AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 23, 1996
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Boston Biomedica, Inc.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MASSACHUSETTS
(STATE OR OTHER JURISDICTION OF
INCORPORATION OR ORGANIZATION)
2835
(PRIMARY STANDARD INDUSTRIAL
CLASSIFICATION CODE NUMBER)
04-2652826
(I.R.S.
EMPLOYER
IDENTIFICATION
NUMBER)
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375 WEST STREET, WEST BRIDGEWATER, MASSACHUSETTS 02379 (508) 580-1900
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
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RICHARD T. SCHUMACHER,
PRESIDENT AND CHIEF EXECUTIVE OFFICER
BOSTON BIOMEDICA, INC.
375 WEST STREET
WEST BRIDGEWATER, MASSACHUSETTS 02379
(508) 580-1900
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA
CODE, OF AGENT FOR SERVICE)
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COPIES TO:
STEVEN R. LONDON, ESQ. PAUL JACOBS, ESQ.
BROWN, RUDNICK, FREED & GESMER FULBRIGHT & JAWORSKI L.L.P.
ONE FINANCIAL CENTER 666 FIFTH AVENUE
BOSTON, MASSACHUSETTS 02111 NEW YORK, NEW YORK 10103
TEL: (617) 856-8200 TEL: (212) 318-3000
FAX: (617) 856-8201 FAX: (212) 752-5958
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement is declared effective by the
Securities and Exchange Commission.
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. [x]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS AGGREGATE REGISTRATION
OF SECURITIES TO BE REGISTERED OFFERING PRICE[F1] FEE
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<S> <C> <C>
Common Stock, $.01 par value $22,080,000 $7,614
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Underwriters' Warrants(2) $ 160
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Common Stock, $.01 par
value(3)(4) $ 2,592,000 $ 894
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TOTAL $8,509
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</TABLE>
(1) Estimated solely for the purpose of determining the registration fee
pursuant to Rule 457(o) under the Securities Act of 1933.
(2) To be sold by the Company to the Underwriters. No additional
registration fee is included pursuant to Rule 457(g).
(3) Issuable upon exercise of the Underwriters' Warrants.
(4) Such presently indeterminate number of additional shares of Common
Stock, $.01 par value, are registered hereunder as may be issued in the
event certain anti-dilution provisions with respect to the Underwriters'
Warrants become operational. No additional registration fee is included for
these shares.
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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.
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SUBJECT TO COMPLETION, DATED AUGUST 23, 1996
PROSPECTUS
SHARES
[LOGO]
BOSTON BIOMEDICA, INC.
COMMON STOCK
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All of the shares of Common Stock (the "Common Stock") offered
hereby are being sold by Boston Biomedica, Inc. (the "Company").
Prior to this Offering, there has been no public market for the Common Stock
of the Company. It is currently estimated that the initial public offering price
will be between $ and $ per share. See "Underwriting" for information
relating to the determination of the initial public offering price. Application
will be made to have the Common Stock approved for listing on the Nasdaq
National Market under the symbol "BBII."
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SEE "RISK FACTORS" beginning on page 6 for a discussion of certain factors that
should be considered by prospective purchasers of the Common Stock offered
hereby.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE
<TABLE>
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UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS(1) COMPANY(2)
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<S> <C> <C> <C>
Per Share $ $ $
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Total(3) $ $ $
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(1) Excludes the value of warrants to be issued to the Underwriters and a 1%
non-accountable expense allowance payable to the Underwriters, of which
$40,000 has been paid to date. The Company has agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See "Underwriting."
(2) Before deducting expenses payable by the Company estimated to be $ .
(3) The Company has granted the Underwriters an option, exercisable within 30
days of the date hereof, to purchase up to additional shares of Common
Stock at the Price to Public less Underwriting Discounts and Commissions to
cover over-allotments, if any. If all such additional shares are purchased,
the total Price to Public, Underwriting Discounts and Commissions and
Proceeds to Company will be $ , $ and $ , respectively.
See "Underwriting."
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The shares of Common Stock are offered by the Underwriters named herein,
subject to receipt and acceptance by them and subject to their right to reject
any order in whole or in part. It is expected that delivery of the certificates
representing such shares will be made against payment therefor at the office of
Oscar Gruss & Son Incorporated in New York, New York on or about , 1996.
OSCAR GRUSS & SON INCORPORATED KAUFMAN BROS., L.P.
THE DATE OF THIS PROSPECTUS IS , 1996.
Description of photograph:
Under the caption "Total Quality System," there is a collage of the Company's
products which are a part of its Total Quality System. In the upper left corner
is a photograph of a TQS Qualification Panel, proceeding clockwise to the upper
right corner is a photograph of an Accurun 1(R) vial and pipette superimposed
over a typical Levey-Jennings daily quality control chart. In the lower right
corner is a photograph of a lab technician operating equipment in one of the
Company's laboratories, and finally, in the lower left corner, is a photograph
of Anti-HIV 1 Western Blots for seven different Company Panel Products.
The BBI logo is a trademark of the Company. Accurun 1(R) is a registered
trademark of the Company. Accurun(tm) is a trademark of the Company.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
TQS Logo
TOTAL QUALITY SYSTEM
* TARGETED TO THE EMERGING END-USER MARKET FOR INFECTIOUS DISEASE TEST KIT
QUALITY CONTROL
* USER-FRIENDLY PRODUCTS FOR MONITORING LABORATORY PROFICIENCY, LOT ACCEPTANCE,
TROUBLESHOOTING AND TRAINING
* DESIGNED TO EVALUATE THE KEY ELEMENTS IN THE TESTING PROCESS: TEST KIT,
EQUIPMENT AND PERSONNEL
* ESSENTIAL PRODUCTS IN AN OVERALL QUALITY ASSURANCE PROGRAM
Photograph of four of the Company's
Quality Control Panel Products
WORLD LEADER IN QUALITY
CONTROL PRODUCTS FOR INFECTIOUS
DISEASE TESTS
* SEROCONVERSION PANELS, PERFORMANCE PANELS AND SENSITIVITY PANELS FOR THE
EVALUATION OF INFECTIOUS DISEASE TEST KITS
* KNOWN AND ACCEPTED THROUGHOUT THE WORLD BY TEST KIT MANUFACTURERS AND
REGULATORS
* DEVELOPED FROM AN EXTENSIVE INVENTORY OF HUMAN BLOOD SPECIMENS
* CONTRIBUTING TO THE IMPROVED SENSITIVITY OF INFECTIOUS DISEASE TESTS WORLDWIDE
Inside Front Cover
Title at top of page reads: "Serving Our Customer's Needs Throughout the Entire
Product Life Cycle."
Description of Photograph: Photograph is comprised of a pie chart superimposed
over photographs of the Company's products and services. The pie chart has four
sections and eight subsections. The four sections refer to the four stages in
the test kit life-cycle and are captioned: "R&D," "Regulatory," "Production" and
"Marketing." Each subsection has a corresponding photograph of a Company product
or service. The eight subsections are captioned: "Performance Panels,"
"Seroconversion Panels," "Highly Characterized Specimen Bank," "Clinical
Trials," "Characterized Disease State Sera," "Basematrix," "Run Controls" and
"OEM and Custom Panels."
Underneath the photograph are the words: "Your Partner in Infectious Disease
Quality Control" and the Company's logo is to the immediate left.
PROSPECTUS SUMMARY
The following is qualified in its entirety by the more detailed information
(including the financial statements and notes thereto) appearing elsewhere in
this Prospectus. Unless otherwise indicated, all information in this Prospectus
(i) assumes no exercise of the Underwriters' option to purchase from the Company
up to _____ additional shares of Common Stock to cover over-allotments, if any,
(ii) gives effect to a 1-for-2 reverse stock split with respect to the Common
Stock to be effected in September 1996, (iii) gives effect to certain changes to
the Company's Articles of Organization and By-Laws which are anticipated to be
approved by the Company's stockholders in September 1996, and (iv) gives effect
to the termination of certain redemption provisions relating to 117,647 shares
of Common Stock upon completion of this Offering. Unless the context indicates
otherwise, all references to the "Company" are to Boston Biomedica, Inc. and its
two wholly-owned subsidiaries, BTRL Contracts and Services, Inc. ("BTRL"), and
BBI -- North American Clinical Laboratories, Inc. ("BBI -- NACL"). For a
discussion of certain matters that should be considered by purchasers of the
Common Stock offered hereby, see "Risk Factors." For the definition of certain
technical and scientific terms, see "Glossary."
THE COMPANY
Boston Biomedica, Inc. is a leading worldwide provider of proprietary
quality control products for use with in vitro diagnostic test kits ("test
kits") for the detection, analysis and monitoring of infectious diseases,
including AIDS, Hepatitis and Lyme Disease. These products are used to develop
test kits, to permit the monitoring of laboratory equipment and personnel, and
to help ensure the accuracy of test results. The Company's products are derived
from human plasma and serum using proprietary manufacturing processes. The
Company believes its Quality Control Panel products are viewed as the current
industry standard for the independent assessment of the performance of HIV and
Hepatitis test kits. The Company also manufactures diagnostic test kit
components and provides specialty laboratory services, including clinical
trials.
To date, the Company has sold its products primarily to test kit
manufacturers and regulatory agencies, but it has recently begun selling Quality
Control Products directly to the emerging end-user market for quality control
products for infectious disease test kits. In late 1994 the Company received
United States Food and Drug Administration ("FDA") clearance for Accurun 1(R),
its first Quality Control Product designed specifically for end-users, and
subsequently has introduced 24 additional Accurun(tm) Quality Control Products.
In July 1996, the Company introduced its Total Quality System ("TQS"), a
marketing platform that combines Accurun(tm) with other Quality Control Products
to provide test kit end-users with the products needed in an overall quality
assurance program. TQS products allow end-users to evaluate each of the key
elements of the testing process: the test kit, laboratory equipment and
laboratory personnel.
The Company's customers include Abbott Diagnostics, Boehringer Mannheim,
Chiron, Fujirebio, Hoffman LaRoche, Ortho Diagnostics (Johnson & Johnson) and
Sanofi Diagnostics; regulatory agencies such as the United States FDA, the
British Public Health Laboratory Service, the French Institut National de la
Transfusion Sanguine and the German Paul Ehrlich Institute; and end-users of
diagnostic test kits, such as blood banks, hospitals and clinical laboratories.
The increased threat of infectious diseases has created a large and growing
market for infectious disease test kits. Venture Planning Group, a medical
products research firm, estimates that the worldwide infectious disease test kit
market was approximately $2.7 billion in 1995 and will grow to $5.0 billion by
2000. The related market for quality control products for in vitro diagnostic
testing for infectious and non-infectious disease totaled approximately $600
million in 1994, according to the Genesis Report Dx, a medical products survey.
The Company believes that quality control products for infectious disease test
kits currently represent less than five percent of the overall quality control
market, primarily as a result of the limited use of such products by end-users.
The Company believes that the market for quality control products for
infectious disease test kits will continue to expand, particularly among
end-users, primarily as a result of several key factors: (i) increased
regulatory scrutiny due to public concern about the dangers of infectious
diseases such as AIDS and Hepatitis; (ii) growing recognition of the value of
using quality control products to ensure the greatest possible safety of the
blood supply, to achieve the earliest possible diagnosis of infection, and to
minimize the occurrence of false negative results; (iii) the discovery of new
infectious diseases and the development of new treatments for diseases requiring
periodic monitoring, such as viral load testing for HIV, Hepatitis B and C and
other diseases; and (iv) the emergence of new testing technologies and
equipment.
3
The Company offers three product groups in infectious disease diagnostics:
Quality Control Panels, Accurun(tm) Run Controls and Diagnostic Components.
These products are used throughout the entire test kit life cycle, from initial
research and development, through the regulatory approval process and test kit
production, to training, troubleshooting and routine use by end-users. The
Company's Quality Control Panels, which combine human blood specimens with
comprehensive quantitative data useful for comparative analysis, help ensure
that test kits detect the correct analyte (specificity), detect it the same way
every time (reproducibility), and detect it at the appropriate levels
(sensitivity). The Company's Accurun(tm) Run Controls enable end-users of test
kits to confirm the validity of results by monitoring test performance, thereby
minimizing false negative test results and improving error detection. In
addition, the Company provides Diagnostic Components, which are custom processed
human plasma and serum products, to test kit manufacturers.
The Company's specialty clinical laboratory services include both routine and
sophisticated infectious disease testing in microbiology, immunology and
molecular biology. The Company seeks to focus its specialty laboratory services
in advanced areas of infectious disease testing, and provides contract research
and clinical trials for domestic and foreign test kit manufacturers.
The Company's strategy is to leverage its scientific capabilities in
microbiology, immunology, virology, and molecular biology to (i) capitalize on
the emerging end-user market, (ii) develop new products and services, (iii)
enhance technical leadership, (iv) capitalize on complementary business
operations, and (v) pursue strategic acquisitions and alliances.
The Company believes that it has several competitive advantages that will
help it implement its strategy:
* an inventory of approximately 50,000 distinct human blood specimens
accumulated since 1986 through its worldwide sources of blood-supply, which
enable the Company to quickly respond to market trends;
* the ability to offer specialty laboratory services and conduct clinical
trials, which helps it to maintain contact and enhance credibility with test
kit manufacturers and regulatory authorities, and allows the Company to
remain at the forefront of market trends and customer needs;
* proprietary manufacturing know-how resulting from ten years of experience
working with leading worldwide manufacturers in the development of their
infectious disease test kits; and
* its reputation as an authority in infectious disease quality control products
among test kit manufacturers and regulatory agencies.
The Company, a Massachusetts corporation, was organized in 1978, but did not
commence significant operations until 1986. The Company's principal offices are
located at 375 West Street, West Bridgewater, MA 02379, and its telephone number
is (508) 580-1900.
THE OFFERING
Common Stock Offered...... shares(1)
Common Stock to be
Outstanding after the
Offering................ shares(1)(2)
Use of Proceeds........... Repayment of indebtedness, capital
expenditures, and general corporate purposes,
including working capital and potential
acquisitions. See "Use of Proceeds."
Proposed Nasdaq National
Market Symbol........... BBII
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(1) Does not include up to _____ shares of Common Stock that may be sold by the
Company pursuant to the Underwriters' over-allotment option. See
"Underwriting."
(2) Does not include 1,161,057 shares of Common Stock issuable upon exercise of
outstanding options and warrants and 14,333 shares of Common Stock issuable
upon conversion of an outstanding subordinated convertible note. See
"Capitalization" and Notes 6, 10 and 11 of Notes to Consolidated Financial
Statements.
4
SUMMARY CONSOLIDATED FINANCIAL DATA
(In thousands, except per share data)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
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1993(1) 1994 1995 1995 1996
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<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Product sales $3,942 $ 5,982 $ 6,622 $ 3,024 $ 3,946
Service revenue 5,215 4,741 5,649 2,540 2,982
-------- -------- -------- -------- --------
Total revenue 9,157 10,723 12,271 5,564 6,928
Income from
operations 312 405 508 104 307
Net income (loss) 142 97 103 (36) 83
Net income (loss) per
share(2) $ 0.06 $ 0.04 $ 0.04 $ (0.01) $ 0.03
Weighted average
common and common
equivalent shares
outstanding(2) 2,480 2,629 3,192 2,640 3,266
</TABLE>
<TABLE>
<CAPTION>
JUNE 30, 1996
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PRO FORMA
ACTUAL AS ADJUSTED(3)
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BALANCE SHEET DATA:
Working capital $ 4,497 $
Total assets 10,047
Long term debt, less current maturities 2,798 --
Redeemable common stock 899 --
Total stockholders' equity 3,332
</TABLE>
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(1) On June 30, 1993, the Company exercised its option to pre-pay the
acquisition note issued in connection with the 1992 purchase of BTRL at a
discount from the balance due, resulting in an extraordinary gain of
$50,000, net of taxes of $33,000. The 1993 net income per share before such
extraordinary gain was $0.04.
(2) The effect of the common stock equivalents on net income per common share
has been excluded from the calculation for 1993 and 1994 and the six months
ended June 30, 1995 as its inclusion was antidilutive.
(3) Adjusted to reflect: (i) application of the estimated net proceeds from the
sale of _____ shares of Common Stock offered by the Company hereby at an
assumed initial public offering price of $ _____ per share, after deducting
estimated underwriting discounts and commissions and offering expenses, and
(ii) the termination of redemption provisions relating to 117,647 shares of
Common Stock upon completion of this Offering.
5
RISK FACTORS
An investment in the shares of Common Stock offered hereby involves a high
degree of risk. In addition to the other information in this Prospectus, the
following factors should be considered carefully in evaluating the Company and
its business before purchasing the shares of Common Stock offered hereby.
UNDEVELOPED END-USER MARKET FOR QUALITY CONTROL PRODUCTS FOR INFECTIOUS
DISEASE TEST KITS
The Company intends to focus its product development and sales and marketing
efforts on quality control products for end-users of infectious disease test
kits. Currently, most quality control products for infectious disease test kits
are sold to test kit manufacturers and regulators. End-users of infectious
disease test kits are currently using quality control products only to a very
limited extent. See "Business -- Industry Overview." The Company's strategy is
based primarily upon significant growth in sales of quality control products to
the end-user market. See "Business -- Strategy." There can be no assurance that
end-users of infectious disease test kits will increase their use of quality
control products, or that the Company will be able to increase its sales of
quality control products to such end-users. Clearance or approval by the United
States Food and Drug Administration (the "FDA") will be necessary before quality
control products may be sold for clinical laboratory use rather than for
research purposes only. See "-- Stringent Government Regulation." If the
end-user market for quality control products does not develop, or if the Company
is unable to increase its sales to this market, the Company's future growth
could be materially and adversely affected.
COMPETITION
In sales of both its products and specialty laboratory services, the Company
experiences substantial competition and the threat of competition from
established and potential competitors, most of which have greater financial,
manufacturing and marketing resources than the Company. Competition for
customers is intense and depends principally on the ability to provide products
of the quality and in the quantity required by customers, as well as the ability
to provide sophisticated specialty laboratory services, at competitive prices.
The Company currently competes against independent reference laboratories,
integrated plasma collection and processing centers and manufacturers of quality
controls and other Diagnostic Components. In addition, the Company understands
that a leading manufacturer of quality control products for non-infectious
diseases recently entered the quality control market for infectious disease test
kits. There can be no assurance that other such manufacturers or other companies
will not enter this market. The entrance of any of these companies into the
quality control market for infectious disease test kits could have a material
adverse effect on the Company, particularly its ability to achieve its strategy
to capitalize on the end-user market for quality control products for infectious
disease test kits. In addition, certain of the Company's products are derived
from donors with rare antibody characteristics. Competition for blood specimens
from such donors may increase, which may increase the cost of obtaining such
specimens. There can be no assurance that such increased competition will not
adversely affect the Company. See "-- Difficulty in Obtaining Certain Raw
Materials" and "Business -- Competition."
ABILITY TO MANAGE GROWTH
The Company's future success will depend in part on its ability to manage
growth as it increases its production capacity and broadens distribution of its
products. To compete effectively and manage future growth, if any, the Company
will be required to continue to implement and improve its operational, financial
and management information systems, procedures and controls on a timely basis,
and to expand, train, motivate and manage its workforce. There can be no
assurance that the Company's personnel, systems, procedures and controls will be
adequate to support the Company's future operations. The failure to implement
new and improved existing operational, financial and management systems or to
expand, train, motivate or manage employees could have a material adverse effect
on the Company's business, operating results and financial condition. There can
be no assurance that the Company will continue to grow or, if it does, that the
Company will manage the growth successfully.
6
FLUCTUATIONS IN QUARTERLY RESULTS OF OPERATIONS
The Company's results of operations have been subject to quarterly
fluctuations due to a variety of factors, including customer purchasing patterns
and seasonal demand for laboratory testing services. In particular, the
Company's sales of its Quality Control Products and Diagnostic Components
typically have been highest in the fourth quarter and lowest in the first
quarter of each fiscal year. For example, total revenue for the fourth quarter
ended December 31, 1994 and 1995 were $3.0 million and $3.8 million compared
with total revenue for the first quarter ended March 31, 1995 and 1996 of $2.7
million and $3.1 million. The Company believes that its customers may expend
end-of-year budget surpluses in the fourth quarter, thereby causing the
Company's fourth quarter product sales to be higher at the expense of first
quarter product sales. In addition, demand for laboratory services tends to be
somewhat higher in the third and fourth quarters of the fiscal year due to the
seasonal nature of Lyme Disease testing, the Company's highest volume test.
Moreover, the Company's margins for its different products and services vary,
with Quality Control Products generally having the highest margins and Contract
Research the lowest. Therefore, the Company's results may vary from period to
period as a result of the mix of products and services and the mix among
products. As a result, quarterly results of operations may not be indicative of
future results of operations. Also, variations in the Company's quarterly
results of operations may affect the market price of the Common Stock. See " --
Volatility of Price of Common Stock" and "Management's Discussion and Analysis
of Financial Condition and Results of Operations."
RISK OF ACQUISITIONS
The Company intends to pursue strategic acquisitions to expand its core
product line, strengthen its base in medical science and technology, and secure
new sources of blood supply. The Company is subject to various risks associated
with an acquisition strategy, including the risk that the Company will be unable
to identify and attract suitable acquisition candidates or to integrate and
manage any acquired business. The Company will compete for acquisition
candidates with companies which have significantly greater financial and
management resources than the Company. Acquisitions could place a significant
burden on the Company's management and operating personnel. Implementing the
Company's expansion strategy may also require significant capital resources.
Capital is needed not only for acquisitions, but also for the effective
integration, operation and expansion of such businesses. The Company may need to
raise capital through the issuance of long-term or short-term indebtedness or
the issuance of its securities in private or public transactions, which could
result in dilution of existing equity positions, increased interest and
amortization expense or decreased income to fund future expansion. There can be
no assurance that acceptable financing for future acquisitions will be available
or that the integration of future acquisitions and expansion of existing
business can be achieved. See "-- Ability to Manage Growth."
DIFFICULTY IN OBTAINING CERTAIN RAW MATERIALS
The Company manufactures its products from human plasma and serum which the
Company obtains from nonprofit and commercial blood centers, primarily in the
United States, but also from similar sources throughout the world. Certain of
the Company's products, including its Seroconversion and Performance Panels, are
comprised of unique and rare plasma specimens obtained from individuals during
the short period of time when the disease markers of particular diseases are
converting from negative to positive. See "Business -- Products." As a result,
the quantity of any such panel is limited, so the Company must replace such
panels as they sell out with another panel comprised of specimens equally unique
and rare. Competition to obtain such specimens may increase, which may increase
the cost of obtaining such products. There can be no assurance that the Company
will continue to be successful in obtaining a steady and adequate supply of the
unique and rare specimens of plasma and serum necessary for certain of its
products. The inability to continue to obtain such specimens, or any significant
delays in obtaining such specimens, would have a material adverse effect on the
Company. See "-- Competition."
DEPENDENCE ON KEY PERSONNEL
The Company's success depends in large part upon its ability to attract and
retain highly qualified scientific and management personnel. The Company
competes for such individuals with other companies, academic institutions,
government entities and other organizations. There can be no
7
assurance that the Company will be successful in hiring or retaining requisite
personnel. The failure of the Company to recruit and retain qualified scientific
and management personnel could have a material adverse effect on the Company.
None of the Company's key management or scientific personnel is subject to an
employment agreement with the Company. The loss of the services of any such key
personnel, including Richard T. Schumacher, President and Chief Executive
Officer of the Company, could have a material adverse effect on the Company. The
Company maintains key person life insurance on certain of its officers,
including Mr. Schumacher, on whose life the Company has $4,750,000 of insurance,
$2,000,000 of which has been pledged to the Company's lender. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Liquidity and Capital Resources," "Business -- Competition" and "Management --
Directors and Executive Officers."
DEPENDENCE ON KEY CUSTOMERS
The Company's three largest customers accounted for an aggregate of
approximately 20% of the Company's revenues in 1993, 1994 and 1995 and the six
months ended June 30, 1995 and 1996, although the customers were not identical
in each period. In addition, the majority of the Company's revenues are based
upon purchase orders. None of the Company's customers are contractually
committed to make future product purchases from the Company. The loss of any
major customer or a material reduction in a major customer's purchases would
have a material adverse effect upon the Company.
A single U.S. government services contract accounted for approximately 7.5%
and 7.3% of the Company's revenues in 1995 and the six months ended June 30,
1996. This contract is due to expire in February 1997. The Company has responded
to a Request for Proposals by the United States government for a new four year
contract to replace this contract. There can be no assurance that the Company's
response to the Request for Proposals will be accepted by the United States
government. Failure to receive the new contract would have a material adverse
effect on the Company. See "Business -- Services."
STRINGENT GOVERNMENT REGULATION
The manufacture and distribution of medical devices, including products
manufactured by the Company that are intended for in vitro diagnostic use, are
subject to extensive government regulation in the United States and in other
countries. In the United States, the Food, Drug, and Cosmetic Act (the "FDCA")
prohibits the marketing of in vitro diagnostic products until they have been
cleared or approved by the FDA, a process that is time-consuming, expensive and
uncertain. Once clearance or approval is obtained, the FDA requires additional
clearances or approvals for product changes that could affect the safety and
effectiveness of the device, including, for example, new indications for use or
changes in the design or manufacturing process. Additional clearances or
approvals may also be required for changes in claims relating to uses of
products. There can be no assurance that the Company will obtain regulatory
clearances or approvals on a timely basis, if at all, for future products,
changes in existing products or changes in claims relating to uses of products.
Delays in obtaining or failure to obtain requisite FDA clearances or approvals
could have a material adverse effect on the Company.
All of the Company's Quality Control Products with the exception of Accurun
1(R) are marketed "for research use only," which do not require FDA premarket
clearance or approval of the product, and not marketed for diagnostic purposes,
which do require FDA premarket clearance or approval. The Company's labeling for
these products limits their use to research. It is possible, however, that some
purchasers of these products may use them for diagnostic purposes despite the
Company's intended use. In these circumstances, the FDA could allege that these
products should have been cleared or approved by the FDA prior to marketing and
initiate enforcement action against the Company, which could have a material
adverse effect on the Company. Failure to obtain, or delays in obtaining, FDA
clearances or approval would adversely affect the Company's strategy of
capitalizing on the end-user market.
The Company believes that its Quality Control Panels are not regulated by
the FDA because they are not intended for diagnostic purposes. The Company
believes that its Diagnostic Components, which are components of in vitro
diagnostic products, may be subject to certain regulatory requirements under the
FDCA and other laws administered by the FDA, but do not require that the Company
obtain a
8
premarket approval or clearance. There can be no assurance, however, that the
FDA would agree or that the FDA will not adopt a different interpretation of the
FDCA or other laws it administers, which could have a material adverse effect on
the Company.
In addition, both before and after clearance or approval, medical devices,
such as Accurun 1(R), are subject to certain export and import requirements
under the FDCA.
The Company is also subject to strict FDA good manufacturing practices
("GMP") regulations governing testing, control and documentation, and to other
postmarketing restrictions with respect to the manufacture of the Company's
medical device products. Ongoing compliance with GMP and other applicable
regulatory requirements is monitored through periodic inspections by the
regulatory authorities. Failure to comply with GMP or other regulatory
requirements can result, among other consequences, in the failure to obtain
premarket clearances or approvals, withdrawal of clearances or approvals, total
or partial suspension of product distribution, injunctions, civil penalties,
recall or seizures of products, and criminal prosecution, each of which would
have a material adverse effect on the Company.
Laws and regulations affecting the Company's products are in effect in many
of the countries, states and other jurisdictions in which the Company markets or
intends to market its products. There can be no assurance that the Company will
be able to obtain any required regulatory clearances or approvals on a timely
basis, or at all. Delays in receipt of or failure to obtain such clearances or
approvals, or the failure to comply with regulatory requirements in these
countries, states or other jurisdictions, could have a material adverse effect
on the Company's business, financial condition and results of operations. See
"Business -- Government Regulation."
The Company is also subject to other national, state and local laws and
regulations, including those relating to the use and disposal of biohazardous,
radioactive and other hazardous substances and wastes. Failure to comply with
such laws and regulations could have a material adverse effect on the Company's
business, financial condition and results of operations. See "Business --
Government Regulation."
FOREIGN RESTRICTIONS ON IMPORTATION OF BLOOD DERIVATIVES
Sales outside the United States in 1993, 1994 and 1995 represented
approximately 15%, 21% and 25%, respectively, of the Company's revenues for
those years, and 27% in each of the six months ended June 30, 1995 and 1996.
Foreign sales are primarily to Western Europe and Japan. Concern over blood
safety has led to movements in a number of European and other countries to
restrict the importation of blood and blood derivatives, including antibodies.
Such restrictions continue to be debated and there can be no assurance that
additional restrictions will not be imposed in the future. If imposed, such
restrictions could have a material adverse effect on the Company's business.
RISK OF TECHNOLOGICAL CHANGE
The infectious disease test kit industry is characterized by rapid and
significant technological change and changes in customer requirements. As a
result, the Company's success will be dependent upon its ability to enhance its
existing products and to develop or acquire and introduce in a timely manner new
products that take advantage of technological advances and respond to customer
requirements. There can be no assurance that the Company will be successful in
developing and marketing such new products or enhancements to the Company's
existing products on a timely basis or that such products will adequately
address the changing needs of the marketplace. Furthermore, rapid technological
development by the Company or others may result in products or services becoming
obsolete or noncompetitive before the Company recovers its investment in
research, development and commercialization.
RISK OF BROAD MANAGEMENT DISCRETION IN APPLICATION OF PROCEEDS
A significant portion of the estimated net proceeds from this Offering will
be allocated to working capital and general corporate purposes, including
potential acquisitions. Accordingly, the Company will have broad discretion as
to the application of the net proceeds and may allocate
9
portions of such proceeds to uses which the Company's stockholders may not deem
desirable. There can be no assurance that the proceeds will be used in a way to
yield a significant return. See "Use of Proceeds."
PROTECTION OF INTELLECTUAL PROPERTY AND PROPRIETARY TECHNOLOGY
None of the Company's Quality Control Products or Diagnostic Components have
been patented and the Company does not intend to seek patent protection for such
products. The Company's ability to compete effectively with other companies will
depend, in part, on its ability to maintain the proprietary nature of its
technologies and products and operate without infringing the rights of third
parties. The Company relies primarily on a combination of trade secrets and
non-disclosure and confidentiality agreements, and in certain limited
circumstances, patents, to establish and protect its proprietary rights in its
technology and products. There can be no assurance that others will not
independently develop or otherwise acquire the same, similar or more advanced
trade secrets and know-how.
The Company has two United States patents and, jointly with the University
of North Carolina at Chapel Hill ("UNC"), has filed three series of United
States and foreign patent applications relating to compounds, pharmaceutical
compositions and therapeutic methods in connection with the Company's drug
discovery program at the University of North Carolina at Chapel Hill. See
"Business -- Services," and " -- Strategic Alliances." There can be no assurance
that patent applications will result in issued patents, that issued patents will
provide any competitive advantage or that patents will not be challenged,
circumvented or invalidated.
Third parties may be issued patents to, or may otherwise acquire the rights
to, technology necessary or potentially useful to the Company. The success of
the Company is dependent in part upon its not infringing patents or other
intellectual property rights of third parties. Litigation relating to the
infringement of the patents or other intellectual property rights of others
could result in substantial costs to the Company. Litigation which could result
in substantial costs to the Company may also be necessary to enforce the
Company's intellectual property rights or to determine the scope and validity of
the proprietary rights of others. Any such substantial costs would have a
material adverse effect on the Company.
UNCERTAINTY RELATED TO HEALTHCARE REFORM; NO ASSURANCE OF ADEQUATE
REIMBURSEMENT
Political, economic and regulatory influences are subjecting the healthcare
industry in the United States to fundamental change. Although to date Congress
has failed to pass comprehensive health care reform legislation, the Company
anticipates that Congress and state legislatures will continue to review and
assess alternative healthcare delivery and payment systems and may in the future
propose and adopt legislation effecting fundamental changes in the healthcare
delivery system. Legislative debate is expected to continue in the future. In
addition, the private sector has been changing the healthcare industry as well
through consolidations and alternatives in healthcare delivery systems. The
Company cannot predict what impact the adoption of any federal or state health
care reform measures or future private sector reform may have on its industry or
business.
In both domestic and foreign markets, sales by the Company's customers of
products and services that incorporate or affect the demand for the Company's
products may depend in part on the availability of reimbursement from
third-party payors such as government health administration authorities, private
health insurers and other organizations. Third-party payors are increasingly
challenging the price and cost-effectiveness of medical products and services.
There can be no assurance that pricing pressures experienced by the Company's
customers will not adversely affect the Company because of a determination that
its products are not cost effective or because of inadequate third-party
reimbursement levels to such customers. In addition, where the payor for the
Company's specialty laboratory services is the patient rather than third-party
payors, there is a greater risk of non-payment. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Results of
Operations."
RISK OF HAZARDOUS WASTE AND PRODUCT LIABILITY; ABSENCE OF INSURANCE
The Company's manufacturing processes involve the controlled use of
biohazardous materials and chemicals. The risk of accidental contamination or
injury from these materials cannot be completely eliminated. In the event of
such an accident, the Company could be held liable for any damages that result,
10
and any such liability could exceed the resources of the Company. The Company
may incur substantial costs to maintain safety in the use of biohazardous
materials and to comply with environmental regulations as the Company further
develops its manufacturing capacity. See "Business -- Government Regulation."
Further, the Company's business exposes it to liability risks that are
inherent in the testing, manufacturing and marketing of its products. The
Company does not currently have product liability insurance. Product liability
claims could expose the Company to substantial liabilities and expenses, which
could materially and adversely affect the Company.
RISKS ASSOCIATED WITH EXPORT SALES
The Company generated significant sales outside the United States and
anticipates that foreign sales will continue to account for a significant
percentage of the Company's net revenues. The Company's foreign operations
accounted for approximately 15%, 21% and 25% of the Company's total revenues for
the years ended December 31, 1993, 1994 and 1995 and approximately 27% in each
of the six months ended June 30, 1995 and 1996, and 36%, 38% and 47% of the
Company's product sales for the years ended December 31, 1993, 1994 and 1995 and
50% and 48% for each of the six months ended June 30, 1995 and 1996. The Company
therefore is subject to risks associated with foreign sales, including United
States and foreign regulatory requirements and policy changes, political and
economic instability, difficulties in accounts receivable collection,
difficulties in managing distributors or representatives and seasonality of
sales. Although the Company's sales have been denominated in United States
dollars, the value of the United States dollar in relation to foreign currencies
may also adversely affect the Company's sales to foreign customers. To the
extent that the Company expands its international operations or changes its
pricing practices to denominate prices in foreign currencies, the Company will
be exposed to increased risks of currency fluctuation. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
Note 5 of the Notes to Consolidated Financial Statements.
POSSIBLE ADVERSE EFFECT OF CONTROL BY EXISTING STOCKHOLDERS
Upon consummation of this Offering, Richard T. Schumacher, President and
Chief Executive Officer, his relatives and the existing officers and directors
of the Company collectively will have voting control over approximately ___% of
the outstanding shares of Common Stock. Accordingly, these stockholders, should
they choose to act in concert, will be in a position to exercise a significant
degree of control over the Company, and to significantly influence stockholder
votes on the election of the Company's directors, increasing the Company's
authorized capital stock, mergers, and sales of the Company's assets. See
"Principal Stockholders."
POSSIBLE ADVERSE EFFECT OF CERTAIN ANTI-TAKEOVER PROVISIONS
Certain provisions of the Company's Amended and Restated Articles of
Organization and Restated Bylaws could have the effect of discouraging a third
party from pursuing a non-negotiated takeover of the Company and preventing
certain changes in control. These provisions include a classified Board of
Directors, a fair price provision, advance notice to the Board of Directors of
stockholder proposals and stockholder nominees for the Board of Directors,
limitations on the ability of stockholders to remove directors and call
stockholders meetings, the provision that vacancies on the Board of Directors be
filled by a majority of the remaining directors and the ability of the Board to
issue, without further stockholder approval, preferred stock with rights and
privileges which could be senior to the Common Stock. The Company also is
subject to Chapter 110F of the Massachusetts General Laws which, subject to
certain exceptions, prohibits a Massachusetts corporation from engaging in any
of a broad range of business combinations with any "interested stockholder" for
a period of three years following the date that such stockholder became an
interested stockholder. These provisions could discourage a third party from
pursuing a takeover of the Company at a price considered attractive by many
stockholders, since such provisions could have the effect of preventing or
delaying a potential acquiror from acquiring control of the Company and its
Board of Directors. See "Description of Capital Stock -- Preferred Stock," "--
Massachusetts Anti-Takeover and Related Statutes" and " -- Certain Provisions of
the Company's Articles of Organization and By-laws."
11
NO ASSURANCE OF PUBLIC MARKET; POSSIBLE VOLATILITY OF PRICE OF COMMON
STOCK
Prior to this Offering, there has been no public trading market for the
Common Stock. There can be no assurance that a regular trading market for the
Common Stock will develop after this Offering or that, if developed, it will be
sustained. The initial public offering price of the Common Stock will be
determined by negotiations between the Company and Representatives of the
Underwriters and may not be indicative of the price at which the Common Stock
will trade after completion of this Offering. For factors that will be
considered in determining the initial public offering price, see "Underwriting."
After completion of this Offering, the market price of the Common Stock could be
subject to significant fluctuations in response to various factors and events,
including the liquidity of the market for the shares of Common Stock, variations
in the Company's operating results, changes in earnings estimates by securities
analysts, publicity regarding the Company, the infectious disease test kit
industry or the healthcare industry generally, new statutes or regulations or
changes in the interpretation of existing statutes or regulations affecting the
healthcare industry in general or the infectious disease test kit industry in
particular. In addition, the stock market in recent years has experienced broad
price and volume fluctuations that often have been unrelated to the operating
performance of particular companies. These market fluctuations also may
adversely affect the market price of the shares of Common Stock.
DILUTION
Purchasers of shares in the Offering will suffer immediate dilution of
$ in net tangible book value per share. See "Dilution" and
"Underwriting."
SHARES ELIGIBLE FOR FUTURE SALE
Sales of substantial amounts of Common Stock in the public market, or the
perception that such sales may occur, could adversely affect the prevailing
market price of the Common Stock and the ability of the Company to raise capital
through a public offering of its equity securities. Upon completion of this
Offering, the Company will have _____ shares of Common Stock outstanding ( _____
shares if the Underwriters' overallotment option is exercised in full). Of those
shares, the _____ shares sold in this Offering ( _____ shares if the
Underwriters' overallotment option is exercised in full) will be freely
tradeable without restriction (except as to affiliates of the Company) or
further registration under the Securities Act. The Company's directors,
executive officers and certain other stockholders holding in the aggregate _____
shares of Common Stock have agreed not to offer to sell, sell or otherwise
dispose of any shares of Common Stock prior to the expiration of 180 days from
the date of this Prospectus. Oscar Gruss & Son Incorporated may, in its sole
discretion and at any time without prior notice, release all or any portion of
the shares of Common Stock subject to the lockup agreements. Following the
expiration of the 180-day lockup period, _____ shares of Common Stock will be
eligible for sale in the public market without registration, subject to certain
volume and other limitations, pursuant to Rule 144 or Rule 701 under the
Securities Act of 1933, as amended (the "Securities Act"). The remaining shares
of Common Stock held by existing stockholders, including shares issuable upon
exercise of options, will become eligible for sale under Rule 144 or otherwise
at various times thereafter. All shares of Common Stock outstanding on the date
of this Prospectus will be eligible for sale to certain qualified institutional
buyers in accordance with Rule 144A under the Securities Act. The Company
intends to register under the Securities Act, shortly after the consummation of
the Offering, shares of Common Stock issuable upon exercise of employee stock
options, including 934,387 shares issuable upon exercise of such options
outstanding on the date of this Prospectus. Two of the Company's stockholders
and the holder of a warrant to purchase Common Stock have the right to cause the
Company to register their shares under the Securities Act and to include their
shares in certain future registrations of securities effected by the Company
under the Securities Act. An aggregate of 1,175,390 shares of Common Stock,
including _____ shares of Common Stock issuable upon exercise of outstanding
warrants, are covered by such registration rights. If such holders, by
exercising their registration rights, cause a large number of shares to be
registered and sold in the public market, such sales may have an adverse effect
on the market price of the Common Stock. If the Company is required to include
in a Company-initiated registration shares held by such holders pursuant to the
exercise of their piggyback registration rights, such sales may have an adverse
effect on the Company's ability to raise needed capital. See "Certain
Transactions," "Principal Stockholders" and "Shares Eligible for Future Sale."
12
USE OF PROCEEDS
The net proceeds to be received by the Company from the sale of the _____
shares of Common Stock offered hereby are estimated to be $ _____ ($_____ if the
Underwriters over-allotment option is exercised in full), at an assumed public
offering price of $_____ per share and after deducting estimated underwriting
discounts and commissions and offering expenses payable by the Company.
The Company expects to use approximately $3.6 million of the net proceeds to
repay outstanding indebtedness, as described below, and approximately $1.0
million for capital expenditures to expand its manufacturing capacity in West
Bridgewater, of which approximately $500,000 will be spent on building expansion
and approximately $500,000 will be spent on equipment. The Company anticipates
using the remaining net proceeds for general corporate purposes, including
working capital, as well as for potential acquisitions and alliances. See "Risk
Factors -- Risk of Broad Management Discretion in Application of Proceeds."
At August 1, 1996, the approximately $3.6 million of indebtedness to be
repaid from the proceeds of this Offering consists of (i) approximately $1.7
million of indebtedness under a secured revolving line of credit due June 30,
1998 that bears interest at a rate equal to the prime rate plus 0.5% per annum;
(ii) a mortgage note in the principal amount of approximately $693,851 on the
West Bridgewater property that bears interest at a fixed rate of 8.3% per annum
until December 2000 and thereafter bears interest at a rate equal to the prime
rate plus 1% per annum, and which is due December 2002; (iii) a term note, in
the principal amount of $477,563, that bears interest at 9.01% per annum and is
due in October 1998; (iv) a term note, in the principal amount of $144,444, that
bears interest at the prime rate plus 1% per annum and is due October 1999; (v)
a term note, in the principal amount of $336,274, that bears interest at a rate
equal to the prime plus 1% per annum and is due August 2000; (vi) a term note,
in the principal amount of $90,000, that bears interest at a rate of 8.22% per
annum and is due December 2000; and (vii) various other notes that aggregate
$82,300 due from June 1997 to August 2000. The proceeds from borrowings incurred
within the past year were used for working capital, to acquire the West
Bridgewater property and to purchase capital equipment. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
Note 6 of Notes to the Consolidated Financial Statements.
With respect to potential acquisitions and alliances, the Company may use a
portion of the net proceeds to acquire blood donor centers and other businesses,
products or technologies that are complementary to the Company's current
business, although it currently has no commitments for such acquisitions or
alliances. See "Business -- Strategy."
The specific timing and amount of funds required for specific uses by the
Company cannot be precisely determined at this time. Pending such uses, the
Company intends to invest in short-term, investment grade, interest bearing
obligations.
DIVIDEND POLICY
The Company has never declared or paid cash dividends on its capital stock
and does not plan to pay any cash dividends in the foreseeable future. The
Company's current policy is to retain all of its earnings to finance future
growth. Any future determination to pay cash dividends will be at the discretion
of the Board of Directors and will be dependent upon the Company's financial
condition, operating results, capital requirements, general business conditions
and such other factors as the Board of Directors deems relevant. The Company is
subject to financial and operating covenants, including a prohibition against
the payment of cash dividends, under its bank financing agreement. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."
13
CAPITALIZATION
The following table sets forth as of June 30, 1996 (i) the actual
capitalization of the Company and (ii) the pro forma capitalization of the
Company after giving effect to the termination of certain redemption provisions
relating to 117,647 shares of Common Stock and as adjusted to give effect to the
sale of _____ shares of Common Stock offered by the Company hereby at an assumed
public offering price of $_____ per share, after deducting estimated
underwriting discounts and commissions and estimated offering expenses payable
by the Company. This table should be read in conjunction with the Consolidated
Financial Statements and related notes thereto appearing elsewhere in this
Prospectus.
<TABLE>
<CAPTION>
JUNE 30, 1996
---------------------
PRO FORMA
ACTUAL AS ADJUSTED
------------ ------------
(IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C> <C>
Current maturities of long term debt $ 490 $ --
========= =========
Long-term debt, less current maturities:
Line of credit 1,398 --
Bank term debt 719 --
Mortgage term debt 620 --
Other notes payable 61 --
--------- ---------
2,798 --
--------- ---------
Redeemable common stock, $.01 par value;
authorized, issued and outstanding
117,647, and none pro forma as adjusted 899 --
--------- ---------
Stockholders' equity:
Common stock, $.01 par value; authorized
15,000,000 shares; issued and
outstanding 2,572,417(1] actual, and
pro forma as adjusted 26
Preferred Stock
Additional paid-in capital 2,717
Retained earnings 589 589
--------- ---------
Total stockholders' equity 3,332
--------- ---------
Total capitalization $7,029 $
--------- ---------
--------- ---------
</TABLE>
- -------------
(1) Excludes the following at June 30, 1996: (i) 934,387 shares of Common Stock
issuable pursuant to the exercise of stock options outstanding at a weighted
average exercise price of $3.15 per share, of which options to purchase
653,684 shares were then exercisable, (ii) 226,670 shares of Common Stock
issuable pursuant to the exercise of warrants outstanding at a weighted
average exercise price of $2.50 per share, all of which were then
exercisable, and (iii) 14,333 shares of Common Stock issuable upon
conversion of the subordinated convertible note at $1.50 per share. Since
June 30, 1996, no stock options were exercised, granted or became
exercisable. See "Management -- Stock Plans."
14
DILUTION
At June 30, 1996, the Company had a net tangible book value of $4,137,943 or
$1.54 per share of Common Stock. "Net tangible book value per share" represents
the tangible book value of the Company (total tangible assets less total
liabilities) divided by the number of shares of Common Stock outstanding (on a
pro forma basis to give effect to the termination of certain redemption
provisions relating to 117,647 shares of Common Stock). Without taking into
account any changes in such net tangible book value as of June 30, 1996, other
than to give effect to the sale by the Company of the _____ shares of Common
Stock offered hereby at an assumed initial public offering price of $ _____ and
after deducting the estimated underwriting discounts and commissions and
offering expenses payable by the Company, the pro forma net tangible book value
of the Company at June 30, 1996 would have been $ _____, or $ ______ per share.
This represents an immediate increase in the net tangible book value per share
of $ _____ to existing stockholders and an immediate dilution of the net
tangible book value per share of $ ______ to persons purchasing the Common Stock
offered hereby (the "New Investors"). The following table illustrates this per
share dilution:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share $
Net tangible book value per share before the
Offering $ 1.54
Increase per share attributable to New Investors
------
Pro forma as adjusted net tangible book value
per share after the Offering
-------
Dilution per share to New Investors $
-------
-------
</TABLE>
The following table sets forth on a pro forma basis, as of June 30, 1996,
the total number of shares purchased from the Company after giving effect to the
sale of the shares of Common Stock offered by the Company hereby, the total
consideration paid to the Company and the average price per share paid by
existing stockholders and by New Investors at an assumed initial public offering
price of $ _____ per share:
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
------------ -------------
AVERAGE
PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
------- ----- -------- ----- -------
<S> <C> <C> <C> <C> <C>
Existing Stockholders 2,690,064 % $ 3,835,373 % $1.43
New Investors % %
------- ----- ------- -----
Total 100.0% $ 100.0%
------- ------- ------- -----
------- ------- ------- -----
</TABLE>
The above information assumes (i) no exercise of the Underwriters' warrants
and (ii) no exercise of any other outstanding options and warrants after June
30, 1996. As of June 30, 1996, there were outstanding options, warrants and a
subordinated convertible note to purchase an aggregate of 1,175,390 shares of
Common Stock at exercise prices ranging from $0.25 to $8.50 per share. Since
June 30, 1996, no stock options were exercised, granted or became exercisable.
To the extent these options and warrants are exercised, there will be further
dilution to New Investors. See "Management -- Stock Plans," "Certain
Transactions" and Note 10 of Notes to Consolidated Financial Statements.
15
SELECTED CONSOLIDATED FINANCIAL DATA
The following table contains certain selected consolidated financial data of
the Company and is qualified in its entirety by the more detailed Consolidated
Financial Statements and Notes thereto included elsewhere in this Prospectus.
The statement of operations data for the fiscal years 1993, 1994 and 1995, and
the balance sheet data as of December 31, 1994 and 1995, have been derived from
the Consolidated Financial Statements of the Company which have been audited by
Coopers & Lybrand L.L.P., independent accountants, and which appear elsewhere in
this Prospectus. The balance sheet data as of December 31, 1993 are derived from
consolidated financial statements that have been audited by Coopers & Lybrand
L.L.P. The statement of operations data of the Company for the fiscal years
ending December 31, 1991 and 1992 and the balance sheet data as of December 31,
1991 and 1992 have been derived from consolidated financial statements of the
Company which have been audited by other independent public accountants. The
unaudited consolidated financial data as of June 30, 1996, and for the six
months ended June 30, 1996 and 1995, have been prepared on a basis consistent
with the audited consolidated financial statements and, in the opinion of
management, include all adjustments (consisting only of normal recurring
adjustments) necessary to present fairly the financial condition and results of
operations for the periods presented. The results for the six months ended June
30, 1996, are not necessarily indicative of the results that may be expected for
the year ending December 31, 1996. This data should be read in conjunction with
the Consolidated Financial Statements and related Notes thereto and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" appearing elsewhere herein.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
----------------
YEAR ENDED DECEMBER 31,
-----------------------
JUNE 30, JUNE 30,
1991 1992(1) 1993(2)(3) 1994 1995 1995 1996
---- ------- ---------- ---- ---- ---- ----
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
REVENUE:
Product sales $2,146 $2,955 $3,942 $ 5,982 $ 6,622 $3,024 $ 3,946
Services 264 1,680 5,215 4,741 5,649 2,540 2,982
Total revenue 2,410 4,635 9,157 10,723 12,271 5,564 6,928
COSTS AND EXPENSES:
Cost of product sales 1,172 1,638 2,088 3,194 3,564 1,646 2,007
Cost of services 191 1,443 3,965 3,416 4,168 1,960 2,250
Research and development 104 222 279 469 375 159 362
Selling and marketing 372 353 894 1,192 1,340 638 915
General and administrative 436 745 1,619 2,047 2,316 1,057 1,088
Total operating costs and expenses 2,275 4,401 8,845 10,318 11,763 5,460 6,622
Income from operations 135 234 312 405 508 104 306
Interest expense, net 101 113 179 244 336 164 168
Income (loss) before income taxes and
extraordinary item 34 121 133 161 172 (60) 138
Provision for income taxes (5) (45) (41) (64) (69) 24 (55)
Income (loss) before extraordinary item 29 76 92 97 103 (36) 83
Extraordinary item-gain on elimination of debt,
net of income taxes -- -- 50 -- -- -- --
Net income (loss) $ 29 $ 76 $ 142 $ 97 $ 103 $ (36) $ 83
Net income (loss) per share(4) $ 0.01 $ 0.03 $ 0.06 $ 0.04 $ 0.04 $(0.01) $ 0.03
Weighted average common and common equivalent
shares outstanding(4) 1,990 2,202 2,480 2,629 3,192 2,640 3,266
</TABLE>
16
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
------------
1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ----
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
WORKING CAPITAL(5) $1,698 $2,457 $3,612 $4,686 $4,829 $ 4,497
TOTAL ASSETS 2,624 4,828 6,870 8,076 9,928 10,047
LONG TERM DEBT, LESS CURRENT MATURITIES(5) 993 1,760 2,381 3,180 4,216 2,798
REDEEMABLE COMMON STOCK -- -- -- -- -- 899
TOTAL STOCKHOLDERS' EQUITY 993 1,837 2,762 3,041 3,187 3,332
DIVIDENDS -- NONE
<FN>
(1) Effective July 1, 1992, the Company acquired the net assets of a division of
Cambridge Biotech Corporation for $762,000 which increased 1992 revenues by
$1,450,000.
(2) On June 30, 1993, the Company exercised its option to pre-pay the
acquisition note in connection with the 1992 purchase of BTRL at a
substantial discount from the balance due, resulting in an extraordinary
gain of $50,000 net taxes of $33,000. The 1993 net income per share before
such extraordinary gain was $0.04.
(3) Effective January 1, 1993, the Company acquired the net assets of North
American Laboratory Group Ltd., Inc. for $425,000, which increased 1993
revenues by $2,019,000.
(4) The effect of the common stock equivalents on net income per share has been
excluded from the calculation for years ended December 31, 1991 through 1994
and the six months ended June 30, 1995 as its inclusion was antidilutive.
(5) The Company's demand line of credit with outstanding amounts of $880,000,
$1,091,000 and $1,895,000 as of December 31, 1991, 1992 and 1993,
respectively, has been presented as part of long-term debt (and excluded
from current liabilities in calculating working capital) for 1991 through
1993 to be consistent with its reclassification to long-term debt in 1994,
1995 and 1996 due to a modification of its maturity date.
</FN>
</TABLE>
17
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Prospectus contains forward-looking statements which involve risks and
uncertainties. The Company's actual results may differ significantly from the
results discussed in the forward-looking statements. Factors that might cause
such a difference include, but are not limited to, those discussed in "Risk
Factors."
The following discussion and analysis should be read in conjunction with the
Company's Consolidated Financial Statements and the Notes thereto appearing
elsewhere in this Prospectus.
OVERVIEW
The Company generates revenue from products and services provided to the in
vitro diagnostic infectious disease industry. Products consist of three groups:
Quality Control Panels, Accurun(tm) Run Controls and Diagnostic Components.
Services consist of Specialty Clinical Laboratory Testing, Contract Research,
Clinical Trials and Drug Screening. In the three full years since the Company's
acquisition of BTRL and BBI-NACL, the Company has experienced a shift in revenue
mix towards increased product sales, as product revenue as a percentage of total
revenue increased from 43.1% in 1993 to 54.0% in 1995, with a corresponding
decrease in the percentage of total revenue provided by services.
The Company's gross profit margin increased from 33.9% in 1993 to 37.0% in
1995 principally as a result of the increased percentage of higher margin
product revenues. Within products, the Company's Quality Control Products
(Accurun(tm) Run Controls and Quality Control Panels) have higher margins than
the Company's Diagnostic Components. Within services, Contract Research gross
margins are lower than other services. However, such contracts enable the
Company to maintain certain scientific staff and capability that it might
otherwise not be able to afford. The Company intends to continue to concentrate
on the growth in sales of its Quality Control Products.
Historically, the Company's results of operations have been subject to
quarterly fluctuations due to a variety of factors, including customer
purchasing patterns, primarily driven by end-of-year expenditures, and seasonal
demand during the summer months for certain laboratory testing services. In
particular, the Company's sales of its Quality Control Products and Diagnostic
Components typically have been highest in the fourth quarter and lowest in the
first quarter of each fiscal year, whereas Specialty Clinical Laboratory Testing
has generally reached a seasonal peak during the third quarter, coinciding with
the peak incidence of Lyme Disease. Research Contracts are generally for large
dollar amounts spread over a one or two year period, and upon completion,
frequently do not have renewal phases. As a result they can cause large
fluctuations in revenue and net income. In addition to staff dedicated to
internal research and development, certain of the Company's technical staff work
on both Contract Research for customers and Company sponsored research and
development. The allocation of certain technical staff to such projects depends
on the volume of Contract Research. As a result, research and development
expenditures fluctuate due to increases or decreases in Contract Research. See
"Risk Factors -- Fluctuations in Quarterly Results of Operations."
To develop new Quality Control Products and support increased sales, the
Company hired additional research and development staff in the second half of
1995 and sales and marketing staff in 1996. The Company intends to continue to
add staff to these departments. This should cause both research and development
and selling and marketing expenses to increase as a percentage of revenue in
1996 and 1997, compared to 1995. General and administrative expenses are not
expected to increase at the same rate, as the Company has already incurred
significant infrastructure expenses.
The Company does not have any foreign operations. However, the Company does
have significant export sales to agents under distribution agreements, as well
as directly to test kit manufacturers. All sales are denominated in U.S.
dollars. Export sales for the years ended December 31, 1993, 1994, and 1995 were
$1.4 million, $2.3 million, and $3.1 million, respectively, and for the six
months ended June 30, 1995 and 1996 were $1.5 million and $1.9 million,
respectively. The Company expects that export sales will continue to be a
significant source of revenue and operating income. See "Risk Factors -- Risks
Associated with Export Sales."
18
The Company's cash flow from operations over the last three years has been
negative as it funded investment in research and development, increased sales
and marketing expenditures, and supported growth-driven working capital needs.
The Company funded the shortfall through a combination of sales of common stock
and bank financing. The Company anticipates using a portion of the net proceeds
of this Offering for working capital requirements until such time as its cash
flow from operations becomes sufficient.
RESULTS OF OPERATIONS
The following table sets forth for the periods indicated the percentage of
total revenue represented by certain items reflected in the Company's
consolidated statements of operations:
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS
DECEMBER 31, ENDED JUNE 30,
------------ --------------
1993 1994 1995 1995 1996
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Revenue:
Products 43.1% 55.8% 54.0% 54.4% 57.0%
Services 56.9 44.2 46.0 45.6 43.0
---- ---- ---- ---- ----
Total revenue 100.0 100.0 100.0 100.0 100.0
Gross profit 33.9 38.4 37.0 35.2 38.6
Operating expenses:
Research and development 3.0 4.4 3.1 2.9 5.2
Selling and marketing 9.8 11.1 10.9 11.4 13.2
General and administrative 17.7 19.1 18.9 19.0 15.7
---- ---- ---- ---- ----
Total operating expenses 30.5 34.6 32.9 33.3 34.1
---- ---- ---- ---- ----
Income from operations 3.4 3.8 4.1 1.9 4.4
Interest expense 2.0 2.3 2.7 3.0 2.4
--- --- --- --- ---
Income (loss) before income taxes 1.5 1.5 1.4 (1.1) 2.0
Net income (loss) 1.6 0.9 0.8 (0.6) 1.2
=== === === ==== ===
Product gross profit 47.0% 46.6% 46.2% 45.6% 49.1%
Services gross profit 24.0% 28.0% 26.2% 22.8% 24.6%
</TABLE>
SIX MONTHS ENDED JUNE 30, 1996 AND 1995
Total revenue increased 24.5%, or $1,364,000, to $6,928,000 for the six
months ended June 30, 1996 from $5,564,000 in the prior year period. This
increase was the result of an increase in product sales of 30.4%, or $921,000,
to $3,946,000 from $3,025,000 and an increase in specialty laboratory services
of 17.4%, or $443,000, to $2,983,000 from $2,540,000. Product revenue increased
primarily as a result of an overall increase of 34.5% in Quality Control
Products, due to sales of new products and increased volume of existing
products, including an increase of 132.5% in the sales of Accurun(tm). The
increase in service revenue was primarily attributable to a 19.0% increase in
Specialty Clinical Laboratory Testing revenue, particularly molecular (PCR)
testing, and the addition of two new research contracts with the National
Institutes of Health in the fourth quarter of 1995.
Gross profit increased 36.5%, or $714,000, to $2,672,000 for the six months
ended June 30, 1996 from $1,958,000 in the prior year period. The gross profit
margin increased to 38.6% in the six months ended June 30, 1996 versus 35.2% in
the prior year period. Gross margins improved in both products, (45.6% to
49.1%), and services (22.8% to 24.6%), as the Company benefited from an improved
revenue mix at the higher volume level.
Research and development expenses increased 127.4%, or $203,000, to $362,000
for the six months ended June 30, 1996 from $159,000 in the prior year period.
Research and development costs as a percentage of revenues increased to 5.2% for
the six months ended June 30, 1996 from 2.9% in the comparable 1995 period. This
increase was primarily the result of increased costs of personnel hired in the
second half of 1995 which enabled the Company to introduce over 30 new products
in the first half of 1996 compared with 15 new introductions in the prior year
period.
19
Selling and marketing expenses increased 43.6%, or $278,000, to $915,000 for
the six months ended June 30, 1996 from $638,000 in the prior year period. This
increase was primarily attributable to increased personnel costs associated with
the addition of tele-sales staff for Quality Control Products, particularly
Accurun(tm), and increased advertising costs due to the commencement of the
Company's "Total Quality System" (TQS) marketing campaign.
General and administrative expenses increased 3.0%, or $31,000, to
$1,088,000 for the six months ended June 30, 1996 from $1,057,000 in the prior
year period. As a result, general and administrative expenses decreased as a
percentage of revenues to 15.7% for 1996 from 19.0% in the prior year period as
management maintained close control of expense levels.
Interest expense was essentially unchanged in the six months ended June 30,
1996 versus the prior year period as the prime rate increases in late 1995 were
offset by reduced borrowing due to both additional equity raised and prepayments
from certain customers for contract research services.
YEARS ENDED DECEMBER 31, 1995 AND 1994
Total revenue increased 14.4%, or $1,548,000, to $12,271,000 in 1995 from
$10,723,000 in 1994 . The increase in revenues was the result of a 10.7%
increase in product revenues of $640,000 to $6,622,000 from $5,981,000, and a
19.1% increase in service revenues of $908,000 to $5,649,000 from $4,741,000 in
1995 compared to 1994. The increase in product revenue was attributable to an
increase in prices at the beginning of 1995 and an increase in the volume of
sales of Quality Control Products and Basematrix (part of the Diagnostic
Components group), which increase was partially offset by the absence of
revenues in 1995 from two OEM Quality Control Panel contracts which were
completed in 1994. The Company also reduced emphasis on certain lower margin
Diagnostic Components as it focused more effort on sales of its proprietary
Basematrix product, which carries a higher margin. During 1995, the Company
reorganized its sales and marketing department and believes that this had an
adverse effect on sales growth for the period. The increase in service revenue
was primarily the result of increased specialty clinical laboratory testing, two
new research contracts and increased clinical trial services, particularly in
the area of HIV.
Gross profit increased 10.4%, or $426,000, to $4,539,000 for 1995 from
$4,113,000 in 1994. Products gross profit increased 9.7%, or $270,000, to
$3,057,000 in 1995 from $2,787,000 in 1994 as the products sales increase was
offset by a small decrease in products gross profit margin (to 46.2% in 1995
from 46.6%). The products gross margin decrease was a result of a small increase
in material handling personnel costs. Services gross profit increased 11.8%, or
$156,000, to $1,481,000 in 1995 from $1,326,000 in 1994 as the sales increase
was offset by a decrease in services gross profit margin to 26.2% in 1995 from
28.0% in 1994. Services gross margin declined primarily as a result of increased
personnel costs in the specialty clinical laboratory and an increase in contract
research activities, which carry a lower margin.
Research and development expenditures decreased 20.0%, or $94,000, to
$376,000 in 1995 from $469,000 in 1994. The decrease resulted from certain
technical staff being utilized for Company sponsored research and development in
1994 and Contract Research in 1995. See "-- Years Ended December 31, 1994 and
1993." Development projects included Accurun(tm), molecular and immunological
Run Controls, specialized molecular assays, and the development of a second
generation Lyme Disease western blot test kit for internal use by the Company's
specialty testing laboratory.
Selling and marketing expenses increased 12.4%, or $148,000, to $1,340,000
in 1995 from $1,192,000 in 1994. The increase was primarily attributable to
additional sales and marketing staff and overhead, partially offset by lower
trade show and travel expenses as the Company realized greater benefits from its
distributor network.
General and administrative costs increased 13.1%, or $269,000, to $2,316,000
in 1995 from $2,047,000 in 1994. This increase was primarily attributable to
additional staffing in support of revenue growth and higher reserve provisions
for doubtful accounts associated with the increased volume of revenue related to
testing in situations where payment to the Company depends on collecting from
the
20
patient rather than a healthcare institution. These increases were partially
offset by lower professional fees. Also included in general and administrative
expense was approximately $60,000 of nonrecurring costs associated with the move
of the specialty testing laboratory into a larger, custom-designed facility.
Interest expense increased 37.8%, or $92,000, to $336,000 in 1995 from
$244,000 in 1994, as the Company funded its working capital needs primarily
through increased borrowings.
YEARS ENDED DECEMBER 31, 1994 AND 1993
Total revenue increased 17.1%, or $1,566,000, to $10,723,000 in 1994 from
$9,157,000 in 1993. This increase was a result of a 51.7%, or $2,039,000,
increase in product sales, partially offset by a 9.1%, or $473,000, decrease in
service revenue. The product sales increase was primarily attributable to unit
volume growth of both existing and new Quality Control Panels for HIV and HCV,
and, to a lesser extent, to sales of the Company's first molecular-based Quality
Control Panel targeted for end-user PCR training. The service revenue decline
was primarily attributable to the completion in February 1994 of a government
contract with the United States Army for retrovirology research that reduced
contract research revenue by approximately $1,100,000 in 1994 compared with
1993. This decrease was partially offset by a $676,000, or 36.5%, increase in
specialty laboratory testing services.
Gross profit increased 32.5%, or $1,009,000, to $4,113,000 for 1994 from
$3,104,000 in 1993. Products gross profit increased 50.3%, or $933,000, to
$2,787,000 in 1994 from $1,855,000 in 1993 as the products sales increase was
partially offset by a small decrease in products gross margin (to 46.6% in 1994
from 47.0%). The products gross margin decrease was a result of higher costs
associated with pilot manufacturing of Accurun(tm). Services gross profit
increased 6.1%, or $76,000, to $1,326,000 in 1994 from $1,250,000 in 1993 as the
sales decrease was more than offset by an increase in services gross margin (to
28.0% in 1994 from 24.0%). Services gross margin increased primarily as a result
of improved economies of scale at its specialty clinical laboratory afforded by
higher test volume, and redeployment of staff into Company sponsored research
and development projects.
Research and development expenditures increased by 68.3%, or $190,000, to
$469,000 in 1994 from $279,000 in 1993 as the Company commenced several research
and development projects, including development of Quality Control Panels for
molecular diagnostics, increased expenditures related to the development of a
PCR test for Lyme Disease, and a second generation Lyme Disease western blot
test kit for internal use by the Company's specialty clinical laboratory.
Selling and marketing expenses increased 33.3%, or $297,000, to $1,192,000
in 1994 from $894,000 in 1993. This increase was primarily attributable to staff
additions in sales and customer service support for the products business and
also higher travel costs.
General and administrative expenses increased 26.4%, or $428,000, to
$2,047,000 in 1994 from $1,619,000 in 1993. This increase was primarily
attributable to a full year impact of staff additions in information systems,
regulatory affairs and accounting in support of the Company's sales growth and
growth expectations in both the Quality Control Products and the Specialty
Clinical Laboratory Services business.
Interest expense increased 36.4%, or $65,000, to $244,000 in 1994 from
$179,000 in 1993 as the Company funded its increased equipment and working
capital needs primarily from borrowings.
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its operations to date through cash flow from
operations, borrowings from banks and sales of equity.
At June 30, 1996 the Company had $1,398,000 outstanding and $2,028,000 of
availability under its $3.5 million Revolving Line of Credit Agreement due June
30, 1998 (the "Revolver"). Under the terms of the Revolver, the Company operates
under a zero balance account arrangement whereby cash receipts are received into
a lockbox at the bank and reduce the Revolver, while disbursements for
21
payroll and accounts payable items increase the outstanding balance of the
Revolver. Borrowings under the Revolver are limited to 80% of eligible accounts
receivable plus the lesser of 40% of inventory or $1.5 million. The Revolver
contains various covenants and restrictions and the amounts outstanding are
secured by all of the Company's assets and a $2 million life insurance policy on
an officer/stockholder. See Note 6 to Notes to the Consolidated Financial
Statements. The Company expects to use a portion of the proceeds of the Offering
to repay the outstanding amount under the Revolver, which at August 1, 1996 was
approximately $1,727,000. See "Use of Proceeds." Amounts repaid on the Revolver
will be available for reborrowing.
Net cash provided by operations for the six months ended June 30, 1996 was
$685,000 as compared to $105,000 in the prior year period. This increase in cash
flow was primarily attributable to an increase in net income and an increase in
deferred revenue from a payment of $308,000 under a research contract for future
clinical trial services. Cash flow used in operations in 1995, 1994 and 1993
amounted to $29,000, $554,000 and $427,000, respectively. The decrease in cash
used in operations in 1995 from 1994 was primarily attributable to an increase
in deferred revenue.
Cash used in investing activities for the six months ended June 30, 1996 was
$283,000 as compared to $216,000 in the prior year period. This increase in
investing activities was the result of increased capital expenditures for
production equipment associated with Accurun(tm) and other Quality Control
Products. Cash used in investing activities for 1995, 1994 and 1993 amounted to
$1,320,000, $405,000 and $850,000, respectively. The increased use of cash in
1995 versus 1994 was the result of the purchase of the Company's West
Bridgewater facility and in 1993 related to the acquisition of the net assets of
North American Laboratory Group Limited, Inc.
Cash used in financing activities for the six months ended June 30, 1996 was
$403,000 as compared to $151,000 provided by financing activities in the prior
comparable year period. Net cash was used in financing activities primarily as a
result of the repayment of $1,591,000 of the Revolver offset by $899,000 raised
through the sale of Common Stock to Kyowa Medex, Co., Ltd. Cash provided by
borrowings for 1995, 1994 and 1993 amounted to $1,240,000, $846,000 and
$494,000, respectively, and net proceeds from the sale of Common Stock for the
same periods amounted to $176,000, $170,000, and $765,000, respectively. The
proceeds of such debt were used for working capital, to acquire the West
Bridgewater property and to purchase capital equipment. The Company expects to
use a portion of the proceeds of the Offering to repay the outstanding balances
on these notes payable, which aggregated approximately $1,829,000 at August 1,
1996. See "Use of Proceeds."
Capital expenditures relate primarily to the Company's facilities and
related equipment. For the six months ended June 30, 1996 and 1995, capital
expenditures totaled $283,000 and $216,000 respectively. This represents an
increase of $67,000 in the six months ended June 30, 1996, as the Company
continues to invest in manufacturing equipment and information systems related
to both operations and finance. In 1995, 1994 and 1993 capital expenditures
amounted to $1,316,000, $405,000 and $461,000, respectively. In 1995, $806,000
of the Company's capital expenditures related to the purchase of the West
Bridgewater facility. As of August 1, 1996, the Company has available to it a
$250,000 five year term facility to finance equipment purchases, bearing
interest at prime plus 1%.
The Company anticipates capital expenditures to increase over the near term
as it expects to use approximately $1.0 million from the proceeds of this
Offering to expand its manufacturing capacity in West Bridgewater, of which
approximately $500,000 will be spent on building expansion and approximately
$500,000 will be spent on equipment. See "Use of Proceeds." The Company believes
that existing cash balances, the borrowing capacity available under the
Revolver, cash generated from operations and the proceeds of this Offering are
sufficient to fund operations and anticipated capital expenditures for the
foreseeable future. There were no material financial commitments for capital
expenditures as of June 30, 1996.
22
On April 26, 1996 the Company entered into a new five year distribution
agreement with a foreign distributor extending a six year old relationship.
Simultaneously, the distributor purchased 117,647 shares of the Company's Common
Stock at a price of $8.50 per share. The Purchase Agreement includes a
redemption right that may require the Company to repurchase the stock at $8.50
per share in the event the Company terminates the distribution agreement or it
expires prior to the Company completing an initial public offering of its Common
Stock. These shares have been presented in the Company's balance sheet
separately as redeemable Common Stock. Completion of this initial public
offering will terminate the redemption provisions and cause the reclassification
of these shares into stockholders' equity.
RECENT ACCOUNTING PRONOUNCEMENTS
In October 1995, the FASB issued Statement of Financial Accounting Standards
No. 123 ("SFAS 123") "Accounting for Stock-Based Compensation," which becomes
effective for fiscal years beginning after December 15, 1995. SFAS 123
establishes new financial accounting and reporting standards for stock-based
compensation plans. However, entities are allowed to elect whether to measure
compensation expense for stock-based compensation under SFAS 123 or APB No. 25,
"Accounting for Stock Issued to Employees." The Company has elected to continue
to account under APB No. 25 and will make the required pro forma disclosures of
net income and earnings per share as if the provisions of SFAS 123 had been
applied in its December 31, 1996 financial statements. The potential impact of
adopting this standard on the Company's pro forma disclosures of net income and
earnings per share has not been quantified at this time.
23
BUSINESS
GENERAL
The Company is a leading worldwide provider of proprietary quality control
products for use with in vitro diagnostic test kits ("test kits") for the
detection, analysis and monitoring of infectious diseases, including AIDS,
Hepatitis and Lyme Disease. These products are used to develop test kits, to
permit the monitoring of laboratory equipment and personnel, and to help ensure
the accuracy of test results. The Company's products are derived from human
plasma and serum using proprietary manufacturing processes. The Company believes
its Quality Control Panel products are viewed as the current industry standard
for the independent assessment of the performance of HIV and Hepatitis test
kits. The Company also manufactures diagnostic test kit components and provides
specialty laboratory services, including clinical trials. The Company's
customers include test kit manufacturers, regulatory agencies and end-users of
test kits such as blood banks, hospital laboratories and clinical reference
laboratories. Currently the Company's products are used in connection with the
detection of more than 15 infectious diseases, and its specialty laboratory
services are used in connection with the detection of over 100 such diseases.
INDUSTRY OVERVIEW
According to the World Health Organization ("WHO"), infectious diseases are
now the leading cause of premature death around the world and the third most
common cause of premature death in the United States. In 1995, more than 17
million people died from exposure to infectious diseases, constituting nearly
one-third of the approximately 52 million people worldwide who died from all
causes. Currently, the Company focuses on two infectious diseases, Viral
Hepatitis and AIDS, which are among the largest killers and are also a primary
focus of blood testing efforts worldwide.
WHO estimates that approximately 20 million people worldwide are infected
with HIV, and that approximately one million people died from AIDS-related
illnesses during 1995. WHO also estimates that up to 350 million people
worldwide are infected with Hepatitis Type B, one of several types of Viral
Hepatitis, and that over one million people died of Viral Hepatitis during 1995.
In developed countries, blood products are routinely screened for HIV and Viral
Hepatitis by use of infectious disease test kits.
The increased threat from infectious diseases has created a large and
growing market for test kits. Venture Planning Group, a medical products
research firm, estimates that the worldwide infectious disease test kit market
was approximately $2.7 billion in 1995, and will grow to $5.0 billion by 2000,
representing a compound annual increase of 13%.
Infectious Disease Test Kits and Testing Methods. Test kits contain in one
compact package all of the materials necessary to run a test for an infectious
disease. These include the disposable diagnostic components, instructions, and
reaction mixing vessels (generally 96-well plates or test tubes) which are
coated with the relevant infectious disease antigens, antibodies or other
materials. To perform the test, either a technician or a specially designed
instrument typically mixes the solutions from the test kit with human blood
specimens in a specific sequence according to the test kit instructions. The
mixture must then "incubate" for up to 18 hours, during which time a series of
biochemical reactions trigger signals (including color, light and radioactive
count) which indicate the presence or absence and amount of specific markers of
the particular disease in the specimen.
Test kits generally employ one of three methods for infectious disease
testing: microbiology, immunology or molecular biology. Traditional microbiology
tests use a growth medium that enables an organism, if present, to replicate and
be detected visually. Immunology tests detect the antigen or antibody, which is
an indicator (marker) of the pathogen (e.g., virus, bacterium, fungus or
parasite). Molecular diagnostic methods, such as the polymerase chain reaction
("PCR"), test for the presence of nucleic acids (DNA or RNA) which are specific
to a particular pathogen.
24
Most infectious disease tests currently use microbiological or immunological
methods. However, molecular diagnostic methods are increasingly being used in
research laboratories worldwide and the Company believes that soon they will be
accepted for routine use in the clinical laboratory setting. The Company
believes that the advent of molecular diagnostic methods will complement rather
than diminish the need to test by microbiological and immunological procedures,
because different test methods reveal different information about a disease
state. The Company anticipates that as new test methods become more widespread,
they will account for a larger portion of the Company's business.
Quality Control for In Vitro Diagnostic Test Kits. Customers employ quality
control products in order to develop and use test kits (both infectious and
non-infectious). Quality control products ensure that test kits detect the
correct analyte (specificity), detect it the same way every time
(reproducibility or precision), and detect it at the appropriate levels
(sensitivity). The major element of this quality control process is the
continuous evaluation of test kits by the testing of carefully characterized
samples that resemble the donor or patient samples routinely used with the test.
Quality control is used in both the infectious and non-infectious disease
markets, although currently it is not as prevalent among end-users of infectious
disease test kits.
The market for quality control products consists of three main customer
segments: (i) manufacturers of test kits, (ii) regulatory agencies that oversee
the manufacture and use of test kits and (iii) end-users of test kits, such as
hospitals, clinical reference laboratories and blood banks.
According to the Genesis Report Dx (May 1994), a medical products survey,
the quality control market for in vitro diagnostic testing for infectious and
non-infectious disease in 1994 totaled approximately $600 million. The Company
believes that the market for quality control products for infectious disease
testing currently represents less than five percent of the overall quality
control market. At the present time, most quality control products for
non-infectious disease test kits are sold to end-users, who have used quality
control products as part of standard laboratory practice for several decades.
Conversely, most quality control products for the infectious disease test kit
segment of the market are sold to test kit manufacturers and regulators, and not
to end-users, who have historically used quality control products only on a
limited basis. The Company believes that this lower level of usage among
end-users of infectious disease test kits is primarily due to laboratory
practices that have evolved from earlier testing methods that did not require
routine and extensive use of external quality controls as part of standard
laboratory practice. However, the Company also believes that this lower level of
usage among end-users of test kits represents a major market opportunity since
current testing methods have been improving test kit performance to increasingly
higher levels of sensitivity, specificity and reproducibility. The Company
believes that these three key criteria of test kit performance can be best
monitored through the use of quality control products, such as those sold by the
Company.
MARKET TRENDS
The Company believes that end-users of test kits will become the most
significant users of quality control products in the infectious disease market
and that the market for infectious disease test kits and related quality control
products will continue to expand, primarily as a result of the following four
trends.
Increased Regulatory Scrutiny. Due to the high level of public concern with
the dangers of infectious diseases, particularly AIDS, Viral Hepatitis, and Lyme
Disease, governmental regulatory agencies are requiring additional tests to
improve the safety of the blood supply, and are requiring manufacturers and
end-users of test kits to adopt quality assurance programs applicable to the
entire test kit product life-cycle, from initial product design and development
through manufacture and end-use. The passage of the Clinical Laboratory
Improvement Amendments of 1988 ("CLIA") and its regulatory implementation
beginning in 1992 have resulted in a set of recommended laboratory practices,
including more stringent quality control programs, as well as regular government
inspections aimed at improving the overall standard of proficiency in clinical
laboratories. As a result, the Company believes that blood bank, hospital and
clinical laboratory personnel are adopting more comprehensive quality assurance
programs, especially in infectious disease testing, to minimize the risk of
errors and to comply with CLIA and other regulations.
25
Growing Recognition of the Value of Using Quality Control Products. To
ensure the greatest possible safety of the blood supply, to achieve the earliest
possible diagnosis of infection, and to minimize the occurrence of false
negative results, sensitivity of tests (i.e., their ability to accurately detect
very small amounts of the disease marker) is a critical element. The Company
believes there is increasing recognition of the benefit of continuously
monitoring test sensitivity using quality control products to help ensure the
accuracy of each test run.
New Diseases and the Development of New Therapies. In recent years, HIV,
Hepatitis C Virus ("HCV"), Borrelia burgdorferi ("Lyme Disease") and Ehrlichia,
among others, have emerged as significant human pathogens. New and drug
resistant strains of known pathogens, such as those causing tuberculosis, escape
mutants of Hepatitis B Virus ("HBV"), and Group O and other variants of HIV,
have also emerged. In response, new and improved tests are being developed. In
addition, as new drug therapies are introduced to treat infectious diseases, new
tests are needed to monitor the effectiveness of these therapies. For example,
the recent advances in AIDS drug therapy, which use a combination of several
drugs to treat infected patients, have prompted the creation of a new viral load
test used to periodically measure the precise amount of virus in the patient's
blood to evaluate the effectiveness of the drug therapy. The Company believes
that viral load testing will be applied to additional areas of infectious
disease, including Hepatitis B and C and Lyme Disease.
Advanced Test Technologies and Equipment. Test kit manufacturers are
continuing to enhance the sensitivity, specificity and reproducibility of their
tests. Molecular diagnostics now permit the direct detection of the nucleic
acids (DNA and RNA) specific to viruses and other pathogens and are being used
to complement traditional microbiological and immunological tests for infectious
disease. New tests for urine and saliva have been developed that offer
advantages in some settings over blood tests and may be more widely used in the
future. Test kit manufacturers are also developing assays on silicon chips,
laser-read microspot arrays, and are using electrochemi- luminescence detection,
among other technologies. The different types of information obtained through
the complementary use of various diagnostic methods can provide the physician
with a broader perspective on the diagnosis and prognosis of the disease, as
well as on the effectiveness of drug therapy.
THE BOSTON BIOMEDICA ADVANTAGE
The Company believes it offers the only integrated range of products for
quality assurance throughout the entire infectious disease test kit life-cycle,
from initial research and development, through the regulatory approval process
and test kit production, to training, troubleshooting and routine use by
end-users. To directly address the emerging end-user market opportunity, the
Company introduced its TQS marketing platform based around its Accurun(tm) Run
Control products. The Company believes that TQS is the first comprehensive
package of quality control products designed specifically for infectious disease
test kit end-users, providing them with a customized approach to evaluate all of
the key elements of the testing process.
The Company believes that it has several competitive advantages which have
enabled it to achieve its current leadership position in quality control
products for infectious diseases:
Valuable Inventory. The Company has an inventory of approximately 50,000
distinct human blood specimens accumulated since 1986 through its worldwide
sources of blood-supply. This inventory cannot be easily or rapidly acquired on
the open market, and enables the Company to respond quickly to market trends and
customer needs.
Specialty Laboratory Services and Clinical Trials. The knowledge gained
through the Company's specialty laboratory services allows the Company to remain
at the forefront of emerging market trends and customer needs. By conducting
clinical trials of new test kits under development, the Company is able to
maintain close contact with manufacturers and to release Quality Control
Products for test kits soon after the test kits are introduced to the market. In
addition, by operating a specialty clinical laboratory, the Company is able to
better understand the requirements of the end-user.
26
Proprietary Manufacturing Know-How. As a result of ten years of experience
working with leading worldwide manufacturers in the development of their test
kits and with regulators to help in the evaluation of test kits, the Company has
developed proprietary know-how in manufacturing its Quality Control Products.
Reputation. The Company believes that it has developed a reputation as an
authority in quality control products for infectious disease among manufacturers
and regulators of infectious disease test kits. The Company believes that its
reputation, established over the past ten years, will assist it in penetrating
the emerging end-user market.
STRATEGY
The Company's strategy is to enhance its leadership position in the
infectious diseases quality control market and to take advantage of the emerging
opportunities in the end-user market for quality control products. There are
five key elements to this strategy:
Capitalize on Emerging End-User Market. In 1996 the Company introduced an
expanded line of Quality Control Products that are specifically designed for the
end-users of test kits, such as blood banks, hospitals and clinical
laboratories. The Company plans to continue to expand its line of Quality
Control Products, particularly its Accurun(tm) line of Run Controls, to cover a
wider range of immunological and molecular markers. The Company also recently
introduced its Total Quality System ("TQS") marketing platform, which combines
Accurun(tm) with other Quality Control Products to provide test kit end-users
with the products needed in an overall quality assurance program. The Company
intends to continue to expand its sales, marketing and distribution activities
to support its product development program for the emerging end-user quality
control market.
Develop New Products and Services. The Company intends to capitalize on its
reputation with manufacturers and regulators by developing Quality Control
Products and Diagnostic Components for use with test kits for both new test
methodologies and new diseases. For example, in response to a 1996 FDA mandate
that all blood collected for transfusion must be tested for the presence of the
HIV antigen, the Company recently introduced on an OEM basis the first quality
control training panels for use with the two FDA-licensed HIV antigen test kits
available in the United States. In addition, the Company has also provided a
training panel for end-users of the only FDA-licensed molecular amplification
test for HIV RNA, and has introduced a new line of HIV RNA controls to meet the
demand of the newly emerging viral load test market. In the future, the Company
expects to provide Quality Control Panels for use with tests that distinguish
among the subtypes of HIV, the serotypes of HCV, and the various strains of
Mycobacteria causing tuberculosis.
Enhance Technical Leadership. The Company seeks to expand its technical
capabilities by continually enhancing its strong scientific staff and
collaborating with other scientists worldwide, thus strengthening its reputation
in the area of quality control for infectious disease testing. The Company
maintains and enhances its technical leadership by participating in scientific
studies relevant to its products and services, and by making presentations at
scientific meetings on blood banking and infectious diseases. The Company's
scientists also publish articles in peer reviewed journals.
Capitalize on Complementary Business Operations. The Company intends to
capitalize on operational and marketing opportunities that arise out of its
activities in both infectious disease products and laboratory services. For
example, the Company conducts clinical trials for manufacturers of in vitro
diagnostic products, which allows the Company to maintain close contact with
test kit manufacturers and regulators, and enables the Company to evaluate new
technologies in various stages of development. The Company believes that the
reputation and experience of its laboratory and scientific staff, its large
number of unique Quality Control Panels, and its inventory of characterized
serum and plasma specimens assist the Company in marketing its clinical trial
services to its customers. Finally, the Company's specialty clinical laboratory
also affords the Company access to materials needed in the production of its
Quality Control Products and Diagnostic Components.
27
Pursue Strategic Acquisitions and Alliances. The Company intends to pursue
strategic acquisitions and alliances to expand its core product lines, to
strengthen its base in medical science and technology, and to secure sources of
blood supply. To date, the Company has acquired BTRL, a research and development
laboratory with a strong capability in molecular and cellular biology, and
BBI-NACL, formerly North American Laboratory Group Ltd., Inc., a microbiology
and immunology clinical laboratory specializing in the diagnosis of infectious
diseases, including tick-borne diseases. These acquisitions led to the
introduction in 1994 of the Company's first Quality Control Products for
molecular diagnostics. The Company believes that there may be additional
acquisition and alliance opportunities, such as blood donor centers in strategic
locations, that would strengthen its existing business.
PRODUCTS
The Company designs, develops and markets diagnostic products used for the
quality control, quality assurance and technical evaluation of test kits for the
laboratory diagnosis of infectious disease. The Company offers three product
groups: Quality Control Panels, Run Controls and Diagnostic Components.
The Company manufactures its products from human plasma and serum which are
obtained from nonprofit and commercial blood centers, primarily in the United
States. The Company has acquired and developed an inventory of approximately
50,000 individual blood units and specimens (with volumes ranging from 1 ml to
800 ml) which provides most of the raw material for its products. The Company
believes the current market value of this inventory is significantly in excess
of its book value.
QUALITY CONTROL PANELS
Quality Control Panels consist of blood products characterized by the
presence or absence of specific disease markers and a Data Sheet containing
comprehensive quantitative data useful for comparative analysis. These Quality
Control Products are designed for measuring overall test kit performance and
laboratory proficiency, as well as for training laboratory professionals. The
Company's Data Sheets are an integral part of its Quality Control Products.
These Data Sheets are created as the result of extensive testing of proposed
panel components in both the Company's laboratories and at major testing
laboratories on behalf of the Company in the United States and Europe, including
national public health laboratories, research and clinical laboratories and
regulatory agencies. These laboratories are selected based on their expertise in
performing the appropriate tests on a large scale in an actual clinical setting;
this testing process provides the Company's customers with the benefit that the
Quality Control Panels they purchase from the Company have undergone rigorous
testing in actual clinical settings. In addition, the Company provides
information on its Data Sheets on the reactivity of panel components in all FDA
licensed test kits and all leading European test kits for the target pathogen,
as well as for all other appropriate markers of this pathogen. For example, the
Company's HIV panel Data Sheets include anti-HIV by IFA, ELISA and western blot;
HIV antigen by ELISA; and HIV RNA by several molecular diagnostic procedures.
The Company's Data Sheets require significant time and scientific expertise to
prepare.
The Company first introduced Quality Control Panels in 1987. The Company
currently offers a broad range of Quality Control Panels that address a variety
of needs of manufacturers and regulators of test kits as well as blood banks,
hospitals, clinical laboratories and other end-users. Prices for the Company's
quality control seroconversion, performance and sensitivity panels range from
$450 to $2,000 each, and its qualification and OEM panels range from $100 to
$200 per panel. The following table describes the types of Quality Control Panel
products currently offered by the Company.
28
QUALITY CONTROL PANEL PRODUCTS
<TABLE>
<CAPTION>
PRODUCT LINE DESCRIPTION USE CUSTOMERS
<S> <C> <C> <C>
SEROCONVERSION PLASMA SAMPLES COMPARE THE TEST KIT
PANELS COLLECTED FROM A CLINICAL MANUFACTURERS AND
SINGLE INDIVIDUAL SENSITIVITY OF REGULATORS
OVER A SPECIFIC COMPETING
TIME PERIOD SHOWING MANUFACTURERS' TEST
CONVERSION FROM KITS, ENABLING THE
NEGATIVE TO USER TO ASSESS THE
POSITIVE FOR SENSITIVITY OF A
MARKERS OF AN TEST IN DETECTING A
INFECTIOUS DISEASE DEVELOPING
ANTIGEN/ANTIBODY
PERFORMANCE A SET OF 10 TO 50 DETERMINE TEST KIT TEST KIT
PANELS SERUM AND PLASMA PERFORMANCE AGAINST MANUFACTURERS AND
SAMPLES COLLECTED ALL EXPECTED LEVELS REGULATORS
FROM MANY DIFFERENT OF REACTIVITIES IN
INDIVIDUALS AND THE EVALUATION OF
CHARACTERIZED FOR NEW, MODIFIED AND
THE PRESENCE OR IMPROVED TEST
ABSENCE OF A METHODS
PARTICULAR DISEASE
MARKER
SENSITIVITY PANELS PRECISE DILUTIONS EVALUATE THE TEST KIT
OF HUMAN PLASMA OR LOW-END ANALYTICAL MANUFACTURERS
SERUM CONTAINING A SENSITIVITY OF A
KNOWN AMOUNT OF AN TEST KIT
INFECTIOUS DISEASE
MARKER AS
CALIBRATED AGAINST
INTERNATIONAL
STANDARDS
QUALIFICATION DILUTIONS OF HUMAN DEMONSTRATE THE CLINICAL REFERENCE
PANELS PLASMA OR SERUM CONSISTENT LABORATORIES, BLOOD
MANIFESTING A FULL LOT-TO-LOT BANKS, AND HOSPITAL
RANGE OF PERFORMANCE OF TEST LABORATORIES
REACTIVITIES IN KITS, TROUBLESHOOT
TEST KITS FOR A PROBLEMS, EVALUATE
SPECIFIC MARKER PROFICIENCY, AND
TRAIN LABORATORY
TECHNICIANS
OEM PANELS CUSTOM-DESIGNED TRAIN LABORATORY CUSTOM DESIGNED
QUALIFICATION PERSONNEL ON NEW WITH TEST KIT
PANELS FOR TEST KITS OR MANUFACTURERS AND
REGULATORS AND TEST EQUIPMENT REGULATORS AS AN
KIT MANUFACTURERS END-USER PRODUCT OR
FOR DISTRIBUTION TO FOR INTERNAL USE
CUSTOMERS OR FOR
INTERNAL USE
</TABLE>
Seroconversion and Performance Panels are comprised of unique and rare
plasma specimens obtained from individuals during the short period of time when
the markers for a particular disease are converting from negative to positive.
As a result, the quantity of any such panel is limited, so that the Company must
replace these panels as they sell out with another panel comprised of different
specimens equally unique and rare. The Company believes that its inventory and
relationships with blood centers affords it a competitive advantage in acquiring
such plasma for replacement panels and developing new products to meet market
demand. There can be no assurance that the Company will be able to continue to
obtain such specimens. See "Risk Factors -- Difficulty in Obtaining Raw
Materials."
The Company believes that it offers its customers a broad range of Quality
Control Panel products to address the requirements of the complete life-cycle of
a test kit, from initial research and development, through the regulatory
approval process, test kit production, training, troubleshooting and routine use
by end-users. The Company further believes that its Data Sheets, an integral
part of all panel products, offer its customers in-depth information on a
particular test kit of interest. Quality
29
Control Panels currently span the immunologic markers for AIDS (i.e., HIV),
Hepatitis B and C, Lyme Disease and ToRCH (Toxoplasma, rubella, cytomegalovirus
and herpes simplex virus). New introductions this year include molecular
Performance Panels for HBV and HCV, qualification panels for HIV, HBV and HCV,
and additional Seroconversion Panels for HIV, HBV, and HCV.
ACCURUN(TM) RUN CONTROLS
End-users of test kits utilize Run Controls to confirm the validity of
results by monitoring test performance, thereby minimizing false negative test
results and improving error detection. Run controls consist of one or more
specimens of known reactivity that are tested together with donor or patient
samples in an assay to determine whether the assay is performing within the
manufacturer's specifications. Clinical laboratories generally process their
patient specimens in a batch processing mode, and typically include 25 to 100
specimens to be tested in each batch (a "run"). Large laboratories may perform
several runs per day, while smaller laboratories may perform only a single run
each day, or sometimes only several runs per week. A clinical laboratory using a
Run Control will place the Run Control product in a testing well or test-tube,
normally used for a specimen, and will test it in the same manner that it tests
the donor or patient specimens. It will then compare the results generated to an
acceptable range, determined by the user, to measure whether the other specimens
are being accurately tested. The Run Control result must be within the
acceptable range to be considered valid. This is often tracked visually using a
Levey-Jennings chart. Depending upon a particular laboratory's quality control
practices, it may use several Run Controls on each run or it may simply use a
Run Control in a single run at the beginning and end of the day.
The Company believes its Accurun(tm) product line provides the following
benefits to end-users:
* Helps to satisfy the requirements of Good Laboratory Practice.
* Tracks the accuracy and precision of test runs.
* Detects laboratory errors and identifies trends before they become a
problem.
* Monitors test kit performance, equipment and personnel.
* Helps to meet National Committee For Clinical Laboratory Standards
("NCCLS") for molecular and immunological diagnostic methods for
infectious disease quality control.
* Documents the validity of test results, day to day, week to week.
The Company introduced its first four Accurun(tm) Run Control products in
the fourth quarter of 1993 and has since developed and released for sale an
additional 24 Accurun(tm) products. A limited number of these products are
available for diagnostic purposes; the others currently are limited to research
use. See " -- Government Regulation." Current Accurun(tm) Run Control products
range in price from $15 to $45 per milliliter and are described in the following
table.
ACCURUN(TM) RUN CONTROLS
<TABLE>
<CAPTION>
CURRENT
NUMBER OF PRIMARY
PRODUCT LINE DESCRIPTION PRODUCTS CUSTOMER(S)
<S> <C> <C> <C>
Accurun(tm) 1-99 Multi-marker Run Control for 4 Blood Banks
immunological tests
Accurun(tm) 100-199 Single-marker Run Control 17 Hospitals and clinical
for immunological tests reference laboratories
Accurun(tm) 200-299 Multi-marker Run Control for 1 Research and specialty
molecular tests laboratories
Accurun(tm) 300-399 Single-marker Run Control 3 Research and specialty
for molecular tests laboratories
Accurun(tm) 800-899 Negative Run Control for 3 All laboratories
immunological and molecular
tests
</TABLE>
30
The Company's Accurun(tm) family of products is targeted at the emerging
market of end-users of infectious disease test kits. The Company believes that
it offers the most comprehensive line of Run Controls in the industry, and that
its Accurun(tm) products, in combination with its Quality Control Panel
products, provide an extensive line of products for quality assurance in
infectious disease testing. See "-- Sales and Marketing." The Company intends to
continue to expand its line of Accurun(tm) products, thereby providing its
customers with the convenience and cost effectiveness of a single supplier for
independent run controls. See "Risk Factors -- Undeveloped End-User Market For
Quality Control Products for Infectious Disease Test Kits."
The Company has received 510(k) clearance from the FDA to market its Accurun
1(R) line, for diagnostic purposes, and intends to apply for such clearance for
the remainder of its Accurun(tm) products. Failure to obtain, or delays in
obtaining, such clearance would adversely affect the Company's strategy of
capitalizing on the end-user market. See "Risk Factors -- Stringent Government
Regulation" and "-- Government Regulation."
DIAGNOSTIC COMPONENTS
Diagnostic Components are the individual materials supplied to infectious
disease test kit manufacturers and combined (often after further processing by
the manufacturer) with other materials to become the various fluid components of
the manufacturer's test kit. The Company supplies Diagnostic Components in four
product lines: Normal Human Plasma, Normal Human Serum, Basematrix, and
Characterized Disease State Serum and Plasma. Normal Human Plasma and Serum are
both the clear liquid portion of blood which contains proteins, antibodies,
hormones and other substances, except that the Serum product has had the
clotting factors removed. Basematrix, the Company's proprietary processed serum
product that has been chemically converted from plasma, is designed to be a
highly-stable, lower cost substitute for most Normal Human Serum and Plasma
applications. Characterized Disease State Serum and Plasma are collected from
specific blood donors pre-selected because of the presence or absence of a
particular disease marker. The Company often customizes its Diagnostic
Components by further processing the raw material to meet the specifications of
the test kit manufacturer. The Company's Diagnostic Components range in price
from $0.25 to $60 per milliliter, with the majority selling between $0.50 and $5
per milliliter.
The Company believes that it has several competitive advantages in
Diagnostic Components. Through its trained and experienced laboratory staff, the
Company is able to perform comprehensive in-house testing for a number of
markers in a particular material, and consequently is able to address the
demands of its customers. The Company's large inventory of approximately 50,000
specimens provides it with the flexibility to produce Diagnostic Components
efficiently and rapidly in response to customer requests. The Company believes
that its proprietary manufacturing knowledge enables it to manufacture stable,
high quality products to meet the demands of its worldwide customer base.
SERVICES
The Company seeks to focus its specialty laboratory services in both the
clinical reference laboratory testing and advanced research areas. The Company
concentrates its services in those areas of infectious disease testing which are
complementary to its quality control and diagnostic products businesses.
Specialty Clinical Laboratory Testing. The Company operates an independent
specialty clinical laboratory which performs both routine and sophisticated
infectious disease testing in microbiology, immunology and molecular biology,
with special emphasis in AIDS, Viral Hepatitis and Lyme Disease. The Company's
specialty clinical laboratory combines traditional microbiology, advanced
immunology, and current molecular diagnostic techniques, such as PCR, to detect
and identify microorganisms, their antigens and related antibodies, and their
nucleic acids (i.e., DNA and RNA). Customers include physicians, clinics,
hospitals and other clinical/research laboratories.
Contract Research. The Company offers a variety of contract research
services in molecular biology, cell biology and immunology to governmental
agencies, diagnostic test kit manufacturers and biomedical researchers.
Molecular biology services include DNA sequencing, recombinant DNA
31
support, probe labeling and custom PCR assays. Cell biology and immunology
services include sterility testing, virus infectivity assays, cultivation of
virus or bacteria from clinical specimens, preparation of viral or bacterial
antigens, or nucleic acids and production of antibodies. The Company is
currently providing research services for assessment of the efficiency of
candidate HIV vaccines in a monkey model system under two separate contracts
with the National Institute for Allergy and Infectious Disease ("NIAID"), a part
of the National Institutes of Health ("NIH"). Each of these contracts has a two
year term which expires in September 1997. In addition, since 1983, the Company,
through its BTRL subsidiary, has provided blood processing and repository
services for the National Cancer Institute ("NCI"), also a part of the NIH. The
repository stores over 2,000,000 specimens and processes or ships up to several
thousand specimens per week in support of various NIH cancer and virus research
programs. While the current NCI repository contract terminates in February 1997,
the Company has responded to a Request for Proposals by the United States
government for a new four year contract to replace this contract. There can be
no assurance that any of these contracts will be replaced with new contracts.
See "Risk Factors -- Dependence on Key Customers."
