevant. Subject to the provisions of the Plan, the Committee shall also
have complete authority to interpret the Plan, to prescribe, amend and rescind
rules and regulations relating to it, to determine the terms and provisions of
the respective Option Agreements (which need not be identical), and to make all
other determinations necessary or advisable for the administration of the Plan.
The Committee's determinations of the matters referred to in this Section 5
shall be conclusive.
6. Eligibility. An Option may be granted only to an employee or consultant
of one or more of the Company and its subsidiaries.
7. Time of Granting Options. The granting of an Option shall take place at
the time specified in the Option Agreement. Only if expressly so provided in the
Option Agreement, shall the Grant Date be the date on which an Option Agreement
shall have been duly executed and delivered by the Company and the Optionee.
8. Option Price. The Option Price under each Incentive Option shall be not
less than 100% of the Fair Market Value of the Stock on the Grant Date, or not
less that 110% of the Fair Market Value of the Stock on the Grant Date if the
Optioneee is a Ten Percent Owner. The Option Price under each Nonstatutory
Option shall not be so limited solely by reason of this Section 8.
9. Option Period. No Incentive Option may be exercised later than the
tenth anniversary of the Grant Date, or the fifth anniversary of the Grant Date,
if the Optionee is a Ten Percent Owner. The Option period under each
Nonstatutory Option shall not be so limited solely by reason of this Section 9.
An Option may become exercisable in such installments, cumulative or
non-cumulative, as the Committee may determine.
10. Limit on Incentive Option Characterization. Notwithstanding any other
provisions hereof, the aggregate Fair Market Value (determined at the time the
option is granted) of Stock with respect to which Incentive Options are
exercisable for the first time by an Optionee during any calendar year (under
all such plans of the Company and its affiliates) shall not exceed $100,000.
11. Exercise of Option. An Option may be exercised in accordance with its
terms by written notice of intent to exercise the Option, specifying the number
of shares with respect to which the Option is then being exercised. The notice
shall be
<PAGE> 5
accompanied by (a) payment in the form of cash or check, or if provided in the
Option Agreement, by shares of the Stock with a then current Fair Market Value
equal to the Option Price of the shares to be purchased and (b), if provided in
the Option Agreement, an executed Stock Purchase Agreement. Within 30 days
thereafter but subject to the remaining provisions of the Plan the Company shall
deliver or cause to be delivered to the Optionee a certificate or certificates
for the number of shares then being purchased. Such shares shall be fully paid
and nonassessable.
12. Restrictions on issue of Shares. Notwithstanding any other provision
of the Plan, if at any time in the reasonable opinion of the Company the
issuance of shares of Stock covered by the exercise of any Option may constitute
a violation of law, then the Company may delay such issuance and the delivery of
a certificate for such shares until (a) approval shall have been obtained from
such governmental agencies, other than the Securities and Exchange Commission,
as may be required under any applicable law, rule, or regulation; and (b) one of
the following conditions shall be satisfied:
(i) the shares with respect to which such Option has been exercised
are at the time of the issue of such shares effectively registered under
the Securities Act of 1933, as amended (the "Securities Act") as now in
force or hereafter amended; or
(ii) a no-action letter in form and substance reasonably
satisfactory to the Company in respect to the issuance of such shares
shall have been obtained by the Company from the Securities and Exchange
Commission.
The Company shall make all reasonable efforts to bring about the
occurrence of said events.
13. Purchase for Investment: Subsequent Registration.
(a) Unless the shares to be issued upon exercise of an Option
granted under the Plan have been effectively registered under the Securities Act
as now in force or hereafter amended, the Company shall be under no obligation
to issue any shares covered by any Option unless the person who exercises such
Option, in whole or in part, shall give a written representation to the Company
which is satisfactory in form and substance to its counsel and upon which the
Company may reasonably rely, that he or she is acquiring the shares issued
pursuant to such exercise of the Option as an investment and not with a view to,
or for sale in connection with, the distribution of any such shares.
(b) Each share of Stock issued pursuant to the exercise of an Option
granted pursuant to this Plan may bear a reference to the investment
representation made in accordance with this Section 13 and to the fact that no
registration
<PAGE> 6
statement has been filed with the Securities and Exchange Commission in respect
to said Stock.
(c) In the event that the Company shall deem it necessary or
desirable to register under the Securities Act or other applicable statutes any
shares with respect to which an Option shall have been granted, or to qualify
any such shares for exemption from the Securities Act or other applicable
statutes then the Company shall take such action at its own expense. The Company
may require from each Optionee, or each holder of shares of Stock acquired
pursuant to the Plan, such information in writing for use in any registration
statement, prospectus, preliminary prospectus or offering circular as is
reasonably necessary for such purpose and may require reasonable indemnity to
the Company and its officers and directors from such holder against all losses,
claims, damage and liabilities arising from such use of the information so
furnished and caused by any untrue statement of any material fact therein or
caused by the omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances under which they were made.
14. Withholding: Notice of Disposition of Stock Prior to Expiration of
Specified Holding Period.
(a) Whenever shares are to be issued in satisfaction of an Option
granted hereunder, the Company shall have the right to require the Optionee to
remit to the Company an amount sufficient to satisfy federal, state, local or
other withholding tax requirements (whether so required to secure for the
Company an otherwise available tax deduction or otherwise) if and to the extent
required by law prior to the delivery of any certificate or certificates for
such shares.
(b) The Company may require as a condition to the issuance of shares
covered by any Incentive Option that the party exercising such Option give a
written representation to the Company which is satisfactory in form and
substance to its counsel and upon which the Company may reasonably rely, that he
or she will report to the Company any disposition of such shares prior to the
expiration of the holding periods specified by Section 422(a)( 1) of the Code.
15. Termination of Association with the Company.
(a) In the event that the Optionee's employment with the Company is
terminated, whether voluntarily or otherwise, the Option, to the extent
exercisable on the date of termination, may be exercised by the Optionee, but
only within three months after he or she ceases to be an employee of the
Company, unless terminated earlier by its terms, and to the extent unexercisable
on the date of termination, the Option shall become null and void; provided,
however, that if termination results from the total and permanent disability or
death of the Optionee, the
<PAGE> 7
Option, to the extent exercisable on the date of such termination, may, if so
provided in the Option Agreement, be exercised at any time within 12 months
thereafter, unless terminated earlier by its terms. Military or sick leave shall
not be deemed a termination of employment.
(b) In the event that the Optionee's consulting relationship with
the Company is terminated for any reason or for no reason, the Option, unless
otherwise specified in the Optionee's consulting agreement with the Company, to
the extent exercisable on the date of termination, plus the pro rata portion of
the installment which would become exercisable on the next succeeding
anniversary of the Grant Date for such Option equivalent to the portion of the
year the Optionee was a consultant with the Company, may be exercised by the
Optionee, but only within three months after he or she ceases to be a consultant
of the Company, unless terminated earlier by its terms, and to the extent
otherwise unexercisable on the date of termination, the Option shall become null
and void on the date of such termination; provided, however, that if termination
results from the total and permanent disability or death of the Optionee, the
Option, to the extent exercisable on the date of such termination, may, if so
provided in the Option Agreement, be exercised at any time within 12 months
thereafter, unless terminated earlier by its terms. Military or sick leave shall
not be deemed a termination of consulting relationship.
16. Transferability of Options. Options shall not be transferable,
otherwise than by will or the laws of descent and distribution, and may be
exercised during the life of the Optionee only by the Optionee.
17. Capital Changes. Each Option Agreement shall provide that in the event
of any stock dividend payable in the Stock or any split-up or contraction in the
number of shares of the Stock occurring after the date of the Agreement and
prior to the exercise in full of the Option, the number of shares subject to
such Agreement shall be proportionately adjusted and the price to be paid for
each share subject to the Option shall be proportionately adjusted. Each such
Agreement shall also provide that in case of any reclassification or change of
outstanding shares of the Stock or in case of any consolidation or merger of the
Company with or into another company or in case of any sale or conveyance to
another company or entity of the property of the Company as a whole or
substantially as a whole, shares of stock or other securities equivalent in kind
and value to those shares an Optionee would have received if he or she had held
the full number of shares of the Stock subject to the Option immediately prior
to such reclassification, change, consolidation merger, sale or conveyance and
had continued to hold those shares (together with all other shares, stock and
securities thereafter issued in respect thereof) to the time of the exercise of
the Option shall thereupon be subject to the Option. Each Agreement shall
further provide that upon dissolution or liquidation of the
<PAGE> 8
Company, the Option shall terminate, but the Optionee (if at the time in the
employ or retained as a consultant of the Company or any of its subsidiaries)
shall have the right, immediately prior to such dissolution or liquidation, to
exercise the Option to the extent exercisable on the date of such dissolution or
liquidation. No fraction of a share shall be purchasable or deliverable upon
exercise, but in the event any adjustment hereunder of the number of shares
covered by the Option shall cause such number to include a fraction of a share,
such number of shares shall be adjusted to the nearest smaller whole number of
shares. In the event of changes in the outstanding Stock by reason of any stock
dividend, split-up, contraction, reclassification, or change of outstanding
shares of the Stock of the nature contemplated by this Section 17, the number of
shares of the Stock available for the purpose of the Plan as stated in Section 4
shall be correspondingly adjusted.
18. Reservation of Stock. The Company shall at all times during the term
of the Plan reserve or otherwise keep available such number of shares of the
Stock as will be sufficient to satisfy the requirements of the Plan and shall
pay all fees and expenses necessarily incurred by the Company in connection
therewith.
19. Limitation of Rights in the Stock: No Special Employment or Other
Rights. The Optionee shall not be deemed for any purpose to be a stockholder of
the Company with respect to any of the shares of Stock covered by an Option,
except to the extent that the Option shall have been exercised with respect
thereto and, in addition, a certificate shall have been issued therefor and
delivered to the Optionee. Any Stock issued pursuant to the Option shall be
subject to all restrictions upon the transfer thereof which may be now or
hereafter imposed by the Certificate of Incorporation or the By-laws of the
Company or by any Stock Purchase Agreement between the Company and one or more
Optionees. Nothing contained in the Plan or in any Option shall confer upon any
Optionee any right with respect to the continuation of his or her employment
with, or retention as a consultant by, the Company (or any subsidiary), or
interfere in any way with the right of the Company (or any subsidiary), subject
to the terms of any separate employment or consulting agreement or provision of
law or corporate articles or by-laws to the contrary, at any time to terminate
such employment or consulting agreement or to increase or decrease the
compensation of the Optionee from the rate in existence at the time of the grant
of an Option.
20. Termination and Amendment of the Plan. The Board may at any time
terminate the Plan or make such modifications of the Plan as it shall deem
advisable. No termination or amendment of the Plan may, without the consent of
the Optionee to whom any Option shall theretofore have been granted, adversely
affect the rights of such Optionee under such Option.
<PAGE> 9
21. Notices and Other Communications. All notices and other communications
required or permitted under the Plan shall be effective if in writing and if
delivered or sent by certified or registered mail, return receipt requested (a)
if to the Optionee, at his or her residence address last filed with the Company,
and (b) if to the Company at 11 Hurley Street, Cambridge, Massachusetts 02141
Attention: Chief Financial Officer, with a copy to the Secretary of the Company,
presently, Justin P. Morreale, Esq., Bingham Dana LLP, 150 Federal Street,
Boston, Massachusetts 02110 or to such other persons or addresses as the
Optionee or the Company may specify by a written notice to the other from time
to time.