Small Business Innovation Research ("SBIR") grants and other government
contracts similar to the ones described have enabled the Company to develop
technologies applicable to new product development and its specialty clinical
laboratory. For example, recent SBIR grants have enabled the Company to develop
PCR based assays for the detection of the nucleic acids of HIV, HCV and Lyme
Disease. Although the Company does not currently have any SBIR grants, it has
two pending applications for such grants and intends to continue to seek
government grants and contracts that further the Company's core technology and
commercial business. There can be no assurance that the Company will receive any
government research grants in the future.
Clinical Trials. The Company conducts clinical trials for domestic and
foreign test kit manufacturers. Test kit manufacturers must conduct such trials
to collect data for submission to the United States FDA and other regulatory
agencies. By providing this service, the Company is able to maintain close
contact with test kit manufacturers and regulators, and is able to evaluate new
technologies in various stages of development. The Company believes that the
reputation of its laboratory and scientific staff, its large number of Quality
Control Panels, and its inventory of characterized serum and plasma specimens
assist the Company in marketing its clinical trial services to its customers.
The Company has performed clinical trials for a number of United States and
foreign test kit manufacturers seeking to obtain FDA approval for their
infectious disease test kits.
Drug Screening Program. As a subcontractor for an NIH AIDS grant held by the
University of North Carolina at Chapel Hill, the Company has established an
anti-HIV drug screening program to test a large number of natural products
(largely plant derivatives) to determine whether they inhibit HIV replication in
an in vitro assay system. These in vitro assays are also offered as a service to
researchers and pharmaceutical companies who wish to test various candidate
anti-viral agents for anti-HIV activity.
RESEARCH AND DEVELOPMENT
The Company's research and development effort is focused on the development
of (i) new and improved Quality Control Products for the emerging end-user
market, (ii) new products for existing customers, (iii) Diagnostic Components
for use with test kits for both new test methodologies and new diseases, and
(iv) infectious disease testing services using PCR and other amplification
assays for AIDS, Viral Hepatitis, Lyme Disease and Chlamydia, among others. The
Company has approximately 20 full or part-time employees dedicated to its
research and development effort. For the six months ended June 30, 1996 the
Company increased spending on research and development as a percentage of
revenues compared to the same period ended June 30, 1995 and expects to continue
to increase such expenditures as a percentage of revenues for the next several
years. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Results of Operations." The Company's research
scientists work closely with sales, marketing and manufacturing personnel to
identify and prioritize the development of new products and services.
32
The Company's product development activities center on the identification
and characterization of materials for the manufacture of new Quality Control
Products and the replacement of sold-out products. For example, during 1996, the
Company has introduced 10 new Seroconversion, Performance and Sensitivity Panel
products as well as 14 new Accurun(tm) Run Controls; in addition, during July
1996, the Company released its first Qualification Panel products. The Company
is developing new Quality Control Products for use with molecular diagnostic
tests for HIV, HCV and HBV. Recently the Company expanded its Quality Control
Product line beyond the retrovirus and Viral Hepatitis diagnostics area to
include sexually transmitted diseases (e.g., Syphilis), tick-borne diseases
(e.g., Lyme Disease), and respiratory and other infections (e.g., Tuberculosis)
and is continuing to develop new Quality Control Products for these and other
diseases. The Company has increased the number of Quality Control Products it
offers from approximately 20 in 1990 to approximately 150 products in 1996.
The Company is also developing new and improved infectious disease specialty
tests for Lyme Disease and other tick-borne diseases for use in its specialty
laboratory business. For example, the Company was among the first to develop
enzyme immunoassays and Western Blot assays for Lyme Disease. The Company is
also pursuing new applications of PCR technology to infectious disease
diagnostics, such as amplification assays for the pathogens of AIDS, Viral
Hepatitis, Lyme Disease and Chlamydia, and for the direct detection of other
infectious agents in blood, tissues and other body fluids.
From time to time in the past, the Company has funded a portion of its
research and development activities from grants provided by various agencies and
departments of the U.S. government. See "-- Services."
STRATEGIC ALLIANCES
University of North Carolina at Chapel Hill. The Company is directly
supporting a drug discovery program at UNC, in which a full-time research
scientist is working to develop synthetic derivatives of anti-HIV compounds that
have been discovered pursuant to the Company's joint collaboration with UNC.
This research scientist is also working to introduce modifications to these
derivatives that would make them more soluble, less toxic, or otherwise enhance
their anti-viral properties. UNC has licensed to the Company exclusive worldwide
rights to three series of patent applications filed by the Company and UNC with
respect to three classes of anti-HIV compounds. Two such compounds have
exhibited therapeutic indices in in vitro test model systems in excess of those
recorded for AZT under comparable test conditions. In addition, under this
license, the Company will also have the rights to any new anti-HIV compounds or
derivatives developed in the course of this sponsored research, provided the
Company obtains certain regulatory approvals from the FDA. See "-- Services."
Ajinomoto Co., Inc. The Company entered into an agreement with Ajinomoto
Co., Inc. in October 1995 pursuant to which the Company is performing research
regarding among other things, whether tests for certain amino acids in plasma
can be used to determine a person's immune status, particularly in chronic
fatigue syndrome. This project is funded by Ajinomoto and has a three year
budget of approximately $1,000,000. Discoveries and inventions arising from the
research will be owned by Ajinomoto, but the Company has the right of first
refusal to obtain certain exclusive licenses from Ajinomoto of any patented
technology arising from the research. The Company is entitled certain royalties
based upon a percentage of sales of products arising out of the research. This
agreement expires in September 1998.
SALES AND MARKETING
The Company's sales and marketing efforts are directed by a Senior Vice
President of Sales and Marketing who supervises 15 sales people and four other
full-time sales and marketing employees.
The Company's marketing strategy is focused upon addressing the needs of its
customers in the infectious disease testing market throughout the entire test
kit life-cycle, from initial research and development, through the regulatory
approval process and test kit production, to training, troubleshooting and
routine use by end-users such as, clinical laboratories, hospitals and blood
banks. By serving its customers at all stages of the product life-cycle, the
Company expects to stay at the forefront of trends in infectious disease
testing, which in turn enables the Company to anticipate and respond to the
needs of the marketplace.
33
The Company recently has begun to focus its sales and marketing efforts on
the emerging end-user market for quality control products for infectious disease
test kits. To promote this objective, the Company is implementing a major
marketing platform, known as "Total Quality System" ("TQS"). TQS is a package of
Quality Control Products, including the Company's Accurun(tm) Run Controls,
which is designed to provide test kit end-users with the products needed in an
overall quality assurance program. These products enable laboratories to
evaluate each of the key elements involved in the testing process: the test kit,
laboratory equipment and laboratory personnel. The Company believes that TQS
effectively addresses the need for end-users to ensure the accuracy of their
test results. The Company intends to continue to expand its sales and marketing
activities with respect to its Accurun(tm) line of Run Control products. Since
the beginning of 1996, the Company has hired two new employees for the sales and
marketing of its Accurun(tm) line of products and expects to add six more direct
salespeople by the end of 1997.
The Company's products are currently sold through a combination of
telephone, mail, third party distributors and limited direct sales efforts.
Domestically, products are sold through an in-house tele-sales group consisting
of five sales representatives, two sales managers and one customer service
representative. Internationally, the Company distributes its products both
directly and through 17 independent distributors located in Japan, Australia,
South America, Southeast Asia, Israel and Europe. The Company's international
sales manager oversees the Company's foreign distributors. During the fiscal
years 1993, 1994, 1995 and the six months ended June 30, 1995 and 1996 the
Company's distributors accounted for 1.9%, 3.5%, 6.2%, 2.8% and 8.8% of the
Company's total revenue, respectively. The Company intends to further expand
sales through international distributors, although there can be no assurances
that it will be able to do so. See "Risk Factors -- Risks Associated with Export
Sales."
The Company's Specialty Clinical Laboratory Testing services are marketed
primarily through a direct domestic sales force consisting of seven sales
representatives managed by a sales director. The sales representatives are
located throughout the eastern and mid-western United States. They are supported
internally by a client services representative.
The Company emphasizes high quality products and services, technical
knowledge, and responsiveness to customer needs in its marketing activities for
both products and services. The Company educates its distributors, customers and
prospective customers about its products through a series of detailed marketing
brochures, technical bulletins and pamphlets, press releases and direct mail
pieces. These materials are supplemented by advertising campaigns in major
industry publications, technical presentations, and exhibitions at local,
national and international trade shows and expositions.
CUSTOMERS
The Company's customers for Quality Control Product and Diagnostic
Components comprise three major groups: (i) international diagnostics and
pharmaceutical manufacturing companies, such as Abbott Diagnostics, Behring,
Boehringer Mannheim, Chiron, Fujirebio, Hoffman LaRoche, Ortho Diagnostics
(Johnson and Johnson), Sanofi Diagnostics and Sorin Biomedica; (ii) regulatory
agencies such as the United States FDA, the British Public Health Laboratory
Service, the French Institut National de la Transfusion Sanguine, and the German
Paul Ehrlich Institute; and (iii) end-users of diagnostic test kits, such as
hospital clinical laboratories, public health laboratories and blood banks,
including the Swiss Red Cross, United Blood Services and Kaiser Permanente. In
1995, the Company sold products to approximately 100 diagnostics and
pharmaceutical manufacturers, 15 regulatory agencies, and 250 end-users. The
Company's Specialty Clinical Laboratory Testing services are sold to hospital
and clinical laboratories, blood banks, researchers and other health care
providers.
The Company does not have long-term contracts with its customers. The
Company's products are sold to its customers pursuant to purchase orders for
discrete purchases. Although the Company believes that its relationships with
these customers are satisfactory, termination of the Company's relationship with
any one of such customers could have a material adverse effect on the Company.
See "Risk Factors -- Dependence on Key Customers."
34
During the fiscal years 1993, 1994 and 1995, and the six months ended June
30, 1995 and 1996, sales to the Company's three largest customers accounted for
an aggregate of approximately 20% of the Company's net sales, although the
customers were not identical in each period and no one customer accounted for
more than 10% of net sales.
MANUFACTURING AND OPERATIONS
The Company manufactures and assembles substantially all of its products at
its facility in West Bridgewater, Massachusetts. The Company has computerized
purchasing, inventory, and test result and materials tracking systems in an
integrated operations management system, and believes that these systems are
adequate for its current level of production, but would require further
enhancements if the Company experiences substantial future growth. The Company
acquires raw materials from a variety of vendors and through a program of donor
recruitment, donor screening, product collection, product characterization and
donor management. All important materials have multiple sources of supply.
The Company's West Bridgewater facility contains environmentally-controlled
freezers and cold rooms, which are used to store raw materials for manufacturing
and finished products. More than 3,000 square feet of space in the West
Bridgewater facility is dedicated to freezers and cold rooms. The freezers and
cold rooms are monitored continuously and the Company maintains a natural gas
fired emergency generator in the event of a power outage.
The Company also operates a specialty clinical laboratory in New Britain,
Connecticut and a research and development laboratory in Rockville, Maryland.
See "-- Properties."
COMPETITION
The market for the Company's products and services is highly competitive.
Many of the Company's competitors are larger than the Company and have greater
financial, research, manufacturing, and marketing resources. Important
competitive factors for the Company's products include product quality, price,
ease of use, customer service and reputation. In a broader sense, industry
competition is based upon scientific and technical capability, proprietary
know-how, access to adequate capital, the ability to develop and market products
and processes, the ability to attract and retain qualified personnel, and the
availability of patent protection. To the extent that the Company's products and
services do not reflect technological advances, the Company's ability to compete
in those products and services could be adversely affected. See "Risk Factors --
Risk of Technological Change" and "-- Competition."
In the area of Quality Control Products, the Company competes in the United
States primarily with NABI (formerly North American Biologicals, Inc.) in Run
Controls and Quality Control Panel products and Blackhawk Biosystems Inc. in Run
Controls. In Europe, the Netherlands Red Cross has recently begun offering
several Run Control and panel products. The Company believes that all three of
these competitors currently offer a more limited line of products than the
Company, although there can be no assurance these companies will not expand
their product lines.
In the Diagnostic Components area, the Company competes against integrated
plasma collection and processing companies such as Serologicals, Inc. and NABI,
as well as smaller, independent plasma collection centers and brokers of plasma
products. In the Diagnostic Components area, the Company competes on the basis
of quality, breadth of product line, technical expertise and reputation.
The Company believes that it has competitive advantages in the quality
control products and diagnostic components industry. These include its access to
raw materials, technical know-how, broad product line and established reputation
among large diagnostics and pharmaceutical manufacturers, as well as regulatory
agencies.
In the Specialty Clinical Laboratory Testing services portion of the
Company's business, it competes with large national reference laboratories, such
as LabCorp of America, Corning Clinical Laboratories and SmithKline Beecham
Clinical Laboratories, as well as several independent regional laboratories,
hospital laboratories, government contract laboratories and large research
institutions. The Company believes that by focusing on the specialty clinical
laboratory market, it is able to offer its customers a higher value-added
service on the more complex diagnostic tests than the larger national reference
laboratories.
35
GOVERNMENT REGULATION
The manufacture and distribution of medical devices, including products
manufactured by the Company that are intended for in vitro diagnostic use, are
subject to extensive government regulation in the United States and in other
countries. See "Risk Factors -- Stringent Government Regulation."
In the United States, the Food, Drug, and Cosmetic Act ("FDCA") prohibits
the marketing of in vitro diagnostic products until they have been cleared or
approved by the FDA, a process that is time-consuming, expensive, and uncertain.
In vitro diagnostic products must be the subject of either a premarket
notification clearance (a "510(k)") or an approved premarket approval
application ("PMA"). With respect to devices reviewed through the 510(k)
process, a Company may not market a device for diagnostic use until an order is
issued by FDA finding the product to be substantially equivalent to a legally
marketed device. A 510(k) submission may involve the presentation of a
substantial volume of data, including clinical data, and may require a
substantial period of review. With respect to devices reviewed through the PMA
process, a Company may not market a device until FDA has approved a PMA
application, which must be supported by extensive data, including preclinical
and clinical trial data, literature, and manufacturing information to prove the
safety and effectiveness of the device.
The Company's Accurun Run Controls, when marketed for diagnostic use, have
been classified by the FDA as medical devices. The Accurun 1(R) Multi-Marker Run
Control, which include eight analytes, has been cleared through the 510(k)
process. The Company expects that, in the future, most of its products that need
FDA premarket review also will be reviewed through the 510(k) process. The FDA
could, however, require that some products be reviewed through the PMA process,
which generally involves a longer review period and the submission of more
information to FDA. There can be no assurance that the Company will obtain
regulatory approvals on a timely basis, if at all. Failure to obtain regulatory
approvals in a timely fashion or at all could have a material adverse effect on
the Company.
All of the Company's Quality Control Products, with the exception of Accurun
1(R), are marketed "for research use only," which do not require FDA premarket
clearance or approval, and not for diagnostic uses, which do require FDA
premarket clearance or approval. The labeling of these products limits their use
to research. It is possible, however, that some purchasers of these products may
use them for diagnostic purposes despite the Company's intended use. In these
circumstances, the FDA could allege that these products should have been cleared
or approved by the FDA prior to marketing, and initiate enforcement action
against the Company, which could have a material adverse effect on the Company.
Once cleared or approved, medical devices are subject to pervasive and
continuing regulation by the FDA, including, but not limited to, good
manufacturing practices ("GMP") regulations governing testing, control, and
documentation; and reporting of adverse experiences with the use of the device.
Ongoing compliance with GMP and other applicable regulatory requirements is
monitored through periodic inspections. FDA regulations require agency clearance
or approval for certain changes if they do or could affect the safety and
effectiveness of the device, including, for example, new indications for use,
labeling changes or changes in design or manufacturing methods. In addition,
both before and after clearance or approval, medical devices are subject to
certain export and import requirements under the FDCA. Product labeling and
promotional activities are subject to scrutiny by the FDA and, in certain
instances, by the Federal Trade Commission. Products may be promoted by the
Company only for their approved use. Failure to comply with these and other
regulatory requirements can result, among other consequences, in failure to
obtain premarket approvals, withdrawal of approvals, total or partial suspension
of product distribution, injunctions, civil penalties, recall or seizures of
products and criminal prosecution.
The Company believes that its Quality Control Panels are not regulated by
the FDA because they are not intended for diagnostic purposes. The Company
believes that its Diagnostic Components, which are components of in vitro
diagnostic products, may be subject to certain regulatory requirements under the
FDCA and other laws administered by the FDA, but do not require that the Company
obtain a
36
premarket approval or clearance. There can be no assurance, however, that the
FDA would agree or that the FDA will not adopt a different interpretation of the
FDCA or other laws it administers, which could have a material adverse effect on
the Company.
Laws and regulations affecting some of the Company's products are in effect
in many of the countries in which the Company markets or intends to market its
products. These requirements vary from country to country. Member states of the
European Economic Area (which is composed of the European Union members and the
European Free Trade Association members) are in the process of adopting various
product and services "Directives" to address essential health, safety, and
environmental requirements associated with the subject products and services.
The "Directives" cover both quality system requirements (ISO Series 9000
Standards) and product and marketing related requirements. In addition, some
jurisdictions have requirements related to marketing of the Company's products.
There can be no assurance that the Company will be able to obtain any regulatory
approvals required to market its products on a timely basis, or at all. Delays
in receipt of, or failure to receive such approvals, or the failure to comply
with regulatory requirements in these countries or states could lead to
compliance action, which could have a material adverse effect on the Company's
business, financial condition, or results of operations.
The Company's service-related business (clinical trials, infectious disease
testing, and contract research) is subject to other national and local
requirements. The Company's facilities are subject to review, inspection,
licensure or accreditation by some states, national professional organizations
(College of American Pathologists), and other national regulatory agencies
(Health Care Financing Administration). Studies to evaluate the safety or
effectiveness of FDA regulated products (primarily human and animal drugs or
biologics) must also be conducted in conformance with relevant FDA requirements,
including Good Laboratory Practice ("GLP") regulations, investigational new drug
or device regulations, Institutional Review Board ("IRB") regulations and
informed consent regulations.
CLIA prohibits laboratories from performing in vitro tests for the purpose
of providing information for the diagnosis, prevention or treatment of any
disease or impairment of, or the assessment of, the health of human beings
unless there is in effect for such laboratories a certificate issued by the U.S.
Department of Health and Human Services ("HHS") applicable to the category of
examination or procedure performed.
The Company currently holds permits issued by HHS (CLIA license), Centers
for Disease Control and Prevention (Importation of Etiological Agents or Vectors
of Human Diseases), the U.S. Department of Agriculture (Importation and
Transportation of Controlled Materials and Organisms and Vectors) and the U.S.
Nuclear Regulatory Commission (in vitro testing with byproduct material under
general license, covering the use of certain radioimmunoassay test methods).
The Company is also subject to government regulation under the Clean Water
Act, the Toxic Substances Control Act, the Resource Conservation and Recovery
Act, the Atomic Energy Act, and other national, state and local restrictions
relating to the use and disposal of biohazardous, radioactive and other
hazardous substances and wastes. The Company is an exempt small quantity
generator of hazardous waste and has a U.S. Environmental Protection Agency
identification number. The Company is also registered with the U.S. Nuclear
Regulatory Commission for use of certain radioactive materials. All hazardous
waste is manifested and disposed of properly. The Company is also subject to
various state regulatory requirements governing the handling of and disposal of
biohazardous, radioactive and hazardous wastes. The Company has never been a
party to any environmental proceeding.
Internationally, some of the Company's products are subject to additional
regulatory requirements, which vary significantly from country to country. Each
country in which the Company's products and services are offered must be
evaluated independently to determine the country's particular requirements. In
foreign countries, the Company's distributors are generally responsible for
obtaining any required government consents.
37
INTELLECTUAL PROPERTY
None of the Company's Quality Control Products or Diagnostic Components have
been patented. The Company has decided to hold as trade secrets current
technology used to prepare Basematrix and other blood-based products. The
Company relies primarily on a combination of trade secrets and non-disclosure
and confidentiality agreements, and in certain limited circumstances, patents,
to establish and protect its proprietary rights in its technology and products.
There can be no assurance that others will not independently develop or
otherwise acquire the same, similar or more advanced trade secrets and know-how.
The Company has two United States patents and, jointly with UNC, has filed
three series of United States and foreign patent applications relating to
compounds, pharmaceutical compositions and therapeutic methods in connection
with the Company's drug discovery program at UNC. See "-- Services," and " --
Research and Development."
The Company has no reason to believe that its products and proprietary
methods infringe the proprietary rights of any other party. There can be no
assurance, however, that other parties will not assert infringement claims in
the future. See "Risk Factors -- Protection of Intellectual Property and
Proprietary Technology."
PROPERTIES
The Company's corporate offices and manufacturing facilities are located in
a two story, 22,500 square foot building in West Bridgewater, Massachusetts. The
Company owns and operates this building. The Company intends to use
approximately $1 million of the proceeds of this Offering to expand its
manufacturing capacity and to purchase necessary equipment at its West
Bridgewater site, and has submitted plans to local authorities for the
development of an additional 7,500 square feet, primarily for manufacturing
purposes. The Company anticipates that these renovations will begin this year.
The Company believes that following these renovations, its facility in West
Bridgewater will be sufficient to meet its foreseeable needs. See "Use of
Proceeds."
The Company leases its laboratory facilities in Rockville, Maryland and New
Britain, Connecticut. The Rockville facility contains 21,000 square feet and is
occupied under a five-year lease that is due to expire on June 30, 1997. The
Company is currently considering the exercise of its option to extend the lease
for an additional five years, as well as relocating its laboratory. The Company
believes that there is sufficient space available in the Rockville facility for
its current needs. The New Britain facility has 15,000 square feet, most of
which is dedicated to laboratory space. The lease is for five years and is due
to expire on July 30, 2000; the Company has an option to renew for an additional
five years.
EMPLOYEES
As of August 1, 1996 the Company employed 184 persons, all of whom were
located in the United States. Seventy-seven of these persons were employed in
West Bridgewater, Massachusetts, 58 in New Britain, Connecticut, and 49 at the
Rockville, Maryland site. None of the Company's employees is covered by a
collective bargaining agreement. The Company believes that it has a satisfactory
relationship with its employees.
38
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of the Company and their ages are as
follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
<S> <C> <C>
Richard T. Schumacher<F1> 46 President; Chief Executive Officer and
Chairman of the Board
Kevin W. Quinlan<F2> 46 Senior Vice President, Finance; Chief
Financial Officer; Treasurer and Director
Patricia E. Garrett, Ph.D. 53 Senior Vice President, Regulatory Affairs &
Strategic Programs
Mark M. Manak, Ph.D. 45 Senior Vice President, Research and
Development
Richard C. Tilton, Ph.D. 60 Senior Vice President, Specialty Laboratory
Services
Barry M. Warren 49 Senior Vice President, Sales & Marketing
Ronald V. DiPaolo, Ph.D. 52 Vice President of Operations
Francis E. Capitanio<F2> 52 Director
Henry A. Malkasian<F1> 79 Director
Calvin A. Saravis<F1><F2> 66 Director
- ------------------
<FN>
<F1> Member of the Compensation Committee.
<F2> Member of the Audit Committee.
</FN>
</TABLE>
Mr. Schumacher, the founder of the Company, has been the President since
1986, and Chief Executive Officer and Chairman since 1992. Mr. Schumacher served
as the Director of Infectious Disease Services for Clinical Science Laboratory,
a New England-based medical reference laboratory, from 1986 to 1988. From 1972
to 1985, Mr. Schumacher was employed by the Center for Blood Research, a
nonprofit medical research institute associated with Harvard Medical School. Mr.
Schumacher received a B.S. in zoology from the University of New Hampshire.
Mr. Quinlan, a Director of the Company since its founding, has been Senior
Vice President, Finance, Treasurer, and Chief Financial Officer since January
1993. From 1990 to December 1992, he was the Chief Financial Officer of ParcTec,
Inc. a New York-based leasing company. Mr. Quinlan served as Vice President and
Assistant Treasurer of American Finance Group, Inc. from 1981 to 1989 and was
employed by Coopers & Lybrand from 1975 to 1980. Mr. Quinlan is a certified
public accountant and received a M.S. in accounting from Northeastern University
and a B.S. in economics from the University of New Hampshire.
Dr. Garrett has been Senior Vice President, Regulatory Affairs & Strategic
Programs since 1988. From 1980 to 1987, Dr. Garrett served as the Technical
Director of the Chemistry Laboratory, Department of Laboratory Medicine at the
Lahey Clinic Medical Center. Dr. Garrett earned her Ph.D. from the University of
Colorado and was a postdoctoral research associate at Harvard University, Oregon
State University, Massachusetts Institute of Technology and the University of
British Columbia.
Dr. Manak has served as Senior Vice President, Research and Development
since 1992. From 1980 to 1992, he served as Senior Research Scientist, Molecular
Biology, of Biotech Research Laboratories. Dr. Manak received his Ph.D. in
biochemistry from the University of Connecticut and completed postdoctoral
research work in biochemistry/virology at Johns Hopkins University.
39
Dr. Tilton has served as Senior Vice President, Specialty Laboratory
Services since the Company's acquisition of BBI-North American Clinical
Laboratories, Inc. in 1993 and was one of the founders of BBI-NACL, where he
served as President from 1989 to 1993. Dr. Tilton has 25 years of experience in
university hospital clinical microbiology laboratories and is board certified in
medical and public health microbiology. Dr. Tilton received his Ph.D. in
microbiology from the University of Massachusetts.
Mr. Warren has served as Senior Vice President, Sales & Marketing since
1993. From 1985 to 1993, Mr. Warren served as Group Director of Marketing of
Organon Teknika, a manufacturer of infectious disease reagents. Mr. Warren
received an M.A. in political science from Loyola University of Chicago and a
B.A. from Loyola University.
Dr. DiPaolo has been Vice President of Operations since 1993. Prior to
joining the Company, Dr. DiPaolo served as Vice President and General Manager of
the Biomedical Products Division of Collaborative Research, a medical research
products company. From 1975 to 1986 he was employed by DuPont New England
Nuclear, an in vitro test kit manufacturer. Dr. DiPaolo received his Ph.D. in
biochemistry from Massachusetts Institute of Technology and later completed
postdoctoral research at the Eunice Shriver Center in Waltham, Massachusetts.
Mr. Capitanio has served as a Director since January 1986. He has been
President, Treasurer and Director of Diatech Diagnostics Inc. (formerly
Immunotech Corporation), an in vitro diagnostics company and a wholly owned
subsidiary of Healthcare Technologies Ltd., since 1980. Mr. Capitanio received
an M.B.A. from the Sloan School of Management, Massachusetts Institute of
Technology and a B.S. in metallurgy from Massachusetts Institute of Technology.
Mr. Malkasian has served as a Director since the Company's organization in
1978. Mr. Malkasian is a practicing attorney-at-law and a member of the firm
Malkasian & Budge in Massachusetts. He received his J.D. degree from Harvard
University School of Law and a B.A. degree from Clark University.
Dr. Saravis has served as a Director since 1978. Since 1971, Dr. Saravis has
been a Senior Research Associate at the Mallory Institute of Pathology and since
1979 he has been a Senior Research Associate at the Cancer Research Institute --
New England Deaconess Hospital. Since 1984, Dr. Saravis has had an appointment
as an Associate Professor of Surgery (biochemistry) at Harvard Medical School
and an Associate Research Professor of Pathology at Boston University School of
Medicine. Dr. Saravis received his Ph.D. in immunology and serology from Rutgers
University.
In August 1990 the Board of Directors established a Compensation Committee
currently composed of Messrs. Schumacher, Saravis and Malkasian. The functions
of the Compensation Committee include presentation and recommendations to the
Board of Directors on compensation levels for officers and directors and
issuance of stock options to the Board of Directors, employees and affiliates.
In August 1990 the Board of Directors established an Audit Committee
currently composed of Messrs. Capitanio, Quinlan and Saravis. The functions of
the Audit Committee include recommending to the Board of Directors the
engagement of the independent accountants, reviewing the scope of internal
controls and reviewing the implementation by management of recommendations made
by the independent accountants.
The Company's Board of Directors is divided into three classes, with the
classes being elected for staggered three-year terms. At each annual meeting of
stockholders, directors will be elected to succeed those in the class whose term
then expires, and each elected director shall serve for a term expiring at the
third succeeding annual meeting of stockholders after such director's election,
and until the director's successor is elected and qualified. Thus, directors
stand for election only once in three years. Executive officers serve at the
discretion of the Board of Directors.
DIRECTOR COMPENSATION
Directors of the Company do not receive cash compensation for their
services. Each director is eligible to receive options to purchase Common Stock
under the Company's 1987 Non-Qualified Stock Option Plan. As of August 1, 1996,
options to purchase an aggregate of 249,750 shares have been granted to
directors of the Company under this Plan. During fiscal 1995, options to
purchase an aggregate of 15,000 shares of Common Stock were granted to the
Directors as follows: 5,000 shares to Mr. Capitanio, 5,000 shares to Mr.
Malkasian, and 5,000 shares to Dr. Saravis and no shares to either Mr.
Schumacher or Mr. Quinlan.
40
EXECUTIVE COMPENSATION
The following table sets forth the compensation for the fiscal year ended
December 31, 1995 of each of the Chief Executive Officer and the six most highly
compensated officers of the Company (the "Named Executive Officers"), none of
whom received any bonuses during the fiscal year ended December 31, 1995:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
FOR FISCAL 1995
---------------
OTHER ANNUAL
NAME AND PRINCIPAL POSITION SALARY($) COMPENSATION($)
--------------------------- --------- ---------------
<S> <C> <C>
Richard T. Schumacher....................................................... 166,676 2,008<F1>
President and Chief Executive Officer
Kevin W. Quinlan............................................................ 120,615 1,650<F2>
Senior Vice President, Finance and Chief Financial Officer
Patricia E. Garrett, Ph.D. ................................................. 92,353 1,650<F2>
Senior Vice President, Regulatory Affairs & Strategic Programs
Mark M. Manak, Ph.D. ....................................................... 102,753 --
Senior Vice President, Research & Development
Richard C. Tilton, Ph.D. ................................................... 111,924 6,000<F3>
Senior Vice President, Specialty Laboratory Services
Barry M. Warren............................................................. 113,454 1,500<F2>
Senior Vice President, Sales & Marketing
Ronald V. DiPaolo, Ph.D. ................................................... 86,614 1,500<F2>
Vice President of Operations
<FN>
<F1> Consists of personal usage of Company vehicle, and includes the value of
premiums paid for a term life insurance policy.
<F2> Consists of automobile allowance, discontinued as of March 31, 1995.
<F3> Consists of automobile allowance.
</FN>
</TABLE>
The following table sets forth the aggregate number and value of options
exercisable and unexercisable by the Named Executive Officers during fiscal
1995. No stock options were granted to, or exercised by, any of the Named
Executive Officers in fiscal 1995.
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT 12/31/95(#) AT 12/31/95($)<F1>
NAME AND PRINCIPAL POSITION EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
--------------------------- ---------------------------------------------------
<S> <C> <C>
Richard T. Schumacher .............................. 127,500 2,500
President and Chief Executive Officer
Kevin W. Quinlan ................................... 58,000 10,000
Senior Vice President, Finance and Chief
Financial Officer
Patricia E. Garrett, Ph.D. ......................... 41,250 1,250
Senior Vice President, Regulatory Affairs &
Strategic Programs
Mark M. Manak, Ph.D. ............................... 26,250 8,750
Senior Vice President, Research & Development
Richard C. Tilton, Ph.D. ........................... 17,500 17,500
Senior Vice President, Specialty Laboratory
Services
Barry M. Warren .................................... 7,500 7,500
Senior Vice President, Sales & Marketing
Ronald V. DiPaolo, Ph.D. ........................... 25,000 1,000
Vice President of Operations
<FN>
<F1> There was no public trading market for the Common Stock as of December 31,
1995. Accordingly, these values have been calculated on the basis of the
assumed initial public offering price of $ _____ per share, less the
applicable exercise price.
</FN>
</TABLE>
41
EMPLOYMENT AGREEMENTS
None of the Company's employees are subject to employment agreements with
the Company.
STOCK PLANS
1987 Non-Qualified Stock Option Plan: The Company adopted the 1987
Non-Qualified Stock Option Plan (the "Non-Qualified Plan") to provide an
opportunity to employees, officers, directors and consultants employed by or
affiliated with the Company or any of its subsidiaries to acquire stock in the
Company, to provide increased incentives to such persons to promote the success
of the Company's business and to encourage such persons to become affiliated
with the Company through the granting of options to acquire its capital stock.
Any employee of the Company or of a subsidiary of the Company, including
officers, as well as directors of the company and consultants or providers of
services to the Company are eligible to receive nonqualified stock options under
the Non-Qualified Plan. A total of 897,600 shares of Common Stock has been
reserved for issuance under the Non-Qualified Plan.
The Non-Qualified Plan is administered by a Committee currently consisting
of at least one member appointed by the Board of Directors, and after the
completion of this Offering to consist of at least two independent members of
the Board of Directors. The Committee has the authority and discretion to
determine those persons to whom options shall be granted under the Non-Qualified
Plan, to determine the number of shares to be granted, to establish the terms
and conditions upon which options may be exercised or transferred, to alter any
restrictions or conditions on the options and to make all other determinations
necessary or desirable for the administration of the Non-Qualified Plan. The
exercise price for options granted under the Non-Qualified Plan is determined by
the Committee, but is in no event less than the par value of the Common Stock.
Options granted under the Non-Qualified Plan continue in effect for such period
as the Committee determines. The Non-Qualified Plan terminates as of December
16, 1997.
As of August 1, 1996, options to purchase 749,850 had been issued pursuant
to the Non-Qualified Plan at exercise prices ranging from $.25 to $6.00,
including an aggregate of 249,750 shares to the Company's directors, Richard
Schumacher, Kevin Quinlan, Francis Capitanio, Henry Malkasian, and Calvin
Saravis.
Employee Stock Option Plan: The purpose of the Employee Stock Option Plan
(the "Employee Plan") is to provide increased incentives to employees, to
encourage new employees to become affiliated with the Company and to associate
more closely the interests of such persons with those of the Company. The
Employee Plan permits the issuance of options to purchase up to 750,000 shares
of Common Stock in the form of incentive stock options as defined in Section 422
of the Internal Revenue Code of 1986, as amended, and non-qualified stock
options. The Employee Plan is currently administered by a Committee consisting
of at least one member appointed by the Board of Directors, and after the
completion of this Offering, shall consist of at least two independent members
of the Board of Directors. The exercise price of stock options is determined by
the Committee, but is in no event less than par value, and the exercise price of
incentive stock options may not be less than the fair market value of the Common
Stock on the date of grant (or, in the case of holders of 10% or more of the
outstanding Common Stock, 110% of the fair market value on such date). The
Committee also determines the vesting schedule, number of shares and other terms
of the options. As of August 1, 1996, options to purchase 184,537 shares of
Common Stock at exercise prices ranging from $6.00 to $8.50 per share were
outstanding under the Employee Plan.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee currently consists of Messrs. Schumacher and
Malkasian and Dr. Saravis, each of whom has received options to purchase shares
of Common Stock. See "-- Director Compensation" and "-- Stock Plans."
LIMITATION OF OFFICERS' AND DIRECTORS' LIABILITY; INDEMNIFICATION
AGREEMENTS
The Company's Amended and Restated Articles of Organization eliminate,
subject to certain exceptions, the personal liability of directors to the
Company or its stockholders for monetary damages for breaches of fiduciary
duties as directors. The Restated Articles do not provide for the elimination of
or any limitation on the personal liability of a director for (i) any breach of
the director's duty of loyalty
42
to the Company or its stockholders, (ii) acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii)
certain unauthorized dividends, redemptions or distributions as provided under
Section 61 of the Massachusetts Business Corporation Law, (iv) certain loans of
assets of the Company to any of its officers or directors as provided under
Section 62 of the Massachusetts Business Corporation Law or (v) any transaction
from which the director derived an improper personal benefit. This provision of
the Amended and Restated Articles of Organization will limit the remedies
available to a stockholder in the event of breaches of any director's duties to
such stockholder or the Company.
The Company's Amended and Restated Articles of Organization provide that the
Company may, either in its By-laws or by contract, provide for the
indemnification of directors, officers, employees and agents, by whomever
elected or appointed, to the full extent permitted by law, as it may be amended
from time to time.
The Company intends to enter into indemnification agreements with each of
the directors and officers. The indemnification agreements will provide that the
Company will pay certain amounts incurred by a director or officer in connection
with any civil or criminal action or proceeding and specifically including
actions by or in the name of the Company (derivative suits) where the
individual's involvement is by reason of the fact that he is or was a director
or officer. Such amounts include, to the maximum extent permitted by law,
attorney's fees, judgments, civil or criminal fines, settlement amounts and
other expenses customarily incurred in connection with legal proceedings. Under
the indemnification agreements, a director or officer will not receive
indemnification if he is found not to have acted in good faith in the reasonable
belief that his action was in the best interests of the Company.
43
CERTAIN TRANSACTIONS
Registration Rights. The Company is a party to a Registration Rights
Agreement dated June 5, 1990, as amended (the "Registration Agreement") with G &
G Diagnostics Limited Partnership I and G & G Diagnostics Limited Partnership II
(together, "G & G") pursuant to which G & G has certain rights to have its
shares of Common Stock registered by the Company under the Securities Act." A
total of 366,670 shares of Common Stock (the "Registrable Shares") held by G & G
or subject to warrants held by G & G may be registered under the Registration
Agreement. If the Company proposes to register any of its securities under the
Securities Act, either for its own account or for the account of other
securityholders, G & G is entitled to notice of the registration and is entitled
to include, at the Company's expense, the Registrable Shares therein, provided,
among other conditions, that the underwriters have the right to limit the number
of such shares included in the registration. In addition, G & G may require the
Company at its expense on no more than two occasions, to file a registration
statement under the Securities Act with respect to its Registrable Shares, and
the Company is required to use its best efforts to effect a registration,
subject to certain conditions and limitations. Further, G & G may require the
Company at its expense to register the Registrable Shares on Form S-3 when such
form becomes available to the Company, subject to certain conditions and
limitations. G & G waived its respective registration rights for this Offering.
See "Principal Stockholders."
Warrant Exercise. In May 1995, G & G Diagnostics Limited Partnership II
exercised warrants to purchase 40,000 shares of the Company's Common Stock for
an exercise price of $2.50 per share or an aggregate amount of $100,000.
Indemnification Contracts. The Company intends to enter into indemnification
agreements with each of its directors and officers. See "Management --
Limitation of Officers' and Directors' Liability; Indemnification Agreements."
44
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information as of August 1, 1996
concerning the beneficial ownership of Common Stock by each director, certain
executive officers, all executive officers and directors as a group, and each
person known by the Company to be the beneficial owner of 5% or more of the
Company's Common Stock. This information is based upon information received from
or on behalf of the named individuals. Unless otherwise noted, the beneficial
owners listed have sole voting and investment power over the shares listed.
<TABLE>
<CAPTION>
PERCENTAGE OF OUTSTANDING SHARES
BENEFICIALLY OWNED<F1>
----------------------
NUMBER OF SHARES BEFORE THE AFTER THE
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED OFFERING OFFERING
------------------------------------ ------------------ -------- --------
<S> <C> <C> <C>
5% Stockholders
Irwin J. Gruverman<F2> .............................. 412,920 14.71% %
c/o G & G Diagnostics Limited Partnership I
30 Ossipee Road
Newton, MA 02164
G & G Diagnostics Limited Partnership II<F3> 153,333 5.69%
Directors and Senior Executives
Richard T. Schumacher<F4><F5> 1,013,957 35.89
Henry A. Malkasian<F4><F6> 311,510 11.54
Kevin W. Quinlan<F4> 93,100 3.37
Patricia E. Garrett<F4> 55,000 2.01
Richard C. Tilton<F4> 62,500 2.29
Mark M. Manak<F4> 55,500 2.03
Barry M. Warren<F4> 37,500 1.37
Ronald V. DiPaolo<F4> 28,000 1.03
Calvin A. Saravis<F4> 23,000 *
Francis E. Capitanio<F4> 8,750 *
All Executive Officers and Directors as a group
(10 Persons)<F4><F5><F6><F7> 1,688,817 54.04
<FN>
* Less than 1% of the outstanding Common Stock.
<F1> The number of shares of Common Stock outstanding used in calculating the
percentage for each listed person includes the shares of Common Stock
underlying options or warrants held by such person.
<F2> Includes 283,333 shares held of record by three limited partnerships
(including G & G Diagnostics Limited Partnership II), of which Mr.
Gruverman is the general partner, 10,000 shares subject to options held by
Mr. Gruverman and 106,670 shares subject to warrants held by one of three
limited partnerships.
<F3> The address for G & G Diagnostics Limited Partnership II is the same as
that for Mr. Gruverman. Mr. Gruverman is the beneficial owner of the shares
of Common Stock held of record by G & G Limited Partnership II.
<F4> Includes the following shares subject to options: Mr. Capitanio -- 8,750,
all of which are exercisable within 60 days after August 1, 1996; Dr.
DiPaolo -- 28,000, 25,000 of which are exercisable within 60 days after
August 1, 1996; Dr. Garrett -- 45,000, 41,250 of which are exercisable
within 60 days after August 1, 1996; Mr. Quinlan -- 73,000, 58,000 of which
are exercisable within 60 days after August 1, 1996; Mr. Malkasian --
10,000, all of which are exercisable within 60 days after August 1, 1996;
Dr. Manak -- 37,500, 26,250 of which are exercisable within 60 days after
August 1, 1996; Dr. Saravis -- 23,000, all of which are exercisable within
60 days after August 1, 1996; Mr. Schumacher --135,000, 127,500 of which
are exercisable within 60 days after August 1, 1996; Dr. Tilton -- 37,500,
26,250 of which are exercisable within 60 days after August 1, 1996; and
Mr. Warren -- 37,500, 7,500 of which are exercisable within 60 days after
August 1, 1996.
<F5> Includes 50,000 shares held of record by Mr. Schumacher's spouse and 20,000
shares held of record by Mr. Schumacher as custodian for his daughter.
Excludes an aggregate of 146,317 shares held by other relatives of Mr.
Schumacher as to which Mr. Schumacher disclaims beneficial ownership.
<F6> Includes 12,000 shares held of record by Mr. Malkasian's son, 5,000 shares
held by Mr. Malkasian's daughter, 53,850 shares held by Mr. Malkasian's
spouse and 30,000 shares held by Mr. Malkasian as trustee in trust for each
of his son and his daughter.
<F7> Includes 4,000 shares held of record by Mr. Manak as custodian for his
daughter.
</FN>
</TABLE>
45
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 20,000,000 shares of
Common Stock, $0.01 par value (referred to herein as "Common Stock") and
1,000,000 shares of Preferred Stock, $.01 par value (referred to herein as
"Preferred Stock").
COMMON STOCK
As of August 1, 1996, there were 2,690,064 shares of Common Stock
outstanding, held of record by approximately 130 stockholders.
The holders of Common Stock are entitled to one vote per share on all
matters to be voted on by stockholders and are entitled to receive such
dividends, if any, as may be declared from time to time by the Board of
Directors from funds legally available therefor. The holders of Common Stock do
not have cumulative voting rights in the election of directors. Upon liquidation
or dissolution of the Company, the holders of Common Stock are entitled to
receive all assets available for distribution to the stockholders. The Common
Stock has no preemptive or other subscription rights, and there are no
conversion rights or redemption or sinking fund provisions with respect to such
shares. All of the shares of Common Stock are, and the shares to be sold in this
Offering will be, fully paid and nonassessable.
PREFERRED STOCK
The Company is authorized to issue up to 1,000,000 shares of Preferred
Stock, none of which are outstanding. The Board of Directors may, without future
action of the stockholders of the Company, issue the Preferred Stock in one or
more classes or series and fix the rights and preferences thereof, including the
dividend rights, dividend rates, conversion rights, voting rights, terms of
redemption (including sinking fund provisions), redemption price or prices,
liquidation preferences and the number of shares constituting any class or
series, or the designations of such class or series. The voting and other rights
of the holders of Common Stock may be subject to and adversely affected by, the
rights of holders of any Preferred Stock that may be issued in the future.
MASSACHUSETTS ANTI-TAKEOVER AND RELATED STATUTES
Control Share Acquisition Law. Under Chapter 110D of the Massachusetts
General Laws governing "control share acquisitions," any stockholder of certain
publicly-held Massachusetts corporations who acquires certain ranges of voting
power -- one-fifth or more but less than one-third of all voting power,
one-third or more but less than a majority of all voting power, or a majority or
more of all voting power -- may not (except in certain transactions) vote such
stock unless the stockholders (excluding the shares held by the interested
stockholders) of the corporation so authorize. As permitted by Chapter 110D, the
Company's Amended and Restated By-laws include a provision which excludes the
Company from the applicability of that statute upon completion of the Offering.
Business Combination Statute. Chapter 110F of the Massachusetts General
Laws, entitled "Business Combinations with Interested Shareholders," applies to
publicly-held Massachusetts corporations with 200 or more stockholders of
record. Generally, this statute prohibits such Massachusetts corporations from
engaging in a "business combination" with an "interested stockholder" for a
period of three years following the date of the transaction in which the person
becomes an interested stockholder unless (a) the interested stockholder obtains
the approval of the corporation's board of directors prior to becoming an
interested stockholder; (b) the interested stockholder acquires at least 90% of
the voting stock of the corporation (excluding shares held by certain affiliates
of the corporation) outstanding at the time he becomes an interested
stockholder; or (c) the business combination is both approved by the board of
directors and authorized at an annual or special meeting of stockholders by the
holders of at least two-thirds of the outstanding voting stock of the
corporation (excluding shares held by the interested stockholder). An
"interested stockholder" is a person who, together with
46
affiliates and associates, owns (or at any time within the prior three years did
own) 5% or more of the outstanding voting stock of the Corporation. A "business
combination" includes, among other transactions, a merger, stock or asset sale
and other transactions resulting in a financial benefit to the stockholder. The
Amended and Restated Articles of Organization and Restated By-laws of the
Company do not expressly provide for opting out of the provisions of Chapter
110F. As a result, the application of this statute to the Company after
completion of this Offering could discourage or make it more difficult for any
person or group of persons to attempt to obtain control of the Company. The
Company may at any time amend its Amended and Restated Articles of Organization
or Restated By-laws to elect not to be governed by Chapter 110F, by a vote of
the holders of a majority of its voting stock, but such an amendment would not
be effective for twelve months and would not apply to a business combination
with any person who became an interested stockholder prior to the date of the
amendment.
CERTAIN PROVISIONS OF THE COMPANY'S AMENDED AND RESTATED ARTICLES OF
ORGANIZATION AND AMENDED AND RESTATED BY-LAWS
The Company's Amended and Restated Articles of Organization include several
provisions which may render more difficult an unfriendly tender offer, proxy
contest, merger or other change in control of the Company. See "Risk Factors --
Possible Adverse Effect of Certain Anti-takeover Provisions."
Preferred Stock. The Amended and Restated Articles of Organization permit
the Board of Directors to issue preferred stock in one or more series and to fix
the rights, preferences, privileges and restrictions thereof, without further
vote or action by the stockholders. The issuance of preferred stock may have the
effect of delaying, deferring or preventing a change in control of the Company
and may adversely affect the voting and other rights of the holders of Common
Stock. The Company currently has no plans to issue any preferred stock.
Classification of Board of Directors. The Amended and Restated Articles of
Organization provide for the classification of the Company's Board of Directors
into three classes, with the classes being elected for staggered three-year
terms. At each annual meeting of stockholders, directors will be elected to
succeed those in the class whose term then expires, and each elected director
shall serve for a term expiring at the third succeeding annual meeting of
stockholders after such director's election, and until the director's successor
is elected and qualified. Thus, directors stand for election only once in three
years. This provision also restricts the ability of stockholders to enlarge the
Board of Directors. Changes in the number of Directors may be effected by a vote
of a majority of the Continuing Directors (as defined in the Amended and
Restated Articles of Organization) or by the stockholders by vote of at least
80% of the shares of Company's voting stock outstanding, voting as a single
class. Under this provision, Directors may only be removed with or without cause
by the affirmative vote of the holders at least 80% of the combined voting power
of the outstanding shares of the Company's voting stock, voting together as a
single class, or upon the vote of a majority of the Continuing Directors.
Fair Price Provision. The Amended and Restated Articles of Organization
contain a "Fair Price Provision" that is intended to protect stockholders who do
not tender their shares in a takeover bid by guaranteeing them a minimum price
for their shares in any subsequent attempt to purchase such remaining shares at
a price lower than the acquiror's original acquisition price. The Fair Price
Provision requires the affirmative vote of the holders of at least 80% of the
Company's outstanding voting stock for certain business combinations with a
Related Person, unless specified price criteria and procedural requirements are
met or the business combination is approved by a majority of the Continuing
Directors.
Indemnification Provision. The Amended and Restated Articles of Organization
provide that the Company may, either in its By-laws or by contract, provide for
the indemnification of directors, officers, employees and agents, by whomever
elected or appointed, to the full extent permitted by applicable law, as it may
be amended from time to time. See "-- Limitation of Officers' and Directors'
Liability; Indemnification Agreements."
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for the Common Stock is ___________.
47
SHARES ELIGIBLE FOR FUTURE SALE
Prior to this Offering, there has been no public market for the Common
Stock. Future sales of substantial amounts of Common Stock in the public market
could adversely affect the market price of the Common Stock.
Upon completion of this Offering, the Company will have _____ shares of
Common Stock outstanding ( _____ shares if the Underwriters' overallotment
option is exercised in full). Of those shares, the _____ shares sold in this
Offering ( _____ shares if the Underwriters' overallotment option is exercised
in full) will be freely tradeable without restriction (except as to affiliates
of the Company) or further registration under the Securities Act. The remaining
2,690,064 shares of Common Stock were sold by the Company in reliance on
exemptions from the registration requirements of the Securities Act and are
"restricted securities" within the meaning of Rule 144 under the Securities Act.
The Company's directors, executive officers and certain other stockholders
holding in the aggregate _____ shares of Common Stock have agreed not to offer
to sell, sell or otherwise dispose of any shares of Common Stock prior to the
expiration of 180 days from the date of this Prospectus. Oscar Gruss & Son
Incorporated may, in its sole discretion and at any time without prior notice,
release all or any portion of the shares of Common Stock subject to the lockup
agreements.
Following the expiration of the 180-day lockup period, _____ shares of
Common Stock will be eligible for sale in the public market without
registration, subject to certain volume and other limitations, pursuant to Rule
144 or Rule 701 under the Securities Act. The remaining _____ shares of Common
Stock held by existing stockholders, including _____ shares issuable upon
exercise of options, will become eligible for sale under Rule 144 or otherwise
at various times thereafter. All shares of Common Stock outstanding on the date
of this Prospectus will be eligible for sale to certain qualified institutional
buyers in accordance with Rule 144A under the Securities Act.
In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated), including an affiliate of the Company, may sell in
the open market within any three-month period a number of shares that does not
exceed the greater of (i) 1% of the then-outstanding shares of the Company's
Common Stock or (ii) the average weekly trading volume in the over-the-counter
market during the four calendar weeks preceding such sale, provided that a
minimum of two years has elapsed between the later of the date of acquisition of
the securities from the issuer or from an affiliate of the issuer. The holding
period of shares of a non-affiliate for this purpose includes the holding period
of all prior non-affiliate holders, provided that if an affiliate has held such
shares at any time, the holding period shall commence upon the sale to a
non-affiliate by the last affiliate to hold the shares. Sales under Rule 144 are
also subject to certain limitations on the manner of sale, notice requirement
and availability of current public information about the Company. Under Rule
144(k), a non-affiliate who holds restricted securities and who has not been
affiliated with the Company during the three-month period preceding the proposed
sale thereof may sell such securities without regard to conditions imposed by
Rule 144 if at least three years have elapsed from the sale of such securities
by the Company or any affiliate. The Securities and Exchange Commission has
proposed amendments to Rule 144, including an amendment which would reduce the
waiting period to one year.
Under Rule 701 of the Securities Act, persons who purchased shares pursuant
to an employee stock purchase program or upon exercise of options granted prior
to the effective date of this Offering are entitled, subject to certain
conditions and limitations of Rule 701, to sell such shares 90 days after the
effective date of this Offering in reliance upon Rule 144, without regard to the
holding period requirement of Rule 144 and, in the case of non-affiliates,
without compliance with the public information, volume limitation or notice
provisions of Rule 144.
The Company intends to register under the Securities Act shortly after the
consummation of the offering an aggregate of 1,629,600 shares of Common Stock
issued or issuable upon exercise of employee stock options granted under the
Non-Qualified Plan and the Employee Plan, including 934,387 shares issuable upon
exercise of such options outstanding on the date of this Prospectus. Two of the
Company's stockholders and the holder of a warrant to purchase Common Stock have
the right to cause the Company to register their shares under the Securities Act
and to include their shares in certain future registrations of securities
effected by the Company under the Securities Act. An aggregate of 604,317 shares
of Common Stock, including 226,670 shares of Common Stock issuable upon exercise
of outstanding warrants are covered by such registration rights. See "Risk
Factors -- Shares Eligible for Future Sale," "Certain Transactions --
Registration Rights" and "Principal Stockholders."
48
UNDERWRITING
The Underwriters named below, for whom Oscar Gruss & Son Incorporated and
Kaufman Bros., L.P. are acting as the Representatives (the "Representatives"),
have severally agreed, subject to the terms and conditions contained in the
Underwriting Agreement, to purchase from the Company the number of shares of
Common Stock set forth opposite their respective names below.
<TABLE>
<CAPTION>
NUMBER OF
NAME SHARES
---- ------
<S> <C>
Oscar Gruss & Son Incorporated
Kaufman Bros., L.P.
-------
TOTAL
=======
</TABLE>
The Underwriting Agreement provides that the several Underwriters are
obligated to purchase all of the _____ shares of Common Stock offered by the
Underwriters hereby (other than shares which may be purchased under the
over-allotment option) if any are purchased. The Representatives have advised
the Company that the Underwriters propose to offer the shares to the public
initially at the public offering price set forth on the cover page of this
Prospectus; that the Underwriters may allow to selected dealers a concession of
$ ___ per share and that such dealers may reallow a concession of $ ___ per
share to certain other dealers. After the initial public offering, the offering
price and the concessions may be changed by the Representatives. The
Representatives have informed the Company that the Underwriters do not intend to
confirm sales to any accounts over which they exercise discretionary authority.
The Company has granted to the Underwriters an option, expiring at the close
of business on the 30th day after the date of the Underwriting Agreement, to
purchase up to _____ additional shares of Common Stock at the public offering
price less underwriting discounts and commissions, all as set forth on the cover
page of this Prospectus. The Underwriters may exercise the option only to cover
over-allotments, if any, in the sale of shares of Common Stock in this Offering.
To the extent that the Underwriters exercise the option, each Underwriter will
become obligated, subject to certain conditions, to purchase approximately the
same percentage thereof that the number of shares to be purchased by each of
them as shown in the foregoing table bears to the _____ shares of Common Stock
offered hereby.
The Company has agreed to pay to the Representatives a non-accountable
expense allowance of one percent of the gross proceeds of the Offering ($ ___ if
the Underwriters' over-allotment option is not exercised and $ ___ if the
Underwriters' overallotment option is exercised in full), of which $40,000 has
been paid to date. If the Offering is not consummated, the Representatives will
return to the Company any unused portion of the pre-paid expense allowance. The
Company has also agreed to pay all expenses in connection with registering or
qualifying the Common Stock offered hereby for sale under the laws of the states
in which the Common Stock is sold by the Underwriters (including expenses of
counsel retained for such purposes by the Underwriters) as well as certain
expenses associated with information meetings.
The Company has agreed to sell to the Representatives, or their designees,
warrants (the "Underwriters' Warrants") to purchase _____ shares of the
Company's Common Stock at an aggregate purchase price of $ ___. The exercise
price per Underwriters' Warrant, subject to anti-dilution adjustment, is equal
to 135% of the public offering price per share of Common Stock offered hereby.
The Underwriters' Warrants expire on the fifth anniversary of the closing date
of the Offering. The Underwriters' Warrants may not be transferred or exercised
for one year from the date of this Prospectus, except for transfers to officers
of the Representatives or members of the underwriting or selling group and/or
their officers or
49
partners, if any. The Underwriters' Warrants become exercisable during the
four-year period commencing one year from the date of this Prospectus (the
"Warrant Exercise Term"). During the Warrant Exercise Term, the holders of the
Underwriters' Warrants are given, at nominal cost, the opportunity to profit
from an increase in the market price of the Company's Common Stock. The Company
has granted the Representatives certain registration rights with respect to the
Underwriters' Warrants. All registration rights will terminate seven years from
the closing date of the Offering.
Except as set forth below, the Company, its officers and directors, and
certain of its stockholders, who will hold an aggregate of ______ shares after
this Offering, have agreed that they will not, directly or indirectly, offer,
sell, offer to sell, contract to sell, grant any option to purchase or otherwise
sell or dispose of any shares of Common Stock or other capital stock of the
Company or any securities convertible into, or exercisable or exchangeable for,
any shares of Common Stock or other capital stock of the Company for a period of
180 days after the date of this Prospectus without the prior written consent of
Oscar Gruss & Son Incorporated on behalf of the Underwriters. Oscar Gruss & Son
Incorporated may, in its sole discretion and at any time without prior notice,
release all or any portion of the shares of Common Stock subject to these
"lock-up" agreements.
Prior to this Offering, there has not been any public market for the Common
Stock. Consequently, the initial public offering price of the Common Stock
offered hereby will be determined through negotiations between the Company and
the Representatives. Among the factors to be considered in making such
determination will be the prevailing market conditions, the Company's fiscal and
operating history and condition, the Company's prospects and the prospects of
its industry, the management of the Company, the market price for securities for
companies in businesses similar to that of the Company and the recent trading
activity and prices of shares of common stock on the Nasdaq National Market. The
estimated initial public offering price range set forth on the cover page of
this Prospectus is subject to change as a result of market conditions and other
factors. See "Risk Factors -- No Assurance of Public Market; Volatility of Stock
Price."
Kaufman Bros., L.P. became registered as a broker-dealer in July 1995.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act.
LEGAL MATTERS
Certain legal matters in connection with this Offering will be passed upon
for the Company by Brown, Rudnick, Freed & Gesmer, Boston, Massachusetts.
Certain legal matters in connection with the Common Stock offered hereby will be
passed upon for the Underwriters by Fulbright & Jaworski L.L.P., New York, New
York. A member of Brown, Rudnick, Freed & Gesmer, counsel to the Company, is
Clerk and is the owner of 12,000 shares of the Company's Common Stock.
EXPERTS
The consolidated balance sheets of Boston Biomedica, Inc. and Subsidiaries
as of December 31, 1994 and 1995 and the consolidated statements of operations,
stockholders' equity, and cash flows for each of the three years in the period
ended December 31, 1995, included in this prospectus, have been included herein
in reliance on the report of Coopers & Lybrand L.L.P., independent accountants,
given on the authority of that firm as experts in accounting and auditing.
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission"), Washington, D.C. 20549, a Registration Statement on Form S-1 (the
"Registration Statement") under the Securities Act with respect to the Common
Stock offered hereby. This Prospectus does not contain all of the information
set forth in the Registration Statement and the exhibits and schedules thereto.
For further information with respect to the Company and the Common Stock,
reference is made to the
50
Registration Statement and the exhibits and schedules thereto. Statements
contained in this Prospectus as to the contents of any contract or other
document are not necessarily complete and, in each instance where such contract
or document is filed as an exhibit to the Registration Statement, reference is
made to the copy of such contract or document filed as an exhibit to the
Registration Statement, each such statement being qualified in all respects by
such reference. A copy of the Registration Statement may be inspected without
charge at the offices of the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the Commission's regional offices located at Seven World
Trade Center, 13th Floor, New York, New York 10048, and at 500 West Madison
Street, Northwestern Atrium Center, Suite 1400, Chicago, Illinois 60661-2511.
Copies of materials can also be obtained at prescribed rates from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549. The Commission maintains a World Wide Web site on the Internet at
http://www.sec.gov that contains registration statements, reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission.
The Company intends to distribute to its stockholders annual reports
containing consolidated financial statements audited by its independent
accountants and will make available copies of quarterly reports for the first
three quarters of each fiscal year containing unaudited consolidated financial
information.
51
BOSTON BIOMEDICA, INC. AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Report of Coopers & Lybrand L.L.P., Independent Accountants .............. F-2
Consolidated Balance Sheets as of December 31, 1994 and 1995 and
June 30, 1996 (unaudited) .............................................. F-3
Consolidated Statements of Operations for the years ended
December 31, 1993, 1994, and 1995 and for the six months ended
June 30, 1995 (unaudited) and June 30, 1996 (unaudited) ............... F-4
Consolidated Statements of Stockholders' Equity for the years
ended December 31, 1993, 1994, and 1995 and for the six
months ended June 30, 1996 (unaudited) ................................ F-5
Consolidated Statements of Cash Flows for the years ended
December 31, 1993, 1994, and 1995 and for the six months
ended June 30, 1995 (unaudited) and June 30, 1996 (unaudited) .......... F-6
Notes to Consolidated Financial Statements ............................... F-7
</TABLE>
F-1
The accompanying consolidated financial statements of Boston Biomedica, Inc.
and Subsidiaries have been prepared to give effect to a Common Stock split prior
to the time the Registration Statement is declared effective as disclosed in the
first paragraph of Note 11 to financial statements. When the aforementioned
Common Stock split is approved by the stockholders of the Company, we will issue
the following report:
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
August 23, 1996
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
BOSTON BIOMEDICA, INC.:
We have audited the accompanying consolidated balance sheets of Boston
Biomedica, Inc. and Subsidiaries as of December 31, 1994 and 1995 and the
related consolidated statements of operations, stockholders' equity and cash
flows for each of the three years in the period ended December 31, 1995. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
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 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Boston
Biomedica, Inc. and Subsidiaries as of December 31, 1994 and 1995 and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1995 in conformity with generally accepted
accounting principles.
Boston, Massachusetts
March 12, 1996, except as to the information
in the first paragraph of Note 11, for which
the date is September____, 1996
F-2
BOSTON BIOMEDICA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
-----------
1994 1995 1996
------- ------- -------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash ..................................... $ 89,129 $ 11,463 $ 10,548
Accounts receivable, less
allowances of $94,723 in 1994,
$142,372 in 1995 and $133,579
in 1996 ................................ 2,259,842 3,075,870 2,866,401
Inventories (Notes 1 & 3) ................ 3,609,516 3,676,851 3,865,219
Prepaid expense and other ................ 156,117 254,199 294,646
Deferred income taxes (Note 7) ........... 101,880 110,766 213,538
----------- ----------- -----------
Total current assets ................... 6,216,484 7,129,149 7,250,352
----------- ----------- -----------
Property and equipment, net (Notes 1 & 4).... 1,724,420 2,614,982 2,625,117
OTHER ASSETS:
Notes receivable and other ............... 22,079 83,422 79,037
Goodwill and other intangibles,
net (Notes 1 & 2) ...................... 112,521 100,820 92,777
----------- ----------- -----------
134,600 184,242 171,814
----------- ----------- -----------
TOTAL ASSETS ........................... $8,075,504 $9,928,373 $10,047,283
========== ========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long term
debt (Note 6) .......................... $ 242,006 $ 436,509 $ 490,126
Accounts payable ......................... 787,406 745,216 815,946
Accrued compensation ..................... 361,911 395,755 488,223
Other accrued expenses ................... 139,052 199,334 127,712
Deferred revenue ......................... -- 523,401 831,244
----------- ----------- -----------
Total current liabilities .............. 1,530,375 2,300,215 2,753,251
----------- ----------- -----------
LONG-TERM LIABILITIES:
Long-term debt, less current
maturities (Note 6) .................... 3,179,526 4,215,501 2,797,581
Deferred rent ............................ 186,860 141,068 107,832
Deferred income taxes (Note 7) ........... 137,520 84,641 157,899
COMMITMENTS AND CONTINGENCIES (Note 8)
REDEEMABLE COMMON STOCK (Note 11)
$.01 par value; 117,647 shares
authorized, issued and
outstanding ............................ -- -- 898,503
STOCKHOLDERS' EQUITY (Note 10):
Common stock, $.01 par value; authorized
15,000,000 shares in 1994, 1995 and 1996;
issued and outstanding 2,578,865 in 1994;
issued 2,640,417 in 1995; issued and
outstanding 2,572,417 in 1996 .......... 25,789 26,404 25,724
Additional paid-in capital ............... 2,612,500 2,798,620 2,717,700
Retained earnings ........................ 402,934 505,924 588,793
----------- ----------- -----------
3,041,223 3,330,948 3,332,217
Less treasury stock, at cost --
80,000 shares .......................... -- (144,000) --
----------- ----------- -----------
Total stockholders' equity ............. 3,041,223 3,186,948 3,332,217
----------- ----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY ................. $8,075,504 $9,928,373 $10,047,283
========== ========== ===========
The accompanying notes are an integral part of these consolidated financial statements
</TABLE>
F-3
BOSTON BIOMEDICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
---------------------------------- ----------------------
1993 1994 1995 1995 1996
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
REVENUE:
Product sales ..................... $3,942,328 $ 5,981,378 $ 6,621,631 $ 3,024,629 $3,945,759
Services .......................... 5,214,688 4,741,376 5,649,099 2,539,851 2,982,624
----------- ----------- ----------- ----------- -----------
Total revenue ................... 9,157,016 10,722,754 12,270,730 5,564,480 6,928,383
COSTS AND EXPENSES:
Cost of product sales ............. 2,087,771 3,194,217 3,564,241 1,646,594 2,006,833
Cost of services .................. 3,965,154 3,415,777 4,167,625 1,960,315 2,249,610
Research and development .......... 278,859 469,358 375,712 159,035 361,619
Selling and marketing ............. 894,202 1,191,573 1,339,792 637,567 915,289
General and administrative ........ 1,619,331 2,047,256 2,315,814 1,056,590 1,088,448
----------- ----------- ----------- ----------- -----------
Total operating costs and
expenses ..................... 8,845,317 10,318,181 11,763,184 5,460,101 6,621,799
----------- ----------- ----------- ----------- -----------
Income from operations ........ 311,699 404,573 507,546 104,379 306,584
Interest expense, net ................ 178,640 243,694 335,899 164,569 168,469
----------- ----------- ----------- ----------- -----------
Income (loss) before income
taxes and extraordinary
item ......................... 133,059 160,879 171,647 (60,190) 138,115
(Provision) benefit (for) from
income taxes (Notes 1 & 7) ......... (40,473) (64,351) (68,657) 24,034 (55,246)
----------- ----------- ----------- ----------- -----------
Income (loss) before
extraordinary item ........... 92,586 96,528 102,990 (36,156) 82,869
----------- ----------- ----------- ----------- -----------
Extraordinary item-gain on
elimination of debt (Notes 6 & 7),
net of income taxes of $33,157 ..... 49,736 -- -- -- --
----------- ----------- ----------- ----------- -----------
Net income (loss) ............. $ 142,322 $ 96,528 $ 102,990 $ (36,156) $ 82,869
=========== =========== =========== =========== ===========
Income (loss) per share:
Before extraordinary gain ..... $ 0.04 $ 0.04 $ 0.04 $ (0.01) $ 0.03
Extraordinary gain ............ 0.02 -- -- -- --
----------- ----------- ----------- ----------- -----------
Net income (loss) ............. $ 0.06 $ 0.04 $ 0.04 $ (0.01) $ 0.03
Weighted average common and common
equivalent shares outstanding ...... 2,479,651 2,629,063 3,192,196 2,639,515 3,266,111
=========== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements
F-4
BOSTON BIOMEDICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON STOCK
----------------------
ADDITIONAL TOTAL
$.01 PAR PAID-IN RETAINED TREASURY STOCKHOLDERS'
SHARES VALUE CAPITAL EARNINGS STOCK EQUITY
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, December 31, 1992 ... 2,280,040 $22,800 $1,635,830 $164,084 -- $1,822,714
Issuance of common
stock ..................... 201,298 2,013 711,318 713,331
Stock options and
warrants exercised ........ 33,000 330 65,420 65,750
Conversion of note
payable ................... 10,690 107 17,532 17,639
Net income 142,322 142,322
--------- --------- --------- --------- --------- ---------
BALANCE, December 31, 1993 ... 2,525,028 25,250 2,430,100 306,406 -- 2,761,756
Issuance of common
stock ..................... 29,862 299 139,403 139,702
Stock options and
warrants exercised ........ 23,975 240 30,197 30,437
Tax benefit of stock
options exercised 12,800 12,800
Net income ................. 96,528 96,528
--------- --------- --------- --------- --------- ---------
BALANCE, December 31,1994 .... 2,578,865 25,789 2,612,500 402,934 -- 3,041,223
Issuance of common
stock ..................... 8,535 85 58,160 58,245
Stock options and
warrants exercised ........ 47,200 472 117,068 117,540
Conversion of note
payable ................... 5,817 58 9,542 9,600
Treasury stock
purchased -- 80,000
shares .................... $(144,000) (144,000)
Tax benefit of stock
options exercised ......... 1,350 1,350
Net income ................. 102,990 102,990
--------- --------- --------- --------- --------- ---------
BALANCE, December 31, 1995 ... 2,640,417 26,404 2,798,620 505,924 (144,000) 3,186,948
Stock options and
warrants exercised
(unaudited) ............... 12,000 120 62,280 62,400
Issuance of treasury
stock -- 80,000
shares (unaudited) ........ (80,000) (800) (143,200) 144,000 --
Net income
(unaudited) ............... 82,869 82,869
--------- --------- --------- --------- --------- ---------
BALANCE, June 30, 1996
(unaudited) ................ 2,572,417 $25,724 $2,717,700 $588,793 -- $3,332,217
========= ======= ========== ======== ========== ==========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements
F-5
BOSTON BIOMEDICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
------------------------------------- --------------------------
1993 1994 1995 1995 1996
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income (loss) ................. $ 142,322 $ 96,528 $ 102,990 $ (36,156) $ 82,869
Adjustments to reconcile net income
(loss) to net cash (used in)
provided by operating activities:
Depreciation and amortization .. 301,004 360,512 441,356 202,693 280,426
Provision for doubtful accounts. 22,956 102,099 181,084 53,643 77,145
Deferred rent .................. 99,708 5,908 (45,792) (12,556) (33,236)
Deferred income taxes .......... 42,323 (42,798) (61,765) (74,809) (29,514)
Tax benefit of stock options
exercised .................... -- 12,800 1,350 -- --
Extraordinary item-gain on
elimination of debt .......... (49,736) -- -- -- --
Changes in operating assets and
liabilities:
Accounts receivable ............ (215,270) (529,157) (997,112) 11,403 132,324
Note receivable and other assets (17,002) (3,720) (61,343) (12,962) 4,385
Inventories .................... (950,715) (567,420) (67,335) 77,857 (188,368)
Prepaid expenses ............... 25,410 (3,500) (98,082) (79,496) (40,447)
Accounts payable ............... 11,875 (86,130) (42,190) 35,834 70,730
Accrued expenses ............... 160,021 100,767 94,126 (60,639) 20,846
Deferred revenue ............... -- -- 523,401 -- 307,843
--------- --------- --------- --------- ---------
Net cash (used in) provided
by operating activities ... (427,104) (554,111) (29,312) 104,812 685,003
--------- --------- --------- --------- ---------
CASH FLOWS FOR INVESTING ACTIVITIES:
Additions to property and
equipment .................... (460,591) (404,639) (1,316,217) (215,542) (282,518)
Purchase of intangible assets .. -- -- (4,000) -- --
Net assets of acquisitions (net
of cash acquired) ............ (389,703) -- -- -- --
--------- --------- --------- --------- ---------
Net cash used in investing
activities ................ (850,294) (404,639) (1,320,217) (215,542) (282,518)
--------- --------- --------- --------- ---------
CASH FLOWS FOR FINANCING ACTIVITIES:
Proceeds from notes payable .... 1,107,392 1,734,425 1,517,867 191,990 226,300
Proceeds from redeemable common
stock, net ................... -- -- -- -- 898,503
Proceeds of common stock issued,
net .......................... 765,081 170,139 175,785 103,126 62,400
Repayments of long-term debt ... (613,199) (887,989) (277,789) -- (1,590,603)
Purchase of treasury stock ..... -- -- (144,000) (144,000) --
--------- --------- --------- --------- ---------
Net cash (used in) provided
by financing activities ... 1,259,274 1,016,575 1,271,863 151,116 (403,400)
--------- --------- --------- --------- ---------
(DECREASE) INCREASE IN CASH: ...... (18,124) 57,825 (77,666) 40,386 (915)
Cash, beginning of period ...... 49,428 31,304 89,129 89,129 11,463
--------- --------- --------- --------- ---------
Cash, end of period ............ $ 31,304 $ 89,129 $ 11,463 $ 129,515 $ 10,548
=========== =========== ============ ============ ===========
SUPPLEMENTAL DISCLOSURES OF NONCASH
ACTIVITIES:
Conversion of note payable to
common stock ................ $ 17,639 -- $ 9,600 $ 9,600 --
SUPPLEMENTAL INFORMATION:
Income taxes paid ............. $ 10,689 $ 33,718 $ 168,994 $ 129,100 $ 85,000
Interest paid ................. $ 163,831 $ 254,133 $ 331,495 $ 163,735 $ 178,328
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements
F-6
BOSTON BIOMEDICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION AS OF JUNE 30, 1996 AND FOR THE SIX MONTHS ENDED JUNE 30,
1996 AND 1995 IS UNAUDITED.)
(1) BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Boston Biomedica, Inc. ("BBI") and Subsidiaries (together, the "Company")
provide infectious disease diagnostic products, contract research and specialty
infectious disease testing services to the in-vitro diagnostic industry,
government agencies, blood banks, hospitals and other health care providers
worldwide.
Significant accounting policies followed in the preparation of these
consolidated financial statements are as follows:
(i) Principles of Consolidation
The consolidated financial statements include the accounts of BBI and its
wholly-owned subsidiaries, Biotech Research Laboratories, Inc. ("BTRL") and
BBI-North American Clinical Laboratories, Inc. ("BBI-NACL"). All significant
intercompany accounts and transactions have been eliminated in the
consolidation.
(ii) Reclassification
Certain amounts included in the prior year's financial statements have been
reclassified to conform to the current presentation.
(iii) Use of Significant Estimates
To prepare the financial statements in conformity with generally accepted
accounting principles, management is required to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period. In
particular, the Company records reserves for estimates regarding the
collectability of accounts receivable. Actual results could differ from the
estimates and assumptions used by management.
(iv) Revenue Recognition
Product revenues are recognized as sales upon shipment of the products or,
for specific orders at the request of the customer, on a bill and hold basis
after completion of manufacture. All bill and hold transactions meet specified
revenue recognition criteria which include normal billing, credit and payment
terms, and transfer to the customers of all risks and rewards of ownership.
Accounts receivable as of December 31, 1995 and June 30, 1996 include bill and
hold receivables of $179,000 and $85,000, respectively. There were no such
receivables as of December 31, 1993 and 1994.
The Company periodically enters into barter transactions whereby the Company
exchanges inventory for testing services. Revenue on these transactions are
recognized when both the products have been shipped and the testing services
have been completed and are recorded at the estimated fair market value of the
inventory based upon standard Company prices. The revenue recognized on these
transactions for the years ended December 31, 1993, 1994 and 1995 and for the
six months ended June 30, 1995 and 1996 was $30,000, $192,000, $213,000,
$126,000 and $191,000, respectively.
Services are recognized as revenue upon completion of tests for specialty
laboratory services, and under the percentage-of-completion method of accounting
as costs are incurred for contract research.
(v) Research and Development Costs
Research and development costs are expensed as incurred.
(vi) Inventories
Inventories are stated at the lower of average cost or net realizable value
and include material, labor and manufacturing overhead.
F-7
BOSTON BIOMEDICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(INFORMATION AS OF JUNE 30, 1996 AND FOR THE SIX MONTHS ENDED JUNE 30,
1996 AND 1995 IS UNAUDITED.)
(1) BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
(vii) Property and Equipment
Property and equipment are stated at cost. For financial reporting purposes,
depreciation is recognized using accelerated and straight-line methods,
allocating the cost of the assets over their estimated useful lives ranging from
five years to ten years for certain manufacturing and laboratory equipment, and
fifteen years for the building. Upon retirement or sale, the cost and related
accumulated depreciation of the asset are removed from the books. Any resulting
gain or loss is credited or charged to income.
(viii) Goodwill and Intangibles
Goodwill results from excess of the purchase prices over the net assets of
BTRL and BBI-NACL acquired and is amortized on a straight line basis over ten
years. Other intangibles primarily consist of patents, licenses, and
intellectual property rights and are amortized over five to ten years.
(ix) Income Taxes
The Company utilizes the liability method of accounting for income taxes.
Under the liability method, deferred taxes arise from temporary differences
between the financial statement and tax bases of assets and liabilities using
enacted tax rates in effect in the years in which the differences are expected
to reverse. A valuation allowance is provided for net deferred tax assets if,
based on the weighted available evidence, it is more likely than not that some
or all of the deferred tax assets will not be realized. Tax credits are
recognized when realized using the flow through method of accounting.
(x) Concentration of Credit Risk
Financial instruments which potentially subject the Company to
concentrations of credit risk are principally cash and accounts receivable. The
Company places its cash in federally chartered banks, each of which is insured
up to $100,000 by the Federal Deposit Insurance Corporation. Concentration of
credit risk with respect to accounts receivable is limited to certain customers
to whom the Company makes substantial sales. The Company does not require
collateral from its customers. To reduce risk, the Company routinely assesses
the financial strength of its customers and, as a consequence, believes that its
trade accounts receivable credit risk exposure is limited.
(xi) Interim Consolidated Financial Statements
The consolidated financial statements as of June 30, 1996 and for the six
months ended June 30, 1995 and 1996 and related footnote information are
unaudited and have been prepared on a basis substantially consistent with the
audited consolidated financial statements, and, in the opinion of management,
include all adjustments (consisting of only normal recurring adjustments)
necessary for fair presentation of the results of these interim periods. The
results of the six months ended June 30, 1996 are not necessarily indicative of
the results to be expected for the entire year.
(xii) Deferred Revenue
Deferred revenue consists of payments received from customers in advance of
services performed.
(xiii) Computation of Income (Loss) Per Share
Net income (loss) per common share is computed based upon the weighted
average number of common shares and common equivalent shares (using the treasury
stock method) outstanding after certain adjustments described below. Common
equivalent shares consist of common stock options and warrants outstanding. In
accordance with Securities and Exchange Commission Staff Accounting Bulletin No.
83, all common, redeemable common, and common equivalent shares issued during
the twelve month period prior to the proposed date of the initial filing of the
Registration Statement have been included
F-8
BOSTON BIOMEDICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(INFORMATION AS OF JUNE 30, 1996 AND FOR THE SIX MONTHS ENDED JUNE 30,
1996 AND 1995 IS UNAUDITED.)
(1) BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
in the calculation as if they were outstanding for all periods using the
treasury stock method and assuming an initial public offering price of $11.00
per share. Fully diluted net income (loss) per common share is not presented as
it does not differ from primary earnings per share.
(2) ACQUISITION
Effective January 1, 1993, North American Laboratory, Inc., a Massachusetts
corporation and wholly-owned subsidiary of BBI, acquired the net assets of North
American Laboratory Group, Ltd., Inc. from its founder and chief scientific
officer, who remains in this same capacity. During 1995, the name was changed to
BBI-North American Clinical Laboratories, Inc. BBI-NACL is a specialty
infectious disease testing laboratory providing testing services to hospitals
and other health care providers. The purchase price was $425,000 in cash
representing $375,038 of net tangible assets (including cash of $35,297) and
$49,962 of goodwill and other intangibles.
(3) INVENTORIES
The Company purchases human plasma and serum from various private and
commercial blood banks. Upon receipt, such purchases generally undergo
comprehensive testing, and associated costs are included in the value of raw
materials. Most plasma is manufactured into Basematrix and other diagnostic
components to customer specifications. Plasma and serum with the desired
antibodies or antigens are sold or manufactured into Quality Control Panels,
Accurun(tm) run controls, and reagents ("Finished Goods"). Panels and reagents
are unique to specific donors and/or collection periods, and require substantial
time to characterize and manufacture due to stringent technical specifications.
Panels play an important role in diagnostic test kit development, licensure and
quality control. Panels are manufactured in quantities sufficient to meet
expected user demand which may exceed one year.
Inventories consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1994 1995 JUNE 30, 1996
--------- --------- -------------
(UNAUDITED)
<S> <C> <C> <C>
Raw materials $1,548,560 $1,298,131 $ 1,272,687
Work-in-process 551,280 565,667 597,922
Finished goods 1,509,676 1,813,053 1,994,610
--------- --------- -------------
$3,609,516 $3,676,851 $ 3,865,219
========== ========== ===========
</TABLE>
(4) PROPERTY AND EQUIPMENT
Property and equipment at December 31, 1994 and 1995 consist of the following:
<TABLE>
<CAPTION>
1994 1995
--------- ---------
<S> <C> <C>
Laboratory equipment $1,442,349 $1,630,872
Management information systems 609,923 834,768
Office equipment 249,544 332,496
Automobiles 176,315 178,465
Leasehold improvements 300,341 108,892
Land, building and improvements -- 941,175
--------- ---------
2,778,472 4,026,668
Less accumulated depreciation 1,054,052 1,411,686
--------- ---------
Net book value $1,724,420 $2,614,982
========== ==========
</TABLE>
Depreciation expense for the years ended December 31, 1993, 1994 and 1995
and the six months ended June 30, 1995 and 1996 was $286,456, $345,228,
$425,655, $194,236 and $272,383, respectively.
F-9
BOSTON BIOMEDICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(INFORMATION AS OF JUNE 30, 1996 AND FOR THE SIX MONTHS ENDED JUNE 30,
1996 AND 1995 IS UNAUDITED.)
(5) REVENUE FROM SIGNIFICANT CUSTOMERS AND EXPORT SALES
The Company performs contract research and certain services under contracts,
subcontracts and grants from United States Government Agencies, primarily the
National Institutes of Health ("NIH"). Revenue from such contracts, subcontracts
and grants was approximately $2,707,000 in 1993, $1,677,000 in 1994, and
$1,628,000 in 1995.
Export sales accounted for approximately $1,411,000, or 15% of consolidated
revenue in 1993; $2,279,000, or 21% in 1994; $3,104,000, or 25% in 1995; and
$1,523,000, or 27%, and $1,877,000, or 27% for the six months ended June 30,
1995 and 1996, respectively.
(6) LONG TERM DEBT
In August 1995, the Company's revolving line of credit ("Revolver") was
increased to $3,500,000 and the due date extended to June 30, 1997. In July
1996, the due date of the Company's Revolver was extended to June 30, 1998, and
the interest rate reduced to prime plus 1/2 %. In addition, the Company borrowed
$200,000 under a five-year term loan approved in 1994 ($170,370 outstanding at
December 31, 1995), $100,000 under a five-year term loan, and $123,700 under a
$350,000 five year term loan facility for equipment acquisitions approved in
1995 ("New Term"). As of December 31, 1995, the Company had additional borrowing
capacity available under the New Term facility equal to $226,300. The Company
borrowed this amount prior to the facility expiration date of May 2, 1996. In
July 1996, the Company received approval for a $250,000, five year equipment
facility loan from its bank due July 31, 2001 at a rate of prime plus 1%.
Borrowings under the Revolver are limited to 80% of eligible accounts
receivable plus the lesser of 40% of inventory or $1,500,000. The Company had
approximately $657,000 and $2,028,000 available under it's Revolver as of
December 31, 1995 and June 30, 1996, respectively. Amounts outstanding under the
Revolver bear interest at the lender's base rate plus 1% (9.75% at December 31,
1995 and 9.25% at June 30, 1996) and are collateralized by all of the Company's
assets and a $2 million life insurance policy of an officer/stockholder.
The Revolver contains covenants regarding the Company's debt-to-equity ratio
and certain minimum debt service coverage ratios. The Revolver further provides
for restrictions on the payment of dividends, limitations on the acquisition of
property and equipment, limitations on additional borrowings, and certain
minimum stock ownership levels by the officer/stockholder referred to above.
In December 1995, the Company purchased its corporate headquarters and
manufacturing facility in West Bridgewater, MA from its former landlord at a
price of $806,800 including closing costs, and borrowed $750,000 from its bank
to finance the purchase. See also Note 4.
On June 30, 1993, the Company exercised its option to pre-pay the
acquisition note in connection with the 1992 purchase of BTRL at a substantial
discount from the balance due, resulting in an extraordinary gain of $49,736
($82,893 minus taxes of $33,157).
During 1993, convertible debt in the amount of $17,639 was converted into
10,690 shares of common stock at a price of $1.65 per share. During 1995,
convertible debt in the amount of $9,600 was converted into 5,817 shares of
common stock at a price of $1.65 per share.
F-10
BOSTON BIOMEDICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(INFORMATION AS OF JUNE 30, 1996 AND FOR THE SIX MONTHS ENDED JUNE 30,
1996 AND 1995 IS UNAUDITED.)
(6) LONG TERM DEBT -- (CONTINUED)
At December 31, 1994 and 1995, and June 30, 1996, the Company had the following
debt outstanding:
<TABLE>
<CAPTION>
JUNE 30,
1994 1995 1996
----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Revolving Line of Credit Agreement due
June 30, 1998 ........................... $2,533,860 $2,784,307 $ 1,397,884
Note payable to a bank, due in monthly
principal payments of $17,687
through October 1998 with interest
fixed at 9.01%. Collateralized by all
of the assets of the Company ............ 813,625 601,375 495,250
Note payable to a bank, due in monthly
principal payments of $3,704
through October 1999 with interest at
prime rate plus 1.0%. Collateralized
by all of the assets of the Company ..... -- 170,370 148,148
Note payable to a bank, due in monthly
principal payments of $1,667 through
December 2000 with interest at 8.22%.
Collateralized by all of the assets
of the Company .......................... -- 100,000 91,667
Note payable to a bank, with interest
only due until May 2, 1996, and
thereafter 54 consecutive equal monthly
principal payments of $6,863
commencing June 18, 1996. Interest is
at prime rate plus 1.0%. Collateralized
by all of the assets of the Company .... -- 123,700 343,137
Note payable to a bank, due in 84 fixed
payments of principal and interest of
$11,729, bearing interest fixed at
8.30% for the first five years, and
floating at prime plus 1.0% for the
remaining term. Collateralized by a
mortgage and all of the assets
of the Company ......................... -- 750,000 705,580
Subordinated convertible note payable,
at 12.5% interest rate, due December 31,
1996, interest payable monthly.
Convertible into common stock at $1.50
per share at the option of the holder .. 31,100 21,500 21,500
Other installment notes payable with
interest rates ranging from 7.25% to
10.99% at December 31, 1995,
collateralized by office equipment
and vehicles due at various maturity
dates from April 1996 to August 2001 ... 42,947 100,758 84,541
------------ ------------ ------------
Total long term debt ................. 3,421,532 4,652,010 3,287,707
Less: current maturities ................. (242,006) (436,509) (490,126)
------------ ------------ ------------
$3,179,526 $4,215,501 $ 2,797,581
========== ========== ===========
</TABLE>
F-11
BOSTON BIOMEDICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(INFORMATION AS OF JUNE 30, 1996 AND FOR THE SIX MONTHS ENDED JUNE 30,
1996 AND 1995 IS UNAUDITED.)
(6) LONG TERM DEBT -- (CONTINUED)
At December 31, 1995, debt maturities are as follows:
YEAR ENDED AMOUNT
- ----------- -----------
1996 ...................................................... $ 436,509
1997 ...................................................... 3,199,875
1998 ...................................................... 386,723
1999 ...................................................... 207,300
2000 ...................................................... 161,382
Thereafter ................................................ 260,221
------------
$ 4,652,010
=============
(7) INCOME TAXES
The Company's effective tax rate does not significantly differ from the
federal and state income tax statutory rates. The components of the provision
for income taxes are as follows:
<TABLE>
<CAPTION>
1993 1994 1995
-------- -------- -------
<S> <C> <C> <C>
Current expense: federal and state ............ $23,700 $ 91,242 $130,422
Deferred (benefit) expense: federal and state . 49,930 (26,891) (61,765)
-------- -------- --------
Total ....................................... $73,630 $ 64,351 $ 68,657
======== ======== ========
</TABLE>
The provision for 1993 includes $33,157 of income taxes which was offset
against the extraordinary gain on elimination of debt of $82,893 and presented
net in the Statement of Operations. See also Notes 2 and 6.
Significant items making up deferred tax liabilities and deferred tax assets
are as follows:
<TABLE>
<CAPTION>
1994 1995
-------- --------
<S> <C> <C>
Current deferred taxes:
Inventory ........................................ $ 47,318 --
Allowances and other accruals .................... 54,562 $ 110,766
-------- --------
Total deferred tax assets ...................... 101,880 110,766
Long term deferred taxes:
Accelerated tax depreciation ..................... (163,139) (207,361)
Cash basis benefit of subsidiary ................. (47,818) --
Goodwill ......................................... (26,859) (22,795)
Tax credits ...................................... 100,296 106,710
State net operating loss carryforwards ........... -- 38,805
-------- --------
Total deferred tax liabilities ................. (137,520) (84,641)
-------- --------
Total net deferred tax (liabilities) assets .... $ (35,640) $ 26,125
========= ==========
</TABLE>
As of December 31, 1995, the net operating loss carryforwards expire at
various dates beginning in 1998 through 2000. Tax credits expire at various
dates beginning in 2006 through 2009.
F-12
BOSTON BIOMEDICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(INFORMATION AS OF JUNE 30, 1996 AND FOR THE SIX MONTHS ENDED JUNE 30,
1996 AND 1995 IS UNAUDITED.)
(8) COMMITMENTS AND CONTINGENCIES
The Company leases certain office space, laboratory, and research facilities
under operating leases with various terms through July 2000. All the real estate
leases include renewal options at increasing levels of rent.
One of the facility leases includes scheduled base rent increases over the
term of the lease. The amount of base rent payments is being charged to expense
on the straight-line method over the term of the lease. As of December 31, 1995,
the Company has recorded a $141,068 noncurrent liability to reflect the excess
of rent expense over cash payments since inception of the lease. In addition to
base rent, the Company pays a monthly allocation of the operating expenses and
real estate taxes for the above facilities.
Rent expense for the years ended December 31, 1993, 1994 and 1995 and six
months ended June 30, 1995 and 1996 was $479,697, $549,713, $477,580, $225,109
and $181,816, respectively. At December 31, 1995, the remaining fixed lease
commitment was as follows:
YEAR ENDED AMOUNT
- ---------- ---------
1996 ........................................................ $ 371,200
1997 ........................................................ 254,600
1998 ........................................................ 117,300
1999 ........................................................ 124,800
2000 ........................................................ 79,700
---------
$ 947,600
===========
(9) RETIREMENT PLAN
In January, 1993, the Company adopted a retirement savings plan for its
employees, which has been qualified under Section 401(k) of the Code. Eligible
employees are permitted to contribute to the plan through payroll deductions
within statutory limitations and subject to any limitations included in the
plan. To date, the Company has made no contributions to the plan.
(10) COMMON STOCK
The Company has two stock option plans which are administered by a committee
of the Board of Directors who determines the employees and affiliated persons to
receive options and the number and option price of shares covered by each such
option.
Options granted under both plans may be either incentive stock options or
non-qualified stock options. In general, for incentive stock options, the option
price shall not be less than the fair market value at the time the option is
granted. Generally, options become exercisable at the rate of 25% at the end of
each of the four years following the anniversary of the grant. Options issued
expire ten years from the date of grant, or 30 days from the date of termination
or affiliation.
At December 31, 1995, 897,600 shares have been reserved for non-qualified
stock options, of which 97,125 are available for future grants. At December 31,
1995, 750,000 shares have been reserved for incentive stock options, of which
696,812 are available for future grants.
The Company has issued warrants in connection with certain equity and debt
financings. As of June 30, 1996, 226,670 shares of Common Stock have been
reserved for issuance pursuant to the exercise of such warrants at a weighted
average exercise price of $2.50 per share.
F-13
BOSTON BIOMEDICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(INFORMATION AS OF JUNE 30, 1996 AND FOR THE SIX MONTHS ENDED JUNE 30,
1996 AND 1995 IS UNAUDITED.)
(10) COMMON STOCK -- (CONTINUED)
The Company has reserved shares of its authorized but unissued common stock
for the following:
<TABLE>
<CAPTION>
STOCK OPTIONS WARRANTS
-------------------- --------------------
PRICE PRICE TOTAL
SHARES PER SHARE SHARES PER SHARE SHARES
------ --------- ------ --------- -------
<S> <C> <C> <C> <C> <C>
Balance outstanding,
December 31, 1992 .... 747,600 $.25-$4.50 266,670 $2.00-$2.50 1,014,270
Granted ............. 166,250 4.50 59,468 3.75-5.20 225,718
Exercised ........... (13,000) .25-1.50 (20,000) 2.50 (33,000)
Expired ............. (19,000) 2.50 -- (19,000)
------- ------- ----------
Balance outstanding,
December 31, 1993 .... 881,850 .25-4.50 306,138 2.00-5.20 1,187,988
Granted ............. -- -- -- -- --
Exercised ........... (19,375) .25-4.50 (4,600) 3.75 (23,975)
Expired ............. (81,525) .25-4.50 -- -- (81,525)
------- ------- ----------
Balance outstanding,
December 31, 1994 .... 780,950 .25-4.50 301,538 2.00-5.20 1,082,488
Granted ............. 73,187 6.00 -- -- 73,187
Exercised ........... (6,000) 1.50-2.50 (41,200) 2.50-5.20 (47,200)
Expired ............. (47,850) 1.50-4.50 -- -- (47,850)
------- ------- ----------
Balance outstanding,
December 31, 1995 .... 800,287 .25-6.00 260,338 2.00-5.20 1,060,625
Granted (unaudited) . 140,600 7.00-8.50 -- -- 140,600
Exercised
(unaudited) ....... -- -- (12,000) 5.20 (12,000)
Expired (unaudited) . (6,500) 6.00-7.00 (21,668) 5.20 (28,168)
------- ------- ----------
Balance outstanding,
June 30, 1996
(unaudited) .......... 934,387 .25-8.50 226,670 2.00-5.00 1,161,057
======= ======= ==========
Exercisable at June 30,
1996 (unaudited) .... 359,500 .25-1.65 -- -- 359,500
262,200 2.50-4.50 206,670 2.00-2.50 468,870
31,984 6.00 20,000 5.00 51,984
------- ------- ----------
Total exercisable at
June 30, 1996
(unaudited) ......... 653,684 $.25-$6.00 226,670 $2.00-$5.00 880,354
======= ======= ==========
Proceeds of exercisable
at June 30, 1996
(unaudited) ......... $1,356,655 $566,675 $1,923,330
========== ======== ===========
</TABLE>
In October 1995, the FASB issued Statement of Financial Accounting Standards
No. 123 ("SFAS 123") "Accounting for Stock-Based Compensation," which becomes
effective for fiscal years beginning after December 15, 1995. SFAS 123
establishes new financial accounting and reporting standards for stock-based
compensation plans. However, entities are allowed to elect whether to measure
compensation expense for stock-based compensation under SFAS 123 or APB No. 25,
"Accounting for Stock Issued to Employees." The Company has elected to continue
to account under APB No. 25 and will make the required pro forma disclosures of
net income and earnings per share as if the provisions of SFAS 123 had been
applied in its December 31, 1996 financial statements. The potential impact of
adopting this standard on the Company's pro forma disclosures of net income and
earnings per share has not been quantified at this time.
F-14
BOSTON BIOMEDICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(INFORMATION AS OF JUNE 30, 1996 AND FOR THE SIX MONTHS ENDED JUNE 30,
1996 AND 1995 IS UNAUDITED.)
(11) SUBSEQUENT EVENT
Stock Split
On August 8, 1996 the Board of Directors approved a 1-for-2 reverse stock
split and an increase in authorized common shares to 20,000,000, and authorized
1,000,000 shares of preferred stock (par value $.01), each subject to
stockholder approval. The stock split has been retroactively reflected in the
accompanying financial statements and notes for all periods presented.
STOCK PURCHASE AGREEMENT
On April 26, 1996, the Company entered into a Stock Purchase Agreement and
Exclusive Distributor Agreement for five years with a foreign distributor.
Pursuant to the Stock Purchase Agreement, the Company issued 117,647 shares of
redeemable common stock at a price per share of $8.50, for which it received net
proceeds of $898,503. Issuance costs were $101,497. Furthermore, the agreement
may require the Company to repurchase the stock at the issuance price
($1,000,000 in total) in three equal installments in the event that the
Distribution Agreement is terminated by the Company prior to the completion of a
public offering. Completion of a public offering will terminate the redemption
feature and cause the reclassification of these shares into stockholders'
equity. In addition, the distributor is restricted from selling these securities
for a one-year period after completion of such Offering. The Company utilized
the 80,000 shares of Treasury Stock in connection with this transaction.
INITIAL PUBLIC OFFERING
The Company is preparing to file a registration statement in August 1996 for
the sale of shares of common stock. There can be no assurances that the initial
public offering of common stock will be successfully completed.
F-15
GLOSSARY
AIDS...................... Acquired Immune Deficiency Syndrome. AIDS is caused
by infection with the Human Immunodeficiency Virus,
HIV.
Antibodies................ Binding proteins naturally produced by the body in
response to exposure to non-self agents (e.g.,
bacteria, viruses, cancer cells). Antibodies form
part of the immunological defense system.
Antigens.................. Foreign non-self agents (such as the proteins or the
nucleic acids of infectious agents) that stimulate
an immune response, including the production of
antibodies.
Assay..................... Synonym for test: qualitative or quantitative
measurement of some component of a material.
Chlamydia................. A sexually transmitted pathogen that can cause
Trachoma (an eye disease which culminates in
blindness), chronic infection of genitals (which can
result in infertility), and pneumonia, especially in
the newborn.
CLIA...................... The Clinical Laboratory Improvement Amendments,
passed by Congress in October 1988, and formulated
into regulations and implemented by the Health Care
Financing Administration beginning in 1992. CLIA
refers to a set of regulations which govern the
staffing and function of all U.S. laboratories that
perform in vitro diagnostic tests for clinical use,
except for blood bank laboratories and Veterans'
Administration hospital laboratories, which are
regulated separately using similar rules.
Cytomegalovirus........... A virus responsible for several diseases that are
especially prevalent in immunocompromised patients
such as those infected with HIV, receiving organ
transplants or receiving cancer chemotherapy.
Diagnostic Components..... The solutions and materials that are combined,
sometimes after further manufacture, to make an in
vitro diagnostic test kit.
DNA....................... Deoxyribonucleic Acid, together with RNA, a class of
molecules called "nucleic acids." DNA carries the
genetic information in most living organisms. The
DNA of each cell contains the information for
"building" a whole organism (e.g., a virus, a plant,
or a whole human being). DNA testing can identify
microscopic amounts of the genetic material of a
virus or bacterium, thus indicating its presence in
quantities undetectable in the bloodstream by
immunoassay techniques.
ELISA..................... Enzyme-Linked Immunosorbent Assay, a biochemical
procedure in which interactions among antibodies,
antigens and enzymes are used to detect and quantify
various diseases and other materials of interest
through the measurement of color released at the end
of the assay.
End-User.................. The purchaser and consumer of an in vitro diagnostic
test kit; usually clinical laboratories, but may
also be other health care providers or members of
the general public.
G-1
Hepatitis................. A disease that causes inflammation of and damage to
the liver, often caused by a virus. In advanced
stages, hepatitis can result in life threatening
liver dysfunction, liver cirrhosis or liver cancer.
The most common causes of viral hepatitis are the
Hepatitis A, B and C viruses (HAV, HBV and HCV).
HIV....................... Human Immunodeficiency Virus. HIV, a retrovirus,
causes AIDS. HIV infection leads to the destruction
of the immune system.
Immunology................ Narrowly defined as the study of the immune system,
but often used to describe tests for infectious
diseases which rely on the principle of the binding
of antigens and antibodies.
Immunoassay............... A test that relies on the specificity of the
reaction between antibodies and antigens to detect
and measure the concentration of biological
molecules.
In Vitro.................. Laboratory procedures that occur "in the test tube,"
or outside the body. In vitro diagnostic testing is
the process of analyzing blood, urine, saliva and
other specimens outside the body to screen for,
monitor or diagnose diseases and other medical
conditions.