<PAGE> 1
EXHIBIT 10.33
December 3, 1998,
as amended and restated
as of June 24, 1999
Mr. Daniel R. Davis
11385 Homedale Street
Los Angeles, CA 90049
Dear Daniel,
It gives me great pleasure to offer you the position of Chief Financial Officer
and Senior Vice President, reporting to Carl Rausch, Chairman of the Board,
President and CEO with a start date to be as of December 7, 1998.
This position is being offered at the exempt rate of $6,539 per pay period. With
26 pay periods per year, this would equate to an annualized salary of $170,014.
You will also be entitled to the following:
- - Participation in Biopure's Management Bonus Program. This is a
non-guaranteed, discretionary plan based on individual and corporate
achievement typically paid out during the first quarter of the new
fiscal year for last fiscal year performance. Your participation for
1998 will be on a prorated basis since you will not have worked for
Biopure during the entire fiscal year of 1998.
- - Subject to Board of Director approval, you will receive an option to
purchase 75,000 shares of Biopure common stock granted as of December
3, 1998, with an exercise price of $6.667 per share and an option to
purchase one hundred thousand (100,000) shares of Biopure common stock
as of February 1, 1999, with an exercise price of $12.00 per share.
- - Vesting is 25% per year with 10 years to exercise options.
- - New incentive options shall be provided following the IPO or earlier
liquidity event which will be 75,000 shares. These options will strike
at a price consistent with those offered to other senior members of the
corporation.
- - Three weeks paid vacation plus customary holidays and
sick/personal days.
- - The Company will reimburse you for up to $20,000 of
relocation expenses, plus gross up, which you incur in
relocating to Massachusetts. Expenses should be reasonable,
<PAGE> 2
Mr. Daniel R. Davis
Page 2
December 3, 1998
supported by actual receipts, and may include costs
associated with: a) packing, shipping and storage of
household goods; b) house hunting; c) travel; d) temporary
living; e)closing costs for your present residence; f)
closing costs for your new residence. Further, by signing
this document, you agree to reimburse the Company in full
for relocation expenses reimbursed if you voluntarily leave
the Company during your first year of employment and 50% of
relocation expenses reimbursed if you voluntarily leave the
Company during your second year of employment.
As conditions of employment, you are required to:
a. Successfully complete a standard medical examination prior to
commencing employment. This medical exam is typically given by a local
medical group retained by Biopure but due to your location, we can
provide the appropriate forms for your private physician to complete
and return to our attention. The standard medical exam will be
reimbursed by Biopure.
b. In accordance with the 1986 Immigration and Control Act ("RCA"),
demonstrate that you have a lawful right to work in the United States.
c. Sign a standard "Employee Agreement Concerning Protection of Company
Property and the Arbitration of Legal Disputes". A copy of this
agreement is attached for your review and signature. Please read it
carefully.
On behalf of Carl and myself, we are looking forward to your joining the Biopure
team.
Sincerely,
Carolyn R. Fuchs
Vice President,
Human Resources
Accepted:
/s/ Carolyn R. Fuchs
- ---------------------
Date:
<PAGE> 3
[ON BIOPURE CORPORATION LETTERHEAD]
February 23, 1999
Mr. Daniel R. Davis
Biopure Corporation
11 Hurley Street
Cambridge, Massachusetts 02141
Dear Daniel:
This letter is intended to amend and clarify your employment agreement
with Biopure Corporation set forth in a letter dated December 3, 1998 (the
"Letter").
The amendment and clarification relate only to the options to be
granted to you, as set forth in the second bullet point of the Letter. Now, you
and Biopure have agreed as follows: you will receive an option to purchase
seventy-five thousand (75,000) shares of Biopure common stock granted as of
December 3, 1998, with an exercise price of $6.6667 per share and an option to
purchase one hundred thousand (100,000) shares of Biopure common stock as of
February 11, 1999, with an exercise price of $12.00 per share.
The previous paragraph replaces the second bullet point of the letter;
in all other respects the letter remains in full force and effect. Please note,
however, that the number of shares subject to "incentive" options both in the
grants described above and following the Company's IPO or other liquidity event,
will be limited by applicable Federal income tax law.
If you agree with the foregoing, please sign below.
Sincerely,
BIOPURE CORPORATION
By:/s/ Carolyn R. Fuchs
Carolyn R. Fuchs
Vice President
Human Resources
Accepted:
/s/ Daniel R. Davis
Date: 2/24/99
<PAGE> 1
EXHIBIT 10.34
EMPLOYMENT AGREEMENT
THIS AGREEMENT (this "Agreement"), dated as of June 9, 1999,
is made by and between Biopure Corporation, a Delaware corporation, having its
principal place of business at 11 Hurley Street, Cambridge, MA (the "Company"),
and Mr. Paul A. Looney residing at 9 Pheasant Lane, Lexington MA 02421 (the
"Executive").
Recitals
1. The Company desires to employ the Executive as the
President of the Company and to enter into an agreement with the Executive
embodying the terms of that relationship.
2. The Executive is willing to accept such employment by the
Company on the terms set forth herein.
Agreement
NOW, THEREFORE, in consideration of the mutual covenants and
premises herein contained, and other good and valuable consideration, the
Company and the Executive hereby agree as follows.
1. Certain Definitions.
1.1 "Effective Date" shall mean July 1, 1999.
1.2 "Employment Period" shall mean the period
commencing on the Effective Date and ending on the third anniversary of such
date, as further extended in accordance with the provisions of this Section 1.2.
The Employment Period (as it may have been extended pursuant to the provisions
of this sentence) shall be extended or further extended, as the case may be,
without any action by the Company or the Executive, on the first anniversary of
the Effective Date and on each subsequent anniversary thereof for an additional
period of one year, unless and until either party gives written notice to the
other party at least six months in advance of any such anniversary that the
Employment Period in effect when such notice is given is not to be extended or
further extended, as the case may be.