Infectious Agent.......... Any microorganism, such as bacteria, viruses, fungi
or other parasites, capable of invading another
organism, with or without pathological
manifestations.
Levey-Jennings Chart...... A chart on which the test results for a Run Control
are plotted over time, so that the reproducibility
of a test method can be monitored. The acceptable
range for the Run Control, as determined by each
individual test kit end-user, is also indicated on
the chart.
Lyme Disease.............. A bacterial infection caused by a spirochete called
Borrelia burgdorferi (B. burgdorferi). This
spirochete usually infects the deer tick which then
bites a person or animal, thus transmitting the
infection.
Marker.................... A substance which, when detected in blood or other
study sample by an in vitro diagnostic test, is
indicative of the presence of disease or other
medical condition.
Microbiology.............. The clinical laboratory testing segment that
specializes in the detection of organisms that cause
infectious disease. Often used to refer to
traditional tests that use a growth medium which
enables an organism, if present, to replicate and be
detected visually. Newer methods for detection and
monitoring of infectious diseases such as immunology
and molecular biology methods are sometimes
performed in separate laboratories and sometimes
incorporated into microbiology laboratories.
Molecular Biology......... The clinical laboratory testing segment which uses
newer methods such as PCR to detect nucleic acids
(i.e., DNA and RNA) for infectious disease diagnosis
and other purposes.
G-2
Multi-Marker Run
Control................. A run control designed to be used with several tests
for different analytes or markers. These controls
are designed to cover groups of markers that are
tested in the same laboratory section, e.g., Accurun
1(R) is a multi-marker run control for blood bank
tests.
Nucleic Acids............. Two families of compounds called deoxyribonucleic
acid (DNA) and ribonucleic acid (RNA) that carry the
coded information from which all living organisms
are made.
Pathogen.................. An organism that causes disease in the study
subjects (e.g., a virus which causes disease in
humans is human pathogen; an insect that causes
disease in a plant is a plant pathogen).
PCR....................... Polymerase Chain Reaction, a sequence of chemical
steps using DNA primers (short pieces of nucleic
acids) to locate and copy (amplify) specific
sequences of DNA, if present, to a concentration
high enough for chemical detection.
Performance Panels........ A set of serum and plasma samples collected from
many different individuals and characterized for the
presence or absence of a particular disease marker.
Plasma.................... The clear liquid portion of blood which contains
clotting factors, proteins, antibodies, hormones,
electrolytes and other components dissolved in
water. Plasma differs from serum only in that plasma
contains clotting factors in addition to its other
components, and serum does not.
Qualification Panels...... Dilutions of human plasma or serum manifesting a
full range of reactivities in test kits for a
specific marker.
Qualitative Test.......... An assay for which the reportable results are
positive, negative or indeterminate. An alternative
set of terms sometimes used to express qualitative
test results is reactive, non-reactive or gray zone.
Quality Control
Products................ Materials including characterized samples of various
kinds, data sheets and software, all designed for
use in the performance evaluation of in vitro
diagnostic tests during their development,
manufacture or use.
Quantitative Test......... An assay for which the reportable results are
numeric.
Reactivity................ Test result for a qualitative test; can take one of
three forms: positive, negative or indeterminate.
Reagent................... A substance, usually a chemical solution, used as a
component of an in vitro diagnostic test.
G-3
Retrovirus................ A virus with its genetic information encoded in RNA
rather than DNA. HIV is a retrovirus.
RNA....................... Ribonucleic acid, with DNA, a class of molecules
called nucleic acids. RNA functions with DNA in most
organisms to translate the coded genetic information
into the organism itself. In some viruses, RNA
substitutes for DNA in carrying the coded
information from which the organism is made. HIV and
HCV are RNA viruses.
Run Controls.............. Well-characterized samples designed to resemble the
donor and patient samples routinely tested with a
given method, manufactured to specific levels of
reactivity and provided in quantities sufficient to
be used each time the test is run, over a period of
time, so that test performance can be continuously
monitored.
Sensitivity............... The ability of a test to detect accurately small
quantities of a substance of interest. The greater
the sensitivity, the smaller the quantity of the
substance the test can detect, and the fewer false
negatives will be reported. Sensitivity and
specificity are two important measures of the
quality of a test.
Sensitivity Panels........ Precise dilutions of human plasma or serum
containing a known amount of an infectious disease
marker as calibrated against international
standards.
Seroconversion Panels..... Plasma samples collected from a single individual
over a specific time period showing conversion from
negative to positive for markers of an infectious
disease.
Serum..................... The clear liquid portion of blood which contains
proteins, antibodies, hormones, electrolytes and
other components dissolved in water. Serum differs
from plasma only in that serum does not contain
clotting factors.
Single Analyte Run
Control................. A run control designed to be used with tests for a
single analyte or marker, e.g., Accurun 106 is a
positive control for HIV antigen tests from several
manufacturers.
Specificity............... The ability of a test to distinguish between similar
materials. The greater the specificity, the better a
test is at identifying a substance in the presence
of substances of similar makeup, and the fewer false
positives will be reported. Sensitivity and
specificity are two important measures of the
quality of a test.
Therapeutic Index......... A mathematical description of the potential
usefulness of a candidate drug, based on its
toxicity to the host system versus its effectiveness
against the pathogen. The Therapeutic Index of a
candidate drug is compared to the Therapeutic Index
in the same test system of a drug already in use for
the disease being studied.
G-4
Titer..................... An approximation of the quantity of a marker in a
qualitative test, arrived at by diluting the sample
repeatedly and testing the dilutions until the
marker is no longer detected by the test method.
Toxoplasma................ A protozoan parasite, ubiquitous in the environment,
and which causes Toxoplasmosis. Toxoplasmosis is
commonly acquired by eating food contaminated by
cysts. Pregnant women may be at risk of acquiring
Toxoplasmosis from cats, with subsequent infection
of the baby.
Virus..................... A microorganism dependent on host cells in order to
grow and reproduce.
Western Blot Method....... The standard diagnostic method for confirmation of
the presence of an infectious disease marker (e.g.
HIV, Borrelia burgdorferi), in which lysate (a
mixture of proteins) is separated on a gel by
electrochemical means and then transferred to a
nitrocellulose filter. The filter is then tested
against a blood sample to identify antibodies to the
proteins.
G-5
Photograph showing certain of the Company's Quality Control Panel Products,
including Seroconversion and Performance Panels.
================================================================================
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFERING DESCRIBED HEREIN, AND, IF GIVEN OR
MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY, OR THE UNDERWRITERS. NEITHER THE DELIVERY
OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF
ANY TIME SUBSEQUENT TO ITS DATE. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THOSE
SPECIFICALLY OFFERED HEREBY OR OF ANY SECURITIES OFFERED HEREBY IN ANY
JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE AN OFFER OR
SOLICITATION IN SUCH JURISDICTION. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL OR A SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY
CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL.
--------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
PROSPECTUS SUMMARY 3
RISK FACTORS 6
USE OF PROCEEDS 13
DIVIDEND POLICY 13
CAPITALIZATION 14
DILUTION 15
SELECTED CONSOLIDATED FINANCIAL DATA 16
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS 18
BUSINESS 24
MANAGEMENT 39
CERTAIN TRANSACTIONS 44
PRINCIPAL STOCKHOLDERS 45
DESCRIPTION OF CAPITAL STOCK 46
SHARES ELIGIBLE FOR FUTURE SALE 48
UNDERWRITING 49
LEGAL MATTERS 50
EXPERTS 50
ADDITIONAL INFORMATION 50
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS F-1
GLOSSARY G-1
</TABLE>
UNTIL ____________ , 1996 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS) ALL
DEALERS EFFECTING TRANSACTIONS IN THE SHARES OF COMMON STOCK, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATIONS OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
================================================================================
================================================================================
SHARES
[LOGO]
BOSTON BIOMEDICA, INC.
COMMON STOCK
--------------
PROSPECTUS
--------------
OSCAR GRUSS & SON INCORPORATED
KAUFMAN BROS., L.P.
, 1996
================================================================================
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
<TABLE>
<CAPTION>
TOTAL
EXPENSES
--------
<S> <C>
SEC Registration Fee $ 8,508
NASD Filing Fee 2,708
Nasdaq National Market Listing Fee 30,000*
Blue Sky Fees and Expenses 15,000*
Underwriters' Non-Accountable Expense Allowance 176,000*
Transfer Agent and Registrar Fees 2,500*
Accounting Fees and Expenses 60,000*
Legal Fees and Expenses 300,000*
Printing and Engraving 60,000*
Miscellaneous 95,284*
------
TOTAL $750,000*
========
- --------------
<FN>
* Estimate
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
</FN>
</TABLE>
The Company's Amended and Restated By-Laws include provisions to permit the
indemnification of officers and directors of the Company for damages arising out
of the performance of their duties unless such damages arise out of the
officer's or director's failure to exercise his duties and to discharge the
duties of his office in good faith and in the reasonable belief that his action
was in, or not opposed to, the best interest of the Company, and with respect to
any criminal action or proceeding, had no reasonable cause to believe that his
conduct was unlawful. The Company intends to enter into indemnification
contracts with each of its directors and officers. Reference is hereby made to
the caption "Management -- Limitation of Officers' and Directors' Liability;
Indemnification Agreements."
Reference is hereby made to the caption "Description of Capital Stock --
Limitation of Directors' Liability" in the Prospectus, which is a part of this
Registration Statement.
Reference is hereby made to Section____ of the Underwriting Agreement
between the Company and the Underwriter, filed as Exhibit 1.1 to this
Registration Statement, for a description of indemnification arrangements
between the Company and the Underwriter.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
The following information is furnished with regard to all securities issued
by the Registrant within the past three years which were not registered under
the Securities Act.
In August 1996, the stockholders of the Registrant voted to approve an
amendment to the Registrant's Articles of Organization to effect a one-for-two
reverse stock split of the Registrant's Common Stock, $.01 par value per share.
All references to number of shares of Common Stock give effect to this stock
split.
II-1
(1) In August 1993, the Registrant sold to eight individual investors an
aggregate of 45,000 shares of Common Stock for total cash consideration of
$202,500, at a price per share of $4.50, and to another investor 1,958 shares of
Common Stock in exchange for services rendered valued at $8,811, which
securities were not registered under the Securities Act.
(2) In April 1994, the Registrant sold to eight individual investors an
aggregate of 21,200 shares of Common Stock, for total consideration of $127,200
at a price per share of $6.00, which securities were not registered under the
Securities Act.
(3) From June through December 1994, the Registrant sold the following at
$6.00 per share: to one investor 5,000 shares of Common Stock for cash
consideration of $30,000, to a second investor 1,167 shares of Common Stock for
cash consideration of $3,501 and in exchange for services rendered valued at
$3,501, and to a third investor 2,494 shares in exchange for services rendered
valued at $14,964, which securities were not registered under the Securities
Act.
(4) In November and December 1995, the Registrant sold to two investors an
aggregate of 7,800 shares of Common Stock for total cash consideration of
$54,600 at a price of $7.00, and to another investor 734 shares of Common Stock
in exchange for services rendered valued at $5,138, which securities were not
registered under the Securities Act.
(5) On April 26, 1996, the Registrant sold 117,647 shares of Common Stock to
Kyowa Medex, Co., Ltd. for total cash consideration of $1,000,000, which
securities were not registered under the Securities Act.
(6) For the period August 1, 1993 to date, the Registrant granted to
directors, officers, employees and consultants, 15,000 ($6.00 per share), 63,000
($4.50 to $7.00 per share), 244,037 ($4.50 to $8.50 per share), and 8,000 ($6.00
per share) , respectively, options to purchase shares of Common Stock under the
Registrant's 1987 Non-Qualified Stock Option Plan or Employee Stock Option Plan,
which securities were not registered under the Securities Act.
(7) During the period from March 1994 through June 1996, the Registrant
issued an aggregate of 88,993 shares to fifteen persons pursuant to the exercise
of options, warrants or convertible notes of the Registrant for exercise prices
ranging from $0.25 to $5.20 per share (an aggregate exercise price of
$219,977.50), which securities were not registered under the Securities Act.
To the extent that the foregoing transactions constituted "sales" within the
meaning of the Securities Act, the securities issued in such transactions were
not registered under the Securities Act, as amended, in reliance upon the
exemptions from registration set forth in Section 3(b) and 4(2) of the
Securities Act, relating to sales by an issuer not involving any public
offering, or in reliance upon Regulation S of the Securities Act relating to
sales by an issuer of securities outside the United States. None of the
foregoing transactions, either individually or in the aggregate, involved a
public offering.
ITEM 16. FINANCIAL STATEMENT SCHEDULE AND EXHIBITS
<TABLE>
<CAPTION>
SCHEDULE
NO.
---
<S> <C>
II -- Valuation and Qualifying Accounts
</TABLE>
<TABLE>
<CAPTION>
EXHIBIT
NO.
---
<S> <C>
1.1 -- Form of Underwriting Agreement*
3.1 -- Amended and Restated Articles of Organization of the Registrant*
3.2 -- Amended and Restated By-Laws of the Registrant*
4.1 -- Specimen Certificate for Shares of the Registrant's Common Stock*
II-2
4.2 -- Description of Capital Stock (contained in the Restated Articles
of Organization of the Registrant filed as Exhibit 3.1)
5.1 -- Legal Opinion of Brown, Rudnick, Freed & Gesmer*
10.1 -- Agreement, dated January 17, 1994, between Roche Molecular
Systems, Inc. and the Registrant
10.2 -- Exclusive License Agreement, dated December 6, 1994, between the
University of North Carolina at Chapel Hill and the Registrant**
10.3 -- Contract, dated September 30, 1995, between the National
Institutes of Health and the Registrant (No. 1-AI-55273)**
10.4 -- Contract, dated September 30, 1995, between the National
Institutes of Health and the Registrant (No. 1-AI-55277)**
10.5 -- Contract, dated March 1, 1993, between the National Cancer
Institute and the Registrant**
10.6 -- Agreement, dated October 1, 1995, between Ajinomoto Co., Inc. and
the Registrant**
10.7 -- Lease Agreement, dated June 30, 1992, for Rockville, Maryland
Facility between Cambridge Biotech Corporation and the Registrant**
10.8 -- Lease Agreement, dated July 28, 1995, for New Britain,
Connecticut Facility between MB Associates and the Registrant**
10.9 -- Worcester County Institution for Savings Warrant dated December
1, 1995 (No. 1)
10.10 -- Worcester County Institution for Savings Warrant dated July 26,
1993 (No. 2)
10.11 -- Stock Purchase Agreement, dated June 5, 1990, between G&G
Diagnostics Limited Partnership I and the Registrant, as amended
10.12 -- Purchase and Sale Agreement, dated December 11, 1995, for 375
West Street Property between James Leonard, Trustee, C.W.B. Trust
and the Registrant
10.13 -- Purchase and Sale Agreement, dated December 20, 1995, for 80
Manley Street Property between the Registrant and Donald M. Leonard,
Trustee, Live Oak Realty Trust
10.14 -- Stock Purchase Agreement, dated April 26, 1996, between Kyowa
Medex Co., Ltd. and the Registrant
10.15 -- 1987 Non-Qualified Stock Option Plan
10.16 -- Employee Stock Option Plan
10.17 -- Form of Underwriters Warrant*
10.18.1 -- Second Amended and Restated Loan and Security Agreement, dated
August 2, 1995, between the First National Bank of Boston and the
Registrant, as amended
10.18.2 -- Note Payable to The First National Bank of Boston, dated October
1994, in the amount of $200,000*
10.18.3 -- Note Payable to The First National Bank of Boston, dated October
1994, in the amount of $849,000*
10.18.4 -- Note Payable to The First National Bank of Boston, dated August
1995, in the amount of $350,000*
10.18.5 -- Note Payable to The First National Bank of Boston, dated December
1995, in the amount of $100,000*
10.18.6 -- Mortgage Note to The First National Bank of Boston, dated
December 1995, in the amount of $750,000*
10.18.7 -- Note Payable to The First National Bank of Boston, dated July
1996, in the amount of $250,000*
II-3
10.19 -- Form of Indemnification Agreement with Officers and Directors
11 -- Statement re Computation of Per Share Earnings
21 -- Subsidiaries of the Registrant
23.1 -- Consent of Brown, Rudnick, Freed & Gesmer (contained in Exhibit
5.1)
23.2 -- Consent of Coopers & Lybrand L.L.P., independent accountants
24 -- Power of Attorney (included on signature page hereof)
27 -- Financial Data Schedule
</TABLE>
- --------------
* To be filed by amendment.
** Confidential Treatment requested for certain portions of this document.
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment 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.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the Offering.
(b) The undersigned Registrant hereby undertakes to provide to the
underwriter at the closing specified in the underwriting agreements certificates
in such denominations and registered in such names as required by the
underwriter to permit prompt delivery to each purchaser.
(c) 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 Registrant's By-Laws, the Underwriting Agreement
relating to this Offering, 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
II-4
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.
(d) The undersigned Registrant hereby further 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-5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of West Bridgewater,
Commonwealth of Massachusetts, on August 23, 1996.
BOSTON BIOMEDICA, INC.
By: /s/ RICHARD T. SCHUMACHER
-------------------------------
RICHARD T. SCHUMACHER
PRESIDENT
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Richard T. Schumacher and Kevin W. Quinlan, and
each of them (with full power to each of them to act alone), his true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all amendments (including post-effective amendments)
to this Registration Statement, and to file the same, with all exhibits thereto
and other documents in connection therewith, and, in connection with any
registration of additional securities pursuant to Rule 462(b) under the
Securities Act of 1933, as amended, to sign any abbreviated registration
statement and any and all amendments thereto, and to file the same, with all
exhibits thereto and other documents in connection therewith, in each case, with
the Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, or their substitutes, may lawfully do or cause to be
done by virtue hereof.
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>
/s/ RICHARD T. SCHUMACHER PRINCIPAL EXECUTIVE OFFICER AUGUST 23, 1996
-------------------------- AND DIRECTOR
RICHARD T. SCHUMACHER
/S/ KEVIN W. QUINLAN PRINCIPAL FINANCIAL AND ACCOUNTING AUGUST 23, 1996
-------------------------- OFFICER AND DIRECTOR
KEVIN W. QUINLAN
/S/ HENRY A. MALKASIAN DIRECTOR AUGUST 23, 1996
--------------------------
HENRY A. MALKASIAN
/S/ FRANCIS E. CAPITANIO DIRECTOR AUGUST 23, 1996
--------------------------
FRANCIS E. CAPITANIO
/S/ CALVIN A. SARAVIS DIRECTOR AUGUST 23, 1996
--------------------------
CALVIN A. SARAVIS
</TABLE>
II-6
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
BOSTON BIOMEDICA, INC.:
In connection with our audits of the consolidated financial statements of
Boston Biomedica, Inc. and Subsidiaries, as of December 31, 1994 and 1995, and
for each of the three years in the period ended December 31, 1995, which
financial statements are included in this Registration Statement, we have also
audited the consolidated financial statement schedule listed in Item 16 herein.
In our opinion, this consolidated financial statement schedule, when
considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information required to be
included therein.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
March 12, 1996
S-1
SCHEDULE II
BOSTON BIOMEDICA, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
RECOVERIES
BALANCE AT FOR ACCOUNTS UNCOLLECTIBLE BALANCE AT
BEGINNING PROVISION FOR PREVIOUSLY ACCOUNTS END OF
ALLOWANCE FOR DOUBTFUL ACCOUNTS OF PERIOD BAD DEBT WRITTEN OFF WRITTEN OFF PERIOD
------------------------------- --------- -------- ----------- ----------- ------
<S> <C> <C> <C> <C> <C>
Six months ended June 20, 1996 $142,372 $ 77,145 -- $ (85,938) $133,579
1995 94,723 181,084 -- (133,435) 142,372
1994 43,956 102,099 -- (51,332) 94,723
1993 21,000 22,956 -- -- 43,956
</TABLE>
S-2
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
------ ----------- ----
<S> <C>
1.1 -- Form of Underwriting Agreement*
3.1 -- Amended and Restated Articles of Organization of the Registrant*
3.2 -- Amended and Restated By-Laws of the Registrant*
4.1 -- Specimen Certificate for Shares of the Registrant's Common Stock*
4.2 -- Description of Capital Stock (contained in the Restated Articles
of Organization of the Registrant filed as Exhibit 3.1)
5.1 -- Legal Opinion of Brown, Rudnick, Freed & Gesmer*
10.1 -- Agreement, dated January 17, 1994, between Roche Molecular
Systems, Inc. and the Registrant
10.2 -- Exclusive License Agreement, dated December 6, 1994, between the
University of North Carolina at Chapel Hill and the Registrant**
10.3 -- Contract, dated September 30, 1995, between the National
Institutes of Health and the Registrant (No. 1-AI-55273)**
10.4 -- Contract, dated September 30, 1995, between the National
Institutes of Health and the Registrant (No. 1-AI-55277)**
10.5 -- Contract, dated March 1, 1993, between the National Cancer
Institute and the Registrant**
10.6 -- Agreement, dated October 1, 1995, between Ajinomoto Co., Inc. and
the Registrant**
10.7 -- Lease Agreement, dated June 30, 1992, for Rockville, Maryland
Facility between Cambridge Biotech Corporation and the Registrant**
10.8 -- Lease Agreement, dated July 28, 1995, for New Britain,
Connecticut Facility between MB Associates and the Registrant**
10.9 -- Worcester County Institution for Savings Warrant (No. 1) dated
December 1, 1995
10.10 -- Worcester County Institution for Savings Warrant (No. 2) dated
July 26, 1993
10.11 -- Stock Purchase Agreement, dated June 5, 1990, between G&G
Diagnostics Limited Partnership I and the Registrant, as amended
10.12 -- Purchase and Sale Agreement, dated December 11, 1995, for 375
West Street Property between James Leonard, Trustee, C.W.B. Trust
and the Registrant
10.13 -- Purchase and Sale Agreement, dated December 20, 1995, for 80
Manley Street Property between the Registrant and Donald M. Leonard,
Trustee, Live Oak Realty Trust
10.14 -- Stock Purchase Agreement, dated April 26, 1996, between Kyowa
Medex Co., Ltd. and the Registrant
10.15 -- 1987 Non-Qualified Stock Option Plan
10.16 -- Employee Stock Option Plan
10.17 -- Form of Underwriters Warrant*
10.18.1 -- Second Amended and Restated Loan and Security Agreement, dated
August 2, 1995, between the First National Bank of Boston and the
Registrant, as amended
10.18.2 -- Note Payable to The First National Bank of Boston, dated October
1994, in the amount of $200,000*
10.18.3 -- Note Payable to The First National Bank of Boston, dated October
1994, in the amount of $849,000*
</TABLE>
INDEX TO EXHIBITS (CONTINUED)
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
------ ----------- ----
<S> <C> <C> <C>
10.18.4 -- Note Payable to The First National Bank of Boston, dated August
1995, the in amount of $350,000*
10.18.5 -- Note Payable to The First National Bank of Boston, dated
December 1995, in the amount of $100,000*
10.18.6 -- Mortgage Note to The First National Bank of Boston, dated
December 1995, in the the amount of $750,000*
10.18.7 -- Note Payable to The First National Bank of Boston, dated July
1996, in the amount of $250,000.
10.19 -- Form of Indemnification Agreement with Officers and Directors
11 -- Statement re Computation of Per Share Earnings
21 -- Subsidiaries of the Registrant
23.1 -- Consent of Brown, Rudnick, Freed & Gesmer (contained in Exhibit
5.1)
23.2 -- Consent of Coopers & Lybrand L.L.P., independent accountants
24 -- Power of Attorney (included on signature page hereof)
27 -- Financial Data Schedule
</TABLE>
- --------------
* To be filed by amendment.
** Confidential Treatment requested for certain portions of this document.
Exhibit 10.1
AGREEMENT
---------
This Agreement is made by and between Roche Molecular Systems, Inc.
("RMS"), having an office at 1080 U.S. Highway 202, Branchburg, New Jersey
08876-1760 and Biotech Research Laboratories ("BTRL"), Rockville, Maryland,
hereafter collectively referred to as "The Parties".
BACKGROUND
----------
A. RMS has the right to grant immunities from suit under certain United States
Patents describing and claiming, inter alia, a gene amplification process known
as the polymerase chain reaction ("PCR") technology.
B. BTRL has attained substantial expertise in validating, documenting and
performing sophisticated diagnostic procedures.
C. BTRL desires to obtain an immunity from suit from RMS to practice PCR
Technology to perform human in vitro clinical laboratory services, and RMS is
willing to grant such an immunity, on the terms and subject to the conditions
provided exclusively in this Agreement.
NOW, THEREFORE, for and in consideration of the mutual covenants
contained herein, RMS and BTRL agree as follows:
1
1. Definitions
For the purpose of this Agreement, and solely for that purpose,
the terms set forth hereinafter shall be defined as follows:
1.1 The term "AFFILIATE" of a designated party to this Agreement
shall mean:
a) an organization of which fifty percent (50%) or more of
the voting stock is controlled or owned directly or
indirectly by either party to this Agreement;
b) an organization which directly or indirectly owns or
controls fifty percent (50%) or more of the voting
stock of either party to this Agreement;
c) an organization, the majority ownership of which is
directly or indirectly common to the majority ownership
of either party to this Agreement; and
d) an organization under (a), (b), or (c) above in which
the amount of said ownership is less than fifty percent
(50%) and that amount is the maximum amount permitted
pursuant to the law governing the ownership of said
organization.
2
It is understood and agreed, however, that the term "Affiliate" shall not
include Genentech Inc., a company located at 460 Point San Bruno Boulevard,
South San Francisco, California, U.S.A. ("Genentech").
1.2 "ASSAY" shall mean an in vitro diagnostic procedure utilizing
PCR Technology to detect the presence, absence or quantity of a nucleic acid
sequence associated with a specific human disease or condition.
1.3 "DIAGNOSTIC PRODUCT" shall mean an assemblage of reagents,
including but not limited to reagents packaged in the form of a kit, useful in
performing an Assay.
1.4 "EFFECTIVE DATE" shall mean the date on which the last
signatory to this Agreement signs the Agreement.
1.5 "LICENSED FIELD" shall mean the field of human in vitro
diagnostics solely for the detection of genetic diseases, genetic
pre-disposition to disease, microorganisms associated with infectious diseases,
cancer, or for tissue transplant typing or Parentage.
1.6 "LICENSED SERVICES" shall mean the performance of an Assay by
BTRL to detect nucleic acid sequences associated with a human disease or
condition within the Licensed Field. Licensed Services include but are not
limited to, any combination of the steps of collecting a sample for analysis,
isolating nucleic acid sequences therein, amplifying one or more desired
sequences, analyzing the amplified material and reporting the results.
3
1.7 "LICENSED TECHNOLOGY" shall mean the application of PCR
Technology, as that term is defined in Section 1.10, to perform Licensed
Services.
1.8 "NET SERVICE REVENUES" shall mean gross invoice price for the
Licensed Services performed by BTRL (or the fair market value for any
nonmonetary consideration which BTRL agrees to receive in exchange for Licensed
Services), less the following deductions where they are factually applicable and
are not already reflected in the gross invoice price:
i) discounts allowed and taken, in amounts customary in
the trade (which shall include the difference between
the dollar amount charged by BTRL for a Licensed
Service and the Medicare and/or Medicaid Limits of
Allowance and/or reimbursement limitations of a Third
Party insurance program); and
ii) sales and/or use taxes and/or duties imposed upon and
with specific reference to particular sales; and
iii) actual bad debt, up to 2% of gross invoice price for
Licensed Services, which bad debt BTRL can prove and
document that it was reasonable and diligent in its
efforts to collect payment.
No allowance or deduction shall be made for commissions or
collections, by whatever name known.
4
It is hereby understood and agreed that, to the extent feasible,
the Licensed Services shall at all times be invoiced, listed and billed by BTRL
as a separate item in BTRL's invoices, bills and reports to customers. However,
in the event a Licensed Service is offered in combination with another non-PCR
diagnostic assay(s) or together with a non-testing service(s) (e.g., an
interpretive or consultive service) as part of a package (e.g., genetic
counseling) (this combination of a Licensed Service with a non-testing or
interpretive service is hereinafter referred to as a "Combination Service"),
then Net Service Revenues for purposes of determining royalties on a Licensed
Service which is part of a Combination Service shall be determined by
multiplying the gross invoice price, less applicable deductions, for the
Combination Service, by the appropriate fraction in Attachment I hereto. The
fraction specified in Attachment I for a particular Licensed Service shall be
mutually agreed to by The Parties as accurately reflecting the value contributed
by the Licensed Service to the overall value of the package of the Combination
Service as offered by BTRL. Attachment I hereto may be modified at any time by
mutual consent of The Parties.
The Net Service Revenues of the Licensed Services that are
performed by BTRL for any person, firm or corporation controlling, controlled
by, or under common control with BTRL, or enjoying a special course of dealing
with BTRL, shall be determined by reference to the Net Service Revenues which
would be applicable under this Section in an arm's length transaction by BTRL to
a Third Party other than such person, firm or corporation.
1.9 "PARENTAGE" shall mean analysis of human genetic material to
ascertain whether two or more individuals are biologically related, but
specifically excludes analysis of forensic evidence for a criminal proceeding.
5
1.10 "PCR TECHNOLOGY" shall mean polymerase chain reaction
technology covered by United States Patent Nos. B1 4,683,195 and B1 4,683,202
and any reissue or reexamination patents thereof.
1.11 "THIRD PARTY" shall mean a party other than an Affiliate of
The Parties to this Agreement.
2. Grant
2.1 Upon the terms and subject to the conditions of this Agreement,
RMS hereby grants to BTRL, and BTRL hereby accepts from RMS, a royalty-bearing,
non-exclusive immunity from suit under PCR Technology solely to use Licensed
Technology to perform Licensed Services within the United States and its
possessions and the Commonwealth of Puerto Rico. The Parties understand and
agree that no rights are hereby granted, expressly or by implication, under U.S.
Patent No. 4,965,188 (the '188 patent). An immunity from suit under the '188
patent may be obtained by purchase of RMS-manufactured polymerase or by
contacting the Director of Licensing, Roche Molecular Systems, Inc., 1145
Atlantic Avenue, Alameda, CA 94501 (510/865-5400).
2.2 The Licensed Technology hereunder may be practiced solely for
the performance of Licensed Services and for no other purpose whatsoever, and no
other right, immunity or license is granted expressly, impliedly or by estoppel.
2.3 BTRL expressly acknowledges and agrees that the immunity from
suit pursuant to this Agreement is personal to BTRL alone and BTRL shall have no
right to sublicense, assign or otherwise transfer or share its rights under the
foregoing
6
immunity from suit and further agrees that Licensed Services will be performed,
offered, marketed and sold only by BTRL and BTRL shall not authorize any other
party, including Affiliates, to practice the Licensed Technology, nor shall it
practice the Licensed Technology in conjunction with any other party.
2.4 For each Combination Service that BTRL offers pursuant to this
immunity from suit, BTRL agrees that it will notify RMS at least sixty (60) days
before it commercializes said Combination Service. The Parties shall then agree
on the fraction of the value of Combination Services which is attributable to
the Licensed Service component. As to all other Licensed Services offered by
BTRL which are not part of a Combination Service, BTRL agrees to keep RMS
informed about the availability from BTRL of each such Service within a
reasonable time after BTRL commences offering the Service.
2.5 RMS hereby grants to BTRL the right and BTRL accepts and
agrees to credit RMS as the source of PCR Technology rights in BTRL's,
promotional materials and any other materials intended for distribution to Third
Parties as follows:
"This test is performed pursuant to a license agreement with Roche
Molecular Systems, Inc."
3. Acknowledgment and Agreement on Diagnostic Products
3.1 BTRL acknowledges and agrees that the immunity from suit
granted hereunder is for the performance of Licensed Services only and does not
include any right to make, have made, import, offer or sell any products,
including
7
devices, PCR reagents, kits or Diagnostic Products. BTRL further acknowledges
and agrees that RMS Affiliates are in the business of providing clinical
laboratory testing services and the commercial sale of diagnostic testing
systems and therefore may compete directly with BTRL's business.
4. Royalties, Records and Reports
4.1 Royalties. For the rights and privileges granted under this
Agreement, BTRL shall pay to RMS earned royalties equal to fifteen percent (15%)
of BTRL's Net Service Revenues for each Assay performed.
4.2 BTRL shall keep full, true and accurate books of account
containing all particulars which may be necessary for the purpose of showing the
amount payable to RMS by way of royalty or by way of any other provision under
this Agreement. Such books and the supporting data shall be open at all
reasonable times, for three (3) years following the end of the calendar year to
which they pertain (and access shall not be denied thereafter, if reasonably
available), to the inspection of RMS or an independent certified public
accountant retained by RMS for the purpose of verifying BTRL's royalty
statements or BTRL's compliance in other respects with this Agreement. If in
dispute, such records shall be kept until the dispute is settled. The inspection
of records shall be at RMS's sole cost and expense, unless the inspector
concludes that royalties reported by BTRL for the period being audited are
understated by five percent (5%) or more from actual royalties, in which case
the costs and expenses of such inspection shall be paid by BTRL.
8
4.3 BTRL shall within thirty (30) days after the first day of
January, April, July and October of each year deliver to RMS a true and accurate
royalty report. This report shall give such particulars of the business
conducted by BTRL during the preceding three (3) calendar months as are
pertinent to an accounting for royalty under this Agreement and shall include at
least the following:
a) the number of assays performed in connection with
performance of the Licensed Services and Combination
Services during those three (3) months;
b) compilation of billings thereon and the allowable
deductions therefrom;
c) Net Service Revenues and the calculation of total
royalties thereon; and
d) the calculation of the net royalty payable to RMS. If
no royalties are due, it shall be so reported.
The correctness and completeness of each such report shall be
attested to in writing by the responsible financial officer of BTRL's
organization or by BTRL's external auditor or by the chair or other head of
BTRL's internal audit committee.
Simultaneously with the delivery of each such report, BTRL shall
pay to RMS the royalty and any other payments due under this Agreement for the
period
9
covered by such report. All payments due RMS hereunder shall be sent together
with the royalty report by the due date to the following address:
Roche Molecular Systems, Inc.
P.O. Box 18139
Newark, N.J. 07191
or to any address that RMS may advise in writing.
4.4 All amounts payable hereunder by BTRL to RMS shall be payable
in United States currency.
4.5 BTRL's obligation to pay royalties pursuant to this Agreement
shall terminate upon a final holding of invalidity or unenforceability of all of
the patents identified in Section 1.10, supra, by a court of appellate
jurisdiction or by a trial court from which no appeal is or can be taken.
4.6 If BTRL shall fail to pay any amount specified under this
Agreement after the due date thereof, the amount owed shall bear interest at the
Citibank NA base lending rate ("prime rate") plus 2% from the due date until
paid, provided, however, that if this interest rate is held to be unenforceable
for any reason, the interest rate shall be the maximum rate allowed by law at
the time the payment is due.
5. Performance of Licensed Services
5.1 The Parties agree that quality assurance is of utmost
importance in the performance of Licensed Services. To that end, BTRL agrees
that it will:
10
a) participate in at least one independent proficiency
testing program for each Licensed Service when such
program(s) becomes available; and
b) comply with all Medicare, Medicaid and/or CLIA
standards for diagnostic testing as well as all other
applicable federal, state and local regulations
applicable to human diagnostic testing.
6. Technology Notification
6.1 With respect to any invention, improvement or discovery
(hereinafter referred to as "Discoveries" in this Article) of BTRL made after
entering into this Agreement, resulting from work conducted under this Agreement
and being applicable to PCR, if BTRL decides to license that Discovery to Third
Parties, then BTRL agrees to provide to RMS, unless not possible due to BTRL's
previous commitments to Third Parties relating to said Discoveries, a reasonable
opportunity to negotiate a license to use said Discoveries in PCR-based
diagnostic products and services. Such Discoveries include, but are not limited
to, improvements of the PCR process or in the performance of Assays,
modifications to or new methods of performing the Assays, including the
automation of the PCR process or of the Assays.
6.2 Any agreement reached between The Parties as a result of
BTRL's notification to RMS of a Discovery pursuant to Section 6.1 hereto shall
be upon terms and conditions negotiated in good faith by The Parties.
11
7. Diligence
BTRL shall exercise reasonable diligence in developing, testing,
validating, documenting, promoting and selling the Licensed Services. In the
course of such diligence, BTRL shall take appropriate steps including, upon
reasonable written request of RMS, furnishing RMS with representative copies of
all promotional material relating to the Licensed Services.
8. Term and Termination
8.1 The imumunity from suit granted to BTRL herein shall commence
on the Effective Date and terminate on the date of expiration of the last to
expire of the patents included within the PCR Technology, which patent contains
at least one claim covering the performance of Licensed Services.
8.2 If in the course of performing and offering Licensed Services,
BTRL fails to comply with the quality assurance provisions of Article 5, BTRL
shall so notify RMS and RMS shall notify BTRL to correct the defects. BTRL shall
have thirty (30) days from receipt of such notice to cure all defects of which
it is notified. If BTRL does not cure all such defects within the designated
thirty (30) days, RMS may then in its sole discretion terminate this Agreement
in its entirety, or any portion thereof immediately. For the purposes of this
Section and this Agreement, BTRL's failure to provide an accurate and correct
test result when participating in an independent proficiency testing program
pursuant to Section 5.1 (a), on two consecutive evaluations, shall automatically
be deemed a failure to comply with Article 5 and shall be a material breach of
this Agreement.
12
8.3 Notwithstanding any other Section of this Agreement, BTRL may
terminate this Agreement for any reason on thirty (30) days' written notice to
RMS.
8.4 The decision of a Court or Administrative body finding RMS
liable or culpable due to BTRL's performance of Licensed Services shall give RMS
the right to terminate this Agreement immediately upon notification to RMS of
said decision.
8.5 The immunity granted hereunder to BTRL shall automatically
terminate upon (i) an adjudication of BTRL as bankrupt or insolvent, or BTRL's
admission in writing of its inability to pay its obligations as they mature; or
(ii) an assignment by BTRL for the benefit of creditors; or (iii) BTRL's
applying for or consenting to the appointment of a receiver, trustee or similar
officer for any substantial part of its property; or such receiver, trustee or
similar officer's appointment without the application or consent of BTRL, if
such appointment shall continue undischarged for a period of ninety (90) days;
or (iv) BTRL's instituting (by petition, application, answer, consent or
otherwise) any bankruptcy, insolvency arrangement, or similar proceeding
relating to BTRL under the laws of any jurisdiction; or (v) the institution of
any such proceeding (by petition, application or otherwise) against BTRL, if
such proceeding shall remain undismissed for a period of ninety (90) days or the
issuance or levy of any judgment, writ, warrant of attachment or execution or
similar process against a substantial part of the property of BTRL, if such
judgment, writ, or similar process shall not be released, vacated or fully
bonded within ninety (90) days after its issue or levy; or (vi) loss of BTRL's
federal or state licenses permits or accreditation necessary for operation of
BTRL as a healthcare institution.
13
8.6 RMS shall have the right to terminate this Agreement by
written notice to BTRL upon any change in the ownership or control of BTRL or of
its assets. Termination under this Section shall be effective immediately upon
receipt by BTRL of RMS's notice of termination. For such purposes, a "change in
ownership or control" shall mean that 30% or more of the voting stock of BTRL
become subject to the control of a person or entity, or any related group of
persons or entities acting in concert, which person(s) or entity(ies) did not
control such proportion of voting stock as of the effective date of the
Agreement. Analogously, RMS shall have the right to terminate this Agreement
upon any transfer or sale of 30% or more of the assets of BTRL to another party.
8.7 Breach. Upon any breach of or default of a material term under
this Agreement by BTRL, RMS may terminate this Agreement upon thirty (30) days'
written notice to BTRL. Said notice shall become effective at the end of the
thirty-day (30) period, unless during said period BTRL fully cures such breach
or default to RMS's reasonable satisfaction and notifies RMS of such a cure.
8.8 Upon termination of this Agreement as provided herein, all
immunities and rights granted to BTRL hereunder shall revert to or be retained
by RMS. To the extent RMS has licensed technology or know-how of BTRL pursuant
to Article 6 hereto, those licenses shall remain in force according to their
terms.
8.9 BTRL's obligations to report to RMS and to pay royalties to
RMS as to the Licensed Services performed under the Agreement prior to
termination or expiration of the Agreement shall survive such termination or
expiration.
14
9. Confidentiality-Publicity
9.1 Except as otherwise specifically provided in Section 2.5, BTRL
agrees to obtain RMS's approval before distributing any written information,
including but not limited to promotional and sales materials, to Third Parties
which contains references to RMS or this Agreement. RMS's approval shall not be
unreasonably withheld or delayed and, in any event, RMS's decision shall be
rendered within three (3) weeks of receipt of the written information. Once
approved, such materials, or abstracts of such materials, which do not
materially alter the context of the material originally approved may be
reprinted during the term of the Agreement without further approval by RMS
unless RMS has notified BTRL in writing of its decision to withdraw permission
for such use.
9.2 Each Party agrees that any financial, legal or business
information or any technical information disclosed to it (the "Receiving Party")
by the other (the "Disclosing Party") in connection with this Agreement shall be
considered confidential and proprietary and the Receiving Party shall not
disclose same to any Third Party and shall hold it in confidence for a period of
five (5) years and will not use it other than as permitted under this Agreement
provided, however, that any information, know-how or data which is orally
disclosed to the Receiving Party shall not be considered confidential and
proprietary unless such oral disclosure is reduced to writing and given to the
Receiving Party in written form within thirty (30) days after oral disclosure
thereof. Such confidential and proprietary information shall include, without
limitation, marketing and sales information, commercialization plans and
strategies, research and development work plans, and technical information such
as patent applications, inventions, trade
15
secrets, systems, methods, apparatus, designs, tangible material, organisms and
products and derivatives thereof.
9.3 The above obligations of confidentiality shall not be
applicable to the extent:
a) such information is general public knowledge or, after
disclosure hereunder, becomes general or public
knowledge through no fault of the Receiving Party; or
b) such information can be shown by the Receiving Party by
its written records to have been in its possession
prior to receipt thereof hereunder; or
c) such information is received by the Receiving Party
from any Third Party for use or disclosure by the
Receiving Party without any obligation to the
Disclosing Party provided, however, that information
received by the Receiving Party from any Third Party
funded by the Disclosing Party (e.g. consultants,
subcontractors, etc.) shall not be released from
confidentiality under this exception; or
d) the disclosure of such information is reasonably needed
for use in connection with performing, offering and
selling Licensed Services; or
16
e) the disclosure of such information is required or
desirable to comply with or fulfill governmental
requirements, submissions to governmental bodies, or
the securing of regulatory approvals.
9.4 With the exception of Section 2.5, each party shall, to the
extent reasonably practicable, maintain the confidentiality of the provisions of
this Agreement and shall refrain from making any public announcement or
disclosure of the terms of this Agreement without the prior consent of the other
party, except to the extent a party concludes in good faith that such disclosure
is required under applicable law or regulations, in which case the other party
shall be notified in advance.
10. Compliance
In exercising any and all rights and in performing its
obligations hereunder, BTRL shall comply fully with any and all applicable laws,
regulations and ordinances and shall obtain and keep in effect licenses, permits
and other governmental approvals, whether at the federal, state or local levels,
necessary or appropriate to carry on its activities hereunder. BTRL further
agrees to refrain from any activities that would have an adverse effect on the
business reputation of RMS. RMS will advise BTRL of any such activities and BTRL
will have thirty (30) days to correct such activity.
11. Assignment
This Agreement shall not be assigned by BTRL (including without
limitation any purported assignment or transfer that would arise from a sale or
transfer of
17
BTRL's business). RMS may assign all or any part of its rights and obligations
under this Agreement at any time without the consent of BTRL. BTRL agrees to
execute such further acknowledgments or other instruments as RMS may reasonably
request in connection with such assignment.
12. Negation of Warranties and Indemnity
12.1 Nothing in this Agreement shall be construed as:
a) a warranty or representation by RMS as to the validity
or scope of any Licensed Technology;
b) a warranty or representation that the practice of the
Licensed Technology is or will be free from
infringement of patents of Third Parties (however, RMS
is not aware of any such infringement and no such claim
has been made);
c) an obligation to bring or prosecute actions or suits
against Third Parties for infringement;
d) except as expressly set forth herein, conferring the
right to use in advertising, publicity or otherwise any
trademark, trade name, or names, or any contraction,
abbreviation, simulation or adaptation thereof, of RMS;
18
e) conferring by implication, estoppel or otherwise any
license, right or immunity under any patents or patent
applications of RMS other than those specified in PCR
Technology, regardless of whether such patents and
patent applications are dominant or subordinate to
those in PCR Technology;
f) an obligation to furnish any know-how not provided in
PCR Technology; or
g) creating any agency, partnership, joint venture or
similar relationship between RMS and BTRL.
12.2 RMS MAKES NO EXPRESS OR IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
12.3 BTRL acknowledges that the technology licensed hereby is
newly developed, and agrees to take all reasonable precautions to prevent death,
personal injury, illness and property damage from the use of such technology.
BTRL shall assume full responsibility for its use of the Licensed Technology and
shall defend, indemnify and hold RMS harmless from and against all liability,
demands, damages, expenses (including attorneys' fees) and losses for death,
personal injury, illness, property damage or any other injury or damage,
including any damages or expenses arising in connection with state or federal
regulatory action, in view of the use by BTRL, including its officers,
directors, agents and employees, of the Licensed Technology, except that BTRL
shall not be liable to RMS for injury or damage arising solely because of RMS's
negligence.
19
13. General
13.1 This Agreement constitutes the entire agreement between
The Parties as to the subject matter hereof, and all prior negotiations,
representations, agreements and understandings are merged into, extinguished by
and completely expressed by it. This Agreement may be modified or amended only
by a writing executed by authorized officers of each of The Parties.
13.2 Any notice required or permitted to be given by this
Agreement shall be given by postpaid, first class, registered or certified mail,
or by courier or facsimile, properly addressed to the other party at the
respective address as shown below:
If to RMS:
Roche Molecular Systems, Inc.
340 Kingsland Street
Nutley, New Jersey 07110
Attn: Corporate Secretary
with a copy to:
Roche Molecular Systems, Inc.
1145 Atlantic Avenue, Suite 100
Alameda, California 94501
Attn: Licensing Manager
If to BTRL:
Biotech Research Laboratories
3 Taft Ct.
Rockville, Maryland 20850
Attn: Mark M. Manak, Ph.D.
Senior Vice President and Director of Science
20
Either party may change its address by providing notice to the other party.
Unless otherwise specified herein, any notice given in accordance with the
foregoing shall be deemed given within four (4) full business days after the day
of mailing, or one full day after the date of delivery to the courier, or the
date of facsimile transmission, as the case will be.
13.3 Governing Law and Venue. This Agreement and its effect are
subject to and shall be construed and enforced in accordance with the law of the
State of New Jersey, U.S.A., except as to any issue which by the law of New
Jersey depends upon the validity, scope or enforceability of any patent within
the Licensed Technology, which issue shall be determined in accordance with the
applicable patent laws of the United States. The Parties agree that the
exclusive jurisdiction and venue for any dispute or controversy arising from
this Agreement shall be in the United States District Court for the District of
New Jersey if federal jurisdiction exists, and if no federal jurisdiction
exists, then in the Superior Court of New Jersey.
13.4 Arbitration. Notwithstanding the provisions of Section 13.3
above, any dispute concerning solely the determination of facts such as, but not
limited to, (i) the value of a Combination Service and a Licensed Service
pursuant to Section 1.8; (ii) a determination of royalty rate payments owed
pursuant to Section 4.1; (iii) compliance with quality assurance pursuant to
Article 5; or (iv) good faith compliance with Article 6; and which dispute does
not involve a question of law, shall be settled by final and binding arbitration
at a mutually convenient location in the State of New Jersey pursuant to the
commercial arbitration rules of the American Arbitration Association, in
accordance with the following procedural process:
21
a) The arbitration tribunal shall consist of three
arbitrators. Each party shall nominate in the request
for arbitration and the answer thereto one arbitrator
and the two arbitrators so named will then jointly
appoint the third arbitrator as chairman of the
arbitration tribunal.
b) The decision of the arbitration tribunal shall be final
and judgment upon such decision may be entered in any
competent court for juridical acceptance of such an
award and order of enforcement. Each party hereby
submits itself to the jurisdiction of the courts of the
place of arbitration, but only for the entry of
judgment with respect to the decision of the
arbitrators hereunder.
13.5 Nothing in this Agreement shall be construed so as to
require the commission of any act contrary to law, and wherever there is any
conflict between any provision of this Agreement or concerning the legal right
of The Parties to enter into this contract and any statute, law, ordinance or
treaty, the latter shall prevail, but in such event the affected provisions of
the Agreement shall be curtailed and limited only to the extent necessary to
bring it within the applicable legal requirements.
13.6 If any provision of this Agreement is held to be
unenforceable for any reason, it shall be adjusted rather than voided, if
possible, in order to achieve the intent of the parties to the extent possible.
In any event, all other provisions of this Agreement shall be deemed valid and
enforceable to the full extent possible.
22
IN WITNESS WHEREOF, The Parties hereto have set their hands and seals and
duly executed this Agreement on the date(s) indicated below, to be effective on
Effective Date as defined herein.
ROCHE MOLECULAR SYSTEMS, INC. BIOTECH RESEARCH LABORATORIES
By: /s/Kathy Oronez By: /s/Mark M. Manak
------------------------ --------------------------
Typed Name: Kathy Ordonez Typed Name: Mark M. Manak, Ph.D.
Title: President Title: Senior Vice President and
Director of Science
Date: Aug. 12, 1993 Date: Jan. 17, 1994
---------------------- ------------------------
Apprv'd As To form LAW DEPT.
By. PSR
22080
23
ATTACHMENT I
------------
COMBINATION SERVICES
--------------------
PERCENT OF NET SERVICE
REVENUES FOR COMBINATION
SERVICES WHICH IS
ATTRIBUTABLE TO LICENSED
LICENSED SERVICES SERVICES
[TO BE DETERMINED]
22080
24
RIDER CONCERNING SUPPLEMENTAL PATENT RIGHTS TO
DIAGNOSTIC SERVICES AGREEMENT
The purpose of this rider is to set forth the agreement of Biotech Research
Laboratories ("BTRL") and Roche Molecular Systems, Inc. ("RMS") concerning the
supplemental rights to additional patents relating to PCR technology which RMS
offers and the parties agree to add to the rights granted to BTRL by the
Agreement between the parties, dated Jan 17, 1994 (the "Diagnostic Services
Agreement").
1. It is understood by the parties that RMS may, from time to time, come
into possession or control of additional patents or claims of patents
relating to PCR technology rights to which RMS may decide to offer to
add to the Diagnostic Services Agreement and which BTRL may desire to
accept. Accordingly, appended hereto as APPENDIX A is a list of such
additional patents or claims of patents as RMS is currently offering to
which BTRL, by its authorized representative, has indicated its
acceptance thereof in accordance with the rights of use and all other
pertinent obligations, restrictions and limitations as set forth in the
Diagnostic Services Agreement.
2. APPENDIX A may be amended by mutual agreement of the parties in writing
so as to add additional patent rights being offered by RMS. Accordingly,
a new APPENDIX A signed and dated by both parties shall supersede any
prior APPENDIX A and shall become a part of this rider.
3. It is expressly understood and agreed by the parties that the grant of
additional patent rights herein does not in any way otherwise modify the
Diagnostic Services Agreement and that all provisions of that Agreement
shall remain in full force and effect as originally set forth therein.
The term of the Diagnostic Services Agreement shall control the
enjoyment of rights
RIDER CONCERNING SUPPLEMENTAL PATENT RIGHTS TO
DIAGNOSTIC SERVICES AGREEMENT
Page 2 of 2
hereunder and is not extended by the rights granted hereby nor shall
there be any additional royalty obligation to RMS beyond that set forth
in said Agreement.
4. In consideration of the further rights being granted it hereunder, BTRL
agrees to remain in good faith compliance with the applicable terms of
the Diagnostic Services Agreement, including reporting and payment of
royalties and the limitation on use of PCR technology strictly for the
performance of licensed services and not to make products.
5. In the event that BTRL's obligation to pay royalties under the
Diagnostic Services Agreement for its rights to use the PCR technology
shall cease for any reason, whether by termination, expiry, invalidation
or otherwise, then the parties agree that this rider shall become null
and void and the rights granted hereunder terminated without notice and
the parties shall be free to negotiate a new agreement with respect to
the patent rights listed on APPENDIX A.
Accepted and Agreed,
ROCHE MOLECULAR SYSTEMS, INC. BIOTECH RESEARCH LABORATORIES
By: /s/Kathy Ordonez By: /s/Mark Manak
------------------------ --------------------
Kathy Ordonez
Title: President Title: Senior Vice President
--------------------- ---------------------
Date: Aug 12, 1993 Date: Jan 17, 1994
--------------------- ----------------------
Apprv'd As To Form
LAW DEPT.
By PSR
APPENDIX A TO RIDER
Additional Patents
- ------------------
U.S. Patent Number 5,008,182
U.S. Patent Number 5,176,995
U.S. Patent Number 5,219,727
ROCHE MOLECULAR SYSTEMS, INC. BIOTECH RESEARCH LABORATORIES
By: /s/Ellen Daniell By: /s/Mark Manak
------------------------- -------------------------
Ellen Daniell, Ph.D.
Title: Director of Licensing Title: Senior Vice President
---------------------- ----------------------
Date: 8/17/93 Date: Jan 14, 1994
---------------------- -----------------------
EXHIBIT 10.2
EXCLUSIVE
LICENSE AGREEMENT
1. Consideration and Effective Date
1.1 The effective date of this agreement shall be ,199 .
1.2 The parties enter into this agreement in consideration of the mutual
covenants and terms expressed herein and hereby acknowledge receipt of said
consideration.
2. Parties
2.1 The University of North Carolina at Chapel Hill is a non-profit
organization having its principal place of business at Chapel Hill, North
Carolina 27599-4100 (hereinafter referred to as the "University").
2.2 BTRL Contracts and Services, Inc., is a corporation organized under the
laws of Massachusetts and has its principal place of business at 1600 E. Gude
Drive, Rockville, Maryland 20850 (hereinafter referred to as "the Company").
3. [RESERVED]
4. Definitions
4.1 RELATED COMPANY shall mean any corporation or other business entity
which directly or indirectly controls, is controlled by, or is under common
control with Company. Control means ownership or other beneficial interest in
40% or more of the voting stock or other voting interest of a corporation or
other business entity. Boston Biomedica, Inc. is presently a RELATED COMPANY.
CORPORATE FAMILY shall mean the COMPANY and all RELATED COMPANIES.
4.2 "SUBJECT INVENTIONS" shall mean:
(a) any invention disclosed in
(i) UNC Invention Disclosure ORS 93-16, entitled "Anti-AIDS
Agents: Suksdorfin (1)";
License Agreement between UNC and Biotech Research Labs
LEE=33
December 6, 1994
(ii)
[Language Deleted due to Confidential Treatment Request]
(iii) U.S. patent application (LEE33) serial number 08/142,992,
filed October 29, 1993; and/or
(iv) U.S. patent application (LEE33A) serial number 08/235,852,
filed April 29, 1994;
(b) any invention arising out of NIH Grant No. AI-33066 and any
continuations, extensions or amendments thereof which relate to one of the
compounds set forth in Appendix 1 or to a derivative or analogue thereof; and/or
These inventions may be compounds, methods of purifying or synthesizing
such compound, compositions comprising such compounds, and/or the use of such
compounds in the FIELD OF USE, whether or not patentable, and whether or not
conceived or made prior to the execution of this Agreement.
4.3 (a) "LICENSED PRODUCT" is a product which is covered by a claim of a
patent or pending patent application, in at least one country included in
LICENSED RIGHTS, or is manufactured by a method covered by such a claim, or is
used or intended to be used in FIELD OF USE, by a method covered by such a
claim, or is manufactured, or used or intended to be used in FIELD OF USE, in
accordance with PROPRIETARY TECHNOLOGY.
(b) A LICENSED ARTICLE is an article of a LICENSED PRODUCT.
(c) A LICENSED TRANSACTION is a transaction whereby a LICENSED
ARTICLE is made, used in FIELD OF USE, leased or sold, and, in the country where
such act occurs (i) such act would, but for this license, and but for any
license implied as a result of assignment of any title in any of LICENSED RIGHTS
to the Company, infringe one or more claims of a patent included in LICENSED
2
License Agreement between UNC and Biotech Research Labs
LEE=33
December 6, 1994
RIGHTS, or, if issued, of a patent application included in LICENSED RIGHTS, or
(ii) such act occurred during the period set forth in Section 6.1(c) in which
the University is entitled to royalties for PROPRIETARY TECHNOLOGY.
4.4 "CONFIDENTIAL INFORMATION" means information, not generally known in
the relevant trade or industry, whether or not used by the disclosing party,
including information relating to research, development, patent solicitation,
manufacture, purchasing, accounting, engineering, marketing, merchandising or
selling, which is considered by the party which possesses or controls it to be
proprietary to it.
4.5 An ARTICLE REPRESENTING CONFIDENTIAL INFORMATION is any object, device,
machine, material, substance or copy thereof, including any writing, recording,
drawing, sample, specimen, prototype, model, photograph, organism, culture,
tissue, organ, antibody, virus, or DNA or RNA molecule, which completely or
partially describes, depicts, embodies, contains, constitutes, reflects or
records CONFIDENTIAL INFORMATION.
4.6 "LICENSED RIGHTS" shall include all pending patent applications and all
patents-in-force in any country which are owned or controlled in whole or in
part by the University, now or during the term of this Agreement, and which
relate to, SUBJECT INVENTIONS, including, but not limited to (i) the patents and
applications listed in Appendix 3, and any division, continuation, continuation-
in-part, substitute, renewal, reissue, extension or reexamination thereof, (ii)
any rights of priority based on the foregoing, (iii) any patent applications
claiming priority from or otherwise related to the applications of (i) above,
and (iv) U.S. and foreign patents issued on (i) and (iii) above. It shall also
include the University's PROPRIETARY TECHNOLOGY.
3
License Agreement between UNC and Biotech Research Labs
LEE=33
December 6, 1994
4.7 (a) "LICENSED TECHNOLOGY" shall mean "PATENTED TECHNOLOGY", "PATENT
PENDING TECHNOLOGY", and "PROPRIETARY TECHNOLOGY".
(b) PATENTED TECHNOLOGY shall mean any method or product the
manufacture, use, sale, rental or lease of which is covered by a claim of a
patent included in LICENSED RIGHTS which has not expired, lapsed, or been
declared invalid or unenforceable by a court from which no appeal has or can be
taken.
(c) PATENT PENDING TECHNOLOGY shall mean any method or product,
other than PATENTED TECHNOLOGY, the manufacture, use, sale, rental or lease of
which is covered by a claim of a pending patent application included in LICENSED
RIGHTS.
(d) PROPRIETARY TECHNOLOGY means an invention, whether or not
patentable, which is not PATENTED TECHNOLOGY or PATENT PENDING TECHNOLOGY, and
which utilizes CONFIDENTIAL INFORMATION owned by UNIVERSITY and disclosed by the
UNIVERSITY to Company, which relates to a SUBJECT INVENTION. However, it shall
not include information which
(i) was in Company's possession at the time of the disclosure and
was not previously acquired, directly or indirectly from the
University, or which is subsequently developed by Company by
persons not privy to the disclosure;
(ii) has since been acquired by Company from others who have no
confidential commitment to the University with respect to same,
or
(iii) is now or becomes, through no fault of Company, a part of the
public domain by publication (including publication or issuance
of Patent applications) or otherwise.
4.8 (a) "Net Sales" shall mean payments received by a CORPORATE FAMILY
member as part of a LICENSED TRANSACTION with respect to LICENSED ARTICLES, less
returns and customary trade
4
License Agreement between UNC and Biotech Research Labs
LEE=33
December 6, 1994
discounts actually taken, outbound freight, value added, sales or use taxes and
custom duties.
(b) However, a transaction between members of the CORPORATE FAMILY
shall only be included in "Net Sales" if the article paid for is used, and such
use is other than in research or development, quality assurance or the
development of data for regulatory approval. A LICENSED TRANSACTION may,
however, occur when the LICENSED ARTICLE is resold, rented or leased to one not
a member of the CORPORATE FAMILY, in accordance with 4.8(a).
(c) (i) In the event any LICENSED PRODUCT is sold as a component
of a combination of two or more active ingredients, where a license hereunder
was not required for all said active ingredients, Net Sales Price for purposes
of determining royalty payments on such combination shall be calculated by
multiplying the net sales price of the combination by the fraction A/(A+B) in
which "A" is the total of the gross selling prices of the licensed active
ingredients when sold separately and "B" is the total of the gross selling
prices of the unlicensed active ingredients. (ii) In the event that it is not
possible to determine the gross selling price for each ingredient, Net Sales
Price shall be calculated by multiplying the net sales price of the combination
by the fraction C/(C+D), in which "C" is the total of the fully allocated costs
of the licensed active ingredients and "D" that of the unlicensed active
ingredients. The fully allocated cost of a component shall be determined in
accordance with conventional cost accounting principles. (iii) Notwithstanding
the above, in no event shall the Net Sales Price be adjusted to be less than
forty percent (40%) of the net sales price of any combination product prior to
adjustment pursuant to (i) and (ii) above.
4.9 FIELD OF USE shall mean (a) use for the inhibition of retroviruses, or
of pathogens of diseases related to those caused
5
License Agreement between UNC and Biotech Research Labs
LEE=33
December 6, 1994
by retroviruses, and (b) uses for compounds included in SUBJECT INVENTIONS,
discovered in whole or in part by the Company, a Related Company, or a
Sublicense.
5. License Grant
5.1 The University grants to Biotech Research Labs, upon and subject to all
the terms and conditions of this Agreement, a worldwide license, exclusive
except for any license to a Federal agency to practice the invention which that
agency has acquired by operation of Public Law 96-517, under LICENSED RIGHTS to
use LICENSED TECHNOLOGY and to make, use, sell, have made, rent or lease
LICENSED PRODUCTS in FIELD OF USE for the term provided under Section 14 hereof.
This license specifically includes a right of sublicense.
5.2 Company is further granted the right to disclose and use any
information pertaining to a SUBJECT INVENTION, or a product incorporating or
embodying same, in any submission to a local, state, federal or foreign
governmental agency or instrumentality, including, but not limited to, the U.S.
Food and Drug Administration and the U.S. Patent and Trademark Office. This
right shall survive the termination of this Agreement under 14.2, but not the
uncured material breach by Company of its obligations hereunder.
5.3 To the extent that the Company cannot practicably make or use a
LICENSED ARTICLE without infringing a patent, other than one included in
LICENSED RIGHTS, which is owned by the University and not exclusively licensed
to a third party, pursuant to this Agreement, the Company pays University a
royalty on said article, the University agrees not to assert said patent against
the manufacture, use or sale of said article by the Company or those in privity
therewith. Where such alternative manufacture or use is practicable, but not
commercially desirable, the University agrees
6
License Agreement between UNC and Biotech Research Labs
LEE=33
December 6, 1994
to negotiate in good faith terms under which it will grant COMPANY a license
under such patent which would permit such manufacture and use, if said patent is
not already exclusively licensed to a third party.
6. Compensation
6.1 In consideration of the license granted under Section 5.1 of this
Agreement, Company shall pay the University a royalty on NET SALES by Company or
a RELATED COMPANY.
(a) During each calendar year, such royalties shall be, on NET SALES of any
PATENTED TECHNOLOGY, [Language Deleted due to Confidential Treatment Request] on
the first fifty million dollars of sales for that year, [Language Deleted due to
Confidential Treatment Request] on sales in excess of fifty million dollars, up
through the hundred millionth dollar of sales for that year, and [Language
Deleted due to Confidential Treatment Request] on sales in excess of one hundred
million dollars for that year.
(b) Also during each calendar year, such royalties shall be, on NET SALES
of any PATENT PENDING TECHNOLOGY, [Language Deleted due to Confidential
Treatment Request] on the first fifty million dollars of sales of PATENT PENDING
TECHNOLOGY for that year, [Language Deleted due to Confidential Treatment
Request] on sales in excess of fifty million dollars up through the hundred
millionth dollar of sales for that year, and [Language Deleted due to
Confidential Treatment Request] on sales in excess of one hundred million
dollars for that year.
(c) Also during each calendar year, such royalties shall be, on NET SALES
of any PROPRIETARY TECHNOLOGY for that year, [Language Deleted due to
Confidential Treatment Request] on the first fifty million dollars of sales of
PROPRIETARY TECHNOLOGY, [Language Deleted due to Confidential Treatment Request]
on sales in excess of fifty million dollars up through the hundred millionth
dollar sales for that year, and [Language Deleted due to Confidential Treatment
Request] on sales in excess one hundred million dollars for that year. However,
no royalty will be due on NET SALES of articles covered solely by PROPRIETARY
TECHNOLOGY more than [Language Deleted due to Confidential Treatment Request]
years after the first sale of an article representing such technology, or
[Language Deleted due to Confidential Treatment Request] years after the
7
License Agreement between UNC and Biotech Research Labs
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December 6, 1994
disclosure of such technology to the Company, whichever comes earlier.
(d) On any particular article, only one PATENTED, PATENT PENDING, or
PROPRIETARY TECHNOLOGY royalty will be paid, whichever is the highest royalty
applicable.
6.2 Nothing in this Agreement shall be construed to require the payment of
more than one royalty with regard to the manufacture, use, lease, or sale of a
particular article.
6.3 In the case of income derived by Company through sublicensing (other
than to a RELATED COMPANY), Company will pay the University a share of such
sublicensing income, which share will be computed as follows:
<TABLE>
<S> <C>
(i) if there is no IND filed on
the sublicensed product.....................[Language Deleted due to Confidential Treatment Request]
(ii) if an IND was filed, but phase II clinical
studies have not been completed.............[Language Deleted due to Confidential Treatment Request]
(iii) if phase II clinical studies have
been completed, but an NDA has not
yet been filed..............................[Language Deleted due to Confidential Treatment Request]
(iv) if an NDA has been filed....................[Language Deleted due to Confidential Treatment Request]
6.4 (a) Company will also make the following milestone payments for each
distinct LICENSED PRODUCT, subject to the limitations of ss. 6.4(b) and (c):
(i) on filing its first IND for the LICENSED
PRODUCT..................................[Language Deleted due to Confidential Treatment Request]
(ii) on first completing a phase II clinical study
for the LICENSED PRODUCT.................[Language Deleted due to Confidential Treatment Request]
(iii) on first filing an NDA (but not an
ANDA) for the LICENSED PRODUCT...........[Language Deleted due to Confidential Treatment Request]
8
License Agreement between UNC and Biotech Research Labs
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December 6, 1994
(iv) on the first commercial sale outside the
CORPORATE FAMILY, of the LICENSED PRODUCT, based
on an approved NDA (but not an
ANDA).................................. [Language Deleted due to Confidential Treatment Request]
</TABLE>
(b) The parties recognize that different LICENSED PRODUCTS may contain the
same active ingredients. A milestone payment is due for a LICENSED PRODUCT only
if it contains an active ingredient (which is the subject of a SUBJECT
INVENTION) which is distinct from the active ingredients of all LICENSED
PRODUCTS for which that level of milestone payment has previously been paid. A
chemical, and its salts, complexes and esters, are considered the same active
ingredient for the purpose of this provision. Moreover, the active ingredient is
not considered distinct if it differs from prior active ingredients solely by
one or more of the following structural differences: substitution of one halogen
atom for another; substitution of one chalcogen (oxygen or sulfur) atom for
another; or lengthening or shortening of a hydrocarbon chain (i.e., the two
compounds are members of a homologous series).
Each of the compounds set forth in Appendix 1 is considered distinct from
the others so listed.
(c) Milestone payments will not apply to products covered solely by
PROPRIETARY TECHNOLOGY.
6.5 If a properly instructed court would be more likely than not to hold
that Company, or a Related Company, or their customers, require a license from a
third party in order to practice a Subject Invention and Company or a Related
Company acquires such a license, Company shall receive a credit equal to the
sums paid by Company or a Related Company to said third party for practicing
said Subject Invention.
9
License Agreement between UNC and Biotech Research Labs
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December 6, 1994
Prior to obtaining said license, the Company shall supply the University
with a reasoned opinion of outside patent counsel supporting its conclusion that
a license is so required.
No such reduction shall be made, notwithstanding the foregoing, if the
University supplies the Company with a reasoned opinion of outside patent
counsel to the effect that the license is not so required, and the University
agrees to indemnify and hold harmless the Company (or, as the case may be, the
Related Company, or their customers) for liability for infringement with respect
to said inventions or uses if the Company (or the Related Company) refuses or
terminates said third party license.
6.6 The credits granted to the Company pursuant to 6.5, 10.2 and 11.5 may
be applied against the payments due under 6.1, 6.3 and 6.4 above, with the
proviso that the total credits outstanding cannot be used to offset more than
50% of the total payments due in any given period under 7.1, any excess being
carried forward to later periods.
7. Reports and Payments
7.1 For each semiannual period in which this Agreement is in force, Company
shall submit to the University a written semiannual report (the "Payment
Report") within two months of the close of each semiannual period. Such Reports
shall state:
(i) NET SALES made by Company and any RELATED COMPANIES during
such period for LICENSED TECHNOLOGY;
(ii) Payments received by the Company or a Related Company which
are excluded from Net Sales pursuant to 4.8(b).
(iii) NET SALES made by unrelated sublicensees during such period;
(iv) sublicensing income under 6.3 for such period, and the
University's share thereof; and
10
License Agreement between UNC and Biotech Research Labs
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December 6, 1994
(v) milestones achieved, for which payments are due under 6.4, for
such period; and
(vi) A calculation under Section 6 of the amounts due to the
University, making reference to each subsection. Said calculation shall include
an itemization of any credits to which the Company is entitled, itemized by the
section under which said credit is granted, and indicating any excess credits
carried into the reported period from a prior period, any new credits, the
amount of the accrued credits which can be used to offset the payment otherwise
due for the reported period, and any excess credit to be carried forward to the
next period.
7.2 Simultaneously with the submission of each Payment Report, Company
shall make payments to the University of the amounts due for the period covered
by the Payment Report.
7.3 Company shall maintain at its principal office the usual books of
accounts and records showing its actions under this Agreement. Upon reasonable
notice, such books and records shall be made available for inspection and
copying, during usual business hours, by University auditors, or by the State
Auditor, or by an independent certified public accountant retained by the
University at its own expense to whom Company has no reasonable objection, for
three years after the calendar quarter for which such books and records pertain,
solely for purposes of verifying the accuracy of the amounts paid by Company
under this Agreement, and the contents of Company's books and records shall be
held in confidence by the University and its accountant. In the event of the
discovery by an independent certified public accountant hired by the University
of an error in Company's favor which is more than $1,000, and more than 10% of
the payment actually due, Company will reimburse the University for the
University's actual and reasonable out of pocket
11
License Agreement between UNC and Biotech Research Labs
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December 6, 1994
expenses for such audit. The amount of said reimbursement shall not, however,
exceed the amount of the error.
Nothing herein shall be construed to limit the authority of the State
Auditor of North Carolina.
8. Patent Prosecution and Maintenance
8.1 As to any Subject Invention which is not fully disclosed in an
application previously filed, the University shall diligently provide the
Company with a written disclosure thereof. The University shall in a timely
manner provide a disclosure sufficiently detailed to permit the Company to
determine the patentability of the Subject Invention, and to permit the drafting
of a patent application with a specification reasonably likely to be deemed
adequate to support one or more patentable and commercially meaningful claims.
The University shall disclose to the Company any information in its possession
or control which is material to patentability of the Subject Invention, and give
the Company timely notice of any activities known to it which could limit the
time available for filing a patent application without loss of rights in the
U.S. or abroad.
8.2 (a) The Company shall give the University timely notice of the deadline
for filing a U.S. application abroad with the benefit of priority, and timely
notice of the deadline for entering the national stage in the case of a PCT
application. The University shall give the Company a timely response indicating
the foreign countries in which it is interested in pursuing patent protection.
(b) The Company shall give the University timely notice of its intent not
to file for patent protection, or to continue to prosecute a pending application
for patent protection, or to maintain a patent, in the United States or any
foreign country, with respect to any Subject Invention.
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8.3 If, after receiving notice under 8.2, the University decides to file,
prosecute or maintain the noticed application or patent, the effect will be that
the Company's exclusive license, with respect to the noticed Subject Invention,
will terminate insofar as the countries in which the University exercises its
right of intervention under this section are concerned. This will not affect the
Company's exclusive license under patents and applications included in Licensed
Rights which the Company continues to file, prosecute, and maintain.
8.4 At the University's discretion, which shall not be unreasonably
refused, the Company may reestablish rights lost pursuant to 8.3 if (a) it
reimburses the University for its reasonable legal expenses in filing or
prosecuting such applications or maintaining such patents, and pays compensation
pursuant to Article 6, for any transactions which would have been LICENSED
TRANSACTIONS if the Company had not terminated the license rights it now seeks
to reestablish, and (b) at the time of the request for reinstatement, the
Company is still an exclusive licensee under this Agreement with respect to at
least one pending application or patent-in-force in at least one country.
8.5 Unless it has given suitable notice under 8.2 above, the Company shall
file for patent protection, and prosecute and maintain Licensed Rights, in such
countries as the University has indicated are of interest to it insofar as the
Subject Invention in question is concerned.
8.6 Until it has given suitable notice under 8.2 above, the Company shall
pay all expenses relating to the filing, prosecution and maintenance of Licensed
Rights. After notice is given under 8.2 above, the University will be
responsible for payment of all expenses incurred after said notice with respect
to the noticed
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License Agreement between UNC and Biotech Research Labs
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December 6, 1994
applications or patents. The Company will remain responsible for expenses
incurred prior to notice, even if billed subsequently.
8.7 Except for the cases as to which the Company has relinquished rights
pursuant to 8.3, the U.S. and foreign prosecution conducted under this Article 8
shall be performed by one or more patent attorneys or agents selected by
Company. The University shall provide said one or more selected patent attorneys
or agents with any necessary Power of Attorney as required to authorize the
patent attorney or agent to prosecute the applications for patent rights.
8.8 The University will timely provide Company with all information in its
possession or control which might be material to patentability of LICENSED
TECHNOLOGY. The University will promptly provide Company's patent counsel with a
copy of any legal opinion it receives or has received regarding the
patentability, validity, enforceability, scope or third party infringement of
any of LICENSED RIGHTS.
8.9 The Company will provide the University with the opportunity to have
draft applications and responses reviewed by patent counsel of the University's
choice, and the Company will reimburse the University for its reasonable
expenses for such review. The Company will give good faith consideration to
suggestions made by the reviewing counsel chosen by the University.
8.10 The University will on a timely basis provide COMPANY with all
information in its possession or control, or readily obtainable by it, which is
reasonably requested by the Company to aid in drafting and prosecuting
applications, and defending patents, within Licensed Rights.
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License Agreement between UNC and Biotech Research Labs
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December 6, 1994
9. Commercialization
9.1 Company shall use its best efforts to develop and market drugs
embodying LICENSED TECHNOLOGY for the treatment of retroviral infections
throughout the world. Specifically, in the case of a drug embodying LICENSED
TECHNOLOGY, Company shall use its best efforts to, for at least one drug which
is a LICENSED PRODUCT (hereafter, LICENSED DRUG), (a) file an IND within
[Language Deleted due to Confidential Treatment Request] years of first
receiving a sample of the drug for testing or executing this Agreement,
whichever comes later, (b) file a new drug application (NDA) within [Language
Deleted due to Confidential Treatment Request] years after its IND for a
LICENSED DRUG becomes effective, (c) obtain NDA approval for a LICENSED DRUG
within [Language Deleted due to Confidential Treatment Request] years after its
NDA for that drug is filed, and (d) commercialize a LICENSED DRUG within
[Language Deleted due to Confidential Treatment Request] year after the NDA for
that drug is approved.
9.2 After [Language Deleted due to Confidential Treatment Request] years
have elapsed from the execution of this Agreement, the University may in writing
notify the Company that it desires that an IND be filed for a LICENSED DRUG for
which the Company has not yet filed an IND, which LICENSED DRUG has been
supplied to the Company for testing, and the Company will then have six months
from such notice to file an IND or have its license terminated as to the noticed
LICENSED DRUG. The University cannot so designate more than three LICENSED DRUGS
within a six month period.
9.3 In the event that Section 9.1 is not complied with in one or more
countries for one or more LICENSED DRUGS, and there is no excuse pursuant to
14.4, the Company shall forfeit its exclusive license in such countries under
this Agreement as to such LICENSED DRUGS as were not developed and marketed in
accordance with 9.1 above, but its license as to other LICENSED DRUGS, or as to
the same LICENSED DRUG in other countries, shall not be affected.
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License Agreement between UNC and Biotech Research Labs
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9.4 To the extent required by law, it is agreed that any LICENSED PRODUCTS
sold in the United States shall be substantially manufactured in the United
States.
10. Infringement
10.1 The University will protect its licensed Patents from infringement
and prosecute infringers at its own expense when in its sole reasonable judgment
such action may be reasonably necessary, proper, and justified.
10.2 If Company shall have supplied the University with written evidence
reasonably demonstrating prima facie infringement of a claim of a Licensed
Patent by a third party selling products in competition with Company or any of
its AFFILIATES, Company may, by written notice, request The University to take
steps to protect the Licensed Patent. Unless the University shall within three
months of the receipt of such notice either (i) cause such infringement to
terminate or (ii) initiate legal proceedings against the infringer, Company may
upon notice to the University initiate legal proceedings against the infringer
at the expense of Company. In such event Company may deduct from shall receive a
credit equal to its reasonable costs and legal fees incurred to conduct such
proceedings.
10.3 In the event one party shall initiate or carry on legal proceedings
to enforce any Licensed Patent against an alleged infringer, the other party
shall use its best efforts to fully cooperate with and shall supply all
assistance reasonably requested by the party initiating or carrying on such
proceedings. The party which institutes any proceeding to protect or enforce a
Licensed Patent shall have sole control of that proceeding and shall bear the
reasonable expenses incurred by said other party in providing
16
License Agreement between UNC and Biotech Research Labs
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such assistance and cooperation as is requested pursuant to this paragraph.
10.4 The litigating party shall not settle, or abandon a legal proceeding
without the consent of the other party, which consent shall not be unreasonably
withheld. If consent is withheld, the nonconsenting party shall assume control
of the proceeding and shall reimburse the prior litigating party for all legal
expenses incurred prior to such assumption of control.
10.5 Any recovery, whether by settlement or judgment, shall be first
applied, in the following order:
(a) to reimburse the parties for their previously unreimbursed costs
and legal fees in connection with the proceedings;
(b) to pay any royalties or milestone payments withheld from the
University by Company under ss. 10.2; and
(c) to pay the University its proper share of that portion of the
recovery which the Company would have expected to receive as
income from sublicensing had the third party been granted a
sublicense on the royalty terms set forth in ss. 6.1.
The remainder of the recovery shall go to the Company.
As a term of any settlement, the settling party shall use best
efforts to require the third party to account for its prior sales in such manner
as to facilitate the calculation of the University's share of the recovery.
10.6 Nothing in this Agreement shall be construed to limit the authority
of the Attorney General of North Carolina.
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License Agreement between UNC and Biotech Research Labs
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11. Representations and Related Obligations by the University
11.1 The University represents, and covenants, as follows:
(a) It has the full right, power, and authority to enter into this
Agreement and to perform all of its obligations hereunder.
(b) The execution and delivery of this Agreement and the
consummation of the transaction contemplated by this Agreement do not violate,
conflict with, or constitute a default under the University's Charter or the
terms and provisions of any material or other instrument to which the University
is a party or by which it is bound, or any material order, award, judgment or
decree to which the University is a party or by which it is bound, or any state
or federal law governing the University activities.
(c) Upon execution and delivery, this Agreement will constitute
the legal, valid and binding obligation of the University enforceable against
the University in accordance with its terms.
(d) To the best of the knowledge and belief of the University, no
employee, agent, or consultant of the University who has performed any work in
connection with the LICENSED TECHNOLOGY is, or is now expected to be, in
violation of any term of any employment or consulting contract or agreement,
non-disclosure or confidentiality agreement, non-competitive agreement, or any
other common law obligation to a former or present employer relating to the
right of any such employee, agent, or consultant to be employed or engaged by
the University in connection with the work to be performed hereunder.
(e) Subject to the rights held by the U.S. Government under Public
Law 96-517, as amended, and the implementing regulations, and to such rights as
may be held by Company, the University is the owner of all right, title and
interest in and to the patents,
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License Agreement between UNC and Biotech Research Labs
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patent rights, and patentable inventions, comprising the LICENSED TECHNOLOGY.
Also subject to the aforementioned rights of the U.S. Government, the University
has the sole and complete authority to issue and grant to Company the exclusive
license granted hereunder, free and clear of any claims, liens, encumbrances or
charges of any third party.
(f) The University has no knowledge of any potential infringement
action or claim relating to the LICENSED TECHNOLOGY and has no knowledge of any
infringement, or breach of any agreement or of any facts that might reasonably
lead to any claim of infringement or breach of any agreement relating to any
patent, patent right, patentable invention, patent application, trade secret or
other proprietary right of any third party relating to the University's use or
ownership of the LICENSED TECHNOLOGY or Company's license to the LICENSED
TECHNOLOGY.
(g) The University has taken all steps within its power which
under Public Law 96-517, as amended, were necessary, as of the date of execution
of this Agreement, for the University to retain title to the fullest extent
permitted by law in any of LICENSED TECHNOLOGY.
11.2 To the extent that rights granted by the University to Company under
this Agreement are subject to the requirements of Public Law 96-517, as amended,
and its implementing regulations, the University agrees that it will take all
steps within its power to retain title, to the fullest extent permitted by law,
to the LICENSED TECHNOLOGY in the United States and in any foreign country
designated by Company for the duration of this license and to avoid exercise by
any federal agency of "march-in" rights under such law.
11.3 The University will promptly disclose to the designated Patent
Counsel of Company all information which is or could be
19
License Agreement between UNC and Biotech Research Labs
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December 6, 1994
material to the patentability, enforceability or validity of any application or
patent included in LICENSED RIGHTS.
11.4 The University will promptly disclose to the designated Patent
Counsel of Company any information pertaining to the likelihood or merits of a
third party claim of infringement arising from Company use of LICENSED
TECHNOLOGY.
11.5 In the event that the University discovers that an interest in an
Invention is not held by either the University or by Company (or its employees),
it shall promptly notify the Company. The University may, at its option, acquire
such interest at its own expense, or invite the Company to acquire said
interest. In the latter case, the cost to the Company of acquiring said interest
may be applied as a credit.
11.6 The University represents that all representations made in this
Article 11 were made only after using best efforts to diligently investigate the
underlying circumstances.
12. Disclosure and Confidentiality
12.1 The University shall disclose each SUBJECT INVENTION to
Company:
(a) within two months after the inventor discloses it to
University personnel or agents responsible for patent matters,
(b) at least two months prior to any intended public disclosure of
all or part of the SUBJECT INVENTION, and
(c) prior to submission for publication of any manuscript or
abstract which discloses all or part of the SUBJECT INVENTION.
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License Agreement between UNC and Biotech Research Labs
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12.2 The disclosure under 12.1 shall be in writing and shall be
sufficiently complete in technical detail to convey a clear understanding to the
extent known at the time of the disclosure, of the nature, purpose, operation
and the physical, chemical, biological or electrical characteristics of the
invention, such that a patent application may be drafted with a specification
reasonably likely to be deemed adequate to support one or more patentable and
commercially meaningful claims. It should also indicate the earliest expected
date of public disclosure of the SUBJECT INVENTION.
12.3 The University will promptly inform Company of the submission of any
abstract or manuscript for publication and of the acceptance thereof.
12.4 The University will not permit public disclosure of the SUBJECT
INVENTION until 60 days after the disclosure under 12.1 (complying with 12.2),
or until after the filing of a patent application adequately disclosing the
SUBJECT INVENTION, whichever is earlier. If within 60 days of the disclosure
under 12.1, Company advises the University that it would be beneficial to have
more time to prepare and file a patent application thereon, and such advice is
reasonably made, the University will defer the public disclosure of the SUBJECT
INVENTION for up to an additional 30 days, and will not unreasonably deny a
request for further deferral.
12.5 Any information which is to be treated as Confidential Information
hereunder must be clearly marked as "confidential" prior to transmittal to the
other party. If such Confidential Information is disclosed orally, it shall be
identified as being confidential at the time of disclosure, and shall thereafter
be reduced to writing within 30 days, marked as confidential, and transmitted to
the receiving party. Specifically excluded from such
21
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confidential treatment shall be information which: (i) as of the date of
disclosure, is already known to the party receiving such information; (ii) is or
becomes part of the public domain, through no fault of the receiving party;
(iii) is lawfully disclosed to the receiving party by a third party who is not
obligated to retain such information in confidence; or (iv) is independently
developed at the receiving party by personnel not privy to the confidential
information.
12.6 Confidential Information shall not be disclosed by the receiving
party without written consent of the other party. Confidential Information will
be used by the receiving party only by its authorized personnel and only for the
purposes contemplated under this Agreement. The receiving party shall advise its
employees, agents, and consultants who have access to the disclosing party
premises or to any proprietary information or trade secrets of the disclosing
party, including any LICENSED TECHNOLOGY not previously released to the public
pursuant the terms of this Article 12, of the responsibility under this
Agreement to be bound by the confidentiality obligations to not disclose,
publicly use, or offer for sale any of said proprietary information or trade
secrets or LICENSED TECHNOLOGY not previously released to the public or any
information that is confidential and proprietary to the disclosing party.
12.7 The obligation pursuant to Section 12.6 shall terminate three years
after the first sale of an article represent-ing such information, or ten years
after the disclosure of the information, whichever comes earlier (compare ss.
6.1(c)).
13. Breach and Cure
13.1 In addition to applicable legal standards, Company shall be
considered to be in material breach of this Agreement for failure
22
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December 6, 1994
to pay fully and promptly amounts due pursuant to Article 6 and payable pursuant
to Article 7; in addition, failure to meet the obligations of Article 9 shall
also be deemed a material breach of this Agreement.
13.2 In addition to applicable legal standards, the University shall be
considered in material breach of this Agreement for making a knowing or
negligent material misrepresentation of a matter as to which UNIVERSITY has made
a representation under Article 11, or breaching its obligations under Article 5,
Section 8.4, Article 11 or Article 12.
13.3 Either party shall have the right to cure its material breach. The
cure shall be effected within a reasonable period of time, but in no event later
than thirty days after written notice of any breach given by the non-breaching
party.
If the breach is not cured within the thirty day period, the non-breaching
party may, in addition to any other rights it may have at law or in equity,
terminate this Agreement.
13.4 In the event of a material breach by University, which is not cured
pursuant to Section 13.3, in lieu of termination, Company may pay into escrow
such compensation as is due under Article 6 as to any articles embodying
Inventions to which the breach pertains, until such breach is cured, while
still, however, paying directly expenses pursuant to Article 8.
13.5 The Parties shall not be liable for any failure to perform as
required by this Agreement, to the extent such failure to perform is caused by
any reason beyond the party's control, or by reason of any of the following:
labor disturbances or disputes of any kind, accidents, failure of any required
governmental approval, civil disorders, acts of aggression, acts of God, energy
or other conservation measures, failure of utilities, mechanical breakdowns,
material shortage, disease, or similar occurrences.
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License Agreement between UNC and Biotech Research Labs
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December 6, 1994
14. Term of Agreement
14.1 This Agreement shall be effective as of the date first set forth
above and shall continue in full force and effect until its expiration or
termination in accordance with this Article 14.
14.2 Unless terminated earlier under any provision of this Agreement, the
term of the exclusive license granted under the LICENSED RIGHTS shall extend
until the expiration, lapse, invalidation, declaration of unenforceability, or
abandonment of the last of the patents and applications included in LICENSED
RIGHTS and the lapse of the period of compensation for PROPRIETARY TECHNOLOGY
pursuant to subsection 6.1(c).
14.3 In the event any term or provision of this Agreement shall for any
reason be held to be invalid, illegal, or unenforceable in any respect, then,
unless such term or provision goes to the root of the Agreement and subject as
otherwise agreed, this Agreement shall continue in full force and effect save
that the term or provision shall be deemed to be excised therefrom and shall be
interpreted and construed as if such term or provision, to the extent the same
shall have been held to be valid, illegal, or unenforceable, had never been
contained herein.
14.4 Each party shall be excused from any nonperformance of this Agreement
which is proximately caused by government regulation, war, strike, act of God,
or other similar circumstances normally deemed outside the control of well
managed businesses.
15. Notices
15.1 Any notice required or permitted to be given under this Agreement
shall be sufficient if sent by first class mail, postage prepaid, if to the
University, to:
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License Agreement between UNC and Biotech Research Labs
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December 6, 1994
David M. Parker, Esq.
Associate Director, Technology Development
and Associate University Counsel
Office of Research Services
CB# 4100, 302 Bynum Hall
The University of North Carolina at
Chapel Hill
Chapel Hill, North Carolina 27599-4100
if to Company, to:
Richard T. Schumacher
President and CEO
Boston Biomedica, Inc.
375 West Street
West Bridgewater, Massachusetts 02379
or to such other or additional address as a party may specify by
notice hereunder.
16. Complete Agreement
16.1 It is understood and agreed between University and Company that this
license, together with Appendix 1, and the invention disclosures and patent
applications referred to in subsection 4.2(a), constitutes the entire Agreement,
both written and oral, between the parties, and that all prior agreements
respecting the subject matter hereof, either written or oral, expressed or
implied, shall be abrogated, canceled, and are null and void and of no effect.
17. Governing Law
17.1 This Agreement shall be governed by North Carolina law applicable to
agreements made and to be performed in North Carolina.
18. Indemnity
18.1 Licensee agrees to indemnify, hold harmless and defend
University, its officers, employees, and agents, against any and
25
License Agreement between UNC and Biotech Research Labs
LEE=33
December 6, 1994
all claims, suits losses, damage, cost, fees, and expenses asserted by third
parties, both government and private, resulting from or arising out of the
exercise of this license, except to the extent that such claims, suits, losses,
damages, costs, fees or expenses arise in whole or in material part from
circumstances related to a breach by the University of a representation or
agreement given under Article 11.
19. Insurance
19.1 Licensee is required to maintain in force at its sole cost and
expense, with reputable insurance companies, to the extent that such coverage is
reasonably available for biotech companies manufacturing or selling drugs for
the inhibition of human retroviruses, general liability insurance and, to the
extent available to Licensee, products liability insurance coverage, in an
amount reasonably sufficient to protect against liability under paragraph 18,
above. The University shall have the right to ascertain from to time that such
coverage exists, such right to be exercised in a reasonable manner, and, if the
University is of the opinion that Licensee's coverage is inadequate, Licensee
will be given a reasonable opportunity to obtain additional coverage or to
explain why its present coverage is sufficient, or why additional coverage is
not reasonably available.
20. Use of University's Name
20.1 The use of the name of University, or any contraction thereof, in any
manner in connection with the exercise of this license is expressly prohibited
except with prior written consent of University. The University consents to use
of its name to the extent such is required to prosecute patent applications
pursuant
26
License Agreement between UNC and Biotech Research Labs
LEE=33
December 6, 1994
to this Agreement and to the extent such is required to secure governmental
approval to test and sell Licensed Technology.
21. Disposition of Licensed Products on Hand Upon Cancellation or
Termination
21.1 Upon cancellation of this Agreement or upon termination in whole or
in part, other than natural termination pursuant to Section 14.2:
(a) Company shall provide University with a written inventory of all
Licensed Technology and Licensed Products in process of manufacture, in use or
in stock.
(b) Except with respect to termination pursuant to Section 13.2, Company
shall have the privilege of disposing of the inventory of such Licensed Products
within a period of one hundred and eighty (180) days of such termination upon
conditions most favorable to University that Company can reasonably obtain.
(c) Company will also have the right to complete performance of all
contracts requiring use of the Licensed Technology (except in the case of
termination pursuant to Paragraph 13.2) or Licensed Products within and beyond
said 180-day period provided that the remaining term of any such contract does
not exceed one year, and
(d) All Licensed Products which are not disposed of as provided above
shall be delivered to University or otherwise disposed of, in University's sole
discretion, and at Company's sole expense.
22. University Use
22.1 It is expressly agreed that, notwithstanding any provisions herein,
University is free to use Subject Invention, Licensed Technology, patent rights
and Licensed Products for its own research (not supported by any "for profit"
entity), public
27
License Agreement between UNC and Biotech Research Labs
LEE=33
December 6, 1994
service, clinical, teaching and educational purposes without payment of
royalties.
23. Waiver
23.1 It is agreed that no waiver by either party hereto of any breach or
default of any of the covenants or agreements herein set forth shall be deemed a
waiver as to any subsequent and/or similar breach or default.
24. Assignments
24.1 This Agreement is binding upon and shall inure to benefit of the
University, its successors and assigns. However, this Agreement shall be
personal to Company and it not assignable by Company to any other entity, except
as part of the sale or transfer of all assets of Company to another entity,
without the written consent of the University, which consent shall not be
withheld unreasonably.
25. Late Payments
25.1 In the event royalty payments or other financial consideration are
not received by the University when due, or within a grace period of 30 days,
Company shall pay to University on said indebtedness, interest running from said
due date to the date of payment, at an interest rate calculated, on the first
business day of each month, at six percentage points above the six month T-bill
rate then applicable, as published in the Wall Street Journal.
26. Compliance with Laws
26.1 In exercising its rights under this license, Company shall use best
efforts to comply with the requirements of any and all
28
License Agreement between UNC and Biotech Research Labs
LEE=33
December 6, 1994
applicable laws, regulations, rules and orders of any governmental body having
jurisdiction over the exercise of rights under this license. Such compliance
includes, but is not limited to, manufacturing articles in the United States to
the extent required by Public Law 96-517, as amended, and the implementing
regulations. Company further agrees to indemnify and hold University harmless
from and against any costs, expenses, attorney's fees, citation, fine, penalty
and liability of every kind and nature which might be imposed by reason of any
asserted or established violation of any such laws, order, rules and/or
regulations.
27. Survival of Terms
27.1 The following shall survive the termination of this
Agreement:
(a) the right of each party to sue the other party for breach
of any term of this Agreement, subject to Article 17
("Governing Law");
(b) the obligation of the Company to compensate the
University, pursuant to Article 6, for its licensed acts;
(c) the obligation of the Company to indemnify the University
pursuant to Articles 18 and 26;
(d) the obligation of the Company to refrain from use of the
University's name, pursuant to Article 20;
(e) the obligation of the receiving party with respect to
Confidential Information, pursuant to Section 12.6, but
subject to Section 12.7;
(f) the right of the Company to dispose of Licensed Products,
pursuant to Article 21, except as limited by said
Article, and subject to the obligations of Article 26;
29
License Agreement between UNC and Biotech Research Labs
LEE=33
December 6, 1994
(g) the Company's right of use of data pursuant to Section
5.2, except as limited thereby, and
(h) the University's right of use pursuant to Article 22.
IN WITNESS THEREOF, the University and the COMPANY, have caused this
Agreement to be executed by their duly authorized representatives as of the day
and year first written above.
UNIVERSITY OF NORTH CAROLINA BRL CONTRACTS AND SERVICES,
AT CHAPEL HILL (UNIVERSITY) INC.
By __________________________ By __________________________
Wayne Jones
Title _______________________ Title _______________________
Vice Chancellor, Business &
Finance
Agreed to:
- --------------------------------
K.H. Lee
30
APPENDIX I
UNC-CH/BTRL EXCLUSIVE LICENSE AGREEMENT
DECEMBER 12, 1994 LIST OF COMPOUNDS:
1. Suksdorfin
2. Xie-Br-24
3. Xie-Br-25
4. DCK
5. KHL-FH-2(also referred to as FH11309)
6. KHL-FH-1A
EXHIBIT 10.3
STANDARD FORM 26 (REV. 4-85)
NSN 7540-01-152-8069
OMB No. 0990-0115
RFP 95-32
AWARD/CONTRACT
1. THIS CONTRACT IS A RATED ORDER UNDER DPAS (15 CFR 350)
RATING
PAGE 1 OF PAGES 20
2. CONTRACT (Proc. inst. ident.) No. ND1-AI-55273
3. EFFECTIVE DATE September 30, 1995
4. REQUISITION/PURCHASE REQUEST/PROJECT N-933
5. ISSUED BY CODE 2668-55273
National Institutes of Health
Contract Management Branch, NIAID
Solar Building, Room 3007
6003 Executive Boulevard MSC 7610
Bethesda, Maryland 20892-7610
6. ADMINISTERED BY (if other than item 5) CODE
7. NAME AND ADDRESS OF CONTRACTOR (No., street, city, country, State and Zip
Code)
BTRL Contracts and Services, Inc., dba/
Biotech Research Laboratories, Inc.
3 Taft Court
Rockville, Maryland 20850
8. DELIVERY
FOB ORIGIN
OTHER (See below Destination)
9. DISCOUNT FOR PROMPT PAYMENT N/A
10. SUBMIT INVOICES
(4 copies unless otherwise specified) TO THE ADDRESS SHOWN IN ITEM G.3
CODE
FACILITY CODE
11. SHIP TO/MARK FOR
See Article F.1.
12. PAYMENT WILL BE MADE BY
See Article G.3.
CODE
13. AUTHORITY FOR USING OTHER THAN FULL AND OPEN COMPETITION N/A
10 U.S.C. 2304 (c)( )
41 U.S.C. 253 (c)( )
14. ACCOUNTING AND APPROPRIATION DATA CAN#5-8425674 DOC#300N1A155273 TIN#1-
043152484-A1
SOC#25.55
FY 95 $343,987
15A. ITEM NO.
15B. SUPPLIES/SERVICES
15C. QUANTITY
15D. UNIT
15E. UNIT PRICE
15F. AMOUNT
Research & Development Contract
Title: MAO/Detection of Antibodies & Proteins; Isolation of Virus (E)
Period: September 30, 1995 through September 29, 1997
Amount allotted: $343,987 Awarded under MA N01-AI-42602
Contract Type: Cost Reimbursement/Completion
FY 95 343,987
FY 96 778,668
15G. TOTAL AMOUNT OF CONTRACT $1,122,655
16. TABLE OF CONTENTS
( ) SEC. DESCRIPTION PAGE(S) ( ) SEC. DESCRIPTION PAGE(S)
PART I - THE SCHEDULE PART II - CONTRACT CLAUSES
X A SOLICITATION/CONTRACT FORM 1 X 1 CONTRACT CLAUSES 13
X B SUPPLIES OR SERVICES AND PRICES/COSTS 4 PART III - LIST OF DOCUMENTS,
EXHIBITS AND OTHER ATTACH.
X C DESCRIPTION/SPECS./WORK STATEMENT 8 X J LIST OF ATTACHMENTS 13
X D PACKAGING AND MARKING 8 PART IV- REPRESENTATIONS AND INSTRUCTIONS
X E INSPECTION AND ACCEPTANCE 9 X K REPRESENTATIONS, CERTIFICATIONS AND OTHER
STATEMENTS OF OFFERORS 13
X F DELIVERIES OR PERFORMANCE 10
X G CONTRACT ADMINISTRATION DATA 11 L INSTRS., CONDS., AND NOTICES TO OFFERORS
X H SPECIAL CONTRACT REQUIREMENTS 12 M EVALUATION FACTORS FOR AWARD
CONTRACTING OFFICER WILL COMPLETE ITEM 17 OR 18 AS APPLICABLE
17. X CONTRACTOR'S NEGOTIATED AGREEMENT (Contractor is required to sign this
document and return 3 copies to issuing office.) Contractor agrees to furnish
and deliver all items or perform all the services set forth or otherwise
identified above and on any continuation sheets for the consideration stated
herein. The rights and obligations of the parties to this contract shall be
subject to and governed by the following documents: (a) this award/contract, (b)
the solicitation, if any, and (c) such provisions, representations,
certifications, and specifications, as are attached or incorporated by reference
herein. (Attachments are listed herein.)
18. AWARD (Contractor is not required to sign this document.) Your offer on
Solicitation Number including the full additions or changes made by you which
additions or changes are set forth in full above, is hereby accepted as to the
items listed above and on any continuation sheets. This award consummates the
contract which consists of the following documents: (a) the Government's
solicitation and your offer, and (b) this award/contract. No further contractual
document is necessary.