<PAGE> 2
1.3 "Board" shall mean the Board of Directors of
the Company.
2. Employment.
Subject to the terms and conditions provided
herein, the Company hereby agrees, during the Employment Period, to employ the
Executive as its President. The Executive hereby agrees to accept such
employment during the Employment Period. The Company agrees to nominate
Executive as a member of the Board and to use all reasonable efforts to cause
him to be elected to serve throughout the Employment Period. Promptly after the
Effective Date, the Company shall propose to the Board that there be elected an
Executive Committee that will include the Executive as a member.
3. Employment Duties. During the Employment Period, the
Executive shall have such duties and responsibilities as are assigned to the
Executive by the Board and are consistent with his status as President.
Executive shall be the chief operating officer of the Company and shall have
general supervision, direction and control of the operations of the business of
the Company, except that the legal function shall report to the Chief Executive
Officer of the Company and the Chief Executive Officer of the Company shall have
the right to direct the activities of the Chief Financial Officer from time to
time as needed to assist the Chief Executive Officer. The Executive shall report
on all activities of the Company to the Chief Executive Officer, who shall have
the general powers and duties of supervision and management usually vested in
the office of the Chief Executive Officer of the Corporation. During the
Employment Period, but excluding any periods of vacation and sick leave, the
Executive agrees to devote substantially all his business attention and time to
the business and affairs of the Company and its subsidiaries, and to use the
Executive's best efforts to perform faithfully and efficiently the duties and
responsibilities assigned to the Executive under this Section 3. It is expressly
understood that (a) the Executive may devote a reasonable amount of time to such
industry associations and charitable and civic endeavors as shall not interfere
with the obligation set forth in the preceding sentence, and (b) with the prior
approval of the Board (which shall not be unreasonably withheld), the Executive
may serve as a member of one or more boards of directors of companies that are
not affiliated with the Company.
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<PAGE> 3
4. Compensation.
4.1 Base Salary. During the Employment Period,
the Company shall pay the Executive a base salary (the "Base Salary") of no less
than $295,000 per annum, payable in accordance with the Company's normal payroll
practices. The Base Salary shall be considered for increase at least once each
year, in accordance with the Company's regular review of senior executive
salaries.
4.2 Incentive, Savings and Retirement Plans.
During the Employment Period, the Executive shall participate in and receive all
benefits under all bonus, short- or long-term incentive plans and programs
maintained by the Company from time to time on or after the Effective Date for
the benefit of senior executives of the Company. During the Employment Period,
the Executive shall participate in and receive all benefits under all savings
and retirement plans and programs maintained by the Company from time to time on
or after the Effective Date for the benefit of senior executives of the Company.
4.3 Welfare Benefit Plans. During the Employment
Period, the Executive and/or the Executive's family, as the case may be, shall
participate in and receive all benefits under all welfare benefit plans and
programs maintained by the Company from time to time on or after the Effective
Date for the benefit of senior executives of the Company.
4.4 Vacation; Fringe Benefits. During the
Employment Period, the Executive shall be entitled to paid vacation in
accordance with the vacation policy maintained by the Company from time to time
on or after the Effective Date for senior executives of the Company. During the
Employment Period, the Executive shall receive such perquisites and fringe
benefits as are generally provided to senior executives of the Company.
4.5 Stock Option Grant. Within a reasonable
period of time, and in any case no later than the earlier of the closing of the
Company's initial public offering or six months after the Effective Date, the
Executive shall be granted stock options entitling the Executive to acquire
350,000 shares of the Company's common stock. Such options shall be for a term
of 10 years, and upon death or termination of employment, shall provide for
continued exercisability for a period of one year. Such options shall be or
become exercisable in respect of 100% of the aggregate number of shares
underlying such options upon the change in control (as defined in such option)
of the Company and upon the Executive's (a) death, (b) Disability (as defined in
Section 5.1 hereof), (c) retirement under the terms of any retirement plan of
the Company applicable to him, (d) termination of employment by the Company for
reasons other than Cause, or (e) voluntary termination of employment for Good
Reason. Prior to any such event, such options shall be or become exercisable in
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respect of the aggregate number of such shares underlying such
option as follows:
25% .............. on the first anniversary of
the Effective Date;
50% .............. on the second anniversary of
the Effective Date.
75% .............. on the third anniversary of
the Effective Date;
100% .............. on the fourth anniversary of
the Effective Date.
5. Termination.
5.1 Death or Disability. The Employment Period
shall terminate automatically upon the Executive's death. If, during the
Employment Period, the Disability (as defined below) of the Executive has
occurred, the Company may give to the Executive written notice of its intention
to terminate the Executive's employment due to such Disability. The Executive's
employment with the Company shall be terminated by the Company on the 30th day
after receipt by the Executive of such notice (the "Disability Effective Date"),
if, within such thirty (30) day period, the Executive shall not have returned to
full-time performance of the Executive's duties. For purposes of this Agreement,
"Disability" means a physical or mental disability resulting in the complete,
total and permanent inability of the Executive to perform his duties under this
Agreement, as determined by a physician selected in good faith by the Company
and approved in good faith by the Executive.
5.2 Cause. During the Employment Period, the
Company, by action of the Board, may terminate the Executive's employment
hereunder for "Cause". For purposes of this Agreement, "Cause" means (a) an act
or acts of material personal dishonesty taken by, or committed at the request
of, the Executive, intended to result in the personal enrichment of the
Executive at the expense of the Company, or any of its subsidiaries, which
results in material damage to the Company, (b) repeated willful violations by
the Executive of the Executive's obligations under this Agreement which have not
been cured within thirty (30) days after a written Notice of Termination setting
forth such violations has been given by the Board to the Executive, or (c) the
conviction of the Executive of a felony.
5.3 Without Cause. During the Employment Period,
the Company, by action of the Board, may terminate, upon thirty
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<PAGE> 5
(30) days' advance written notice given to the Executive, the Executive's
employment hereunder other than for Cause.
5.4 Termination by Executive for Good Reason.
During the Employment Period the Executive may terminate employment hereunder
for Good Reason. For purposes of this Agreement, "Good Reason" shall mean: (a)
the reduction of the Executive's Base Salary, (b) the changing, without his
consent, of the Executive's title, authority, duties or responsibilities as
specified in Section 3, (c) the Company requiring the Executive, without his
consent, to be based in any office or location other than the Company's
headquarters office, or (d) the material breach by the Company of any provision
of this Agreement which has not been cured within thirty (30) days after a
Notice of Termination has been given by the Executive to the Company.
5.5 Date of Termination. "Date of Termination"
shall mean the date of receipt of a notice of termination or any later date
specified therein (which date shall be not more than fifteen (15) days after the
giving of such notice); provided, however, that (a) if the Executive's
employment is terminated by the Company, other than for Cause or Disability, the
Date of Termination shall be the thirtieth day after the date on which the
Company notifies the Executive in writing of such termination under Section 5.3,
(b) if the Executive's employment is terminated by the Company for Cause as
defined in clause (b) of the second sentence of Section 5.2, the Date of
Termination shall be the thirtieth day after the Notice of Termination is given
(provided that the Executive has not cured his violations of his obligations
under this Agreement prior to such thirtieth day), (c) if the Executive's
employment is terminated for Good Reason as defined in Section 5.4, the Date of
Termination shall be the thirtieth day after the Notice of Termination is given
(provided that the Company has not cured its breach of this Agreement prior to
such thirtieth day), (d) if the Executive's employment is terminated voluntarily
by the Executive other than for Good Reason, the Date of Termination shall be
the date on which the Executive notifies the Company of such termination (or the
date on which the Company otherwise first learns of such voluntary termination),
and (e) if the Executive's employment is terminated by reason of death or
Disability, the Date of Termination shall be the date of death of the Executive
or the Disability Effective Date, as the case may be.
6. Obligations of the Company upon Termination.
6.1 Death. If the Executive's employment is
terminated by reason of the Executive's death, the Employment Period shall
terminate on the date of death, and the Executive, or the Executive's legal
representatives, as the case may be, shall be entitled to receive (a) the
Executive's Base Salary through the Date of Termination, (b) any compensation
previously
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<PAGE> 6
deferred by the Executive (together with any accrued interest thereon) and not
yet paid by the Company, and (c) any accrued vacation pay not yet paid by the
Company (such amounts specified in clauses (a), (b), and (c) are hereinafter
referred to as the "Accrued Obligations"). All such Accrued Obligations shall be
paid to the Executive's estate or beneficiary, as applicable, in a lump sum in
cash within thirty (30) days after the Date of Termination. In addition, the
Executive's family shall be entitled to receive any family death benefits
provided by the Company to surviving families of senior executives (or, if more
favorable, other employees) of the Company under the plans and programs, if any,
then maintained by the Company.
6.2 Disability. If the Executive's employment is
terminated by reason of the Executive's Disability, the Employment Period shall
terminate on the Date of Termination and the Executive shall be entitled to
receive all Accrued Obligations. All such Accrued Obligations shall be paid to
the Executive in a lump sum in cash within thirty (30) days after the Date of
Termination. In addition, the Executive shall be entitled as of the Disability
Effective Date to receive the disability benefits provided by the Company to
disabled senior executives (or, if more favorable, other employees) of the
Company under the plans and programs, if any, then maintained or provided by the
Company, as if the Executive were disabled as of the Disability Effective Date
within the meaning of such plans and programs and regardless of whether the
Executive is actually disabled within the meaning of such plans and programs.
6.3 Cause; Voluntarily. If the Executive's
employment shall be terminated for Cause by the Company or by the Executive
voluntarily, the Employment Period shall terminate on the Date of Termination
and the Executive shall be entitled to receive all Accrued Obligations. All such
Accrued Obligations shall be paid to the Executive in a lump sum in cash within
thirty (30) days after the Date of Termination.
6.4 Other Than for Cause or Disability or
Termination by the Executive for Good Reason. If, during the Employment Period,
the Company terminates the Executive's employment (other than for death, Cause
or Disability), or the Executive terminates his employment for Good Reason, the
Employment Period shall not terminate until it otherwise would in accordance
with the provisions of Section 1.2 and the Executive shall be entitled to
receive, within thirty (30) days after the Date of Termination, the following:
(a) The Company shall pay to the Executive
all Accrued Obligations.
(b) The Company shall pay to the Executive a
lump sum payment equal to (i) the amount of Base
Salary the Executive would have been paid pursuant
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<PAGE> 7
to Section 4.1 had he remained in employment with the
Company in accordance with the terms of this
Agreement for the period from the Date of Termination
to the end of the Employment Period, plus (ii) the
amount (if any) determined by multiplying (A) the
average annual incentive award awarded to the
Executive for the three most recent fiscal years
ending in the Employment Period, or all fiscal years
ending in the Employment Period if less than three,
(for purposes of this clause (A), the incentive award
for 1999 shall be deemed to be 15% of Base Salary) by
(B) the greater of one or a fraction, the numerator
of which is the number of days remaining from the
Date of Termination to the end of the Employment
Period and the denominator of which is 365.
(c) The Company shall pay to or provide the
Executive with the benefits under the Company
Retirement Plan (including without limitation
additional benefit accruals), and all other
retirement, savings and welfare benefit plans and
programs maintained by the Company as of the Date of
Termination, that he would have received had he
remained in employment with the Company in accordance
with the terms of this Agreement for the period from
the Date of Termination to the end of his Employment
Period.