19A. NAME AND TITLE OF SIGNER (Type or print)
Mark Manak, Senior Vice President
20A. NAME OF CONTRACTING OFFICER
Nancy Hershey, Contracting Officer
CMB, NIAID, HIH
19B. NAME OF CONTRACTOR
BY Mark Manak
(Signature of person authorized to sign)
19C. DATE SIGNED
9/21/95
20B. UNITED STATES OF AMERICA
BY Lawrence M. Butler
(Signature of Contracting Officer)
20C. DATE SIGNED
9/22/95
DETAILED TABLE OF MASTER AGREEMENT ORDER (MAO) CONTENTS
-------------------------------------------------------
PART I - THE SCHEDULE
SECTION A - SOLICITATION/MAO FORM............................................. 1
- ---------------------------------
SECTION B - SUPPLIES OR SERVICES AND PRICES/COSTS............................. 4
- -------------------------------------------------
ARTICLE B.1. BRIEF DESCRIPTION OF SUPPLIES OR SERVICES........................ 4
ARTICLE B.2. ESTIMATED COST AND FIXED FEE..................................... 4
ARTICLE B.3. PROVISIONS APPLICABLE TO DIRECT COSTS............................ 5
ARTICLE B.4. ADVANCE UNDERSTANDINGS........................................... 6
SECTION C - DESCRIPTION/SPECIFICATIONS/WORK STATEMENT......................... 8
- -----------------------------------------------------
ARTICLE C.1. STATEMENT OF WORK................................................ 8
ARTICLE C.2. REPORTING REQUIREMENTS........................................... 8
SECTION D - PACKAGING, MARKING AND SHIPPING................................... 8
- -------------------------------------------
SECTION E - INSPECTION AND ACCEPTANCE......................................... 9
- -------------------------------------
SECTION F - DELIVERIES OR PERFORMANCE........................................ 10
- -------------------------------------
ARTICLE F.1. DELIVERIES...................................................... 10
ARTICLE F.2. STOP WORK ORDER................................................. 10
SECTION G - MAO ADMINISTRATION DATA.......................................... 11
- -----------------------------------
ARTICLE G.1. PROJECT OFFICER................................................. 11
ARTICLE G.2. KEY PERSONNEL................................................... 11
ARTICLE G.3. INVOICE SUBMISSION . . . . . . . . . . ..........................11
ARTICLE G.4. GOVERNMENT PROPERTY............................................. 12
ARTICLE G.5. GOVERNMENT SUPPLY SOURCES........................................12
SECTION H - SPECIAL MASTER AGREEMENT ORDER REQUIREMENTS.......................12
- -------------------------------------------------------
ARTICLE H.1. HUMAN SUBJECTS . . . . ......................................... 12
ARTICLE H.2. SALARY RATE LIMITATION LEGISLATION PROVISIONS................... 12
PART II...................................................................... 13
SECTION I - MASTER AGREEMENT ORDER CLAUSES................................... 13
- ------------------------------------------
ARTICLE I.1. GENERAL CLAUSES FOR A NEGOTIATED COST-PLUS-A-FIXED FEE
MASTER AGREEMENT ORDER ...................................................... 13
ARTICLE I.2. AUTHORIZED SUBSTITUTIONS OF CLAUSES............................. 13
ARTICLE I.3. ADDITIONAL MAO CLAUSES.......................................... 13
ARTICLE I.4. ADDITIONAL FAR CLAUSES INCLUDED IN FULL TEXT.................... 13
2
PART III..................................................................... 13
SECTION J - LIST OF ATTACHMENTS.............................................. 13
Statement of Work.............................................................13
PART IV...................................................................... 13
SECTION K - REPRESENTATIONS AND CERTIFICATIONS............................... 13
Representations and Certifications........................................... 13
3
SECTION B - SUPPLIES OR SERVICES AND PRICES/COSTS
- -------------------------------------------------
[THIS MAO IS AWARDED UNDER MASTER AGREEMENT NO1-AI-42602 FOR HIV PRECLINICAL
VACCINE DEVELOPMENT].
ARTICLE B.1. BRIEF DESCRIPTION OF SUPPLIES OR SERVICES
The purpose of this master agreement order (MAO) is for the "Detection of
Antibodies and Proteins; Isolation of Virus; Section A: Immunization with HIV
Vaccines and Challenge with SHIV.
ARTICLE B.2. ESTIMATED COST AND FIXED FEE
a. The estimated cost of this MAO is $1,057,412.
b. The fixed fee for this MAO is $65,243. The fee shall be paid in
installments based on the percentage of completion of work, as
determined by the Contracting Officer, and subject to the withholding
provisions of the clauses ALLOWABLE COST AND PAYMENT and FIXED FEE
referenced in the General Clause Listing in Part II, ARTICLE I.1 of
this MAO. Payment of fixed fee shall not be made in less than monthly
increments.
c. The Government's obligation, represented by the sum of the estimated
cost plus the fixed fee, is $1,122,655.
d. Total funds currently available for payment and allotted to this MAO
are $343,987, of which $323,996 represents the estimated costs, and of
which $19,991 represents the fixed fee. For further provisions on
funding, see the LIMITATION OF FUNDS referenced in Part II, ARTICLE I.2
Authorized Substitutions of Clauses of the MA.
e. It is estimated that the amount currently allotted will cover
performance of the MAO through September 29, 1996.
f. Increments to be allotted to this contract are estimated as follows:
Estimated Fixed Total Estimated
FY Period Cost Fee Cost
-- ------ ---- --- ----
95 9/30/95 - 9/29/96 $ 323,996 $ 19,991 $ 343,987
96 9/30/96 - 9/29/97 $ 733,416 $ 45,252 $ 778,668
Total $1,057,412 $ 65,243 $1,122,655
g. The Contracting Officer may allot additional funds to the MAO without
the concurrence of the MA Holder.
4
ARTICLE B.3. PROVISIONS APPLICABLE TO DIRECT COSTS
- ---------------------------------------------------
a. Items Unallowable Unless Otherwise Provided
Notwithstanding the clause, ALLOWABLE COST AND PAYMENT, [and FIXED FEE]
incorporated into this MAO, unless authorized in writing by the
Contracting Officer, the costs of the following items or activities
shall be unallowable as direct costs:
(1) Acquisition, by purchase or lease, of any interest in real
property;
(2) Special rearrangement or alteration of facilities;
(3) Purchase or lease of any item of general purpose office
furniture or office equipment regardless of dollar value.
(General purpose equipment is defined as any items of personal
property which are usable for purposes other than research,
such as office equipment and furnishings, pocket calculators,
etc.);
(4) Travel to attend general scientific meetings (a general
scientific meeting is defined as an assemblage of
scientific/technical personnel held to exchange information
and ideas through a scheduled program of presentations;
includes conferences, congresses, seminars, symposia and
workshops; usually sponsored by a national organization);
(5) Foreign travel - See Paragraph b. below;
(6) Overtime premium;
(7) Consultant fees;
(8) Subcontracts;
(9) Accountable Government property (defined as both real and
personal property with an acquisition cost of $1,000 or more
and a life expectancy of more than two years) and "sensitive
items" (defined and listed in the Contractor's Guide for
Control of Government Property, 1990, regardless of
acquisition value.
b. Travel Costs
(1) Foreign Travel
Requests for foreign travel must be submitted at least six weeks in
advance and shall contain the following: (a) meeting(s) and place(s) to
be visited, with costs and dates; (b) name(s) and title(s) of MAO's
personnel to travel and their functions in the specific MAO project;
(c) the MAO purposes to be served by the travel; (d) how travel of MAO
personnel will benefit and contribute to accomplishing the specific MAO
project, or will otherwise justify the expenditure of NIH MAO funds;
(e) how such advantages justify the costs for travel and absence from
the project of more than one person if such are suggested; and (f) what
additional functions may be performed by the travelers to accomplish
other purposes of the specific MAO and thus further benefit the
project.
5
ARTICLE B.4. ADVANCE UNDERSTANDINGS
- ------------------------------------
a. The estimated level of effort set forth below is for guidance to serve
not as a measure of the MAO Holder's obligation but as a further
description of the required tasks. It will represent the basis of
direct labor agreed to in the MAO negotiations for the period from
September 30, 1995 through September 29, 1997, and will be used by both
the Government and the MAO Holder to monitor progress toward
achievement of the MAO objectives.
<TABLE>
<CAPTION>
Total Estimated Total Estimated Total Estimated
Labor Category Year 1 Hours Year 2 Hours Number of Hours
-------------- ------------ ------------ ---------------
<S> <C> <C> <C>
[Language Deleted due to Confidential Treatment Request.]
TOTAL
</TABLE>
b. The MAO Holder agrees to abide by the terms of FAR 52.247-63,
Preference for U.S.-Flag Air Carriers. This provision states in part
that, in performing work under this MAO, the MAO Holder shall utilize
U.S. flag air carriers unless service by those carriers is not
available. If U.S. flag air carriers are not available the MAO Holder
shall so certify in writing and include that
certification/justification in the request for advance approval of
foreign travel. (Cost/lower fares are not acceptable reasons for
proposing to utilize foreign air carriers.)
c. The MAO Holder agrees to submit an annual and a final inventory of
Government property as required by the DHHS "Contractor's Guide for
Control of Government Property." Inventories shall be submitted to the
Contract Property Administrator identified in Article G.4. of this
contract, with a copy to the Contracting Officer. Annual inventories
shall be submitted by October 31 each year.
d. The MAO Holder agrees to immediately notify the Contracting Officer in
writing if there is a projected overrun (in any amount) or unexpended
balance (greater than 10%) in the overall budget at the end of any
funding period, and the reasons for the variance (see also the
requirements of the Limitation of Funds clause in the MAO).
e. If the MAO contains any specific limitations/ceilings on particular
costs, these shall always prevail until modified in the MAO.
f. The MAO Holder agrees that samples/products received from/through the
Government for utilization under this MAO shall be used only for
purposes required by this MAO.
g. Publication of Manuscripts or Abstracts
Because there is a likelihood that the MAO Holder will be evaluating
proprietary compounds provided to the Government by a third party, it
is essential to include provisions that will protect the rights of the
third party suppliers as follows:
The MAO Holder agrees that manuscripts/abstracts based on
data/information generated under this MAO will not be
submitted for publication until written Project Officer
clearance has been received. MAO support shall be acknowledged
in all such publications. A "publication" is defined as an
issue of printed material offered for distribution or any
communication or oral presentation of information.
6
The Project Officer will review all manuscripts/documents in a
period of time not to exceed 30 calendar days from receipt,
and will either grant clearance for publication/disclosure,
recommend changes or, as applicable, refer the document to the
Supplier of the compound for their review.
NIAID will use its best efforts to assist and expedite the
review process by the Supplier wherever possible.
h. Correspondence Procedures
To promote timely and effective administration, correspondence (except
for invoices/financial reports, technical progress reports/other
deliverables) submitted under this MAO shall be subject to the
following procedures:
1. Technical correspondence shall be addressed to the Project
Officer with an information copy of the basic correspondence
to the Contracting Officer. (As used herein, technical
correspondence excludes correspondence which proposes
deviations from or modifications of MAO requirements, terms or
conditions.)
2. Other correspondence shall be addressed to the Contracting
Officer, with an information copy of the basic correspondence
to the Project Officer.
3. Subject Line(s). All correspondence shall contain a subject
line commencing with the MAO number as illustrated below:
SUBJECT: MAO No. NO1-AI-55273
Request for Approval of
7
SECTION C - DESCRIPTION/SPECIFICATIONS/WORK STATEMENT
- -----------------------------------------------------
ARTICLE C.1. STATEMENT OF WORK
- -------------------------------
a. Independently and not as an agent of the Government, the MAO Holder
shall furnish all the necessary services, qualified personnel,
material, equipment, and facilities, not otherwise provided by the
Government as needed to perform the Statement of Work, SECTION J,
ATTACHMENT 1, dated September 30, 1995 attached hereto and incorporated
herein.
b. If there is any inconsistency between the MAO Holder's technical
proposals dated March 7, 1995, June 20, 1995 and August 7, 1995, and
the work described in this Article C.1., Paragraph a., the terms and
conditions of this Article C.1., Paragraph a, shall control.
ARTICLE C.2. REPORTING REQUIREMENTS
- ------------------------------------
a. Technical Reports
In addition to those reports required by the other terms of this MAO,
the MAO Holder shall prepare and submit the following reports in the
manner stated below and in accordance with ARTICLE F.1. DELIVERIES of
this MAO:
(1) Quarterly Progress Report
By the fifteenth calendar day of the month following the end
of each quarter, the MA Holder shall submit (5) copies of a
quarterly technical report. Four (4) copies shall be submitted
to the Project Officer and one (1) copy shall be submitted to
the Contracting Officer. This report shall include a
(description of the activities during the reporting period,
and the activities planned for the ensuing reporting period.
The first reporting period consists of the first full three
months of performance including any fractional part of the
initial month. Thereafter, the reporting period shall consist
of three full calendar months. A quarterly report shall not be
submitted when a final report is due.
(2) Final Report
The MAO Holder shall submit five (5) copies of the final
report documents. Four (4) copies shall be submitted to the
Project Officer and (1) copy shall be submitted to the
Contracting Officer. This report is to include a summation of
the work performed and results obtained for the entire MAO
period of performance. This report shall be in sufficient
detail to describe comprehensively the results achieved. The
Final Report shall be submitted no later than the completion
date of this MAO.
SECTION D - PACKAGING, MARKING AND SHIPPING
- -------------------------------------------
All deliverables required under this MAO shall be packaged, marked and shipped
in accordance with Government specifications. The MAO Holder shall guarantee
that all required materials shall be delivered in immediate usable and
acceptable condition.
8
SECTION E - INSPECTION AND ACCEPTANCE
- -------------------------------------
a. For the purpose of this ARTICLE, the designated Project Officer is the
authorized representative of the Contracting Officer, who shall perform
inspection and acceptance of materials and services to be provided.
b. Inspection and acceptance will be performed at the Project Officer's
address listed in the clause entitled "Deliveries" in Section F.
Acceptance may be presumed unless otherwise indicated in writing by the
Contracting Officer or the duly authorized representative within 30
days of receipt.
c. This MAO incorporates the following clause by reference, with the same
force and effect as if it were given in full text. Upon request, the
Contracting Officer will make its full text available.
FAR Clause 52.246-9, INSPECTION OF RESEARCH AND DEVELOPMENT - (SHORT
FORM)(APRIL 1984).
9
SECTION F - DELIVERIES OR PERFORMANCE
- -------------------------------------
ARTICLE F.1. DELIVERIES
- ------------------------
Satisfactory performance of this MAO shall be deemed to occur upon delivery and
acceptance by the Contracting Officer, or the duly authorized representative, of
the following items in accordance with the stated delivery schedule:
The items specified below as described in (SECTION C, ARTICLE C.2. shall be
delivered f.o.b. destination as set forth in FAR 52.247-35, F.O.B. DESTINATION,
WITHIN CONSIGNEES PREMISES (APRIL 1984), and in accordance with and by the
date(s) specified below [and any specifications stated in SECTION D, PACKAGING,
MARKING AND SHIPPING, of this MAO]:
Item Description QuantityDelivery Schedule
---- ----------- -------------------------
1. Quarterly 5 1/15/96, 97
4/15/96, 97
7/15/96, 97
10/15/96
2. Final 5 By completion date of this MAO
The above items shall be addressed and delivered to:
Addressee Deliverable Item No. Quantity
--------- -------------------- --------
Project Officer 1. 4
PRB, DAIDS 2. 4
Solar Bldg., Rm. 2A31
6003 Executive Blvd.
Bethesda, MD. 20892
Contracting Officer 1. 1
CMB, DEA, NIAID, NIH 2. 1
Solar Bldg., Rm. 3C07
6003 Executive Blvd.
Bethesda, MD. 20892
ARTICLE F.2. STOP WORK ORDER
- -----------------------------
This MAO incorporates the following clause by reference, with the same force and
effect as if it were given in full text. Upon request, the Contracting Officer
will make its full text available.
FEDERAL ACQUISITION REGULATION (48 CFR CHAPTER 1) CLAUSE:
52.212-13, STOP WORK ORDER (AUGUST 1989) with ALTERNATE I (APRIL 1984).
10
SECTION G - MAO ADMINISTRATION DATA
- -----------------------------------
ARTICLE G.1. PROJECT OFFICER
- -----------------------------
Pursuant to the Project Officer Article incorporated in the MA, the following
Project Officer will represent the Government for the purpose of this MAO:
MAO Project Officer: Marta J. Glass, M.S.
The Project Officer is responsible for: (1) monitoring the MAO Holder's
technical progress, including the surveillance and assessment of performance and
recommending to the Contracting Officer changes in requirements; (2)
interpreting the Statement of Work and any other technical performance
requirements; (3) performing technical evaluation as required; (4) performing
technical inspections and acceptances required by this MAO; and (5) assisting in
the resolution of technical problems encountered during performance.
The Contracting Officer is the only person with authority to act as agent of the
Government under this MAO. Only the Contracting Officer has authority to: (1)
direct or negotiate any changes in the Statement of Work; (2) modify or extend
the period of performance; (3) change the delivery schedule; (4) authorize
reimbursement to the MAO Holder any costs incurred during the performance of
this MAO; or (5) otherwise change any terms and conditions of this MAO.
The Government may unilaterally change its Project Officer designation.
ARTICLE G.2. KEY PERSONNEL
- ---------------------------
Pursuant to the Key Personnel clause incorporated in the MAO, the following
individuals are considered to be essential for the work being performed
hereunder:
NAME TITLE
---- -----
Chang Chih-Tai, Ph.D. Principal Investigator
Hanna Weissberger, Ph.D. Co-Principal Investigator
ARTICLE G.3. INVOICE SUBMISSION
- -------------------------------
The Invoice/Financing Request Instructions for NIH Cost-Reimbursement Type
Contracts, NIH(RC)-1, set forth in your Master Agreement are incoporated herein.
The invoice instructions and directions for the submission of invoice/financing
requests contained in the MA must be followed to meet the requirements of a
"proper" invoice, pursuant to FAR 32.9.
11
ARTICLE G.4. GOVERNMENT PROPERTY
- ---------------------------------
a. In addition to the requirements of the clause, GOVERNMENT PROPERTY,
incorporated in this Section I of this MAO, the MAO Holder shall comply
with the provisions of DHHS Publication, Contractor's Guide for Control
of Government Property, (1990), which is incorporated into this MAO by
reference. Among other issues, this publication provides a summary of
the MAO Holder's responsibilities regarding purchasing authorizations
and inventory and reporting requirements under the MAO. A copy of this
publication is available upon request to the Contract Property
Administrator at the following address:
Contracts Property Administrator
Research Contracts Property Administration, NIH
Building 13, Room 2E-65
9000 Rockville Pike
Bethesda, Maryland 20892
(301) 496-6466
ARTICLE G.5. GOVERNMENT SUPPLY SOURCES, is hereby incorporated into this MAO by
reference pursuant to the Master Agreement.
SECTION H - SPECIAL MASTER AGREEMENT ORDER REQUIREMENTS
- -------------------------------------------------------
The following Articles are incorporated into this MAO by reference pursuant to
the Master Agreement. [(Any MAO Articles which are not contained in the MA are
set forth below in full text)]:
a. ARTICLE H.1. HUMAN SUBJECTS
----------------------------
b. ARTICLE H.2. SALARY RATE LIMITATION LEGISLATION PROVISIONS
-----------------------------------------------------------
Paragraph b. of this ARTICLE is revised as follows:
b. Public Law No. Fiscal Year Salary Limitation
-------------- ----------- -----------------
103-333 1995 $125,000
12
PART II
- -------
SECTION I - MASTER AGREEMENT ORDER CLAUSES
- ------------------------------------------
The following Articles are incorporated into this MAO by reference pursuant to
the Master Agreement. [(Any MAO Articles which are not contained in the MA are
set forth below in full text)]:
a. ARTICLE I.1. GENERAL CLAUSES FOR A NEGOTIATED COST PLUS A FIXED FEE
MASTER AGREEMENT ORDER
b. ARTICLE I.2. AUTHORIZED SUBSTITUTIONS OF CLAUSES, [Cost-Reimbursement]
c. ARTICLE I.3. ADDITIONAL MASTER AGREEMENT CLAUSES, [Cost-Reimbursement]
d. ARTICLE I.4. ADDITIONAL FAR CLAUSES INCLUDED IN FULL TEXT
PART III
- --------
SECTION J - LIST OF ATTACHMENTS
- -------------------------------
Unless otherwise indicated below, the following documents are attached and
incorporated in this MAO:
1. Statement of Work, September 30, 1995, 7 pages.
2. Invoice/Financing Request Instructions for NIH Cost-Reimbursement Type
Contracts, NIH(RC)-1 6/18/92, 4 pages. [This attachment is part of the
Master Agreement document and is incorporated into this MAO by
reference].
3. Safety and Health, PHSAR clause 352.223-70, (4/84), 2 pages. [This
attachment is part of the Master Agreement document and is incorporated
into this MAO by reference.
4. Procurement of Certain Equipment, NIH(RC)-7, (4/1/84), 1 page. [This
attachment is part of the Master Agreement document and is incorporated
into this MAO by reference.
SECTION K - REPRESENTATIONS AND CERTIFICATIONS
- ----------------------------------------------
The following documents are incorporated by reference in this MAO:
1. Representations and Certifications, dated August 7, 1995.
END of the SCHEDULE
(MASTER AGREEMENT ORDER)
13
STATEMENT OF WORK
-----------------
SECTION A: IMMUNIZATION WITH HIV VACCINES AND CHALLENGE WITH SHIV
- ---------- ------------------------------------------------------
Independently, and not as an agent of the Government, the Master Agreement Order
holder shall provide the necessary services, qualified personnel, material,
equipment, and facilities, not otherwise provided by the Government, as needed
to perform the tasks of the Statement of Work below:
The MAO Holder shall:
1. Perform assays to assess the humoral immune responses of macaques that have
been immunized with HIVenv (or with a combination of HIVenv and SIV non-env)
vaccines. Specifically the MAO Holder shall:
a. Conduct assays (such as ELISA and western blots) to detect
antibodies to the envelope of HIV (and to non-envelope
proteins of SIV that are included in the immunization
protocol) in the sera or other fluids of immunized or
virus-infected monkeys for all vaccine studies assigned.
b. Develop assays to detect antibodies to the above proteins or
antigens if an assay system is not currently available to
detect those antibodies or if existing assays are not of
sufficient sensitivity or specificity to provide the
information required by NIAID.
MAO Statement of Work ATTACHMENT 1
(09/30/95) Page 1
2. Conduct assays to determine whether monkeys become infected after exposure to
SHIV:
a. Determine whether SHIV can be isolated from PBMC, lymph nodes,
or other tissue of monkeys after virus challenge by
co-cultivating the cells or tissue with primary simian and/or
human peripheral blood cells, other primary cells, and/or cell
lines. Evaluate the virus load in the PBMC of infected monkeys
by conducting limitingdilution virus isolations.
Confirm virus transmission to the target cells by
demonstration of the presence of virus or viral protein(s) in
the culture supernatant and/or the presence of viral protein
or nucleic acid in the cultured cells.
b. Conduct assays to detect HIV proteins and/or SIV proteins, or
SHIV nucleic acids (using HIV or SIV primers or probes, as
appropriate) in peripheral blood lymphocytes or other tissues
of animals after challenge with virus.
c. Conduct assays (such as antigen capture assays) to detect
viral antigens or conduct assays to detect viral nucleic acids
in the plasma of animals after challenge with virus.
MAO Statement of Work ATTACHMENT 1
(09/30/95) Page 2
3. Receive, catalog, track, and maintain an inventory of the specimens
that arrive for evaluation:
a) Advise sample suppliers (Category B MAO contractors) of the most
suitable manner for shipment of sera, whole blood, cells or other
specimens for evaluation and arrange for the transfer of these
specimens from primate laboratories to the MAO Holder. All shipments
must be coordinated so that activity/viability of specimens will not be
adversely affected.
b) When necessary, pick up or arrange for pick up of incoming specimen
shipments from a specified airport or other contact site in a timely
manner and assure maintenance of activity and/or viability of the
specimens by providing the appropriate temperature in transit from the
airport or other contact site to the MAO Holder's laboratory.
c) Receive and catalog specimens arriving for evaluation from the
primate laboratories. Maintain documentation on file for all incoming
specimens, including but not limited to:primate subject identification
number, trial site, protocol identification number, specimen collection
date and condition of sample upon arrival.
d) Store cataloged, aliquotted specimens under appropriate conditions
to retain maximum immunological activity.
e) Maintain specimen tracking and inventory system such that specimens
can be traced and located from receipt through processing and assay
analysis.
4. Maintain test result database and transfer data electronically:
a) Compile and maintain a computerized database of all assay and virus
isolation results, using a format compatible with the FOX-PRO data base
that NIAID plans to use to compile records and data from the vaccine
studies. Results are to be recorded with designations of study protocol
number, animal number, specimen collection date, and other information
requested by the Project Officer.
b) Transfer specified data electronically to the AIDS Vaccine
Evaluation Group (AVEG) Statistical and Coordinating Center (SCC) and
to the Project Officer at regular intervals as instructed by the
Project Officer (Format to be agreed upon betwen NIAID and the MAO
Holder).
MAO Statement of Work ATTACHMENT 1
(09/30/95) Page 3
c) Ensure protection against the loss of data by the duplication of
data base files and programs for storage; provide for the security and
safety of data on the specimen inventory and the test results database.
5. Provide facilities and resources:
a) Provide facilities and equipment for the work to be conducted,
including a biosafety level 2 or 3 laboratory for conducting work with
live HIV and SHIV as well as samples from infected monkeys.
b) Provide, maintain, and operate facilities for controlled storage of
sera, virus stocks, cell stocks, and other samples and reagents,
including storage at -10 to -20 degrees C, at -70 to - 90 degrees C,
and in liquid nitrogen conditions, with appropriate monitoring of
storage conditions to guarantee continuous proper storage. The
reliability of supply systems, electrical power, and backup support
systems shall be ensured by the MAO Holder.
c) Provide protective garments, equipment and sufficient monitoring to
assure safe handling of potentially hazardous materials, including
radioactive materials. Specifically, the MAO Holder shall comply with
all applicable health and safety regulations while conducting the work
set forth herein.
d) Conduct work under this MAO in accordance with all applicable
Federal, state, and local laws, codes, ordinances and regulations, and
with the following basic references and other related modifications by
the Public Health Service:
(1) Biosafety in Microbiological and Biomedical
Laboratories, U.S. Department of Health and Human
Services, Centers for Disease Control and National
Institutes of Health, HHS Pub. No. (NIH) 93-8395
published by the U.S. Government Printing Office,
third edition, May 1993, stock number 17-040-
00523-7.
(2) Recommendations for Prevention of HIV Transmission in
Health Care Settings, Morbidity and Mortality Weekly
Report, Vol. 36, No. 2-S.
(3) Agent Summary Statement for Human Immunodeficiency
Virus and Report on Laboratory-Acquired Infection
with Human Immunodeficiency Virus, Morbidity and
Mortality Weekly Report, Vol. 37, No.S-4, pp.1-22.
(4) "Guidelines to Prevent Simian Immunodeficiency Virus
Infection in Laboratory Workers and Animal Handlers,"
Morbidity and Mortality Weekly Report, Vol. 37, No.
45, pp. 693-704.
MAO Statement of Work ATTACHMENT 1
(09/30/95) Page 4
6. Designate a project coordinator to manage the day-to-day conduct of the
study, to interact with the Category B MAO laboratory or laboratories providing
non-human primate samples from the vaccine study or studies, and to provide
information on the status of the assay results to the Project Officer.
7. Report data and results to NIAID or to a designated NIAID contractor.
Printouts of data and verbal reports of the status of the study are to be
provided on an ongoing basis during the course of the study at the request of
the Project Officer, in addition to the required periodic (quarterly and final)
written reports describing the progress of the study, and in addition to the
periodic electronic transfer of data described in item (6) above.
MAO Statement of Work ATTACHMENT 1
(09/30/95) Page 5
SUMMARY OF VACCINE STUDIES FOR WHICH ASSAYS WILL BE REQUIRED
------------------------------------------------------------
(SECTION A: IMMUNIZATION WITH HIV VACCINES AND CHALLENGE
WITH SHIV)
VACCINE STUDY 4
- ---------------
Title: Testing of Recombinant Poxvirus/HIV Together with Recombinant
Poxvirus/SIV Vaccines in the SHIV Model
Description: Rhesus monkeys will be immunized with recombinant vaccina
expressing HIV-1 env, recombinant vaccina expressing SIV non-envelope genes or
with both; monkeys will be immunized with recombinant fowlpox expressing HIV-1
env, recombinant fowlpox expressing SIV non-envelope genes, or with both.
Immunized monkeys will be boosted with purified HIV-1 env protein and/or with
SIV proteins. Monkeys will be challenged with a SHIV. The experiment is designed
to evaluate the contribution of env versus non-env immune responses in providing
protection from infection and to compare the efficacy of vaccinia-based versus
fowlpox-based vaccines when followed by a protein boost.
Number of monkeys: 48 (8 groups of 6)
Length of study: 18 months
Number of inoculations per animal: 5 immunizations plus 1 virus challenge
Number of bleeds per animal: approximately 40
VACCINE STUDY 13
- ----------------
Title: Immunogenicity of a Soluble Oligomeric Form of the HIV-1 Envelope Protein
Description: Rhesus monkeys will be immunized with a purified oligomeric form of
the HIV-1 envelope protein to determine if monkeys will generate antibodies
(presumably to conformational epitopes of the oligomeric envelope) that are able
to neutralize genetically divergent strains of HIV- 1. Vaccines based on
monomeric forms of the HIV-1 envelope generate predominantly type-specific
antibodies that neutralize a limited range of HIV-1 isolates, but preliminary
studies with the oligomeric form of the envelope indicate that antibodies to it
may be more broadly reactive. Animals will be challenged with SHIV after
immunization to determine the ability of the immune response to the oligomeric
envelope to protect monkeys from infection.
MAO Statement of Work ATTACHMENT 1
(09/30/95) Page 6
Number of monkeys: 36 (6 groups of 6)
Length of study: 24 months
Number of inoculations per animal: 5 immunizations plus 1 virus challenge
VACCINE STUDY 16
- ----------------
Title: Evaluation of a Recombinant Semliki Forest Virus/HIV Vaccine
Description: Rhesus monkeys will be immunized with an avirulent recombinant
Semliki Forest virus expressing HIV-1 envelope and SIV gag proteins. The monkeys
will be infected with the virus, which has a broad tissue tropism, by either
intramuscular, intravenous, subcutaneous, or mucosal site administration.
Animals will be challenged with SHIV to determine the efficacy of this vaccine
in protecting from virus infection.
Number of monkeys: 10 (5 groups of 2)
Length of study: 18 months
Number of inoculations per animal: 8 immunizations plus l virus challenge
MAO Statement of Work ATTACHMENT 1
(09/30/95) Page 7
EXHIBIT 10.4
STANDARD FORM 26 (REV. 4-85)
NSN 7540-01-152-8069
OMB No. 0990-0115
RFP 95-3
AWARD/CONTRACT
1. THIS CONTRACT IS A RATED ORDER UNDER DPAS (15 CFR 350)
RATING
PAGE 1 OF PAGES 21
2. CONTRACT (Proc. inst. ident.) No. NO1-AI-55277
3. EFFECTIVE DATE September 30, 1995
4. REQUISITION/PURCHASE REQUEST/PROJECT N0. 000948
5. ISSUED BY CODE 2668-55277
National Institutes of Health
Contract Management Branch, NIAID
Solar Building, Room 3007
6003 Executive Boulevard MSC 7610
Bethesda, Maryland 20892-7610
6. ADMINISTERED BY (If other than item 5) CODE
7. NAME AND ADDRESS OF CONTRACTOR (No., street, city, country, State and Zip
Code)
BTRL Contracts and Services, Inc., dba/
Biotech Research Laboratories
3 Taft Court
Rockville, Maryland 20850
8. DELIVERY
FOB ORIGIN
OTHER (See below) DESTINATION
9. DISCOUNT FOR PROMPT PAYMENT N/A
10. SUBMIT INVOICES
(4 copies unless otherwise specified) TO THE ADDRESS SHOWN IN
ITEM G.3
CODE
FACILITY CODE
11. SHIP TO/MARK FOR
See Article F.1.
12. PAYMENT WILL BE MADE BY
See Article G.3.
CODE
13. AUTHORITY FOR USING OTHER THAN FULL AND OPEN COMPETITION N/A
10 U.S.C. 2304 (c)( )41 U.S.C. 253(c)( )
14. ACCOUNTING AND APPROPRIATION DATA
CAN#58425674 (Amount Obligated - $387,353)
DOC#300N1A155277
EIN#1-043152484-A1
SOC#25.55
15A. ITEM NO.
15B. SUPPLIES/SERVICES
15C. QUANTITY
15D. UNIT
15E. UNIT PRICE
15F. AMOUNT
Research & Development Contract
Title: MAO/Assessment of Humoral Immune Responses (G)
Period: September 30, 1995 through September 29, 1997
Amount allotted: $387,353 Awarded under MA N01-AI-42602
Contract Type: Cost Reimbursement/Completion
FY 95 387,353
FY 96 226,739
15G. TOTAL AMOUNT OF CONTRACT $614,092
16. TABLE OF CONTENTS
( ) SEC. DESCRIPTION PAGE(S) ( ) SEC. DESCRIPTION PAGE(S)
PART I - THE SCHEDULE PART II - CONTRACT CLAUSES
X A SOLICITATION/CONTRACT FORM 1 X 1 CONTRACT CLAUSES 11
X B SUPPLIES OR SERVICES AND PRICES/COSTS 3 PART III - LIST OF DOCUMENTS,
EXHIBITS AND OTHER ATTACH.
X C DESCRIPTION/SPECS./WORK STATEMENT 7 X J LIST OF ATTACHMENTS 12
X D PACKAGING AND MARKING 7 PART IV- REPRESENTATIONS AND INSTRUCTIONS
X E INSPECTION AND ACCEPTANCE 7 X K REPRESENTATIONS, CERTIFICATIONS AND OTHER
STATEMENTS OF OFFERORS 13
X G CONTRACT ADMINISTRATION DATA 9
11 L INSTRS., CONDS., AND NOTICES TO OFFERORS
X H SPECIAL CONTRACT REQUIREMENTS 10 M EVALUATION FACTORS FOR AWARD
CONTRACTING OFFICER WILL COMPLETE ITEM 17 OR 18 AS APPLICABLE
17. X CONTRACTOR'S NEGOTIATED AGREEMENT (Contractor is required to sign this
document and return 3 copies to issuing office.) Contractor agrees to furnish
and deliver all items or perform all the services set forth or otherwise
identified above and on any continuation sheets for the consideration stated
herein. The rights and obligations of the parties to this contract shall be
subject to and governed by the following documents: (a) this award/contract, (b)
the solicitation, if any, and (c) such provisions, representations,
certifications, and specifications, as are attached or incorporated by reference
herein. (Attachments are listed herein.)
18. AWARD (Contractor is not required to sign this document.) Your offer on
Solicitation Number including the full additions or changes made by you which
additions or changes are set forth in full above, is hereby accepted as to the
items listed above and on any continuation sheets. This award consummates the
contract which consists of the following documents: (a) the Government's
solicitation and your offer, and (b) this award/contract. No further contractual
document is necessary.
19A. NAME AND TITLE OF SIGNER (Type or print)
Mark Manak, Senior Vice President
20A. NAME OF CONTRACTING OFFICER
Jacqueline C. Holden, Contracting Officer
AIDS Preclinical Research Contract Section, CMB, NIAID, HIH
19B. NAME OF CONTRACTOR
BY Mark Manak
(Signature of person authorized to sign)
19C. DATE SIGNED
9/25/95
20B. UNITED STATES OF AMERICA
BY Jacqueline C. Holden
(Signature of Contracting Officer)
20C. DATE SIGNED
9/27/95
DETAILED TABLE OF MASTER AGREEMENT ORDER (MAO) CONTENTS
-------------------------------------------------------
<TABLE>
<S> <C>
PART I - THE SCHEDULE
SECTION A - SOLICITATION/CONTRACT FORM........................................................................... 1
--------------------------------------
SECTION B - SUPPLIES OR SERVICES AND PRICES/COSTS................................................................. 3
-------------------------------------------------
ARTICLE B.1. BRIEF DESCRIPTION OF SUPPLIES OR SERVICES..................................................... 3
ARTICLE B.2. ESTIMATED COST AND FIXED FEE.................................................................. 3
ARTICLE B.3. PROVISIONS APPLICABLE TO DIRECT COSTS......................................................... 3
ARTICLE B.4. ADVANCE UNDERSTANDINGS........................................................................ 5
SECTION C - DESCRIPTION/SPECIFICATIONS/WORK STATEMENT............................................................. 7
-----------------------------------------------------
ARTICLE C.1. STATEMENT OF WORK............................................................................. 7
ARTICLE C.2. REPORTING REQUIREMENTS........................................................................ 7
SECTION D - PACKAGING, MARKING AND SHIPPING....................................................................... 7
-------------------------------------------
SECTION E - INSPECTION AND ACCEPTANCE............................................................................. 7
-------------------------------------
SECTION F - DELIVERIES OR PERFORMANCE............................................................................. 8
-------------------------------------
ARTICLE F.1. DELIVERIES.................................................................................... 8
ARTICLE F.2. STOP WORK ORDER............................................................................... 8
SECTION G - CONTRACT ADMINISTRATION DATA.......................................................................... 9
----------------------------------------
ARTICLE G.1. PROJECT OFFICER............................................................................... 9
ARTICLE G.2. KEY PERSONNEL................................................................................. 9
ARTICLE G.3. INVOICE SUBMISSION............................................................................ 9
ARTICLE G.4. GOVERNMENT PROPERTY.......................................................................... 9
ARTICLE G.5. GOVERNMENT SUPPLY SOURCES.......................................................................9
SECTION H - SPECIAL MASTER AGREEMENT ORDER REQUIREMENTS.......................................................... 10
-------------------------------------------------------
ARTICLE H.1. HUMAN SUBJECTS............................................................................... 10
ARTICLE H.2. SALARY RATE LIMITATION LEGISLATION PROVISIONS................................................ 10
PART II................................................................................................................. 11
SECTION I - MASTER AGREEMENT ORDER CLAUSES........................................................................ 11
------------------------------------------
ARTICLE I.1. GENERAL CLAUSES FOR A COST-REIMBURSEMENT RESEARCH AND
DEVELOPMENT MASTER AGREEMENT ORDER.................................................................... 11
ARTICLE I.2. AUTHORIZED SUBSTITUTIONS OF CLAUSES........................................................... 11
ARTICLE I.3. ADDITIONAL MAO CLAUSES........................................................................ 11
ARTICLE I.4. ADDITIONAL FAR CLAUSES INCLUDED IN FULL TEXT.................................................. 11
PART III................................................................................................................ 12
SECTION J - LIST OF ATTACHMENTS................................................................................... 12
-------------------------------
Statement of Work................................................................................................. 12
PART IV................................................................................................................. 13
SECTION K - REPRESENTATIONS AND CERTIFICATIONS.................................................................... 13
----------------------------------------------
Representations and Certifications.......................................................................... 13
</TABLE>
2
SECTION B - SUPPLIES OR SERVICES AND PRICES/COSTS
- -------------------------------------------------
[THIS MAO IS AWARDED UNDER MASTER AGREEMENT NO1-AI-42602 FOR HIV PRECLINICAL
VACCINE DEVELOPMENT]
ARTICLE B.1. BRIEF DESCRIPTION OF SUPPLIES OR SERVICES
- -------------------------------------------------------
The purpose of this master agreement order (MAO) is for the Assessment of
Humoral Immune Response.
ARTICLE B.2. ESTIMATED COST AND FIXED FEE
- ------------------------------------------
a. The estimated cost of this MAO is $573,918
b. The fixed fee for this MAO is $40,174. The fixed fee shall be paid in
installments based on the percentage of completion of work, as determined
by the Contracting Officer, and subject to withholding provisions of the
clauses ALLOWABLE COST AND PAYMENT AND FIXED FEE referenced in the General
Clause Listing in PART II, ARTICLE I.1. of this MAO.
Payment of fixed fee shall not be made in less than monthly installments.
c. The Government's obligation, represented by the sum of the estimated cost
plus fixed fee, is $614,092.
d. Total funds currently available for payment and allotted to this MAO are
$387,353 of which $362,012 represents the estimated costs, and of which
$25,341 represents the fixed fee. For further provisions on funding see
the LIMITATION OF FUNDS clause referenced in Part II, ARTICLE I.2.
Authorized Substitutions of Clauses of the Master Agreement (MA).
e. It is estimated that the amount currently allotted will cover performance
of the MAO through September 29, 1996.
f. Increments to be allotted to this contract are estimated as follows:
<TABLE>
<CAPTION>
Estimated Fixed Total Estimated
FY Period Cost Fee Cost Plus Fee
----- --------------------- ---------- -------- --------------
<S> <C> <C> <C> <C>
95 09/30/95 - 09/29/96 $362,012 $25,341 $387,353
96 09/30/96 - 09/29/97 $211,906 $14,833 $226,739
Totals $573,918 $40,174 $614,092
</TABLE>
g. The Contracting Officer may allot additional funds to the MAO without the
concurrence of the MAO Holder.
ARTICLE B.3. PROVISIONS APPLICABLE TO DIRECT COSTS
- ---------------------------------------------------
a. Items Unallowable Unless Otherwise Provided
Notwithstanding the clause(s), ALLOWABLE COST AND PAYMENT, [and FIXED
FEE,] incorporated in this MAO, unless authorized in writing by the
Contracting Officer, the costs of the following items or activities shall
be unallowable as direct costs:
(1) Acquisition, by purchase or lease, of any interest in real property;
(2) Special rearrangement or alteration of facilities;
(3) Purchase or lease of any item of general purpose office furniture or
office equipment regardless of dollar value. (General purpose
equipment is defined as any items of personal property which are
usable for purposes other than research, such as office equipment
and furnishings, pocket calculators, etc.);
3
(4) Travel to attend general scientific meetings (a general scientific
meeting is defined as an assemblage of scientific/technical
personnel held to exchange information and ideas through a scheduled
program of presentations; includes conferences, congresses,
seminars, symposia and workshops; usually sponsored by a national
organization);
(5) Foreign travel - See Paragraph b. below;
(6) Overtime premium;
(7) Consultant fees;
(8) Subcontracts;
(9) Accountable Government property (defined as both real and personal
property with an acquisition cost of $1,000 or more and a life
expectancy of more than two years) and "sensitive items" (defined
and listed in the Contractor's Guide for Control of Government
Property, 1990, regardless of acquisition value.
b. Travel Costs
(1) Domestic Travel
(a) Total expenditures for domestic travel (transportation, lodging,
subsistence, and incidental expenses) incurred in direct performance
of this MAO shall not exceed $-0- without the prior written approval
of the Contracting Officer.
(Domestic travel is defined as MA Holder travel directly applicable
to performance under this MAO; includes travel to discuss progress
under this MAO with the Project Officer or Contracting Officer or to
attend meetings, called by the NIAID, of collaborating program
investigators to discuss program progress and plans. The domestic
travel amount above does not include scientific meeting travel which
is defined in Article B.3.a. above and which shall be specifically
approved in writing by the Contracting Officer.)
(b) The cost of travel by privately-owned automobile shall be reimbursed
at the mileage rate prescribed by the MA Holder's established,
generally applicable travel policy in lieu of actual costs,
provided, however, that such reimbursement shall not exceed the
otherwise allowable comparative cost of travel by common carrier.
(c) Reasonable actual costs of lodging and subsistence, or per diem in
lieu of actual costs, shall be allowable to the extent that such
actual costs or per diem amounts do not exceed the amounts or per
diem rates prescribed by the MA Holder's established, generally
applicable travel policy.
(d) Any revision to the MA Holder's established, generally applicable
travel policy submitted to the cognizant audit agency during the
period of performance of this MAO shall be effective, without formal
modification to this MAO, upon delivery to the Contracting Officer
of notice describing such revised policy together with evidence of
submission thereof to the cognizant audit agency.
(2) Foreign Travel
Requests for foreign travel must be submitted at least six weeks in
advance and shall contain the following: (a) meeting(s) and place(s) to be
visited, with costs and dates; (b) name(s) and title(s) of Master
Agreement Holder's personnel to travel and their functions in the specific
Master Agreement Order project; (c) the Master Agreement Order purposes to
be served by the travel; (d) how travel of Master Agreement Order
personnel will benefit and contribute to accomplishing the specific Master
Agreement Order project, or will otherwise justify the expenditure of NIH
Master Agreement Order funds; (e) how such advantages justify the costs
for travel and absence from the project of more than one person if such
are suggested; and (f) what additional functions may be performed by the
travelers to accomplish other purposes of the specific Master Agreement
Order and thus further benefit the project.
4
ARTICLE B.4. ADVANCE UNDERSTANDINGS
- ------------------------------------
a. The estimated level of effort set forth below is for guidance to serve not
as a measure of the MAO Holder's obligation but as a further description
of the required tasks. It will represent the basis of direct labor agreed
to in the MAO negotiations for the period from September 30, 1995 through
September 29, 1997, and will be used by both the Government and the MAO
Holder to monitor progress toward achievement of the MAO objectives.
Total Estimated Total Estimated Total Estimated
Labor Category Year 1 Hours Year 2 Hours Number of Hours
-------------- ------------ ------------ ---------------
[Language Deleted due to Confidential Treatment Request.]
TOTAL
b. The total costs negotiated for this MAO only cover Vaccine Studies in
support of Section B of the Statement of Work. Section A of the Statement
of Work is also attached to this contract should it be necessary to
perform assays in support of Vaccine Studies for Section A. If it is
necessary to perform Section A assays, the costs for those assays shall be
offset against the cost negotiated for performance of Section B assays.
c. The MAO Holder agrees to abide by the terms of FAR 52.247-63, Preference
for U.S.-Flag Air Carriers. This provision states in part that, in
performing work under this MAO, the MAO Holder shall utilize U.S. flag air
carriers unless service by those carriers is not available. If U.S. flag
air carriers are not available the MAO Holder shall so certify in writing
and include that certification/justification in the request for advance
approval of foreign travel. (Cost/lower fares are not acceptable reasons
for proposing to utilize foreign air carriers.)
d. The MAO Holder agrees to submit an annual and a final inventory of
Government property as required by the DHHS "Contractor's Guide for
Control of Government Property." Inventories shall be submitted to the
Contract Property Administrator identified in Article G.4. of this
contract, with a copy to the Contracting Officer. Annual inventories shall
be submitted by October 31 each year.
e. The MAO Holder agrees to immediately notify the Contracting Officer in
writing if there is a projected overrun (in any amount) or unexpended
balance (greater than 10%) in the overall budget at the end of any funding
period, and the reasons for the variance (see also the requirements of the
Limitation of Funds clause in the MAO).
f. If the MAO contains any specific limitations/ceilings on particular costs,
these shall always prevail until modified in the MAO.
g. The MAO Holder agrees that samples/products received from/through the
Government for utilization under this contract shall be used only for
purposes required by this MAO.
h. Publication of Manuscripts or Abstracts
Because there is a possibility that the MAO Holder will be evaluating
proprietary compounds provided to the Government by a third party, it is
essential to include provisions that will protect the rights of the third
party suppliers as follows:
The MAO Holder agrees that manuscripts/abstracts based on
data/information generated under this MAO will not be submitted for
publication until written Project Officer clearance has been
received. MAO support shall be acknowledged in all such
publications. A "publication" is defined as an issue of printed
material offered for distribution or any communication or oral
presentation of information.
5
The Project Officer will review all manuscripts/documents in a
period of time not to exceed 30 calendar days from receipt, and will
either grant clearance for publication/disclosure, recommend changes
or, as applicable, refer the document to the Supplier of the
compound for their review. NIAID will use its best efforts to assist
and expedite the review process by the Supplier wherever possible.
i. Correspondence Procedures
To promote timely and effective administration, correspondence (except for
invoices/financial reports, technical progress reports/other deliverables)
submitted under this MAO shall be subject to the following procedures:
1. Technical correspondence shall be addressed to the Project Officer
with an information copy of the basic correspondence to the
Contracting Officer. (As used herein, technical correspondence
excludes correspondence which proposes deviations from or
modifications of MAO requirements, terms or conditions.)
2. Other correspondence shall be addressed to the Contracting Officer,
with an information copy of the basic correspondence to the Project
Officer.
3. Subject Line(s). All correspondence shall contain a subject line
commencing with the contract number as illustrated below:
SUBJECT: Contract No. NO1-AI-55277
Request for Approval of
6
SECTION C - DESCRIPTION/SPECIFICATIONS/WORK STATEMENT
- -----------------------------------------------------
ARTICLE C.1. STATEMENT OF WORK
- -------------------------------
a. Independently and not as an agent of the Government, the MAO Holder shall
furnish all the necessary services, qualified personnel, material,
equipment, and facilities, not otherwise provided by the Government as
needed to perform the Statement of Work, SECTION J, ATTACHMENT 1, dated
September 30, 1995, attached hereto and incorporated herein.
b. If there is any inconsistency between the MAO Holder's technical proposal
and the work described in this Article C.1., Paragraph a., the terms and
conditions of this Article C.1., Paragraph a, shall control.
ARTICLE C.2. REPORTING REQUIREMENTS
- ------------------------------------
a. Technical Reports
In addition to those reports required by the other terms of this MAO, the
MAO Holder shall prepare and submit the following reports in the manner
stated below and in accordance with ARTICLE F.1. DELIVERIES of this MAO:
(1) Quarterly Progress Report
By the fifteenth calendar day of the month following the end of each
quarter, the MAO Holder shall submit (5) copies of a quarterly
technical report. Four (4) copies shall be submitted to the Project
Officer and one (1) copy shall be submitted to the Contracting
Officer. This report shall include a description of the activities
during the reporting period, and the activities planned for the
ensuing reporting period. The first reporting period consists of the
first full three months of performance including any fractional part
of the initial month. Thereafter, the reporting period shall consist
of three full calendar months. A quarterly report shall not be
submitted when a final report is due.
(2) Final Report
The MAO Holder shall submit five (5) copies of the final report
documents. Four (4) copies shall be submitted to the Project Officer
and (1) copy shall be submitted to the Contracting Officer. This
report is to include a summation of the work performed and results
obtained for the entire MAO period of performance. This report shall
be in sufficient detail to describe comprehensively the results
achieved. The Final Report shall be submitted no later than the
completion date of this MAO.
SECTION D - PACKAGING, MARKING AND SHIPPING
- -------------------------------------------
All deliverables required under this MAO shall be packaged, marked and shipped
in accordance with Government specifications. The MAO Holder shall guarantee
that all required materials shall be delivered in immediate usable and
acceptable condition.
SECTION E - INSPECTION AND ACCEPTANCE
- -------------------------------------
a. For the purpose of this ARTICLE, the designated Project Officer is the
authorized representative of the Contracting Officer, who shall perform
inspection and acceptance of materials and services to be provided.
b. Inspection and acceptance will be performed at the Project Officer's
address listed in the clause entitled "Deliveries" in Section F.
Acceptance may be presumed unless otherwise indicated in writing by the
Contracting Officer or the duly authorized representative within 30 days
of receipt.
c. This MAO incorporates the following clause by reference, with the same
force and effect as if it were given in full text. Upon request, the
Contracting Officer will make its full text available.
FAR Clause 52.246-9, INSPECTION OF RESEARCH AND DEVELOPMENT - (SHORT
FORM)(APRIL 1984).
7
SECTION F - DELIVERIES OR PERFORMANCE
- -------------------------------------
ARTICLE F.1. DELIVERIES
- ------------------------
a. Satisfactory performance of this MAO shall be deemed to occur upon
delivery and acceptance by the Contracting Officer, or the duly authorized
representative, of the following items in accordance with the stated
delivery schedule:
The items specified below as described in (SECTION C, ARTICLE C.2. shall
be delivered f.o.b. destination as set forth in FAR 52.247-35, F.O.B.
DESTINATION, WITHIN CONSIGNEES PREMISES (APRIL 1984), and in accordance
with and by the date(s) specified below [and any specifications stated in
SECTION D, PACKAGING, MARKING AND SHIPPING, of this MAO]:
Item Description Quantity Delivery Schedule
---- ----------- -------- -----------------
1. Quarterly 5 01/15/96, 97,
04/15/96, 97,
07/15/96, 97,
10/15/96
2. Final 5 By completion date of this
contract
The above items shall be addressed and delivered to:
Addressee Deliverable Item No. Quantity
--------- -------------------- --------
Project Officer a.1. 4
PRB, DAIDS a.2. 4
Solar Bldg., Rm. 2A38
6003 Executive Blvd.
Bethesda, MD. 20892
Contracting Officer a.1. 1
CMB, DEA, NIAID, NIH a.2. 1
Solar Bldg., Rm. 3C07
6003 Executive Blvd.
Bethesda, MD. 20892
ARTICLE F.2. STOP WORK ORDER
- -----------------------------
This MAO incorporates the following clause by reference, with the same force and
effect as if it were given in full text. Upon request, the Contracting Officer
will make its full text available.
FEDERAL ACQUISITION REGULATION (48 CFR CHAPTER 1) CLAUSE:
52.212-13, STOP WORK ORDER (AUGUST 1989) with ALTERNATE I (APRIL 1984).
8
SECTION G - CONTRACT ADMINISTRATION DATA
- ----------------------------------------
ARTICLE G.1. PROJECT OFFICER
- -----------------------------
Pursuant to the Project Officer Article incorporated in the MA, the following
Project Officers will represent the Government for the purpose of this MAO:
MAO Project Officer: Nancy Miller, Ph.D.
ARTICLE G.2. KEY PERSONNEL
- ---------------------------
Pursuant to the Key Personnel clause incorporated in the MA, the following
individuals are considered to be essential to the work being performed
hereunder:
NAME TITLE
---- -----
Mark Cosentino, Ph.D. Principal Investigator
Hanna Weissberger, Ph.D. Co-Investigator
ARTICLE G.3. INVOICE SUBMISSION
- --------------------------------
a. INVOICE SUBMISSION - COST-REIMBURSEMENT MAOs
The Invoice/Financing Request Instructions for NIH Cost-Reimbursement Type
Contracts, NIH(RC)-1, set forth in your Master Agreement are incorporated
herein.
The invoice instructions and directions for the submission of
invoice/financing requests contained in the MA must be followed to meet
the requirements of a "proper" invoice, pursuant to FAR 32.9.
ARTICLE G.4. GOVERNMENT PROPERTY
- ---------------------------------
a. In addition to the requirements of the clause, GOVERNMENT PROPERTY,
incorporated in this Section I of this MAO, the MAO Holder shall comply
with the provisions of DHHS Publication, Contractor's Guide for Control of
Government Property, (1990), which is incorporated into this MAO by
reference. Among other issues, this publication provides a summary of the
MAO Holder's responsibilities regarding purchasing authorizations and
inventory and reporting requirements under the MAO. A copy of this
publication is available upon request to the Contract Property
Administrator at the following address:
Contracts Property Administrator
Research Contracts Property Administration, NIH
Building 13, Room 2E-65
9000 Rockville Pike
Bethesda, Maryland 20892
(301) 496-6466
ARTICLE G.5. GOVERNMENT SUPPLY SOURCES, is hereby incorporated into this MAO by
reference pursuant to the Master Agreement.
9
SECTION H - SPECIAL MASTER AGREEMENT ORDER REQUIREMENTS
- -------------------------------------------------------
The following Articles are incorporated into this MAO by reference pursuant to
the Master Agreement. [(Any MAO Articles which are not contained in the MA are
set forth below in full text)]:
a. ARTICLE H.1. HUMAN SUBJECTS
----------------------------
b. ARTICLE H.2. SALARY RATE LIMITATION LEGISLATION PROVISIONS
-----------------------------------------------------------
Paragraph b. of this ARTICLE is revised as follows:
b. Public Law No. Fiscal Year Salary Limitation
-------------- ----------- -----------------
103-333 1995 $125,000
10
PART II
- -------
SECTION I - MASTER AGREEMENT ORDER CLAUSES
- ------------------------------------------
The following Articles are incorporated into this MAO by reference pursuant to
the Master Agreement. [(Any MAO Articles which are not contained in the MA are
set forth below in full text)]:
a. ARTICLE I.1. GENERAL CLAUSES FOR A NEGOTIATED COST-REIMBURSEMENT MASTER
AGREEMENT ORDER
b. ARTICLE I.2. AUTHORIZED SUBSTITUTIONS OF CLAUSES]
For this Master Agreement Order (N01-AI-55277), FAR Clause 52.232-22,
LIMITATION OF FUNDS, (APRIL 1984) as contained in MA N01-AI-42602 is
deleted in its entirety and is replaced with FAR Clause 52.232-20,
LIMITATION OF COSTS.
c. ARTICLE I.3. ADDITIONAL MASTER AGREEMENT CLAUSES
d. ARTICLE I.4. ADDITIONAL FAR CLAUSES INCLUDED IN FULL TEXT
11
PART III
- --------
SECTION J - LIST OF ATTACHMENTS
- -------------------------------
Unless otherwise indicated below, the following documents are attached and
incorporated in this MAO:
1. Statement of Work, September 30, 1995; 8 pages.
2. Invoice/Financing Request Instructions for NIH Cost-Reimbursement Type
Contracts, NIH(RC)-1 (6/18/92), 4 pages. [This attachment is part of the
Master Agreement document and is incorporated into this MAO by reference.]
3. Safety and Health, PHSAR Clause 352.223-70, (4/84), 2 pages. [This
attachment is part of the Master Agreement document and is incorporated
into this MAO by reference.]
4. Procurement of Certain Equipment, NIH(RC)-7, (4/1/84), 1 page. [This
attachment is part of the Master Agreement document and is incorporated
into this MAO by reference.]
12
PART IV
- -------
SECTION K - REPRESENTATIONS AND CERTIFICATIONS
- ----------------------------------------------
The following documents are incorporated by reference in this MAO:
1. Representations and Certifications, dated September 15, 1995.
END of the SCHEDULE
(MASTER AGREEMENT ORDER)
13
MASTER AGREEMENT ORDER FOR CATEGORY G
STATEMENT OF WORK
ASSESSMENT OF HUMORAL IMMUNE RESPONSES
SECTION A: HUMORAL IMMUNE RESPONSES TO HIV VACCINES
Independently, and not as an agent of the Government, the Master Agreement Order
holder shall provide the necessary services, qualified personnel, material,
equipment, and facilities, not otherwise provided by the Government, as needed
to perform the tasks of the Statement of Work below:
The MAO Contractor shall perform assays to assess and characterize the humoral
immune responses of macaques that have been immunized with HIVenv or with a
combination of HIVenv and SIV non-env vaccines. Specifically the MAO Contractor
shall:
1. Conduct assays to determine the ability of sera or mucosal secretions from
monkeys immunized with HIV vaccines (or of sera from infected monkeys
after SHIV challenge) to neutralize infection of cell lines and/or primary
cells (PBMC) by the HIV strain used for the vaccine. Further characterize
the antibodies, including determining the neutralization titer against the
vaccine (homologous) HIV strain. If the appropriate SHIV virus stock is
available, determine the ability of the sera to neutralize the SHIV made
with the envelope gene of the homologous (vaccine) HIV.
2. For sera (or mucosal secretions) that were determined (above) to
neutralize the homologous strain of HIV, determine the neutralization
titer against infection of T cell lines and/or PBMC by heterologous
laboratory strains of HIV.
3. For sera (or mucosal secretions) that show the ability to neutralize
heterologous HIV isolates (above), determine the ability to neutralize
infection of T cell lines and/or primary PBMC and/or primary macrophages
by primary, "field" isolates of HIV grown only in primary cells.
4. Prior to conducting neutralization assays with the monkey sera from the
vaccine studies, grow appropriate HIV and SHIV virus stocks and
demonstrate that the viruses are able to be neutralized by sera from
HIV-infected people or SHIV-infected monkeys.
5. Receive, catalog, track, and maintain an inventory of the specimens that
arrive for evaluation:
a) Advise sample suppliers (Category B contractors) of the most
suitable manner for shipment of sera, whole blood, cells or other
specimens for evaluation and arrange for the transfer of these
specimens from primate laboratories to the Contractor. All shipments
must be coordinated so that activity/viability of specimens will not
be adversely affected.
b) When necessary, pick up or arrange for pick up of incoming specimen
shipments from a specified airport or other contact site in a timely
manner and assure maintenance of activity and/or viability of the
specimens by providing the appropriate temperature in transit from
the airport or other contact site to the Contractor's laboratory.
c) Receive and catalog specimens arriving for evaluation from the
primate laboratories. Maintain documentation on file for all
incoming specimens, including but not limited to:primate subject
identification number, trial site, protocol identification number,
specimen collection date and condition of sample upon arrival.
d) Store cataloged, aliquotted specimens under appropriate conditions
to retain maximum immunological activity.
e) Maintain specimen tracking and inventory system such that specimens
can be traced and located from receipt through processing and assay
analysis.
MAO Statement of Work ATTACHMENT 1
9/30/95
14
6. Maintain test result database and transfer data electronically:
a) Compile and maintain a computerized database of all neutralization
assays results, using a format compatible with the FOX-PRO data base
that NIAID plans to use to compile records and data from the vaccine
studies. Assay results are to be recorded with designations of study
protocol number, animal number, specimen collection date, and other
information requested by the Project Officer.
b) Transfer specified data electronically to the AIDS Vaccine
Evaluation Group (AVEG) Statistical and Coordinating Center (SCC)
and to the Project Officer at regular intervals as instructed by the
Project Officer (format to be agreed upon between NIAID and the
Contractor).
c) Ensure protection against the loss of data by the duplication of
data base files and programs for storage; provide for the security,
safety, and accuracy of data on the specimen inventory and the test
results database.
7. Provide facilities and resources
a) Provide facilities and equipment for the work to be conducted,
including a biosafety level 2 or 3 laboratory for conducting work
with live HIV and SHIV as well as samples from infected monkeys.
b) Provide, maintain, and operate facilities for controlled storage of
sera, virus stocks, cell stocks, and other samples and reagents,
including storage at -10 to -20 degrees C, at -70 to -90 degrees C,
and in liquid nitrogen conditions, with appropriate monitoring of
storage conditions to guarantee continuous proper storage. The
reliability of supply systems, electrical power, and backup support
systems shall be ensured by the contractor.
c) Provide protective garments, equipment and sufficient monitoring to
assure safe handling of potentially hazardous materials, including
radioactive materials. Specifically, the contractor shall comply
with all applicable health and safety regulations while conducting
the work set forth herein.
d) Conduct work under this contract in accordance with all applicable
Federal, state, and local laws, codes, ordinances and regulations,
and with the following basic references and other related
modifications by the Public Health Service:
(1) Biosafety in Microbiological and Biomedical Laboratories, U.S.
Department of Health and Human Services, Centers for Disease
Control and National Institutes of Health, HHS Pub. No. (NIH)
93-8395 published by the U.S. Government Printing Office,
third edition, May 1993, stock number 17-040-00523-7.
(2) Recommendations for Prevention of HIV Transmission in Health
Care Settings, Morbidity and Mortality Weekly Report, Vol. 36,
No. 2-S.
(3) Agent Summary Statement for Human Immunodeficiency Virus and
Report on Laboratory-Acquired Infection with Human
Immunodeficiency Virus, Morbidity and Mortality Weekly Report,
Vol. 37, No.S-4, pp.1-22.
(4) "Guidelines to Prevent Simian Immunodeficiency Virus Infection
in Laboratory Workers and Animal Handlers", Morbidity and
Mortality Weekly Report, Vol. 37, No. 45, pp. 693-704.
8. Designate a project coordinator to manage the day-to-day conduct of the
study, to interact with the Category B MAO laboratory or laboratories
providing non-human primate samples from the vaccine study or studies, and
to provide information on the status of the assay results to the Project
Officer.
9. Report data and results to NIAID or to a designated NIAID contractor.
Printouts of data and verbal reports of the status of the study are to be
provided on an ongoing basis during the course of the study at the request
of the Project Officer, in addition to the required periodic (quarterly
and final) written reports describing the progress of the study, and in
addition to the periodic electronic transfer of data described in item (6)
above.
MAO Statement of Work ATTACHMENT 1
9/30/95
15
SUMMARY OF VACCINE STUDIES FOR WHICH ASSAYS MAY BE REQUIRED
-----------------------------------------------------------
(SECTION A: HUMORAL IMMUNE RESPONSES TO HIV VACCINES)
VACCINE STUDY 7
- ---------------
Title: Evaluation of HIV DNA Vaccines in Monkeys Using the SHIV Model
Description: To compare routes of administration, rhesus monkeys will be
immunized by either intramuscular injection or by "gene gun" inoculation with
DNA constructs which express HIV-1 env proteins, together with DNA constructs
expressing SIV proteins. The animals will be challenged with SHIV to determine
if a protective response is induced and, if so, how soon it is induced and how
long it persists.
Number of monkeys: 24 (6 groups of 3; 3 groups of 2)
Length of study: 30 months
Number of inoculations per animal: 4 immunizations plus 1 virus challenge
VACCINE STUDY 8
- ---------------
Title: Evaluation of the Contribution of SIV Regulatory Genes to the Efficacy of
an HIV/SIV DNA Vaccine.
Description: Rhesus monkeys will be immunized intramuscularly with DNA
constructs encoding HIV envelope, DNA constructs expressing SIV proteins, and
DNA constructs expressing SIV regulatory gene products to determine if
theregulatory proteins elicit immune responses (particularly CTL responses) that
enhance the ability of the monkeys to resist infection with SHIV.
Number of monkeys: 20 (5 groups of 4)
Length of study: 24 months
Number of inoculations per animal: 4 immunizations plus 1 virus challenge
VACCINE STUDY 13
- ----------------
Title: Immunogenicity of a Soluble Oligomeric Form of the HIV-1 Envelope Protein
Description: Rhesus monkeys will be immunized with a purified oligomeric form of
the HIV-1 envelope protein to determine if monkeys will generate antibodies
(presumably to conformational epitopes of the oligomeric envelope) that are able
to neutralize genetically divergent strains of HIV-1. Vaccines based on
monomeric forms of the HIV-1 envelope generate predominantly type- specific
antibodies that neutralize a limited range of HIV-1 isolates, but preliminary
studies with the oligomeric form of the envelope indicate that antibodies to it
may be more broadly reactive. Animals will be challenged with SHIV after
immunization to determine the ability of the immune response to the oligomeric
envelope to protect monkeys from infection.
Number of monkeys: 18 (6 groups of 3)
Length of study: 24 months
Number of inoculations per animal: 5 immunizations plus 1 virus challenge
MAO Statement of Work ATTACHMENT 1
9/30/95
16
VACCINE STUDY 16
- ----------------
Title: Evaluation of a Recombinant Semliki Forest Virus/HIV Vaccine
Description: Rhesus monkeys will be immunized with an avirulent recombinant
Semliki Forest virus expressing HIV-1 envelope and SIV gag proteins. The monkeys
will be infected with the virus, which has a broad tissue tropism, by either
intramuscular, intravenous, subcutaneous, or mucosal site administration.
Animals will be challenged with SHIV to determine the efficacy of this vaccine
in protecting from virus infection.
Number of monkeys: 10 (5 groups of 2)
Length of study: 18 months
Number of inoculations per animal: 8 immunizations plus 1 virus challenge
MAO Statement of Work ATTACHMENT 1
9/30/95
17
SECTION B: HUMORAL IMMUNE RESPONSES TO SIV VACCINES
- ----------------------------------------------------
Independently, and not as an agent of the Government, the Master Agreement Order
holder shall provide the necessary services, qualified personnel, material,
equipment, and facilities, not otherwise provided by the Government, as needed
to perform the tasks of the Statement of Work below.
The MAO Contractor shall perform assays to assess the humoral immune responses
of macaques that have been immunized with an SIV vaccine. Specifically the MAO
Contractor shall:
1. Determine the capability of sera or mucosal secretions from monkeys
immunized with SIV vaccines to neutralize infection of cell lines and/or
primary cells (PBMC) by the SIV strain used for the vaccine. Further
characterize these antibodies, including determining the neutralization
titer against the vaccine (homologous) SIV strain.
2. For sera (or mucosal secretions) that were determined (above) to
neutralize the homologous strain of SIV, determine the neutralization
titer against infection of T cell lines and/or PBMC by a heterologous
strain or strains of SIV.
3. Prior to conducting neutralization assays with the monkey sera (or mucosla
secretions) from the vaccine studies, grow appropriate SIV virus stocks
and demonstrate that the viruses are able to be neutralized by sera from
SIV-infected monkeys.
4. Receive, catalog, track, and maintain an inventory of the specimens that
arrive for evaluation:
a) Advise sample suppliers (Category B contractors) of the most
suitable manner for shipment of sera, whole blood, cells or other
specimens for evaluation and arrange for the transfer of these
specimens from primate laboratories to the Contractor. All shipments
must be coordinated so that activity/viability of specimens will not
be adversely affected.
b) When necessary, pick up or arrange for pick up of incoming specimen
shipments from a specified airport or other contact site in a timely
manner and assure maintenance of activity and/or viability of the
specimens by providing the appropriate temperature in transit from
the airport or other contact site to the Contractor's laboratory.
c) Receive and catalog specimens arriving for evaluation from the
primate laboratories. Maintain documentation on file for all
incoming specimens, including but not limited to: primate subject
identification number, trial site, protocol identification number,
specimen collection date and condition of sample upon arrival.
d) Store cataloged, aliquotted specimens under appropriate conditions
to retain maximum immunological activity.
e) Maintain specimen tracking and inventory system such that specimens
can be traced and located from receipt through processing and assay
analysis.
5. Maintain test result database and transfer data electronically:
a) Compile and maintain a computerized database of all neutralization
assays results, using a format compatible with the FOX-PRO data base
that NIAID plans to use to compile records and data from the vaccine
studies. Assay results are to be recorded with designations of study
protocol number, animal number, specimen collection date, and other
information requested by the Project Officer.
b) Transfer specified data electronically to the AIDS Vaccine
Evaluation Group (AVEG) Statistical and Coordinating Center (SCC)
and to the Project Officer at regular intervals as instructed by the
Project Officer (format to be agreed upon between NIAID and the
Contractor).
MAO Statement of Work ATTACHMENT 1
9/30/95
18
c) Ensure protection against the loss of data by the duplication of
data base files and programs for storage; provide for the security
and safety of data on the specimen inventory and the test results
database.
6. Provide facilities and resources:
a) Provide facilities and equipment for the work to be conducted,
including a biosafety level 2 or 3 laboratory for conducting work
with live HIV and SHIV as well as samples from infected monkeys.
b) Provide, maintain, and operate facilities for controlled storage of
sera, virus stocks, cell stocks, and other samples and reagents,
including storage at -10 to -20 degrees C, at -70 to -90 degrees C,
and in liquid nitrogen conditions, with appropriate monitoring of
storage conditions to guarantee continuous proper storage. The
reliability of supply systems, electrical power, and backup support
systems shall be ensured by the contractor.
c) Provide protective garments, equipment and sufficient monitoring to
assure safe handling of potentially hazardous materials, including
radioactive materials. Specifically, the contractor shall comply
with all applicable health and safety regulations while conducting
the work set forth herein.
d) The Contractor shall conduct work under this contract in accordance
with all applicable Federal, state, and local laws, codes,
ordinances and regulations, and with the following basic references
and other related modifications by the Public Health Service:
(1) Biosafety in Microbiological and Biomedical Laboratories, U.S.
Department of Health and Human Services, Centers for Disease
Control and National Institutes of Health, HHS Pub. No. (NIH)
93-8395 published by the U.S. Government Printing Office,
third edition, May 1993, stock number 17-040-00523-7.
(2) Recommendations for Prevention of HIV Transmission in Health
Care Settings, Morbidity and Mortality Weekly Report, Vol. 36,
No. 2-S.
(3) Agent Summary Statement for Human Immunodeficiency Virus and
Report on Laboratory-Acquired Infection with Human
Immunodeficiency Virus, Morbidity and Mortality Weekly Report,
Vol. 37, No.S-4, pp.1-22.
(4) "Guidelines to Prevent Simian Immunodeficiency Virus Infection
in Laboratory Workers and Animal Handlers," Morbidity and
Mortality Weekly Report, Vol. 37, No. 45, pp. 693-704.
7. Designate a project coordinator to manage the day-to-day conduct of the
study, to interact with the Category B MAO laboratory or laboratories
providing non-human primate samples from the vaccine study or studies, and
to provide information on the status of the assay results to the Project
Officer.
8. Report data and results to NIAID or to a designated NIAID contractor.
Printouts of data and verbal reports of the status of the study are to be
provided on an ongoing basis during the course of the study at the request
of the Project Officer, in addition to the required periodic (quarterly
and final) written reports describing the progress of the study, and in
addition to the periodic electronic transfer of data described in item (6)
above.
MAO Statement of Work ATTACHMENT 1
9/30/95
19
SUMMARY OF VACCINE STUDIES FOR WHICH ASSAYS MAY BE REQUIRED:
- ------------------------------------------------------------
(SECTION B: HUMORAL IMMUNE RESPONSES TO SIV VACCINES)
VACCINE STUDY 1
- ---------------
Title: Comparison of Different Routes of Immunization with ALVAC/SIV
Description: Rhesus monkeys will be immunized by three different routes with
recombinant avipox (ALVAC) expressing SIV genes. Intramuscular and two mucosal
routes are planned. Animals will be challenged with SIV administered
intravenously or at a mucosal surface to determine if there is a difference in
efficacy of the vaccine when administered by different routes and to determine
if mucosal routes of immunization are more effective at blocking infection at
mucosal surfaces than intramuscular immunizations. Monkeys will be followed
after challenge to determine whether infection has occurred and whether
immunization affects disease progression in any infected animals.
Number of monkeys: 48 (8 groups of 6)
Length of study: 32 months
Number of inoculations per animal: 5 immunizations plus 1 virus challenge
VACCINE STUDY 2
- ---------------
Title: Comparison of Different Routes of Immunization with NYVAC/SIV
Description: Rhesus monkeys will be immunized by three different routes with
recombinant attenuated vaccinia virus (NYVAC) expressing SIV proteins.
Intramuscular and two different mucosal routes are planned. Animals will be
challenged with SIV administered intravenously or at a mucosal surface to
determine if there is a difference in efficacy of the vaccine when administered
by different routes and to determine if mucosal routes of immunization are more
effective at blocking infection at mucosal surfaces than intramuscular
immunizations. Monkeys will be followed after challenge to determine whether
infection has occurred and whether immunization affects disease progression in
infected animals.
Number of monkeys: 48 (8 groups of 6)
Length of study: 32 months
Number of inoculations per animal: 5 immunizations plus 1 virus challenge
VACCINE STUDY 5
- ---------------
Title: Evaluation of Immunization with Recombinant Vaccinia/SIV Vaccine Followed
by Immunization with SIV Proteins
Description: Rhesus monkeys will be immunized with recombinant vaccinia
expressing SIV genes by intradermal, subcutaneous, intramuscular or oral routes,
followed by immunizations with SIV proteins. Animals will be challenged WITH SIV
to determine whether the efficacy of the vaccine is affected by the route of
administration.
Number of monkeys: 24 (4 groups of 6)
Length of study: 24 months
Number of inoculations per animal: 6 immunizations plus 1 virus challenge
MAO Statement of Work ATTACHMENT 1
9/30/95
20
VACCINE STUDY 14
- ----------------
Title: Evaluation of recombinant BCG/SIV vaccines
Description: Rhesus monkeys will be immunized orally with a live recombinant BCG
expressing SIV proteins, followed by immunization with a mixture of SIV
peptides. The monkeys will be challenged with SIV administered intravenously or
at a mucosal site different from the site of immunization to determine if the
live recombinant BCG vaccine administered by a mucosal route confers protection
from infection.
Number of monkeys: 16 (4 groups of 4)
Length of study: 30 months
Number of inoculations per animal: 4 immunizations plus 1 virus challenge
VACCINE STUDY 15
- ----------------
Title: Evaluation of a Recombinant Polio/SIV Vaccine
Description: Pig-tailed macaques will be immunized at two mucosal sites with
live recombinant poliovirus replicons expressing SIV proteins. This will be
followed by immunization with purified SIV proteins. The animals will be
challenged with SIV either intravenously or at a mucosal site used for
immunization or at a mucosal site different from the one used for immunization.
Number of monkeys: 30 (for immunizations: 6 groups of 4; for titration of
challenge virus stock: 6)
Length of study: 24 months
Number of inoculations per animal: 3 immunizations plus 1 virus challenge
MAO Statement of Work ATTACHMENT 1
9/30/95
21
EXHIBIT 10.5
<TABLE>
<S> <C>
AWARD/CONTRACT 1. THIS CONTRACT IS A RATED ORDER RATING PAGE OF PAGE
UNDER DPAS (15 CFR 350) 1 32
2. CONTRACT (Proc. Inst. Indent.) NO. 3. EFFECTIVE DATE 4. REQUISITION PURCHASE REQUEST/PROJECT NO.
N01-CP-33060 03/01/93
5. ISSUED BY CODE 261933060 6. ADMINISTERED BY (IF OTHER THAN ITEM 5) CODE
National Cancer Institute ENVIRONMENTAL EPIDEMIOLOGY
Research Contracts Branch, CECS EPIDEMIOLOGY AND BIOSTATISTICS PROGRAM
Executive Plaza South, Room 620 DIVISION OF CANCER ETIOLOGY
9000 Rockville Pike (RFP No. NCI-CP-21000-21)
Bethesda, Maryland 20892
7. NAME AND ADDRESS OF CONTRACTOR
(No., street, city, county,
State and ZIP Code) 8. Delivery
BIOTECH RESEARCH LABORATORIES, INC. FOB ORIGIN FOB DESTINATION
3 TAFT COURT 9. DISCOUNT FOR PROMPT PAYMENT
T HIGH RIS, MARYLAND 20850 10. SUBMIT NOTICES ITEM
(4 copies unless other- SEE SECTION G
PLACE OF PERFORMANCE: ROCKVILLE, MARYLAND wise specified) TO ARTICLE G.3.
CODE FACILITY CODE THE ADDRESS SHOWN IN:
11. SHIP TO/MARK FOR CODE 12. PAYMENT WILL BE MADE BY CODE
SEE SECTION C, ARTICLE C.2. SEE SECTION G, ARTICLE G.3.
13. AUTHORITY FOR USING OTHER THAN FULL AND OPEN COMPETITION 14. ACCOUNTING AND APPROPRIATION DATA
CAN1 38422985 TIN 1043152484A1
10 U.S.C. 2304(c) ( ) 41 U.S.C. 253(c) ( ) CAN2 DOC. NO. N1CP33060A
OC CODE 25.3T LOC
15A. ITEM NO. 15B. SUPPLIES/SERVICES 15C. QUANTITY 15D. UNIT 15E. UNIT PRICE 15F. AMOUNT
TITLE: LABORATORY SUPPORT FOR PROCESSING AND STORAGE OF BIOLO-
GICAL SPECIMENS FROM PERSONS AT HIGH RISK FROM CANCER
CONTRACT PERIOD: 03/01/93 through 02/28/94.
CONTRACT TYPE: Cost-Plus Fixed Fee, TERM 558,106
CURRENT OBLIGATION:
$
15G. TOTAL AMOUNT OF CONTRACT $ 898,011
16. TABLE OF CONTENTS
(() SEC. DESCRIPTION PAGE(S) (() SEC. DESCRIPTION PAGE(S)
PART I - THE SCHEDULE PART II - CONTRACT CLAUSES
( A SOLICITATION/CONTRACT FORM 1 ( I CONTRACT CLAUSES 25
( B SUPPLIES OR SERVICES AND PRICES/COSTS 4 PART III - LIST OF DOCUMENTS, EXHIBITS AND OTHER ATTACH.
( C DESCRIPTION/SPECS./WORK STATEMENT 7 ( J LIST OF ATTACHMENTS 32
( D PACKAGING AND MARKING 14 ( PART IV - REPRESENTATIONS AND INSTRUCTIONS
( E INSPECTION AND ACCEPTANCE 15 K REPRESENTATIONS, CERTIFICATIONS AND
( F DELIVERIES OR PERFORMANCE 16 OTHER STATEMENTS OF OFFERORS 32
( G CONTRACT ADMINISTRATION DATA 17 L INSTRS., CONDS., AND NOTICES TO OFFERORS
( H SPECIAL CONTRACT REQUIREMENTS 22 M EVALUATION FACTORS FOR AWARD
CONTRACTING OFFICER WILL COMPLETE ITEM 17 OR 18 AS APPLICABLE
17. CONTRACTOR'S NEGOTIATED AGREEMENT (Contractor is 18. AWARD (Contractor is not required to sign this document.)
required to sign this document and return 1 copies to issuing Your offer on Solicitation Number ,
office.) Contractor agrees to furnish and deliver all items or including the additions or changes made by you which
perform all the services set forth or otherwise identified above additions or changes are set forth in full above, is hereby
and on any continuation sheets for the consideration stated additions or items listed above and on any continuation
herein. The rights and obligations of the parties to this sheets. This award consumates the contract which consists of
contract shall be subject to and governed by the following the following documents: (a) the Government's solicitation
documents: (a) this award/contract, (b) the solicitation, if and your offer, and (b) this award/contract. No further
any, and (c) such provisions, representations, certifications, contractual document is necessary.
and specifications, as are attached or incorporated by reference
herein. (Attachments are listed herein.)
19A. NAME AND TITLE OF SIGNER (Type or Print) 20A. NAME OF CONTRACTING OFFICER
/S/ MARK MANAK NANCY E COLEMAN
VICE PRESIDENT
19B. NAME OF CONTRACTOR 19C. DATE SIGNED 20B. UNITED STATES OF AMERICA 20C. DATE SIGNED
/S/ Mark Manuk BY /S/ SIGNATURE UNREADABLE 2/22/93
(Signature of person authorized to sign) 2/22/93 (Signature of Contracting Officer)
NSW 7540-01-152-8069 26-107 STANDARD FORM 26 (REV. 4-85)
PREVIOUS EDITION UNUSABLE Prescribed by GSA
FAR (48 CFR) 53.214(a)
* GPO: 1985 0 - 461-275 (418)
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Biotech Research Laboratories, Inc.
N01-CP-33060
DETAILED TABLE OF CONTRACT CONTENTS
<TABLE>
<CAPTION>
PART I - THE SCHEDULE
<S> <C>
SECTION A - SOLICITATION/CONTRACT FORM...........................................................1
SECTION B - SUPPLIES OR SERVICES AND PRICES/COSTS................................................4
ARTICLE B.1. BRIEF DESCRIPTION OF SUPPLIES OR SERVICES................................4
ARTICLE B.2. ESTIMATED COST AND FIXED FEE.............................................4
ARTICLE B.3. PROVISIONS APPLICABLE TO DIRECT COSTS....................................5
ARTICLE B.4. ADVANCE UNDERSTANDINGS...................................................7
SECTION C - DESCRIPTION/SPECIFICATIONS/WORKSTATEMENT.............................................7
ARTICLE C.1. STATEMENT OF WORK........................................................7
ARTICLE C.2. REPORTING REQUIREMENTS...................................................13
SECTION D - PACKAGING, MARKING AND SHIPPING...................................................14
ARTICLE D.1. PACKAGING................................................................14
ARTICLE D.2. MARKING..................................................................15
ARTICLE D.3. SHIPPING.................................................................15
SECTION E - INSPECTION AND ACCEPTANCE...........................................................15
ARTICLE E.1. INSPECTION AND ACCEPTANCE................................................15
SECTION F - DELIVERIES OR PERFORMANCE............................................................16
ARTICLE F.1. PERIOD OF PERFORMANCE....................................................16
ARTICLE F.2. LEVEL OF EFFORT..........................................................16
ARTICLE F.3. STOP WORK ORDER..........................................................17
SECTION G - CONTRACT ADMINISTRATION DATA.........................................................17
ARTICLE G.1. PROJECT OFFICER..........................................................17
ARTICLE G.2. KEY PERSONNEL............................................................18
ARTICLE G.3. INVOICE SUBMISSION.......................................................18
ARTICLE G.4. CONTRACT FINICAL REPORT..................................................19
ARTICLE G.5. INDIRECT COST RATES......................................................20
ARTICLE G.6. GOVERNMENT PROPERTY......................................................20
ARTICLE G.7. GOVERNMENT SUPPLY SOURCES................................................22
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N01-CP-33060
SECTION H - SPECIAL CONTRACT REQUIREMENTS........................................................22
ARTICLE H.l. REIMBURSEMENT OF COSTS FOR INDEPENDENT RESEARCH AND
DEVELOPMENT PROJECTS.....................................................22
ARTICLE H.2. HUMAN SUBJECTS...........................................................23
ARTICLE H.3. HUMAN MATERIALS..........................................................23
ARTICLE H.4. PRIVACY ACT..............................................................23
ARTICLE H.5. OPTION PROVISION.........................................................23
ARTICLE H.6. SALARY RATE LIMITATION IN FISCAL YEAR 1993...............................24
ARTICLE H.7. CONFIDENTIALITY OF INFORMATION...........................................25
PART II
SECTION I - CONTRACT CLAUSES.....................................................................25
ARTICLE I.1. GENERAL CLAUSES FOR A COST-PLUS-A-FIXED-FEE CONTRACT.....................25
ARTICLE I.2. AUTHORIZED SUBSTITUTIONS OF CLAUSES......................................29
ARTICLE I.3. ADDITIONAL CONTRACT CLAUSES..............................................29
ARTICLE I.4. ADDITIONAL FAR CONTRACT CLAUSES INCLUDED IN FULL TEXT....................30
PART III
SECTION J - LIST OF ATTACHMENTS..................................................................32
Invoice/Financing Request Instructions for NIH Cost-Reimbursement
Type Contracts......................................................................32
Financial Report of Individual Project/Contract, NIH 2706...............................32
Instructions for Completing form NIH 2706...............................................32
Privacy Act System of Records...........................................................32
Safety and Health.......................................................................32
Procurement of Certain Equipment........................................................32
Schedule II-A, Government Furnished Property............................................32
PART IV
SECTION K - REPRESENTATIONS AND CERTIFICATIONS...................................................32
Representations and Certifications......................................................32
</TABLE>
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Biotech Research Laboratories, Inc.
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SECTION B - SUPPLIES OR SERVICES AND PRICES/COSTS
ARTICLE B.1. BRIEF DESCRIPTION OF SUPPLIES OR SERVICES
Numerous scientific advancements have been accelerated by having available
well-characterized biologic specimens collected from previous research efforts
and then preserved for long-term storage. The Epidemiology and Biostatistics
Program (EBP), Division of Cancer Etiology (DCE), National Cancer Institute
(NCI), has had a long history of collaboration with laboratory investigators
involving the collection, testing and storage of biologic samples on patients
with malignancies or at high risk of developing malignancies, as well as
appropriate controls. The Contractor shall maintain a repository of biologic
specimens for the Epidemiology and Biostatistics Program (EBP). This shall
include frozen serum, plasma, urine, tumor tissue, tumor tissue extracts, whole
red blood cells, separated and frozen white blood cells, or fractions of white
blood cell populations, bone marrow cells, body fluids, lymphoblastoid cell
lines, DNA, stool specimens or smears on slides and other types of specimens as
specified by the Project Officer. These materials shall be maintained at optimum
temperatures for long-term storage, including liquid nitrogen, if appropriate.
ARTICLE B.2. ESTIMATED COST AND FIXED FEE
a. The estimated cost of Year 1 of this contract is $842,429.
b. If the Government exercises its options pursuant to ARTICLE H.5. of this
contract, the estimated cost of this contract will be increased by
$881,626 (Option 1, Year 2); $922,633 (Option 2, Year 3); $965,679
(Option 3, Year 4).
c. The fixed fee for Year 1 of this contract is $55,582. The fixed fee
shall be paid in direct ratio to the level of effort expended; that is,
the percent of fee paid shall be equal to the percent of total effort
expended. Payment shall be subject to the withholding provisions of the
clauses ALLOWABLE COST AND PAYMENT and FIXED FEE referenced in the
General Clause Listing in Part II, ARTICLE I.1. of this contract.
Payment of fixed fee shall not be made in less than monthly increments.
d. If the Government exercises its options pursuant to ARTICLE H.5. of this
contract, the fixed fee of this contract will be increased by $58,207
(Option 1, Year 2); $60,955 (Option 2, Year 3); $63,841 (Option 3, Year
4).
e. The Government's obligation, represented by the sum of the estimated
cost plus the fixed fee for Year 1 is $898,011.
f. If the Government exercises its options pursuant to ARTICLE H.5. of this
contract, the Government's obligation represented by the sum of the
estimated cost plus the fixed fee will be $939,833 (Option 1, Year 2);
$983,588 (Option 2, Year 3); $1,029,520 (Option 3, Year 4).
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N01-CP-33060
g. Total funds currently available for payment of Year 1 and allotted to
this contract are $558,106 of which $523,562 represents the estimated
costs and of which $34,544 represents the fixed fee. For further
provisions on funding, see the LIMITATION OF FUNDS clause referenced in
Part II, ARTICLE I.2. Authorized Substitutions of Clauses.
h. It is estimated that the amount currently allotted will cover
performance of the contract through October 15, 1993.
i. The Contracting Officer may allot additional funds to the contract
without the concurrence of the Contractor.
ARTICLE B.3. PROVISIONS APPLICABLE TO DIRECT COSTS
a. Items Unallowable Unless Otherwise Provided
Notwithstanding the clauses, ALLOWABLE COST AND PAYMENT and FIXED FEE,
incorporated in this contract, unless authorized in writing by the
Contracting Officer, the costs of the following items or activities shall
be unallowable as direct costs:
1) Acquisition, by purchase or lease, of any interest in real property;
2) Special rearrangement or alteration of facilities;
3) Purchase or lease of any item of general purpose office furniture or
office equipment regardless of dollar value. (General purpose
equipment is defined as any items of personal property which are
usable for purposes other than research, such as office equipment and
furnishings, pocket calculators, etc.);
4) Travel to attend general scientific meetings;
5) Foreign travel - [See paragraph b.2), below.];
6) Patient care costs;
7) Accountable Government property (defined as both real and personal
property with an acquisition cost of $1,000 or more and a life
expectancy of more than two years) and "sensitive items" (defined and
listed in the Contractor's Guide for Control of Government Property,
1990, regardless of acquisition value.
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Biotech Research Laboratories, Inc.
N01-CP-33060
b. Travel Costs
1) Domestic Travel
a) No expenditures for domestic travel (transportation, lodging,
subsistence, and incidental expenses) are to be incurred in
direct performance of this contract without the prior written
approval of the Contracting Officer. In the event travel costs
may be required as a direct cost to this contract, these costs
must be approved in writing, in advance, by the Contracting
Officer, and must be certified that the cost will not be
included in the indirect costs.
b) This contract is subject to the provisions of Section 24 of
Public Law 99-234 which amends the Office of Federal
Procurement Policy Act to provide that contractor costs for
travel, including lodging, other subsistence, and incidental
expenses, shall be allowable only to the extent that they do
not exceed the amount allowed for Federal employees.
2) Foreign Travel
Requests for foreign travel must be submitted at least six
weeks in advance and shall contain the following: (a)
meeting(s) and place(s) to be visited, with costs and dates;
(b) name(s) and title(s) of contractor personnel to travel and
their functions in the contract project; (c) contract purposes
to be served by the travel; (d) how travel of contractor
personnel will benefit and contribute to accomplishing the
contract project, or will otherwise justify the expenditure of
NIH contract funds; (e) how such advantages justify the costs
for travel and absence from the project of more than one person
if such are suggested; and (f) what additional functions may be
performed by the travelers to accomplish other purposes of the
contract and thus further benefit the project.
3) Government Discount Air Travel Rates
a) To the maximum extent practicable consistent with travel
requirements, the Contractor agrees to use the reduced air
transportation rates and services provided through available
Government discount air fares. These fares are available only
for bona-fide employees' travel that is otherwise reimbursable
as a direct cost pursuant to this contract. The objective is
to achieve the lowest overall cost to the Contractor and,
thus, to the Government. The Contractor shall submit written
requests to the Contracting Officer for authorization to use
these rates. The request shall provide the full name of the
traveler(s), the number of the contract for which the travel
is being performed, the contract objective that is to be
fulfilled, and the dates during which the
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travel is to occur. Contracting Officer approval, if given,
will be on official agency letterhead so that the letter can
be presented to the airline as confirmation of the
authorization.
b) Nothing in this clause shall authorize transportation or
services which are not otherwise reimbursable under this
contract. Nothing in this clause requires air carriers to make
available to the Contractor any Government discount airfares.
ARTICLE B.4. ADVANCE UNDERSTANDINGS
Other provisions of this contract notwithstanding, approval of the following
items within the limits set forth is hereby granted without further
authorization from the Contracting Officer.
a. Indirect Rates
[Language Deleted due to Confidential Treatment Request.]
SECTION C - DESCRIPTION/SPECIFICATIONS/WORKSTATEMENT
ARTICLE C.1. STATEMENT OF WORK
a. Independently and not as an agent of the Government, the Contractor shall
be required to furnish all the necessary services, qualified personnel,
material, equipment, and facilities, not otherwise provided by the
Government, as needed to perform the Statement of Work below:
1) The Contractor shall provide the services described below in accordance
with Contractor-developed, Government-approved protocols:
a) separation and viable cryopreservation of blood mononuclear
lymphocytes;
b) separation, aliquotting and storage of serum, plasma and/or urine
as needed;
c) cryopreservation of bone marrow samples;
d) storage of tumor extracts;
e) cryopreservation of whole tumor tissue;
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Biotech Research Laboratories, Inc.
N01-CP-33060
f) cryopreservation of intact red blood cells;
g) viable cryopreservation of previously established lymphoblastoid
cell lines;
h) storage of DNA and other biological materials as specified by the
Project Officer;
i) extraction of DNA from biologic materials;
j) specimen processing as required by NCI to preserve special biologic
materials;
k) logging in, labeling and tracking of each vial of each sample
employing an NCI developed computerized specimen tracking system,
including all laboratory safeguards to insure the fidelity and
purity of each sample; and
l) maintenance of the previously-established repository currently
containing 300,000 biological specimens and allowance for an
estimated increase of up to 25% of freezer storage space.
These services shall be available routinely between the hours of 9:00
a.m. and 2:00 p.m., Monday through Friday, and at any other time
(including nights, weekends and holidays) by special arrangement,
usually with advance notice. A laboratory staff member shall be
available during non-business hours for emergency specimen processing
(as might occur when a patient dies). A biohazard area adequate for
processing specimens with Acquired Immunodeficiency Syndrome (AIDS)
shall be available for the processing of all biologic samples.
2) The Contractor shall supply messenger service to pick up specimens or
inter-laboratory communication from medical care facilities in the
Washington, D.C. area or at area transportation centers (i.e., Dulles,
D.C. National and Baltimore/Washington Airports). This messenger
service shall be supplied by the Contractor and not subcontracted to
commercial carriers. All specimens submitted to the laboratory for
processing shall be scheduled in advance, except in emergencies as
detailed below. Specimens shall be delivered to the Contractor's
laboratory within four hours of notification for pick-up. Specimens
shall be protected from temperature extremes by use of insulated
containers or other acceptable means as needed. A portable liquid
nitrogen container for transport of frozen cells or tumor specimens
shall also be required. Only specimens provided by or approved by the
Project Officer shall be accepted for processing and storage by the
Contractor.
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Biotech Research Laboratories, Inc.
N01-CP-33060
3) The Contractor shall be responsible for recording and monitoring the
location of all specimens that are being sent or received through use of
a log book of all requests and specimens. The Contractor shall be
responsible for monitoring, shipping and receipt of specimens to
minimize delay or loss. If a specimen is not received within four hours
of expected delivery, the Contractor shall inform the Project Officer by
telephone. An after-hours telephone number of the Contractor's staff
member shall be available to assist in this follow-up and the staff
member shall be available at that number. The Contractor shall be
responsible for tracing immediately the location of delinquent specimens
not received when expected. All specimens that are of questionable
research value shall be noted and the Project Officer immediately
notified by telephone, as well as in writing, providing identifying
names or numbers, quantity, place of origin, etc., so that repeat
specimens can be obtained. The Contractor shall designate a specific
individual to be responsible for after-hours specimen processing and
name an alternate to act when the primary person is not available.
4) The Contractor shall maintain a repository of biologic specimens for the
Epidemiology and Biostatistics Program (EBP). This shall include frozen
serum, plasma, urine, tumor tissue, tumor tissue extracts, whole red
blood cells, separated and frozen white blood cells, or fractions of
white blood cell populations, bone marrow cells, body fluids,
lymphoblastoid cell lines, DNA, stool specimens or smears on slides and
other types of specimens as specified by the Project Officer. These
materials shall be maintained at optimum temperatures for long-term
storage, including liquid nitrogen, if appropriate.
5) All specimens will be submitted to the Contractor, accompanied by
written identification of the specimen source, using forms supplied by
the Project Officer. Specimens from members of NCI-associated families
will be submitted with a unique Family Studies identification number to
insure compatibility with NCI laboratory computer data bases. Specimens
shall be assigned a unique code number which shall be the only
identification of the specimen in future laboratory processing,
dispersal, etc. This code number shall comply with the format and
convention established by the NCI Project Officer. The name of the donor
shall not be used in labeling of specimens or in correspondence
concerning the specimen by laboratory personnel. Such labeling shall
uniquely identify each vial of each specimen and the quality of that
individual vial will be recorded and updated as needed in the
NCI-developed computer system.
6) The Contractor shall provide and train primary and backup staff in the
operation of a computerized record system for specimens which has been
developed and furnished by the Project Officer. Using this system, the
laboratory shall keep records of all manipulation on all specimens and
accurately enter data on each specimen. The data shall include but not
be limited to vial identification number, study ID, material type and
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Biotech Research Laboratories, Inc.
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material description, volume or cell concentration, freezer location,
subject ID, crisis events, data received, specimen vial quality, etc.
Data shall be entered into the system within 48 hours of receipt or as
specified by the NCI Project Officer. The Contractor shall be
responsible for extracting this information from either data forms or
floppy disks which will be transmitted with the samples. The Contractor
shall also use this system to monitor and track all activities related
to specimens. The Project Officer will supply computer support for
generating management reports for the Contractor on a regular basis.
7) The Contractor shall prepare a variety of specimens for storage.
Specifically, white blood cell separation, fractionation and viable
cryopreservation, red blood cell cryopreservation, serum separation and
storage of aliquots of 0.5 ml, plasma separation and storage, tumor
tissue freezing, tumor tissue extracts, urine, serum, or blood fluid
lyophilization, freezing and/or extraction of stool specimens and other
techniques as required. Specimens shall be stored in containers
impervious to entry of CO2 so that they can be shipped on dry ice. In
order to ensure the viability of valuable specimens, the Contractor
shall be prepared to have appropriate personnel travel to a contract
site, foreign or domestic, to train local staff on optimal techniques
for freezing viable material.
8) Freezers shall be equipped with a stylus recording system indicating
consistency of temperature which shall be reviewed frequently each day
at specified times. Freezer malfunctions must give warning by means of
an alarm system. The Contractor must provide a central alarm system
monitored 24-hours a day, 365 days a year. A switch-operated electric
generator of appropriate wattage for these particular freezers shall be
hooked up and on standby in the event of a major power outage. Liquid
nitrogen freezers must have automatic filling mechanisms drawing on a
constant central source of liquid nitrogen with emergency back-up. All
unplanned defrostings must be logged, giving date and times during which
defrostings were in effect and temperature reached, and reported by
telephone as soon as possible to the Project Officer. The circumstances
of the defrosting shall be reported immediately to the Project Officer
in writing, giving full particulars.
9) The laboratory shall keep clear records of all manipulations on all
specimens and carefully document specimen type, volume, cell
concentration, source, "crisis events", etc. for each sample. The exact
freezer location shall be known for each specimen and shall be kept in a
master log which is easy to understand. Information shall be supplied
routinely to the NCI Project Officer on forms designed and supplied by
NCI in conjunction with laboratory personnel. These records shall
include number of vials, exact location of vials and specimen type. The
Contractor shall conduct a complete inventory of all stored specimens on
an annual basis. Thorough quality control protocols must be designed,
documented and
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Biotech Research Laboratories, Inc.
N01-CP-33060
approved by the NCI Project Officer. These protocols must be rigorously
implemented in the conduct of the inventories. The results of each
inventory shall be documented in the Annual Technical Progress Report.
10) The Contractor shall respond only to written requests for biological
specimens from collaborating investigators, which have been approved by
the NCI Project Officer or his/her designee(s). Specimens shall not be
sent to any investigators without a written request from the NCI Project
Officer or his/her designee(s). A copy of this written request and
Contractor-generated correspondence shall be sent to the NCI Project
Officer. All written requests for specimen distribution shall be acted
upon within four working days of receipt, unless permission to delay
such action is obtained from the Project Officer.
The Contractor shall not supply the outside collaborator with any
information concerning the biological specimens other than code number,
specimen type or other information essential to specimen processing.
Requests for identification of the patient, the diagnosis, demographic
information or other such information shall be referred to the NCI
Project Officer.
The Contractor shall never send out the last vial from a particular
specimen without explicit authorization from the Project Officer.
The Contractor shall prepare specimens for shipment, supply shipping
containers appropriate to maintain specimens in the proper state (cool,
frozen, deep frozen, etc.) and make arrangements through commercial air
freight companies and other carriers to send biologic specimens to
collaborating investigators in an expeditious (e.g., overnight or same
day) fashion. For immunologic or genetic typing studies, the Contractor
shall prepare specimens for delivery to the local HLA typing laboratory
or immune function laboratory in a suitable form. The local in-house
delivery service shall be used for these particular specimens to ensure
expeditious delivery under optimum conditions. In some cases, commercial
freight companies shall be used in overnight shipments to investigators
in other cities. The Contractor shall be responsible for notifying the
receiving laboratory of the specimens shipment and anticipated arrival
time to insure that the receiving laboratory is prepared to receive the
specimens. All specimens for both immunologic testing and HLA typing and
serum or other type storage shall be processed by the Contractor.
Peripheral blood cells shall be aliquoted for storage in suitable
quantities for subsequent testing. Other specimens, such as red blood
cells, plasma, serum, urine, stool, tumor tissue, and body fluids shall
be processed for storage.
11) A large repository of sera and cells used for immunogenetic tissue
typing shall be inventoried, stored and maintained under this contract.
This shall include preparing appropriate inventory forms for specimen
storage, retrieval and shipment.
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Biotech Research Laboratories, Inc.
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The laboratory shall retain written, hard-copy records of inventory
sheets and shall supply copies in suitable form for computer entry by
NCI computer support personnel. Laboratory personnel shall verify the
accuracy of information as it is entered in the computer against the
original data, and errors shall be corrected.
12) The Contractor shall be prepared to process up to 1100 mls. of blood per
day four days per week for lymphocyte harvesting (these samples coming
from as many as 60 donors per day). For this aspect of the contract, it
is anticipated that technicians shall be available at least one day per
weekend through the entire period of this contract (the weekend blood
samples will be less than 200 mls. and from less than five donors). The
Contractor shall also be prepared to receive and process approximately
5000 serum vials from up to 400 individuals and approximately 250 mls.
whole blood per month for plasma and red blood cell storage.
13) The Contractor shall handle international shipments of biological
specimens (blood components, urine, gastric juice, and biopsy specimen)
and clearance of these shipments through U.S. and foreign customs. Most
of these samples are being collected in a collaborative study with the
Beijing Institute for Cancer Research investigating causes of stomach
cancer. Pan Alpina, a European company with officers in Beijing and
Northern Virginia, will ship these samples from China to the U.S. West
Coast, clear them through U.S. customs, and then transfer them to
Federal Express for shipment to various laboratories in the U.S. or to
the Contractor's own facilities for short-term storage. In addition, Pan
Alpina will occasionally ship samples from the U.S. via the Contractor's
short-term storage facilities to laboratories outside the U.S. The
Contractor shall serve as the liaison between Biostatistics Branch
scientists and Pan Alpina and must work closely with Pan Alpina to
coordinate these shipments. Close coordination is vital because these
samples need to be kept frozen with dry ice, and freezer-to-freezer
shipping time must be less than 72 hours. Delays of just one or two days
will seriously jeopardize months of scientific and medical work.
Another large group of samples (estimated to be at least 40,000 aliquots
of sera and 20,000 cervical swabs) will be shipped from Costa Rica and
shall require similar clearance, transfer, and storage. A separate
shipping/customs agent shall be procured by the Contractor to provide
this service. Large quantities of samples are shipped from London,
Europe, the West Indies, Africa and other geographic locales. In each
instance, the repository Contractor shall have responsibility for
coordinating logistics to insure their timely arrival, including
contracting with appropriate customs brokers and agents to expedite
shipment and customs clearances.
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Biotech Research Laboratories, Inc.
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ARTICLE C.2. REPORTING REQUIREMENTS
a. Technical Progress Reports
In addition to those reports required by the other terms of this contract,
the contractor shall prepare and submit the following reports during the
period of performance of this contract:
1) Monthly Computerized and Written Reports
The Contractor shall submit Monthly Computerized and Written Reports
summarizing the status of all newly received specimens and outlining
all dispersals by the laboratory. A summary of all correspondence
consisting of requests for shipment, cover letters and inquiries from
outside collaborators shall be submitted monthly to the NCI Project
Officer and copies made available upon request. Emphasis shall be on
conciseness as well as comprehensiveness.
The first monthly report shall cover the period consisting of the first
full calendar month following the effective date of the contract and
any fractional part of the initial month and shall be due on or before
April 15, 1993. Thereafter, monthly reports shall be due on or before
the 15th day of the month following each monthly reporting period. The
submission of monthly reports shall continue through the exercise of
each option period. A Monthly Computerized and Written Report shall not
be required when submitting the Annual Reports or the Final Report.
2) Annual Technical Progress Reports
The Contractor shall prepare Annual Technical Progress Reports which
explain the progress of work performed under this contract. Each report
shall describe the progress of the project to date, noting all
technical areas in which the effort is being directed and indicating
the status of work in each area. This report shall include: (a) a
quantitative summary of the numbers of specimens processed by the
Contractor, their type and investigator source; (b) shipments and
logistics; (c) an indication of any current problems which may impede
performance under the contract and the proposed corrective action, and
(d) a discussion of work to be performed during the next reporting
period. The annual report shall, in addition, include a complete,
up-to-date inventory of the Repository and its contents. Additional
interim reports may be requested as necessary.
The first annual report shall cover the period consisting of the first
full year following the effective date of the contract and shall be due
on or before February 28, 1994. If the Government exercises its options
pursuant to ARTICLE H.5., the annual report will be due on/before the
expiration date of each option year. If the Government does not
exercise its options, the annual report shall cover the period
consisting of the first full year following the effective date of this
contract through the
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expiration date of the current option period and shall represent the
Final Technical Progress Report. Emphasis shall be on conciseness as
well as comprehensiveness. A separate Annual Technical Progress Report
shall not be required when submitting the Final Report.
3) Final Technical Progress Report
The Contractor shall submit a Final Technical Progress Report on or
before the expiration date of the contract. The Final Report shall
include information in sufficient detail to describe comprehensively
the results achieved and shall include a summation of the work
performed for the entire contract period of performance.
4) Summary of Salient Results
The Contractor shall submit, with the Final Technical Progress Report,
a summary (not to exceed 200 words) of salient results achieved during
the performance of the contract.
b. Addresses for Submission of Technical Progress Reports
Technical progress reports shall be addressed to:
ORIGINAL TO: Contracting Officer
Cancer Etiology Contracts Section
Research Contracts Branch, OD
National Cancer Institute
Executive Plaza South, Suite 620
Bethesda, Maryland 20892
TWO COPIES TO: Project Officer
Viral Epidemiology Branch
Epidemiology & Biostatistics Program
Division of Cancer Etiology
National Cancer Institute
Executive Plaza North, Suite 434
Bethesda, Maryland 20892
SECTION D - PACKAGING, MARKING AND SHIPPING
ARTICLE D.1. PACKAGING
Specimens shall be protected from temperature extremes by use of insulated
containers or other acceptable means as needed. A portable liquid nitrogen
container for transport of frozen cells shall also be required.
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ARTICLE D.2. MARKING
All deliverables under this contract shall be clearly identified with the
subject contract number. All specimens shall be submitted to the Contractor,
accompanied by written identification of the specimen source, using forms
supplied by the Project Officer. All specimens from members of the
NCI-associated families will be submitted with a unique alpha-numeric code
number which will be the only identification of the specimen in future
laboratory processing, dispersal, etc. The name of the donor shall not be used
in the labeling of specimens by laboratory personnel. No names of persons
enrolled in AIDS-associated studies shall be written on vials.
ARTICLE D.3. SHIPPING
The Contractor shall prepare specimens for shipment, supply shipping containers
appropriate to maintain specimens in the proper state (cool, frozen, deep
frozen, etc.) and make arrangements through commercial air freight companies and
other carriers to send biologic specimens to collaborating investigators in an
expeditious (e.g., overnight or same day) fashion. For immunologic or genetic
typing studies, the Contractor shall prepare specimens for delivery to the local
Human Leukocyte Antigen (HLA) typing laboratory or immune function laboratory in
a suitable form. The local in-house delivery service shall be used for these
particular specimens to ensure expeditious delivery under optimum conditions. In
some cases, commercial freight companies shall be used for overnight shipments
to investigators in other cities. The Contractor shall be responsible for
notifying the receiving laboratory of the specimens shipment and anticipated
arrival time to insure that the receiving laboratory is prepared to receive the
specimens.
SECTION E - INSPECTION AND ACCEPTANCE
ARTICLE E.1. INSPECTION AND ACCEPTANCE
a. The Contracting Officer or the duly authorized representative will perform
inspection and acceptance of materials and services to be provided.
b. For the purpose of this ARTICLE, the Project Officer identified in ARTICLE
G.1., is the authorized representative of the Contracting Officer.
c. Inspection and acceptance will be performed at the National Cancer
Institute, Division of Cancer Etiology, Viral Epidemiology Branch,
Epidemiology & Biostatistics Program, 6130 Executive Boulevard, Executive
Plaza North, Room 434, Rockville, Maryland 20852.
Acceptance may be presumed unless otherwise indicated in writing by the
Contracting Officer or the duly authorized representative within 30 days of
receipt.
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d. This contract incorporates the following clause by reference, with the same
force and effect as if it were given in full text. Upon request, the
Contracting Officer will make its full text available.
FAR 52.246-9, INSPECTION OF RESEARCH AND DEVELOPMENT - (SHORT FORM)
(APRIL 1984).
SECTION F - DELIVERIES OR PERFORMANCE
ARTICLE F.1, PERIOD OF PERFORMANCE
The period of performance of Year 1 of this contract shall be from March 1, 1993
through February 28, 1994.
If the Government exercises its options pursuant to ARTICLE H.5. of this
contract, the period of performance of this contract will be:
Option 1, Year 2 -- March 1, 1994 through February 28, 1995.
Option 2, Year 3 -- March 1, 1995 through February 29, 1996.
Option 3, Year 4 -- March 1, 1996 through February 28, 1997.
ARTICLE F.2. LEVEL OF EFFORT
a. During Year 1 of this contract, the Contractor shall provide [Language
Deleted due to Confidential Treatment Request.] total direct labor hours.
If the Government exercises its options pursuant to ARTICLE H.5. of this
contract, the total direct labor hours of this contract will be increased
by [Language Deleted due to Confidential Treatment Request.] labor hours
(Option 1, Year 2); [Language Deleted due to Confidential Treatment
Request.] labor hours (Option 2, Year 3); [Language Deleted due to
Confidential Treatment Request.] labor hours (Option 3, Year 4). The labor
hours exclude vacation, sick leave, and holiday. It is estimated that the
labor hours are constituted as specified below and will be expended
approximately as follows:
Option 1 Option 2 Option 3
Labor Category Year 1 Year 2 Year 3 Year 4
-------------- ------ ------ ------ ------
[Language Deleted due to Confidential Treatment Request.]
TOTALS
b. The Contractor shall have satisfied the requirement herein if not less than
90% nor more than 110% of the total direct labor hours specified herein are
furnished. Accordingly, the Contractor shall not expend more than 110%.
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c. In the event fewer hours than the minimum specified number of direct labor
hours in the total categories are used by the Contractor in accomplishing
the prescribed work and the Government has not invoked its rights under the
FAR Clause 52.249-6, TERMINATION (Cost-Reimbursement), incorporated in this
contract, these parties agree that the fee will be adjusted based solely
upon the quantity of hours by which the number of direct labor hours
furnished is less than the number of direct labor hours specified in this
ARTICLE. The resulting adjustment shall be evidenced by a contract
modification.
ARTICLE F.3. STOP WORK ORDER
This contract incorporates the following clause by reference, with the same
force and effect as if it were given in full text. Upon request, the Contracting
Officer will make its full text available.
FEDERAL ACQUISITION REGULATION (48 CFR CHAPTER 1) CLAUSE:
52.212-13, STOP WORK ORDER (AUGUST 1989) with ALTERNATE I (APRIL 1984).
SECTION G - CONTRACT ADMINISTRATION DATA
ARTICLE G.1. PROJECT OFFICER
The following Project Officer(s) will represent the Government for the purpose
of this contract:
Dr. Paul A. Levine, Project Officer
Dr. William A. Blattner, Assistant Project Officer
The Project Officer is responsible for: (1) monitoring the Contractor's
technical progress, including the surveillance and assessment of performance and
recommending to the Contracting Officer changes in requirements; (2)
interpreting the Statement of Work and any other technical performance
requirements; (3) performing technical evaluation as required; (4) performing
technical inspections and acceptances required by this contract; and (5)
assisting in the resolution of technical problems encountered during
performance.
The Contracting Officer is the only person with authority to act as agent of the
Government under this contract. Only the Contracting Officer has authority to:
(1) direct or negotiate any changes in the Statement of Work; (2) modify or
extend the period of performance; (3) change the delivery schedule; (4)
authorize reimbursement to the Contractor any costs incurred during the
performance of this contract; or (5) otherwise change any terms and conditions
of this contract.
The Government may unilaterally change its Project Officer designation.
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ARTICLE G.2. KEY PERSONNEL
Pursuant to the Key Personnel clause incorporated in this contract, the
following individual(s) is/are considered to be essential to the work being
performed hereunder:
NAME TITLE
---- -----
Dr. Hanna Weissberger Principal Investigator
Radhika Uppaluri Laboratory Manager
ARTICLE G.3. INVOICE SUBMISSION
a. Invoice/Financing Request Instructions for NIH Cost-Reimbursement Type
Contracts NIH(RC)-l are attached and made part of this contract. The
instructions and the following directions for the submission of
invoices/financing request must be followed to meet the requirements of a
"proper" payment request pursuant to FAR 32.9.
Invoices/financing requests shall be submitted concurrently as follows:
1) An original and two copies to the following designated payment office:
National Institutes of Health
Division of Financial Management
Chief, Contracts Section FAAB
Building 31, Room BlBO5A
9000 Rockville Pike
Bethesda, Maryland 20892
2) Three copies to the following approving officer:
Contracting Officer
Cancer Etiology Contracts Section
Research Contracts Branch, OD
National Cancer Institute, NIH
Executive Plaza South, Suite 620
Bethesda, Maryland 20892
Inquiries regarding payment of invoices should be directed to the
designated payment office, attention of Chief, Contracts Section, FAAB
(301) 496-6452.
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b. The Contractor shall include the following certification on every invoice
for reimbursable costs incurred with Fiscal Year 1993 funds. For billing
purposes, certified invoices are required for the billing period during
which Fiscal Year 1993 funds were initially charged through the final
billing period utilizing the Fiscal Year 1993 funds:
"I hereby certify that the salaries charged in this invoice are in
compliance with P.L. 102-394 and ARTICLE H.6. of the above
referenced contract."
ARTICLE G.4. CONTRACT FINANCIAL REPORT
a. Financial reports on the attached Form NIH 2706, Financial Report of
Individual Project/Contract, shall be submitted by the Contractor in
accordance with the Instructions for Completing Form NIH 2706, which
accompany the form, in an original and two copies, not later than the 30th
working day after the close of the reporting period. The line entries for
subdivisions of work and elements of cost (expenditure categories) which
shall be reported within the total contract are listed in paragraph e.,
below. Subsequent changes and/or additions in the line entries shall be
made in writing.
b. Unless otherwise stated in that part of the Instructions for Completing
Form NIH 2706, entitled "PREPARATION INSTRUCTIONS," all columns A through
J, shall be completed for each report submitted.
c. The first financial report shall cover the period consisting of the first
full three calendar months following the date of the contract, in addition
to any fractional part of the initial month. Thereafter, reports will be on
a quarterly basis.
d. The Contracting Officer may require the Contractor to submit detailed
support for costs contained in one or more interim financial reports. This
clause does not supersede the record retention requirements in FAR Part
4.7.
e. The following is a listing of expenditure categories to be reported:
Expenditure Category
A
--------------------
1) Direct Labor
2) Overhead
3) Materials & Supplies
4) Shipping
5) Freezer Maintenance and Repair
6) G&A
7) Fixed Fee
8) Government Furnished Equipment
9) TOTAL CPFF
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ARTICLE G.5. INDIRECT COST RATES
In accordance with Federal Acquisition Regulation (FAR) (48 CFR Chapter 1)
Clause 52.216-7 (d)(2), Allowable Cost and Payment incorporated by reference in
this contract in Part II, Section I, the cognizant Contracting Officer
responsible for negotiating provisional and/or final indirect cost rates is
identified as follows:
Chief, Financial Advisory Services Branch
Division of Contracts and Grants
Building 31, Room 1B43
9000 Rockville Pike
National Institutes of Health
Bethesda, Maryland 20892
These rates are hereby incorporated without further action of the Contracting
Officer.
ARTICLE G.6. GOVERNMENT PROPERTY
a. In addition to the requirements of the clause, GOVERNMENT PROPERTY,
incorporated in Section I of this contract, the Contractor shall comply
with the provisions of DHHS Publication, Contractor's Guide for Control of
Government Property, (1990), which is incorporated into this contract by
reference. Among other issues, this publication provides a summary of the
Contractor's responsibilities regarding purchasing authorizations and
inventory and reporting requirements under the contract. A copy of this
publication is available upon request to the Contract Property
Administrator.
This contract's Contract Property Administrator is:
David A. Hubbard, II
Contracts Property Administrator
Research Contracts Property Administration, NIH
Building 13, Room 2E-65
9000 Rockville Pike
Bethesda, Maryland 20892
(301) 496-6467
b. Contractor-Acquired Government Property - Schedule I-B
Pursuant to the clause, GOVERNMENT PROPERTY, incorporated in this contract,
the Contractor will be authorized to acquire the property listed in
Schedule I-B, below, for use in direct performance of the contract,
following receipt of the Contracting Officer's written approval, based on
contractor-furnished prices and evidence of competition.
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SCHEDULE I-B
Year 1:
Total
Estimated Estimated
Item Quantity Unit Price Cost
---- -------- ---------- ----
Forma Freezers 4 $4,794.00 $19,176
Forma Racks 132 $52.00 6,864
MVE Liquid
Nitrogen Freezers 2 $9,579.00 19,158
MVE Racks 40 $80.00 3,200
Year 1 Total Est. Cost: $48,398
Option 1 (Year 2):
Total
Estimated Estimated
Item Quantity Unit Price Cost
---- -------- ---------- ----
Forma Freezers 4 $5,034.00 $20,136
Forma Racks 132 $54.59 7,206
MVE Liquid
Nitrogen Freezers 2 $10,058.00 20,116
MVE Racks 40 $84.00 3,360
Option 1 (Year 2) Total Est. Cost: $50,818
Option 2 (Year 3):
Total
Estimated Estimated
Item Quantity Unit Price Cost
---- -------- ---------- ----
Forma Freezers 4 $5,285.75 $21,143
Forma Racks 132 $57.32 7,566
MVE Liquid
Nitrogen Freezers 2 $10,561.00 21,122
MVE Racks 40 $88.20 3,528
Option 2 (Year 3) Total Est. Cost: $53,359
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Option 3 (Year 4):
Total
Estimated Estimated
Item Quantity Unit Price Cost
---- -------- ---------- ----
Forma Freezers 4 $5,550.00 $22,200
Forma Racks 132 $60.18 7,944
MVE Liquid
Nitrogen Freezers 2 $11,089.00 22,178
MVE Racks 40 $92.62 3,705
Option 3 (Year 4) Total Est. Cost: $56,027
c. Government Furnished Property - Schedule II-A
Pursuant to the clause, GOVERNMENT PROPERTY, incorporated in this contract,
the Contractor is hereby authorized to retain custody of the property
listed in the attached Schedule II-A (ATTACHMENT 7) for use in direct
performance of this contract. Accountability for the items listed in
Schedule II-A is hereby transferred to this contract from predecessor
Contract No. N01-CP-95663, under which these items were provided by the
Government. Title to this property shall remain in the Government.
ARTICLE G.7. GOVERNMENT SUPPLY SOURCES
This contract incorporates the following clause by reference, with the same
force and effect as if it were given in full text. Upon request, the Contracting
Officer will make its full text available.
FEDERAL ACQUISITION REGULATION (48 CFR CHAPTER 1) CLAUSE 52.251-01,
GOVERNMENT SUPPLY SOURCES
SECTION H - SPECIAL CONTRACT REQUIREMENTS
ARTICLE H.l. REIMBURSEMENT OF COSTS FOR INDEPENDENT RESEARCH AND DEVELOPMENT
PROJECTS
The primary purpose of the Public Health Service (PHS) is to support and advance
independent research within the scientific community. This support is provided
in the form of contracts and grants totalling approximately 7 billion dollars
annually. PHS has established effective, time tested and well recognized
procedures for stimulating and supporting this independent research by selecting
from multitudes of applications those research projects most worthy of support
within the constraints of its appropriations. The reimbursement through the
indirect cost mechanism of independent research and development costs not
incidental to product improvement would circumvent this competitive process.
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To ensure that all research and development projects receive similar and equal
consideration, all organizations may compete for direct funding of independent
research and development projects they consider worthy of support by submitting
those projects to the appropriate Public Health Service grant office for review.
Since these projects may be submitted for direct funding, the Contractor agrees
that no costs for any independent research and development project, including
all applicable indirect costs, will be claimed under this contract.
ARTICLE H.2. HUMAN SUBJECTS
It is hereby understood and agreed that research involving human subjects shall
not be conducted under this contract, and that no material developed, modified,
or delivered by or to the Government under this contract, or any subsequent
modification of such material, shall be used by the Contractor or made available
by the Contractor for use by anyone other than the Government, for experimental
or therapeutic use involving humans without the prior written approval of the
Contracting Officer.
ARTICLE H.3. HUMAN MATERIALS
It is understood that the acquisition and supply of all human specimen material
(including fetal material) used under this contract shall be obtained by the
Contractor in full compliance with applicable State and Local laws and the
provisions of the Uniform Anatomical Gift Act in the United States and that no
undue inducements, monetary or otherwise, will be offered to any person to
influence their donation of human material.
ARTICLE H.4. PRIVACY ACT
This procurement action requires the Contractor to do one or more of the
following: design, develop, or operate a system of records on individuals to
accomplish an agency function in accordance with the Privacy Act of 1974, Public
Law 93-579, December 31, 1974 (5 USC 552a) and applicable agency regulations.
Violation of the Act may involve the imposition of criminal penalties.
The Privacy Act System of Records applicable to this project is Number
09-25-0130. This document is incorporated into this contract as ATTACHMENT 4.
ARTICLE H.5. OPTION PROVISION
a. Unless the Government exercises its option pursuant to paragraph b. of this
article, the contract will consist only of YEAR 1 of the Statement of Work
as defined in Sections C and F of the contract. Pursuant to FAR 52.217-9
set forth in paragraph b., below, the Government may, by unilateral
contract
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N01-CP-33060
modification, require the Contractor to perform Years 2 through 4 (Options
2 through 3) of the Statement of Work as also defined in Sections C and F
of the contract. If the Government exercises these options, notice must be
given at least 60 days prior to the expiration date of this contract, and
the estimated cost plus fixed fee of the contract will be increased as set
forth in ARTICLE B.2.
b. FAR 52,217-9. OPTION TO EXTEND THE TERM OF THE CONTRACT (MARCH 1989)
(a) The Government may extend the term of this contract by written notice
to the Contractor within the time specified within the Schedule;
provided, that the Government shall give the Contractor a preliminary
written notice of its intent to extend at least 60 calendar days before
the contract expires. The preliminary notice does not commit the
Government to an extension.
(b) If the Government exercises this option, the extended contract shall be
considered to include this option provision.
(c) The total duration of this contract, including the exercise of any
options under this clause, shall not exceed four years.
(End of clause)
ARTICLE H.6. SALARY RATE LIMITATION IN FISCAL YEAR 1993
a. Pursuant to Public Law (P.L.) 102-394, no NIH Fiscal Year 1993 (October
1, 1992 - September 30, 1993) funds may be used to pay the direct salary
of an individual through this contract at a rate in excess of $125,000
per year (direct salary is exclusive of Overhead, Fringe Benefits and
General and Administrative Expenses). The $125,000 per year salary rate
limit also applies to individuals proposed under subcontracts. If this
is a multi-year contract, it may be subject to unilateral modification
by the Government if an individual's salary rate exceeds any salary rate
ceiling established in future HHS appropriation acts. P.L.
102-394 states in pertinent part:
"None of the funds appropriated in this title for the National
Institutes of Health and the Substance Abuse and Mental Health
Services Administration shall be used to pay the salary of an
individual through a grant or extramural mechanism at a rate in
excess of $125,000 per year."
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ARTICLE H.7. CONFIDENTIALITY OF INFORMATION
The following information is covered by HHSAR Clause 352.224-70, Confidentiality
of Information (APRIL 1984):
a. Identification of the specimen source or donor name;
b. All records of manipulations on all specimens;
c. Information concerning the identification of the patient, the diagnosis,
demographic information or other such information;
d. Written, hard-copy records of inventory sheets;
PART II
SECTION I - CONTRACT CLAUSES
ARTICLE I.1 GENERAL CLAUSES FOR A COST-PLUS-A-FIXED-FEE CONTRACT - CLAUSES
INCORPORATED BY REFERENCE (APRIL 1984)
This contract incorporates the following clauses by reference, with the same
force and effect as if they were given in full text. Upon request, the
Contracting Officer will make their full text available [FAR 52.252-2 (JUNE
1988)].
a. FEDERAL ACQUISITION REGULATION (FAR) (48 CFR CHAPTER 1) CLAUSES:
FAR
CLAUSE NO. TITLE AND DATE
52.203-1 Officials Not to Benefit (APRIL 1984)
52.203-3 Gratuities (APRIL 1984)
52.203-5 Covenant Against Contingent Fees (APRIL 1984)
52.203-6 Restrictions on Subcontractor Sales to the Government (JULY
1985)
52.203-7 Anti-Kickback Procedures (OCTOBER 1988)
52.203-10 Price or Fee Adjustment for Illegal or Improper Activity
(SEPTEMBER 1990)
52.203-12 Limitation on Payments to Influence Certain Federal
Transactions (Over $100,000) (JANUARY 1990)
52.209-6 Protecting the Government's Interests when Subcontracting
with Contractors Debarred, Suspended, or Proposed for
Debarment (NOVEMBER 1992)
(12/92)
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FAR
CLAUSE NO. TITLE AND DATE
52.215-1 Examination of Records by Comptroller General (FEBRUARY
1993)
52.215-2 Audit--Negotiation (FEBRUARY 1993)
52.215-22 Price Reduction for Defective Cost or Pricing Data (Over
$100,000) (JANUARY 1991)
52.215-24 Subcontractor Cost or Pricing Data (Over $100,000)
(DECEMBER 1991)
52.215-27 Termination of Defined Benefit Pension Plans (Over
$100,000) (SEPTEMBER 1989)
52.215-33 Order of Precedence (JANUARY 1986)
52.215-39 Reversion or Adjustment or Plans for Post-retirement
Benefits Other Than Pensions (PRB) (Over $100,000) (JULY
1991)
52.216-7 Allowable Cost and Payment (JULY 1991)
52.216-8 Fixed Fee (APRIL 1984)
52.219-8 Utilization of Small Business Concerns and Small
Disadvantaged Business Concerns (FEBRUARY 1990)
52.219-9 Small Business and Small Disadvantaged Business
Subcontracting Plan (Over $500,000) (JANUARY 1991)
52.219-13 Utilization of Women-Owned Small Businesses (AUGUST 1986)
52.219-16 Liquidated Damages--Small Business Subcontracting Plan
(Over $500,000) (AUGUST 1989)
52.220-1 Preference for Labor Surplus Area Concerns (APRIL 1984)
52.220-3 Utilization of Labor Surplus Area Concerns (APRIL 1984)
52.222-2 Payment for Overtime Premiums (Over $100,000) (JULY 1990)
(NOTE: The dollar amount in paragraph (a) of this clause is
$0 unless otherwise specified in the contract.)
52.222-18 Notification of Employee Rights Concerning Payment of Union
Dues or Fees (MAY 1992)
52.222-20 Walsh-Healey Public Contracts Act (APRIL 1984)
52.222-26 Equal Opportunity (APRIL 1984)
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FAR
CLAUSE NO. TITLE AND DATE
52.222-28 Equal Opportunity Preaward Clearance of Subcontracts (Over
$1,000,000) (APRIL 1984)
52.222-35 Affirmative Action for Special Disabled and Vietnam Era
Veterans (APRIL 1984)
52.222-36 Affirmative Action for Handicapped Workers (APRIL 1984)
52.222-37 Employment Reports on Special Disabled Veterans and
Veterans of the Vietnam Era (JANUARY 1988)
52.223-2 Clean Air and Water (Over $100,000) (APRIL 1984)
52.223-6 Drug-Free Workplace (JULY 1990)
52.225-11 Restrictions on Certain Foreign Purchases (MAY 1992)
52.227-1 Authorization and Consent (APRIL 1984)
52.227-2 Notice and Assistance Regarding Patent and Copyright
Infringement (APRIL 1984)
52.227-3 Patent Indemnity (APRIL 1984)
52.227-14 Rights in Data--General (JUNE 1987)
52.232-9 Limitation on Withholding of Payments (APRIL 1984)
52.232-17 Interest (JANUARY 1991)
52.232-20 Limitation of Cost (APRIL 1984)
52.232-23 Assignment of Claims (JANUARY 1986)
52.232-25 Prompt Payment (SEPTEMBER 1992)
52.232-28 Electronic Funds Transfer Payment Methods (APRIL 1989)
52.233-1 Disputes (DECEMBER 1991)
52.233-3 Protest After Award (AUGUST 1989) Alternate I (JUNE 1985)
52.242-1 Notice of Intent to Disallow Costs (APRIL 1984)
52.242-13 Bankruptcy (APRIL 1991)
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FAR
CLAUSE NO. TITLE AND DATE
52.243-2 Changes--Cost-Reimbursement (AUGUST 1987) Alternate II
(APRIL 1984)
52.244-2 Subcontracts (Cost-Reimbursement and Letter Contracts)
(JULY 1985)
52.244-5 Competition in Subcontracting (APRIL 1984)
52.245-5 Government Property (Cost-Reimbursement, Time-and-Material,
or Labor-Hour Contracts) (JANUARY 1986)
52.246-23 Limitation of Liability (APRIL 1984)
52.248-1 Value Engineering (Over $100,000) (MARCH 1989)
52.249-6 Termination (Cost-Reimbursement) (MAY 1986)
52.249-14 Excusable Delays (APRIL 1984)
52.253-1 Computer Generated Forms (JANUARY 1991)
b. DEPARTMENT OF HEALTH AND HUMAN SERVICES ACQUISITION REGULATION (HHSAR) (48
CFR CHAPTER 3) CLAUSES:
HHSAR
CLAUSE NO. TITLE AND DATE
352.202-1 Definitions (APRIL 1984) Alternate I (APRIL 1984)
352.228-7 Insurance - Liability to Third Persons (DECEMBER 1991)
352.232-9 Withholding of Contract Payments (APRIL 1984)
352.233-70 Litigation and Claims (APRIL 1984)
352.242-71 Final Decisions on Audit Findings (APRIL 1984)
352.270-5 Key Personnel (APRIL 1984)
352.270-6 Publication and Publicity (JULY 1991)
352.270-7 Paperwork Reduction Act (APRIL 1984)
[End of GENERAL CLAUSES FOR A COST-PLUS-A-FIXED-FEE CONTRACT]
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N01-CP-33060
ARTICLE I.2. AUTHORIZED SUBSTITUTIONS OF CLAUSE
ARTICLE I.1. of this SECTION is hereby modified as follows:
FAR 52.215-31, WAIVER OF FACILITIES CAPITAL COST OF MONEY (SEPTEMBER 1987) is
added.
FAR 52.219-9, SMALL BUSINESS AND SMALL DISADVANTAGED BUSINESS SUBCONTRACTING
PLAN (JANUARY 1991), and FAR 52.219-16, LIQUIDATED DAMAGES--SMALL BUSINESS
SUBCONTRACTING PLAN (AUGUST 1989), are deleted in their entirety.
FAR 52.232-20, LIMITATION OF COST, is deleted in its entirety and FAR 52.232-22,
LIMITATION OF FUNDS (APRIL 1984), is substituted therefor.
ARTICLE 1.3. ADDITIONAL CONTRACT CLAUSES
a. FEDERAL ACQUISITION REGULATION (FAR) (48 CFR CHAPTER 1) CLAUSES:
This contract incorporates the following clauses by reference, (unless
otherwise noted), with the same force and effect as if they were given in
full text. Upon request, the Contracting Officer will make their full text
available.
1) FAR 52.220-4, LABOR SURPLUS AREA SUBCONTRACTING PROGRAM (APRIL 1984).
2) FAR 52.224-1, PRIVACY ACT NOTIFICATION (APRIL 1984).
3) FAR 52.224-2, PRIVACY ACT (APRIL 1984).
4) ALTERNATE I (JUNE 1987), FAR 52.227-14, RIGHTS IN DATA--GENERAL (JUNE
1987).
5) FAR 52.247-63, PREFERENCE FOR U.S.-FLAG AIR CARRIERS (APRIL 1984).
b. DEPARTMENT OF HEALTH AND HUMAN SERVICES ACQUISITION REGULATIONS/PUBLIC
HEALTH SERVICE ACQUISITION REGULATIONS (HHSAR)/(PHSAR) (48 CFR CHAPTER 3)
CLAUSES:
This contract incorporates the following clauses by reference, (unless
otherwise noted) with the same force and effect as if they were given in
full text. Upon request, the Contracting Officer will make their full text
available.
1) HHSAR 352.224-70, CONFIDENTIALITY OF INFORMATION (APRIL 1984).
2) PHS 352.223-70, SAFETY AND HEALTH (APRIL 1984), is hereby incorporated
in full text. See Part III, Section J of this contract.
29
Biotech Research Laboratories, Inc.
N01-CP-33060
c. NATIONAL INSTITUTES OF HEALTH (NIH) RESEARCH CONTRACTING (RC) CLAUSES:
The following clauses are attached and made a part of this contract:
1) NIH(RC)-7, PROCUREMENT OF CERTAIN EQUIPMENT (APRIL 1984) (OMB Bulletin
81-16).
ARTICLE I.4. ADDITIONAL FAR CONTRACT CLAUSES INCLUDED IN FULL TEXT
This contract incorporates the following clause(s) in full text.
FEDERAL ACQUISITION REGULATION (FAR)(48 CFR CHAPTER 1) CLAUSES:
a. FAR Clause 52.203-9 REQUIREMENT FOR CERTIFICATE OF PROCUREMENT INTEGRITY--
MODIFICATION (NOVEMBER 1990)
(a) Definitions. The definitions set forth in FAR 3.104-4 are hereby
incorporated in this clause.
(b) The Contractor agrees that it will execute the certification set
forth in paragraph (c) of this clause when requested by the Contracting
Officer in connection with the execution of any modification of this
contract.
(c) Certification. As required in paragraph (b) of this clause, the
officer or employee responsible for the modification proposal shall
execute the following certification:
CERTIFICATE OF PROCUREMENT INTEGRITY--MODIFICATION (NOV 1990)
(1) I, ___________________ [Name of certifier] am the officer or
employee responsible for the preparation of this modification proposal
and hereby certify that, to the best of my knowledge and belief, with
the exception of any information described in this certification, I have
no information concerning a violation or possible violation of
subsection 27(a), (b), (d), or (f) of the Office of Federal Procurement
Policy Act, as amended* (41 U.S.C. 423), (hereinafter referred to as
"the Act"), as implemented in the FAR, occurring during the conduct of
this procurement ___________________ [contract and modification number].
(2) As required by subsection 27(e)(1)(B) of the Act, I further
certify that to the best of my knowledge and belief, each officer,
employee, agent, representative, and consultant of
____________________[Name of Offeror] who has participated personally
and substantially in the preparation or submission of this proposal has
certified that he or she is familiar with, and will comply with, the
requirements of subsection 27(a) of the Act, as implemented in the FAR,
and will report immediately to me any information concerning a violation
or possible violation of subsections 27(a), (b), (d), or (f) of the Act,
as implemented in the FAR, pertaining to this procurement.
30
Biotech Research Laboratories, Inc.
N01-CP-33060
(3) Violations or possible violations: [Continue on plain bond paper if
necessary and label Certificate of Procurement Integrity--Modification
(Continuation Sheet), ENTER "NONE" IF NONE EXISTS]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- ----------------------------------
[Signature of the officer or employee responsible for the modification proposal
and date]
- ----------------------------------
[Typed name of the officer or employee responsible for the modification
proposal]
*Subsections 27(a), (b), and (d) are effective on December 1, 1990.
Subsection(f) is effective on June 1, 1991.
THIS CERTIFICATION CONCERNS A MATTER WITHIN THE JURISDICTION OF AN AGENCY OF THE
UNITED STATES AND THE MAKING OF A FALSE, FICTITIOUS, OR FRAUDULENT CERTIFICATION
MAY RENDER THE MAKER SUBJECT TO PROSECUTION UNDER TITLE 18, UNITED STATES CODE,
SECTION 1001.
[End of certification]
(d) In making the certification in paragraph (2) of the certificate, the
officer or employee of the competing Contractor responsible for the offer or
bid, may rely upon a one-time certification from each individual required to
submit a certification to the competing Contractor, supplemented by periodic
training. These certifications shall be obtained at the earliest possible date
after an individual required to certify begins employment or association with
the Contractor. If a contractor decides to rely on a certification executed
prior to the suspension of section 27 (i.e., prior to December 1, 1989), the
Contractor shall ensure that an individual who has so certified is notified that
section 27 has been reinstated. These certifications shall be maintained by the
Contractor for a period of 6 years from the date a certifying employee's
employment with the company ends or, for an agent, representative, or
consultant, 6 years from the date such individual ceases to act on behalf of the
Contractor.
(e) The certification required by paragraph (c) of this clause is a
material representation of fact upon which reliance will be placed in executing
this modification.
[End of clause]
31
Biotech Research Laboratories, Inc.
N01-CP-33060
PART III
SECTION J - LIST OF ATTACHMENTS
The following documents are attached and incorporated in this contract:
1) Invoice/Financing Request Instructions for NIH Cost-Reimbursement Type
Contracts, NIH(RC)-l (6/18/92), 5 pages.
2) Financial Report of Individual Project/Contract, NIH 2706, (5/92), 1 page.
3) Instructions for Completing form NIH 2706, Financial Report of Individual
Project/Contract, (5/92), 3 pages.
4) Privacy Act System of Records, Number 09-25-0130, as cited in the Federal
Register Notice issued in Volume 56, Number 8, (1/11/91), 2 pages.
5) Safety and Health, PHSAR Clause 352.223-70,(4/84), 2 pages.
6) Procurement of Certain Equipment, NIH(RC)-7, (4/1/84), 1 page.
7) Schedule II-A, Government Furnished Property, (3/1/93), 6 pages.
PART IV
SECTION K - REPRESENTATIONS AND CERTIFICATIONS
The following documents are incorporated by reference in this contract:
1) Representations and Certifications, dated October 23, 1992.
END of the SCHEDULE
(CONTRACT)
32
INVOICE/FINANCING REQUEST INSTRUCTIONS
FOR NIH COST-REIMBURSEMENT TYPE CONTRACTS. NIH(RC)-l
General: The Contractor shall submit claims for reimbursement in the manner and
format described herein and as illustrated in the sample invoice/financing
request.
Format: Standard Form 1034, Public Voucher for Purchases and Services Other Than
Personal; and Standard Form 1035, Public Voucher for Purchases and Services
Other Than Personal--Continuation Sheet, or reproduced copies of such forms
marked ORIGINAL should be used to submit claims for reimbursement. In lieu of
SF-1034 and SF-1035, claims may be submitted on Form NIH 2706, Financial Report
of Individual Project/Contract, or on the payee's letterhead or self-designed
form provided that it contains the information shown on the sample
invoice/financing request.
Number of Copies: As indicated in the Invoice Submission clause in the contract.
Frequency: Invoices/financing requests submitted in accordance with the payment
clause shall be submitted monthly unless otherwise authorized by the Contracting
Officer.
Cost Incurrence Period:Costs incurred must be within the contract performance
period or covered by precontract cost provisions.
Billing of Costs Incurred: If billed costs include: (1) Costs of a prior billing
period, but not previously billed, or (2) costs incurred during the contract
period and claimed after the contract period has expired, the amount and
month(s) in which such costs were incurred shall be cited.
Contractor's Fiscal Year: Invoices/financing requests shall be prepared in such
a manner that costs claimed can be identified with the Contractor's fiscal year.
Currency: All NIH contracts are expressed in United States dollars. Where
expenditures are made in a currency other than United States dollars, billings
on the contract shall be expressed, and reimbursement by the United States
Government shall be made, in that other currency at amounts coincident with
actual costs incurred. Currency fluctuations may not be a basis of gain or loss
to the Contractor. Notwithstanding the above, the total of all invoices paid
under this contract may not exceed the United States dollars authorized.
Costs Requiring Prior Approval: Costs requiring the Contracting Officer's
approval which are not set forth in an advance understanding in the contract
shall be so identified and reference the Contracting Officer's Authorization
(COA) number.
Invoice/Financing Request Identification: Each invoice/financing request shall
be identified as either:
(a) Interim Invoice/Contract Financing Request: These are interim payment
requests during the contract performance period.
NIH(RC)-1 ATTACHMENT 1
Rev. 6/18/92
(b) Completion Invoice: The completion invoice is a final invoice which is
submitted promptly upon completion of the work, but no later than one year
from the contract completion date. The completion invoice should be
submitted when all costs (except for finalization of indirect cost rates)
have been assigned to the contract and all performance provisions have
been completed.
(c) Final Invoice: A revised final invoice may be required after the amounts
owed have been settled between the Government and the Contractor (e.g.,
final indirect cost rates and resolution of all suspensions and audit
exceptions).
Preparation and Itemization of the Invoice/Financing Request: The Contractor
shall furnish the information set forth in the explanatory notes below. These
notes are keyed to the entries of the sample invoice/financing request.
(a) Payor's Name and Address: The paying office and address, identified in the
Invoice Submission clause of the contract, shall be entered on all copies
of the invoice/financing request.
(b) Invoice/Financing Request Number: Insert the appropriate serial number of
the invoice/financing request.
(c) Date Invoice/Financing Request Prepared: Insert the date the
invoice/financing request is prepared.
(d) Contract Number and Date: Insert the contract number and the date of the
contract.
(e) Payee's Name and Address: Show the Contractor's name (as it appears in the
contract), correct address, and the title and phone number of the
responsible official to whom payment is to be sent. When an approved
assignment has been made by the Contractor, or a different payee has been
designated, then insert the name and address of the payee instead of the
Contractor.
(f) Total Estimated Cost of Contract: Insert the total estimated cost of the
contract, exclusive of fixed-fee. For incrementally funded contracts,
enter the amount currently obligated and available for payment.
(g) Total Fixed-Fee: Insert the total fixed-fee (where applicable).
(h) Billing Period: Insert the beginning and ending dates (day, month, and
year) of the period in which costs were incurred and for which
reimbursement is claimed.
(i) Amount Billed for Current Period: Insert the amount billed for the major
cost elements, adjustment and adjusted amounts for the period.
(j) Cumulative Amount from Inception to Date of this Billing: Insert the
cumulative amounts billed for the major cost elements and adjusted amounts
claimed during this contract.
NIH(RC)-1 ATTACHMENT 1
Rev. 6/18/92
(k) Direct Costs: Insert the major cost elements. For each element, consider
the application of the paragraph entitled Costs Requiring Prior Approval
on page 1 of these instructions.
(1) Direct Labor: This consists of salaries and wages paid (or accrued)
for direct performance of the contract.
(2) Fringe Benefits: This represents fringe benefits applicable to direct
labor and billed as a direct cost. Fringe benefits included in
indirect costs should not be identified here.
(3) Accountable Personal Property: This category of cost includes
permanent research equipment and general purpose equipment having a
unit acquisition cost of $1,000 or more and having an expected
service life of more than two years, and sensitive property
regardless of cost (See the DHHS Contractor's Guide for Control of
Government Property.) Show permanent research equipment separate from
general purpose equipment. Prepare and attach Form HHS-565, "Report
of Accountable Property," in accordance with the following
instructions:
List each item for which reimbursement is requested. A reference
shall be made to the following (as applicable):
(A) The item number for the specific piece of equipment listed
in the Property Schedule;
(B) The Contracting Officer's Authorization letter and number,
if the equipment is not covered by the Property Schedule,
or;
(C) Be preceded by an asterisk (*) if the equipment is below
the approval level.
Further itemization of invoices/financing requests shall only be
required for items having specific limitations set forth in the
contract.
(4) Materials and Supplies: This category includes equipment with unit
costs of less than $500 or an expected service life of two years or
less, and consumable material and supplies regardless of amount.
(5) Premium Pay: This is remuneration in excess of the basic hourly rate,
(6) Consultant Fee: Fees paid to consultants. Identify consultant by name
or category as set forth in the contract's advance understanding or
in the COA letter, as well as the effort (i.e., number of hours,
days, etc.) and rate being billed.
(7) Travel: Foreign travel is travel outside of Canada, the United States
and its territories and possessions. However, for an organization
located outside Canada, the United States and its territories and
possessions, foreign travel means travel outside that country.
Foreign travel should be billed separately from domestic travel.
NIH(RC)-1 ATTACHMENT 1
Rev. 6/18/92
(8) Subcontract Costs: List subcontractor(s) by name and amount billed.
(9) Other: List all other direct costs in total unless exceeding $1,000
in amount. If over $1,000, list cost elements and dollar amount
separately. If the contract contains restrictions on any cost
element, that cost element should be listed separately.
(l) Cost of Money (COM): Cite the COM factor and base in effect during the
time the cost was incurred and for which reimbursement is claimed.
(m) Indirect Costs--Overhead: Cite the formula (rate and base) in effect
during the time the cost was incurred and for which reimbursement is
claimed. If special rate is being used; e.g., off-site, then so specify.
(n) Fixed-Fee: If the contract provides for a fixed-fee, it must be claimed as
provided for by the contract. Cite the formula or method of computation.
(o) Total Amounts Claimed: Insert the total amounts claimed for the current
and cumulative periods.
(p) Adjustments: This includes amounts conceded by the Contractor, outstanding
suspensions and disapprovals subject to appeal.
(q) Grand Totals
The Contracting Officer may require the Contractor to submit detailed support
for costs claimed on one or more interim invoices/financing requests.
NIH(RC)-l ATTACHMENT 1
Rev. 6/18/92
SAMPLE INVOICE/FINANCING REQUEST
<TABLE>
<S> <C>
(a) Payor's Name and Address (b) Invoice/Financing Request No.
NATIONAL INSTITUTES OF HEALTH
Division of Financial Management
Contracts Section, FAAB (c) Date Voucher Prepared
Building 31, Room B1B05A
Bethesda, Maryland 20892
(d) Contract No. and Date
(e) Payee's Name and Address
ABC CORPORATION (f) Total Est. Cost of Contract
100 Main Street
Anywhere, U.S.A. zip code
(g) Total Fixed-Fee
Attention: Name, Title and Phone Number of
Official to Whom Payment is Sent
(h) This invoice/financing request represents reimbursable costs from August 1,
1982 through August 31, 1982.
(i) Amount Billed (j) Cumulative Amt. From
for Current Inception to Date
Period of this Billing
(k) Direct Costs
(1) Direct Labor $ 3,400 $ 6,800
(2) Fringe Benefits 600 1,200
(3) Accountable Personal Property
(Attach HHS-565)
Permanent Research 3,000 8,000
General Purpose 2,000 2,000
(4) Materials and Supplies 2,000 4,000
(5) Premium Pay 100 150
(6) Consultant Fee 100 100
Dr. Jones/1 day @ 100 (COA #3)
(7) Travel -- (Domestic) 200 200
(Foreign) 200 200
(8) Subcontract Cost 0 0
(9) Other 0 0
Total Direct Costs $11,600 $20,650
(l) Cost of Money
(Factor) of (Approp. Base) 2,400 3,600
(m) Indirect Costs - Overhead
% of Direct Labor or Other Base (Formula) 4,000 6,000
(n) Fixed-Fee Earned (Formula) 700 1,400
(o) Total Amount Claimed $18,700 $31,650
(p) Adjustments
Outstanding Suspensions
(q) Grand Totals $18,700 $29,950
"I certify that all payments requested are for appropriate purposes and in accordance with the contract."
(Name of Official) (Title)
</TABLE>
NIH(RC)-1 ATTACHMENT 1
Rev. 6/18/92
<TABLE>
<CAPTION>
National Institute of Health Project Task Contract No.
Financial Report of Individual
Project/Contract
Reporting Period Contractor's Name and Address
Complete this form in accordance with accompanying instructions.
Expenditure Cagetory Percentage of Effort/Hours Cumulative Incurred Cumulative Estimated
Insurred Cost-Current Cost to Date Cost to
Cost at End Period (D + E) Complete
of Prior Period
Funded Actual
A B C D E F G
<S> <C>
Direct Labor 22,435
Overhead
Materials/Supp.
Shipping
Freezer Maint.
G&A
Fixed Fee
Government Furnished Equip.
TOTAL CPFF
Date of Report 0990-0134
0990-0131
Estimated Funded Variance (Over
Cost at Contract Amount or Under)
Completion Year 1 (I - H)
(F + G)
H I J
Direct Labor [Language Deleted due to Confidential Treatment Request.]
Overhead [Language Deleted due to Confidential Treatment Request.]
Materials/Supp. [Language Deleted due to Confidential Treatment Request.]
Shipping [Language Deleted due to Confidential Treatment Request.]
Freezer Maint. [Language Deleted due to Confidential Treatment Request.]
G&A [Language Deleted due to Confidential Treatment Request.]
Fixed Fee [Language Deleted due to Confidential Treatment Request.]
Government Furnished Equip.
[Language Deleted due to Confidential Treatment Request.]
TOTAL CPFF
NIH 2706 (5/92) Formerly HHS646
</TABLE>
ATTACHMENT 2
INSTRUCTIONS FOR COMPLETING FORM NIH 2706
"FINANCIAL REPORT OF INDIVIDUAL PROJECT/CONTRACT"
GENERAL INFORMATION
Purpose. Form NIH 2706 is designed to: (1) provide a management tool for use by
NIH in monitoring the application of financial and personnel resources to NIH
contracts, (2) provide contractors with financial and personnel management data
which is usable in their management processes, (3) promptly indicate potential
areas of contract underruns or overruns by making possible comparisons of actual
performance and projections with prior estimates on individual elements of cost
and personnel, and (4) obtain contractor's analyses of cause and effect of
significant variations between actual and prior estimates of financial and
personnel performance.
REPORTING REQUIREMENTS
(a) Scope. The specific cost and personnel elements to be reported shall be
established by mutual agreement prior to award. The Government may require the
contractor to provide detailed documentation to support any element(s) on one or
more financial reports.
(b) Number of Copies and Mailing Address. An original and two (2) copies of the
report(s) shall be sent to the Contracting Officer at the address shown on the
face page of the contract, no later than the 30th working day after the end of
the period reported.
REPORTING STATISTICS
A modification which extends the period of performance of an existing contract
will not require reporting on a separate Form NIH 2706, except where it is
determined by the Contracting Officer that separate reporting is necessary.
Furthermore, when incrementally funded contracts are involved, each separate
allotment is not considered a separate contract entity (only a funding action).
Therefore, the statistics under incrementally funded contracts should be
reported cumulatively from the inception of the contract through completion.
Definitions and Instructions for Completing Form NIH 2706. For the purpose of
establishing expenditure categories in Column A, the following definitions and
instructions will be utilized. Each contract will specify the categories to be
reported.
(1) Personnel--Professional. Included are the senior level and all other
personnel whose total annual salary rates are $50,000 or more. It should include
key personnel regardless of annual salary rates. All such individuals should be
listed by names and job titles on a separate line including those whose salary
is not directly charged to the contract but whose effort is directly associated
with the contract. The listing must be kept up to date.
(2) Personnel--Other. This will be listed as one amount unless otherwise
required by the contract.
Form NIH 2706, Instructions ATTACHMENT 3
(5/92)
(3) Fringe Benefits. Include allowances and services provided by the Contractor
to employees as compensation in addition to regular salaries and wages. If a
fringe benefit rate(s) has been established, identify the base, rate, and amount
billed for each category. If a rate has not been established, the various fringe
benefit costs may be required to be shown separately. Fringe benefits which are
included in the indirect cost rate should not be shown here.
(4) Accountable Personal Property. Nonexpendable personal property with an
acquisition cost of $1,000 or more and with an expected useful life of two or
more years, and sensitive items regardless of cost. Form HHS 565, "Report of
Accountable Property," must accompany the contractor's public voucher (SF
1034/SF 1035) or this report if not previously submitted. See "Contractor's
Guide for Control of Government Property."
(5) Supplies. Includes the cost of supplies and material and equipment charged
directly to the contract, but excludes the cost of nonexpendable equipment as
defined in (4) above.
(6) Inpatient Care. Costs associated with a subject while occupying a bed in a
patient care setting. It normally includes both routine and ancillary costs.
(7) Outpatient Care. Costs associated with a subject while not occupying a bed.
It normally includes ancillary costs only.
(8) Travel. Includes all direct costs of travel, including transportation,
subsistence and miscellaneous expenses. Travel for staff and consultants shall
be shown separately. Identify foreign and domestic travel separately. If
required by the contract, the following information shall be submitted: (i) Name
of traveler and purpose of trip; (ii) Place of departure, destination and
return, including time and dates; and (iii) Total cost of trip.
(9) Consultant Fee. Fees paid to consultant. Identify each consultant with
effort expended, billing rate, and amount billed.
(10) Premium pay. Includes the amount of salaries and wages over and above the
basic rate of pay.
(11) Subcontracts. List each subcontract by name and amount billed.
(12) Other costs. Includes a number of separate expenditure categories for which
the Government does not require individual line item reporting. It may include
some of the above categories.
(13) Overhead/Indirect Costs. Identify the cost base, indirect cost rate, and
amount billed for each indirect cost category.
(14) General and Administrative expense. Cite the rate and the base. In the case
of nonprofit organizations, this item will usually be included in the indirect
cost.
(15) Fee. If any, cite the fee earned.
(16) Total Costs to the Government.
Form NIH 2706, Instructions ATTACHMENT 3
(5/92)
PREPARATION INSTRUCTIONS
These instructions are keyed to the columns on Form NIH 2706.
Column A--Expenditure Category. Enter in column A the expenditure categories
required by the contract.
Column B--Percentage of Effort/Hours Funded. Enter in column B the percentage of
effort or number of hours agreed to during contract negotiations for each labor
category listed in column A.
Column C--Percentage of Effort/Hours-Actual. The Contractor will enter the
cumulative percentage of effort or number of hours worked by each employee or
group of employees listed in Column A.
Column D--Cumulative Incurred Cost at End of Prior Period. This column should
show the cumulative incurred costs up to the end of the prior reporting period.
This column will be blank at the time of the submission of the initial report.
Column E--Incurred Cost-Current Period. The Contractor should enter the costs
which were incurred during the current period.
Column F--Cumulative Incurred Cost to Date. The Contractor should enter the
combined total of Columns D and E.
Column G--Estimated Cost to Complete. Entries need only be made when the
Contractor estimates that a particular expenditure category will vary from the
amount funded. Realistic estimates are essential.
Column H--Estimated Costs at Completion. No entry is required in this column
unless an entry is made in Column G.
Column I--Funded Contract Amount. Enter in this column the costs agreed to
during contract negotiations for all expenditure categories listed in Column A.
Column J--Variance (Over or Under). This column need not be filled in when
Column H is blank. When entries have been made in Column H, this column should
show the difference between the estimated costs at completion (Column H) and
funded costs (Column I). When a line item varies by plus or minus 10%, i.e., the
percentage arrived at by dividing Column J by Column I, an explanation of the
variance should be submitted. In the case of an overrun (net negative variance),
this submission shall not be deemed as notice under the Limitation of Cost
(Funds) clause of the contract.
Modifications. Any modification in the amount funded for an item since the
preceding report should be listed in the appropriate cost category.
Expenditures Not Funded. An expenditure for an item for which no amount was
funded (e.g., at the discretion of the Contractor in performance of its
contract) should be listed in the appropriate cost category and all columns
filled in except for I. Column J will of course show a 100% variance and will be
explained along with those identified under J above.
Form NIH 2706, Instructions ATTACHMENT 3
(5/92)
Federal Register / Vol. 56, No. 8 / Friday, January 11, 1991 / Notices
SYSTEMS EXEMPTED FROM CERTAIN PROVISIONS OF THE ACT:
None.
89-25-0138
SYSTEM NAME:
Clinical Research: Environm and Epidemiologic Studies in the Div National Cancer
etiology, HHS/NIH/NCL Institutes
SECURITY CLASSIFICATION:
None.
SYSTEM LOCATION:
National Institutes of Health, Executive Plaza North, room 443, 0130
Executive Blvd., Bethesda, MD 20882, and National Institutes of Health,
Building 12, 9000 Rockville Pike, Bethesda, MD 20882, and at hospitals,
medical schools, universities, research institutions, commercial
organizations, state agencies, and collaborating government agencies. A list
of locations and contracts is available upon request from the system manager.
CATEGORIES OF INDIVIDUALS COVERED BY THE SYSTEM:
Patients with cancer and other environmentally caused diseases, (e.g., birth
defects), patients with other diseases (e.g., heart disease), normal and
other persons (e.g., family members) for the purpose of making comparisons.
CATEGORIES OF PERSONS IN THE SYSTEM:
Medical records, progress reports, correspondence, epidemiological
computerized data and records on biological specimens (e.g., blood, tumors,
urine, etc.).
AUTHORITY FOR MAINTENANCE OF THE SYSTEM:
42 U.S.C. 241, AND 282.
PURPOSE(S) OF THE SYSTEM:
To determine: (1) Factors or substances in the environment which cause
cancer; (2) ways in which these factors or substances may cause cancer; (3)
characteristics of persons who may be particularly susceptible to the
environmental factor(s) or substance(s) and/or to cancer.
ROUTINE USES OF RECORDS MAINTAINED IN THE SYSTEM, INCLUDING CATEGORIES OF USERS
AND THE PURPOSES OF SUCH USES
1. Disclosure may be made to HHS contractors, grantees and collaborating
researchers and their staff in order to accomplish the research purposes for
which the records are collected. The recipients are required to protect such
records from improper disclosure.
2. Disclosure may be made to a congressional office from the record of
ATTACHMENT 4
Federal Register / Vol. 56, No. 8 / Friday, January 11, 1991 / Notices
an individual in response to an inquiry from the congressional office made at
the request of the individual.
3. The Department contemplates that it will contract with a private firm
for the purpose of collating, analyzing, aggregating or otherwise refining
records in this system. Relevant records will be disclosed to such a contractor.
The contractor shall be required to maintain Privacy Act safeguards with respect
to such records.
4. In the event of litigations where the defendant is (a) the Department,
any component of the Department, or any employee of the Department in his or her
official capacity; (b) the United States where the Department determines that
the claim, if successful, is likely to directly affect the operations of the
Department or any of its components; or (c) any Department employee in his or
her individual capacity where the Justice Department has agreed to represent
such employees, or example in defending against a claim based upon an
individual's mental or physical condition and alleged to have arisen because of
activities of the Public Health Services in connection with such individual, the
Department may disclose such records as it deems desirable or necessary to the
Department of Justice or other appropriate Federal agency to enable that agency
to present an effective defense, provided that such disclosure is compatible
with the purpose for which the records were collected.
POLICIES AND PRACTICES FOR STORAGE, RETRIEVING, ACCESSING, RETAINING AND
DISPOSING OF RECORDS IN THE SYSTEM:
STORAGE:
File folders, microfilm, charts, graphs, computer tapes, disks, and punch
cards.
RETRIEVABILITY:
By name and/or code number.
SAFEGUARDS:
HHS contractors and collaborating researchers are required to comply with
the provisions of the Privacy Act and with Department Regulations. Subjects
participating in a clinical study are advised that their identity will only be
known to those who are involved in conducting the study and that any published
findings will be in a format which precludes individual identification.
1. Authorized Users: Employees who maintain records in this system are
instructed to grant regular access only to physicians, scientists and support
staff of the National Cancer Institute, collaborating researchers, or HHS
contractors, whose duties require the use of ATTACHMENT 4 such information.
Other one-time and special access by other employees is granted on a
need-to-know basis as specifically authorized by the system manager.
2. Physical Safeguards: Data are kept in secured areas with access limited
to authorized personnel (system manager, project officer, contracting officer,
collaborating researchers, staff, and HHS contractors). Data transmitted to the
NCI are in a form which precludes individual identification.
3. Procedural Safeguards: For computerized records, the contractor is
required to comply, where appropriate, with Department standards and National
Bureau of Standards Guidelines. For example, access is controlled by the use of
security codes known only to authorized personnel. These practices are in
compliance with the standards of Chapter 45-13 of the HHS General Administration
Manual. "Safeguarding Records Contained in Systems of Records," supplementary
Chapter PHS bf: 45-13, and Part 6, "ADP Systems Security," of the HHS
Information Resources Management Manual and the National Institute of Standards
and Technology Federal Information Processing Standards (FIPS Pub. 41 and FIPS
Pub. 31).
RETENTION AND DISPOSAL:
Records are retained and disposed of under the authority of the NIH Records
Control Schedule contained in NIH Manual Chapter 1743, Appendix 1--"Keeping and
Destroying Records" (HHS Records Management Appendix B-301), item 3000-G-3,
which allows records to be kept as long as they are useful in scientific
research. Refer to the NIH Manual Chapter for specific disposition instructions.
SYSTEM MANAGER AND ADDRESS:
National Cancer Institute, Chief, Environmental Epidemiology Branch,
Executive Plaza North, room 443, 0130 Executive Blvd., Bethesda, Maryland 20862.
NOTIFICATION PROCEDURE:
To determine if a file exists, write to System Manager and provide the
following information:
a. System name: Environmental Epidemiologic Studies in the Division of
Cancer Causes and Prevention;
b. Complete Name at time of study;
c. Facility and Home Address at the time the study was undertaken;
d. Date(s) at the time the information was provided (if known);
e. Birth date;
f. Disease type (if known)
The requester must also verify his or her identify by providing either a
notarization of the request or a written certification that the requester is who
he or she claims to be and understands that the knowing and willful request for
acquisition of a record pertaining to an individual under false pretense is a
criminal offense under the Act, subject to five thousand dollar fine.
Individuals seeking notification of or access to medical records should
designate a representative (including address) who may be a physician, other
health professional, or other responsible individual who would be willing to
review the record and inform the subject individual of its contents, at the
representative's discretion.
A parent or guardian who requests notification of or access to a child's or
incompetent person's medical record shall designate a family physician or other
health professional (other than a family member) to whom the record; if any,
will be sent. The parent or guardian must verify relationship to the child or
incompetent person as well as his or her own identity.
RECORD ACCESS PROCEDURE:
Write to System Manager and specify the record sought. The same information
required above for notification is also needed for access. Individuals may also
request listings of accountable disclosures that have been made of their
records, if any.
CONTESTING RECORDS PROCEDURE
Write to System Manager and specify the record and the part(s) to be
contested, and state the corrective action sought and the reasons for the
correction. The right to contest records is limited to information which is
incomplete, irrelevant, incorrect, or untimely (obsolete).
RECORD SOURCE CATEGORIES
HHS agencies, institutions under contract to the U.S. Government,
universities, medical schools, hospitals, research institutions, commercial
institutions, state agencies, other U.S. Government agencies, patients and
normal volunteers, physicians, research investigators and other collaborating
personnel.
SYSTEMS EXEMPTED FROM CERTAIN PROVISIONS OF THE ACT:
None.
PHS 352.223-70 SAFETY AND HEALTH (APRIL 1984)
(a) In order to provide safety controls for protection to the life and health
of employees and other persons; for prevention of damage to all property;
and for avoidance of work interruptions in the performance of the contract;
the Contractor will consult, comply with, and include in all applicable
subcontracts, the following standards, as appropriate:
(1) Biosafety in Microbiological and Biomedical Laboratories, U.S.
Department of Health and Human Services, Centers for Disease Control
(CDC) and the NIH, HHS Pub. No. (CDC) 88-8395.
(2) Recommendations for Prevention of HIV Transmission in Health-Care
Settings, Morbidity and Mortality Report, August 21, 1987, Vol. 35,
No. 2S.
(3) Update: Universal Precautions for Prevention of Transmission of Human
Immunodeficiency Virus, Hepatitis B Virus, and Other Bloodborne
Pathogens in Health-Care Settings. Morbidity and Mortality Weekly
Report, June 24, 1988, Vol. 37, No. 24.
(4) Agent Summary Statement for Human Immunodeficiency Viruses (HIV);
Included are GTLV-III, LAV, HIV-1, and HIV-2. Morbidity and Mortality
Weekly Report, April 1, 1988, Vol. 37, No. S4.
(5) Recommendations for the Safe Handling of Parentoral Antineoplastic
Drugs, NIH Publication No. 83-2621.
(6) NIH Guidelines for the Laboratory Use of Chemical Carcinogens, NIH No.
81-2385.
The above, (1) - (6), may be obtained from:
Division of Safety
Office of Research Services
National Institutes of Health
Building 31, Room 1C02
Bethesda, Maryland 20892
(7) Guidelines for Research Involving Recombinant DNA Molecules (49 FR
46266 latest revision) and Administrative Practices Supplement. These
may be from:
Office of Recombinant DNA Activities
Office of Science Policy and Legislation
National Institutes of Health
Building 31, Room B1C34
Bethesda, Maryland 20892
Safety and Health Clause ATTACHMENT 5
PHS 352.223-70 (04/84)
(8) Procedures for the Domestic handling and Transport of Diagnostic
Specimens and Etiologic Agents, National Committee for Clinical
Laboratory Standards, July 17, 1985, Vol. 5. This may be obtained from
National Committee for Clinical Laboratory Standards
771 East Lancaster Avenue
Villanova, Pennsylvania 19085
Further, the Contractor shall take or cause to be taken such additional
safety measures as the Contracting Officer may determine to be reasonably
necessary; provided, that if compliance with such additional safety
measures results in a material increase in the cost or time of performance
of the contract, an equitable adjustment will be made in accordance with
the clause of this contract entitled "Changes."
(b) Prior to commencement of work, the Contractor will submit in writing its
plan for complying with the safety and health provisions of this contract,
and will meet with the Contracting Officer or his/her designated
representative to discuss and develop a mutual understanding relative to
administration of the overall safety program.
(c) During the performance of work under this contract, the Contractor shall
comply with all procedures prescribed by the Contracting Officer for the
control and safety of persons visiting the job site and will comply with
such requirements to prevent accidents as may be prescribed by the
Contracting Officer.
(d) The Contractor will maintain an accurate record of, and report to the
Contracting Officer in such manner as the Contracting Officer may
prescribe, all accidents and incidents resulting in death, traumatic
injury, occupational disease, and/or damage to all property incident to
work performed under the contract.
(e) The Contracting Officer shall notify (if otherwise, confirm in writing)
the Contractor of any noncompliance with the provisions of this clause and
corrective action to be taken. After receipt of such notice, the
Contractor shall immediately take such corrective action. (Such notice,
when delivered to the Contractor or its representative at the site of the
work, shall be deemed sufficient for the purpose.) If the Contractor fails
or refuses to comply promptly, the Contracting Officer may issue an order
stopping all or part of the work until satisfactory corrective action has
been taken. No part of the time lost due to any such stop order shall be
the subject of claim for extension of time or for costs or damages by the
Contractor.
(f) The Contractor shall insert the substance of this clause in each
subcontract involving the use of hazardous materials or operations.
Compliance with the provisions of this clause by subcontractors will be
the responsibility of the Contractor.
[End of Clause]
Safety and Health Clause ATTACHMENT 5
PHS 352.223-70 (04/84)
PROCUREMENT OF CERTAIN EQUIPMENT
Notwithstanding any other clause in this contract, the Contractor will not be
reimbursed for the purchase, lease, or rental of any item of equipment listed in
the following Federal Supply Groups, regardless of the dollar value, without the
prior written approval of the Contracting Officer.
67 - Photographic Equipment
69 - Training Aids and Devices
70 - General Purpose ADP Equipment, Software, Supplies
and Support (Excluding 7045-ADP Supplies and
Support Equipment.)
71 - Furniture
72 - Household and Commercial Furnishings and Appliances
74 - Office Machines and Visible Record Equipment
77 - Musical Instruments, Phonographs, and Home-type
Radios
78 - Recreational and Athletic Equipment
When equipment in these Federal Supply Groups is requested by the Contractor and
determined essential by the Contracting Officer, the Government will endeavor to
fulfill the requirement with equipment available from its excess personal
property sources, provided the request is made under a cost-reimbursement
contract. Extensions or renewals of approved existing leases or rentals for
equipment in these Federal Supply Groups are excluded from the provisions of
this article.
NIH(RC)-7 (4/1/84) ATTACHMENT 6
OMB Bulletin 81-16
Biotech Research
SCHEDULE II-A
Master List of
Government Furnished Property
<TABLE>
<CAPTION>
Description Model # Serial # Gov. Decal # Location Cost ($) Date
Acquired
<S> <C> <C> <C> <C> <C> <C>
Freezer, Mechanical MPG/Forma 8158 80638-004 467579 3 Taft, Annex 1,780 04/03/82
Freezer, Mechanical MPG/Forma 8158 80856-007 481561 3 Taft, Annex 4,850 10/22/84
Freezer, Mechanical MPG/Forma 8158 80638-005 467580 3 Taft, Annex 1,780 04/03/82
Freezer, Mechanical MPG/Forma 8158 80638-003 467578 3 Taft, Annex 1,780 04/03/82
Freezer, Mechanical MPG/Forma 8158 80856-008 467628 3 Taft, Annex 4,850 10/22/84
Freezer, Mechanical MPG/Forma 8358 69929-77 467349 3 Taft, Annex 4,539 12/27/83
Freezer, Mechanical MPG/Forma 8358 69566-1 449931 3 Taft, Annex 4,539 08/03/83
Freezer, Mechanical MPG/Forma 8358 69566-2 449932 3 Taft, Annex 4,539 08/03/83
Freezer, Mechanical MPG/Forma 8358 60091-118 468220 3 Taft, Annex 4,539 06/28/84
Freezer, Mechanical MPG/Forma 8358 60091-119 468222 3 Taft, Annex 4,539 06/28/84
Freezer, Mechanical MPG/Forma 8358 60342-261 486569 3 Taft, Annex 4,732 05/02/85
Freezer, Mechanical MPG/Forma 8358 80128-320 496994 3 Taft, Annex 4,680 07/25/85
Freezer, Mechanical MPG/Forma 8358 81043-402 None 3 Taft, Annex 4,680 07/01/85
Freezer, Mechanical MPG/Forma 8358 81391-455 509353 3 Taft, Annex 4,680 02/18/86
Freezer, Mechanical MPG/Forma 8358 81611-479 509354 3 Taft, Annex 4,680 06/25/86
Freezer, Mechanical MPG/Forma 8358 82004-659 525534 3 Taft, Annex 4,275 05/06/87
Freezer, Mechanical MPG/Forma 8358 82004-658 525535 3 Taft, Annex 4,275 05/06/87
Freezer, Mechanical MPG/Forma 8358 82189-762 600051 3 Taft, Annex 4,792 11/01/87
Freezer, Mechanical MPG/Forma 8358 82154-858 None 3 Taft, Annex 4,857 08/01/88
Freezer, Mechanical MPG/Forma 8358 82154-857 None 3 Taft, Annex 4,857 08/01/88
Freezer, Mechanical MPG/Forma 8358 82154-860 None 3 Taft, Annex 4,857 08/01/88
Freezer, Mechanical MPG/Forma 8458 83029-220 None 3 Taft, Annex 4,743 06/01/89
Freezer, Mechanical MPG/Forma 8458 83029-219 None 3 Taft, Annex 4,743 06/01/89
Freezer, Mechanical MPG/Forma 8458 83071-255 609114 3 Taft, Annex 4,743 09/01/89
Freezer, Mechanical MPG/Forma 8458 83071-256 609115 3 Taft, Annex 4,743 09/01/89
Freezer, Mechanical MPG/Forma 8458 83327-403 623931 3 Taft, Annex 5,028 04/01/90
Freezer, Mechanical MPG/Forma 8458 83327-402 623932 3 Taft, Annex 5,028 04/01/90
Freezer, Mechanical MPG/Forma 8458 83510-576 811081 3 Taft, Annex 4,473 12/01/90
Freezer, Mechanical MPG/Forma 8458 83510-578 811080 3 Taft, Annex 4,473 12/01/90
Freezer, Mechanical MPG/So-Low SE27-120 8889646 01023091 3 Taft, Annex 11/92
Freezer, Mechanical MPG/So-Low SE27-120 8889645 01023092 3 Taft, Annex 11/92
Freezer, MFG/Montgomery Ward None 3 Taft, Lab D 450
Freezer Racks, for Mechanical 820012 449933 3 Taft, Annex 2,884 08/03/83
MFG/Forma
Freezer Racks, for Mechanical (2 sets 12-2 None 3 Taft, Annex 5,469 03/05/91
MFG / Cryo
Freezer, LN 2 MFG / MVE A4500 449-B 449930 3 Taft, Freezer Rm 6,909 07/06/83
Freezer, LN 2 MFG / MVE A4500 448-B 449929 3 Taft, Freezer Rm 6,909 07/06/83
Freezer, LN 2 MFG / MVE A4500 276-B 467577 3 Taft, Freezer Rm 1,460 04/03/82
Freezer, LN 2 MFG / MVE A4500 272-B 467576 3 Taft, Freezer Rm 1,460 04/03/82
Freezer, LN 2 MFG / MVE A4500 274-B 467575 3 Taft, Freezer Rm 1,460 04/03/82
Freezer, LN 2 MFG / MVE A4500 481-B 481973 3 Taft, Freezer Rm 7,500 04/01/85
Freezer, LN 2 MFG / MVE A4500 561 509677 3 Taft, Freezer Rm 7,800 08/22/86
Freezer, LN 2 MFG / MVE A4500 595 530495 3 Taft, Freezer Rm 8,952 09/01/87
Freezer, LN 2 MFG / MVE A4500 593 530496 3 Taft, Freezer Rm 8,952 09/01/87
Freezer, LN 2 MFG / MVE XLC1110 DKA88J102 None 3 Taft, Freezer Rm 9,500 09/01/88
Freezer, LN 2 MFG / MVE XLC1110 DKG89G101 609116 3 Taft, Freezer Rm 9,870 09/01/89
Freezer, LN 2 MFG / MVE XLC1110 DKC89G103 609117 3 Taft, Freezer Rm 9,870 09/01/89
Freezer, LN 2 MFG / MVE XLC1110 DKD90B102 623933 3 Taft, Freezer Rm 9,870 04/01/90
Freezer, LN 2 MFG / MVE XLC1110 DKD90B101 623934 3 Taft, Freezer Rm 9,870 04/01/90
Freezer, LN 2 MFG / MVE XLC1110 DFK90K110 811082 3 Taft, Freezer Rm 10,077 12/01/90
Freezer Racks, for LN 2 (2 sets) 9-2 44934 3 Taft, Freezer Rm 2,260 08/12/83
MFG/MVE 44935
Freezer Racks, for LN 2 MFG / MVE 12-2C 468221 3 Taft, Freezer Rm 2,970 08/17/84
Freezer Racks, for LN 2 MFG / MVE 9-2C 481973 3 Taft, Freezer Rm 1,300 04/01/85
Freezer Racks, for LN 2 MFG / MVE 12-2C 486570 3 Taft, Freezer Rm 2,805 05/22/85
Freezer Racks, for LN 2 MFG / Cryo 9-2 None 3 Taft, Freezer Rm 1,409 03/05/91
Centrifuge, Micro MFG/Fisher 59 1611 467566 3 Taft, Lab D 1,100 04/03/82
Centrifuge MFG/IEC PR-6 47914P2 295075 3 Taft, Lab D 2,606 04/03/82
Centrifuge MFG/Beckman TJ-6 10309 481563 3 Taft, Lab D 2,900 10/22/84
Centrifuge MFG/IEC CRU-5000 23452863 467626 3 Taft, Lab D 2,950 10/22/84
Centrifuge with H-100B Rotor RT6000B 8601962 509355 3 Taft, Lab D 7,325 07/17/86
MFG/Sorvall
Water Bath MFG/Precision Scientific 182 22AM/7 467574 3 Taft, Lab D 450 04/03/82
Water Bath MFG/Precision Scientific 184 22AM/6 467572 3 Taft, Lab D 450 04/03/82
Hood, Laminar Flow MFG/Nuaire, Inc. NU-408-424 4009 MM-A 467568 3 Taft, Lab D 8,952 04/03/82
Hood, Laminar Flow MFG/CCI 740 13406 418708 3 Taft, Annex 8,952 05/01/90
Coulter Counter MFG/Coulter Electron ZBi 5632 467567 3 Taft, Lab D 10,000 04/03/82
Tank, TN 2 MFG/MVE 160L DURA-LO L83112112CA 467514 3 Taft, Freezer Rm 1,295 02/06/84
Freezer, Control Rate; Programmer 900 81050ID 496118 3 Taft, Freezer Rm 9,870 1986
Controller, & Recorder
MFG/Cryomed
Freezer, Control Rate; Chamber 990 81020F 496118 3 Taft, Freezer Rm 1986
MFG/Cryomed
Freezer, Control Rate; Programer & 1010 89-22026 None 3 Taft, Freezer Rm 06/01/89
Controller MFG/Cryomed
Freezer, Control Rate; Recorder L655221 1288/89 None 3 Taft, Freezer Rm 06/01/89
MFG/Cryomed
Freezer, Control Rate; Chamber 2700C 882110 None 3 Taft, Freezer Rm 06/01/89
MFG/Cryomed
Refrigerator MFG/Puffer Hubbard LR201T4 11138 277520 3 Taft, Lab D 880 04/03/82
Refrigerator MFG/Gibson RT173WJGB 0781677522 401923 3 Taft, Lab D 310 10/22/84
Freezer, Mechanical MFG/Forma 8458 84200-00719 811940 3 Taft, Annex 5,431 08/28/91
Freezer, Mechanical MFG/Forma 8458 84200-00720 811941 3 Taft, Annex 5,431 08/28/91
Freezer, LN2MFG/MVE DFK91G101 811942 3 Taft, Freezer Room 9,870 08/28/91
Freezer Racks for LN2MFG/MVE 3 Taft, Freezer Room 2,000 08/28/91
Freezer Racks for LN2MFG/MVE 3 Taft, Freezer Room 1,725 08/28/91
COMPUTER EQUIPMENT
Computer, 286 MFG/Compaq 20 48-14AM3B1292 None 3 Taft, Office D 2,195 12/01/88
Monitor, Monochrome 1418 AONO7564 None 3 Taft, Office D 157 12/01/88
MFG/Packard Bell
Printer MFG/Epson DFX-5000 OOG0000823 None 3 Taft, Office D 1,517 12/01/88
Modem MFG/Hayes 2400B None 3 Taft, Office D 443 12/01/88
Graphic Card MFG/Hercules None 3 Taft, Office D 194 12/01/88
Program, MS DOS MFG/Compaq V3.3 None 3 Taft, Office D 84 12/01/88
Disc Drive/Compaq None 3 Taft, Office D 400 06/25/91
Hard Drive/Compaq None 3 Taft, Office D 538 07/09/91
Keyboard/Compaq None 3 Taft, Office D 07/09/91
Liquid Nitrogen Dry CRYOMED CMD-20-1 916815 1,100 11/91
Shipper CMD-20
Liquid Nitrogen Dry CRYOMED CMD-20-2 916816 1,100 11/91
Shipper CMD-20
Freezer, LN2 MFG/MVE XLC 1110 JIA92B101 871521 9,882 05/92
Freezer, Mechanical MFG/So-Low SE27.120 9192769 871522 5,243 06/92
Freezer, Mechanical MFG/So-Low SE27.120 9192768 871523 5,243 06/92
</TABLE>
EXHIBIT 10.6
AGREEMENT
WHEREAS, Ajinomoto Co., Inc. ("Ajinomoto") of Tokyo, Japan desires to
sponsor and fund a research and development program and BTRL Contracts and
Services, Inc., doing business as Biotech Research Laboratories (BTRL) a wholly
owned subsidiary company of Boston Biomedica, Inc., desires to provide the
necessary services to perform such research (The Project), this Contract
Agreement is made this 1st day of October 1995 by Ajinomoto and BTRL. In
consideration of the mutual promises set forth herein, the parties hereto state
and agree as follows:
1. BTRL agrees, that in return for the payments to be made thereunder, it
shall provide services including labor, materials and supplies,
facilities and administrative support necessary to perform the Project as
described in Attachment I, using its best efforts therein. This work will
be performed under the direction of the Project Officer (Ajinomoto) and
facilitated by a Principal Investigator (BTRL).
2. In consideration of the services to be performed by BTRL during the
Project, Ajinomoto will pay BTRL in accordance with the budget specified
in Attachment II.
a. The Labor, Materials and Supplies and Other Direct Charges will
reflect the actual usage on the Contract, and will be burdened
with a [Language Deleted Due To Confidential Treatment Request.]
Fringe Benefit Rate, an [Language Deleted Due To Confidential
Treatment Request.] G&A Rate and a [Language Deleted Due To
Confidential Treatment Request.] Fee as indicated. Fringe benefits
will include: long-term disability, life insurance, earned time,
tuition reimbursement, usually ten paid holidays, 401K plan and
short term disability. No health insurance coverage will be
offered to this class of employee ( "Project At-Will").
b. The Rental and Other Fixed Overhead Costs will remain fixed in the
course of the Project as indicated.
c. Any required equipment purchases which are not billed directly to
this contract, but which come from a Supplementary Budget, will
not be burdened with G&A or Fee.
The payments on each year's budget shall be payable in two equal
semi-annual installments, the first of which shall be due as of the
effective date of this Agreement and the remaining installments due at
six month intervals thereafter. BTRL will provide Ajinomoto with monthly
statements indicating the actual expenditures incurred on this Project.
In the event that substantial changes in the proposed budget are
requested by Ajinomoto, (such as hiring additional personnel or requiring
substantial increases in the cost of Materials or Services), and such
changes will exceed the proposed
-Page 1-
budget for the year, BTRL will request a Supplementary Budget and await
Ajinomoto's approval prior to incurring these costs. Approved payments
relating to the Supplementary Budget will be made in accordance with the
manner detailed in a., b., c., above.
3. BTRL agrees that in the performance of the Project, it shall provide the
personnel identified and required by Ajinomoto. Initially, this personnel
shall consist of a Principal Investigator (10% effort), two full-time
Technicians and one full-time Administrative Assistant. If requested by
Ajinomoto, a full-time Senior Scientist or other personnel may be added
at a subsequent time. Personnel hired by BTRL for the Project, other than
the P.I., will be "Project At-Will" employees directly reimbursed by the
Project. The scientific personnel working on the Project shall have the
necessary scientific training and experience to perform the Project.
4. In further consideration of the payments to be made in Paragraph 2 above,
BTRL shall provide two carpeted offices (designated as Room I and Ia on
BTRL's floor plan), one for [Language Deleted Due To Confidential
Treatment Request.], the on-site Project Officer employed by Ajinomoto,
and another for the Administrative Assistant and scientific personnel.
The offices will come equipped with a telephone extension connecting to
the Company switchboard for internal and local use and a computer network
connection. Private telephone line(s) will be provided by the Project as
will any additional office improvements. BTRL also agrees to provide to
the Project, laboratory space designated as Laboratory X and Xa on BTRL's
floor plan. Laboratory Xa comes equipped with laboratory casework and
cabinets. Laboratory X does not come equipped with laboratory casework or
cabinets. Any additional casework , cabinets or laboratory renovations
will be provided by the Project.
5. Ajinomoto agrees and shall require the Project Officer and any other
Ajinomoto representative entering BTRL's premises to agree to the
following:
a. The presence of such person(s) in BTRL's premises is for the
benefit of Ajinomoto and though BTRL will use reasonable efforts
to maintain its premises in a safe condition, BTRL shall not be
liable for any illness or injury suffered by such person(s) while
in, on or around BTRL's premises, including its laboratories where
infectious biological materials are or may be used.
b. In the event of any illness or injury to such person(s) occurring
on, in or around BTRL's premises, BTRL shall be released from any
and all responsibility or liability for such illness or injury
except to the extent such illness or injury occurred as a result
of any intentional misconduct by BTRL. Ajinomoto shall defend BTRL
against any such claims by such persons and indemnify BTRL from
any liability arising from such claims.
-Page 2-
c. Ajinomoto shall have the responsibility of providing statutory
workers compensation insurance and any other insurance coverage
that may apply to such person(s).
d. BTRL shall have no obligation to provide any insurance coverage
whatsoever for the benefit of Ajinomoto or such person(s).
e. Such person(s) shall abide by all BTRL policies and procedures,
including those concerning health, security and safety, and any
violation of such policies and procedures shall entitle BTRL to
refuse to allow such person(s) on its premises and/or to require
Ajinomoto to substitute other representatives for those who
violate such policies and procedures.
f. Any non-public information learned about any aspect of the
business of BTRL and/or its affiliated companies (other than
information concerning the Project) shall be held in full and
complete confidence and shall not be used, or disclosed to any
person or entity whatsoever, without the prior written consent of
BTRL. The foregoing restriction shall apply to technical
information, and financial and non-financial information including
but not limited to know-how, formulae, patents, processes,
procedures, sales information, manufacturing data and names of
customers or vendors.
6. This Agreement and the Project shall extend for an initial term of three
(3) years, which may be extended by mutual agreement for additional terms
of one year each.
Ajinomoto shall have the right to terminate this Agreement prior to
September 30, 1998 by giving three (3) months prior written notice to
BTRL. If however, Ajinomoto terminates this Agreement without cause for
its own convenience BTRL shall be due the balance of all Fee as specified
in the Project Budget (Attachment II). Except as otherwise provided above
or unless explicitly agreed otherwise between the parties, neither party
shall have the right to terminate this Agreement on or before October 30,
1998, except that either party may terminate this Agreement forthwith:
a. in the event the other party shall breach any of its obligations
under this Agreement and fails to remedy such breach within sixty
(60) days from receipt of notice of such breach by the party not
in default:
b. in case of the other party's liquidation, bankruptcy or state of
insolvency; or
c. in the event the other party assigns this Agreement without the
written consent of the terminating party.
Upon expiration or termination of this agreement for any reason
whatsoever, all claims each party may have against the other party shall
become due. The parties
-Page 3-
shall make up a list of such claims of each against the other. Such
claims shall be offset and the net amount arrived at shall be settled
within sixty (60) days from the termination of this agreement.
7. In order to protect the confidentiality of all confidential subject
matter, the parties agree not to disclose or release such confidential
subject matter to any person, laboratory, institution, corporation or
other entity that is not directly participating in this Project; and, to
not use or permit the use of said confidential subject matter for any
purpose other than for the Project without first obtaining the express
written permission of the other party, except under the following
circumstances:
a. Subject matter that, as of the signing of this agreement, is in
the public domain;
b. Subject matter that, as of the date of the signing of this
agreement, can be shown by written evidence to have been known to
either party;
c. Subject matter that, at any time is received in good faith by
either party from a third party who was lawfully in possession of
the same and had the right to disclose the same; and
d. Subject matter that the parties mutually agree in writing to
release from the terms of this agreement.
8. Any and all discoveries and/or inventions arising from performance of the
Project shall belong to Ajinomoto. BTRL shall, however, be entitled to a
royalty of [Language Deleted Due To Confidential Treatment Request.] of
the net sales of those products which are covered by a product patent
arising out of the Project; and BTRL shall be entitled to a royalty of
[Language Deleted Due To Confidential Treatment Request.] of the net
sales of products covered by only a process patent arising from the
Project. In the event a product is covered by both a product patent and a
process patent, BTRL shall receive a royalty of [Language Deleted Due To
Confidential Treatment Request.]. Royalty payments on products covered by
patents shall continue for the life of the applicable patent. BTRL shall
be entitled to a [Language Deleted Due To Confidential Treatment
Request.] royalty on net sales of products utilizing technology developed
under the Project if there is no patent on either the product or the
process utilized therein. Royalty payments applicable to unpatented
products or processes shall continue for a period of ten years from the
date of the first commercial sale of a product utilizing the unpatented
technology.
9. BTRL shall have a right of first refusal on an exclusive or
semi-exclusive (with Ajinomoto) basis in the event Ajinomoto decides to
license any patented technology arising from the Project. BTRL shall have
the right to use unpatented technology in exchange for payment of a sum
to be agreed upon by both parties during the term of its use; however,
after ten years of royalty payments BTRL shall be deemed to have a paid
up license to use such technology.
-Page 4-
10. In the event that either of the parties hereto, at any time during the
term of this Agreement, commits a breach of any provision thereunder, and
fails to rectify such breach within sixty (60) days from the receipt of
written notice thereof from the other party, such other party may be
entailed to terminate this Agreement.
11. In the event of any dispute, the parties shall use their best efforts to
resolve such dispute. If such dispute is not resolved within sixty (60)
days of the first written notice thereof, either party may request
arbitration, with such arbitration to take place in Rockville, Maryland,
in accordance with the Commercial Mediation rules of the American
Arbitration Association. The parties agree that they will be represented
at the oral proceedings of such mediation by at least one of their
authorized officers who may be assisted by one or more advisors. The cost
of such mediation shall be shared equally by the parties, and each party
shall bear its own expenses in connection with such mediation. The
parties shall endeavor and shall instruct the mediator to have the
mediation proceedings completed and a final resolution reached within 60
days of the date the mediator is appointed.
This Agreement shall be governed by and construed in accordance with the
laws of the State of Maryland. In the event of an unsettled dispute, the
parties mutually agree to the use of any federal or state court in the
State of Maryland having jurisdiction over the subject matter thereof,
and the parties hereby waive any and all rights to object to the laying
of venue in any such court and to the right to claim that any such court
may be an inconvenient forum. The parties hereby submit themselves to the
jurisdiction of each such court and agree that service of process on them
in any such action may be effected by notice in writing to the officials
or their replacements who have signed this Agreement.
12. In the event of termination of or at the end of the Agreement Ajinomoto
agrees to reimburse BTRL for those expenses incurred by the Project after
the winding down of the Project. Sixty days prior to the end of the
agreement BTRL will submit to the on-site Project Officer a list of
expenses to be approved that will be incurred as a result of the end of
the project
13. Attachment I is a description of the Project.
14. Attachment II is the Project Budget.
15. Attachment III is the List of Equipment.
16. Attachment IV is a Building Floor Plan designating office and laboratory
space to be assigned to the Project.
-Page 5-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date set forth above by their duly authorized
representatives.
AJINOMOTO CO., INC. BTRL CONTRACTS AND SERVICES, INC.
BY BY
---------------------------- ------------------------------------------
Masakatsu Nakamura Richard T. Schumacher
TITLE TITLE
------------------------- ---------------------------------------
Managing Director President
-Page 6-
ATTACHMENT 1
Research Objectives
a. Relationship between immunodeficiency and plasma levels of
L-cystine
There is evidence to support the idea that persons with
immunodeficiencies, such as Low Natural Killer Syndrome (LNKS),
advanced and terminal stage cancers, HIV-1 infections, etc., have
significantly lower plasma levels of certain essential amino
acids, i.e., L-cystine and L-glutamine compared to those of
healthy individuals. Since current assays for immunodeficiencies,
specifically NK activity assays, require the use of radioisotopes
and viable biological samples, a chemical assay to measure amino
acids would be both simpler and easier. Our group is developing a
colorimetric assay to determine plasma levels of L-cystine. This
assay can be used in place of the more time-consuming NK activity
assay to determine a person's immune status. The results we have
obtained thus far using this colorimetric assay lend further
support to the above hypothesis.
The ultimate goal of this project is to develop a diagnostic kit
that makes use of plasma levels of L-cystine as a marker for
immunodeficiency.
b. Support of clinical trials of Low NK Syndrome patients by
treatment with Lentinan.
The University of Pittsburgh School of Medicine, in cooperation
with Ajinomoto Company, is planning clinical trials to gain FDA
approval to administer Lentinan, a polysaccharide extracted from
an edible Japanese mushroom, to patients with Chronic Fatigue
Syndrome (CFS) with or without LNKS. Use of Lentinan in Japan has
proven to be an effective immunopotentiator for the treatment of
CFS and LNKS.
c. Examination of etiology of Low NK Syndrome
Our group will also be collaborating with the University of
Pittsburgh School of Medicine to determine the etiology of LNKS.
As of now, there are three hypotheses as to the cause of LNKS: (1)
an undetermined virus, (2) a defective metabolic pathway and/or
(3) a genetic factor. Once the mechanism(s) that leads to LNKS has
been defined, a quantitative assay, e.g., PCR in the case of a
viral infection, can be utilized to further characterize the
etiologic agent(s).
ATTACHMENT II
YEARLY COST BREAKDOWN
SUMMARY OF ANNUAL COSTS
AJINOMOTO CONTRACT
3 YEAR
YEAR 1 YEAR 2 YEAR 3 TOTAL
DIRECT LABOR
Technician [Language Deleted Due To Confidential Treatment Request.]
Technician
Admin Assistant [Language Deleted Due To Confidential Treatment Request.]
P.I.
TOTAL DIRECT
LABOR [Language Deleted Due To Confidential Treatment Request.]
FRINGE BENEFITS
FACILITIES
OFFICE 272 SQUARE FT. [Language Deleted Due To Confidential Treatment Request.]
LABS 892 SQUARE FT.
OTHER FIXED OVERHEAD COSTS
MATERIALS [Language Deleted Due To Confidential Treatment Request.]
OTHER DIRECT
(HEALTH INSURANCE, POSTAGE, TRAVEL, PRIVATE TELEPHONE)
SUBTOTAL
G & A [Language Deleted Due To Confidential Treatment Request.]
TOTAL COSTS
[Language Deleted Due To Confidential Treatment Request.]
FEE
TOTAL COSTS PLUS
FIXED FEE [Language Deleted Due To Confidential Treatment Request.]
EQUIPMENT
DIRECT LABOR BASED ON 1856 PERON HOURS PER YEAR
ATTACHMENT III
FURNITURE/COMPUTER EQUIPMENT:
Ajinomoto owns desks, chairs, and file cabinets for Dr. Aoki and his staff; 2
IBM compatible computers, 1 laser printer, and 1 laserjet fax.
EQUIPMENT:
Ajinomoto owns the following equipment:
Miscellaneous equipment, supplies, disposable labware, chemicals, etc.
Locker
Scotsman Ice Maker
LKB Ultraspec Plus (Spectrophotometer)
Perkin Elmer Thermal Cycler (Gene Amp PCR System 9600)
Sorvall RT6000B Refrigerated Centrifuge
Ohaus balance
3x Forma Scientific Water-Jacketed Incubator
2x Olympus CK2 Microscopes
Olympus CK2 Microscope with Camera
Zeiss Axiophot Fluorescence Microscope
Skatron A/S Plate Washer
HPLC equipment
Branson 8200 Sonifier
Orion Research pH meter
Sartorius Balance
Ohaus GT480 Balance
2x Refrigerator/Freezers
Beckman 18-70M Ultracentrifuge
Revco (-70%C) freezer (Deep Freezer)
Napco 201 and 202 water baths
Beckman Microfuge 12
Power Supply
Fischer Biotech UV Box
HP Quiet Jet Printer
Titertek Multiskan Mcc/340 Plate Reader
Mistral 3000E Centrifuge
Beckman J2-M1 Centrifuge
Fire Safety Cabinet
Hoeffer Transfor
Packard Liquid Scintillation Analyzer
Branson Sonifier 250
LKB-HPLC Variable Monitor
LKB-HPLC Superac
LKB-HPLC LC Controller
LKB-HPLC HPLC Pump
Attachment IV
[FLOOR PLAN -- UPPER LEVEL]
Attachment IV
[FLOOR PLAN -- LOWER LEVEL]
EXHIBIT 10.7
LEASE AGREEMENT
THIS LEASE is made as of this 30th day of June, 1992, by and between (i)
Cambridge Biotech Corporation, a Delaware corporation qualified to do business
in the State of Maryland (the "Landlord"), with a business and mailing address
of 1500 East Gude Drive, Rockville, MD 20850, and (ii) BTRL Contracts and
Services Inc., a Massachusetts corporation qualified to do business in the State
of Maryland (the "Tenant"), with a business and mailing address of c/o Boston
Biomedica, Inc., 375 West Street, West Bridgewater, Massachusetts 02379.
WITNESSETH:
For and in consideration of the covenants herein contained and upon the
terms and conditions herein set forth, the parties agree as follows:
1. Introductory Provisions.
(a) Fundamental Lease Provisions. Certain Fundamental Lease
provisions are presented in this Section in summary form solely to facilitate
convenient reference by the parties hereto:
<TABLE>
<S> <C> <C> <C> <C>
(1) Leased Premises 3 Taft Court [See Section 2(a)
Rockville, MD 20850 and Exhibit A]
(2) Floor Space of Leased 20,680 square feet [See Section 2(a)]
Premises (more or less)
(3) Gross Leasable Area of 22,680 square feet [See Section 2(b))
Property
(4) A. Proportionate Share 91% [See Section 2(c)]
B. R.E. Proportionate 67%
Share
C. Insurance Propor- 67%
tionate Share
(5) Rent Commencement Date July 1, 1992 [See Section 3(a)]
(6) Expiration Data June 30, 1997 [See Section 3(a)]
(7) Minimum Annual Rent Lease Year Minimum Annual Rent [See Section 4(a)]
1 $19,200.00
2 $144,760.00
3 $206,800.00
4 $248,160.00
5 $289,520.00
(8) Basic Monthly Rent Lease Year Basic Monthly Rent [See Section 4(a)]
1 $1,600.00
2 $12,063.33
3 $17,233.33
4 $20,680.00
5 $24,126.66
(9) Tenant's Use Clause General office,
research/development, [See Section 6]
and manufacturing
(as allowed by
zoning code) in
biotechnology and
biomedical fields
(10) Security Deposit $12,063.00 [See Section 5]
(11) Leasing Broker None [See Section 35]
</TABLE>
(b) References and Conflicts. References appearing in Section
1(a) are intended to designate some of the other places in the Lease where
additional provisions applicable to the particular fundamental Lease provisions
appear. These references are for convenience only and shall not be deemed all
inclusive. Each reference in this Lease to any of the fundamental Lease
provisions contained in Section 1(a) shall be construed to incorporate all of
the terms provided for under such provisions, and such provisions shall be read
in conjunction with all other provisions of this Lease applicable thereto. If
there is any conflict between any of the fundamental Lease provisions set forth
in Section 1(a) and any other provisions of the Lease, the latter shall control.
-2-
(c) Exhibits. The following drawings and special provisions are
attached hereto as exhibits and hereby made a part of this Lease:
Exhibit A. Site Plan of Property including the Leased Premises and Adjacent
Laboratory Building
Exhibit B. List of Landlord Repairs After Rent Commencement Date
Exhibit C. Rules and Regulations
2. Premises.
(a) Leased Premises. Landlord hereby leases to Tenant, and Tenant
hereby rents from Landlord, that certain building (the "Leased Premises") which
is located at 3 Taft Court, Rockville, MD 20850 and is outlined in blue on
Exhibit A, together with the non-exclusive right to use the common areas of the
Property as more fully described in Section 7 hereof. The Leased Premises shall
consist of the agreed square footage of floor space as specified in Section
l(a)(2).