(d) The parties recognize and agree that, if
the Company terminates the Executive's employment
during the Employment Period other than for
Disability or Cause or if the Executive terminates
his employment during the Employment Period for Good
Reason, the actual damages to the Executive would be
difficult if not impossible to ascertain and agree
that the Executive's sole remedy shall be a right to
receive amounts determined and paid in accordance
with the provisions of this Section 6.4. The
Executive shall not be required to mitigate the
amount of any payment provided for in this Section
6.4 by seeking other employment or otherwise, nor
shall any compensation earned by the Executive in
other employment or otherwise reduce the amount of
any payment provided for in this Section 6.4.
6.5 Full Satisfaction. The payments received by
the Executive (or his legal representatives) under this Agreement that are
attributable to the termination of the Executive's employment shall be in full
and complete satisfaction of any and all claims the Executive (or his legal
representatives) may have
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<PAGE> 8
against the Company which are, in any way, related to the employment
relationship between the Executive and the Company.
7. Other Payments. Notwithstanding anything to the contrary
contained herein (including without limitation Section 6.5), any compensation or
benefits, if any, which are vested in the Executive or which the Executive is
otherwise entitled to receive under any plan or program of the Company before,
at or subsequent to the Date of Termination shall be payable in accordance with
the terms and provisions of such plan or program.
8. Confidential Information. During the Employment Period, the
Executive shall hold in a fiduciary capacity for the benefit of the Company and
its subsidiaries all secret, proprietary or confidential information, knowledge
or data relating to the Company or its subsidiaries, and their respective
businesses, which shall have been obtained by the Executive. After termination
of the Executive's employment with the Company, the Executive shall not, without
the prior written consent of the Company, use, communicate or divulge any such
information, knowledge or data to anyone at any time.
9. Non-Competition. During the Executive's employment with the
Company, and for one year thereafter, the Executive agrees that, without the
prior written consent of the Company, (a) the Executive shall not, directly or
indirectly, either as principal, manager, agent, consultant, officer,
stockholder, partner, investor, lender or employee, or in any other capacity,
carry on or engage in, or advise or have any financial interest in any company
that carries on or engages in, business which is in competition with any
business of the Company or its subsidiaries, (b) the Executive shall not, on his
own behalf or on behalf of any person, firm or company, directly or indirectly,
solicit for employment any person that has been employed by the Company or any
of its subsidiaries at any time during the one (1) year period immediately
preceding such solicitation, and (c) the Executive shall not, on his own behalf
or on behalf of any competitor of the Company or its subsidiaries, directly or
indirectly, solicit or divert the business of any person or entity which was a
customer (or a prospective customer) of the Company or any of its subsidiaries
at any time during the Executive's employment with the Company or as of the
Executive's Date of Termination. Anything in this Section 9 to the contrary
notwithstanding, the Executive may invest in stock, bonds, or other securities
of any business in competition with the Company (but without otherwise
participating in such competition with the Company) if (a) such stock, bonds, or
other securities are listed on any national or regional securities exchange or
have been registered under Section 12(g) of the Securities Exchange Act of
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<PAGE> 9
1934, as amended, and (b) his investment does not exceed, in the case of any
class of the capital stock of any one issuer, three percent (3%) of the issued
and outstanding shares, or, in the case of other securities, three percent (3%)
of the aggregate principal amount thereof issued and outstanding.
10. Survival; Injunctive Relief.
10.1 Survival. The Executive agrees that
Sections 8 and 9 of this Agreement shall survive the termination of (a) this
Agreement, (b) the Employment Period and/or (c) the Executive's employment with
the Company. The Executive acknowledges that the Company has no adequate remedy
at law and would be irreparably harmed if the Executive breaches or threatens to
breach any of the provisions of Sections 8 or 9 of this Agreement, and,
therefore, agrees that the Company shall be entitled to injunctive relief to
prevent any such breach or threatened breach thereof, and to specific
performance of the terms of such sections (in addition to any other legal or
equitable remedy the Company may have). The Executive further agrees that the
Executive shall not, in any equity proceeding relating to the enforcement of
Sections 8 or 9 of this Agreement, raise the defense that the Company has an
adequate remedy at law. Nothing in this Agreement shall be construed as
prohibiting the Company from pursuing any other remedies at law or in equity
that it may have under and in respect of this Agreement or any other agreement
or understanding.
10.2 Reasonable Restrictions. All of the
provisions of this Agreement, including, without limitation, Sections 8 and 9,
are intended by the parties hereto as separate and divisible provisions and if,
for any reason, any one of them (or part thereof) is held to be invalid or
unenforceable neither the validity nor the enforceability of any other provision
(or part thereof) shall be affected thereby. The Executive agrees that the
restrictions imposed by Section 9 are reasonable in both geographic scope and
duration. The Executive understands that the provisions of Sections 8 and 9 of
this Agreement may affect or limit the Executive's ability to earn a livelihood
in a business similar to the businesses engaged in by the Company (or any of its
subsidiaries), but the Executive nevertheless believes and agrees that the
Executive shall receive (or shall have received) sufficient consideration,
remuneration and other benefits from the Company to make enforceable the
restrictions and limitations contained in Sections 8 and 9 of this Agreement.
10.3 Judicial Restatement. If for any reason any
court of competent jurisdiction shall find the provisions of Section 9 of this
Agreement unreasonable in geographic scope or duration, the Executive and the
Company agree that the restrictions and limitations contained in Section 9 shall
be restated so that they are effective and enforceable to the
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<PAGE> 10
fullest extent allowed or allowable under the applicable law of any such
jurisdiction. It is further agreed by the Executive and the Company that any
judicial restraints ordered by any such court in respect of the restrictions and
limitations imposed by Section 9 of this Agreement shall be applicable and
effective only with respect to such particular jurisdiction in which such order
is made.
11. Successors. This Agreement is personal to the Executive.
Without the prior written consent of the Company it shall not be assignable by
the Executive otherwise than by will or the laws of descent and distribution.