(b) The Property. The Leased Premises is a part of a parcel of
improved real property owned by Landlord which is more fully described as "Lot
5, Block A, in the Redgate Industrial Park Subdivision as shown on a plat
thereof recorded in Plat Book 102, Plat 11503 among the Land Records of
Montgomery County, Maryland" (the "Property"). Landlord represents and warrants
to Tenant that it is the owner in fee simple of the Property, subject to certain
encumbrances, rights of way, easements, and other matters of record. Located on
the Property is the Leased Premises, a laboratory building known as 3 1/2 Taft
Court, Rockville, Maryland 20850 (the "Adjacent Laboratory Building"), and
certain common areas as hereinafter defined in Section 7. Landlord and Tenant
acknowledge that the gross leasable area of both the Leased Premises and the
Adjacent Laboratory Building is specified in Section l(a)(3) ("Gross Leasable
Area" or "GLA"), and shall hereafter be referred to as the GLA of the Property.
The GLA of the Property shall be used hereinafter for purposes of computing
Tenant's "Proportionate Share" (as hereinafter defined) of certain expenses
payable to Landlord as "Additional Rent" (as hereinafter defined). Landlord
reserves the right to modify the GLA of the Property, and shall modify the GLA
of the Property, from time to time during the Lease Term as a result of
construction of new leasable improvements or the demolition of existing leasable
improvements on the Property. Landlord's right to modify the GLA of the Property
shall not be construed to provide Landlord with any right to modify the GLA of
the Leased Premises, or to deprive Tenant of the reasonable use of any portion
of the parking areas allocated to it.
(c) Tenant's Proportionate Share. Tenant's Proportionate Share of
certain expenses hereinafter made payable to Landlord as Additional Rent is
specified in Section l(a)(4). Said computation is based upon the ratio of the
total area of floor space in the Leased Premises to the GLA of the Property. The
Proportionate Share shall be modified during the Lease Term in the event that
the GLA of the Property is modified as described in Section 2(b) above.
3. Term and Acceptance by Tenant.
(a) Lease Term. The term of this Lease (sometimes herein called
the "Lease Term") shall begin as of the date specified in Section 1(a) (5)
("Rent Commencement Date") and, unless sooner terminated as herein provided,
continue thereafter through the date specified in Section l(a)(6) ("Expiration
Date"). The period commencing with the Rent Commencement Date and ending on the
last day of the twelfth (12th) full calendar month thereafter shall constitute
the first "Lease Year" as such
-3-
term is used herein. Each successive full twelve (12) month period during the
Lease Term shall constitute a "Lease Year".
(b) Acceptance of Leased Premises. Tenant accepts possession of
the Leased Premises in "as is" condition, except that Landlord shall be
obligated to complete, or cause to be completed, repairs to the Leased Premises
which are identified in Exhibit B, in a good and workmanlike manner using first
quality materials, on or before the ninetieth (90th) day following the date of
execution of this Lease by both parties hereto. Landlord shall use all
reasonable efforts to cause said repair work to be completed by such independent
contractors in a diligent manner. Tenant expressly acknowledges and agrees that
Landlord has made no representations or warranties with respect to the Leased
Premises, and that no promises to alter, repair or improve the Leased Premises
or the Property have been made by Landlord or its agents or employees, unless
specifically set forth herein.
(c) Permits. Tenant shall be responsible for obtaining the
occupancy permit (if and to the extent required by law) and all other permits or
licenses necessary for its lawful occupancy of the Leased Premises. This
requirement shall not relieve Tenant of its liability for the payment of Minimum
Annual Rent and Additional Rent, and the performance of all other obligations
contained herein, from and after the Rent Commencement Date, in the event that
all of said approvals, permits and licenses have not been acquired prior
thereto.
4. Rent.
(a) Minimum Annual Rent. The Minimum Annual Rent reserved
hereunder in Section 1(a)(7) shall be payable by Tenant to Landlord during each
Lease Year of the Lease Term in equal monthly installments of Basic Monthly Rent
in the amounts set forth in Section 1(a)(8), due in advance, without notice or
demand, and without set-off, deduction, recoupment or abatement of any kind, on
the Rent Commencement Date and the first (1st) day of each and every calendar
month thereafter during the Lease Term. In the event that the Rent Commencement
Date occurs on a day other than the first day of a calendar month or the Lease
Term ends on a day other than the last day of a calendar month, then the Basic
Monthly Rent or Additional Rent for such partial month(s) shall be computed on a
per diem basis by dividing the Basic Monthly Rent or Additional Rent by thirty
(30) and multiplying it by the number of days in the partial calendar month.
Rent shall be paid to Landlord, or to such other person(s), or at such other
address as Landlord may designate to Tenant from time to time.
(b) Additional Rent.
(i) General. Whenever it is provided by the terms of this
Lease that Tenant is required to make any payment to Landlord other than a
payment of Minimum Annual Rent, such payment shall be deemed to be a payment of
additional rent ("Additional Rent"). Unless otherwise expressly specified
herein, Additional Rent shall be paid by Tenant with the next installment of
Basic Monthly Rent thereafter falling due. Additional Rent shall include, but
not be limited to:
(ii) Real Estate Taxes. On or before September 1, 1992,
Tenant shall pay to Landlord its R.E. Proportionate Share of the Real Estate
Taxes to be incurred by Landlord on the Property during the 1992-1993 tax year,
based upon a copy of the 1992-1993 tax bill for the Property delivered to Tenant
by Landlord prior thereto (or if a copy of said tax bill is not delivered to
Tenant until after September 1, 1992, then within five (5) business days of the
receipt thereof). Commencing upon the 1st day of October, 1992, and thereafter
on the first day of each calendar month throughout the Lease Term, Tenant shall
pay to Landlord, without
-4-
notice or demand therefor (other than the annual notice of Landlord's estimate
of Tenant's R.E. Proportionate Share of the Real Estate Taxes and a copy of the
tax bill as described in the following paragraph of this Section), and without
any deduction whatsoever, one-twelfth (1/12) of its R.E. Proportionate Share of
Landlord's good faith estimate of the Real Estate Taxes to be incurred by
Landlord on the Property during the following tax year (prorated, if necessary,
if the remainder of the Lease Term constitutes less than the full tax year).
Tenant's obligation to pay its R.E. Proportionate Share of the Real Estate Taxes
incurred during the Lease Term shall survive the expiration or other termination
of the Lease.
The term "Real Estate Taxes" shall mean all taxes and assessments,
general and special, ordinary and extraordinary, foreseen and unforeseen, now or
hereafter assessed, levied or imposed upon the Property, including both the land
and the improvements which are built thereon, including, without limitation,
front foot benefit charges and adequate public facility costs and assessments,
together with (i) any tax, assessment, or other imposition in the nature of a
real estate tax, (ii) any ad valorem tax on rent or any tax on income if imposed
in lieu of or in addition to real estate taxes and assessments, and (iii) any
taxes and assessments which may hereafter be substituted for real estate taxes,
including by way of illustration only, any tax, assessment or other imposition
(whether a business rental or other tax) now or hereafter levied upon Landlord
for a tenant's use or occupancy of or conduct of business on the Property, or a
tenant's improvements to or furniture, fixtures or equipment on the Property.
Real Estate Taxes shall also include all reasonable costs incurred by Landlord
in contesting the validity or amount of any such taxes. Real Estate Taxes shall
not include transfer, inheritance, capital stock or income taxes or other
similar personal tax of Landlord, nor any late charges, penalties or interest,
incurred due to untimely payments by Landlord in connection with said tax.
Within fifteen (15) days after Landlord's receipt from the taxing
authority of the Real Estate Tax bill for the 1993-1994 tax year and for each
tax year thereafter during the Lease Term, Landlord shall deliver to Tenant a
copy of such tax bill, together with a statement showing Tenant's R.E.
Proportionate Share of the actual Real Estate Taxes due for said tax year and
the amount of payments made by Tenant based upon the estimate thereof. Tenant
shall pay Landlord, within thirty (30) days of Tenant's receipt of such
statement, Tenant's R.E. Proportionate Share of the excess, if any, of the Real
Estate Taxes for such tax year over the estimated costs thereof. If the amount
paid by Tenant as Tenant's R.E. Proportionate Share of the estimated Real Estate
Taxes for such tax year exceeded Tenant's R.E. Proportionate Share of actual
Real Estate Taxes for such tax year, the excess shall be credited toward payment
of the next installment of Basic Monthly Rent to be paid by Tenant after Tenant
receives said statement from Landlord. If the amount paid by Tenant for the last
tax year of the Lease Term exceeds Tenant's R.E. Proportionate Share of actual
Real Estate Taxes for such tax year, Landlord shall pay Tenant the excess amount
within thirty (30) days after Landlord's submission to Tenant of the aforesaid
statement for such tax year.
In the event that the Adjacent Laboratory Building is demolished
during the Lease Term, then, commencing upon the effective date of the
reassessment of the Property and the modification of Real Estate Taxes resulting
from such demolition, and for so long as the Leased Premises constitutes one
hundred percent (100%) of the leasable improvements located on the Property,
Tenant shall be obligated to pay Tenant's R.E. Proportionate Share of the Real
Estate Taxes assessed against the Property land and one hundred percent (100%)
of the Real Estate Taxes assessed against the Property improvements.
-5-
Upon Tenant's written request, Landlord will contest, at Tenant's
expense, the validity or amount of any such Real Estate Tax. Tenant shall be
entitled to its R.E. Proportionate Share of any refund.
Landlord shall deposit and thereafter hold in escrow, until
disbursement, the funds received from Tenant pursuant to this section in an
interest bearing, federally insured account. All interest earned on said account
shall be credited to Tenant and shall be used in the adjustments to Tenant's
payments made hereunder from time to time during the Lease Term so that Landlord
collects only such monies as are necessary to pay Tenant's R.E. Proportionate
Share of said Real Estate Taxes.
In addition to Tenant's obligation for the payment of its R.E.
Proportionate Share of the Real Estate Taxes, Tenant shall be liable for, and
shall pay before delinquency, all taxes levied against any personal property or
trade fixtures placed by Tenant in or about the Leased Premises.
(iii) Insurance. Commencing upon the Rent Commencement Date and
thereafter throughout the Lease Term, Tenant shall pay to Landlord without
notice or demand therefor and without any deduction whatsoever, its Insurance
Proportionate Share of the premium cost of the casualty insurance, liability
insurance, rent loss insurance, and other reasonable and necessary form of
insurance carried by Landlord with respect to the Property ("Insurance Cost")
during any policy year; provided, however, that if the Adjacent Laboratory
Building is demolished during the Lease Term, then commencing upon such
demolition and for so long as the Leased Premises constitutes one hundred
percent (100%) of the leasable improvements on the Property, Tenant shall be
obligated to pay one hundred percent (100%) of the Insurance Cost.
Not less than ten (10) days before the Rent Commencement Date, Landlord
shall deliver to Tenant a written statement of Landlord's estimate of the amount
of the Insurance Cost for the then-current policy year, and Tenant's Insurance
Proportionate Share of such Insurance Cost. On the Rent Commencement Date, and
on the first day of each month thereafter throughout the Lease Term, Tenant
shall pay one-twelfth (1/12) of Tenant's Insurance Proportionate Share of
Landlord's estimate of the Insurance Cost for the then-current policy year, as
shown on Landlord's estimate. Landlord shall submit its estimate of the
Insurance Cost for the forthcoming policy year and Tenant's Insurance
Proportionate Share thereof at the commencement of each such policy year, and
Tenant's monthly payments made after its receipt of such estimate shall be in
the amount of one-twelfth (1/12) of the amount of Tenant's Insurance
Proportionate Share of Insurance Cost as shown on such estimate. Landlord may
revise its estimate of the Insurance Cost at any time during a policy year by
notice to Tenant, setting forth such revised estimate and Tenant's Insurance
Proportionate Share thereof. In such event, all monthly payments made by Tenant
after such notice shall be in an amount calculated on the basis of such revised
estimate. Tenant shall, in all cases, continue to make monthly payments of
Insurance Cost based on the last estimate received from Landlord until it
receives a revised or updated estimate.
After the end of each policy year, Landlord will as soon as practicable
submit to Tenant a statement of the actual Insurance Cost for such policy year
and Tenant's Insurance Proportionate Share thereof. Landlord shall cause its
insurance carrier, whenever practical, to issue policies of insurance covering
the Leased Premises which are separate and apart from the Adjacent Laboratory
Building and all other properties owned by Landlord, in which event Tenant's
Proportionate Share of Insurance Cost shall be the full cost payable pursuant to
said
-6-
separate policy. Where such separate policies cannot be issued practically,
Landlord shall cause its insurance carrier to provide a written statement
identifying the manner in which all premiums paid by Landlord are allocated to
reflect the portion thereof attributable to the insurance carried on the Leased
Premises and the portion thereof attributable to the insurance carried on the
Adjacent Laboratory Building and other properties owned by Landlord. Tenant
shall pay Landlord, within thirty (30) days of Tenant's receipt of such
statement, Tenant's Insurance Proportionate Share of the excess, if any, of
Insurance Cost for such policy year over the projected Insurance Cost. If the
amount paid by Tenant as Tenant's Insurance Proportionate Share of the estimated
Insurance Cost for such policy year exceeded Tenant's Insurance Proportionate
Share of actual Insurance Cost for such policy year, the excess shall be
credited toward payment of the next installment of Basic Monthly Rent to be paid
by Tenant after Tenant receives said statement from Landlord. If the amount paid
by Tenant for the last policy year of the Lease Term exceeds Tenant's Insurance
Proportionate Share of actual Insurance Cost for such year, Landlord shall pay
Tenant the excess amount within thirty (30) days after Landlord's submission to
Tenant of the aforesaid Insurance Cost statement for such policy year.
Landlord shall deposit and thereafter hold in escrow, until
disbursement, the funds received from Tenant pursuant to this section in an
interest bearing, federally insured account. All interest earned on said account
shall be credited to Tenant and shall be used in the adjustments to Tenant's
payments made hereunder from time to time during the Lease Term so that Landlord
collects only such monies as are necessary to pay Tenant's Insurance
Proportionate Share of said Insurance Cost.
Landlord agrees that, at all times during the Lease Term, it shall carry
casualty insurance and liability insurance in such form and in such amounts
which are consistent with and comparable to the coverage of casualty insurance
policies and liability insurance policies carried by landlord's owning
commercial buildings located in Montgomery County, Maryland that are similar to
the Leased Premises.
(iv) Utility Expenses Not Separately Metered.
(aa) Throughout the Lease Term, Tenant agrees to pay to
Landlord, as Additional Rent, Tenant's Proportionate Share of all water usage
charges, exterior electric lighting charges, and any other utility charges
("Shared Charges") not separately metered (and only for so long as each is not
separately metered) for each of the Leased Premises, the Adjacent Laboratory
Building, and the common areas of the Property.
(bb) Upon receipt of each billing for Shared Charges,
Landlord will as soon as practicable submit to Tenant a statement of Shared
Charges incurred for the preceding billing period. Tenant shall pay Landlord,
within thirty (30) days of Tenant's receipt of such statement, Tenant's
Proportionate Share of Shared Charges.
(v) Landlord's Enforcement Costs. Additional Rent shall
include any and all expenses incurred by Landlord, including reasonable
attorneys' fees, for the collection of monies due from Tenant and the
enforcement of Tenant's obligations under the provisions of this Lease. In the
event Minimum Annual Rent or Additional Rent is not paid within fifteen (15)
business days of its due date, Landlord, at its sole option, may assess a late
charge equal to five percent (5%) of the amount of the delinquent Basic Monthly
Rent and Additional Rent as compensation for the additional administrative costs
incurred by Landlord as a result of such late payment.
-7-
(c) Payment of Rent. Any Minimum Annual Rent or
Additional Rent which is not paid within five (5) business days after the same
is due shall bear interest ("Penalty Rate") at one percentage (1%) point above
the prime rate of interest by NationsBank/Maryland existing from time to time
and adjusted each day the prime rate is redetermined to reflect the change in
said prime rate of interest, from the due date until the date received by
Landlord. Any payments of Minimum Annual Rent or Additional Rent by Tenant or
acceptance by Landlord of a lesser amount than shall be due from Tenant to
Landlord shall be treated as a payment on account. The acceptance by Landlord of
a check for a lesser amount with an endorsement or statement thereon, or upon
any letter accompanying such check, that such lesser amount is payment in full,
shall be given no effect, and Landlord may accept such check without prejudice
to any other rights or remedies which Landlord may have against Tenant. If
Landlord receives from Tenant two (2) returned or "bounced" checks in any one
Lease Year, Landlord may require all future Rent by cashier's or certified
check.
5. Security Deposit.
(a) Contemporaneously with the execution of this Lease,
Tenant has deposited with Landlord the sum specified in Section 1(a)(10) as the
security deposit ("Security Deposit"), the receipt of which is hereby
acknowledged. Said Security Deposit shall serve as security for the faithful
performance by Tenant of all the terms, covenants and conditions of this Lease
to be kept and performed by Tenant during the Lease Term. If, at any time during
the Lease Term, any payment of Minimum Annual Rent or Additional Rent herein
reserved shall be overdue and unpaid, then Landlord may, at its option,
appropriate and apply any portion of said Security Deposit to the payment of any
such overdue rent or other sum.
(b) In the event of the failure of Tenant to keep and
perform any of the terms, covenants and conditions of this Lease to be kept and
performed by Tenant, then Landlord, at its option, may appropriate and apply the
entire Security Deposit, or so much thereof as may be necessary, to compensate
Landlord for loss or damage sustained or suffered by Landlord due to such breach
on the part of Tenant. Should the entire Security Deposit, or any portion
thereof, be appropriated and applied by Landlord for the payment of overdue rent
or other sums due and payable to Landlord by Tenant hereunder, then Tenant
shall, upon the written demand of Landlord, forthwith remit to Landlord a
sufficient amount in cash to restore the Security Deposit to the original sum.
Tenant's failure to do so within five (5) days after receipt of such demand
shall constitute a breach of this Lease. Should Tenant comply with all of said
terms, covenants and conditions of this Lease and promptly pay all Minimum
Annual Rent and Additional Rent herein provided as it falls due, then the
Security Deposit (and all accrued interest) shall be returned in full to Tenant
within forty-five (45) days of the Expiration Date or earlier termination of the
Lease Term.
(c) Landlord shall deliver the funds deposited
hereunder by Tenant as a Security Deposit to the purchaser of Landlord's
interest in the Property and/or the Leased Premises in the event that such
interest is sold, and thereupon Landlord shall be discharged from any further
liability with respect to such Security Deposit.
(d) If the Tenant fails to take possession of the
Leased Premises as required by this Lease, the Security Deposit shall not be
deemed liquidated damages, and Landlord's use of the Security Deposit pursuant
to this Section 5 shall not preclude Landlord from recovering from Tenant all
additional damages incurred by Landlord.
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(e) Landlord shall deposit the funds delivered by
Tenant as a Security Deposit in an interest bearing, federally insured account,
and shall hold the Security Deposit in such an account(s) during the entire
Lease Term. For so long as Signet Bank/Maryland holds a first lien security
interest in the Property, the Security Deposit shall be held in an account at
Signet Bank/Maryland which identifies Landlord as the escrow agent or custodian
of the proceeds constituting the Security Deposit for the benefit of Tenant. All
interest earned on said account shall be credited to Tenant, and, so long as
Tenant is not in default of its obligations under this Lease, Landlord shall pay
to Tenant all accrued interest (and shall deliver to Tenant an appropriate
statement showing the accrual of such interest on said account) on or before the
31st day of January of each calendar year during the Lease Term. Tenant
acknowledges that its tax identification number is #04-3152484 for purposes of
reporting to the Internal Revenue Service interest earned on said account.
6. Use.
(a) Use. Tenant shall use the Leased Premises for the
purposes specified in Section 1(a)(9), and for no other purpose.
(b) Compliance With Laws, Fire Insurance, Condition of
Leased Premises. Tenant shall not do, or permit anything to be done in the
Leased Premises or on the Property, or bring or keep anything therein, which
will in any way invalidate or conflict with fire insurance policies on the
Property, including, but not limited to all improvements, the Property's
fixtures and personal property kept therein, or obstruct or interfere with the
rights of the Landlord or of other tenants of the Property, or in any other way
injure or annoy Landlord or such other tenants, or subject Landlord to any
liability for injury to persons or damage to property, or interfere with the
good order of the Property, as determined by Landlord in its sole reasonable
discretion. Tenant shall refrain or discontinue said use immediately upon
receipt of written notice from Landlord requiring such action. Tenant, at its
expense, shall comply with all present and future laws, rules or regulations of
any federal, state or municipal authority, or the Maryland Fire Underwriters
Rating Bureau, or with any notice from any public officer pursuant to law
pertaining to Tenant's occupancy or use of the Leased Premises, whether such
notice shall be served on Landlord or Tenant (including, where necessary, the
construction of capital improvements to the Leased Premises). Tenant agrees to
indemnify, defend, and hold Landlord harmless from all liability, damage, cost,
and expense (including, without limitation, court costs and reasonable attorneys
fees) resulting from any injury to persons or damage to property occurring in or
around the Leased Premises, whether occasioned by any act or omission of Tenant,
Tenant's agents, contractors, servants, employees, invitees or licensees. Tenant
agrees that any increases of fire insurance premiums on the Leased Premises or
contents caused by the occupancy of Tenant and any expenses or costs incurred in
consequence of negligence or carelessness or the willful action of Tenant,
Tenant's employees, agents, contractors, servants, invitees, or licensees shall
be deemed Additional Rent and paid by Tenant to Landlord as they accrue.
7. Common Areas.
(a) Common Areas Defined. In this Lease, "common areas"
means all areas, facilities and improvements provided, from time to time, on the
Property for the mutual convenience and use of all tenants or other occupants of
the Leased Premises and the Adjacent Laboratory Building, their respective
agents, employees, and invitees, and shall include, if provided, but are not
limited to, parking areas and facilities, access roads,
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driveways, retaining walls, sidewalks, walkways, landscaped areas, and exterior
lighting facilities.
(b) Landlord's Control. Landlord shall, as between Landlord and
Tenant, at all times during the Lease Term have the sole and exclusive control,
management and direction of the common areas, and may, at any time and from time
to time during the Lease Term, exclude and restrain any person from use or
occupancy thereof, excepting, however, Tenant and other tenants of Landlord and
bona fide invitees of either who make use of said areas in accordance with the
rules and regulations established by Landlord from time to time with respect
thereto. The rights of Tenant in and to the common areas shall at all times be
subject to the rights of others to use the same in common with Tenant, and it
shall be the duty of Tenant to keep all of said areas free and clear of any
obstructions created or permitted by Tenant or resulting from Tenant's
operation. Landlord may at any time and from time to time (i) close all or any
portion of the common areas to make repairs or changes, (ii) close all or any
portion of the common areas to such extent as may, in the opinion of Landlord,
be necessary to prevent a dedication thereof or the accrual of any rights to any
person or to the public therein, and (iii) do and perform such other acts in and
to said areas as, in the exercise of good business judgment, Landlord shall
determine to be advisable with a view to the improvement of the convenience and
use thereof by tenants, their employees, agents, and invitees. Landlord shall at
all times have the right and privilege of determining the nature and extent of
the common areas, and of making such changes, rearrangements, additions or
reductions therein and thereto from time to time which in its opinion are deemed
to be desirable and for the best interest of all persons using the common areas
or which are as a result of any federal, state or local environmental protection
or other law, rule, regulation, guideline or order. The purpose of the site plan
attached hereto as Exhibit A is to show the approximate locational relationship
of the Leased Premises to the Adjacent Laboratory Building and to the common
areas as of the Rent Commencement Date. Nothing described in Exhibit A shall
limit or prevent Landlord from effecting any change or alteration to the
Property as described in this paragraph. Nothing contained in this Section shall
give Landlord the right to impose restrictions on the use and enjoyment of the
common areas by Tenant, or to make modifications to the common areas, in a way
to cause Tenant to be unable to use the Leased Premises and the common areas in
a reasonable manner for the purposes originally contemplated by this Lease.
(c) Parking Spaces. During the Lease Term, Tenant shall
have the exclusive right to the use of all parking spaces in the common areas of
the Property, except for the six (6) parking spaces which are marked in red on
Exhibit A and are reserved by Landlord for its use.
8. Rules and Regulations. Tenant agrees to comply with and observe any
reasonable rules and regulations promulgated by Landlord as set forth in Exhibit
C, which may be supplemented or amended from time to time by Landlord. Tenant's
failure to keep and observe said rules and regulations shall constitute a breach
of the terms of this Lease in the same manner as if the same were contained
herein as covenants.
9. Utilities. Tenant shall be solely responsible for and shall promptly
pay any and all utility charges including but not limited to electricity, fuel,
gas, and telephone (including equipment and installation charges) used in,
consumed at, or supplied to the Leased Premises. Tenant shall immediately
transfer all separately metered utility accounts for the Leased Premises into
its own name on the Rent Commencement Date. Tenant shall pay to Landlord, as
Additional Rent, its Proportionate Share of any and all bills for utility
charges which are not
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separately metered in the manner described in Section 4(b)(iv) hereof.
10. Landlord's Right of Entry. Landlord, and its agents, shall have the
right, upon prior notice to Tenant and during reasonable business hours during
the Lease Term (except in the case of an emergency involving damage to person or
property), to enter upon the Leased Premises to examine the same, or to make
such repairs, alterations or improvements, as Landlord may deem necessary or
proper, or to remove any alteration or improvement which is in violation of the
provisions of this Lease, provided, however, Landlord shall not adversely
interfere with Tenant's business operations in a material manner. Landlord
reserves the right to show the Leased Premises to prospective tenants or brokers
during the last ninety (90) days of the Lease Term, and to show the Leased
Premises to prospective purchasers at all reasonable times, provided that prior
verbal notice is given to Tenant in each case and that Tenant's use and
occupancy of the Leased Premises shall not be materially inconvenienced by any
such action of Landlord.
11. Condition - Maintenance and Repair.
(a) Tenant's Responsibility. Tenant shall maintain the
Leased Premises in substantially the same good order and condition as it is on
the commencement of the Lease Term and shall return the Leased Premises to
Landlord in such condition at the Expiration Date or at the earlier termination
of this Lease, ordinary wear and tear excepted. Except as obligations to repair
are expressly delegated to Landlord as described in Section 11(b) below, Tenant
shall be responsible for the full cost of all maintenance and repair of (i) the
Leased Premises, including but not limited to the doors, door jambs, windows,
window casings and sills, screens, floor coverings, walls (excluding load
bearing structures), and ceilings located in the Leased Premises, and all pipes,
gutters, downspouts, wires, conduits and other equipment and fixtures located in
the Leased Premises, and (ii) the common areas of the Property (including all
landscaping thereon, except for the landscaping immediately surrounding the
Adjacent Laboratory Building). Tenant, at its expense, shall perform routine
maintenance, repair, and replacement of the plumbing, electrical, heating,
ventilating and air-conditioning systems, and all other systems and equipment,
serving the Leased Premises. Tenant will throughout the Lease Term obtain and
keep in force a maintenance contract with a qualified service company to
regularly inspect and perform maintenance services to the heating, ventilating
and air-conditioning system serving the Leased Premises. Tenant, at its expense,
shall furnish Landlord with a copy of said maintenance contract, and of renewals
or replacements thereof, promptly after the effective date thereof. All repairs
and maintenance required to be performed by Tenant at the Leased Premises shall
be made or performed within a reasonable period of time upon the occurrence of
the necessity therefor, and shall be made or performed in a workmanlike manner,
using first class materials, by a contractor duly licensed in the State of
Maryland, and shall be made or performed in accordance with (i) all applicable
federal, state and county governmental codes and regulations, and (ii) insurance
requirements. Tenant shall also be responsible for keeping all sidewalks and
parking areas on the Property free and clear of dirt, trash, debris, ice, snow,
and any other obstructions; provided, however, that Landlord shall upon request
promptly reimburse Tenant for nine percent (9%) of the cost of any such
services. Tenant shall keep its trash and garbage in enclosed containers in a
trash holding area within the Leased Premises, and shall perform regular trash
removal from such trash holding area. Tenant shall also be responsible for the
performance of regular, periodic pest control services at the Leased Premises.
All glass, both exterior and interior, shall be maintained in the Leased
Premises at the sole
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risk of Tenant, and Tenant agrees to replace any glass promptly at its sole
expense in the event of breakage.
(b) Landlord's Responsibility. Except for any
structural alterations or improvements made by Tenant, Landlord shall maintain
in good order and repair the roof and the structural portions of the foundation,
floors, stairwells, exterior walls, columns and other load bearing elements of
the Leased Premises, and shall perform all non-routine repair and replacement of
the heating, ventilating and air-conditioning system at the Leased Premises,
provided, in each case, that Tenant shall give Landlord notice of the necessity
therefor, whereupon Landlord shall have a reasonable period of time within which
to make such repairs, and provided, further, that any such repairs necessitated
by the acts or omissions of Tenant, its agents, employees, contractors or
invitees, shall be performed at Tenant's expense, and the cost thereof shall be
paid by Tenant to Landlord, as Additional Rent, within twenty (20) days after
Landlord's submission of a bill therefor.
12. Alterations or Improvements by Tenant. Except for incidental
painting and decoration of the interior of the Leased Premises and other minor
alterations and improvements which do not affect the structure or utility
systems of the Leased Premises, Tenant shall not make any alterations,
additions, or improvements, structural or otherwise (collectively,
"Alterations") in, on or to the Leased Premises, without the prior written
consent of Landlord, which consent shall not be unreasonably withheld or
delayed. In connection with Landlord's review of such proposed alterations or
improvements prior to giving its consent thereto, Landlord shall have the right
to require that Tenant supply plans, specifications, working drawings and
similar documents in reasonable detail which show the scope of work to be
performed within the Leased Premises. Landlord's approval of the plans,
specifications and working drawings for Tenant's alterations and improvements
shall create no liability on the part of Landlord for their completeness, design
sufficiency, or compliance with all laws, rules, regulations of governmental
agencies or authorities. Landlord acknowledges that Tenant desires to build a P3
laboratory in the Leased Premises during the Lease Term, and that Landlord shall
not unreasonably withhold or delay its consent to the construction thereof. Any
contractors employed by Tenant to perform Tenant's work (i) shall be qualified
to perform such work and licensed in the State of Maryland and (ii) shall
maintain any insurance which may be reasonably required by Landlord, and (iii)
shall be bonded or otherwise reasonably satisfactory to Landlord. Tenant will
defend, indemnify and hold Landlord harmless from and against any and all
expenses, liens, claims or damages, including attorneys' fees, for injury to
person or property which may or might arise, directly or indirectly, by reason
of the making of any Alterations. If any Alterations are effected without the
prior written consent of Landlord, Landlord may remove or correct the same and
Tenant shall be liable for any and all expenses of this work. All rights given
to Landlord herein shall be in addition to any other right or remedy of Landlord
contained in this Lease. Tenant shall be obligated to make any and all
Alterations and other improvements to the Leased Premises required by applicable
federal, state, and local law, in connection with the use of the Leased Premises
by Tenant during the Leased Term. Tenant hereby agrees that all Alterations made
in, to, or on the Leased Premises shall, unless otherwise provided by written
agreement or by the provisions of Section 13 below, be the property of Landlord
and shall remain upon and be surrendered with the Leased Premises on the
Expiration Date or other termination of this Lease.
13. Surrender. Upon the Expiration Date or other termination of the
Lease Term, Tenant shall quit and surrender the Leased Premises to the Landlord
in good order and condition,
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ordinary wear and tear excepted, and Tenant shall remove all of its personal
property from the Leased Premises on or before the Expiration Date or other
termination of this Lease. Tenant's obligation to observe or perform the
covenants described in this Section 13 shall survive the expiration or other
termination of this Lease. If Tenant does not remove Tenant's furniture, trade
fixtures and all other items of personal property of every kind and description
from the Leased Premises as specified herein, then Landlord shall be permitted
to remove, dispose or otherwise discard such property without further payment or
credit by Landlord to Tenant. Notwithstanding anything to the contrary contained
in this Lease, Tenant shall have the right and the obligation , at the end of
the Lease Term, to remove all built-in desks, cabinets, basins, emergency
showers and other pieces of equipment which are affixed to the Leased Premises
by Tenant. In connection with the removal of said equipment, Tenant shall be
obligated to stub pipes; bundle and cap wires; close ducts; repair and replace
(as appropriate) flooring coverings; repair, replace, finish and repaint (as
appropriate) walls, and perform all other acts which are necessary for the
Leased Premises to be returned to Landlord in same good order and condition as
exists of the Rent Commencement Date.
14. Tenant Holding Over. If Tenant holds possession of the Leased
Premises after the Expiration Date or other termination of this Lease, Landlord
shall have the option, exercisable in writing within thirty (30) days after the
date of termination as aforesaid, to treat Tenant as a trespasser, or as a
tenant by the month. If the Landlord fails to make such election then the Tenant
shall be deemed a tenant by the month, commencing with the first day after the
termination of the Lease at one hundred fifty percent (150%) of the Basic
Monthly Rent paid during the last month of the Lease Term, and upon all the
other terms of this Lease, including the provisions of this Section. Said
holdover term shall terminate upon thirty (30) days notice from one party to the
other. Nothing contained herein shall be construed within said thirty (30) days
after the date of Lease termination as aforesaid as a consent by Landlord to the
occupancy or possession of the Leased Premises by Tenant after the termination
of the Lease, and Landlord, upon said termination, if Landlord elects to treat
Tenant as a trespasser, shall be entitled to the benefit of all general or
public laws relating to the speedy recovery of the possession of land and
tenements held over by Tenant, whether now or hereafter in force and effect. If
Tenant fails to surrender the Leased Premises upon the expiration or other
termination of this Lease despite demand to do so by Landlord, Tenant shall
indemnify, defend, and hold Landlord harmless from all injury, loss, claims,
expenses and liability, including without limitation, any claim made by any
succeeding tenant and any attorneys' fees, founded on or resulting from such
failure to surrender.
15. Assignment and Subletting.
(a) Assignment by Tenant. Tenant shall not assign,
mortgage or encumber this Lease, or any right hereunder, nor sublet the Leased
Premises or any part thereof, nor permit the Leased Premises to be used by
others without the prior written consent of Landlord, which consent shall be at
Landlord's sole discretion. If Tenant is a corporation, unincorporated
association or partnership, then the transfer, assignment or hypothecation of
any stock or interest in such corporation, association or partnership so as to
result in a change of fifty percent (50%) or more in the ownership thereof by
the person, persons or entities owning said entity as of the date of this Lease,
without the prior written consent of Landlord (which consent shall not be
unreasonably withheld or delayed), shall be deemed an assignment made in breach
of this covenant. Landlord's consent in any specific instance to any assignment,
mortgage, encumbrance, subletting or use of the Leased Premises and its
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collection and acceptance of rent from any such approved assignee, subtenant or
other occupant shall neither constitute a waiver of the provisions of this
paragraph, nor be construed as permission of any subsequent assignment,
mortgage, encumbrance, subletting or use without compliance with this paragraph.
Without the prior written consent of Landlord, this Lease and the interest of
Tenant, or any assignee of Tenant, shall not pass by operation of law, nor shall
it be subject to garnishment or sale under execution in any suit or proceeding
which may be brought against or by Tenant, or any assignee of Tenant. No
assignment of this Lease, sublease of all or any portion of the Leased Premises,
or collection of rent from an assignee or subtenant (whether or not permitted by
Landlord) shall relieve Tenant of its obligations hereunder. In the event that
Landlord gives Tenant its written consent to assign, transfer, or sublet all or
a portion of the Leased Premises to a third party which is unrelated to Tenant,
any monthly rent or other payment accruing to Tenant as the result of any such
assignment, transfer or sublease, including any lump sum or periodic payment in
any manner relating to such assignment, transfer or sublease, which is in excess
of the Minimum Annual Rent and Additional Rent then payable by Tenant under the
Lease shall be paid by Tenant to Landlord monthly as Additional Rent, excluding
any reasonable expenses incurred by Tenant in connection with such assignment or
subletting, e.g. legal fees and brokers' commissions. Landlord may require a
certificate from Tenant specifying the full amount of any such payment of
whatsoever nature. Any reasonable costs and expenses, including reasonable
attorneys' fees incurred by Landlord in connection with any proposed or
purported assignment, transfer or sublease shall be borne by Tenant and shall be
payable to Landlord as Additional Rent within five (5) days of demand therefor.
Notwithstanding anything herein to the contrary, Tenant shall have
the right, without Landlord's prior written consent, to assign this Lease or
sublet the Leased Premises to any parent corporation of Tenant, or to any
subsidiary of any parent corporation of Tenant, subject to the following express
conditions:
(i) No such assignment or sublease shall be deemed to release
Tenant from continuing liability for all of Tenant's
covenants and obligations under this Lease, or Boston
Biomedica, Inc. ("Tenant's Guarantor") from its obligations
under its Guaranty; and
(ii)Any assignee or subtenant must expressly assume in writing
all of the covenants and obligations of Tenant under this
Lease, joint and severally with Tenant.
Further, Landlord agrees not to unreasonably withhold its consent
to an assignment of this Lease (or to a sale or transfer of Tenant's stock)
resulting from a merger, consolidation, corporate reorganization (other than
pursuant to the bankruptcy laws), sale of the assets or other transfer of stock
of Tenant, subject to the following conditions:
(i) Such assignee or transferee, as the case may be, shall have a
net worth at least equal to that of Tenant, as of the date
hereof, or the date of such request for consent to an
assignment or transfer, whichever is greater;
(ii) No such assignment shall be deemed to release Tenant's
Guarantor from its obligations under its Guaranty; and
(iii)Such assignee or transferee, as the case may be, must
expressly assume in writing all of the
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covenants and obligations of Tenant under this Lease, jointly
and severally with Tenant.
Further, any issuance by Tenant of its capital stock in a public
offering which is effected in compliance with the registration requirements of
the Securities Act of 1933, as amended, and the rules and regulations
thereunder, shall not be deemed to be a change in control or an assignment of
this Lease requiring Landlord's consent.
(b) Assignment by Landlord. It is expressly understood and
agreed that this Lease and all rights of Landlord hereunder shall be fully and
freely assignable by Landlord without notice to, or consent of, Tenant. In the
event of the transfer and assignment by Landlord of its interest in this Lease,
Landlord shall thereby be released from any responsibility for the performance
of obligations thereafter accruing hereunder, and Tenant agrees to look solely
to such successor in interest of the Landlord for performance of such
obligations. Nothing contained herein shall prevent Tenant from looking to
Landlord for the performance of obligations of which Landlord has actual
knowledge and which predate the effective date of the transfer and assignment by
Landlord of its interest in this Lease. The term "Landlord" as used in this
Lease shall mean the owner of the Leased Premises, at the time in question. In
the event of a transfer (whether voluntary or involuntary) by such owner of its
interest in the Leased Premises, such owner shall thereupon be released and
discharged from all covenants and obligations of the Lease thereafter accruing,
but such covenants and obligations shall be binding during the Lease Term upon
each new owner for the duration of such owner's ownership.
16. Bankruptcy.
(a) The following shall be Events of Bankruptcy under this
Lease: (1) Tenant or any guarantor of Tenant's obligations under this Lease
("Tenant's Guarantor") becoming insolvent, as that term is defined in Title 11
of the United States Code (the "Bankruptcy Code"), or under the insolvency laws
of any state, district, commonwealth or territory of the United States (the
"Insolvency Laws"); (2) the appointment of a receiver or custodian for any or
all of Tenant's or Tenant's Guarantor's property or assets, or the institution
of a foreclosure action upon any of Tenant's or Tenant's Guarantor's real or
personal property; (3) the filing of a voluntary petition under the provisions
of the Bankruptcy Code or Insolvency Laws by Tenant or Tenant's Guarantor; (4)
the filing of an involuntary petition against Tenant or Tenant's Guarantor as
the subject debtor under the Bankruptcy Code or Insolvency Laws, which either
(A) is not dismissed within one hundred twenty (120) days of the date of filing,
or (B) results in the issuance of an order for relief against the debtor; or (5)
Tenant's or Tenant's Guarantor's making or consenting to an assignment for the
benefit of creditors or a common law composition of creditors.
(b) Upon occurrence of an Event of Bankruptcy, Landlord shall
have all rights and remedies available to Landlord pursuant to Section 18;
provided, however, that while a case in which Tenant is the subject debtor under
the Bankruptcy Code is pending, Landlord shall not exercise its rights and
remedies pursuant to Section 20 so long as (1) the Bankruptcy Code prohibits the
exercise of such rights and remedies, and (2) Tenant or its Trustee in
Bankruptcy (hereinafter referred to as "Trustee") (i) cures all defaults under
this Lease, (ii) compensates Landlord for monetary damages incurred as a result
of such defaults, (iii) provides adequate assurance of future performance on the
part of Tenant as debtor in possession or on the part of the assignee tenant,
and (iv) complies with all other requirements of the Bankruptcy Code and this
Lease.
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17. Default. Each of the following shall be deemed a default by Tenant
and a material breach of this Lease:
(a) An Event of Bankruptcy as defined in Section 16;
(b) An assignment or encumbrance of Tenant's interest
in this Lease or the Leased Premises or a
subletting of any part of the Leased Premises in
violation of Section 15;
(c) A failure by Tenant to make any payment of
Minimum Annual Rent or Additional Rent within
five (5) days of receipt of written notice that
such payment was not received on its due date
(provided that Landlord shall not be obligated to
provide Tenant with such written notice more than
twice during any twelve month period during the
Lease Term, and after receipt of such second
notice, Tenant shall be deemed in default,
without further notice, if any such payment is
not received by Landlord on its due date);
(d) Abandonment of the Leased Premises; and
(e) A failure by Tenant in the performance of any
other term, covenant, agreement or condition of
this Lease on the part of Tenant to be performed
after fifteen (15) days notice, or if such
default cannot reasonably be cured within said
fifteen (15) day period and Tenant does not
commence to diligently pursue the same within
said fifteen (15) day period and to continue to
diligently pursue the same until remedied.
Landlord agrees that it shall not exercise any rights or remedies, which are
available to it pursuant to the terms of Section 18, as a result of an event of
default described in Section 17 (b) or (d) above, unless and until Landlord has
provided Tenant with a period of fifteen (15) days after receipt of written
notice thereof within which to cure such default.
18. Landlord's Rights Upon Tenant's Default. Upon default by Tenant of
any of the terms or covenants of this Lease, Landlord shall be entitled to
remedy such default as follows:
(a) Landlord shall have the right, immediately or at any time
after said default, without further notice to Tenant
(unless otherwise provided herein), to enter the Leased
Premises, without terminating this Lease or being guilty of
trespass, and do any and all acts as Landlord may deem
necessary, proper or convenient to cure such default, for
the account and at the expense of Tenant, and Tenant agrees
to pay to Landlord as Additional Rent all damage and/or
expense incurred by Landlord in so doing, including
interest at the Penalty Rate from the due date until the
date payment is received by Landlord. The making of such
payment or the taking of such action by Landlord shall not
be deemed to cure the default or to stop Landlord from the
pursuit of any remedy to which Landlord would otherwise be
entitled.
(b) Landlord shall, following said default, have the right to
terminate this Lease and/or Tenant's right to possession of
the Leased Premises and, with or without legal process,
take possession of the Leased Premises and remove Tenant,
any occupant and any property therefrom, without being
guilty of trespass and without relinquishing any rights of
Landlord against Tenant. Landlord shall be entitled to
recover
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damages from Tenant in an amount equal to the amount herein covenanted to be
paid as Minimum Annual Rent during the remainder of the Lease Term, said Minimum
Annual Rent for the full term then remaining having been fully accelerated at
the option of Landlord, together with (i) all reasonable expenses of any
proceedings (including, but not limited to, legal expenses and attorney's fees)
which may be necessary in order for Landlord to recover possession of the Leased
Premises, (ii) the reasonable expenses of the re-renting of the Leased Premises
(including, but not limited to, any commissions paid to any real estate agent,
advertising expense and the costs of such alterations, repairs, replacements and
decoration or re-decoration as Landlord, in its sole judgment reasonably
exercised, considers advisable and necessary for the purpose of re-renting the
Leased Premises), and (iii) interest computed at the Penalty Rate from the due
date until paid; provided, however, that said damages shall be discounted to
present value using a discount factor of 5%, and further that there shall be
credited against the amount of such damages all amounts received by Landlord
from such re-renting of the Leased Premises and such amounts shall be refunded
to Tenant. No act or thing done by Landlord shall be deemed to be an acceptance
of a surrender of the Leased Premises, unless Landlord shall execute a written
agreement of surrender with Tenant. Tenant's liability hereunder shall not be
terminated by the execution of a new lease of the Leased Premises by Landlord.
In the event Landlord does not exercise its option to accelerate the payment of
Minimum Annual Rent as provided hereinabove, then Tenant agrees to pay to
Landlord, upon demand, the amount of damages herein provided after the amount of
such damages for any month shall have been ascertained; provided, however, that
any expenses incurred by Landlord shall be deemed to be a part of the damages
for the month in which they were incurred. Separate actions may be maintained
each month or at other times by Landlord against Tenant to recover the damages
then due, without waiting until the end of the term of this Lease to determine
the aggregate amount of such damages.
(c) Upon any default by Tenant to pay Minimum Annual Rent or
Additional Rent, Landlord shall have a lien upon the property of Tenant in the
Leased Premises for the amount of any unpaid Minimum Annual Rent or Additional
Rent. In such event, Tenant shall not remove any of Tenant's property from the
Leased Premises except with the prior written consent of Landlord, which consent
shall be granted at Landlord's sole and absolute discretion.
(d) All rights and remedies provided to either Landlord or Tenant
herein as a result of a default by the other party shall be cumulative, and none
shall exclude any other right or remedy allowed by law. For the purposes of any
suit brought or based hereon, this Lease shall be construed to be a divisible
contract, to the end that successive actions may be maintained on this Lease as
successive periodic sums mature hereunder.
19. Lender Requirements.
(a) Subordination. Tenant agrees that this Lease is subject and
subordinate to the lien of any existing mortgage or deed of trust which is a
lien upon the Property or any part thereof on the Rent Commencement Date, and to
all renewals, modifications, consolidations, replacements and extensions
thereof, and to all advances made or hereafter to be made upon the security
thereof. Landlord agrees that it shall use reasonable efforts to acquire from
any such existing mortgagee or holder of an existing deed of trust a
non-disturbance agreement in such lender's usual form for the benefit of Tenant.
Tenant agrees that this Lease is and shall be subject and subordinate to the
lien of any future mortgages or deeds of trust which at any time during the
Lease Term may be made a lien upon the Property or any part thereof, and to all
advances made or hereafter to be
-17-
made upon the security thereof; provided that such subordination shall be
effective only upon the delivery to Tenant of a non-disturbance agreement in
such lender's usual form for the benefit of Tenant by such future mortgagee or
holder of a deed of trust. These subordination provisions shall be
self-operative and no further instrument of subordination shall be required.
Tenant agrees to execute and deliver, upon request, such further instrument or
instruments confirming this subordination as shall be desired by Landlord or by
any mortgagee or proposed mortgagee; and Tenant hereby constitutes and appoints
Landlord as Tenant's attorney-in-fact to execute any such instrument or
instruments. Tenant further agrees that, at the option of the holder of any
mortgage or of the trustee under any deed of trust, this Lease may be made
superior to said mortgage or deed of trust by the insertion therein of a
declaration that this Lease is superior thereto, and to all renewals,
modifications, consolidations, replacements and extensions thereof.
(b) Attornment. In the event any proceedings are brought for the
foreclosure of, or in the event of exercise of the power of sale under, any deed
to secure a debt given by Landlord and covering the Leased Premises, Tenant
shall execute such attornment agreement as shall be reasonably required by said
purchaser, pursuant to the terms of which Tenant recognizes such purchaser as
the owner and landlord under this Lease, and the purchaser recognizes Tenant as
the tenant under this Lease.
(c) Notice to Mortgagee Upon Landlord Default. Tenant agrees to
give any mortgagee by certified mail, return receipt requested, a copy of any
notice of default served upon Landlord, provided that before such notice Tenant
has been notified in writing of the address of such mortgagee. Tenant further
agrees that if Landlord shall have failed to cure such default within the time
provided for in this Lease, then mortgagee shall have an additional fifteen (15)
days within which to cure such default; provided, however, that if such default
cannot be reasonably cured within that time, then such mortgagee shall have such
additional time as may be necessary to cure such default so long as mortgagee
has commenced and is diligently pursuing the remedies necessary to cure such
default (including, without limitation, the commencement of foreclosure
proceedings, if necessary), in which event this Lease shall not be terminated
while such remedies are being so diligently pursued. In the event of the sale of
the Property or the Leased Premises, by foreclosure or deed in lieu thereof, the
mortgagee or purchaser at such sale shall be responsible for the return of the
security deposit only to the extent that such mortgagee or purchaser actually
received the security deposit. In addition, Tenant shall not pay any rental
hereunder for more than one (1) month in advance.
20. Estoppel Certificates. Tenant agrees, at any time and from time to
time, upon not less than five (5) business days prior notice by Landlord, to
execute, acknowledge and deliver to Landlord a statement in writing (i)
certifying that this Lease is unmodified and in full force and effect (or if
there have been modifications the nature of same), (ii) stating the dates to
which the Minimum Annual Rent and Additional Rent have been paid by Tenant,
(iii) stating whether or not to the best knowledge of Tenant, Landlord is in
default in the performance of any covenant, agreement or condition contained in
this Lease, and, if so, specifying each such default of which Tenant may have
knowledge, (iv) stating the address to which notices to Tenant should be sent,
and (v) certifying such other matters as may be requested by Landlord. Any such
statement delivered pursuant hereto may be relied upon by an owner of the
Property, any prospective purchaser of the Property, any mortgagee or
prospective mortgagee of the Property, or of Landlord's interest therein, or any
prospective assignee of any such mortgage.
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21. Damage by Fire or Other Casualty.
(a) Restoration. If the Leased Premises shall be damaged by fire
or other casualty but such damage does not render the Leased Premises wholly
unfit for Tenant's business operations as shall be determined by Landlord and
Tenant in their reasonable business judgment, Landlord, at Landlord's expense,
shall promptly restore the Leased Premises, and Tenant, at Tenant's sole
expense, shall promptly restore all leasehold improvements installed in the
Leased Premises by Tenant or at Tenant's request and its own furniture,
furnishings, trade fixtures and equipment. No penalty shall accrue for
reasonable delay which may arise by reason of adjustment of insurance on the
part of Landlord, or on account of labor problems, or any other cause beyond
Landlord's reasonable control. Minimum Annual Rent and Additional Rent shall
abate proportionately (based on the proportion of the number of square feet
rendered untenantable to the total number of square feet of the Leased
Premises), from the date of the damage or destruction until the date the
Landlord has substantially completed such restoration. Notwithstanding anything
stated to the contrary herein, in the event that such damage shall occur during
the last year of the Lease Term, Landlord shall not be required to restore the
Leased Premises.
(b) Termination. If the Leased Premises are substantially damaged
or are rendered substantially untenantable by fire or other casualty during the
Lease Term to such an extent that it is rendered substantially unusable by
Tenant for the purposes originally contemplated by this Lease, Landlord shall
restore or repair the same unless expressly not required to do so under Section
21(c). If such damage occurs, however, at any time during the Lease Term, and
(i) Landlord's architect certifies that the Leased Premises cannot be repaired
within one hundred twenty (120) working days of normal working hours, said
period commencing on the casualty date, or (ii) Landlord shall decide to
demolish the Leased Premises or not to rebuild it, then Landlord may, within
ninety (90) days after such fire or other casualty, terminate this Lease by
giving Tenant notice of such decision, and thereupon the Lease Term shall expire
by lapse of time upon the third day after such notice is given, and Tenant shall
thereupon vacate the Leased Premises and surrender the same to Landlord. In the
event that damage to the Leased Premises cannot be repaired sufficiently within
one hundred twenty (120) days after such fire or other casualty so that Tenant
can commence to refixture the Leased Premises for the use thereof as originally
contemplated by this Lease, then Tenant shall have the right to terminate this
Lease by giving Landlord written notice thereof within said one hundred twenty
(120) day period, and thereupon the Lease Term shall expire by lapse of time
upon the third day after such notice is given, and Tenant shall thereupon vacate
the Leased Premises and surrender the same to Landlord. Upon the termination of
this Lease under the conditions hereinbefore provided, Tenant's liability for
Minimum Annual Rent and Additional Rent shall cease as of the day following the
casualty.
(c) Lender's Approval. Notwithstanding anything to the contrary in
this Section or in any other provision of this Lease, any obligation (under this
Lease or otherwise) of Landlord to restore all or any portion of the Leased
Premises shall be subject to Landlord's receipt of approval of the same by the
mortgagee(s) of Landlord (and any other approvals required by applicable laws),
as well as receipt from any such mortgagee(s) of such fire and other hazard
insurance policy proceeds as may have been assigned to any such mortgagee; it
being agreed that if Landlord has not received such approval(s) and proceeds
within one hundred and eighty (180) days after any such casualty, then Landlord
shall have the option to terminate this Lease, at any time thereafter, by notice
to Tenant. Landlord shall diligently
-19-
pursue the receipt of all approvals and insurance policy proceeds which are
described in this Section 21(c).
22. Condemnation. In the event the whole or a "substantial part" (as
hereinafter defined) of the Leased Premises shall be taken for any public or
quasi-public purpose by any lawful power or authority by exercise of the right
of appropriation, condemnation or eminent domain, or sold to said authority to
prevent such taking (collectively referred to herein as a "taking"), this Lease
shall terminate effective as of the date possession is required to be
surrendered to said authority, and the Minimum Annual Rent and Additional Rent
shall be apportioned as of the date. For purposes of this Section, a
"substantial part" of the Leased Premises shall be considered to have been taken
if fifty percent (50%) or more of the Leased Premises is taken or condemned.
Tenant shall not assert any claim against Landlord or the taking authority for
any compensation arising out of or related to such taking and Landlord shall be
entitled to receive the entire amount of any award without deduction for any
estate or interest of Tenant; provided, however, that nothing contained in this
section shall be deemed to give Landlord any interest in any award made to
Tenant for the taking of personal property and fixtures belonging to Tenant or
for Tenant's moving expenses, as long as such award is made in addition to and
separately stated from any award made to Landlord for the Leased Premises and
the Property. If less than fifty percent (50%) of the Leased Premises is so
taken, the Lease shall continue to be in full force and effect, and the Minimum
Annual Rent and Additional Rent shall be adjusted (based on the ratio that the
number of square feet of rentable area taken from the Leased Premises bears to
the number of rentable square feet in the Leased Premises immediately prior to
such taking) as of the date possession is required to be surrendered to said
authority; provided, however, Landlord shall have the right to determine that
the Leased Premises should be demolished and not rebuilt, in which event
Landlord may, within ninety (90) days after such taking, terminate this Lease by
giving Tenant notice of such decision, and thereupon the Lease Term shall expire
by lapse of time upon the third day after such notice is given, and Tenant shall
thereupon vacate the Leased Premises and surrender the same to Landlord. In the
event that the Lease remains in full force and effect in accordance with the
terms described above, Landlord shall be obligated to repair and restore the
Leased Premises to usable condition by Tenant, and such repair shall be a
condition precedent to the continued effectiveness of this Lease. Landlord shall
have no obligation to contest any taking.
23. Landlord's Liability. Landlord, 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, water, rain, or leaks from any part of
the Leased Premises, or from the pipes, conduits, appliances or plumbing works,
or by dampness or by any other cause of whatsoever nature, unless caused by or
due to the gross negligence of Landlord, its agents, servants, or employees. All
personal property and equipment located in the Leased Premises shall be at the
risk of Tenant.
24. Tenant's and Landlord's Liability. Tenant shall reimburse Landlord
for all expense, damages or fines, incurred or suffered by Landlord by reason of
any breach, violation or nonperformance by Tenant, or its agents, servants, or
employees, of any covenant or provision of this Lease or the Rules and
Regulations promulgated by Landlord hereunder from time to time, or by reason of
damage to persons or property caused by moving property of or for Tenant in or
out of the Property, or by the installation or removal of furniture or other
property of or for Tenant, by reason of or arising out of the carelessness,
negligence or improper conduct of Tenant, or its agents, servants, employees,
invitees or licensees in the use or
-20-
occupancy of the Leased Premises or the common areas of the Property. Landlord
shall reimburse Tenant for all expense, damages or fines, incurred or suffered
by Tenant by reason of any breach, violation or nonperformance by Landlord, or
its agents, servants, or employees, of any covenant or provision of this Lease,
by reason of or arising out of the gross negligence of Landlord, or its agents,
servants, employees, invitees or licensees.
25. Indemnity.
(a) By Tenant. Tenant shall indemnify and defend Landlord and
its agents and employees and save them harmless from and against any and all
claims, actions, damages, liabilities and expense in connection with loss of
life, personal injury and/or damage to property arising from or out of any
occurrence in, upon or at the Leased Premises, or the occupancy or use by Tenant
of the Leased Premises or any part thereof, or occasioned wholly or in part by
any act or omission of the Tenant, its agents, contractors, employees, servants,
invitees or licensees, whether inside the Leased Premises or elsewhere in the
Property.
(b) By Landlord. Landlord shall indemnify and defend Tenant and
its agents and employees and save them harmless from and against any and all
claims, actions, damages, liabilities and expense in connection with loss of
life, personal injury and/or damage to property occasioned wholly or in part by
any act or omission of the Landlord, its agents, contractors, employees,
servants, invitees or licensees, whether inside the Leased Premises or elsewhere
in the Property.
26. Tenant's Insurance.
(a) Coverages. Tenant shall have issued, pay the premiums
therefor, and maintain in full force and effect during the Lease Term and any
option period:
(i) Comprehensive Liability. A
commercial general liability
insurance policy or policies in
which the Landlord and Landlord's
mortgagee(s) (and such additional
persons and/or entities as Landlord
may request) and Tenant shall be the
insured, protecting the Landlord and
Landlord's mortgagee(s) (and such
additional persons and/or entities
as Landlord may request) and Tenant
in the amount of at least Three
Million and No/100 Dollars
($3,000,000.00) combined, single
limit coverage for bodily injury,
including death, or property damage,
which amount may be increased from
time to time by Landlord in its
reasonable determination;
(ii) All-Risk Casualty. All-risk casualty
insurance, naming Landlord (and such
additional persons and/or entities
as Landlord may request) and Tenant
as insureds (as their interests may
appear), written at replacement cost
value and with replacement cost
endorsement, covering all leasehold
improvements installed in the Leased
Premises by Tenant or at Tenant's
request and all of Tenant's personal
property in the Leased Premises
(including, without limitation,
inventory, trade fixtures, floor
coverings, furniture and other
property removable by Tenant under
the provisions of this Lease).
-21-
(iii) Workers' Compensation. If and to the
extent required by law, workers'
compensation and employer's
liability or similar insurance in
form and amounts required by law.
(b) Policy Requirements. Tenant's failure to provide such
insurance or failure to pay the premiums when due, shall be deemed a default
hereunder. Any monies expended by Landlord to cure said default shall be deemed
Additional Rent and shall be due and owing with Tenant's next payment of Basic
Monthly Rent. All such policies shall contain only such reasonable deductible
amounts as may be approved in advance by Landlord and shall contain a provision
that Landlord shall receive not less than thirty (30) days advance notice in
writing from the insurance company of any intention of the insurance company to
cancel such policy or policies. Tenant shall provide written evidence to
Landlord of its acquisition of such policies prior to the commencement of this
Lease and prior to any renewal date of such policies. All policies shall be
carried with a reputable insurance company qualified to do business in the State
of Maryland and rated not lower than A-XII in the A.M. Best Rating Guide.
(c) No Limitation of Liability. Neither the issuance of any
insurance policy required under this Lease nor the minimum limits specified
herein shall be deemed to limit or restrict in any way Tenant's liability
arising under or out of this Lease.
27. Waiver of Subrogation. Landlord and Tenant mutually covenant and
agree that each party, in connection with insurance policies required to be
furnished in accordance with the terms and conditions of this Lease, or in
connection with insurance policies which they obtain insuring such insurable
interest as Landlord or Tenant may have in its own properties, whether personal
or real, shall expressly waive any right of subrogation on the part of the
insurer against the Landlord (and any mortgagee requested by Landlord) or Tenant
as the same may be applicable, which right to the extent not prohibited or
violative of any such policy is hereby expressly waived, and Landlord and Tenant
each mutually waive all right of recovery against each other, their agents, or
employees for any loss, damage or injury of any nature whatsoever to property or
person for which either party carries insurance or is required by this Lease to
carry insurance.
28. No Liens Permitted; Discharged. Tenant will not permit to be created
or to remain undischarged any lien, encumbrance or charge (arising out of any
work done or materials or supplies furnished, or claimed to have been done or
furnished, by any contractor, mechanic, laborer or materialman or any mortgage,
conditional sale, security agreement or chattel mortgage, or otherwise by or for
Tenant) which might be or become a lien or encumbrance or charge upon the
Property or any part thereof or the income therefrom. If any lien, or notice of
lien on account of an alleged debt of Tenant or any notice of contract by a
party engaged by Tenant or Tenant's contractor to work on the Leased Premises
shall be filed against the Property or any part thereof, Tenant, within fifteen
(15) days after notice of the filing thereof, will cause the same to be
discharged of record by payment, deposit, bond, order of a court of competent
jurisdiction or otherwise. If Tenant shall fail to cause such lien or notice of
lien to be discharged within the period aforesaid, then, in addition to any
other right or remedy, Landlord may, but shall not be obligated to, discharge
the same either by paying the amounts claimed to be due or by procuring the
discharge of such lien by deposit or by bonding proceedings and in any such
event Landlord shall be entitled, if Landlord so elects, to compel the
prosecution of an action for the
-22-
foreclosure of such lien by the lienor and to pay the amount of the judgment in
favor of the lienor with interest, costs and allowances. Any amount so paid by
Landlord and all reasonable costs and expenses, including attorneys' fees,
incurred by Landlord in connection therewith, shall constitute Additional Rent
payable by Tenant under this Lease and shall be paid by Tenant to Landlord on
demand. Nothing herein contained shall obligate Tenant to pay or discharge any
lien created by Landlord.
29. Signs, Awnings and Canopies. Tenant will not place or suffer to be
placed or maintained on the exterior of the Leased Premises any sign, awning or
canopy, or other written matter of any kind, without first obtaining Landlord's
written approval which shall not be unreasonably withheld or delayed, provided
that any such sign, awning, canopy or written matter is in compliance with the
applicable federal, state and/or county regulations. Tenant further agrees to
maintain in good condition and repair at all times such sign, awning, canopy,
decoration, lettering, or written matter as may be approved. Any of said items
so installed without such written approval and consent may be removed by
Landlord at Tenant's expense.
30. Environmental Protection. Tenant and Tenant's employees and agents
shall not dispose of any oil, petroleum or chemical liquids or solids, liquid or
gaseous products or any hazardous waste or hazardous substance including,
without limitation, asbestos (hereinafter collectively referred to as "hazardous
waste"), as those terms are used in the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, or in any other federal, state or local
law governing hazardous substances, as such laws may be amended from time to
time (hereinafter collectively referred to as the "Act"), at, upon, under or
within the Leased Premises or the Property, or into the plumbing or sewer or
water system servicing the Leased Premises and/or the Property, nor shall
Tenant, its agents or employees cause or permit the discharge, spillage,
uncontrolled loss, seepage or filtration of any hazardous waste at, upon, under
or within the Leased Premises or the Property or into the plumbing or sewer or
water system servicing the same. Notwithstanding the foregoing, Landlord
acknowledges that the use which Tenant contemplates for the Leased Premises
involves the use, storage, and disposal of materials which are defined herein as
hazardous waste, and Tenant shall have the right to maintain such materials on
the Leased Premises so long as they are used, stored and disposed of in
accordance with the Act. Tenant shall comply in all respects with the
requirements of the Act and related regulations, and shall notify Landlord
immediately in the event of its discovery of any hazardous waste at, upon, under
or within the Leased Premises or the Property which has not been used, stored or
disposed of in accordance with the Act. Tenant shall advise Landlord, in
writing, of the identities of hazardous wastes being used and stored in the
Leased Premises promptly upon written request from Landlord, but in no event
less frequently than once every twelve (12) months. Tenant shall indemnify
Landlord against all costs, expenses, liabilities, losses, damages, injunctions,
suits, fines, penalties, claims, and demands, including reasonable attorneys'
fees, arising out of any violation of or default by Tenant, and its employees
and agents, in the covenants of this Section. The provisions of this Section
shall survive the expiration of the Lease Term.
31. Notices. All notices to be given under this Lease shall be in
writing and either (i) hand-delivered, (ii) sent by Federal Express (or other
nationally recognized, overnight mail courier service), (iii) or mailed by
United States Certified or Registered Mail, return receipt requested, postage
prepaid. Notices should be delivered as follows:
(a) To Landlord to the attention of the "General Manager"
at the business and mailing address
-23-
stated on page 1 of this Lease, with a copy to
Shulman, Rogers, Gandal, Pordy & Ecker, P.A., 11921
Rockville Pike, Suite 300, Rockville, Maryland 20852,
attn: Karl L. Ecker, Esquire. Pursuant to the terms of
Section 19(a) hereof, for so long as Signet
Bank/Maryland holds a first lien security interest in
the Property, a copy of any notice of default served
on Landlord shall be delivered to Signet Bank/Maryland
at 7700 Wisconsin Avenue, Suite 400, Bethesda,
Maryland 20814, attn: Ms. Susan Benninghoff, Vice
President.
(b) To Tenant to the attention of Richard T. Schumacher,
President, at the business and mailing address stated
on page 1 of this Lease, with a copy to Brown Rudnick
Freed & Gesmer, One Financial Center, Boston,
Massachusetts 02111, attn: Howard L. Levin, Esquire.
Any such notice shall be deemed to be received on the date it is hand-delivered
or delivered by Federal Express (or other nationally recognized, overnight mail
courier service), or on the third day after the date on which it is deposited in
the U.S. mails. Landlord, Tenant and Signet Bank/Maryland shall each have the
right to change the person and/or address to which notices shall be delivered
upon notice thereof to the other parties sent pursuant to the provisions of this
paragraph.
32. Time. Landlord and Tenant acknowledge that time is of the essence in
the performance of any and all obligations, terms, and provisions of this Lease.
33. Postponement of Performance. In the event that either party hereto
shall be delayed or hindered in or prevented from the performance of any act
required hereunder by reason of strikes, labor troubles, inability to procure
labor or materials, failure of power, restrictive governmental laws or
regulations, riots, insurrection, war, acts of God, fire or other casualty or
other reason of a similar or dissimilar nature beyond the reasonable control of
the party delayed in performing work or doing acts required under the terms of
this Lease, then performance of such act shall be excused for the period of the
delay and the period for the performance of any such act shall be extended for a
period equivalent to the period of such delay; provided, however that nothing in
this section shall excuse any delay in the payment of Minimum Annual Rent or
Additional Rent; and provided, further, that delays or failures to perform
resulting from lack of funds shall not be deemed delays beyond the reasonable
control of a party. Nothing contained herein shall be construed to limit the
provisions concerning the abatement of Minimum Annual Rent and Additional Rent
resulting from fire and casualty damage or from condemnation damage to the
Leased Premises as more fully described in Sections 21 and 22 hereof.
34. Brokers. Landlord and Tenant represent and warrant each to the
other that neither has authorized any broker, agent or finder purporting to act
on either's behalf in respect to this Lease transaction except the Leasing
Broker specified in Section l(a)(11), and each hereby agree to indemnify and
hold harmless one from the other from and against any cost, expense, claims,
liability or damage resulting from a breach of the representation and warranty
herein contained.
35. No Waiver. No waiver by Landlord or Tenant of any breach of any of
the terms, covenants, agreements, or conditions of this Lease shall be deemed to
constitute a waiver of any succeeding breach thereof, or a waiver of any breach
of any of the other terms, covenants, agreements, and conditions herein
-24-
contained. No provision of this Lease shall be deemed to have been waived by
Landlord or Tenant, unless such waiver be in writing signed by such party. No
employee of Landlord or of Landlord's agents shall have any authority to accept
the keys of the Leased Premises prior to termination of the Lease, and the
delivery of keys to any employee of Landlord or Landlord's agents shall not
operate as a termination of the Lease or a surrender of the Leased Premises. The
receipt by Landlord of any payment of Minimum Annual Rent or Additional Rent
with knowledge of the breach of any covenant of this Lease shall not be deemed a
waiver of such breach. The failure of Landlord to enforce any of the Rules and
Regulations made a part of this Lease, or hereafter adopted, against Tenant or
any other tenant in the Property shall not be deemed a waiver of any such Rules
and Regulations.
36. Amendments. This Lease and the Exhibits attached hereto, together
with the terms and conditions of that certain Assets for Cash Purchase
Agreement, of even date, entered into by and between Landlord, Tenant and
Tenant's Guarantor, which describe the sale and purchase of certain assets by
Landlord to Tenant and Tenant's Guarantor, contain the entire agreement between
the parties, and any agreement hereafter made shall be ineffective to change,
modify, discharge or effect an abandonment in whole or in part unless such
agreement is in writing and signed by the party against whom enforcement of the
change, modification, discharge or abandonment is sought.
37. Applicable Law. The laws of the State of Maryland shall govern the
validity, performance and enforcement of this Lease.
38. Transfer of the Property. In the event of the sale or other transfer
of Landlord's right, title and interest in the Leased Premises or the Property
(except in the case of a sale- leaseback financing transaction in which Landlord
is the lessee), Landlord shall transfer and assign to such purchaser or
transferee all amounts of pre-paid Minimum Annual Rent and Additional Rent, and
provided that the purchaser or transferee shall assume all of the surviving
liabilities and obligations of Landlord hereunder accruing after the
consummation of such sale or transfer, Landlord thereupon shall be released from
all liability and obligations hereunder derived from this Lease arising out of
any act, occurrence or omission relating to the Leased Premises or this Lease
occurring after the consummation of such sale or transfer. Tenant shall have no
right to terminate this Lease, to abate Minimum Annual Rent or Additional Rent,
nor to deduct from, nor set-off, nor counterclaim against Minimum Annual Rent or
Additional Rent because of any sale or transfer (including, without limitation,
any sale-leaseback) by Landlord or its successors or assigns.
39. Extension Option. Provided (i) that this Lease shall be in full
force and effect; (ii) that BTRL Contracts and Services, Inc. (or a permitted
assignee of Tenant [which is a related party to Tenant] pursuant to the
provisions of Section 15 hereof) shall be the tenant hereunder; and (iii) that
Tenant shall not be in default under any of the terms, provisions, covenants or
condition of this Lease, then, and only in such event, Tenant shall have the
right, at Tenant's sole option, to extend the term of this Lease for two (2)
additional periods of five (5) years each ("Extension Terms"). Each such
extension option shall be exercisable by Tenant giving written notice of the
exercise of such extension option to Landlord no sooner than three hundred
sixty-five (365) days and no later than one hundred eighty (180) days prior to
the expiration date of the then-current term; provided, however, in the event
Tenant fails to exercise any option to extend during the aforesaid period such
extension option shall become null and void and all rights with respect thereto
and with respect to any subsequent extension option shall become null and void
and all rights with respect
-25-
thereto and with respect to any subsequent extension option shall automatically
terminate and expire. Each Extension Term shall be upon the same terms,
covenants and conditions as set forth herein with respect to the Lease Term,
except that Minimum Annual Rent payable during each Lease Year of each Extension
Term shall be computed in the following manner. On the first day of the first
Lease Year of the first Extension Term, and on the first day of each Lease Year
thereafter during the remainder of the first Extension Term and during the
Second Extension Term, the Minimum Annual Rent (then in effect) shall be
adjusted by [Language Deleted Due To Confidential Treatment Request.] of any
change in the Index now known as "United States Bureau of Labor Statistics,
Consumer Price Index for All Urban Consumers, All Items (1982-1984=100)"
("Index"), provided, however, that the amount of Minimum Annual Rent payable by
Tenant during any Lease Year of an Extension Term pursuant to this provision
shall not be less than [Language Deleted Due To Confidential Treatment
Request.]of the Minimum Annual Rent paid during the previous Lease Year. Subject
to the foregoing, each such adjustment shall be accomplished (and shall be
effective for the entire then- operative Lease Year) by adding to the Minimum
Annual Rent (then in effect) the amount created by multiplying the Minimum
Annual Rent then in effect by the amount created by subtracting one (1) from a
fraction, the numerator of which shall be the most recently published monthly
Index figure prior to the date of the adjustment, and the denominator of which
shall be the published monthly Index figure for the same month of the previous
year. Landlord shall give Tenant written notice of each such adjustment and the
amount of Minimum Annual Rent payable during the forthcoming Lease Year. Should
said Index cease to be published, then the closest similar published Index by an
agency of the United States Government shall be substituted. Should there be no
such substitute, then the parties hereto shall, under rules of the American
Arbitration Association, agree to a substitute formula, or source, designed to
accomplish the same original purpose of this provision. This extension option is
personal to Tenant, and shall not be available to any other subtenant or
assignee of the Lease (other than a party which is related to Tenant),
regardless of whether such sublease or assignment was approved by Landlord in
the manner described herein.
40. Right of First Offer. In the event that, during the Lease Term,
Landlord determines to sell the Property to any party which is unrelated to
Landlord, then, provided that (i) this Lease shall be in full force and effect;
(ii) that BTRL Contracts and Services, Inc. (or a permitted assignee of Tenant
[which is a related party to Tenant] pursuant to the provisions of Section 15
hereof) shall be the tenant hereunder; and (iii) Tenant shall not be in default
under any of the terms, provisions, covenants or conditions of this Lease, then,
and only in such event, Tenant shall have the first right to purchase the
Property upon the following terms and conditions. Promptly after determining the
terms and conditions upon which the Property shall be sold to a third party,
Landlord shall give Tenant written notice of its opportunity to purchase same,
by presenting Tenant with an execution copy of a Contract of Sale for the
Property containing all material terms and conditions as determined by Landlord
to be appropriate for the sale of the Property. Tenant shall exercise its right
of first offer by executing the copy of the Contract of Sale tendered by
Landlord and returning it to Landlord (together with any required earnest money
deposit) within thirty (30) calendar days of the date on which Landlord
delivered the proposed Contract of Sale to Tenant. The failure of Tenant to
execute and deliver the Contract of Sale (and required earnest money deposit) to
Landlord within the aforesaid thirty (30) calendar day period shall
automatically extinguish Tenant's right to exercise such right of first offer
with regard to the Property, and further shall relieve Landlord of any and all
liability with respect to same; provided that such right of first offer shall be
reinstated, without further act required by any party, in the event that
Landlord has not settled on the sale of the Property within three hundred
sixty-five (365) days of the expiration date of Tenant's right of first offer as
described
-26-
herein. Notwithstanding the foregoing, Landlord shall not thereafter offer to
sell the Property to any third party for a purchase price which is less than
that offered to Tenant or upon such other material terms and conditions which
are substantially less advantageous to the purchaser, without first renewing its
offer to Tenant to purchase same at the lesser amount of purchase price (and
affording Tenant the right to exercise its first right of offer in the manner
described herein). Should Tenant fail to exercise properly its right of first
offer as described above, Landlord shall be free to proceed with the sale of the
Property to any third party, free and clear of all rights of Tenant; provided
that such right of first offer shall be reinstated, without further act required
by any party, in the event that Landlord has not settled on the sale of the
Property within three hundred sixty-five (365) days of the expiration date of
Tenant's right of first offer as described herein. In the event that Tenant
exercises its right of first offer as provided herein, then Landlord and Tenant
shall proceed to settlement thereunder in accordance with the terms and
conditions of the Contract of Sale. In the event that Tenant thereafter fails to
settle on its purchase of the Property in accordance with the terms and
conditions of the Contract of Sale, then Landlord shall have the right (but not
the obligation), as determined in its sole and absolute discretion, to terminate
this Lease, in addition to exercising any and all rights available to it
pursuant to the terms and conditions of the Contract of Sale. Landlord shall
exercise its right to terminate this Lease by giving written notice thereof to
Tenant, in which event this Lease shall terminate on the third day after the
giving of such notice, and Tenant shall deliver possession of the Leased
Premises to Landlord. This right of first offer is personal to Tenant, and shall
not be available to any other subtenant or assignee of the Lease (other than a
party which is related to Tenant), regardless of whether such sublease or
assignment was approved by Landlord in the manner described herein.
41. Right of First Refusal. Provided (i) that Landlord has not
offered Tenant the right to purchase the Property for a purchase price which is
equal to or less than the offer described below and is upon such material terms
and conditions which are substantially the same or more advantageous to the
purchaser than are contained in the offer described below, and that Tenant's
right of first offer has not expired (and Tenant's right under Section 40 has
not been reinstated), all pursuant to the terms and conditions of Section 40
hereof; (ii) that this Lease shall be in full force and effect; (iii) that BTRL
Contracts and Services, Inc. (or a permitted assignee of Tenant [which is a
related party to Tenant] pursuant to the provisions of Section 15 hereof) shall
be the tenant hereunder; and (iv) that Tenant shall not be in default under any
of the terms, provisions, covenants or condition of this Lease, then, and only
in such event, Tenant shall have the right of first refusal to purchase the
Property (the "Right of First Refusal") upon the following terms: If at any time
during the Lease Term, Landlord shall receive a bona fide offer from a third
party for the purchase of the Property, which offer Landlord desires to accept,
Landlord promptly shall deliver to Tenant a copy of such offer. Tenant may,
within thirty (30) days after receipt of such offer, elect to purchase the
Property on the same terms and conditions as set forth in such offer, by
delivering to Landlord written notice of said exercise within the aforesaid
thirty (30) day period. In the event that Landlord shall receive an offer for
the purchase of the Property which is not consummated by delivering a deed to
the offeror, Tenant's Right of First Refusal as set forth herein shall remain
applicable to subsequent offers made to Landlord. In the event that Landlord
shall sell the Property after Tenant fails to exercise its Right of First
Refusal, such sale shall be subject to the terms of this Lease, provided,
however, the Right of First Offer and the Right of First Refusal as set forth in
this Lease shall expire upon the date of conveyance of the Property to said
third party, and said rights shall not continue in force or effect, nor shall
they be applicable to any
-27-
subsequent sale or ownership of the Property by successive parties. In the event
that any mortgagee or holder of a deed of trust or other security interest in
the Property shall foreclose on the Property or accept a deed in lieu of
foreclosure as a result of the failure of Landlord to pay any debt secured by
the Property, the Right of First Offer and the Right of First Refusal as set
forth in this Lease shall expire automatically upon the date of conveyance of
the Property to said mortgagee or holder of a security interest therein (or to
any third party assignee of said mortgagee or holder of a security interest
therein), and said Right of First Offer and the Right of First Refusal shall not
continue in force or effect, nor shall they be applicable to any subsequent sale
or ownership of the Property by successive parties.
42. Waiver of Counterclaim and Trial by Jury/Attorneys Fees. Landlord
and Tenant waive their right to trial by jury in any action, proceeding or
counterclaim brought by either of the parties hereto against the other (except
for personal injury or property damage) on any matters whatsoever arising out of
or in any way connected with this Lease, the relationship of Landlord and
Tenant, Tenant's use of or occupancy of the Leased Premises, and any emergency
statutory or any other statutory remedy. Tenant shall not interpose any
counterclaim(s) or claim(s) for set-off, recoupment or deduction of Minimum
Annual Rent or Additional Rent in a summary proceeding for nonpayment of Minimum
Annual Rent or Additional Rent, unless such counterclaim is mandatory in nature
and must be interposed in such summary proceeding initiated by Landlord or
otherwise be deemed waived. In the event either Landlord or Tenant institute an
action or proceeding against the other to enforce the terms and conditions of
this Lease, the prevailing party shall be entitled to recover all reasonable
attorneys fees and costs incurred as a result thereof.
43. Separability. If any term or provision of this Lease or the
application thereof to any person or circumstances shall, to any extent, be
invalid or unenforceable, the remainder of this Lease or the application of such
term or provision to persons or circumstances other than those as to which it is
held invalid or unenforceable, shall not be affected thereby and each other term
and provision of this Lease shall be valid and enforceable to the fullest extent
permitted by law.
44. Corporate Authority. Concurrently with the execution of this Lease,
Tenant has delivered to Landlord a certified copy of a resolution of Tenant's
Board of Directors (or other evidence reasonably satisfactory to Landlord)
approving the leasing of the Leased Premises by Tenant pursuant to the terms and
conditions contained herein, stating that this Lease is fully binding upon
Tenant, and authorizing the execution of this Lease by each person signing this
Lease on behalf of Tenant.
45. Interpretation.
(a) Captions. The captions, marginal references, General
Information sheet, and table of contents appearing in this Lease are inserted
only as a matter of convenience and in no way amplify, define, limit, construe,
or described the scope or intent of this Lease nor in any way affect this Lease.
(b) Gender. The neuter, feminine or masculine pronoun when used
herein shall each include each of the other genders and the use of the singular
shall include the plural.
(c) Covenants. The parties hereto agree that all the provisions of
this Lease are to be construed as covenants and agreements as though the words
importing such covenants and agreements were used in each separate provision
hereof.
(d) Interpretation. Although the printed provisions of this Lease
were drawn by Landlord, this Lease shall
-28-
not be construed for or against Landlord or Tenant, but this Lease shall be
interpreted in accordance with the general tenor of the language in an effort to
reach the intended result.
46. Landlord's Agreement re: Contract of Sale of the Property. Landlord
agrees that, during the Lease Term and prior to its execution of any contract
for the sale of the Property to a prospective purchaser, it shall give written
notice of the existence of this Lease and Tenant's occupancy rights in and to
the Leased Premises (together with a copy of this Lease), to any such
prospective purchaser of the Property.
47. Reasonableness of Expenses. Wherever it is required by the terms of
this Lease that one party reimburse the other party for costs and expenses
incurred in connection with the performance of an obligation or the exercise of
a right described herein, unless expressly stated otherwise, all costs and
expenses for which such reimbursement is sought shall be reasonable in amount
and nature, as determined in accordance with local standards of commercial
reasonableness in the District of Columbia metropolitan area.
48. Limits of Landlord's Liability. In the event that any mortgagee or
holder of a deed of trust or other security interest in the Property shall
foreclose on the Property or accept a deed in lieu of foreclosure as a result of
the failure of Landlord to pay any debt secured by the Property, then,
thereafter, neither the owner of the Property, as Landlord, nor its agents,
employees or officers, whether disclosed or undisclosed, shall have any personal
liability under any provision of this Lease, and if such a subsequent owner of
the Property, as Landlord, defaults in the performance of any of its obligations
hereunder or otherwise, Tenant shall look solely to Landlord's equity, interest
and rights in the Property for satisfaction of Tenant's remedies on account
thereof.
49. Binding Effect. This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto, and the heirs, personal representatives,
successors and assigns of said parties.
IN WITNESS WHEREOF, the parties hereto have duly executed, sealed, and
delivered this Lease, or have caused same to be executed, sealed and delivered
by their duly authorized attorney-in-fact, as of the day and year above written.
WITNESS LANDLORD:
Cambridge Biotech Corporation,
a Delaware corporation
By: /s/ signature unreadable (SEAL)
- --------------------------- ---------------------------------
/s/ signature unreadable
---------------------------------
Date of Execution: July 14, 1992
---------
WITNESS/ATTEST: TENANT:
BTRL Contracts and Services, Inc.,
a Massachusetts corporation
/s/ signature unreadable By: /s/ signature unreadable (SEAL)
---------------------------------
/s/ signature unreadable , President
--------------------------
Date of Execution: July 14, 1992
--------
EXHIBIT C
RULES AND REGULATIONS
Tenant agrees as follows:
1. Tenant will keep the Leased Premises and approaches thereto clean
and free from rubbish; will remove snow, ice and debris from the adjacent
sidewalks; will keep all windows and any sign neat, clean and in good order;
will not erect any screen or fence; and will not perform any acts or carry on
any practices which may damage the Leased Premises or the Property or be a
nuisance or menace to other tenants.
2. Tenant shall not obstruct or interfere with the rights of others to
use any Property driveways, parking facilities, sidewalks, exits, entrances, if
any.
3. Tenant shall not store any material, supplies, equipment, wooden
pallets, vehicles or anything whatsoever outside of the Leased Premises. If any
such items are not removed within forty-eight (48) hours Landlord shall have the
right to remove the same, with prior notice to Tenant, and with no
responsibility to Tenant for loss or damage to such items, and the cost to
Landlord of such removal shall be deemed to be Additional Rent under the Lease
and will be immediately paid by Tenant to Landlord upon demand.
4. Business and mechanical equipment which cause noise or vibration that
may be transmitted to the structure of the Leased Premises or to any space
therein to such a degree as to be objectionable to Landlord or any other tenant
of the Property, shall be placed and maintained by Tenant, at Tenant's expense,
on vibration eliminators or other devices sufficient to eliminate noise or
vibration.
5. Tenant shall comply with any governmental energy-saving rules, laws
or regulations of which Tenant has notice.
6. The sewage system shall not be used for any purpose other than that
for which it was constructed and no foreign substance of any kind whatsoever
shall be thrown therein. The expense of any breakage, stoppage or damage
resulting from the violation of this rule shall be borne by the Tenant who, or
whose employees or invitees, shall have caused it.
7. Should the Tenant, its agents or invitees, activate its sprinkler
system (if there is one in the Leased Premises), Tenant agrees that it will pay,
as Additional Rent to Landlord, any damage to the Leased Premises and to
property of other Property tenants.
8. All trash and garbage shall be kept within the Leased Premises (or in
a dumpster placed on the common areas of the Property at a location reasonably
satisfactory to Landlord) and collected on a regular basis. Tenant shall not
place in any trash box or receptacle any material which cannot be disposed of in
the ordinary and customary manner of trash and garbage disposal.
9. Tenant shall comply with all safety, fire protection and evacuation
procedures and regulations established by or any governmental agency having
jurisdiction.
10. Tenant assumes any and all responsibility for protecting the Leased
Premises from theft, robbery and pilferage which includes keeping doors locked
and other means of entry to the Leased Premises closed.
11. Tenant shall keep the inside and the outside of all glass in the
doors and windows within the Leased Premises clean, keep all exterior surfaces
of the Leased Premises clean, replace
promptly any cracked or broken glass of the Leased Premises with glass of like
kind, color, and quality.
12. Tenant shall be responsible for the observance of all the foregoing
rules by Tenant's employees, agents, clients, customers, invitees and guests.
13. Tenant shall give Landlord immediate notice in case of fire or
accidents in the Leased Premises, and in case of fire or accidents on the
Property involving Tenant, its agents, employees or invitees.
GUARANTY
In consideration of, and as a material inducement to Cambridge Biotech
Corporation, a Delaware corporation qualified to do business in the State of
Maryland, with a business and mailing address at 1500 East Gude Drive,
Rockville, MD 20850 (the "Landlord"), executing and delivering simultaneously
herewith, in reliance upon this Guaranty, that certain Lease (the "Lease"),
dated as of June 30, 1992, between Landlord and BTRL Contracts and Services,
Inc., a Massachusetts corporation qualified to do business in the State of
Maryland ("Tenant"), the undersigned, Boston Biomedica, Inc., a Massachusetts
corporation (the "Guarantor"), with a business and mailing address at 375 West
Street, West Bridgewater, Massachusetts 02379, hereby unconditionally and
absolutely guarantees unto Landlord, its successors and assigns, the full,
prompt and complete payment by Tenant of the Minimum Annual Rent and Additional
Rent provided in the Lease, and the prompt, faithful and complete performance
and observance by Tenant of all of the terms, covenants and conditions of the
Lease on the Tenant's part to be performed and/or observed. Upon the failure of
Tenant to make any such payment of Minimum Annual Rent or Additional Rent
provided in the Lease, or to perform or observe any such term, covenant or
condition of the Lease on the Tenant's part to be performed and/or observed,
Guarantor shall, promptly upon demand, pay such required sum to Landlord, or
perform or observe the required term, covenant or condition of the Lease.
Guarantor does hereby waive notice of any and all defaults on the part
of the Tenant, waives acceptance and notice of acceptance of this Guaranty, and
waives all demand for payment and/or performance; and Guarantor agrees that no
delay on the part of Landlord in enforcing any of its rights or remedies or
insisting thereupon, nor any extension of time nor any changes or modifications
in or to, or in connection with the Lease, shall in any way limit, affect or
impair the liability of Guarantor hereunder; and Guarantor hereby expressly
consents to and approves thereof with the same force and effect as though its
written consent had been given to each of such delays, extensions, changes and
modifications.
This Guaranty is independent of and in addition to any security or other
remedies which Landlord has or may have for the performance of any of the
obligations on the part of Tenant; and Guarantor agrees that Landlord shall not
be required to resort to any other security or other remedies before proceeding
upon this Guaranty, but that Landlord may proceed hereunder against Guarantor at
any time it sees fit, independently of or concurrently with any other remedies
it may have.
This Guaranty shall remain in full force and effect notwithstanding the
institution by or against Tenant, of bankruptcy, reorganization, readjustment,
receivership or insolvency proceedings of any nature, or the disaffirmance of
the Lease in any such proceedings or otherwise.
If Guarantor is a corporation and is merged into or with any other
company, firm or corporation, the resulting merged company, firm or corporation
shall become liable as Guarantor under this Guaranty to the same extent as the
original named Guarantor hereunder.
Concurrently with the execution of this Guaranty, Guarantor has
delivered to Landlord a certified copy of a resolution of its Board of Directors
(or other evidence reasonably satisfactory to Landlord) approving the guaranty
by Guarantor of Tenant's obligations contained in the Lease pursuant to the
terms and conditions contained herein, stating that this Guaranty is fully
binding upon Guarantor, and authorizing the execution of this Guaranty by each
person signing this Lease on behalf of Guarantor.
This Guaranty shall be binding upon the undersigned, the undersigned's
successors and assigns, and shall inure to the benefit of Landlord, its
successors and assigns, and to the benefit of any successors to the interest of
Landlord under the Lease and/or to the Leased Premises.
IN WITNESS WHEREOF, the undersigned has duly executed this Guaranty
under seal as of the 30th day of June, 1992.
WITNESS/ATTEST: GUARANTOR:
Boston Biomedica, Inc.
/s/ signature unreadable By: /s/ signature unreadable (SEAL)
- ---------------------------- --------------------------------
Secretary Name: /s/ signature unreadable
---------------------------
Title: President
--------------------------
State of UNREADABLE
------------------
County of UNREADABLE
------------------
On this the 14th day of July, 1992, before me, the subscriber, a Notary Public
in and for the jurisdiction aforesaid, personally appeared UNREADABLE who
acknowledged himself/herself to be the President of Boston Biomedica, Inc., a
Massachusetts corporation, and that he/she, as such President, being authorized
so to do, executed the foregoing and annexed Guaranty for the purposes contained
therein, by signing the name of the corporation by himself/herself as President.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ signature unreadable
-----------------------------
Notary Public
My Commission Expires 11/6/92
-------
BTRL Contracts and Services, Inc.
375 West Street
West Bridgewater, Massachusetts 02379
Re: Lease Agreement Dated as of June 30, 1992 between Cambridge
Biotech Corporation and BTRL Contracts and Services, Inc.,
covering certain premises known as 3 Taft Court, Rockville,
Maryland 20850
Gentlemen:
Reference is made to the above-reference Lease Agreement (the "Lease"),
pursuant to which Cambridge Biotech Corporation ("Landlord") has leased certain
premises known as 3 Taft Court, Rockville, Maryland, to be BTRL Contracts and
Services, Inc. ("Tenant").
In mutual consideration of Landlord and Tenant entering into the
above-referenced Lease, this will confirm that Landlord and Tenant have agreed
to supplement the provisions of the Lease as follows:
1. Landlord and Tenant have agreed to clarify the provisions of
Section 4(b)(iii), relating to insurance, so as to clarify in
the third paragraph thereof that in the event that Landlord
causes its insurance carrier to provide a written statement
reflecting the allocation of premiums paid by Landlord
attributable to the Leased Premises (as defined therein) and
the premiums attributable to the insurance carried on other
properties owned by Landlord, the premiums attributable to the
Leased Premises shall be Tenant's Proportionate Share of
insurance costs payable under the Lease.
2. Landlord has agreed to provide to Tenant, on a quarterly basis,
true and complete copies of bank statements reflecting the
status of accounts in which monies have been deposited in
escrow on account of real estate taxes pursuant to Section
4(b)(ii) of the Lease, insurance premiums pursuant to Section
4(b)(iii) of the Lease, and the Security Deposit pursuant to
Section 5 of the Lease.
3. In the event that Landlord refinances the real property of
which the Leased Premises constitute a part, Landlord agrees to
modify and amend the Lease so as to eliminate the limitations
on the Landlord's (and any subsequent owner's) liability
pursuant to Section 48 of the Lease, unless Landlord's
prospective new mortgage lender, if any, refuses (in its sole
discretion) to finance the property if such modification or
amendment is made.
EXECUTED as a sealed instrument as of the 30th day of June, 1992.
TENANT: LANDLORD:
BTRL CONTRACTS SERVICES, INC. CAMBRIDGE BIOTECH CORPORATION
BY: /s/ signature unreadable BY: /s/ signature unreadable
---------------------------- ----------------------------
Vice President
EXHIBIT 10.8
LEASE
BY AND BETWEEN
MB ASSOCIATES
AND
BBI - NORTH AMERICAN CLINICAL LABORATORIES, INC.
75 NORTH MOUNTAIN ROAD
NEW BRITAIN, CONNECTICUT
DATED AS OF JULY 28, 1995
CONTENTS
--------
<TABLE>
<CAPTION>
SECTION CAPTION PAGE
- ------- ------- ----
<S> <C> <C>
1. Demise - Premises - Term ........................................................................
2. Rent ............................................................................................
3. Renewal Options .................................................................................
4. Construction by the Landlord ....................................................................
5. Use .............................................................................................
6. Signs ...........................................................................................
7. Subordination of Lease ..........................................................................
8. Quiet Enjoyment .................................................................................
9. Assignments and Subleases .......................................................................
10. No Nuisance; Compliance with Laws and Requirements of Public Authorities.........................
11. Insurance .......................................................................................
12. Rules and Regulations ...........................................................................
13. Alterations and Improvements ....................................................................
14. Tenant's Property ...............................................................................
15. Tenant's Repairs ................................................................................
16. Landlord's Repairs, Maintenance, ................................................................
17. Access to Demised Premises ......................................................................
18. Damage or Destruction ...........................................................................
19. Condemnation ....................................................................................
20. Surrender .......................................................................................
21. Default and Damages .............................................................................
22. Parking .........................................................................................
23. Unperformed Covenants ...........................................................................
24. Holding Over ....................................................................................
25. Certain Rights Reserved by the Landlord .........................................................
26. Waiver of Notice ................................................................................
27. Notices .........................................................................................
28. Estoppel Certificate ............................................................................
29. Limitation of Liability .........................................................................
30. Rights of Landlord; Non-Waiver ..................................................................
31. Broker ..........................................................................................
32. Notice of Lease .................................................................................
33. Prior Agreements ................................................................................
34. Captions; Sections; Gender ......................................................................
35. Benefit and Burden ..............................................................................
36. Applicable Law ..................................................................................
Signatures ......................................................................................
</TABLE>
EXHIBITS
- --------
Exhibit A - Plan of Demised Premises
Exhibit B - Schedule of Landlord's Work
Exhibit C - Rules and Regulations
LEASE
-----
THIS LEASE made as of the 28th day of July, 1995, by and between MB
ASSOCIATES, a Connecticut partnership having its office at Plainville,
Connecticut (the "Landlord", and BBI- NORTH AMERICAN CLINICAL LABORATORIES,
INC., a Massachusetts corporation having an address of 75 North Mountain Road,
New Britain, Connecticut (the "Tenant").
1. Demise - Premises - Term.
(a) The Landlord hereby demises and leases to the Tenant, and the
Tenant hereby takes and hires from the Landlord, for the term hereinafter
stated, for the rent hereinafter reserved, and upon and subject to the
covenants, agreements, terms, conditions, limitations, exceptions and
reservations of this lease, the building known as 75 North Mountain Road, New
Britain, Connecticut, together with the exclusive use of the parking area and
land shown and described in Exhibit A, attached hereto and made a part hereof
(the "Demised Premises).
(b) The term of this lease and the estate hereby granted (collectively
the "term of this Lease") shall commence on the Commencement Date (as defined in
section 1(c)) and shall end on the last day of the calendar month in which
occurs the day preceding the fifth (5th) anniversary of the Commencement Date,
which ending date, unless the context otherwise requires, is hereinafter called
the "Expiration Date", or shall end on such earlier date upon which the term of
this lease may expire or be terminated pursuant to any of the provisions of this
lease or pursuant to law.
(c) The term "Commencement Date: shall be that date when the Demised
Premises are ready for occupancy by the Tenant, or on August 1, 1995, whichever
date shall occur later, and all of the following conditions are met: (i)
temporary or final certificate of occupancy shall have been issued by the City
of New Britain permitting the activities specified in Section 5 to be conducted
in the Demised Premises; (ii) the contractor engaged by the Landlord has issued
a certificate attesting that the Landlord's Work (as defined in section 4(b))
has been substantially completed; and (iii) the Landlord's Work has been
substantially completed, and it shall be deemed to be substantially completed
notwithstanding the fact that minor or insubstantial details of construction,
mechanical adjustment or decoration remain to be performed, the noncompletion of
which does not interfere materially with the Tenant's normal use and occupancy
of the Demised Premises, provided, however, that if substantial completion of
the Landlord's Work shall be delayed beyond July 31, 1995, because of changes in
the Landlord's Work at the request of the Tenant as provided in Section 4(c)
(within fifteen (15) days after the delivery of any such change request, the
Landlord shall notify the Tenant
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whether or not such change request is likely to cause a delay in the completion
of the Landlord's Work beyond July 31, 1995) then the Commencement Date shall be
deemed to be August 1, 1995, provided all other work has been substantially
completed, even though the conditions set forth in this Section 1(c) shall not
have been satisfied.
2. Rent.
(a) The rent reserved under this lease (the "Rent") for the term hereof
shall commence to accrue on the Commencement Date and shall be:
<TABLE>
<S> <C>
(i) Annual Fixed Rent For the First Year, [Language Deleted Due To Confidential Treatment Request.]
(ii) Annual Fixed Rent For the Second Year, [Language Deleted Due To Confidential Treatment Request.]
(iii) Annual Fixed Rent For the Third Year, [Language Deleted Due To Confidential Treatment Request.]
(iv) Annual Fixed Rent For the Fourth Year, [Language Deleted Due To Confidential Treatment Request.]
(v) Annual Fixed Rent For the Fifth Year, [Language Deleted Due To Confidential Treatment Request.]
(vi) such other sums of money as shall become due and
payable by the Tenant to the Landlord as provided in
this lease, such other sums of money to be deemed to
be additional rent whether or not such sums of money
are designated as such hereunder.
</TABLE>
(b) The Rent shall be paid to the Landlord at its address specified in
Section 27, or at such other place as the Landlord may from time to time
designate, in lawful money of the United States of America, as and when the same
shall become due and payable and without abatement or offset and without notice
or demand therefor.
(c) The annual Fixed Rent for each lease year shall be payable in equal
monthly installments in advance on the first day of each and every calendar
month during each lease year. If the Commencement Date is other than the first
day of the calendar month, the first monthly installment of the Fixed Rent shall
include a pro rata installment of Fixed Rent for the period from the
Commencement Date to the last day of the month in which the Commencement Date
occurs based upon the Fixed Rent payable during the term hereof.
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(d) If the Tenant fails to pay within ten (10) days after the same is
due and payable any installment of Fixed Rent or any additional rent to be paid
by the Tenant to the Landlord as provided in this lease, such unpaid amount
shall bear interest from the due date thereof to the date of payment at the rate
equal to the lesser of (i) twelve percent (12%) per annum, or (ii) the maximum
rate permitted by applicable law. Such interest shall be paid by the Tenant to
the Landlord on the earlier to occur of A) at the time that the Tenant pays to
the Landlord the installment of Fixed Rent or the additional rent upon which
such interest shall have accrued or (B) five (5) days after written demand
therefor.
(e) As used herein, the term "lease year" shall mean the period
commencing on the Commencement Date and ending on the last day of the calendar
month in which occurs the day preceding the first (1st) anniversary of the
Commencement Date, and each period of twelve (12) consecutive calendar months
thereafter.
(f) If, on the Grand Lists of 10/1/95, 10/1/96, 10/1/97, 10/1/98 and
10/1/99, as a result of Tenant's use of the Demised Premises, the City of New
Britain provides real property tax abatement for the Demised Premises, the rent
reserved in Section 2(a), above, will be reduced by an amount equal to the
amount of tax abatement received, but in no event less than Six Thousand Dollars
($6,000.00) per year for the 2nd through the 5th year of the Term, and the first
year of the first renewal term of this Lease.
The parties agree to execute an amendment to this Lease establishing
the fixed annual rent in the event of such tax abatement and to establish the
annual fixed rent for the renewal terms set forth in Sections 3 (a) and (b).
3. Renewal Options:
(a) Tenant shall have the option to renew this Lease for a term of five
(5) years on the same terms and conditions as provided herein except that the
annual fixed rent for each year during said first renewal term shall be the
greater of (i) [Language Deleted Due To Confidential Treatment Request.] or (ii)
[Language Deleted Due To Confidential Treatment Request.] plus the cumulative
percentage of increase, if any, in the Consumer Price Index All Item Figures for
Urban Wage Earners and Clerical Workers (N.Y., Northern N.J., Long Island, N.Y,
NJ, CT) (1982-94 = 100) published by the Bureau of Labor Statistics, U.S.
Department of Labor as of the date of the commencement of the first renewal
period over the said Index as of the date of the commencement of the initial
term of this Lease, which increase shall not exceed [Language Deleted Due To
Confidential Treatment Request.].
(b) Tenant shall have a further option to renew this Lease for an
additional term of five
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(5) years on the same terms and conditions as provided herein except that there
shall be no further right of renewal and that the annual fixed rent for each
year of said second renewal term shall be the greater of (i) an amount equal to
the annual fixed rent during said first renewal term plus [Language Deleted Due
To Confidential Treatment Request.] or (ii) the annual fixed rent during said
first renewal term plus the cumulative percentage of increase, if any, in the
Consumer Price Index All Item Figures for Urban Wage Earners and Clerical
Workers (N.Y., Northern N.J., Long Island, N.Y, NJ, CT) (1982-94 = 100)
published by the Bureau of Labor Statistics, U.S. Department of Labor as of the
date of the commencement of the second renewal period over the said Index as of
the date of the commencement of the first renewal period of this Lease, which
increase shall not exceed [Language Deleted Due To Confidential Treatment
Request.].
(c) The Tenant's right to exercise its options to renew hereunder shall
be contingent upon (i) the Tenant's giving to the Landlord notice of the
Tenant's election to exercise its option to renew not later than nine (9) months
prior to the expiration date of the initial term or first renewal term, as the
case may be, of this Lease and (ii) the term of this lease being in full force
and effect on the date that the Landlord receives notice of the Tenant's
election to exercise its option to renew and on the expiration date of the
initial term or first renewal term as the case may be of this lease. If such
contingencies shall be satisfied in respect to the exercise of the Tenant's
options to renew hereunder, then the renewal period shall be added to and become
part of the term of this lease and any reference in this lease to "term of this
lease"; the "term hereof" or any similar expression shall be deemed to include
such renewal period.
(d) If at any time the Landlord shall be restricted or prevented by
virtue of any law, rule, regulation or order, such as a "Wage-Price-Rent
Freeze", from obtaining the full amount of the Rent for such renewal term, then
on any occasion upon which it becomes lawful to obtain and receive the balance
(or any part thereof) of the full rent payable, the Fixed Rent payable hereunder
shall be increased by the maximum amount lawful until the full Fair Market
Rental Value for such renewal period is received by the Landlord.
(e) A memorandum recording the amount of the rent payable for such
renewal period shall be annexed hereto and signed by the Landlord and the Tenant
promptly upon the same being agreed or determined in accordance with the terms
hereof.
4. Construction by the Landlord.
(a) The Landlord may make such improvements or additions to the Demised
Premises and its appurtenances as the Landlord shall see fit except that the
Landlord shall secure the prior written approval of the Tenant, which approval
shall not be unreasonably withheld or delayed, in the
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case of any change, addition or deletion which materially and adversely affects
the visibility, access of or to Tenant's use of the Demised Premises for the
purposes set forth in Section 5 or any other rights of the Tenant under this
lease.
(b) The Landlord shall perform work and make installations in the
Demised Premises in a good and workmanlike manner and in accordance with the
plans and specifications set forth in Exhibit B attached hereto. (All of the
work to be performed by the Landlord pursuant to this Section 4(b) is referred
to as the "Landlord's Work").
(c) The Tenant may make written requests for changes in the Landlord's
Work, and the Landlord shall comply with any such request that in the Landlord's
judgment is not unreasonable. Any change in the scope of the Landlord's Work
which would result from such a request and which would unreasonably interfere
with or delay the work of the Landlord's contractors and subcontractors in the
Demised Premises or elsewhere in or about the building shall be conclusively
deemed unreasonable. Any increase in the Landlord's cost of construction of the
Landlord's Work resulting from such a request shall be acknowledged in writing
by the Tenant prior to the performance of the change in the Landlord's Work. Any
net increase arising from all such changes in the Landlord's Work shall be paid
by the Tenant to the Landlord, as additional rent, within ten (10) days after
the Landlord's written demand. The Tenant shall not be entitled to any payment
from the Landlord, or to any credit against or reduction in the Rent, on account
of any net decrease arising from all such changes in the Landlord's Work.
(d) The Tenant, by entering into actual possession of any part or parts
of the Demised Premises, shall be deemed to have agreed that the Landlord, up to
the time of such possession, has performed all of its obligations hereunder with
respect to preparation of such part or parts of the Demised Premises for the
Tenant's possession, except for (i) latent defects and (ii) minor items
remaining incomplete. The Tenant, within sixty (60) days after the Commencement
Date, shall give the Landlord written notices of any incomplete work,
unsatisfactory conditions or defects, and the Landlord shall repair or replace
all materials and workmanship, fixtures, systems, facilities and equipment
installed by the Landlord in or serving the Demised Premises which prove to be
defective, and shall prosecute those items remaining incomplete to completion
with reasonable diligence.
5. Use. The Tenant shall have the right to occupy and use the Demised
Premises for a medical laboratory, clinical laboratory, biomedical
manufacturing, biomedical repository, research and general office purposes, and
the Tenant shall not use or permit the use of the Demised Premises for any other
purpose.
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6. Signs. Unless the Landlord shall have given its prior written
consent, which consent shall not be unreasonably withheld, the Tenant shall not
install, paint, inscribe or maintain any lettering, name, sign, business
designation, advertising or publicity device on the Land or on any exterior
window or on any other interior or exteriors portion of the building. All
signage shall be consistent with a comprehensive sign plan for the planned area
development of this North Mountain Road area and is contingent upon approval
from all appropriate governmental agencies.
7. Subordination of Lease.
Tenant agrees that upon the request of Landlord in writing it will
subordinate this Lease and the lien hereof from time to time to the lien of any
present or future mortgage to a bank, insurance company or similar financial
institution, irrespective of the time of execution or time of recording of any
such mortgage or mortgages, provided that the holder of any such mortgage shall
enter into an agreement with Tenant, in recordable form, that in the event of
foreclosure or other right asserted under the mortgage by the holder or any
assignee thereof, this Lease and the rights of Tenant hereunder shall continue
in full force and effect and shall not be terminated or disturbed except in
accordance with the provisions of this Lease. Tenant agrees that if requested by
the holder of any such mortgage it will be a party to said agreement and will
agree in substance that if the mortgagee or any person claiming under the
mortgagee shall succeed to the interest of Landlord in this Lease, it will
recognize said mortgagee or person as its landlord under the terms of this
Lease. Tenant agrees that it will upon the request of Landlord, execute,
acknowledge and deliver any and all instruments necessary or desirable to give
effect to or notice of such subordination. The word "mortgage" as used herein
includes mortgages, deeds of trust or other similar instruments and
modifications, consolidations, extensions, renewals, replacements and
substitutes thereof.
Such subordination agreement shall include, but not be limited to,
statements that if the lender or ground lessor succeeds to the interest of
Landlord under this Lease, lender or ground lessor shall not be:
(i) liable for any act or omission of any prior landlord
(including Landlord) except for those acts or omissions which
are continuing after lender succeeds to landlord's interest;
or
(ii)subject to any offsets or defenses which Tenant might have
against any prior landlord (including Landlord); or
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(iii) bound by any rent or additional rent which Tenant might
have paid for more than the current month to any prior
landlord (including Landlord).
(b) If, in connection with the procurement, amendment or renewal of any
financing of the Demised Premises, the mortgagee shall request reasonable
modifications of this lease as a condition of such financing, the Tenant shall
not withhold or delay its consent to such modifications provided that they do
not increase the obligations of the Tenant under this lease or adversely affect
the rights of the Tenant under this lease.
8. Quiet Enjoyment. The Landlord covenants and agrees that so long as
the Tenant pays the Rent and performs the remainder of the Tenant's obligations
under this lease, the Tenant shall peaceably and quietly have, hold, and enjoy
the Demised Premises without interference by any person claiming by, through or
under the Landlord.
9. Assignments and Subleases.
(a) Except as otherwise provided in this Section 9, the Tenant agrees
not to assign or in any way encumber this lease, nor to sublet the Demised
Premises, or any part thereof, nor to permit the Demised Premises, or any part
thereof, to be used by others, without obtaining the prior written consent of
the Landlord in each instance, which consent shall not be unreasonably withheld
or delayed.
(b) So long as no event of default shall have occurred and be
continuing hereunder, the Tenant may assign this lease to any corporation or
other entity into which the Tenant may be merged or with which the Tenant may be
consolidated, or to which all or substantially all of the Tenant's assets shall
be transferred, provided that such corporation or other entity shall have a net
worth at least equal to that of the Tenant immediately prior to such merger,
consolidation or transfer. The Tenant shall give notice to the Landlord of any
assignment under this Section 9(b), and shall deliver to the Landlord an
executed counterpart of the instrument effecting such assignment, together with
an undertaking by any such corporation or other entity to agree to be bound by
and to perform all of the Tenant's obligations hereunder.
(c) (Left Intentionally Blank)
(d) No assignment or subletting of this lease shall relieve the Tenant
of any of the Tenant's obligations under this lease, unless otherwise agreed to
in writing by Landlord.
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(e) Notwithstanding Subparagraph 9(a) above, until such time as Tenant
is able to utilize the entire floor space of the building of the Demised
Premises, Tenant may sublet that portion of the building which it does not use
for its business purposes, with Landlord's prior written approval which shall
not be unreasonably withheld or delayed, subject, however, to the following
conditions:
1. Sublessee shall be of good reputation and financial responsibility.
2. Character of business to be conducted by such sublessee shall be
reasonably acceptable to Landlord, and the premises shall be used only for a
purpose allowed in Section 5 above and shall be in keeping with the character,
standing, and quality of the building.
3. Any assignee or subleasee shall be bound by the terms of this Lease,
including Schedule C hereto.
4. Tenant shall not be released by reason of such subletting from the
due, prompt, and punctual performance of all of the terms, covenants, and
conditions contained in this lease to be performed on its part and from the
payment of the rents and additional rents herein reserved.
5. Landlord's consent to such subletting shall not constitute a waiver
of any provision of this agreement and no further subletting shall be made
without Lessor's written consent. The sublessee shall not further assign,
sublet, or underlet the premises without Landlord's prior written consent, and
then only on compliance with all of the provisions contained in this Paragraph.
10. No Nuisance; Compliance with Laws and Requirements of Public
Authorities. The Tenant agrees (a) not to create or permit any nuisance in or
about the Demised Premises, (b) to comply with and conform to (i) all of the
laws and regulations of the State of Connecticut, and (ii) the by-laws,
ordinances, rules and regulations of the City of New Britain so far as the
Tenant's use of the Demised premises may be concerned, and (c) to save the
Landlord harmless from all damages, fines, penalties and costs for violation of
or non-compliance by the Tenant or the Tenant's servants, employees, agents,
customers, invitees, licensees, or visitors with the provisions of this Section
10 and obtain and keep in effect all permits required by governmental agencies
for the operation of a medical laboratory, including, but not limited to, waste
discharge permits from the Connecticut Department of Environmental Protection.
11. Insurance.
(a) At all times during the term of this lease, the Landlord shall
insure the building
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against loss or damage by fire, and such other casualties as may be included
within the extended coverage clauses of policies which are then standard for use
in the State of Connecticut, in such amount as the Landlord in its sole judgment
shall deem appropriate.
(b) The Tenant shall not commit or permit any violation of the policies
carried by the Landlord pursuant to Section 11(a), or do or permit anything to
be done, or keep or permit anything to be kept, on or in the Demised Premises,
which, in case of any of the foregoing (i) would result in termination of any of
such policies, (ii) would adversely affect the Landlord's right of recovery
under any of such policies, or (iii) would result in the refusal by reputable
and independent insurance companies to insure the building or the property of
the Landlord therein in amounts reasonably satisfactory to the Landlord. If any
such action by the Tenant, or any failure by the Tenant to comply with the
reasonable requirements of insurance policies with respect to the building or to
perform any of the Tenant's obligations under this lease, or the use of the
Demised Premises by the Tenant, shall result in any increase in the rate of
premiums payable with respect to such policies carried by the Landlord, the
Tenant shall pay to the Landlord, as additional rent, within ten (10) days after
demand therefor, the resulting additional premiums which shall be paid by the
Landlord, it being understood that such policies obtained by Landlord will
permit without extra cost the uses described in Paragraph 5 above.
(c) At all times during the term of this lease, the Tenant shall (i)
insure the Tenant's Improvements (as defined in Section 13), but excluding all
fixtures and real property and the Tenant's Property (as defined in Section 14)
against loss or damage by fire and such other casualties as may be included
within the extended coverage clauses of policies which are then standard for use
in the State of Connecticut in amounts at all times equal to the full
replacement value of the Tenant's Improvements and the Tenant's Property, and
(ii) keep in full force and effect a policy of public liability and property
damage insurance with respect to the Demised Premises, the building and the Land
in which the limits initially shall be not less than One Million Dollars
($1,000,000.00) for each person and Three Million Dollars ($3,000,000.00) for
each accident, and in which the limit for property damage initially shall not be
less than Two Hundred Fifty Thousand Dollars ($250,000.00), such limits to be
increased from time to time as reasonably specified by the Landlord. In
addition, for and during any time when the Tenant shall be constructing or
making Tenant's Improvements, the Tenant shall keep in full force and effect a
policy of completed value builder's risk insurance (or an "installations
floater") for the Demised Premises, covering loss or damage from fire,
lightning, extended coverage, perils, vandalism and malicious mischief and
perils in an amount not less than the final cost, as reasonably estimated by the
Tenant, of such Tenant's Improvements.
(d) Each party hereto shall procure an appropriate clause in, or
endorsement on, each of
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its policies for fire and extended coverage insurance covering the Demised
Premises, the Tenant's Improvements, or the building or personal property,
fixtures or equipment located thereon or therein, pursuant to which the
insurance company waives subrogation or consents to a waiver of right of
recovery against the other party, and if such a clause or endorsement of waiver
of subrogation or consent to a waiver of right of recovery is obtained, such
party hereby agrees that it will not make any claim against or seek to recover
from the other for any loss or damage to its property or the property of others
covered by such fire or extended coverage insurance; provided, however, that the
release, discharge, exoneration and covenant not to sue herein contained shall
be limited by the terms and provisions of the waiver of subrogation clause or
endorsement or the clause or endorsement consenting to a waiver of right of
recovery and shall be co-extensive therewith.
(e) All insurance provided by the Tenant pursuant to this Section 11
shall be effected under valid and enforceable policies in form and substance
then standard in the State of Connecticut, issued by insurers of recognized
responsibility licensed to do business in the State of Connecticut. Upon the
Commencement Date, and thereafter not less than thirty (30) days prior to the
expiration dates of expiring policies provided by the Tenant pursuant to this
Section 11, the Tenant shall deliver to the Landlord copies of policies or
certificates with respect to the insurance being maintained by the Tenant
pursuant to the terms of this lease. All such policies or certificates shall
contain an agreement by the insurers that such policies will not be canceled,
amended or otherwise modified without at least thirty (30) days prior written
notice to the Landlord, and that the Landlord's rights and interests under such
polices shall not be subject to cancellation by reason of any act or omission of
the Tenant. All insurance policies provided by the Tenant pursuant to this
Section 11 shall name the Landlord and the Landlord's mortgage lenders as
additional insureds as their interests may appear.
(f) The Tenant shall indemnify and hold the Landlord harmless against
and from any liability or expense, including, without limitation, reasonable
attorney's fees, on account of (i) any accident or injury to the Tenant, the
Tenant's servants, employees, agents, customers, invitees, licensees, or
visitors who may be injured or suffer an accident in the Demised Premises unless
the same is caused by the negligence or willful act of the Landlord, or the
Landlord's servants, agents or employees, and (ii) the Tenant's activities in or
use of the Demised Premises or elsewhere on the Land or in the building.
12. Rules and Regulations. The Tenant and its officers, employees and
agents shall conform to and aide by such reasonable rules and regulations,
including those Rules and Regulations as are set forth on Exhibit C attached
hereto, as shall be established from time to time by the Landlord in connection
with the operation, maintenance, safety and security of the Demised
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Premises. The Landlord shall not be liable to the Tenant for violation of such
rules and regulations by others.
13. Alterations and Improvements.
(a) The Tenant may make or have made interior alterations,
improvements, decorations, installations and substitutions (collectively called
"Tenant's Improvements"), to the Demised premises without the prior written
consent of the Landlord, but shall make no structural alterations or exterior
improvements or additions without the prior written consent of Landlord. Any
improvements or alterations in the Demised Premises made by the Tenant
(including, without limitation, permanent partitions, wall paneling and lighting
fixtures, but excepting the Tenant's Property (as defined in Section 14)) shall
be and remain the property of the Landlord and, except as provided in Section
20, shall remain upon and be surrendered with the Demised Premises at the
termination of the term of this lease. If the Landlord consents to any such
alterations, improvements or additions, it may impose such conditions with
respect thereto as the Landlord reasonably deems appropriate, including, without
limitations, requiring the Tenant to furnish the Landlord with security for the
payment of all costs to be incurred in connection with such work, insurance
against liabilities which may arise out of such work and plans, specifications
and permits necessary for such work. Upon completion of such work the Tenant
shall deliver to the Landlord, if payment is made directly to contractors,
evidence of payment, contractors' affidavits and full and final waivers of all
liens for labor, services of materials.
(b) The Tenant, at its expense, shall obtain all necessary governmental
permits and certificates for the commencement and prosecution of the Tenant's
improvements (other than the Landlord's Work) and for final approval thereof
upon completion, and shall cause the Tenant's Improvements (other than the
Landlord's Work) to be performed in compliance therewith and with all applicable
laws and requirements of public authorities, and in a good and workmanlike
manner using only good grades of materials.
(c) The Tenant's Improvements shall not constitute the basis for a
claim against the Landlord, nor a lien or charge upon or against the Demised
Premises, and if at any time any such claim, lien or charge shall be filed
against the Demised Premises, the Tenant shall cause such claim, lien or charge
to be properly released of record within forty-five (45) days after the filing
thereof, and if the Tenant shall fail to do so, then the Landlord may discharge
the same. The Tenant shall defend, indemnify and save harmless the Landlord from
and against any and all such claims, liens and charges, and all costs and
expenses, including reasonable attorney's fees, incurred by the Landlord in
procuring the discharge of any such claim, lien or charge or in connection with
any
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action or proceeding brought thereon.
(d) The Tenant shall pay for all materials, excluding Tenant's
equipment and personal property constituting Tenant's Improvements, and the
Tenant agrees that none of such materials that are incorporated into and made a
part of the building or real estate shall be at any time subject to or
encumbered by any lien, security interest, encumbrance, charge, installment
sales contract or the interest of any other person, firm or corporation whether
created voluntarily or involuntarily.
14. Tenant's Property.
(a) Except for Tenant's Improvements and those items furnished or
installed by the Landlord as part of the Landlord's Work as provided in Section
4(b), all movable partitions, business machinery and equipment, communications
equipment and all other property which is not attached to or built into the
Demised Premises and which is installed in the Demised Premises by or for the
account of the Tenant at its sole expense, and all furniture, furnishings and
other articles of personal property owned by the Tenant and located in the
Demised Premises (all of which are collectively called the "Tenant's Property"),
shall be and shall remain the property of the Tenant, and shall be removed by it
at the termination of the term of this lease. The Tenant shall repair or pay the
cost of repairing any damage to the Demised Premises or to the building
resulting from such removal.
(b) The Landlord shall not be liable to the Tenant or any other person
for any loss or damage to the Tenant's Property or the Tenant's Improvements, or
to any property of any other person, from any cause, including, without
limitation, theft, vandalism, illegal entry, or by steam, gases or electricity,
or by water, rain or snow, whether the same may leak into, issue or flow from
any part of the building, or from the pipes or plumbing work of the building, or
from any other place or quarter, unless caused by the negligence or willful act
of the Landlord, its servants, agents or employees.
15. Tenant's Repairs, Cleaning & Utilities.
(a) Except for the maintenance for which the Landlord is expressly
responsible pursuant to the provisions of Section 16, the Tenant agrees that
throughout the term of this lease, the Tenant, at its expense, shall (i) keep
the interior of Demised Premises in a clean condition and in clean and neat
condition, and (ii) not do or suffer any waste, damage in or to the Demised
Premises or the Tenant's Improvements.
(b) Except for loss or damage by reason of the causes set forth in
Section 11(a), the
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Tenant shall reimburse the Landlord for all costs and expense incurred by the
Landlord to repair all damage to the Demised Premises as shall be required by
reason of the fault or neglect of the Tenant, or any of its officers, employees,
contractors, agents or invitees, such payment to be made within ten (10) days
after written demand therefor.
(c) Tenant shall provide its own janitorial services within the Demised
Premises and shall pay for all utility charges related to the provision of hot
and cold running water, electricity, heat, air conditioning and ventilation in
the building on the Demised Premises. At the end of the first Lease year, the
parties agree to review the costs of janitorial and utility services paid for by
Tenant. Upon the signing of this Lease, the Tenant has estimated its janitorial
costs to be $7,800.00 per year and Landlord has estimated the utility costs, for
a 5-day, 14-hour per day week, and a 1/2 day Saturday, to be $42,000.00 per
year. If the actual costs for utility services vary from the above estimate by
more than five percent (5%), the parties agree to discuss in good faith
modifying the amount of rent payable under this Lease in light of such variance.
The parties shall consider splitting the cost of purchasing and installing such
energy saving measures as they may mutually agree upon, but are not obligated to
do so.
16. Landlord's Repairs, Maintenance
The Landlord shall keep, maintain and repair the Demised Premises,
including without limitation, its fixtures, appurtenances, systems and
facilities, sidewalks, exterior, roof, structural elements, foundation, parking
lot, exterior lighting and other appurtenances thereto, in good working order
and condition and will obtain and pay for maintenance service contracts for the
Landlord's systems. The Landlord shall not be required to maintain or repair the
Tenant's Improvements.
17. Access to Demised Premises.
(a) The Landlord and the Landlord's agents shall have the right, but
not the obligation, to enter and pass through the Demised Premises or any part
or parts thereof during business hours and at such other times as such entry
shall be required by circumstances of emergency affecting the Demised Premises
(i) to examine the Demised Premises and to show them to any mortgagee,
prospective mortgagees or purchasers of the Demised Premises, and (ii) for the
purpose of performing such maintenance and making such repairs or changes in or
to the Demised Premises or its facilities as may be provided for or permitted by
this lease or as may be mutually agreed upon by the parties or as the Landlord
may be required to make by laws and requirements of public authorities. The
Landlord shall be allowed to take all materials into and upon the Demised
Premises that may be required for such repairs, changes or maintenance. Landlord
agrees to abide by Tenant's
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restricted access policies and written safety procedures. Tenant shall cooperate
with Landlord in making access available consistent with such policies and
procedures.
(b) During the period of six (6) months prior to the Expiration Date,
the Landlord may, unless the Tenant shall have theretofore given notice to the
Landlord of its election to exercise its option to renew the term of this lease,
exhibit the Demised Premises to prospective tenants.
18. Damage or Destruction.
(a) In the event that the Demised Premises (other than Tenant's
Improvements), or any part thereof, or access thereto, shall be damaged or
destroyed by fire or other insured casualty, but the Tenant shall continue to
have reasonably convenient access to the Demised Premises and no portion of the
Demised Premises (other than Tenant's Improvements) shall thereby be rendered
unfit for use and occupancy by the Tenant for the purposes set forth in Section
5, the Landlord shall promptly and diligently repair such damage or destruction
(except damage or destruction to Tenant's Property or Tenant's Improvements).
During the period when such repair work is being conducted, the Rent shall not
be abated or suspended.
(b) In the event that the Demised Premises (other than Tenant's
Improvements), or any part thereof, or access thereto, shall be so damaged or
destroyed by fire or other insured casualty that the Tenant shall not have
reasonably convenient access to the Demised Premises or any portion of the
Demised Premises (other than Tenant's Improvements), or so that part of but not
more than 25% of the Demised Premises' square footage then in use by the Tenant
shall thereby be rendered unfit for use or occupancy by the Tenant for the
purposes set forth in Section 5, and if in Landlord's determination reasonably
exercised the damage or destruction may be repaired within ninety (90) days
after the occurrence of the damage or destruction, then the Landlord shall so
notify the Tenant within thirty (30) days after the occurrence of the damage or
destruction and shall promptly and diligently repair such damage or destruction
(except damage or destruction to Tenant's Property or Tenant's Improvements). In
the event that the Landlord shall not complete such repairs within ninety (90)
days after the occurrence of the damage or destruction, then the Tenant shall
have the right to terminate the term of this lease by giving written notice of
such termination to the Landlord within then (10) days after the end of such
ninety (90) day period. If in the Landlord's determination reasonably exercised
the Demised Premises (other than Tenant's Improvements), or means of access
thereto, cannot be repaired within ninety (90) days after the occurrence of the
damage or destruction or, if more than 25% of the Demised Premises' square
footage then in use by the Tenant should be rendered unfit for use and occupancy
by Tenant, then either party shall have the right to terminate the term of this
lease by giving written notice of such termination to the other party within the
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of thirty (30) to forty-five (45) days after the occurrence of such damage or
destruction. If neither party give such notice of intention to terminate the
term of this lease, then the Landlord shall promptly and diligently repair the
damage or destruction.
(c) If any casualty results in the suspension of business in the
Demised Premises, all rents and additional charges shall abate from the date of
such suspension of business until the date business is resumed. If the casualty
or restoration results in a partial suspension of business, rent and additional
charges shall be equitably abated during any such period. If Landlord fails to
begin or complete the restoration within a reasonable time period, then Tenant
may, in addition to any other remedies it may have, perform all or a portion of
such restoration, and Landlord shall pay to Tenant the reasonable costs incurred
by Tenant to restore the Demised Premises.
(d) In addition to and apart from the foregoing provisions of this
Section, (i) if more than twenty-five percent (25%) of the Gross Rentable Area
of the Demised Premises shall be totally or almost totally damaged or destroyed
by fire or other cause at any time during the last six (6) months of the term of
this lease, or during the last six (6) months of any renewal or extension
thereof, either the Landlord or the Tenant may terminate the term of this lease
by giving written notice of such termination to the other party within ten (10)
days after the occurrence of such damage or destruction, and (ii) if the
building on the Demised Premises is damaged or destroyed by fire or other cause
to such extent that the cost of repair the damage or destruction, as reasonably
estimated by the Landlord,, will be more than twenty-five percent (25%) of the
replacement value of the building immediately prior tot he occurrence of such
damage or destruction, then either party may terminate the term of this lease by
giving written notice of such termination to the Tenant within thirty (30) days
after the occurrence of such damage or destruction.
(e) Except as provided in this Section, no damages, compensation or
claim shall be payable by the Landlord to the Tenant, or any other person by
reason of inconvenience, loss of business or annoyance arising from any damage
or destruction, or any repair thereof, as if referred to in this Section.
19. Condemnation.
(a) If all of the building, or so much of the building or the Demised
Premises as is necessary for the Tenant's use and occupancy of the Demised
Premises for the purposes set forth in Section 5, or for reasonably convenient
access to the Demised Premises, shall be taken by condemnation or in any other
manner for any public or quasi-public use and purpose, then the term of this
lease shall forthwith terminate as of the date title vests in the taking
authority and the Rent
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shall be apportioned as of such date.
(b) In addition to and apart from the foregoing provisions of Section
20(a), if more than twenty-five percent (25%) of the Gross Rentable Area of the
building shall be so taken, then either party may terminate the term of this
lease by giving written notice of such termination to the other within thirty
(30) days after the date title vests in the taking authority.
(c) The Tenant shall have the exclusive right in any proceeding with
respect to any taking referred to in this Section 20 to any award payable for
the Tenant's moving expenses and the then value of the Tenant's Property, but
the Tenant shall have no other right to any award for either a total taking or a
partial taking of the land, the building or the Demised Premises, including any
right for the contract value of this lease, and any such award shall be retained
by the Landlord as the Landlord's sole property.
(d) In the event of any taking which does not result in a termination
of the term of this lease, the Rent shall be equitably suspended or abated and
the Landlord, at its expense, shall proceed with reasonable diligence to repair
and restore the remaining part of the building and the Demised Premises to
substantially its former condition to the extent that the same may be feasible.
Any suspension or abatement of Rent shall cease upon substantial completion of
such repairs or restoration.
20. Surrender. On the Expiration Date, or on the expiration of the
final renewal period to which the Tenant exercises its right, or upon any
earlier termination of the term of this lease, the Tenant shall quit and
surrender the Demised Premises, including Tenant's Improvements, to the Landlord
in good order, condition and repair, except for (a) Ordinary wear and tear and
(b) Conditions requiring repairs which are not required to be made by the
Tenant. The Tenant shall remove all of the Tenant's Property, and at the
Landlord's request, shall remove those portions of the Tenant's Improvements as
shall be designated by the Landlord for Tenant's removal at the time the
Landlord approves the plans therefor, and shall repair any damage to the Demised
Premises on account of such removal.
21. Default and Damages.
(a) Any of the following occurrences or acts shall constitute an event
of default under this lease: (i) whenever the Tenant shall default in the
payment of any Rent or any other charge payable by the Tenant to the Landlord,
on any day upon which the same is due, and such default shall continue for five
(5) days after written notice thereof from Landlord; or (ii) whenever the
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Tenant shall do, or fail to do, or permit to be done, whether by action or
inaction, anything contrary to any of the Tenant's obligations hereunder, and if
such situation shall continue and shall not be remedied by the Tenant within
(A) Five (5) days after notice in the case of any voluntary
situation within the Tenant's reasonable control, or
(B) Thirty (30) days in the case of any involuntary
situation not within the Tenant's reasonable control, after the Landlord shall
have given to the Tenant a notice specifying the same, or, in the case of a
situation which cannot with due diligence be cured within a period of five (5)
or thirty (30) days, as the case may be, if the Tenant shall not (1) within such
5-day or 30-day period, as the case may be, advise the Landlord of the Tenant's
intention duly to institute all steps necessary to remedy such situation, and
(2) duly institute within such 5-day or 30-day period, as the case may be, and
thereafter diligently prosecute to completion, all steps necessary to remedy the
same; (iii) whenever the Tenant is dissolved (other than in the contest of a
corporate reorganization where the business enterprise is continued), makes
assignment for the benefit of creditors, files a voluntary petition in
bankruptcy, is adjudicated a bankrupt or insolvent, files a petition or answer
seeking for the Tenant any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any statute, law
or regulation, files an answer or other pleading admitting or failing to contest
material allegations of a petition filed against the Tenant in any proceeding of
this nature, or seeks, consents to, or acquiesces in the appointment of a
trustee, receiver, or liquidator of the Tenant or of all or any substantial part
of the Tenant's properties; or (iv) if within sixty (60) days after the
commencement of any proceeding against the Tenant seeking reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any statute, law, or regulation, the proceeding has not been
dismissed; or if within sixty (60) days after the appointment without the
Tenant's consent or acquiescence of a trustee, receiver, or liquidator of the
Tenant or of all or any substantial part of the Tenant's properties, the
appointment is not vacated or stayed; or if within sixty (60) days after
expiration of any such stay, the appointment is not vacated; or (v) the event of
an occurrence of default beyond any applicable grace period in that certain
$87,000 Promissory Note from Tenant to Landlord of even date herewith.
(b) If an event of default shall have happened and be continuing, the
Landlord shall have the immediate right at its election (i) to terminate the
term of this lease by giving the Tenant not less than five (5) days written
notice of the Landlord's election to terminate, and (ii) whether or not the
Landlord shall have terminated the term of this lease pursuant to this Section
21(b), and without demand or notice whatever, to re-enter and take possession of
the Demised Premises, removing all persons and property therefrom either by
summary process proceedings or by other action, without being liable for any
damages therefor.
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(c) If the Landlord elects to re-enter and take possession of the
Demised Premises pursuant to Section 21 (b), and whether or not the Landlord
shall have terminated the term of this lease pursuant to Section 21 (b), the
Landlord may (but shall be under no obligation to) re-let the whole or any part
of the Demised Premises on behalf of the Tenant for a period equal to, or
greater or less than, the remainder of the term of this lease, at such rent and
upon such terms and conditions as the Landlord shall determine reasonable, to
any tenant the Landlord may consider suitable and for any use or purpose the
Landlord may deem appropriate in the Demised Premises. The Landlord shall not be
liable for failure to re-let the Demised Premises, and the Landlord shall be
entitled to receive and retain the rent received upon such re-letting, whether
or not such rent is in excess of the Rent.
(d) Should Landlord elect to re-enter as herein provided or should it
take possession pursuant to legal proceedings or pursuant to any notice provided
for by law, it may either terminate this Lease or make such alterations and
repairs as may be necessary in order to relet the premises, and relet said
premises or any part thereof for such term or terms (which may be for a term
extending beyond the term of this Lease) and at such rental or rentals and upon
such other terms and conditions as Landlord in its discretion may deem
advisable; and upon each such reletting all rentals received by the Landlord
from such reletting shall be applied first, to the payment of any indebtedness
other than rent due hereunder from Tenant to Landlord; second, to the payment of
any costs and expenses of such reletting, including brokerage fees and
attorneys' fees and of costs and expenses of such reletting, including the costs
of recovering possession of the Demised Premises, brokerage fees and attorneys'
fees and of costs of such alterations and repairs; third, all utility expenses
and expenses of maintaining the Demised Premises while vacant, fourth, to the
payment of rent due and unpaid hereunder, and the residue, if any, shall be held
by Landlord and applied in payment of future rent as the same may become due and
payable hereunder. If such rentals received from such reletting during any month
be less than that to be paid during that month by Tenant hereunder, Tenant shall
pay any deficiency to Landlord. Such deficiency shall be calculated and paid
monthly. No such re-entry or taking possession of Demised Premises by Landlord
shall be construed as an election on its part to terminate this Lease unless a
written notice of such intention be given to Tenant or unless the termination
thereof be decreed by a court of competent jurisdiction.
22. Parking. The Landlord shall provide to the Tenant seventy (70)
parking spaces in the parking area provided and maintained by the Landlord.
23. Unperformed Covenants. If the Tenant shall default in the
performance of any of the Tenant's obligations hereunder, the Landlord, without
thereby waiving such default, may, at the Landlord's option, by reason of any
default of the Tenant hereunder, perform the same for the
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account of the Tenant. If the Landlord makes any expenditures or incurs any
obligations for the payment of money, including attorneys' fees, such sums paid
or obligations incurred shall be paid by the Tenant to the Landlord on the first
day of the calendar month next following the rendition to the Tenant of the
Landlord's bill therefor to the Tenant.
24. Holding Over. The Tenant shall pay to the Landlord an amount as
Rent equal to one hundred fifty percent (150%) of one-twelfth (1/12) of the
Fixed Rent required to be paid by the Tenant during the previous Lease Year as
herein provided for each month or portion thereof for which the Tenant shall
retain possession of the Demised Premises, or any part thereof, after the
termination of the term of this lease, whether by lapse of time or otherwise,
and also shall pay all damages sustained by the Landlord, whether direct or
consequential, on account thereof. The provisions of this Section 24 shall not
be deemed to limit or constitute a waiver of any other rights or remedies of the
Landlord provided herein or at law. Without limiting any rights or remedies of
the Landlord resulting by reason of the wrongful holding over by the Tenant, or
creating any right in the Tenant to continue in possession of the Demised
Premises, all of the Tenant's obligations with respect to the use, occupancy and
maintenance of the Demised Premises shall continue during such period of
unlawful retention.
25. Certain Rights Reserved by the Landlord. The Landlord shall have
the following rights, each of which the Landlord may exercise with notice to the
Tenant but without liability to the Tenant for damage or injury to property,
person or business on account of the exercise thereof, and the exercise of any
such rights shall not be deemed to constitute an eviction or disturbance of the
Tenant's use or possession of the Demised Premises and shall not give rise to
any claim for set-off or abatement of rent or any other claim, provided that the
Landlord agrees that in the exercise of such rights it shall not do or cause to
be done anything which is, in any material respect, inconsistent with the
operation of the Demised Premises as a first-class/laboratory office building:
(a) To change the building's street address, if required by the U.S.
Postal Service.
(b) To install, affix and maintain any and all reasonable directional
signs on the land of the Demised Premises.
(c) Upon reasonable notice to Tenant, to make repairs, or improvements,
whether structural or otherwise, in an about the building, or any part thereof,
and for such purposes to enter upon the Demised Premises, Landlord agrees to use
reasonable efforts to cause minimal disruption to the Tenant's use of the
Demised Premises.
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(d) The Tenant shall not install or operate machinery or any mechanical
devices of a nature not directly related to the Tenant's ordinary use of the
Demised Premises without the prior written consent of the Landlord. The Tenant's
movements of property into or out of the building or Demised Premises and within
the building are entirely at the risk and responsibility of the Tenant.
26. Waiver of Notice. The Tenant hereby waives any notice to quit under
the statutes relating to summary process which, were it not for this waiver,
might otherwise be necessary in obtaining possession of the Demised Premises.
27. Notices. Any notice, approval, request, consent, bill, statement or
other communication required or permitted to be given, rendered, served or made
by either party hereto, shall be in writing and shall be sent by certified or
registered United Stated Mail, postage prepaid, return receipt requested, or
federal express, or hand delivery or over night carrier:
(a) addressed to the Tenant at:
BBI - North American Clinical Laboratories, Inc.
C/O Boston Biomedica, Inc.
375 West Street
West Bridgewater, MA 02379
Attn: Treasurer
Fax No. 508-580-1110
Telephone No. 508-580-1900
(b) addressed to the Landlord at:
MB Associates
414 New Britain Road
P.O. Box 99
Plainville, CT 06062
Attn: Property Management Department
Fax No. 203-747-5299
Telephone No. 203-229-4853
Either party may, from time to time, by written notice to the other, designate a
different mailing address for notices, bills, statements or other communications
intended for it.
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28. Estoppel Certificate. The Tenant shall, from time to time, within
ten (10) days after the Landlord's written request, deliver to the Landlord a
written certificate, in recordable form, ratifying this lease, and stating
(a) the Commencement Date and the Expiration Date,
(b) that this lease is in full force and effect and has not been
assigned, modified, supplemented or amended (except by such writings as shall be
stated),
(c) that all conditions under this lease to be performed by the
Landlord have been satisfied,
(d) that there are no defenses or offsets against the enforcement of
this lease by the Landlord, or stating those claimed by the Tenant,
(e) the amount of advance rental, if any (or none if such is the case),
paid by the Tenant,
(f) the date to which rental has been paid, and
(g) the amount of security deposited with the Landlord, provided,
however, that the Tenant shall not be required to make written declarations as
to any matters which to its knowledge are inaccurate or not true. Any such
certificate may be relied upon by any mortgagee of the Land and the building,
any assignee of such mortgagee, and any prospective purchaser of the Land and
the building. Landlord agrees to provide written confirmation of the Lease terms
and status upon Tenant's written request.
29. Limitation of Liability. Anything in this lease to the contrary
notwithstanding, the Tenant agrees that it shall look solely to the estate and
property of the Landlord in the Demised Premises for the collection of any
judgment (or other judicial process) requiring the payment of money by the
Landlord in the event of any default or breach by the Landlord with respect to
any of the terms, covenants and conditions of this lease to be observed or
performed by the Landlord, and no other assets of the Landlord or of any partner
in the Landlord shall be subject to levy, execution or other procedures for the
satisfaction of the Tenant's remedies.
30. Rights of Landlord; Non-Waiver. No right or remedy herein conferred
upon or reserved to the Landlord is intended to be exclusive of any other right
or remedy, and every right and remedy shall be cumulative and in addition to any
other right or remedy given hereunder or now or
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hereafter existing. The failure of the Landlord to insist upon the strict
performance of any provision hereof or to exercise any option, right, power or
remedy contained herein shall not be construed as a waiver or relinquishment
thereof for the future. Receipt by the Landlord of any Fixed Rent, any
additional rent or any other sum payable hereunder with knowledge of the breach
of any provision hereof shall not be deemed a waiver of such breach, and no
waiver by the Landlord of any provision hereof shall be deemed to have been made
unless expressed in writing and signed by the Landlord. In addition to other
remedies provided herein, the Landlord shall be entitled, to the extent not
prohibited by law, to injunctive relief in case of the violation, or attempted
or threatened violation, of any of the provisions hereof, or to a decree
compelling performance of any of the provisions hereof, or to any other remedy
allowed to the Landlord by law.
31. Broker. The Tenant represents that no broker or agent other than
Grubb & Ellis participated with the Tenant in this transaction. The Tenant
agrees to indemnify and hold the Landlord harmless from and against any claim or
demand of any other broker or agent who claims that he participated with the
Tenant in this transaction. Landlord represents that it has only dealt with
Grubb & Ellis in connection with this lease.
32. Notice of Lease.
(a) This lease shall not be recorded in the New Britain Land Records.
Upon the request of either party, the other party shall execute a Notice of
Lease, in recordable form, satisfying the requirements of Section 47-19 of the
Connecticut General Statutes, Rev. 1958, as amended.
(b) The parties shall also enter into recordable supplementary notices
setting forth, among other proper matters, such items as the termination of this
lease and the exercise of any options afforded by this lease.
33. Prior Agreements. This lease and the exhibits and Notice of Lease
constitute the entire agreement by and between the parties hereto affecting the
Demised Premises and supersedes any and all previous agreements, written or
oral, between the parties and affecting the Demised Premises.
34. Captions; Sections; Gender. The captions contained herein have been
inserted for convenience only and shall not have the effect of modifying,
amending or changing the express terms and provisions of this lease. All
references to a "Section" shall refer to a Section of this lease unless the
context otherwise requires. Whenever used, the singular number shall include the
plural, the plural the singular, and use of any gender shall include all
genders.
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35. Benefit and Burden. The covenants, conditions, agreements and terms
of this lease shall be binding upon and shall inure to the benefit of the
parties hereto and their successors and permitted assigns.
36. Applicable Law. This Lease shall be governed by and construed in
accordance with the laws of the State of Connecticut.
37. Signatures. This Lease may be signed in counterparts and any number
of counterparts signed in the aggregate by the parties shall constitute a single
original document. Additionally, a facsimile signature shall be deemed
equivalent to an original signature.
TENANT ACKNOWLEDGES THAT THIS LEASE IS A COMMERCIAL TRANSACTION AND
THAT IT HAS THE RIGHT UNDER CHAPTER 903a of the CONNECTICUT GENERAL STATUTES,
SUBJECT TO CERTAIN LIMITATIONS, TO NOTICE OF, AND HEARING ON, THE RIGHT OF THE
LANDLORD TO OBTAIN A PREJUDGMENT REMEDY, SUCH AS ATTACHMENT OR GARNISHMENT UPON
COMMENCING ANY LITIGATION AGAINST IT. NOTWITHSTANDING, TENANT HEREBY WAIVES ALL
RIGHTS TO NOTICE, JUDICIAL HEARING OR PRIOR COURT ORDER IN CONNECTION WITH THE
ASSERTION BY THE LANDLORD OF ANY PREJUDGMENT REMEDY TO COLLECT THE OBLIGATIONS
OR TO ENFORCE LANDLORDS RIGHTS HEREUNDER.
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IN WITNESS WHEREOF, the Landlord and the Tenant have hereunto caused to
be set their hands and seals as of the day and year first above written.
WITNESSES: LANDLORD: MB ASSOCIATES
___________________________ By_______________________________
___________________________ A Partner, Duly Authorized
TENANT: BBI - NORTH
AMERICAN CLINICAL LABORATORIES,
INC.
____________________________ By_________________________________
Kevin Quinlan
Its Sr. Vice President & Treasurer
____________________________ Duly Authorized
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STATE OF CONNECTICUT)
) ss: July 28, 1995
COUNTY OF HARTFORD )
Personally appeared ____________________, __________________ of MB
Associates, signer and sealer of the foregoing instrument and acknowledged the
same to be his free act and deed and the free act and deed of said partnership,
before me.
-------------------------------
Commissioner, Superior Court
Notary Public
My Commission Expires:
STATE OF )
) ss: July 28, 1995
COUNTY OF )
Personally appeared ____________________, __________________ of BBI -
North American Clinical Laboratories, Inc., signer and sealer of the foregoing
instrument and acknowledged the same to be his free act and deed and the free
act and deed of said corporation, before me.
-------------------------------
Commissioner, Superior Court
Notary Public
My Commission Expires:
GUARANTY OF TENANT'S PERFORMANCE
--------------------------------
In consideration of Landlord's having executed said Lease a the request
of the undersigned and in further consideration of One Dollar ($1.00) and other
valuable considerations paid, the receipt whereof is hereby acknowledged, the
undersigned (Guarantor) hereby unconditionally guarantees to Landlord and its
successors and assigns, the payment of the rents and other sums provided for in
said Lease and the performance and observance of all agreements and conditions
contained in said Lease on the part of Tenant to be performed or observed.
Guarantor hereby waives presentment for payment, demand for payment,
notice of nonpayment or dishonor, protest and notice of protest, diligence in
collection, and any and all
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formalities which may be legally required to charge it with liability; and the
Guarantor does further agree that its liability as Guarantor shall in nowise be
impaired or affected by any renewals, waivers, or extensions which may be made
from time to time, with or without its knowledge and consent, of any default or
the time of payment or performance required under said Lease, or by any
forbearance or delay in enforcing any obligation thereof, or by assignment of
said Lease or subletting of the demised premises, neglect or refusal to enforce
or to realize upon any security which may have been given or may hereafter be
given thereunder or hereunder, or by any modifications of the terms or
provisions of the Lease.
The Guarantor further covenants and agrees to pay all expenses and
fees, including attorney's fees which may be incurred by the landlord or its
successors and assigns in enforcing any of the terms or provisions of this
Guaranty.
This Guaranty shall be binding upon the successors, and assigns of the
Guarantors, shall not be discharged or affected, in whole or in part by the
bankruptcy, or insolvency of the Tenant.
This Guaranty is absolute, unconditional, and continuing and payment of
the sums for which the undersigned become liable shall be made at the office of
the Landlord or its successors or assigns from time to time on demand as the
same become or are declared due.
Dated: July 28, 1995 BOSTON BIOMEDICA, INC.
BY:_____________________________
Kevin Quinlan
Its Sr. Vice President & Treasurer
Duly Authorized
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EXHIBIT A
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LEASED PREMISES
EXHIBIT 'A'
LEASED PREMISES
A certain piece or parcel of land with all buildings and improvements thereon
situated northerly of North Mountain Road in the City of New Britain,
Connecticut and being more particularly shown on a map entitled "Map Showing
Location Of Proposed Leasing Agreement For BBI - North American Clinical
Laboratories, Inc. Located At #75 North Mountain Road, New Britain, Connecticut
Map Prepared By: MBA Engineering, Inc., 211 New Britain Road, Suite 103,
Kensington, Connecticut 06037 (203) 827-0222 Job Number: 95068, Scale 1" = 50'
Drawn By: BNB Checked By LJM Date: July 13, 1995" and containing 4.081 +/- acres
and being more particularly bounded and described as follows:
Beginning at a point located in the westerly line of Lot No. 206 which point is
the southeast corner of the within described premises; thence running N 89o 07'
53" W. 417.53 feet to a point as shown on said map; thence running N 06o 75'
26" E, 66.77 feet to a point as shown on said map; thence running N 31o 03' 55"
W, 35.15 feet to a point as shown on said map; thence running N 00o 09' 15" W.
276.41 feet, to a point as shown on said map; thence running N 77o 44' 24" E,
291.54 feet, to a point as shown on said map; thence running S 86o 44' 06" E,
152.84 feet to a point as shown on said map; thence running S O1o 07' 17" W.
426.62 feet to the point and place of beginning.
Said premises are leased together with a 30 foot wide right-of-way from North
Mountain Road to the leased premises, in common with the Landlord and others,
for motor vehicle and pedestrian ingress and egress. Said right-of-way is shown
on said map as "Minimum 30 Ft. Wide Driveway Right-of-Way From North Mountain
Road to Leased Portion of Site. R.O.W. to be centered of 24 Ft. BIT. Driveway"
and "Minimum 30 Ft. Wide Right-of-Way From Driveway R.O.W. To Front Entrance of
Site. R.O.W. to be centered over aisle portion of existing BIT. Parking Lot."
Initials
_________ (Landlord)
_________ (Tenant)
EXHIBIT B
---------
SCHEDULE OF LANDLORD'S WORK
The Improvement list below is a detailed list subject to minor modifications.
These "modifications" must be finalized immediately. Both parties understand
that this final plan directly correlates to the Landlord's Performance Schedule.
Improvements
1. Existing cafeteria to be subdivided and used as an employee lounge and
soundproofed conference room.
2. One existing Lab area, as specified in the front left area of the facility,
to be renovated into 3 or 4 offices, to be located as reasonably determined by
Tenant.
3. One existing lab area to be refurbished as a client service/specimen
processing, as determined by Tenant.
4. all existing computer and phone wiring to be removed.
5. Floor areas, as designated by Tenant, to be sealed.
6. All carpets, as designated by Tenant, to be replaced.
7. Any damaged ceiling tiles to be replaced.
8. Interior to be cleaned and painted.
9. Landlord to warrant that electrical systems HVAC and plumbing are in good
working order, including all Emergency Lighting, exterior building/parking lot
lighting and the existing security camera in the parking area is operational.
10. New driveway and parking area adjacent to Tenant's building.
11. Lab furniture to be in good working order as reasonably determined by the
parties.
Initials
_________ (Landlord)
_________ (Tenant)
12. Landlord to warrant that the electric circuits are fully operational via the
back-up generator or will identify which circuits/outlets are operational from
this generator.
Initials
_________ (Landlord)
_________ (Tenant)
EXHIBIT C
---------
RULES AND REGULATIONS
1. The sidewalks, entrances, passages, courts, elevators, vestibules, stairways,
corridors and public parts of the Building shall not be obstructed or encumbered
by Tenant or used by Tenant for any purpose other than ingress and egress to and
from the Demised Premises.
2. No awnings, air conditioning units or other projections shall be attached to
the outside walls or windowsills of the Building or otherwise project from the
Building, without the prior written consent of landlord.
3. All signs or lettering affixed by Tenant on any part of the outside of the
Demised Premises shall be approved by landlord, which approval shall not be
unreasonably withheld or delayed.
4. No bottles, parcels or other articles be placed on the windowsills or in any
other part of the Building, nor shall any article be thrown out of the doors or
windows of the Demised Premises.
5. Tenant shall not make, or permit to be made, unseemly or disturbing noises or
interfere with other tenants or those having business with them.
6. Tenant shall not put any covering of any type or nature upon the exterior of
windows in the Demised Premises.
Initials
_________ (Landlord)
_________ (Tenant)
EXHIBIT 10.9
NEITHER THIS WARRANT NOR THE SHARES OF STOCK ISSUABLE UPON
EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED. NO SALE, TRANSFER OR OTHER DISPOSITION OF THIS
WARRANT OR SAID SHARES MAY BE EFFECTED WITHOUT (I) AN EFFECTIVE
REGISTRATION STATEMENT RELATED THERETO, OR (II) AN OPINION OF
COUNSEL, REASONABLY SATISFACTORY TO COUNSEL TO THE COMPANY, THAT
AN EXEMPTION FROM REGISTRATION UNDER SAID ACT IS AVAILABLE.
Warrant No. of
No. 1 STOCK PURCHASE WARRANT Shares 10,000
--- ------
To Subscribe for and Purchase Common Stock of
BOSTON BIOMEDICA, INC.
THIS CERTIFIES that, for value received, Worcester County Institution
for Savings, a Massachusetts savings bank (together with any subsequent
transferees of all or any portion of this Warrant, the "Holder"), is entitled,
upon the terms and subject to the conditions hereinafter set forth, to subscribe
for and purchase from Boston Biomedica, Inc., a Massachusetts corporation
(hereinafter called the "Company"), at the price of $20.00 per share (subject to
adjustment as provided in Section 6, the "Warrant Purchase Price"), up to 10,000
fully paid and non-assessable shares of the Company's common stock, $.01 par
value per share (the "Shares"),
1. Definitions. As used herein the following terms shall have the
following meanings:
"Act" means the Securities Act of 1933 as amended, or a similar Federal
statute and the rules and regulations of the Commission issued under that Act,
as they each may, from time to time, be in effect.
"Commission" means the Securities and Exchange Commission, or any other
Federal agency at the time administering the securities laws of the United
States.
"Registration Statement" means a registration statement (other than a
registration statement on Form S-8 solely with respect to employee benefit
plans, or on Form S-4 solely with respect to Rule 145 transactions, or any
successor form or forms used for the purpose specified by such forms) filed by
the Company with the Commission under the Act for a public offering and sale of
securities of the Company.
"Shares" means the 10,000 shares of the Company's Common Stock issued or
issuable to the Holder upon the exercise of this Warrant and any other shares of
Common Stock of the Company issued with respect to such shares (because of stock
splits, stock dividends, reclassifications, recapitalizations, mergers,
consolidations, or similar events); provided, however, that any shares
previously sold by the Holder to the public pursuant to a registered public
offering or Rule 144 under the Act shall cease to be within the definition of
"Shares" as used herein.
-1-
2. Purchase Rights. The purchase rights represented by this Warrant are
exercisable by the Holder in accordance with the following provisions:
(a) subject to the provisions of subparagraph (b) hereof, this Warrant
is exercisable, in whole or in part, at any time and from time to time
commencing on the date hereof and ending at 5:00 p.m. on December 1, 2001.
(b) the Holder's right to exercise this Warrant shall vest with respect
to the indicated percentage of the total number of Shares purchaseable hereunder
at the expiration of the indicated periods from the date hereof:
Years Expired From Percentage of Total Shares
Date of Issuance of Common Stock Purchaseable
---------------- ----------------------------
Less than 1 year 50%
1 or more and less than 2 years 62 1/2%
2 or more and less than 3 years 75%
3 or more and less than 4 years 87 1/2%
4 or more years 100%
3. Exercise of Warrant. Subject to Section 2 above, the purchase rights
represented by this Warrant may be exercised, in whole or in part and from time
to time, by (a) the surrender of this Warrant and the duly executed Notice of
Exercise (the form of which is attached as Exhibit A) at the principal office of
the Company and by the payment to the Company, by check, of an amount equal to
the then applicable Warrant Purchase Price per share multiplied by the number of
Shares then being purchased, or (b) if in connection with a registered public
offering of the Company's securities, the surrender of this Warrant and the duly
executed Notice of Exercise (the form of which is attached as Exhibit A-1) at
the principal office of the Company together with notice of arrangements
reasonably satisfactory to the Company for payment to the Company either by
check or from the proceeds received from the sale of Shares to be sold by the
Holder in such public offering of an amount equal to the then applicable Warrant
Purchase Price per share multiplied by the number of Shares then being
purchased. Upon exercise, the Holder shall be entitled to receive, within a
reasonable time, a certificate or certificates, issued in the Holder's name or
in such name or names as the Holder may direct, for the number of Shares so
purchased. The Shares so purchased shall be deemed to be issued as of the close
of business on the date on which this Warrant shall have been exercised.
4. Shares to be Issued; Reservation of Shares. The Company covenants
that all shares that may be issued upon the exercise of the purchase rights
represented by this Warrant will, upon
-2-
issuance, be fully paid and non-assessable, and free from all taxes, liens and
charges with respect to the issue thereof. During the period within which the
purchase rights represented by the Warrant may be exercised, the Company will at
all times have authorized and reserved, for the purpose of issuance upon
exercise of the purchase rights represented by this Warrant, a sufficient number
of shares of its Common Stock to provide for the exercise of the right
represented by this Warrant.
5. No Fractional Shares. No fractional shares shall be issued upon the
exercise of this Warrant. In lieu thereof, a cash payment shall be made equal to
such fraction multiplied by the fair market value of such shares of Common
Stock, as determined in good faith by the Company's Board of Directors.
6. Adjustments of Warrant Purchase Price and Number of Shares.
(a) If there shall be any change in the Common Stock of the Company
through merger, consolidation, reorganization, recapitalization, stock dividend,
stock split or other change in the corporate structure of the Company,
appropriate adjustments shall be made by the Board of Directors of the Company
(or if the Company is not the surviving corporation in any such transaction, the
Board of Directors of the surviving corporation) in the aggregate number and
kind of shares subject to this Warrant, and the number and kind of shares and
the price per share then applicable to shares covered by the unexercised portion
of this Warrant.
(b) Upon each adjustment under subparagraph (a) above, the Company shall
give prompt written notice thereof addressed to the Holder at the address of
such holder as shown on the records of the Company (if to the original holder,
to the attention of the Commercial Loan Department), which notice shall state
the Warrant Purchase Price resulting from such adjustment and the increase or
decrease, if any, in the number of shares of Common Stock issuable upon the
exercise of this Warrant, setting forth in reasonable detail the method of
calculation and the facts upon which such calculation is based.
7. Piggyback Registration Rights. The Company agrees as follows:
(a) The rights granted to the Holder in Section 7(b) below are wholly
subordinated, junior and subject to the exercise of certain registration rights
granted to G & G Diagnostics Limited Partnership I under a certain Registration
Rights Agreement dated June 5, 1990 (the "G&G Registration Rights Agreement"), a
copy of which shall be furnished to the Holder upon written request and without
charge.
(b) If the Company shall determine to register any shares of its Common
Stock under the Act and in connection therewith the Company may lawfully
register any of the Shares, the Company will promptly give written notice
thereof to the Holder. Upon the
-3-
written request of the Holder within 30 days after receipt of any such notice
from the Company, the Company will, except as herein provided, cause all of the
Shares which the Holder has requested to be registered to be included in such
Registration Statement, all to the extent requisite to permit the sale or other
disposition of the Shares. However nothing herein shall prevent the Company from
at any time abandoning or delaying any registration.
(c) If any shares registered pursuant to this Section 7 shall be
included in an underwritten public offering in whole or in part, the Company may
require that the Shares requested for inclusion hereunder be included in the
underwriting on the same terms and conditions as the securities otherwise being
sold through the underwriters. If and in the event that the managing underwriter
of such public offering shall be of the opinion that inclusion of all of the
Shares would adversely affect the marketing of the securities to be sold by the
Company therein, then the number of Shares otherwise to be included in the
underwritten public offering may be reduced on a pro rata basis with the shares
proposed to be included in such offering by any other selling shareholder
(exclusive of the Company and the holder or holders of shares subject to the G&G
Registration Rights Agreement). No Shares will be registered under this Section
7 if the holder or holders of shares subject to the G&G Registration Rights
Agreement request the registration of all but do not have all of their shares
subject to said G&G Registration Rights Agreement so registered.
8. Registration Procedures. If and whenever the Company is required by
the provisions of Section 7 to effect the registration of the Shares under the
Act, the Company will:
(a) prepare and file with the Commission a Registration Statement with
respect to such securities, and use its best efforts to cause such Registration
Statement to become and remain effective for such period as may be reasonably
necessary to effect the sale of such securities, not to exceed nine months;
(b) prepare and file with the Commission such amendments to such
Registration Statement and supplements to the prospectus contained therein as
may be necessary to keep such Registration Statement effective for such period
as may be reasonably necessary to effect the sale of such Shares, not to exceed
nine months;
(c) furnish to the Holder participating in such registration and to the
underwriters of the securities being registered such reasonable number of copies
of the Registration Statement, preliminary prospectus, final prospectus and such
other documents as such underwriters may reasonably request in order to
facilitate the public offering of such securities;
(d) use its best efforts to register or qualify the securities covered
by such Registration Statement under the state securities or blue sky laws of
such jurisdictions as the Holder
-4-
may reasonably request within 20 days following the original filing of such
Registration Statement, except that the Company shall not for any purpose be
required to execute a general consent to service of process or to qualify to do
business as a foreign corporation in any jurisdiction wherein it is not so
qualified;
(e) notify the Holder promptly after it shall receive notice thereof, of
the time when such Registration Statement has become effective or a supplement
to any prospectus forming a part of such registration statement has been filed;
(f) notify the Holder promptly of any request by the Commission for the
amending or supplementing of such Registration Statement or prospectus or for
additional information;
(g) prepare and promptly file with the Commission and promptly notify
the Holder of the filing of such amendment or supplement to such Registration
Statement or prospectus as may be necessary to correct any statements or
omissions if, at the time when a prospectus relating to such securities is
required to be delivered under the Act, any event shall have occurred as the
result of which any such prospectus or any other prospectus as then in effect
would include an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of the
circumstances in which they were made, not misleading;
(h) advise the Holder promptly after it shall receive notice or obtain
knowledge thereof, of the issuance of any stop order by the Commission
suspending the effectiveness of such Registration Statement or the initiation or
threatening of any proceeding for that purpose and promptly use its best efforts
to prevent the issuance of any stop order or to obtain its withdrawal if such
stop order should be issued; and
(i) furnish on the effective date of the Registration Statement to the
Holder and any underwriters, at the closing provided for in the underwriting
agreement, an opinion of counsel for the Company and a letter from the
independent certified public accountants for the Company, in form and substance
customary for similar offerings;
9. Expenses. All expenses in connection with, or incidental to, the
preparation and filing of any Registration Statement pursuant to Section 7
hereof, any registration or qualification under securities or blue sky laws of
states in which the offering will be made, and any filing fee of the National
Association of Securities Dealers, Inc. ("NASD") relating to such offering,
shall be borne by the Company; provided, however, that the Holder shall bear its
pro rata share of the underwriting discount and commissions and transfer taxes,
all fees and disbursements of Holder's counsel, and, to the extent required by
applicable state securities laws and NASD rules and regulations, all legal fees
and disbursements and other
-5-
expenses of complying with state securities or blue sky laws of any
jurisdictions in which the Shares to be offered are to be registered or
qualified.
10. Indemnification.
(a) The Company will indemnify and hold harmless the Holder and any
underwriter (as defined in the Act) for such Holder and each person, if any, who
controls such Holder or such underwriter within the meaning of the Act, from and
against, and will reimburse such Holder and each such underwriter and
controlling person with respect to, any and all loss, damage, liability, cost
and expense to which such Holder or any such underwriter or controlling person
may become subject under the Act or otherwise, insofar as such losses, damages,
liabilities, costs or expenses are caused by any untrue statement or alleged
untrue statement of any material fact contained in any Registration Statement,
any prospectus contained therein or any amendment or supplement thereto, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading; provided, however, that the Company will not be liable in any such
case to the extent that any such loss, damage, liability, cost or expense arises
out of or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission so made in conformity with information furnished by
such Holder, such underwriter or such controlling person in writing specifically
for use in the preparation thereof.
(b) The Holder will indemnify and hold harmless the Company, its
directors and officers, any underwriter and any controlling person of such
underwriter from and against, and will reimburse the Company, underwriter or
controlling person with respect to, any and all loss, damage, liability, cost or
expense to which the Company, any underwriter or any controlling person thereof
may become subject under the Act or otherwise, insofar as such losses, damages,
liabilities, costs or expenses are caused by any untrue or alleged untrue
statement of any material fact contained in any Registration Statement, any
prospectus contained therein or any amendment or supplement thereto, or arise
out of or are based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made, not misleading,
in each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was so made in
reliance upon written information furnished by such Holder specifically for use
in the preparation thereof.
11. Rights and Obligations Survive Exercise and Expiration of Warrant.
The rights and obligations of the Company and the Holder set forth in Sections
7, 8, 9 and 10 shall survive the exercise and expiration of this Warrant.
-6-
12. No Rights as Shareholders. This Warrant does not entitle the Holder
to any voting rights or other rights as a shareholder of the Company prior to
exercise of this Warrant and the payment for the shares of Common Stock so
purchased. Notwithstanding the foregoing, the Company agrees to transmit to the
Holder such information, documents and reports as are generally distributed to
holders of the capital stock of the Company concurrently with the distribution
thereof to the shareholders. Upon valid exercise of this Warrant and payment for
the shares of Common Stock so purchased in accordance with the terms of the
Warrant, the Holder or the Holder's designee, as the case may be, shall be
deemed a shareholder of the Company.
13. Sale or Transfer of the Warrant; Legend. The Warrant and the shares
of Common Stock shall not be sold or transferred unless either (i) they first
shall have been registered under the Act, or (ii) the Company first shall have
been furnished with an opinion of legal counsel satisfactory to the Company to
the effect that such sale or transfer is exempt from the registration
requirements of the Act. Each certificate representing any Warrant shall bear
the legend set out on page 1 hereof. Each certificate representing any Common
Stock shall bear a legend substantially in the following form, as appropriate:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED
FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH,
THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION
MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT
RELATED THERETO OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE
SECURITIES ACT OF 1933.
Such Warrant and Shares may be subject to additional restrictions on transfer
imposed under applicable state and federal securities law.
14. Modifications and Waivers. This Warrant may not be changed, waived,
discharged or terminated except by an instrument in writing signed by the party
against which enforcement of the same is sought.
15. Notices. Any notice, request or other document required or permitted
to be given or delivered to the holder hereof or the Company shall be delivered,
or shall be sent by certified or registered mail, postage prepaid, to the Holder
at its address shown on the books of the Company or to the Company at the
address indicated therefor on the signature page of this Warrant.
16. Loss, Theft, Destruction or Mutilation of Warrant. The Company
covenants with the Holder that upon its receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant or any stock certificate and, in the case of any such loss, theft
or destruction, of an indemnity or security reasonably satisfactory to it, and
upon reimbursement to the Company of all reasonable
-7-
expenses incidental thereto, and upon surrender and cancellation of this Warrant
or stock certificate, if mutilated, the Company will make and deliver a new
Warrant or stock certificate, of like tenor, in lieu of the lost, stolen,
destroyed or mutilated Warrant or stock certificate.
17. Representations and Warranties of Holder. By accepting this Warrant,
the Holder represents and warrants that it is acquiring this Warrant and the
Shares for its own account, for investment and not with a view to, or for sale
in connection with, any distribution thereof or any part thereof. Holder
represents and warrants that it is (a) experienced in the evaluation of
businesses similar to the Corporation, (b) is able to fend for itself in the
transactions contemplated by this Warrant, (c) has such knowledge and experience
in financial and business matters as to be capable of evaluating the merits and
risks of an investment in the Corporation, (d) has the ability to bear the
economic risks of an investment in the Corporation, (e) has been furnished with
or has had access to such information as is specified in subparagraph (b)(2) of
Rule 502 promulgated under the Act and (f) has been afforded the opportunity to
ask questions of and to receive answers from the Corporation and to obtain any
additional information necessary to make an informed investment decision with
respect to an investment in the Corporation.
18. Binding Effect on Successors. This Warrant shall be binding upon any
corporation succeeding the Company by merger, consolidation or acquisition of
all or substantially all of the Company's assets, and all of the obligations of
the Company relating to the Shares issuable upon exercise of this Warrant shall
survive the exercise and termination of this Warrant and all of the covenants
and agreements of the Company shall inure to the benefit of the successors and
assigns of the Holder.
19. Governing Law. This Warrant shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the laws of
the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, BOSTON BIOMEDICA, INC. has caused this Warrant to be
executed under seal by its officer thereunto duly authorized.
DATED: December 1, 1991
BOSTON BIOMEDICA, INC.
CORPORATE
SEAL
By: ____________________________
Its President
Address: _______________________
________________________________
-8-
EXHIBIT A
NOTICE OF EXERCISE
------------------
To: BOSTON BIOMEDICA, INC.
1. The undersigned hereby elects to purchase _______ shares of Common
Stock of BOSTON BIOMEDICA, INC. pursuant to the terms of the attached Warrant,
and tenders herewith payment of the purchase price of such shares in full.
2. Please issue a certificate or certificates representing said shares
in the name of the undersigned or in such other name or names as are specified
below.
3. The undersigned represents that the aforesaid shares of Common Stock
are being acquired for the account of the undersigned for investment and not
with a view to, or for resale in connection with, the distribution thereof and
that the undersigned has no present intention of distributing or reselling such
shares. The undersigned further represents that such shares shall not be sold or
transferred unless either (1) they first shall have been registered under the
Securities Act of 1933, as amended, or (ii) the Company first shall have been
furnished with an opinion of legal counsel reasonably satisfactory to the
Company to the effect that such sale or transfer is exempt from the registration
requirement.
4. In the event of partial exercise, please re-issue an appropriate
Warrant exercisable into the remaining shares.
-------------------------------
(Name)
-------------------------------
(Address)
-------------------------------
(Signature)
-------------------------------
(Date)
-9-
EXHIBIT A-1
NOTICE OF EXERCISE
------------------
To: BOSTON BIOMEDICA, INC. (the "Company")
1. Contingent upon and effective immediately prior to the closing (the
"Closing") of the Company's public offering contemplated by the Registration
Statement of Form S_____, filed __________, 19__, the undersigned hereby elects
to purchase _____ shares of Common Stock of the Company (or such lesser number
of shares as may be sold on behalf of the undersigned at the Closing) pursuant
to the terms of the attached Warrant.
2. Please deliver to the custodian for the selling shareholders a stock
certificate representing such ____ shares.
3. The undersigned has instructed the custodian for the selling
shareholders to deliver to the Company $______ from the net proceeds due the
undersigned from the sale of shares in the aforesaid public offering.
-------------------------------
(Signature)
-------------------------------
(Date)
-10-
EXHIBIT 10.10
NEITHER THIS WARRANT NOR THE SHARES OF STOCK ISSUABLE UPON
EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED. NO SALE, TRANSFER OR OTHER DISPOSITION OF THIS
WARRANT OR SAID SHARES MAY BE EFFECTED WITHOUT (I) AN EFFECTIVE
REGISTRATION STATEMENT RELATED THERETO, OR (II) AN OPINION OF
COUNSEL, REASONABLY SATISFACTORY TO COUNSEL TO THE COMPANY, THAT
AN EXEMPTION FROM REGISTRATION UNDER SAID ACT IS AVAILABLE.
Warrant No. of
No. 2 STOCK PURCHASE WARRANT Shares 40,000
--- ------
To Subscribe for and Purchase Common Stock of
BOSTON BIOMEDICA, INC.
THIS CERTIFIES that, for value received, Worcester County Institution
for Savings, a Massachusetts savings bank (together with any subsequent
transferees of all or any portion of this Warrant, the "Holder"), is entitled,
upon the terms and subject to the conditions hereinafter set forth, to subscribe
for and purchase from Boston Biomedica, Inc., a Massachusetts corporation
(hereinafter called the "Company"), at the price of $2.50 per share (subject to
adjustment as provided in Section 6, the "Warrant Purchase Price"), up to 40,000
fully paid and non-assessable shares of the Company's common stock, $.01 par
value per share (the "Shares"),
1. Definitions. As used herein the following terms shall have the
following meanings:
"Act" means the Securities Act of 1933 as amended, or a similar Federal
statute and the rules and regulations of the Commission issued under that Act,
as they each may, from time to time, be in effect.
"Commission" means the Securities and Exchange Commission, or any other
Federal agency at the time administering the securities laws of the United
States.
"Registration Statement" means a registration statement (other than a
registration statement on Form S-8 solely with respect to employee benefit
plans, or on Form S-4 solely with respect to Rule 145 transactions, or any
successor form or forms used for the purpose specified by such forms) filed by
the Company with the Commission under the Act for a public offering and sale of
securities of the Company.
"Shares" means the 40,000 shares of the Company's Common Stock issued or
issuable to the Holder upon the exercise of this Warrant and any other shares of
Common Stock of the Company issued with respect to such shares (because of stock
splits, stock dividends, reclassifications, recapitalizations, mergers,
consolidations, or similar events); provided, however, that any shares
previously sold by the Holder to the public pursuant to a registered public
offering or Rule 144 under the Act shall cease to be within the definition of
"Shares" as used herein.
-1-
2. Purchase Rights. The purchase rights represented by this Warrant are
exercisable by the Holder in accordance with the following provisions:
(a) subject to the provisions of subparagraph (b) hereof, this Warrant
is exercisable, in whole or in part, at any time and from time to time
commencing on the date hereof and ending at 5:00 p.m. on July 26, 1998.
(b) the Holder's right to exercise this Warrant shall vest with respect
to the indicated percentage of the total number of Shares purchaseable hereunder
at the expiration of the indicated periods from the date hereof:
Years Expired From Percentage of Total Shares
Date of Issuance of Common Stock Purchaseable
---------------- ----------------------------
Less than 1 year 50%
1 or more and less than 2 years 62 1/2%
2 or more and less than 3 years 75%
3 or more and less than 4 years 87 1/2%
4 or more years 100%
3. Exercise of Warrant. Subject to Section 2 above, the purchase rights
represented by this Warrant may be exercised, in whole or in part and from time
to time, by (a) the surrender of this Warrant and the duly executed Notice of
Exercise (the form of which is attached as Exhibit A) at the principal office of
the Company and by the payment to the Company, by check, of an amount equal to
the then applicable Warrant Purchase Price per share multiplied by the number of
Shares then being purchased, or (b) if in connection with a registered public
offering of the Company's securities, the surrender of this Warrant and the duly
executed Notice of Exercise (the form of which is attached as Exhibit A-1) at
the principal office of the Company together with notice of arrangements
reasonably satisfactory to the Company for payment to the Company either by
check or from the proceeds received from the sale of Shares to be sold by the
Holder in such public offering of an amount equal to the then applicable Warrant
Purchase Price per share multiplied by the number of Shares then being
purchased. Upon exercise, the Holder shall be entitled to receive, within a
reasonable time, a certificate or certificates, issued in the Holder's name or
in such name or names as the Holder may direct, for the number of Shares so
purchased. The Shares so purchased shall be deemed to be issued as of the close
of business on the date on which this Warrant shall have been exercised.
4. Shares to be Issued; Reservation of Shares. The Company covenants
that all shares that may be issued upon the exercise of the purchase rights
represented by this Warrant will, upon
-2-
issuance, be fully paid and non-assessable, and free from all taxes, liens and
charges with respect to the issue thereof. During the period within which the
purchase rights represented by the Warrant may be exercised, the Company will at
all times have authorized and reserved, for the purpose of issuance upon
exercise of the purchase rights represented by this Warrant, a sufficient number
of shares of its Common Stock to provide for the exercise of the right
represented by this Warrant.
5. No Fractional Shares. No fractional shares shall be issued upon the
exercise of this Warrant. In lieu thereof, a cash payment shall be made equal to
such fraction multiplied by the fair market value of such shares of Common
Stock, as determined in good faith by the Company's Board of Directors.
6. Adjustments of Warrant Purchase Price and Number of Shares.
(a) If there shall be any change in the Common Stock of the Company
through merger, consolidation, reorganization, recapitalization, stock dividend,
stock split or other change in the corporate structure of the Company,
appropriate adjustments shall be made by the Board of Directors of the Company
(or if the Company is not the surviving corporation in any such transaction, the
Board of Directors of the surviving corporation) in the aggregate number and
kind of shares subject to this Warrant, and the number and kind of shares and
the price per share then applicable to shares covered by the unexercised portion
of this Warrant.
(b) Upon each adjustment under subparagraph (a) above, the Company shall
give prompt written notice thereof addressed to the Holder at the address of
such holder as shown on the records of the Company (if to the original holder,
to the attention of the Commercial Loan Department), which notice shall state
the Warrant Purchase Price resulting from such adjustment and the increase or
decrease, if any, in the number of shares of Common Stock issuable upon the
exercise of this Warrant, setting forth in reasonable detail the method of
calculation and the facts upon which such calculation is based.
7. Piggyback Registration Rights. The Company agrees as follows:
(a) The rights granted to the Holder in Section 7(b) below are wholly
subordinated, junior and subject to the exercise of certain registration rights
granted to G & G Diagnostics Limited Partnership I under a certain Registration
Rights Agreement dated June 5, 1990 (the "G&G Registration Rights Agreement"), a
copy of which shall be furnished to the Holder upon written request and without
charge.
(b) If the Company shall determine to register any shares of its Common
Stock under the Act and in connection therewith the Company may lawfully
register any of the Shares, the Company will promptly give written notice
thereof to the Holder. Upon the
-3-
written request of the Holder within 30 days after receipt of any such notice
from the Company, the Company will, except as herein provided, cause all of the
Shares which the Holder has requested to be registered to be included in such
Registration Statement, all to the extent requisite to permit the sale or other
disposition of the Shares. However nothing herein shall prevent the Company from
at any time abandoning or delaying any registration.
(c) If any shares registered pursuant to this Section 7 shall be
included in an underwritten public offering in whole or in part, the Company may
require that the Shares requested for inclusion hereunder be included in the
underwriting on the same terms and conditions as the securities otherwise being
sold through the underwriters. If and in the event that the managing underwriter
of such public offering shall be of the opinion that inclusion of all of the
Shares would adversely affect the marketing of the securities to be sold by the
Company therein, then the number of Shares otherwise to be included in the
underwritten public offering may be reduced on a pro rata basis with the shares
proposed to be included in such offering by any other selling shareholder
(exclusive of the Company and the holder or holders of shares subject to the G&G
Registration Rights Agreement). No Shares will be registered under this Section
7 if the holder or holders of shares subject to the G&G Registration Rights
Agreement request the registration of all but do not have all of their shares
subject to said G&G Registration Rights Agreement so registered.
8. Registration Procedures. If and whenever the Company is required by
the provisions of Section 7 to effect the registration of the Shares under the
Act, the Company will:
(a) prepare and file with the Commission a Registration Statement with
respect to such securities, and use its best efforts to cause such Registration
Statement to become and remain effective for such period as may be reasonably
necessary to effect the sale of such securities, not to exceed nine months;
(b) prepare and file with the Commission such amendments to such
Registration Statement and supplements to the prospectus contained therein as
may be necessary to keep such Registration Statement effective for such period
as may be reasonably necessary to effect the sale of such Shares, not to exceed
nine months;
(c) furnish to the Holder participating in such registration and to the
underwriters of the securities being registered such reasonable number of copies
of the Registration Statement, preliminary prospectus, final prospectus and such
other documents as such underwriters may reasonably request in order to
facilitate the public offering of such securities;
(d) use its best efforts to register or qualify the securities covered
by such Registration Statement under the state securities or blue sky laws of
such jurisdictions as the Holder
-4-
may reasonably request within 20 days following the original filing of such
Registration Statement, except that the Company shall not for any purpose be
required to execute a general consent to service of process or to qualify to do
business as a foreign corporation in any jurisdiction wherein it is not so
qualified;
(e) notify the Holder promptly after it shall receive notice thereof, of
the time when such Registration Statement has become effective or a supplement
to any prospectus forming a part of such registration statement has been filed;
(f) notify the Holder promptly of any request by the Commission for the
amending or supplementing of such Registration Statement or prospectus or for
additional information;
(g) prepare and promptly file with the Commission and promptly notify
the Holder of the filing of such amendment or supplement to such Registration
Statement or prospectus as may be necessary to correct any statements or
omissions if, at the time when a prospectus relating to such securities is
required to be delivered under the Act, any event shall have occurred as the
result of which any such prospectus or any other prospectus as then in effect
would include an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of the
circumstances in which they were made, not misleading; and
(h) advise the Holder promptly after it shall receive notice or obtain
knowledge thereof, of the issuance of any stop order by the Commission
suspending the effectiveness of such Registration Statement or the initiation or
threatening of any proceeding for that purpose and promptly use its best efforts
to prevent the issuance of any stop order or to obtain its withdrawal if such
stop order should be issued.
(i)
9. Expenses. All expenses in connection with, or incidental to, the
preparation and filing of any Registration Statement pursuant to Section 7
hereof, any registration or qualification under securities or blue sky laws of
states in which the offering will be made, and any filing fee of the National
Association of Securities Dealers, Inc. ("NASD") relating to such offering,
shall be borne by the Company; provided, however, that the Holder shall bear its
pro rata share of the underwriting discount and commissions and transfer taxes,
all fees and disbursements of Holder's counsel, and, to the extent required by
applicable state securities laws and NASD rules and regulations, all legal fees
and disbursements and other expenses of complying with state securities or blue
sky laws of any jurisdictions in which the Shares to be offered are to be
registered or qualified.
10. Indemnification.
(a) The Company will indemnify and hold harmless the Holder and any
underwriter (as defined in the Act) for such Holder and
-5-
each person, if any, who controls such Holder or such underwriter within the
meaning of the Act, from and against, and will reimburse such Holder and each
such underwriter and controlling person with respect to, any and all loss,
damage, liability, cost and expense to which such Holder or any such underwriter
or controlling person may become subject under the Act or otherwise, insofar as
such losses, damages, liabilities, costs or expenses are caused by any untrue
statement or alleged untrue statement of any material fact contained in any
Registration Statement, any prospectus contained therein or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in which
they were made, not misleading; provided, however, that the Company will not be
liable in any such case to the extent that any such loss, damage, liability,
cost or expense arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission so made in conformity with
information furnished by such Holder, such underwriter or such controlling
person in writing specifically for use in the preparation thereof.
(b) The Holder will indemnify and hold harmless the Company, its
directors and officers, any underwriter and any controlling person of such
underwriter from and against, and will reimburse the Company, underwriter or
controlling person with respect to, any and all loss, damage, liability, cost or
expense to which the Company, any underwriter or any controlling person thereof
may become subject under the Act or otherwise, insofar as such losses, damages,
liabilities, costs or expenses are caused by any untrue or alleged untrue
statement of any material fact contained in any Registration Statement, any
prospectus contained therein or any amendment or supplement thereto, or arise
out of or are based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made, not misleading,
in each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was so made in
reliance upon written information furnished by such Holder specifically for use
in the preparation thereof.
11. Rights and Obligations Survive Exercise and Expiration of Warrant.
The rights and obligations of the Company and the Holder set forth in Sections
7, 8, 9 and 10 shall survive the exercise and expiration of this Warrant.
12. No Rights as Shareholders. This Warrant does not entitle the Holder
to any voting rights or other rights as a shareholder of the Company prior to
exercise of this Warrant and the payment for the shares of Common Stock so
purchased. Notwithstanding the foregoing, the Company agrees to transmit to the
Holder such information, documents and reports as are generally distributed to
holders of the capital stock of the Company concurrently with the distribution
thereof to the shareholders. Upon valid exercise of this Warrant and payment
-6-
for the shares of Common Stock so purchased in accordance with the terms of the
Warrant, the Holder or the Holder's designee, as the case may be, shall be
deemed a shareholder of the Company.
13. Sale or Transfer of the Warrant; Legend. The Warrant and the shares
of Common Stock shall not be sold or transferred unless either (i) they first
shall have been registered under the Act, or (ii) the Company first shall have
been furnished with an opinion of legal counsel satisfactory to the Company to
the effect that such sale or transfer is exempt from the registration
requirements of the Act. Each certificate representing any Warrant shall bear
the legend set out on page 1 hereof. Each certificate representing any Common
Stock shall bear a legend substantially in the following form, as appropriate:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED
FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH,
THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION
MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT
RELATED THERETO OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE
SECURITIES ACT OF 1933.
Such Warrant and Shares may be subject to additional restrictions on transfer
imposed under applicable state and federal securities law.
14. Modifications and Waivers. This Warrant may not be changed, waived,
discharged or terminated except by an instrument in writing signed by the party
against which enforcement of the same is sought.
15. Notices. Any notice, request or other document required or permitted
to be given or delivered to the holder hereof or the Company shall be delivered,
or shall be sent by certified or registered mail, postage prepaid, to the Holder
at its address shown on the books of the Company or to the Company at the
address indicated therefor on the signature page of this Warrant.
16. Loss, Theft, Destruction or Mutilation of Warrant. The Company
covenants with the Holder that upon its receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant or any stock certificate and, in the case of any such loss, theft
or destruction, of an indemnity or security reasonably satisfactory to it, and
upon reimbursement to the Company of all reasonable expenses incidental thereto,
and upon surrender and cancellation of this Warrant or stock certificate, if
mutilated, the Company will make and deliver a new Warrant or stock certificate,
of like tenor, in lieu of the lost, stolen, destroyed or mutilated Warrant or
stock certificate.
17. Representations and Warranties of Holder. By accepting this Warrant,
the Holder represents and warrants that it is acquiring this Warrant and the
Shares for its own account, for
-7-
investment and not with a view to, or for sale in connection with, any
distribution thereof or any part thereof. Holder represents and warrants that it
is (a) experienced in the evaluation of businesses similar to the Corporation,
(b) is able to fend for itself in the transactions contemplated by this Warrant,
(c) has such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of an investment in the Corporation,
(d) has the ability to bear the economic risks of an investment in the
Corporation, (e) has been furnished with or has had access to such information
as is specified in subparagraph (b)(2) of Rule 502 promulgated under the Act and
(f) has been afforded the opportunity to ask questions of and to receive answers
from the Corporation and to obtain any additional information necessary to make
an informed investment decision with respect to an investment in the
Corporation.
18. Binding Effect on Successors. This Warrant shall be binding upon any
corporation succeeding the Company by merger, consolidation or acquisition of
all or substantially all of the Company's assets, and all of the obligations of
the Company relating to the Shares issuable upon exercise of this Warrant shall
survive the exercise and termination of this Warrant and all of the covenants
and agreements of the Company shall inure to the benefit of the successors and
assigns of the Holder.
19. Governing Law. This Warrant shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the laws of
the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, BOSTON BIOMEDICA, INC. has caused this Warrant to be
executed under seal by its officer thereunto duly authorized.
DATED: July 26, 1993
BOSTON BIOMEDICA, INC.
CORPORATE
SEAL
By: ____________________________
Its President
Address: 375 West Street
West Bridgewater, MA 02379
-8-
EXHIBIT A
NOTICE OF EXERCISE
------------------
To: BOSTON BIOMEDICA, INC.
1. The undersigned hereby elects to purchase _______ shares of Common
Stock of BOSTON BIOMEDICA, INC. pursuant to the terms of the attached Warrant,
and tenders herewith payment of the purchase price of such shares in full.
2. Please issue a certificate or certificates representing said shares
in the name of the undersigned or in such other name or names as are specified
below.
3. The undersigned represents that the aforesaid shares of Common Stock
are being acquired for the account of the undersigned for investment and not
with a view to, or for resale in connection with, the distribution thereof and
that the undersigned has no present intention of distributing or reselling such
shares. The undersigned further represents that such shares shall not be sold or
transferred unless either (1) they first shall have been registered under the
Securities Act of 1933, as amended, or (ii) the Company first shall have been
furnished with an opinion of legal counsel reasonably satisfactory to the
Company to the effect that such sale or transfer is exempt from the registration
requirement.
4. In the event of partial exercise, please re-issue an appropriate
Warrant exercisable into the remaining shares.
-------------------------------
(Name)
-------------------------------
(Address)
-------------------------------
(Signature)
-------------------------------
(Date)
-9-
EXHIBIT A-1
NOTICE OF EXERCISE
------------------
To: BOSTON BIOMEDICA, INC. (the "Company")
1. Contingent upon and effective immediately prior to the closing (the
"Closing") of the Company's public offering contemplated by the Registration
Statement of Form S_____, filed __________, 19__, the undersigned hereby elects
to purchase _____ shares of Common Stock of the Company (or such lesser number
of shares as may be sold on behalf of the undersigned at the Closing) pursuant
to the terms of the attached Warrant.
2. Please deliver to the custodian for the selling shareholders a stock
certificate representing such ____ shares.
3. The undersigned has instructed the custodian for the selling
shareholders to deliver to the Company $______ from the net proceeds due the
undersigned from the sale of shares in the aforesaid public offering.
-------------------------------
(Signature)
-------------------------------
(Date)
-10-
EXHIBIT 10.11
================================================================================
COMMON STOCK
PURCHASE AGREEMENT
between
BOSTON BIOMEDICA, INC.
and
G&G DIAGNOSTICS LIMITED PARTNERSHIP I
Dated as of June 5, 1990
================================================================================
COMMON STOCK PURCHASE AGREEMENT dated as of June 5, 1990 between BOSTON
BIOMEDICA, INC., a Massachusetts corporation (the "Company"), and G&G
Diagnostics Limited Partnership I (the "Purchaser").
WHEREAS, the Company wishes to issue and sell to the Purchaser an aggregate
of 10,000 shares (the "Shares") of the authorized but unissued Common Stock,
$.01 par value, of the Company (the "Common Stock");
WHEREAS, the Company wishes to grant the Purchaser an option to purchase
16,667 additional shares of Common Stock; and
WHEREAS, the Purchaser wishes to purchase the Shares on the terms and
subject to the conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained in this Agreement, the parties agree as follows:
ARTICLE I
THE SHARES
SECTION 1.01 Issuance, Sale and Purchase of the Shares. The Company agrees
to issue and sell to the Purchaser and the Purchaser agrees to purchase from the
Company at the Closing (as defined in Section 1.03 hereof), 10,000 shares of the
Company's Common Stock for an aggregate purchase price of $150,000.00.
SECTION 1.02 Grant of Option to Purchase Additional Shares. In connection
with the sale and purchase described in Section 1.01 hereof, the Company agrees
to grant to the Purchaser an option to purchase up to 16,667 additional shares,
exercisable for a period of two years, commencing on the date hereof (the
"Option Period"), at a price of $20.00 per share during the first year following
the date hereof and at a price of $25.00 per share during the second year
following the date hereof; provided, however, that if the Company shall sell any
shares or equity-equivalents (other than Reserved Employee Shares as defined in
Section 5.02 hereof or pursuant to Section 1.06 hereof) at a price lower than
$20.00 per share during the first year of the Option Period, and (i) if the
Purchaser has not yet exercised the option in full and the Purchaser exercises
the option in part or in full within thirty (30) days following receipt of
notice from the Company of such sale, or (ii) if the Purchaser has already
exercised the option in part or in full, then (iii) the Company shall issue to
the Purchaser a sufficient number of shares of Common Stock as shall reduce (but
not increase) the cost per share paid by the Purchaser upon exercise of the
option to such price at which such shares or equity-equivalents were issued; and
provided, further, that if the Company shall sell any shares or
- 2 -
equity-equivalents (other than Reserved Employee Shares as defined in Section
5.02 hereof) at a price lower than $25.00 per share during the second year of
the Option Period, and (i) if the Purchaser has not yet exercised the option in
full and the Purchaser exercises the option in part or in full within thirty
(30) days following receipt of notice from the Company of such sale, or (ii) if
the Purchaser has already exercised the option in part or in full, then (iii)
the Company shall issue to the Purchaser a sufficient number of shares of Common
Stock as shall reduce (but not increase) the cost per share paid by the
Purchaser upon exercise of the option to such price at which such shares or
equity-equivalents were issued.
SECTION 1.03 Closing. The closing of the purchase and sale described in
Section 1.01 shall take place at 2:30 p.m., Boston time, on June 5, 1990, or at
such other date and time as may be agreed upon between the Purchaser and the
Company (such closing being called the "Closing" and such date and time being
called the "Closing Date").
SECTION 1.04 Payment and Delivery. At the Closing, the Company shall
deliver to the Purchaser a certificate registered in the Purchaser's name
representing 10,000 shares of Common Stock. As payment in full for the Shares
being purchased by and against delivery of the stock certificate therefore, the
Purchaser shall pay to the Company by certified check or wire transfer, or
combination thereof, One Hundred Fifty Thousand Dollars ($150,000.00).
SECTION 1.05 Price Protection.
(a) If the Company shall within three years after the Closing Date issue
additional shares of Common Stock or other securities convertible into, or
exercisable or exchangeable for Common Stock (other than the Reserved Employee
Shares described in Section 5.02 below) at a price per common-equivalent share
of less than the price per share paid for the Shares by the Purchaser under
Section 1.01 hereof, the Company shall issue to the Purchaser at no cost to the
Purchaser a sufficient number of shares of Common Stock as shall reduce (but not
increase) the cost per share paid by the Purchaser for the Shares (which for
purposes of this Section 1.05 shall include any shares issued pursuant to the
option in Section 1.02) to such price at which such Common Stock equivalents
were issued.
(b) Any Shares of Common Stock issued under this Section 1.05 shall be
included within the definition of Shares.
SECTION 1.06 Additional Investments. The Purchaser hereby acknowledges that
within the six month period following the Closing Date, the Company may issue
and sell up to an additional 30,000 shares of Common Stock and options to
purchase 50,001 shares of Common Stock or an aggregate of 80,001 Common Stock
equivalents for the purpose of raising additional equity
- 3 -
capital. In connection with such issuance and sale, the Company shall not grant
any new investors any rights which are superior to those granted to the
Purchaser under this Agreement without securing for the Purchaser the right to
participate in such superior rights pro rata with such new investors on the
basis of the total dollar amount invested by the Purchaser and each such
investor. Conversely, such new investors shall have the right to participate on
a similar pro rata basis with the Purchaser in connection with the rights of
Purchaser under the Registration Rights Agreement (as hereinafter defined), and
the rights granted under Sections 5.01(a) (the Purchaser's right of approval to
be exercised by one representative of all such investors, including the
Purchaser), 5.02, and 5.11 (the nominee referred to therein being the nominee of
the Purchaser and the new investors) of this Agreement. The Purchaser and the
Company each agrees to execute and deliver any and all such further instruments
and waivers which may be reasonably necessary to carry out the intent of the
parties under this Section 1.06.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Purchaser that, except as set
forth in the Disclosure Schedule attached as Schedule I (which Disclosure
Schedule makes explicit reference to the particular representation or warranty
as to which exception is taken, which in each case shall constitute the sole
representation and warranty as to which such exception shall apply):
SECTION 2.01 Organization, Qualifications and Corporate Power. The Company
is a corporation duly incorporated, validly existing and in good standing under
the laws of the Commonwealth of Massachusetts and is duly licensed or qualified
to transact business as a foreign corporation and is in good standing in each
jurisdiction in which the nature of the business transacted by it or the
character of the properties owned or leased by it requires such licensing or
qualification except where the failure to be so licensed or qualified would not
have a material adverse effect on the business, operations or financial
condition of the Company. The Company has the corporate power and authority to
own and hold its properties and to carry on its business as now conducted and as
proposed to be conducted, to execute, deliver and perform this Agreement, the
Registration Rights Agreement with the Purchaser in the form attached as Exhibit
A (the "Registration Rights Agreement") and the Stock Restriction Agreement with
the Purchaser and the other party thereto named in paragraph (h) of Article IV
of this Agreement, in the form attached as Exhibit B (the "Stock Restriction
Agreement"), and to issue, sell and deliver the Shares. The Company has no
subsidiaries.
- 4 -
SECTION 2.02 Authorization of Agreements, Etc.
(a) The execution and delivery by the Company of this Agreement, the
Registration Rights Agreement and the Stock Restriction Agreement, the
performance by the Company of its obligations hereunder and thereunder, the
issuance, sale and delivery of the Shares have been duly authorized by all
requisite corporate action and will not violate any provision of law, any order
of any court or other agency of government, the Articles of Organization of the
Company, as amended (the "Charter") or the By-laws of the Company, as amended,
or any provision of any indenture, agreement or other instrument to which the
Company, any of its subsidiaries or any of their respective properties or assets
is bound, or conflict with, result in a breach of or constitute (with due notice
or lapse of time or both) a default under any such indenture, agreement or other
instrument, or result in the creation or imposition of any lien, charge,
restriction, claim or encumbrance of any nature whatsoever upon any of the
properties or assets of the Company or any of its subsidiaries. No provision of
the Stock Restriction Agreement violates, conflicts with, results in a breach of
or constitutes (with due notice or lapse of time or both) a default under any
indenture, agreement or other instrument to which the Company or any of its
subsidiaries is bound or, to the best of the Company's knowledge, any other
indenture, agreement or instrument (regardless, in each such case, of whether
any such violation, conflict, breach or default relates to the Company or any of
its subsidiaries or to another party to any such indenture, agreement or other
instrument).
(b) The Shares have been duly authorized and, when issued in
accordance with this Agreement, will be validly issued, fully paid and
nonassessable shares of Common Stock and will be free and clear of all liens,
charges, restrictions, claims and encumbrances imposed by or through the Company
except as set forth in the Registration Rights Agreement. The issuance, sale or
delivery of the Shares is not subject to any preemptive right of stockholders of
the Company or to any right of first refusal or other right in favor of any
person.
SECTION 2.03 Validity. This Agreement has been duly executed and delivered
by the Company and constitutes the legal, valid and binding obligation of the
Company, enforceable in accordance with its terms. The Registration Rights
Agreement and the Stock Restriction Agreement, when executed and delivered in
accordance with this Agreement, will constitute the legal, valid and binding
obligations of the Company, enforceable in accordance with their respective
terms.
SECTION 2.04 Authorized Capital Stock. The authorized capital stock of the
Company consists of 1,000,000 shares of Common Stock. Immediately prior to the
Closing, 163,787 shares of Common Stock will be validly issued and outstanding,
fully paid
- 5 -
and nonassessable. The stockholders of record and holders of subscriptions,
warrants, options, convertible securities, and other rights (contingent or
other) to purchase or otherwise acquire equity securities of the Company, and
the number of shares of Common Stock and the number of such subscriptions,
warrants, options, convertible securities, and other such rights held by each,
are as set forth in the attached Schedule II. The designations, powers,
preferences, rights, qualifications, limitations and restrictions in respect of
each class and series of authorized capital stock of the Company are as set
forth in the Charter, a copy of which is attached as Exhibit C, and all such
designations, powers, preferences, rights, qualifications, limitations and
restrictions are valid, binding and enforceable and in accordance with all
applicable laws. Except as set forth in the attached Schedule II, (i) no person
owns of record or is known to the Company to own beneficially any share of
Common Stock, (ii) no subscription, warrant, option, convertible security, or
other right (contingent or other) to purchase or otherwise acquire equity
securities of the Company is authorized or outstanding and (iii) there is no
commitment by the Company to issue shares, subscriptions, warrants, options,
convertible securities, or other such rights or to distribute to holders of any
of its equity securities any evidence of indebtedness or asset. Except as
provided for in the Charter or as set forth in the attached Schedule II, the
Company has no obligation (contingent or other) to purchase, redeem or otherwise
acquire any of its equity securities or any interest therein or to pay any
dividend or make any other distribution in respect thereof. Except for the Stock
Restriction Agreement, to the best of the Company's knowledge there are no
voting trusts or agreements, stockholders' agreements, pledge agreements,
buy-sell agreements, rights of first refusal, preemptive rights or proxies
relating to any securities of the Company or any of its subsidiaries (whether or
not the Company or any of its subsidiaries is a party thereto).
SECTION 2.05 Financial Statements. The Company has furnished to the
Purchaser the audited consolidated balance sheet of the Company and its
subsidiaries as of December 31, 1988 and the related consolidated statements of
income, stockholders' equity and cash flows of the Company and its subsidiaries
for the year ended December 31, 1988, the unaudited consolidated balance sheet
of the Company and its subsidiaries as of December 31, 1989, and the related
consolidated statements of income, stockholders' equity and cash flows of the
Company and its subsidiaries for the year ended December 31, 1989, and the
unaudited consolidated balance sheet of the Company and its subsidiaries as of
April 30, 1990 (the "Balance Sheet") and the related consolidated statement of
income, for the four month period ended April 30, 1990. All such financial
statements have been prepared in accordance with generally accepted accounting
principles consistently applied and fairly present the consolidated financial
position of the Company and its subsidiaries as of December 31, 1988 and
December 31,
- 6 -
1989, respectively, and the consolidated results of their operations and cash
flows for the years ended December 31, 1988 and December 31, 1989, respectively.