This Agreement shall inure to the benefit of, and be enforceable by, the
Executive's legal representatives. This Agreement shall inure to the benefit of
and be binding upon the Company and its successors and assigns. The Company will
require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and
assets of the Company to assume expressly and agree to perform this Agreement in
the same manner and to the same extent that the Company would be required to
perform it if no such succession had taken place.
12. Miscellaneous. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Massachusetts,
without reference to principles of conflict of laws thereunder. The captions of
this Agreement are not part of the provisions hereof and shall not have any
force or effect. This Agreement may not be amended or modified otherwise than by
a written agreement executed by the parties hereto or their respective
successors and legal representatives. All notices and other communications
hereunder shall be in writing and shall be given by facsimile transmission, hand
delivery to the other party or by registered or certified mail, return receipt
requested, postage prepaid, to the addresses set forth above (in the case of the
Company, to the attention of the Chairman) or to such other address as either
party shall have furnished to the other in writing in accordance herewith. Any
such notice and communications shall be effective when actually received by the
addressee. The Company may withhold from any amounts payable under this
Agreement such federal, state or local taxes as shall be required to be withheld
pursuant to any applicable law or regulation. This Agreement contains the entire
understanding of the Company and the Executive with respect to the subject
matter hereof.
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<PAGE> 11
IN WITNESS WHEREOF, the Executive has hereunto set his hand
and, pursuant to the authorization of its Board of Directors, the Company has
caused these presents to be executed in its name and on its behalf, all as of
the day and year first above written.
BIOPURE CORPORATION
By: /s/ Carl W. Rausch
------------------------------
Name: Carl W. Rausch
------------------------------
Title: Chairman, Chief Executive
Officer and President
------------------------------
/s/ Paul A. Looney
-------------------------------------
Paul A. Looney
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<PAGE> 1
EXHIBIT 10.35
BIOPURE CORPORATION
EMPLOYEE AGREEMENT CONCERNING PROTECTION OF
COMPANY PROPERTY AND THE ARBITRATION
OF LEGAL DISPUTES
AGREEMENT dated as of _____________________________, 1999, by and between
(the "Employee") and Biopure Corporation (the "Company").
INTRODUCTION. The principal purpose of this Agreement is to acknowledge
certain of the Employee's responsibilities relating to the protection of
confidential information and inventions and protection of the business of the
Company from competition for limited periods. Since these matters are vital to
the preservation and development of the Company's business, both the Company and
its employees have a common interest and responsibility in carrying out this
Agreement.
In this Agreement, the Employee acknowledges, among other things, that any
innovations, inventions, or discoveries which are made by the Employee in
connection with his(1) employment, are the exclusive property of the Company. In
addition, the Employee agrees to hold and maintain confidential certain secret,
confidential and/or proprietary information which is the property of the
Company, to return all such information to the Company when he leaves the employ
of the Company and not to compete with the Company during his employment and for
a limited period thereafter. The formal details of these and certain other
agreements are set forth below.
This Agreement further provides that with the exception of the Company's
right to seek injunctive relief and damages in court to restrain and remedy
violations of this Agreement, all legal disputes arising between the Employee
and the Company which cannot be resolved informally shall be determined through
final and binding arbitration in accordance with Biopure's "Mandatory Policy
Regarding Resolution of Legal Disputes," a copy of which is attached hereto, and
the terms of which are incorporated herein.
This Agreement is important because it confirms and creates certain
obligations which are binding on the Employee, and provides a mechanism for
resolving legal disputes between the Company and the Employee; it should be read
completely and carefully before being signed.
- --------------
(1) Masculine pronouns are used solely for convenience of reference, and are
intended to have general application.
<PAGE> 2
In consideration of, and as part of the terms of, the employment or
continued employment of the Employee by the Company, the compensation paid and
to be paid by the Company to the Employee, the entrusting to the Employee of
certain of the Company's trade secrets and proprietary information, and the
mutual covenants and promises set forth herein, the Employee and the Company
agree as follows:
1. CONFIDENTIAL INFORMATION. The Employee recognizes and acknowledges that
the Company's trade secrets, know-how and proprietary processes as they may
exist from time to time (including, without limitation, information regarding
methods, processes, synthesis techniques, protein and nucleic acid sequences,
purification techniques and assay procedures) as well as the Company's
confidential business plans and financial data, and confidential information
belonging to third parties which may from time to time be disclosed or made
available to the Company (together, "Confidential Information") are valuable,
special and unique assets of the Company's business. Without the Company's
express prior written consent, the Employee will not, at any time during or
after his employment by the Company, use any Confidential Information for
himself or others, or disclose or communicate any Confidential Information to
any third party for any purpose whatsoever.
2. EXTENT OF SERVICES; NON-COMPETITION. The Employee will devote his best
efforts, attention and energies to the Company's business. During the period of
employment and for five years thereafter, the Employee will not, directly or
indirectly, engage in (or own interest in any entity which engages in)
activities in competition with the business or potential business of the
Company. In addition, during the same period, the Employee will not, directly or
indirectly, solicit, hire, or attempt to persuade any employee or agent of, or
consultant to, the Company to terminate his relationship with the Company. The
time period provided for herein shall be extended for any period of time in
which the Employee is in violation of any of the provisions of this Section.
3. INVENTIONS. All discoveries, inventions, improvements (including, but
not limited to, all processes, technologies and procedures, ideas and
innovations, whether or not patentable or copyrightable including all data and
records pertaining thereto), which the Employee may invent, discover, originate,
make or conceive during the term of his employment and for a period of six
months thereafter, either alone or with others and whether or not during working
hours or by the use of facilities of the Company, and which arise out of
research conducted by, for or under the direction of the Company or which relate
to, or are or may be likely be, useful in connection with the business of the
Company. The Employee will promptly and fully disclose Inventions to the
Company, and will promptly record Inventions in such form as the Company may
request. The Employee will assign to the Company all right, title and interest
to all Inventions reduced to writing, drawings or practice by or for the
Employee, or an assignee or successor, within six months after termination of
employment. This Agreement shall not be construed to limit in any way any "shop
rights" or other common law or contractual rights of the Company with respect to
any Inventions or Confidential Information, which the Company has or may have by
virtue of the Employee's employment or otherwise.
<PAGE> 3
The Employee will execute upon the Company's request at any time, and at
the Company's expense, any applications, assignments and other documents that
the Company may deem necessary or desirable to protect or perfect its rights
(including any patent rights) in the Inventions, and will assist the Company, at
the Company's expense, in obtaining, defending, and enforcing its rights
therein, all without further compensation or payments to the Employee. The
Employee hereby appoints the Company his attorney-in-fact for purposes of
effecting any or all of the foregoing.
4. TERMINATION; RETURN OF DOCUMENTS. All originals, copies and summaries
of manuals, memorandums, notes, 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 Company, whether or not
they contain Confidential Information, are and shall continue to be the property
of the Company, and all of such documents or items in the possession or under
the control of the Employee will be delivered to the Company by the Employee
immediately upon termination of his employment.
5. FREEDOM TO CONTRACT, The Employee represents that he is free to enter
into this Agreement, that he has not and will not become subject to any
agreement in conflict with this Agreement, and that he will not disclose to the
Company or use for the Company's benefit any trade secrets or confidential
information which is the property of another party.
6. RESOLUTION OF LEGAL DISPUTES THROUGH BINDING ARBITRATION. Any legal
dispute arising between the Employee and the Company (other than a claim by the
Company that the Employee has committed an actual or threatened breach, default
or violation of the provisions set forth in paragraphs 1 through 4 hereof),
which legal dispute or claim cannot be resolved informally, shall be resolved
through final and binding arbitration in accordance with the Employment Dispute
Resolution Rules of the American Arbitration Association in effect as of
November 1, 1993, as amended by Biopure's "Mandatory Policy Regarding Resolution
of Legal Disputes." "Legal dispute" when applied to an employee claim means a
claim by an employee that Biopure Corporation or one of its agents has breached
a legal obligation to the employee by violating a statute, regulation or common
law obligation applicable in the employment relationship. Nothing in this
Agreement shall be construed to alter the nature of the employment relationship
between the Company and the Employee, or to confer on the Employee any right of
continued employment for a particular term of time or to require cause for the
termination of the employment relationship.
7. ENFORCEMENT. The Employee agrees and acknowledges that the Company will
suffer irreparable injury and damage and cannot be reasonably or adequately
compensated in monetary damages for the loss by the Company of its benefits or
rights under this Agreement as the result of a breach, default or violation by
the Employee of his obligations under paragraph 1 through 4, hereunder.
Accordingly, the Company shall be
<PAGE> 4
entitled, in addition to all other remedies which may be available equitable
relief in any court of competent jurisdiction to prevent or otherwise restrain
or terminate any actual or threatened breach, default or violation by the
Employee of any provision contained in paragraphs 1 through 4 hereof or to
enforce any such provision.
8. MISCELLANEOUS. This Agreement shall inure to the benefit of and be
binding upon the parties' successors, assigns and legal representatives,
provided, however, that the Employee's obligations under this Agreement may not
be assigned. This Agreement may be executed in two or more counterparts, all of
which together shall constitute a single agreement. This Agreement together with
the Company's "Mandatory Policy Regarding Resolution of Legal Disputes," which
is incorporated herein by reference, constitute the sole and entire agreement
and understanding of the parties with respect to the subject matter hereof. No
prior or contemporaneous agreement, whether written or oral, shall be construed
to change, amend, alter, repeal or invalidate this Agreement. A waiver by one
party of a breach of this Agreement by the other party shall not be construed as
a waiver of any subsequent or similar breach. This Agreement may be amended or
terminated only by written agreement of both parties hereto.
IN WITNESS WHEREOF, the parties have signed this Agreement as of the date first
written above as a sealed instrument to be governed by the laws of the
Commonwealth of Massachusetts.
EMPLOYEE: COMPANY:
BIOPURE CORPORATION
____________________________________ By:_________________________________
(Signature) Title:______________________________
____________________________________
(Print Name)
<PAGE> 1
Exhibit 23.1
Consent of Ernst & Young LLP, Independent Auditors
We consent to the reference to our firm under the captions "Summary
Consolidated Financial Data", "Selected Consolidated Financial Data", and
"Experts" and to the use of our report dated December 11, 1998 (except for Note
14, as to which the date is January 27, 1999) in the Registration Statement
(Form S-1 No. 333-78829) and related Prospectus of Biopure Corporation.
Ernst & Young LLP
Boston, Massachusetts
July , 1999
The foregoing consent is in the form that will be signed upon the completion of
the reverse stock split described in Note 2 to the consolidated financial
statements.
/s/ Ernst & Young LLP
Boston, Massachusetts
June 24, 1999
<PAGE> 1
Exhibit 23.2
Consent of Paul A. Looney
I, Paul A. Looney, consent to the inclusion of my name as a prospective
director of Biopure Corporation under the caption "Management -- New Directors"
in the Registration Statement on Form S-1 (File No. 333-78829) for the
registration of shares of its class A common stock.
/s/ Paul A. Looney
-----------------------------------
Paul A. Looney
June 21, 1999
<PAGE> 1
Exhibit 23.3
Consent of Daniel P. Harrington
I, Daniel P. Harrington, consent to the inclusion of my name as a prospective
director of Biopure Corporation under the caption "Management -- New Directors"
in the Registration Statement on Form S-1 (File No. 333-78829) for the
registration of shares of its class A common stock.
/s/ Daniel P. Harrington
------------------------------------
Daniel P. Harrington
June 21, 1999
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