Since the date of the Balance Sheet, (i) there has been no change in the assets,
liabilities or financial condition of the Company and its subsidiaries (on a
consolidated basis) from that reflected in the Balance Sheet except for changes
in the ordinary course of business which in the aggregate have not been
materially adverse and (ii) none of the business, prospects, financial
condition, operations, property or affairs of the Company and its subsidiaries
(on a consolidated basis) has been materially adversely affected by any
occurrence or development, individually or in the aggregate, whether or not
insured against.
SECTION 2.06 Events Subsequent to the Date of the Balance Sheet. Since the
date of the Balance Sheet, the Company has not (i) issued any stock, bond or
other corporate security, (ii) borrowed any amount or incurred or become subject
to any liability (absolute, accrued or contingent), except current liabilities
incurred and liabilities under contracts entered into in the ordinary course of
business, (iii) discharged or satisfied any lien or encumbrance or incurred or
paid any obligation or liability (absolute, accrued or contingent) other than
current liabilities shown on the Balance Sheet and current liabilities incurred
since the date of the Balance Sheet in the ordinary course of business, (iv)
declared or made any payment or distribution to stockholders or purchased or
redeemed any share of its capital stock or other security, (v) mortgaged,
pledged or subjected to lien any of its assets, tangible or intangible, other
than liens of current real property taxes not yet due and payable, (vi) sold,
assigned or transferred any of its tangible assets except in the ordinary course
of business, or cancelled any debt or claim, (vii) sold, assigned, transferred
or granted any exclusive license with respect to any patent, trademark, trade
name, service mark, copyright, trade secret or other intangible asset, (viii)
suffered any loss of property or waived any right of substantial value whether
or not in the ordinary course of business, (ix) made any change in officer
compensation except in the ordinary course of business and consistent with past
practice, (x) made any material change in the manner of business or operations
of the Company, (xi) entered into any transaction except in the ordinary course
of business or as otherwise contemplated hereby or (xii) entered into any
commitment (contingent or otherwise) to do any of the foregoing.
SECTION 2.07 Litigation; Compliance with Law. Except with respect to
Intellectual Property (as such term is defined in Section 2.14 of this
Agreement), which matters are separately discussed in Section 2.14 of this
Agreement, there is no (i) action, suit, claim, proceeding or investigation
pending or, to the best of the Company's knowledge, threatened against or
affecting the Company, at law or in equity, or before or by any Federal, state,
municipal or other governmental department, com-
- 7 -
mission, board, bureau, agency or instrumentality, domestic or foreign, (ii)
arbitration proceeding relating to the Company pending under collective
bargaining agreements or otherwise or (iii) governmental inquiry pending or, to
the best of the Company's knowledge, threatened against or affecting the Company
(including without limitation any inquiry as to the qualification of the Company
to hold or receive any license or permit), and there is no basis for any of the
foregoing. The Company is not in default with respect to any order, writ,
injunction or decree known to or served upon the Company of any court or of any
Federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign. There is no action or
suit by the Company pending or threatened against others. To the best of the
Company's knowledge the Company has complied with all laws, rules, regulations
and orders applicable to its business, operations, properties, assets, products
and services, and the Company has all necessary permits, licenses and other
authorizations required to conduct its business as conducted and as proposed to
be conducted except where the failure to comply or obtain such permit, license
or other authorization would not have a material adverse effect on the business,
operations or financial condition of the Company. There is no existing law,
rule, regulation or order, and the Company is not aware of any proposed law,
rule, regulation or order, whether Federal or state, which would prohibit or
restrict the Company from, or otherwise materially adversely affect the Company
in, conducting its business in any jurisdiction in which it is now conducting
business or in which it proposes to conduct business.
SECTION 2.08 Proprietary Information of Third Parties. To the best of the
Company's knowledge, no third party has claimed or has reason to claim that any
person employed by or affiliated with the Company has (a) violated or may be
violating any of the terms or conditions of his employment, non-competition or
non-disclosure agreement with such third party, (b) disclosed or may be
disclosing or utilized or may be utilizing any trade secret or proprietary
information or documentation of such third party or (c) interfered or may be
interfering in the employment relationship between such third party and any of
its present or former employees. No third party has requested information from
the Company which suggests that such a claim might be contemplated. To the best
of the Company's knowledge, no person employed by or affiliated with the Company
has employed or proposes to employ any trade secret or any information or
documentation proprietary to any former employer, and to the best of the
Company's knowledge, no person employed by or affiliated with the Company has
violated any confidential relationship which such person may have had with any
third party, in connection with the development, manufacture or sale of any
product or proposed product or the development or sale of any service or
proposed service of the Company, and the Company has no reason to believe there
will be any such employment or violation. To the best of the Company's
- 8 -
knowledge, none of the execution or delivery of this Agreement, or the carrying
on of the business of the Company as officers, employees or agents by any
officer, director or key employee of the Company, or the conduct or proposed
conduct of the business of the Company, will conflict with or result in a breach
of the terms, conditions or provisions of or constitute a default under any
contract, covenant or instrument under which any such person is obligated.
SECTION 2.09 Title to Properties. The Company and its subsidiaries have
good and marketable title to their respective properties and assets reflected on
the Balance Sheet or acquired by them since the date of the Balance Sheet (other
than properties and assets disposed of in the ordinary course of business since
the date of the Balance Sheet), and all such properties and assets are free and
clear of mortgages, pledges, security interests, liens, charges, claims,
restrictions and other encumbrances, except for liens for or current taxes not
yet due and payable and minor imperfections of title, if any, not material in
nature or amount and not materially detracting from the value or impairing the
use of the property subject thereto or impairing the operations or proposed
operations of the Company and its subsidiaries.
SECTION 2.10 Leasehold Interests. Each lease or agreement to which the
Company is a party under which it is a lessee of any property, real or personal,
is a valid and subsisting agreement without any default of the Company
thereunder and, to the best of the Company's knowledge, without any default
thereunder of any other party thereto. No event has occurred and is continuing
which, with due notice or lapse of time or both, would constitute a default or
event of default by the Company under any such lease or agreement or, to the
best of the Company's knowledge, by any other party thereto. The Company's
possession of such property has not been disturbed and, to the best of the
Company's knowledge, no claim has been asserted against the Company adverse to
its rights in such leasehold interests.
SECTION 2.11 Insurance. The Company holds valid policies covering all of
the insurance required to be maintained by it under Section 5.04.
SECTION 2.12 Taxes. The Company has filed all tax returns, Federal, state,
county and local, required to be filed by it, and the Company has paid all taxes
shown to be due by such returns as well as all other taxes, assessments and
governmental charges which have become due or payable, including without
limitation all taxes which the Company is obligated to withhold from amounts
owing to employees, creditors and third parties. All such taxes with respect to
which the Company has become obligated pursuant to elections made by the Company
in accordance with generally accepted practice have been paid. The Federal
income tax returns of the Company have never been audited by the Internal
Revenue
- 9 -
Service. No deficiency assessment with respect to or proposed adjustment of the
Company's Federal, state, county or local taxes is pending or, to the best of
the Company's knowledge, threatened. There is no tax lien, whether imposed by
any Federal, state, county or local taxing authority, outstanding against the
assets, properties or business of the Company. Neither the Company nor any of
its stockholders has ever filed (a) an election pursuant to Section 1362 of the
Internal Revenue Code of 1986, as amended (the "Code"), that the Company be
taxed as an S corporation or (b) consent pursuant to Section 341(f) of the Code,
relating to collapsible corporations.
SECTION 2.13 Other Agreements. Except as set forth in the attached Schedule
III(A), the Company is not a party to or otherwise bound by any written or oral
contract or instrument or other restriction involving payment by or to the
Company of an amount greater than $25,000 which individually or in the aggregate
could materially adversely affect the business, prospects, financial condition,
operations, property or affairs of the Company. Except as set forth in the
attached Schedule III(B), the Company is not a party to or otherwise bound by
any written or oral:
(a) distributor, dealer, manufacturer's representative or sales agency
contract or agreement which is not terminable on less than ninety (90)
days' notice without cost or other liability to the Company (except for
contracts which, in the aggregate, do not involve payment by or to the
Company of amounts greater than $25,000);
(b) sales contract which entitles any customer to a rebate or right of
set-off, to return any product to the Company after acceptance thereof
or to delay the acceptance thereof, involving payment by or to the
Company of an amount greater than $25,000;
(c) contract with any labor union (and, to the knowledge of the
Company, no organizational effort is being made with respect to any of
its employees);
(d) contract or other commitment with any supplier containing any
provision permitting any party other than the Company to renegotiate the
price or other terms, or containing any pay-back or other similar
provision, upon the occurrence of a failure by the Company to meet its
obligations under the contract when due or the occurrence of any other
event, involving payment by or to the Company of an amount greater than
$25,000;
(e) contract for the future purchase of fixed assets or for the future
purchase of materials, supplies or equipment in excess of its normal
operating requirements which involves the actual or potential payment by
the Company of an amount greater than $25,000;
- 10 -
(f) contract for the employment of any officer, employee or other
person (whether by oral or written agreement) on a full-time or
consulting basis which is not terminable on notice without cost or other
liability to the Company, except normal severance arrangements and
accrued vacation pay;
(g) bonus, pension, profit-sharing, retirement, hospitalization,
insurance, stock purchase, stock option or other plan, contract or
understanding pursuant to which benefits are provided to any employee of
the Company (other than group insurance plans applicable to employees
generally);
(h) agreement or indenture relating to the borrowing of money or to
the mortgaging or pledging of, or otherwise placing a lien or security
interest on, any asset of the Company;
(i) guaranty of any obligation for borrowed money or otherwise;
(j) voting trust or agreement, stockholders' agreement, pledge
agreement, buy-sell agreement or first refusal or preemptive rights
agreement relating to any securities of the Company;
(k) agreement, or group of related agreements with the same party or
any group of affiliated parties, under which the Company has advanced or
agreed to advance money or has agreed to lease any property as lessee or
lessor;
(l) agreement or obligation (contingent or otherwise) to issue, sell
or otherwise distribute or to repurchase or otherwise acquire or retire
any share of its capital stock or any of its other equity securities;
(m) assignment, license or other agreement with respect to any form
of intangible property;
(n) agreement under which it has granted any person any registration
rights, other than the Registration Rights Agreement;
(o) agreement under which it has limited or restricted its right to
compete with any person in any respect;
(p) other contract or group of related contracts with the same party
involving more than $25,000 or continuing over a period of more than six
months from the date or dates thereof (including renewals or extensions
optional with another party), which contract or group of contracts is
not terminable by the Company without penalty upon notice of thirty (30)
days or less, but excluding any contract or group of contracts with a
customer of the Company for the sale,
- 11 -
lease or rental of the Company's products or services if such contract
or group of contracts was entered into by the Company in the ordinary
course of business; or
(q) other contract, instrument, commitment, plan or arrangement, a
copy of which would be required to be filed with the Securities and
Exchange Commission (the "Commission") as an exhibit to a registration
statement on Form S-1 if the Company were registering securities under
the Securities Act of 1933, as amended (the "Securities Act").
The Company, and to the best of the Company's knowledge, each other party
thereto have in all material respects performed all the obligations required to
be performed by them to date, have received no notice of default and are not in
default (with due notice or lapse of time or both) under any material provision
of any lease, agreement or contract now in effect to which the Company is a
party or by which it or its property may be bound. The Company has no present
expectation or intention of not fully performing all its obligations under each
such lease, contract or other agreement, and the Company has no knowledge of any
breach or anticipated breach by the other party to any contract or commitment to
which the Company is a party. The Company is in full compliance with all of the
terms and provisions of its Charter and By-laws, as amended.
SECTION 2.14 Patents, Trademarks, Etc. The Company has no patents, patent
rights or patent applications. Set forth in Schedule I is a list and brief
description of all trademarks, trademark applications, service marks, service
mark applications, trade names and copyrights, and all applications for such
which are in the process of being prepared, owned by or registered in the name
of the Company, or of which the Company is a licensor or licensee or in which
the Company has any right, and in each case a brief description of the nature of
such right. No claim is pending or, to the best of the Company's knowledge,
threatened to the effect that the operations of the Company infringe upon or
conflict with the asserted rights of any other person under any patents, patent
applications, trademarks, trademark applications, service marks, service mark
applications, trade names, copyrights, manufacturing processes, formulae, trade
secrets and know how (collectively, "Intellectual Property"), and the Company
has not been notified as to any basis for any such claim (whether or not pending
or threatened). No claim is pending or threatened to the effect that any such
Intellectual Property owned or licensed by the Company, or which the Company
otherwise has the right to use, is invalid or unenforceable by the Company, and
the Company has not been notified as to any basis for any such claim (whether or
not pending or threatened). To the best of the Company's knowledge, all
technical information developed by and belonging to the Company which has not
been patented has been kept confidential. The Company has not granted or
assigned to any other person or entity any right to manufacture, have
- 12 -
manufactured, assemble or sell the products or proposed products or to provide
the services or proposed services of the Company.
SECTION 2.15 Loans and Advances. The Company does not have any outstanding
loans or advances to any person and is not obligated to make any such loans or
advances, except, in each case, for advances to employees of the Company in
respect of reimbursable business expenses anticipated to be incurred by them in
connection with their performance of services for the Company.
SECTION 2.16 Assumptions, Guaranties, Etc. of Indebtedness of Other
Persons. The Company has not assumed, guaranteed, endorsed or otherwise become
directly or contingently liable on any indebtedness of any other person
(including, without limitation, liability by way of agreement, contingent or
otherwise, to purchase, to provide funds for payment, to supply funds to or
otherwise invest in the debtor, or otherwise to assure the creditor against
loss), except for guaranties by endorsement of negotiable instruments for
deposit or collection in the ordinary course of business.
SECTION 2.17 Significant Customers and Suppliers. No customer or supplier
which was significant to the Company during the period covered by the financial
statements referred to in Section 2.05 or which has been significant to the
Company thereafter, has terminated, materially reduced or threatened to
terminate or materially reduce its purchases from or provision of products or
services to the Company, as the case may be. For purposes of this Section 2.17,
a customer is significant to the Company if it accounts for or is expected to
account for five percent (5%) or more of the Company's annual revenues and a
supplier is significant to the Company if it accounts for or is expected to
account for supply purchases by the Company in excess of $25,000 per year.
SECTION 2.18 Governmental Approvals. Subject to the accuracy of the
representations and warranties of the Purchaser set forth in Article III, no
registration or filing with, or consent or approval of or other action by, any
Federal, state or other governmental agency or instrumentality is or will be
necessary for the valid execution, delivery and performance by the Company of
this Agreement, the Registration Rights Agreement or the Stock Restriction
Agreement, the issuance, sale and delivery of the Shares, other than (i) filings
pursuant to state securities laws (all of which filings have been made by the
Company) in connection with the sale of the Shares and (ii) with respect to the
Registration Rights Agreement, the registration of the shares covered thereby
with the Commission and filings pursuant to state securities laws.
SECTION 2.19 Disclosure. Neither this Agreement, nor any Schedule or
Exhibit to this Agreement, nor the Business Plan of the Company dated March 31,
1989 (the "Business Plan"), contains
- 13 -
an untrue statement of a material fact or omits a material fact necessary to
make the statements contained herein or therein not misleading except that the
Company makes no representations or warranties as to third party marketing data
contained in the Business Plan. None of the statements, documents, certificates
or other items prepared or supplied by the Company with respect to the
transactions contemplated hereby contains an untrue statement of a material fact
or omits a material fact necessary to make the statements contained therein not
misleading. There is no fact which the Company has not disclosed to the
Purchaser and its counsel and of which the Company is aware which materially and
adversely affects or could materially and adversely affect the business,
prospects, financial condition, operations, property or affairs of the Company
or any of its subsidiaries. The financial projections and other estimates
contained in the Business Plan were prepared by the Company based on the
Company's experience in the industry and on assumptions of fact and opinion as
to future events which the Company, at the date of the issuance of the Business
Plan, believed to be reasonable, but which the Company cannot and does not
assure or guarantee the attainment of in any manner. As of the date hereof no
facts have come to the attention of the Company which would, in its opinion,
require the Company to revise or amplify the assumptions underlying such
projections and other estimates or the conclusions derived therefrom.
SECTION 2.20 Offering of the Shares. Neither the Company nor any person
authorized or employed by the Company as agent, broker, dealer or otherwise in
connection with the offering or sale of the Shares or any security of the
Company similar to the Shares has offered the Shares or any such similar
security for sale to, or solicited any offer to buy the Shares or any such
similar security from, or otherwise approached or negotiated with respect
thereto with, any person or persons, and neither the Company nor any person
acting on its behalf has taken or will take any other action (including, without
limitation, any offer, issuance or sale of any security of the Company under
circumstances which might require the integration of such security with the
Shares under the Securities Act or the rules and regulations of the Commission
thereunder), in either case so as to subject the offering, issuance or sale of
the Shares to the registration provisions of the Securities Act.
SECTION 2.21 Brokers. The Company has no contract, arrangement or
understanding with any broker, finder or similar agent with respect to the
transactions contemplated by this Agreement.
SECTION 2.22 Officers. Set forth in Schedule I is a list of the names of
the officers of the Company, together with the title or job classification of
each such person and the total compensation anticipated to be paid to each such
person by the Company and its subsidiaries in 1990. None of such persons has an
employment agreement, whether oral or written, with the
- 14 -
Company or any of its subsidiaries, which is not terminable on notice by the
Company or such subsidiary without cost or other liability to the Company or
such subsidiary other than voluntary payment of reasonable severance.
SECTION 2.23 Transactions With Affiliates. No director, officer, employee
or stockholder of the Company, or member of the family of any such person, or
any corporation, partnership, trust or other entity in which any such person, or
any member of the family of any such person, has a substantial interest or is an
officer, director, trustee, partner or holder of more than 5% of the outstanding
capital stock thereof, is a party to any transaction with the Company, including
any contract, agreement or other arrangement providing for the employment of,
furnishing of services by, rental of real or personal property from or
otherwise requiring payments to any such person or firm.
SECTION 2.24 Employees. Each of the officers of the Company, each key
employee and each other employee now employed by the Company who has access to
confidential information of the Company has executed a Employee Nondisclosure
Developments Agreements substantially in the form of Exhibit D (collectively,
the "Employee Nondisclosure and Developments Agreements"), and such agreement is
in full force and effect. No officer or key employee of the Company has advised
the Company (orally or in writing) that he intends to terminate employment with
the Company. To the best of the Company's knowledge it has complied in all
material respects with all applicable laws relating to the employment of labor,
including provisions relating to wages, hours, equal opportunity, collective
bargaining and the payment of Social Security and other taxes, and with the
Employee Retirement Income Security Act of 1974, as amended.
SECTION 2.25 U.S. Real Property Holding Corporation. The Company is not now
and has never been a "United States real property holding corporation", as
defined in Section 897(c)(2) of the Code and Section 1.897-2(b) of the
Regulations promulgated by the Internal Revenue Service.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Company that:
(a) it is an "accredited investor" within the meaning of Rule 501
under the Securities Act and was not organized for the specific purpose
of acquiring the Shares;
(b) it has sufficient knowledge and experience in investing in
companies similar to the Company in terms of the Company's stage of
development so as to be able to evaluate
- 15 -
the risks and merits of its investment in the Company and it is able
financially to bear the risks thereof;
(c) it has had an opportunity to discuss the Company's business,
management and financial affairs with the Company's management, the
officers of the Company have made available any and all written
information which the Purchaser has requested and have answered to the
Purchaser's satisfaction all inquiries made by the Purchaser;
(d) the Shares being purchased by it are being acquired for its own
account for the purpose of investment and not with a view to or for sale
in connection with any distribution thereof;
(e) it understands that (i) the Shares have not been registered
under the Securities Act by reason of their issuance in a transaction
exempt from the registration requirements of the Securities Act pursuant
to Section 4(2) thereof or Rule 505 or 506 promulgated under the
Securities Act, based in part on the bona fide nature of its investment
intent as expressed herein, (ii) the Shares must be held indefinitely
unless a subsequent disposition thereof is registered under the
Securities Act or is exempt from such registration, (iii) the Shares will
bear a legend to such effect and (iv) the Company will make a notation on
its transfer books to such effect;
(f) it has the power and authority to enter into this Agreement and
to perform all of its obligations hereunder; and
(g) it has no contract, arrangement or understanding with any
broker, finder or similar agent with respect to the transactions
contemplated by this Agreement.
ARTICLE IV
CONDITIONS TO THE OBLIGATIONS
OF THE PURCHASER
The obligation of the Purchaser to purchase and pay for the Shares being
purchased by it on the Closing Date is, at its option, subject to the
satisfaction, on or before the Closing Date, of the following conditions:
(a) Opinion of Company's Counsel. The Purchaser shall have received
from Brown, Rudnick, Freed & Gesmer, counsel for the Company, an opinion
dated the Closing Date, substantially in the form attached hereto as
Exhibit E.
(b) Representations and Warranties to be True and Correct. The
representations and warranties contained in Arti-
- 16 -
cle II shall be true, complete and correct on and as of the Closing Date
with the same effect as though such representations and warranties had
been made on and as of such date, and the President and Treasurer of the
Company shall have certified to such effect to the Purchaser in writing.
(c) Performance. The Company shall have performed and complied with
all agreements contained herein required to be performed or complied with
by it prior to or at the Closing Date, and the President and Treasurer of
the Company shall have certified to the Purchaser in writing to such
effect and to the further effect that all of the conditions set forth in
this Article IV have been satisfied.
(d) All Proceedings to be Satisfactory. All corporate and other
proceedings to be taken by the Company in connection with the
transactions contemplated hereby and all documents incident thereto shall
be satisfactory in form and substance to the Purchaser and its counsel,
and the Purchaser and its counsel shall have received all such
counterpart originals or certified or other copies of such documents as
they reasonably may request.
(e) Supporting Documents. The Purchaser and its counsel shall have
received copies of the following documents:
(i) (A) the Charter, certified as of a recent date by the Secretary of
State of the Commonwealth of Massachusetts, (B) a certificate of said
Secretary dated as of a recent date as to the due incorporation and
good standing of the Company, the payment of all excise taxes by the
Company and listing all documents of the Company on file with said
Clerk and (C) a certificate of the Secretary of State of the
jurisdiction of incorporation of each of the Company's subsidiaries
dated as of a recent date as to the due incorporation and good
standing of such subsidiary;
(ii) a certificate of the Clerk or an Assistant Clerk of the Company
dated the Closing Date and certifying: (A) that attached thereto is a
true and complete copy of the By-laws of the Company as in effect on
the date of such certification; (B) that attached thereto is a true
and complete copy of all resolutions adopted by the Board of Directors
or the stockholders of the Company authorizing the execution, delivery
and performance of this Agreement, the Registration Rights Agreement
and the Stock Restriction Agreement and issuance, sale and delivery of
the Shares, and that all such resolutions are in full force and effect
and are all the resolutions adopted in connection with the
transactions contemplated by this Agreement, the
- 17 -
Registration Rights Agreement and the Stock Restriction Agreement; (C)
that the Charter has not been amended since the date of the last
amendment referred to in the certificate delivered pursuant to clause
(i)(B) above; and (D) to the incumbency and specimen signature of each
officer of the Company executing this Agreement, the Registration
Rights Agreement or the Stock Restriction Agreement, the stock
certificates representing the Shares and any certificate or instrument
furnished pursuant hereto, and a certification by another officer of
the Company as to the incumbency and signature of the officer signing
the certificate referred to in this clause (ii); and
(iii) such additional supporting documents and other information with
respect to the operations and affairs of the Company as the Purchaser
or its counsel reasonably may request.
(f) Registration Rights Agreement. The Company shall have executed
and delivered the Registration Rights Agreement.
(g) Board of Directors. The By-laws of the Company shall provide, in
addition to any provisions required by law, that any two directors may
call a meeting of the Board.
(h) Stock Restriction Agreement. The Stock Restriction Agreement
shall have been executed and delivered by the Company and Richard T.
Schumacher.
(i) Non-Competition Agreements. Each officer of the Company shall
have entered into a Non-Competition Agreement with the Company in the
form attached as Exhibit F (collectively, the "Non-Competition
Agreements"), and copies thereof shall have been delivered to counsel for
the Purchaser.
(j) Charter. The Charter shall read in its entirety as set forth in
Exhibit C.
(k) Employee Agreements. Copies of the Employee Non-disclosure and
Development Agreements shall have been delivered to counsel for the
Purchaser.
(1) Preemptive Rights. All stockholders of the Company having any
preemptive, first refusal or other rights with respect to the issuance of
the Shares shall have irrevocably waived the same in writing.
(m) Percentage Ownership. The Company shall have sufficient Stock
outstanding so that the purchase of shares by the Purchaser shall not
result in aggregate ownership by
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the Purchaser of twenty percent (20%) or more of the equity securities of
the Company.
(n) Fees of Purchaser's Counsel. The Company shall have paid in
accordance with Section 6.01 the fees and disbursements of Purchaser's
counsel invoiced at the Closing.
All such documents shall be satisfactory in form and substance to the Purchaser
and its counsel.
ARTICLE V
COVENANTS OF THE COMPANY
The Company covenants and agrees with the Purchaser that until the date
which is the earlier of (i) five (5) years after the Closing Date under this
Agreement; (ii) the effective date of the registration under the Securities Act
of an underwritten public offering of securities of the Company of $2,000,000 or
more; or (iii) such time as the number of Shares owned by the Purchaser shall
drop below five percent (5%) of the outstanding shares of Common Stock of the
Company:
SECTION 5.01 Financial Statements, Reports, Etc. The Company shall furnish
to the Purchaser:
(a) within ninety (90) days after the end of each fiscal year of the
Company a consolidated balance sheet of the Company and its subsidiaries
as of the end of such fiscal year and the related consolidated statements
of income, stockholders' equity and cash flows for the fiscal year then
ended, prepared in accordance with generally accepted accounting
principles and certified by a firm of independent public accountants
selected by the Board of Directors of the Company and approved by the
nominee of the Purchaser;
(b) within forty-five (45) days after the end of each fiscal quarter
in each fiscal year (other than the last fiscal quarter in each fiscal
year), a consolidated balance sheet of the Company and its subsidiaries
and the related consolidated statements of income and stockholders'
equity, unaudited but prepared in accordance with generally accepted
accounting principles and certified by the Chief Financial Officer of the
Company, such consolidated balance sheet to be as of the end of such
fiscal quarter and such consolidated statements of income, stockholders'
equity and cash flows to be for such fiscal quarter and for the period
from the beginning of the fiscal year to the end of such fiscal quarter,
in each case with comparative statements for the corresponding period in
the prior fiscal year;
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(c) at the time of delivery of each annual financial statement
pursuant to Section 5.01(a), a certificate executed by the Chief Financial
Officer of the Company stating that such officer has caused this Agreement
to be reviewed and has no knowledge of any default by the Company in the
performance or observance of any of the provisions of this Agreement or,
if such officer has such knowledge, specifying such default and the nature
thereof;
(d) within thirty (30) days prior to the start of each fiscal year,
consolidated capital and operating expense budgets, cash flow projections
and income and loss projections for the Company and its subsidiaries in
respect of such fiscal year, all itemized in reasonable detail and
prepared on a monthly basis, and, promptly after preparation, any
revisions to any of the foregoing;
(e) promptly following receipt by the Company, each audit response
letter, accountant's management letter and other written report submitted
to the Company by its independent public accountants in connection with an
annual or interim audit of the books of the Company or any of its
subsidiaries;
(f) promptly after the commencement thereof, notice of all actions,
suits, claims, proceedings, investigations and inquiries of the type
described in Section 2.07 that could materially adversely affect the
Company or any of its subsidiaries;
(g) promptly upon sending, making available or filing the same, all
press releases, reports and financial statements that the Company sends or
makes available to its stockholders or directors or files with the
Commission; and
(h) promptly, from time to time, such other information regarding the
business, prospects, financial condition, operations, property or affairs
of the Company and its subsidiaries as such Purchaser reasonably may
request.
Notwithstanding the foregoing, if the Company, using its best efforts is
unable to deliver the materials specified in paragraphs (a) and (d) of this
Section 5.01 within the specified time period, the Purchaser shall accept such
materials if delivered in the case of Section 5.01(a) within one hundred twenty
(120) days after the end of the fiscal year and in the case of Section 5.01(d)
within thirty (30) days after the end of the fiscal year.
SECTION 5.02 Right of First Refusal. The Company shall, prior to any
issuance by the Company of any of its securities (other than debt securities
with no equity feature), offer to the Purchaser by written notice the right, for
a period of thirty
- 20 -
(30) days, to purchase all of such securities for cash at an amount equal to the
price or other consideration for which such securities are to be issued;
provided, however, that the first refusal rights of the Purchaser pursuant to
this Section 5.02 shall not apply to securities issued (A) as a stock dividend
or upon any subdivision of shares of Common Stock, provided that the securities
issued pursuant to such stock dividend or subdivision are limited to additional
shares of Common Stock, (B) pursuant to subscriptions, warrants, options,
convertible securities, or other rights which are listed in Schedule II as being
outstanding on the Closing Date, (C) solely in consideration for the acquisition
(whether by merger or otherwise) by the Company or any of its subsidiaries of
all or substantially all of the stock or assets of any other entity, (D)
pursuant to a firm commitment underwritten public offering, (E) pursuant to the
exercise of options to purchase Common Stock granted to employees of the
Company, not to exceed in the aggregate that number of shares that is 20% of the
Common Stock outstanding at any time (appropriately adjusted to reflect stock
splits, stock dividends, combinations of shares and the like with respect to the
Common Stock) less the number of shares (as so adjusted) issued pursuant to
options granted to current or former employees, consultants or directors of the
Company, outstanding on the date of this Agreement and listed in Schedule II
pursuant to clause (B) above (the shares exempted by this clause (E) being
hereinafter referred to as the "Reserved Employee Shares"), (F) within a period
of six months following the Closing Date for the purpose of raising equity
capital for the Company but not to exceed 30,000 shares of Common Stock and
options to purchase 50,001 shares of Common Stock or an aggregate of 80,001
Common Stock equivalents, (G) upon the exercise of any right which was not
itself in violation of the terms of this Section 5.02, and (H) at any time after
the date which is five (5) years from the date of the Closing. The Company's
written notice to the Purchaser shall describe the securities proposed to be
issued by the Company and specify the number, price and payment terms. The
Purchaser may accept the Company's offer as to all, but not less than all, of
the securities offered to it by written notice thereof given by it to the
Company prior to the expiration of the aforesaid thirty (30) day period, in
which event the Company shall promptly sell and the Purchaser shall buy, upon
the terms specified, the number of securities agreed to be purchased by the
Purchaser. The Company shall be free at any time prior to one hundred twenty
(120) days after the date of its notice of offer to the Purchaser, to offer and
sell to any third party or parties the number of such securities not agreed by
the Purchaser to be purchased by it, at a price and on payment terms no less
favorable to the Company than those specified in such notice of offer to the
Purchaser. However, if such third party sale or sales are not consummated within
such one hundred twenty (120) day period, the Company shall not sell such
securities as shall not have been purchased within such period without again
complying with this Section 5.02.
- 21 -
SECTION 5.03 Corporate Existence. The Company shall maintain and cause each
of its subsidiaries to maintain their respective corporate existence, rights and
franchises in full force and effect.
SECTION 5.04 Properties, Business, Insurance. The Company shall maintain
and cause each of its subsidiaries to maintain as to their respective properties
and business, with financially sound and reputable insurers, insurance against
such casualties and contingencies and of such types and in such amounts as is
customary for companies similarly situated, which insurance shall be deemed by
the Company to be sufficient. The Company shall also maintain in effect a "key
person" life insurance policy, payable to the Company, on the life of Richard T.
Schumacher (so long as he remains an employee of the Company), in an amount not
less than $2,000,000. If the Company shall maintain life insurance policies
payable to the Company on the life of Mr. Schumacher in an amount in excess of
$2,000,000, then on the death of Mr. Schumacher, nothing in this Section 5.04
shall restrict the Company's use of insurance proceeds in excess of $2,000,000.
The Company shall not cause or permit any assignment or change in beneficiary
and shall not borrow against any such policy. The Company will add one designee
of the Purchaser as a notice party for any such policy and shall request that
the issuer of such policy provide such designee with ten (10) days' notice
before such policy is terminated (for failure to pay premiums or otherwise) or
assigned or before any change is made in the beneficiary thereof.
SECTION 5.05 Inspection, Consultation and Advice. The Company shall permit
and cause each of its subsidiaries to permit the Purchaser and such persons as
it may designate, at the Purchaser's expense, to visit and inspect any of the
properties of the Company and its subsidiaries, examine their books and take
copies and extracts therefrom, discuss the affairs, finances and accounts of the
Company and its subsidiaries with their officers, employees and public
accountants (and the Company hereby authorizes said accountants to discuss with
the Purchaser and such designees such affairs, finances and accounts), and
consult with and advise the management of the Company and its subsidiaries as to
their affairs, finances and accounts, all at reasonable times and upon
reasonable notice.
SECTION 5.06 Restrictive Agreements Prohibited. Neither the Company nor any
of its subsidiaries shall become a party to any agreement which by its terms
restricts the Company's performance of this Agreement, the Registration Rights
Agreement, the Stock Restriction Agreement or the Charter.
SECTION 5.07 Transactions with Affiliates. Except for transactions
contemplated by this Agreement or as otherwise approved by the Board of
Directors, neither the Company nor any of its subsidiaries shall enter into any
transaction with any
- 22 -
director, officer, employee or holder of more than 5% of the outstanding capital
stock of any class or series of capital stock of the Company or any of its
subsidiaries, member of the family of any such person, or any corporation,
partnership, trust or other entity in which any such person, or member of the
family of any such person, is a director, officer, trustee, partner or holder of
more than 5% of the outstanding capital stock thereof, except for transactions
on customary terms related to such person's employment.
SECTION 5.08 Use of Proceeds. The Company shall use the proceeds from the
sale of the Shares in accordance with Exhibit G.
SECTION 5.09 Board of Directors Meetings. The Company shall use its best
efforts to ensure that meetings of its Board of Directors are held at least four
times each year and at least once each quarter.
SECTION 5.10 Compensation. The Company shall not pay to its management
compensation in excess of that compensation customarily paid to management in
companies of similar size, of similar maturity, and in similar businesses.
SECTION 5.11 By-laws. The Company shall at all times cause its By-laws to
provide that, (i) the number of directors constituting the entire Board of
Directors is six (6), and (ii) unless otherwise required by the laws of the
Commonwealth of Massachusetts any two directors shall have the right to call a
meeting of the Board of Directors or stockholders. The Company shall use its
best efforts to ensure that at all times a nominee of the Purchaser shall have
been elected and shall hold office as one of the directors. The Company shall at
all times maintain provisions in its By-laws and/or Charter indemnifying all
directors against liability and absolving all directors from liability to the
Company and its stockholders to the maximum extent permitted under the laws of
the Commonwealth of Massachusetts.
SECTION 5.12 Performance of Contracts. The Company shall not amend, modify,
terminate, waive or otherwise alter, in whole or in part, any of the Employee
Nondisclosure and Developments Agreements or the Non-Competition Agreement
without the approval of the Company's Board of Directors.
SECTION 5.13 Vesting of Reserved Employee Shares. The Company shall not
grant to any of its employees options to purchase Reserved Employee Shares which
will become exercisable at a rate in excess of 20% per annum from the date of
such grant without the approval of the Company's Board of Directors. Nothing
contained in this Section 5.13 shall prohibit the immediate vesting of all
options to purchase Reserved Employee Shares in the event of the sale of all or
substantially all of the assets
- 23 -
of the Company, a merger or consolidation with and into another entity or
entities, or any similar transaction in which there is a change in control of
the Company.
SECTION 5.14 Employee Nondisclosure and Developments Agreements. The
Company shall use its best efforts to obtain and shall cause its subsidiaries to
use their best efforts to obtain an Employee Nondisclosure and Developments
Agreement in substantially the form of Exhibit D from all future officers, key
employees and other employees who will have access to confidential information
of the Company upon their employment by the Company or any of its subsidiaries.
SECTION 5.15 Mergers, Sale of Assets, Etc. of Subsidiaries. The Company
shall not permit any subsidiary to consolidate or merge into or with or sell or
transfer all or substantially all its assets, except that any subsidiary may (i)
consolidate or merge into or with or sell or transfer assets to any other
subsidiary, or (ii) merge into or sell or transfer assets to the Company,
without the approval of the Company's Board of Directors.
SECTION 5.16 Maintenance of Ownership of Subsidiaries. The Company shall
not sell or otherwise transfer any shares of capital stock of any subsidiary,
except to the Company or another subsidiary, or permit any subsidiary to issue,
sell or otherwise transfer any shares of its capital stock or the capital stock
of any subsidiary, except to the Company or another subsidiary, without the
approval of the Company's Board of Directors.
SECTION 5.17 Distributions by Subsidiaries. The Company shall not permit
any subsidiary to purchase or set aside any sums for the purchase of, or pay any
dividend or make any distribution on, any shares of its stock, except for
dividends or other distributions payable to the Company or another subsidiary,
without the approval of the Company's Board of Directors.
SECTION 5.18 Compliance with Laws. The Company shall use its best efforts
to comply, and cause each subsidiary to comply, with all applicable laws, rules,
regulations and orders, noncompliance with which could materially adversely
affect its business or condition, financial or otherwise.
SECTION 5.19 Keeping of Records and Books of Account. The Company shall
keep, and cause each subsidiary to keep, adequate records and books of account,
in which complete entries will be made in accordance with generally accepted
accounting principles consistently applied, reflecting all financial
transactions of the Company and such subsidiary, and in which, for each fiscal
year, all proper reserves for depreciation, depletion, obsolescence,
amortization, taxes, bad debts and other purposes in connection with its
business shall be made.
- 24 -
SECTION 5.20 Change in Nature of Business. The Company shall not make, or
permit any subsidiary to make, any material change in the nature of its business
as set forth in the Business Plan without the approval of the Company's Board of
Directors.
SECTION 5.21 U.S. Real Property Interest Statement. Upon a written request
by the Purchaser, the Company shall provide the Purchaser with a written
statement informing the Purchaser whether its interest in the Company
constitutes a U.S. real property interest. The Company's determination shall
comply with the requirements of Treasury Regulation section 1.897-2(h)(1) or any
successor regulation, and the Company shall provide timely notice to the
Internal Revenue Service, in accordance with and to the extent required by
Treasury Regulation section 1.897-2(h)(2) or any successor regulation, that such
statement has been made. The Company's written statement to the Purchaser shall
be delivered to the Purchaser within ten (10) days of the Purchaser's written
request therefor. The Company's obligation to furnish a written statement
pursuant to this Section 5.24 shall continue notwithstanding the fact that a
class of the Company's stock may be regularly traded on an established
securities market.
SECTION 5.22 Changes in Outstanding Equity Securities. The Company shall
not repurchase outstanding equity securities or otherwise adjust the number of
equity securities outstanding if such repurchase or adjustment would result in
the Purchaser's aggregate investments in the securities of the Company
accounting for 20% or more of the equity securities of the Company, unless the
Company shall offer to repurchase a sufficient number of shares of Common Stock
from the Purchaser as shall be necessary to reduce the aggregate investments in
the securities of the Company to less than 20% of the equity securities of the
Company at the same time and on the same terms and conditions as the Company
repurchases outstanding equity securities from other security holders.
SECTION 5.23 Delayed Commencement of Certain Covenants. Notwithstanding
anything to the contrary in this Article V or in this Agreement generally, the
covenants set forth in Section 5.01, 5.02, 5.04, 5.11, 5.15, 5.16, 5.17 and 5.21
shall not commence and the Company shall have no obligations whatsoever
thereunder unless and until either (i) within a period of two years from the
Closing Date, the Company receives not less than $100,000 from the Purchaser in
consideration of the issuance and sale to the Purchaser of additional shares of
Common Stock or Common Stock equivalents, whether pursuant to the exercise of
the option referred to in Section 1.02 or pursuant to purchases of additional
securities directly from the Company, or (ii) within a period of six months from
the Closing Date, the company has received not less than an aggregate of
$500,000 from the sale of securities referred to in Section 1.06 or from the
Purchaser pursuant to clause (i), above. The date on which the earlier of
- 25 -
the two events set forth in clause (i) and clause (ii), above, shall occur,
provided such occurrence takes place within the respective time periods also set
forth in said clauses, shall be referred to as the "Effective Date."
ARTICLE V(A)
------------
RIGHT OF FIRST REFUSAL FOR PURCHASER'S SHARES
---------------------------------------------
At anytime after the Closing Date, the Purchaser shall, prior to any sale or
transfer of any of the Company's securities held by it (other than sales or
transfers to Irwin J. Gruverman, G.D. Searle & Co., or any affiliate of G.D.
Searle & Co.), offer the Company by written notice the right, for a period of
thirty (30) days, to purchase all of such securities for cash at an amount equal
to the price or other consideration for which such securities are to be sold or
transferred. The Purchaser's written notice to the Company shall describe the
type and number of securities proposed to be sold or transferred by the
Purchaser and specify the number, price and payment terms. The Company may
accept the Purchaser's offer as to all, but not less than all, of the securities
offered to it by written notice thereof given by it to the Purchaser prior to
the expiration of the aforesaid thirty (30) day period, in which event the
Purchaser shall promptly sell and the Company shall buy, upon the terms
specified, the number of securities agreed to be purchased by the Company. The
Purchaser shall be free at any time prior to one hundred twenty (120) days after
the date of its notice of offer to the Company to sell and transfer to any third
party or parties the number of such securities not agreed by the Company to be
purchased by it, at a price and on payment terms no less favorable to the
Purchaser than those specified in such notice of offer to the Company. However,
if such third party sale or transfer is not consummated within such one hundred
twenty (120) day period, the Purchaser shall not sell or transfer such
securities as shall not have been purchased with such period without again
complying with this Article V(A).
ARTICLE VI
MISCELLANEOUS
SECTION 6.01 Expenses. Each party hereto will pay its own expenses in
connection with the transactions contemplated hereby, provided, however, that
the Company shall pay the fees and disbursements of the Purchaser's special
counsel, Testa, Hurwitz & Thibeault, in connection with such transactions and
the subsequent amendment or enforcement thereof up to $3,000.
SECTION 6.02 Survival of Agreements. All covenants, agreements,
representations and warranties made herein or in the Registration Rights
Agreement, the Stock Restriction Agreement,
- 26 -
or any certificate or instrument delivered to the Purchaser pursuant to or in
connection with this Agreement, the Registration Rights Agreement or the Stock
Restriction Agreement, shall sur- vive the execution and delivery of this
Agreement, the Registration Rights Agreement and the Stock Restriction
Agreement, the issuance, sale and delivery of the Shares, and all statements
contained in any certificate or other instrument delivered by the Company
hereunder or thereunder or in connection herewith or therewith shall be deemed
to constitute representations and warranties made by the Company.
SECTION 6.03 Brokerage. Each party hereto will indemnify and hold harmless
the others against and in respect of any claim for brokerage or other
commissions relative to this Agreement or to the transactions contemplated
hereby, based in any way on agreements, arrangements or understandings made or
claimed to have been made by such party with any third party.
SECTION 6.04 Parties in Interest. All representations, covenants and
agreements contained in this Agreement by or on behalf of any of the parties
hereto shall bind and inure to the benefit of the respective successors and
assigns of the parties hereto whether so expressed or not. Without limiting the
generality of the foregoing, all representations, covenants and agree- ments
benefiting the Purchaser shall inure to the benefit of any qualified subsequent
holder from time to time of the Shares. For purposes of this Section 6.04 the
term qualified subsequent holder shall include G.D. Searle & Co. or any
affiliate, the General Partner of the Purchaser or any individual or entity that
purchases 100% of the shares purchased by the Purchaser under this Agreement.
SECTION 6.05 Notices. All notices, requests, consents and other
communications hereunder shall be in writing and shall be delivered in person or
mailed by certified or registered mail, return receipt requested, or telexed in
the case of non-U.S. residents, addressed as follows:
(a) if to the Company, at Boston Biomedica, Inc., 375 West Street,
West Bridgewater, Massachusetts 02379, Attention: President, with a copy
to Steven R. London, Esq., Brown, Rudnick, Freed & Gesmer, One Financial
Center, Boston, MA 02111; and
(b) if to the Purchaser, at G&G Diagnostics Corp., 90 Oak Street,
Newton, Massachusetts 02164, Attention: Irwin J. Gruverman, with a copy
to Katherine M. Todd, Esq., Testa, Hurwitz & Thibeault, Exchange Place,
53 State Street, Boston, Massachusetts 02109;
or, in any such case, at such other address or addresses as shall have been
furnished in writing by such party to the others.
- 27 -
SECTION 6.06 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Massachusetts.
SECTION 6.07 Entire Agreement. This Agreement, including the Schedules and
Exhibits hereto, constitutes the sole and entire agreement of the parties with
respect to the subject matter hereof. All Schedules and Exhibits hereto are
hereby incorporated herein by reference.
SECTION 6.08 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
SECTION 6.09 Amendments. This Agreement may not be amended or modified, and
no provisions hereof may be waived, without the written consent of the Company
and the holders of at least two-thirds of the outstanding shares of Common Stock
issued as Shares under this Agreement.
SECTION 6.10 Severability. If any provision of this Agreement shall be
declared void or unenforceable by any judicial or administrative authority, the
validity of any other provision and of the entire Agreement shall not be
affected thereby.
SECTION 6.11 Titles and Subtitles. The titles and subtitles used in this
Agreement are for convenience only and are not to be considered in construing or
interpreting any term or provision of this Agreement.
SECTION 6.12 Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
(a) "person" shall mean an individual, corporation, trust,
partnership, joint venture, unincorporated organization, government
agency or any agency or political subdivision thereof, or other entity.
(b) "subsidiary" shall mean, as to the Company, any corporation of
which more than 50% of the outstanding stock having ordinary voting
power to elect a majority of the Board of Directors of such corporation
(irrespective of whether or not at the time stock of any other class or
classes of such corporation shall have or might have voting power by
reason of the happening of any contingency) is at the time directly or
indirectly owned by the Company, or by one or more of its subsidiaries,
or by the Company and one or more of its subsidiaries.
- 28 -
IN WITNESS WHEREOF, the Company and the Purchaser have executed this
Agreement as of the day and year first above written.
BOSTON BIOMEDICA, INC.
By:/s/Richard T. Shumacher
-----------------------
[Corporate Seal] Title: President
-------------------
ATTEST:
/s/Signature Unreadable
- -----------------------
Clerk
G&G DIAGNOSTICS LIMITED
PARTNERSHIP I
By: /s/Signature Unreadable
-----------------------
General Partner
AMENDMENT NO. 1 TO
COMMON STOCK PURCHASE AGREEMENT
WITH
BOSTON BIOMEDICA, INC.
Dated as of
December 5, 1990
AMENDMENT NO. 1 TO
COMMON STOCK PURCHASE AGREEMENT
This Amendment No. 1 (the "Amendment") to the Common Stock Purchase
Agreement, dated June 5, 1990 by and between Boston Biomedica, Inc., a
Massachusetts corporation (the "Company") and G&G Diagnostics Limited
Partnership I (the "Purchaser") (the "Purchase Agreement") is made as of
December 5, 1990, by and between the Company, the Purchaser and G&G Diagnostics
Limited Partnership II (the "Additional Purchaser").
WHEREAS, the Company wishes to issue and sell to the Additional Purchaser,
and Additional Purchaser wishes to purchase from the Company, an aggregate of
10,000 shares (the "New Shares") of Common Stock, $.01 par value per share (the
"Common Stock"), of the Company; and
WHEREAS, the Company wishes to grant the Additional Purchaser an option
(the "New Option") to purchase 16,667 shares of Common Stock; and
WHEREAS, the Additional Purchaser wishes to purchase the New Shares and
accept the New Option subject to substantially the same terms and conditions as
are set forth in the Purchase Agreement; and
WHEREAS, the parties hereto wish to amend the Purchase Agreement pursuant
to Section 6.09 thereof, as hereinafter provided;
NOW THEREFORE, in consideration of the payments provided herein and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereby agree as follows:
I. THE NEW SHARES AND NEW OPTION
-----------------------------
1.1 Issuance, Sale and Purchase of New Shares and New Option. The
parties hereby agree that the Company shall issue and sell to the Additional
Purchaser and the Additional Purchaser shall purchase from the Company at the
Second Closing (as defined in Section 1.3 hereof) 10,000 shares of Common Stock
having the rights and privileges set forth in the Company's Articles of
Organization, as amended, for an aggregate purchase price of $150,000.00. In
connection with the sale and purchase described in Section 1.1 hereof, the
Company agrees to grant to the Additional Purchaser an option to purchase up to
16,667 additional shares, exercisable for a period of two years, commencing on
the date hereof (the "New Option Period") at a price of $20.00 per share during
the first year following the
- 2 -
date hereof and at a price of $25.00 per share during the second year following
the date hereof; provided, however, that if the Company shall sell any shares or
equity-equivalents (other than Reserved Employee Shares as defined in Section
5.02 of the Purchase Agreement or pursuant to Section 1.06 of the Purchase
Agreement, as amended by Section 1.5 hereof) at a price lower than $20.00 per
share during the first year of the New Option Period, and (i) if the Additional
Purchaser has not yet exercised the New Option in full and the Additional
Purchaser exercises the New Option in part or in full within thirty (30) days
following receipt of notice from the Company of such sale, or (ii) if the
Additional Purchaser has already exercised the New Option in part or in full,
then (iii) the Company shall issue to the Additional Purchaser a sufficient
number of shares of Common Stock as shall reduce (but not increase) the cost per
share paid by the Additional Purchaser upon exercise of the New Option to such
price at which such shares or equity-equivalents were issued; and provided,
further, that if the Company shall sell any shares or equity-equivalents (other
than Reserved Employee Shares as defined in Section 5.02 of the Purchase
Agreement) at a price lower than $25.00 per share during the second year of the
New Option Period, and (i) if the Additional Purchaser has not yet exercised the
New Option in full and the Additional Purchaser exercises the New Option in part
or in full within thirty (30) days following receipt of notice from the Company
of such sale, or (ii) if the Additional Purchaser has already exercised the New
Option in part or in full, then (iii) the Company shall issue to the Additional
Purchaser a sufficient number of shares of Common Stock as shall reduce (but not
increase) the cost per share paid by the Additional Purchaser upon exercise of
the New Option to such price at which such shares or equity-equivalents were
issued.
1.2 Second Closing, Payment and Delivery. The closing of the purchase
and sale described in Section 1.1 shall take place at the offices of Testa,
Hurwitz & Thibeault, 53 State Street, Boston, Massachusetts 02109 at 10:00 a.m.,
Boston time, on December , 1990, or at such other date and time and place as may
be agreed upon between the Additional Purchaser and the Company (such closing
being called the "Second Closing") and such date and time being called the
"Second Closing Date"). At the Second Closing, the Company shall deliver to the
Additional Purchaser a certificate registered in the Additional Purchaser's name
representing 10,000 shares of Common Stock. As payment in full for the New
Shares being purchased by and against delivery of the stock certificate
therefore, the Additional Purchaser shall pay to the Company by certified check
or wire transfer, or combination thereof, One Hundred Fifty Thousand Dollars
($150,000.00).
1.3 Definitions. The parties further agree that the New Shares issued
hereunder shall be deemed to be "Shares" for all purposes under the Purchase
Agreement and to the same extent
- 3 -
as if such shares had been originally issued under the Purchase Agreement. In
addition, all references in the Purchase Agreement to the "Purchaser" shall be
deemed to refer to the Purchaser and the Additional Purchaser.
1.4 Price Protection. The provisions of Section 1.05 of the Purchase
Agreement shall apply to the New Shares purchased by the Additional Purchaser
under the Amendment to the same extent as if the New Shares had been originally
issued under the Purchase Agreement except that for purposes of determining the
three-year period during which such price protection provisions shall apply to
the New Shares the "Closing Date" shall be the Second Closing Date as defined in
Section 1.3 hereof.
1.5 Additional Investments. After the purchase by the Additional
Purchaser of the New Shares, the number of shares of Common Stock and options to
purchase Common Stock which the Company may issue and sell pursuant to Section
1.06 of the Purchase Agreement shall be reduced to 20,000 shares and 33,334
shares respectively or an aggregate of 53,334 Common Stock equivalents. In
addition, Section 1.06 of the Purchase Agreement shall be amended so that
reference to the "Closing Date" shall be changed to the "Second Closing Date" as
defined in Section 1.3 hereof.
II. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
----------------------------------------------
The Company represents and warrants to the Additional Purchaser that except
as set forth in the Supplemental Disclosure Schedule attached as Exhibit A
hereto, the representations and warranties in Article II of the Purchase
Agreement shall be true and correct on the Second Closing Date.
III. REPRESENTATIONS AND WARRANTIES OF THE ADDITIONAL PURCHASER.
-----------------------------------------------------------
The Additional Purchaser represents and warrants to the Company that each
of the representations and warranties of the Purchaser set forth in Article III
to the Purchase Agreement shall be true on the Second Closing Date with respect
to the Additional Purchaser.
IV. CONDITIONS TO THE OBLIGATIONS OF THE ADDITIONAL PURCHASER.
----------------------------------------------------------
The obligation of the Additional Purchaser to purchase the New Shares from
the Company is subject to the satisfaction on or before the Second Closing Date
of the following conditions, all or any of which may be waived in writing by the
Additional Purchaser:
(a) Representations and Warranties. Subject to any supplemental
information set forth in Exhibit A, the representations and warranties in
Article II of the Purchase
- 4 -
Agreement shall be true, complete and correct on and as of the Second Closing
Date with the same effect as though then made, and the President and Treasurer
of the Company shall have certified to such effect to the Additional Purchaser
in writing.
(b) Performance. The Company shall have performed and complied with all
agreements contained herein required to be performed or complied with by it
prior to or at the Second Closing Date, and the President and Treasurer of the
Company shall have certified to the Additional Purchaser in writing to such
effect and to the further effect that all of the conditions set forth in this
Article IV have been satisfied.
(c) All Proceedings to be Satisfactory. All corporate and other
proceedings to be taken by the Company in connection with the transactions
contemplated hereby and all documents incident thereto shall be satisfactory in
form and substance to the Additional Purchaser and its counsel, and the
Additional Purchaser and its counsel shall have received all such counterpart
originals or certified or other copies of such documents as they reasonably may
request.
(d) Supporting Documents. The Additional Purchaser and its counsel shall
have received copies of the documents specified in Article IV paragraph (e) of
the Purchase Agreement.
(e) Registration Rights Agreement. The Company, the Purchaser and the
Additional Purchaser shall have executed and delivered an amendment to the
Registration Rights Agreement in substantially the form attached hereto as
Exhibit B.
(f) Stock Restriction Agreement. The Company and Richard T. Schumacher
shall have executed and delivered an amendment to the Stock Restriction
Agreement in substantially the form attached hereto as Exhibit C.
(g) Preemptive Rights. All stockholders of the Company having any
preemptive, first refusal or other rights with respect to the issuance of the
New Shares shall have irrevocably waived the same in writing.
(h) Percentage Ownership. The Company shall have sufficient Stock
outstanding so that the purchase of shares by the Additional Purchaser shall not
result in aggregate ownership by the Purchaser and the Additional Purchaser of
twenty percent (20%) or more of the equity securities of the Company.
(i) Fees of Counsel. The Company shall have paid the fees and
disbursements of counsel to the Purchaser and Additional Purchaser, Testa,
Hurwitz & Thibeault, as invoiced at the Second Closing for services rendered to
the Purchaser and the Additional Purchaser.
- 5 -
V. COVENANTS OF THE COMPANY
------------------------
The Company covenants and agrees with the Additional Purchaser that it will
observe, perform and comply with each of the covenants of the Company set forth
in Article V of the Purchase Agreement, provided, however, that clause (F) of
Section 5.02 of the Purchase Agreement shall be amended so that reference to the
"Closing Date" shall be changed to the "Second Closing Date" as defined in
Section 1.3 hereof and the number of shares of Common Stock and options to
purchase Common Stock which the Company may issue and sell pursuant to such
clause shall be reduced to 20,000 shares and 33,334 shares respectively or an
aggregate of 53,334 Common Stock equivalents.
VI. MISCELLANEOUS
-------------
6.1 Except where context otherwise requires all references to the
Purchaser in the Purchase Agreement shall be deemed to refer to the Purchaser
and the Additional Purchaser, collectively or individually, as applicable.
6.2. The Purchase Agreement shall remain in full force and effect
except as amended hereby.
6.3. From and after the date hereof, the parties hereto shall execute
and deliver such instruments, amendments and other documents as may be necessary
to effectuate fully the purposes of this Amendment.
6.4. This Amendment may be executed in any number of separate
counterparts with the same effect as if all parties had signed the same
document. All such counterparts shall be construed together and shall constitute
one and the same instrument.
[The Remainder of this Page is Intentionally Left Blank]
- 6 -
IN WITNESS WHEREOF, the parties have executed this Amendment No. 1
to the Common Stock Purchase Agreement as of the date first written above.
BOSTON BIOMEDICA, INC.
By: /s/ Richard T. Shumacher
------------------------
Title: President
---------------------
G&G DIAGNOSTICS LIMITED
PARTNERSHIP I
By: /s/ Irwin J. Gruverman
-------------------------
General Partner
G&G DIAGNOSTICS LIMITED
PARTNERSHIP II
By: /s/ Irwin J. Gruverman
------------------------
General Partner
Exhibit A
SUPPLEMENTAL DISCLOSURE SCHEDULE
Section 2.04 Authorized Capital Stock
- ------------ ------------------------
Immediately prior to the Second Closing, 175,454 shares of Common Stock will be
issued and outstanding.
See attached Schedule II.
Section 2.05 Financial Statements
- ------------ --------------------
1. The Company sold 10,000 shares of its Common Stock and granted options
to purchase 16,667 additional shares of Common Stock to G&G Limited
Partnership I for $150,000 on June 5, 1990.
2. On September 7, 1990, the Company amended its Loan and Security
Agreement with Worcester County Institution for Savings ("WCIS") to
increase its revolving line of credit to $500,000. On the same day, the
Company amended and restated its Revolving Demand Note with WCIS to
increase the principal sum to $500,000.
Section 2.06 Events Subsequent to Date of Balance Sheet
- ------------ ------------------------------------------
See Section 2.05.
Section 2.09 Title to Properties
- ------------ -------------------
1. WCIS has a perfected security interest in all assets of the Company to
secure the obligations of the Company pursuant to its Loan and Security
Agreement dated August 17, 1988 and amendments thereto dated September
7, 1990.
2. Bank of New England has a security interest in a $15,000 Certificate of
Deposit of the Company to secure a Secured Time Note, the outstanding
balance of which is approximately $13,000.
3. North Easton Savings Bank has a security interest in the following items
presently owned by the Company:
a. 1989 Chevrolet Nova
b. 1988 Chevrolet Corsica
c. Desk Top Publishing System
d. Toshiba Copier
November 30, 1990
Mr. Irwin J. Gruverman, General Partner
G & G Diagnostics Limited Partnership I [COPY]
90 Oak Street
Newton, MA 02164
Dear Irv:
Pursuant to your request, please find below a detailed description of our
intended use of the proceeds from the upcoming sale of common stock (10,000
shares: $150,000) to G & G Diagnostics Limited Partnership I.
<TABLE>
<CAPTION>
I. Marketing and Sales
-------------------
<S> <C>
1. full-time sales representative $30,000
2. full time sales support person 24,000
3. American Association of Blood Banks Meeting
a. booth space 3,000
b. travel, lodging and entertainment expenses 10,000
c. promotional materials - 10,000
(poster, pamphlet, PERFORMANCE Panel Handouts)
4. Promotional material (sales catalogue, pamphlets, etc.) 12,000
5. Direct mail (postage, labels, brochures) 6,000
6. Miscellaneous 10,000
II. Research and Development/Production
-----------------------------------
1. Preparation of new PERFORMANCE Panels for release during 45,000
first two quarters of 1991 (anti-HTLV, HIV Antigen, HLA,
False Positive anti-HIV 1, anti-HIV 2, Low Titer anti-HIV 1)
</TABLE>
Sincerely,
/s/ Ric
- ---------------------
Richard T. Schumacher
President
RTS/cjk
BBI BOSTON BIOMEDICA, INC.
375 WEST STREET - WEST BRIDGEWATER MA 02379
Tel (508) 580-1900 - Telex 5106012210 - FAX (508) 580-2202
AMENDED AND RESTATED
STOCK RESTRICTION AGREEMENT
This Amended and Restated Stock Restriction Agreement (this "Agreement") is
made and entered into as of this 5th day of December, 1990, by and among Boston
Biomedica, Inc., a Massachusetts corporation (the "Company"), Richard T.
Schumacher (the "Stockholder"), and G&G Diagnostics Limited Partnership I and
G&G Diagnostics Limited Partnership II (each an "Investor" and collectively the
"Investors").
WHEREAS, the Stockholder is the holder of an aggregate of 82,500 shares of
common stock, $.01 par value, of the Company (the "Common Stock");
WHEREAS, the Investors have acquired shares of Common Stock of the Company
pursuant to the terms of a Common Stock Purchase Agreement dated June 5, 1990 as
amended on the date hereof between the Company and the Investors (the "Purchase
Agreement"); and
WHEREAS, it is a condition to the obligations of the Investors under
Amendment No. 1 to the Purchase Agreement that this Agreement be executed by the
parties hereto, and the parties are willing to execute this Agreement and to be
bound by the provisions hereof;
NOW, THEREFORE, in consideration of the foregoing, the agreements set
forth below, and the parties' desire to provide for continuity of ownership of
the Company to further the interests of the Company and its present and future
stockholders, the parties hereby agree with each other as follows:
1. Certain Defined Terms. As used in this Agreement, the following terms
shall have the following respective meanings:
(a) "Stock" shall mean and include all shares of Common Stock, and all
other securities of the Company which may be issued in exchange for or in
respect of shares of Common Stock (whether by way of stock split, stock
dividend, combination, reclassification, reorganization, or any other means).
(b) "Shares" shall mean and include all shares of Stock now owned or
hereafter acquired by either the Stockholder or the Investor.
(c) "Effective Date" shall have the meaning set forth in Section 5.23
of the Purchase Agreement.
- 2 -
2. Prohibited Transfers. After the Effective Date, the Stockholder shall not
sell, assign, transfer, pledge, hypothecate, mortgage, encumber or dispose of
all or any of his Shares except to the Company or as expressly provided in this
Agreement. Notwithstanding the foregoing, the Stockholder may transfer all or
any of his Shares (i) by way of gift to any member of his family or to any trust
for the benefit of any such family member or the Stockholder, provided that any
such transferee shall agree in writing with the Company and the Investor, as a
condition to such transfer, to be bound by all of the provisions of this
Agreement to the same extent as if such transferee were the Stockholder, (ii) by
will or the laws of descent and distribution, in which event each such
transferee shall be bound by all of the provisions of this Agreement to the same
extent as if such transferee were the Stockholder. Notwithstanding Section 3
below the Stockholder may pledge not more than 50% of the Shares held by him for
purposes of obtaining personal financing. As used herein, the word "family"
shall include any spouse, lineal ancestor or descendant, brother or sister,
niece or nephew.
3. Right of First Refusal on Dispositions.
---------------------------------------
(a) If at any time after the Effective Date the Stockholder desires to
sell for cash or cash equivalents all or any part of his Shares pursuant to a
bona fide offer from a third party (the "Proposed Transferee"), the Stockholder
shall submit a written offer (the "Offer") to sell such Shares (the "Offered
Shares") to the Investor on terms and conditions, including price, not less
favorable to the Investors than those on which the Stockholder proposes to sell
such Offered Shares to the Proposed Transferee. The Offer shall disclose the
identity of the Proposed Transferee, the Offered Shares proposed to be sold, the
total number of Shares owned by the Stockholder, the terms and conditions,
including price, of the proposed sale, and any other material facts relating to
the proposed sale. The Offer shall further state that the Investors may acquire,
in accordance with the provisions of this Agreement, all, but not less than all,
of the Offered Shares for the price and upon the other terms and conditions,
including deferred payment (if applicable), set forth therein.
(b) The Investors shall have the absolute right to purchase all of the
Offered Shares. To the extent that the Investors as a group may purchase all,
but not less than all, of the Offered Shares, the Investors may determine among
themselves the number of such Offered Shares to be purchased by each Investor.
(c) If an Investor desires to purchase all or any part of the Offered
Shares, said Investor shall communicate in writing its election to purchase to
the Stockholder, which communication shall state the number of Offered Shares
said Investor desires to
-3-
purchase and shall be delivered in person or mailed to the Stockholder at the
address set forth in accordance with Section 11 below within thirty days of the
date the Offer was made. Such communication shall, when taken in conjunction
with the Offer, be deemed to constitute a valid, legally binding and enforceable
agreement for the sale and purchase of such Offered Shares. Sales of the Offered
Shares to be sold to purchasing Investors pursuant to this Section 3 shall be
made at the offices of the Company on the 45th day following the date the Offer
was made (or if such 45th day is not a business day, then on the next succeeding
business day). Such sales shall be effected by the Stockholder's delivery to
each purchasing Investor of a certificate or certificates evidencing the Offered
Shares to be purchased by it, duly endorsed for transfer to such purchasing
Investor, against payment to the Stockholder of the purchase price therefor by
such purchasing Investor.
(d) If the Investors do not purchase all of the Offered Shares, the
Offered Shares not so purchased may be sold by the Stockholder at any time
within 90 days after the date the Offer was made, subject to the provisions of
Sections 4, 5 and 6. Any such sale shall be to the Proposed Transferee, at not
less than the price and upon other terms and conditions, if any, not more
favorable to the Proposed Transferee than those specified in the Offer. Any
Offered Shares not sold within such 90-day period shall continue to be subject
to the requirements of a prior offer pursuant to this Section 3. If Offered
Shares are sold pursuant to this Section 3 to any purchaser who is not a party
to this Agreement, the Offered Shares so sold shall no longer be subject to any
of the restrictions imposed by this Agreement.
(e) The Investors' right of first refusal provided in this Section 3
shall not apply with respect to sales of Shares to the Company.
4. Right of Participation in Sales.
--------------------------------
(a) If at any time after the Effective Date the Stockholder desires to
sell all or any part of the Shares owned by him to any person or entity other
than one or more of the Investors (the "Purchaser"), each of the Investors shall
have the right to sell to the Purchaser, as a condition to such sale by the
Stockholder, at the same price per share and on the same terms and conditions as
involved in such sale by the Stockholder, the same percentage of the Shares
owned by such Investor as the Shares to be sold by the Stockholder to the
Purchaser represents with respect to the Shares owned by the Stockholder
immediately prior to the sale of any of his Shares to the Purchaser. For the
purposes of this Section 4, all of the stock which an Investor has the right to
acquire from the Company upon the conversion, exercise or exchange of any of the
securities of the Company then owned by such Investor.
- 4 -
(b) Each Investor wishing to so participate in any sale under this
Section 4 it shall notify the Stockholder in writing of such intention as soon
as practicable after receipt of the Offer made pursuant to Section 3, and in any
event within twenty days after the date the Offer was made. Such notification
shall be delivered in person or mailed to such Stockholder at the address set
forth in accordance with Section 11 below.
(c) The Stockholder and each participating Investor shall sell to the
Purchaser all, or at the option of the Purchaser, any part of the Shares
proposed to be sold by them at not less than the price and upon other terms and
conditions, if any, not more favorable to the Purchaser than those in the Offer
provided by the Stockholder under Section 3 above; provided, however, that any
purchase of less than all of such Shares by the Purchaser shall be made from the
Stockholder and each participating Investor pro rata based upon the relative
amount of the Shares that the Stockholder and each participating Investor are
otherwise entitled to sell pursuant to Section 4(a).
(d) Any Shares sold by the Stockholder pursuant to this Section 4
shall no longer be subject to the restrictions imposed by this Agreement and any
Shares sold by a participating Investor pursuant to this Section 4 shall no
longer be entitled to the benefits conferred by this Agreement.
(e) The Investors' right to participate in sales pursuant to this
Section 4 shall not apply with respect to sales of Shares to the Company.
5. Election of Directors. After the Effective Date, the Stockholder agrees
to vote all his Shares at all elections of directors of the Company so that the
Board of Directors of the Company shall consist of six members. The Stockholder
further agrees to vote his Shares to cause and maintain the election to the
Board of Directors of the Company of the person designated by the Investor.
6. Sales Before the Effective Date. If the Stockholder shall sell, assign,
transfer or otherwise dispose of all or any of his Shares prior to the Effective
Date to any Purchaser who is not a party to this Agreement the Shares so sold
shall continue to be subject to the restrictions of this Agreement (including
but not limited to the restrictions on transfer in Sections 2, 3, and 4 and the
voting provisions of Section 5).
7. Term. This Agreement shall terminate (a) immediately prior to the
consummation of the first firm commitment underwritten public offering pursuant
to an effective registration statement on Form S-1 (or its then equivalent)
under the Securities Act of 1933, as amended, pursuant to which the aggregate
price paid by the public for the purchase of Stock is at least $5,000,000, or
(b) the fifth anniversary of the Second Closing Date, whichever occurs first.
- 5 -
8. Failure to Deliver Shares. If the Stockholder becomes obligated to sell
any Shares to an Investor or the Company under this Agreement and fails to
deliver such Shares in accordance with the terms of this Agreement, such
Investor or the Company, as the case may be, may, at its option, in addition to
all other remedies it may have, send to the Stockholder the purchase price for
such Shares as is herein specified. Thereupon, the Company upon written notice
to the Stockholder, (a) shall cancel on its books the certificate or
certificates representing the Shares to be sold and (b) shall issue, in lieu
thereof, in the name of such Investor or the Company, as the case may be, a new
certificate or certificates representing such Shares, and thereupon all of the
Stockholder's rights in and to such Shares shall terminate.
9. Specific Enforcement. The Stockholder expressly agrees that the
Investors and the Company will be irreparably damaged if this Agreement is not
specifically enforced. Upon a breach or threatened breach of the terms,
covenants and/or conditions of this Agreement by the Stockholder, the Investors
and the Company shall, in addition to all other remedies, each be entitled to a
temporary or permanent injunction, without showing any actual damage, and/or a
decree for specific performance, in accordance with the provisions hereof.
10. Legend. Each certificate evidencing any of the Shares shall bear a
legend substantially as follows:
"The shares represented by this certificate are subject to
restrictions on transfer and may not be sold, exchanged,
transferred, pledged, hypothecated or otherwise disposed of except
in accordance with and subject to all the terms and conditions of
a certain Stock Restriction Agreement dated as of June 5, 1990, a
copy of which the Company will furnish to the holder of this
certificate upon request and without charge."
11. Notices. Notices given hereunder shall be deemed to have been duly
given on the date of personal delivery or on the date of postmark if mailed by
certified or registered mail, return receipt requested, to the party being
notified at his or its address specified on the applicable signature page hereto
or such other address as the addressee may subsequently notify the other parties
of in writing.
12. Entire Agreement and Amendments. This Agreement constitutes the entire
agreement of the parties with respect to the subject matter hereof and neither
this Agreement nor any provision hereof may be waived, modified, amended or
terminated except by a written agreement signed by the parties hereto. To the
extent any term or other provision of any other indenture, agreement or
instrument by which any party hereto is bound conflicts with this Agreement,
this Agreement shall have precedence over such conflicting term or provision.
- 6 -
13. Governing Law; Successors and Assigns. This Agreement shall be governed
by the laws of the Commonwealth of Massachusetts and shall be binding upon the
heirs, personal representatives, executors, administrators, successors and
assigns of the parties.
14. Waivers. No waiver of any breach or default hereunder shall be
considered valid unless in writing, and no such waiver shall be deemed a waiver
of any subsequent breach or default of the same or similar nature.
15. Severability. If any provision of this Agreement shall be held to be
illegal, invalid or unenforceable, such illegality, invalidity or
unenforceability shall attach only to such provision and shall not in any manner
affect or render illegal, invalid or unenforceable any other provision of this
Agreement, and this Agreement shall be carried out as if any such illegal,
invalid or unenforceable provision were not contained herein.
16. Captions. Captions are for convenience only and are not deemed to be
part of this Agreement.
17. Continuation of Employment. Nothing in this Agreement shall create an
obligation on the Company or the Investor to continue the Stockholder's
employment with the Company.
18. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, this Agreement has been executed as of the date and
year first above written.
COMPANY:
BOSTON BIOMEDICA, INC.
By: /s/Richard T. Shumacher
-------------------------
Title: President
----------------------
Address: 375 West Street
West Bridgewater,
MA 02379
- 7 -
INVESTORS:
G&G DIAGNOSTICS LIMITED
PARTNERSHIP I
By: /s/ Irwin J. Gruverman
--------------------------
Title: General Partner
Address: 90 Oak Street
Newton, MA 02164
G&G DIAGNOSTICS LIMITED
PARTNERSHIP II
By: /s/ Irwin J. Gruverman
--------------------------
Title: General Partner
Address: 90 Oak Street
Newton, MA 02164
STOCKHOLDER:
/s/Richard T. Shumacher
------------------------------
Richard T. Schumacher
Address: 375 West St.
W. Bridgewater, MA 02379
AMENDMENT NO. 1
TO
REGISTRATION RIGHTS AGREEMENT
December 5, 1990
This Amendment No. 1 (the "Amendment") to the Registration Rights Agreement
dated as of June 5, 1990 (the "Agreement") by and among Boston Biomedica, Inc.,
a Massachusetts corporation (the "Company") and G&G Diagnostics Limited
Partnership I (the "Purchaser") is made as of December 5, 1990 by and between
the Company, the Purchaser and G&G Diagnostics Limited Partnership II (the
"Additional Purchaser").
WHEREAS, the Additional Purchaser has agreed to purchase shares of Common
Stock, $.0l par value ("Common Stock"), of the Company pursuant to Amendment No.
1 to the Common Stock Purchase Agreement of June 5, 1990 (the "Purchase
Agreement") between the Company, the Purchaser and the Additional Purchaser,
dated the date hereof; and
WHEREAS, as an inducement to the Additional Purchaser to consummate the
transactions contemplated by the Purchase Agreement, the Company and the
Purchaser have agreed to make the Additional Purchaser a party to the Agreement;
NOW THEREFORE, in consideration of the foregoing and the agreements set
forth below, the parties hereby agree and consent to the following:
As of the date hereof, the following terms as used in the Registration
Rights Agreement of June 5, 1990 shall have the following respective meanings:
"Registrable Shares" shall mean all shares of Common Stock issued or
issuable to the Purchaser and the Additional Purchaser pursuant to
the Purchase Agreement and any amendment thereto whether purchased or
issued pursuant to the equity provisions thereof.
[The Remainder of This Page Intentionally Left Blank.]
- 2 -
IN WITNESS WHEREOF, this Amendment has been executed as of the date and
year first above written.
BOSTON BIOMEDICA, INC.
By:/s/Richard T. Shumacher
------------------------
Title: President
---------------------
AGREED TO AND ACCEPTED as of
the date first above written.
G&G Diagnostics Limited
Partnership I
By: /s/ Irwin J. Gruverman
-----------------------
Title: General Partner
G&G Diagnostic Limited
Partnership II
By: /s/ Irwin J. Gruverman
-----------------------
Title: General Partner
EXHIBIT 10.12
STANDARD FORM
PURCHASE AND SALE AGREEMENT
<TABLE>
<S> <C>
This 11th day of December 1995
1. PARTIES JAMES LEONARD, TRUSTEE, C.W.B. REALTY TRUST
AND MAILING
ADDRESSES hereinafter called the SELLER, agrees to SELL and
(fill in) BOSTON BIOMEDICA, INC.
hereinafter called the BUYER or PURCHASER, agrees to BUY,
upon the terms hereinafter set forth, the following
described premises:
2. DESCRIPTION 375 West Street, West Bridgewater, MA recorded in the Plymouth
(fill in and include County Registry of Deeds at Book 8406, Page 180 and 80 Manley
title reference) Street, West Bridgewater, MA recorded in the Plymouth County
Registry of Deeds at Book 8406 Page 180
3. BUILDINGS, Included in the sale as a part of said premises are the
STRUCTURES, buildings, structures, and improvements now thereon, and the
IMPROVEMENTS, fixtures belonging to the SELLER and used in connection
FIXTURES therewith including, if any, all wall-to-wall carpeting,
drapery rods, automatic garage door openers, venetian
blinds, window shades, screens, screen doors, storm windows
and doors, awnings, shutters, furnaces, heaters, heating
equipment, stoves, ranges, oil and gas burners and fixtures
appurtenant thereto, hot water heaters, plumbing and bathroom
fixtures, garbage disposers, electric and other lighting
fixtures, mantels, outside television antennas, fences,
gates, trees, shrubs, plants, and, refrigerators, air
conditioning equipment, ventilators, dishwashers, washing
machines and dryers; but excluding the inventory equipment,
construction materials, and construction equipment at 80
Manley Street, W. Bridgewater, MA.
4. TITLE DEED Said premises are to be conveyed by a good and sufficient
(fill in) quitclaim deed running to the BUYER, or to the nominee
* Include here by specific designated by the BUYER by written notice to the SELLER at
reference any restric- least seven days before the deed is to be delivered as herein
tions, easements, rights provided, and said deed shall convey a good and clear record
and obligations in party and marketable title thereto, free from encumbrances, except
walls not included in (b) (a) Provisions of existing building and zoning laws;
leases, municipal and (b)
other liens, other encum- (c) Such taxes for the then current year as are not due and
brances, and make pro- payable on the date of the delivery of such deed:
vision to protect (d) Any liens for municipal betterments assessed after the
SELLER against BUYER's date of this agreement;
breach of SELLER's (e) Easements, restrictions and reservations of record, if
covenants in leases, any, so long as the same do not prohibit or materially
where necessary. interfere with the current use of said premises;
5.PLANS If said deed refers to a plan necessary to be recorded
therewith the SELLER shall deliver such plan with the deed in
form adequate for recording or registration.
6. REGISTERED
TITLE
7. PURCHASE PRICE The agreed purchase price for said premises is EIGHT HUNDRED
(fill in); space is FIFTY THOUSAND
allowed to write ($850,000.00)----------------------------- dollars, of which
out the amounts $ 10.00 have been paid as a deposit this day and
if desired $
$ are to be paid at the time of delivery
of the deed in cash, or by certified,
$ cashier's, treasurer's or bank check(s).
$
$ 849,990.00 TOTAL
COPYRIGHT 1979 1984. 1986. 1987, 1988 [GRAPHIC OMITTED] All rights reserved This form may not be
GREATER BOSTON REAL ESTATE BOARD [Real Estate Logo] copied or reproduced in whole or in part
In any manner whatsoever without the prior
express written consent of the Greater
Boston Real Estate Board.
8. TIME FOR Such deed is to be delivered at 10:00 o'clock AM on the 11th day
PERFORMANCE; of December 1995, at the offices of Brown Rudnick Freed &
DELIVERY OF Gesmer unless otherwise agreed upon in writing. It is agreed
DEED (fill in) that time is of the essence of this agreement.
9. POSSESSION AND Full possession of said premises free of
CONDITION OF all tenants and occupants is to be delivered
PREMISE. at the time of the delivery of the deed,
(attach a list of said premises to be then (a) in the same
exceptions, if any) condition as they now are, reasonable use
and wear thereof excepted, and (b) not in violation of said
building and zoning laws, and (c) in compliance with
provisions of any instrument referred to in clause 4 hereof.
The BUYER shall be entitled personally to inspect said
premises prior to the delivery of the deed in order to
determine whether the condition thereof complies with the
terms of this clause. *except Boston Biomedica, Inc., at 375
West Street and CWB Contractors, Inc. at 80 Manley St. West
Bridgewater.
10. EXTENSION TO If the SELLER shall be unable to give title or to make conveyance, or to deliver possession
PERFECT TITLE of the premises, all as herein stipulated, or if at the time of the delivery of the deed the
OR MAKE premises do not conform with all provisions hereof, then the SELLER shall use reasonable
PREMISES efforts to remove any defect in title, or to deliver possession as provided herein, or to
CONFORM make the said premises conform to the provisions hereof, as the case may be, in which event
(Change period of the SELLER shall give written notice thereof to the BUYER at or before the time for
time if desired). performance hereunder, and thereupon the time for performance hereof shall be extended for a
period of thirty days.
11. FAILURE TO If at the expiration of the extended time the SELLER shall have
PERFECT TITLE failed so to remove any defect in title, deliver possession,
OR MAKE or make the premises conform, as the case may be, all as
PREMISES herein agreed, or if at any time during the period of this agreement or
CONFORM,ETC. any extension, thereof, the holder of a mortgage on said
premises shall refuse to permit the insurance proceeds, if any, to
be used for such purposes, then any payments made under this
agreement shall be forthwith refunded and all other obligations of
the parties hereto shall cease and this agreement shall be void
without recourse to the parties hereto.
12. BUYER's The BUYER shall have the election, at either the original or any
ELECTION TO extended time for performance, to accept such title as the
ACCEPT TITLE SELLER can deliver to the said premises in their then
condition and to pay therefore the purchase price without
deduction, in which case the SELLER shall convey such title, except
that in the event of such conveyance in accord with the provisions
of this clause, if the said premises shall have been damaged by
fire or casualty insured against, then the SELLER shall, unless the
SELLER has previously restored the premises to their former
condition, either
(a) pay over or assign to the BUYER, on delivery of the deed,
all amounts recovered or recoverable on account of such
insurance, less any amounts reasonable expended by the
SELLER for any partial restoration, or
(b) if a holder of a mortgage on said premises shall not
permit the insurance proceeds or a part thereof to be used
to restore the said premises to their former condition or
to be so paid over or assigned, give to the BUYER a credit
against the purchase price, on delivery of the deed, equal
to said amounts so recovered or recoverable and retained
by the holder of the said mortgage less any amounts
reasonably expended by the SELLER for any partial
restoration.
13. ACCEPTANCE The acceptance of a deed by the BUYER or his nominee as the case
OF DEED may be, shall be deemed to be a full performance and discharge of
every agreement and obligation herein contained or expressed,
except such as are, by the terms hereof, to be performed after the
delivery of said deed.
14. USE OF To enable the SELLER to make conveyance as herein provided, the
MONEY TO SELLER may, at the time of delivery of the deed, use the purchase
CLEAR TITLE money or any portion thereof to clear the title of any or all
encumbrances or interests, provided that all instruments so
procured are recorded simultaneously with the delivery of said
deed, or to make such reasonable arrangements with all lienholders
of record to clear title.
15. INSURANCE Until the delivery of the deed, the SELLER shall maintain insurance
*Insert amount on said premises as follows:
(list additional Type of Insurance Amount of Coverage
types of insurance
and amounts as agreed) (a) Fire and Extended Coverage $ as currently insured
(b)
16. ADJUSTMENTS Water use charges, and taxes for the then current fiscal year,
(list operating ex- shall be apportioned and fuel value shall be adjusted,
penses, if any, or as of the day of performance of this agreement and the net amount
attach schedule) thereof shall be added to or deducted from, as the case may be,
the purchase price payable by the BUYER at the time of
delivery of the deed. Uncollected rents for the current rental
period shall be apportioned if and when collected by either party.
17. ADJUSTMENT If the amount of said taxes is not known at the time of the
OF UNASSESSED delivery of the deed, they shall be apportioned on the basis of the
AND taxes assessed for the preceding fiscal year, with a
ABATED TAXES reapportionment as soon as the new tax rate and valuation can be
ascertained; and, if the taxes which are to be apportioned shall
thereafter be reduced by abatement, the amount of such abatement,
less the reasonable cost of obtaining the same, shall be
apportioned between the parties, provided that neither party shall
be obligated to institute or prosecute proceedings for an abatement
unless herein otherwise agreed.
18. BROKER's FEE THE PARTIES REPRESENT THAT NO BROKERAGE COMMISSION IS DUE UNDER THIS AGREEMENT.
(fill in fee with
dollar amount or
percentage; also
name of Brokerage
firm(s))
19. BROKER(S) WARRANTY
(fill in name)
20. DEPOSIT All deposits made hereunder shall be held in escrow by JAMES M.
(fill in name) BURKE, ESQUIRE as escrow agent subject to the terms of this
agreement and shall be duly accounted for at the time for
performance of this agreement.
21. BUYER's If the BUYER shall fail to fulfill the BUYER's agreements herein,
DEFAULT; all deposits made hereunder by the BUYER shall be retained by the
DAMAGES SELLER as liquidated damages and shall be the SELLER's sole and
exclusive remedy at law and in equity.
22. RELEASE BY
HUSBAND OR
WIFE
23. BROKER AS
PARTY
24. LIABILITY OF If the SELLER or BUYER executes this agreement in a representative
TRUSTEE, or fiduciary capacity, only the principal or estate represented
SHAREHOLDER, shall be bound, and neither the SELLER or BUYER so executing, nor
BENEFICIARY, etc. any shareholder or beneficiary of any trust, shall be personally
liable for any obligation, express or implied, hereunder.
25. WARRANTIES AND The BUYER acknowledges that the BUYER has not been influenced to
REPRESENTATIONS enter into this transaction nor has he relied upon any warranties
(fill in); if none, or representations not set forth or incorporated in this agreement
state "none"; if or previously made in writing except for the following additional
any listed, indicate warranties and representations, if any, made by either the SELLER
by whom each war- or the Broker(s): NONE.
ranty or represen-
tation was made
26. MORTGAGE
CONTINGENCY
CLAUSE
(omit if not
provided for
in Offer to
Purchase)
27. CONSTRUCTION The instrument, executed in multiple counterparts, is to be
OF AGREEMENT construed as a Massachusetts contract, is to take effect as a
sealed instrument, sets forth the entire contract between the
parties, is binding upon and enures to the benefit of the parties
hereto and their respective heirs, devisees, executors,
administrators, successors and assigns, and may be cancelled,
modified or amended only by a written instrument executed by both
the SELLER and the BUYER. If two or more persons are named herein
as BUYER their obligations hereunder shall be joint and several.
The captions and marginal notes are used only as a mater of
convenience and are not to be considered a part of this agreement
or to be used in determining the intent of the parties to it.
28. LEAD PAINT
LAW
29. SMOKE
DETECTORS
30. ADDITIONAL The initialed riders, if any, attached hereto, are incorporated
PROVISIONS herein by reference.
SEE RIDER TO PURCHASE AND SALE AGREEMENT HERETO ANNEXED CONTAINING
PARAGRAPHS 31-40.
FOR RESIDENTIAL PROPERTY CONSTRUCTED PRIOR TO 1978, BUYER MUST ALSO HAVE SIGNED
LEAD PAINT "PROPERTY TRANSFER NOTIFICATION CERTIFICATION"
</TABLE>
NOTICE: This is a legal document that creates binding obligations. If not
understood, consult an attorney.
/s/James Leonard Trustee
- -------------------------- -----------------------------
SELLER (or spouse) SELLER JAMES LEONARD, TRUSTEE
C.W.B. REALTY TRUST
- -------------------------- -----------------------------
BUYER BUYER
BOSTON BIOMEDICA, INC.
Broker(s) BY: /s/Richard T. Shumacher, President
EXTENSION OF TIME FOR PERFORMANCE
Date _____________
The time for the performance of the foregoing agreement is extended until __
________ o'clock _____ M. on the ___________________ day of__________________
19 ______ time still being of the essence of this agreement as extended. In all
other respects, this agreement is hereby ratified and confirmed.
This extension, executed in multiple counterparts, is intended to take effect
as a sealed instrument
- ----------------------------------- ----------------------------------
SELLER (or spouse) SELLER
- ----------------------------------- ----------------------------------
BUYER BUYER
---------------------------------------------------------------------
Broker(s)
RIDER TO PURCHASE AND SALE AGREEMENT BETWEEN JAMES LEONARD, TRUSTEE, C.W.B.
REALTY TRUST, SELLER, AND BOSTON BIOMEDICA, INC., BUYER, WITH RESPECT TO THE
PREMISES AT 375 WEST STREET, WEST BRIDGEWATER, MA AND 80 MANLEY STREET, WEST
BRIDGEWATER, MA
31. COMPLIANCE WITH TITLE REQUIREMENTS: Without limiting any other provisions of
this Agreement, the Premises shall not be considered to be in compliance with
the provisions of this Agreement with respect to title unless:
(a) All structures and improvements on the Premises, including driveways,
garages, cesspools, leach field, etc. (but not limited thereto) and all means of
access to the premises shall be wholly within the lot lines of said premises and
shall not encroach upon or under any property not within said lot lines;
(b) No building, structure, improvement, way or property of any kind
encroaches upon or under said Premises from any other premises;
(c) Title to said Premises is insurable, for the benefit of Buyer by a
title insurance company in a fee owner's title insurance policy, at normal
applicable premium rates, in the American Land Title Association form currently
in use, subject only to those printed exceptions normally included in said
policy; and
(d) Said Premises abut a public way, duly laid out and/or accepted as
such by the town or city in which said premises are located.
32. HAZARDOUS WASTE:
---------------
(a) The Seller's Lender has had a hazardous waste site inspection and
assessment performed on the Premises by a qualified environmental engineer
indicating that no hazardous waste is present on the premises, a copy of which
report will be furnished to the Buyer.
(b) Buyer agrees that if any additional testing is required by its
lending institution, that it will be done at the Buyer's sole expense. Copies of
all test results will be furnished to the Seller.
(c) Should any evidence of oil, hazardous waste or hazardous materials as
defined by Massachusetts General Law, Chapter 21E, be found in, upon or under
the premises to be purchased then this Agreement shall be null and void and all
deposits returned.
33. NOTICES: All notices under this Agreement shall be in writing and shall be
delivered personally or shall be sent by U.S. Post Office, Express Mail, Federal
Express, return receipt requested, addressed as follows:
TO SELLERS: JAMES LEONARD, TRUSTEE
C.W.B. REALTY TRUST
80 Manley Street
West Bridgewater, MA 02379
With a copy to: JAMES M. BURKE, ESQUIRE
48 North Pearl Street
Brockton, MA 02401
TO BUYER: KEVIN W. QUINLAN, SR. VICE PRESIDENT
CHIEF FINANCIAL OFFICER
BOSTON BIOMEDICA, INC.
375 West Street
West Bridgewater, MA 02379
With a copy to: HOWARD L. LEVIN, ESQUIRE
BROWN RUDNICK FREED & GESMER
ONE FINANCIAL CENTER
BOSTON, MA 02111
34. RIGHT OF ENTRY PRIOR TO CLOSING: Upon reasonable prior notice to the Seller,
the Buyer may, enter and inspect the premises.
35. AFFIDAVITS: Seller agrees to execute at the time of closing customary
affidavits or other documents required by the title insurance company insuring
title to the Premises as may be necessary to delete the standard exceptions for
mechanic's liens, and for claims of tenants. Seller agrees to execute such
affidavits required by Section 1445 of the Internal Revenue Code.
36. SELLER'S REPRESENTATIONS, WARRANTIES AND AGREEMENTS:
36.1 Seller hereby represents, warrants and covenants as follows:
(a) No written notice or written communication, not heretofore
rectified, has been received by Seller (or its management agent) from (A) any
public authority that (i) the Premises are not zoned for their present or
intended use or (ii) there exists with respect to the Premises any condition
which violates any municipal, state or federal law, rule or regulation, or (B)
any insurance carrier of the Premises regarding any dangerous, illegal or other
condition requiring any corrective action;
(b) The Premises are not subject to any service, management or
maintenance contracts and are not the subject of any outstanding agreements with
any party pursuant to which any such party may acquire any interest in the
Premises, other than the right of occupancy as set forth in any lease of a
portion of the Premises;
(c) Seller has received no written notice of taking, condemnation or
assessment, actual or proposed, with respect to the Premises;
(d) Seller has full power and authority to enter into this Agreement and to
carry out the transactions contemplated hereby, and the persons executing this
Agreement on behalf of Seller are duly authorized to execute, on behalf of
Seller, this Agreement, and other instruments or documents reasonably necessary
to effect the transactions contemplated by this Agreement;
(e) Between the date hereof and the Closing Date, Seller shall not sell,
transfer or, convey or further mortgage the Premises, or any part thereof;
(f) There are no assessments for public improvements presently affecting
the Premises of which Seller has knowledge;
(g) All certificates of occupancy required for the lawful operation of the
Premises have been issued and are in full force and effect.
36.2 Except as otherwise herein provided, the representations and warranties
contained in Paragraph 36.1 and elsewhere in this Agreement, refer to the date
of execution of this Agreement except as otherwise therein provided. Seller will
promptly notify Buyer of any change in facts which would make any such
representation or warranty materially untrue if such state of facts had existed
on the date of execution of this Agreement. Unless Buyer waives such changed
facts, (whether or not informed thereof by Seller) or Seller rectified the same
to Buyer's satisfaction, Buyer's sole remedy shall be to terminate this
Agreement and receive back his deposits together with any earnings thereon.
37. ZONING: This Agreement is contingent on the securing of a Special Permit
from the Town of West Bridgewater to allow manufacturing at the property at 80
Manley Street and 375 West Street, West Bridgewater, MA, to which all appeal
periods have expired.
38. MORTGAGE CONTINGENCY CLAUSE: This agreement is contingent upon the Buyer's
securing mortgage financing from Bank of Boston in an amount of $750,000.00.
39. CAPTIONS: The captions in this Agreement are inserted for convenience of
reference only and in no way define, describe or limit the scope or intent of
this Agreement or any of the provisions thereof.
40. MISCELLANEOUS:
The Seller shall, if available, provide to the Buyer a copy of all
existing Title policies including schedule prior to the closing
and agrees to cooperate to the extend possible in the issuance of an owner's
policy of insurance in the Buyer's name at closing.
SELLER: BUYER:
BOSTON BIOMEDICA, INC.
/s/James Leonard, Trustee BY:/s/Richard T. Shumacher, President
- ------------------------- ----------------------------------
JAMES LEONARD, TRUSTEE
C.W.B. REALTY TRUST
QUITCLAIM DEED
JAMES LEONARD, TRUSTEE, C.W.B. REALTY TRUST u/d/t dated March 21, 1988, recorded
at Plymouth County Registry of Deeds at Book 8406, Page 168
of Manley Street, West Bridgewater, Plymouth County, Massachusetts
in consideration of EIGHT HUNDRED FIFTY THOUSAND ($850,000.00) DOLLARS
grants to BOSTON BIOMEDICA, INC., a Massachusetts corporation with a usual place
of business at 375 West Street, West Bridgewater, MA 02379
with quitclaim covenants
the land with buildings thereon located at 375 West Street and 80 Manley Street,
West Bridgewater, Plymouth County, Massachusetts, more particularly described as
follows:
PARCEL I - 375 WEST STREET, WEST BRIDGEWATER, MA
The land in West Bridgewater, Plymouth County, Massachusetts, on the northerly
side of West Street and the westerly side of Manley Street, shown as Lot 1A on a
plan entitled, "Plan of land in West Bridgewater, Mass., owned by C.W.B.
Contractors, Inc., June 11, 1985" said plan being recorded in Plymouth County
Registry of Deeds in Plan Book 26, Page 260.
Being the same premises conveyed by deed dated April 22, 1988 from C.W.B.
Contractors, Inc. and duly recorded with Plymouth County Registry of Deeds at
Book 8406, Page 180.
PARCEL II - 80 MANLEY STREET, WEST BRIDGEWATER, MA
The land in West Bridgewater, Plymouth County, Massachusetts on the northerly
side of West Street and the westerly side of Manley Street as shown as Lot 2A on
a plan entitled, "Plan of Land in West Bridgewater, Mass. owned by C.W.B.
Contractors, Inc., June 11, 1985" said plan being recorded in Plymouth County
Registry of Deeds in Plan Book 26, Page 260.
Being the same premises conveyed by deed dated April 22, 1988 from C.W.B.
Contractors, Inc., and recorded at Plymouth County Registry of Deeds at Book
8406, Page 180.
Executed as a sealed instrument this llth day of December, 1995.
/s/JAMES LEONARD, TRUSTEE
- ------------------------ ---------------------------
JAMES LEONARD, TRUSTEE
C.W.B. REALTY TRUST
COMMONWEALTH OF MASSACHUSETTS
Suffolk, SS December 11, 1995
Then personally appeared the above named JAMES LEONARD, TRUSTEE, C.W.B.
REALTY TRUST, and acknowledged the foregoing instrument to be his free act and
deed, before me,
/s/ Signature Unreadable
------------------------
Notary Public
My commission expires: 3/22/96
RETURN TO:
WARRANTY BILL OF SALE
KNOW ALL MEN BY THESE PRESENTS, that James Leonard, Trustee of C.W.B.
Realty Trust, with a usual place of business at 80 Manley Street, West
Bridgewater, MA, in consideration of the sum of Eight Hundred Fifty Thousand
($850,000.00) Dollars to us paid by Boston Biomedica, Inc., a Massachusetts
Corporation with its usual place of business at 375 West Street, West
Bridgewater, MA, the receipt of which is hereby acknowledged, do hereby grant,
sell, transfer, assign and deliver unto the said Boston Biomedica, Inc., all the
right, title and interest in and to all equipment, fixtures and property used in
connection with the property located at 80 Manley Street and 375 West Street,
West Bridgewater, MA, the Trustee's interest in said property being that of a
100% owner.
To have and to hold all and singular the said goods and chattels unto the
said Boston Biomedica, Inc., their heirs, administrators, successors and assigns
to their own use and behalf forever.
The Trustee hereby warrants that he is the sole and only Trustee of the
Trust and has full power and authority to sign on behalf of the Trust and that
the Trust has good right to sell the same as aforesaid.
Witness my hand and seal this 11 day of December, 1995
/s/Signature Unreadable /s/James Leonard, Trustee
- ----------------------- --------------------------
WITNESS JAMES LEONARD, TRUSTEE
C.W.B. REALTY TRUST
EXHIBIT 10.13
STANDARD FORM
PURCHASE AND SALE AGREEMENT
This 20 day of December 1995
<TABLE>
<S> <C>
1. PARTIES BOSTON BIOMEDICA, INC.
AND MAILING
ADDRESSES herein after called the SELLER, agrees to SELL and DONALD M.
(fill in) LEONARD, TRUSTEE, LIVE OAK REALTY TRUST, u/d/t dated June 30, 1995
to be recorded at the Plymouth County Northern District Reg.
hereinafter called the BUYER or PURCHASER, agrees to BUY, upon the
terms hereinafter set forth, the following described premises:
2. DESCRIPTION 80 MANLEY STREET, WEST BRIDGEWATER, MA as per deed recorded at
(fill in and include Plymouth County Registry of Deeds at Book 8406, Page 180.
title reference)
3. BUILDINGS, Included in the sale as a part of said premises are the buildings,
STRUCTURES, structures, and improvements now thereon, and the fixtures
IMPROVEMENTS, belonging to the SELLER and used in connection therewith
FIXTURES including, if any, all wall-to-wall carpeting, drapery rods,
(fill in or delete) automatic garage door openers, venetian blinds, window shades,
screens, screen doors, storm windows and doors, awnings, shutters,
furnaces, heaters, heating equipment, stoves, ranges, oil and gas
burners and fixtures appurtenant thereto, hot water heaters,
plumbing and bathroom fixtures, garbage disposers, electric and
other lighting fixtures, mantels, outside television antennas,
fences, gates, trees, shrubs, plants, and ONLY IF BUILT IN,
refrigerators, air conditioning equipment, ventilators,
dishwashers, washing machines and dryers.
4. TITLE DEED Said premises are to be conveyed by a good and sufficient quitclaim deed running to the
(fill in) BUYER, or to the nominee designated by the BUYER by written notice to the SELLER at least
* Include here by specific seven days before the deed is to be delivered as herein provided, and said deed shall
reference any restric- convey a good and clear record and marketable title thereto, free from encumbrances,
tions, easements, rights except
and obligations in party (a) Provisions of existing building and zoning laws;
walls not included in (b), (c) Such taxes for the then current year as are not due and payable on the date
leases, municipal and of the delivery of such deed;
other liens, other encum- (d) Any liens for municipal betterments assessed after the date of this
brances, and make pro- agreement;
vision to protect (e) Easements, restrictions and reservations of record, if any, so long as the
SELLER against BUYER's same do not prohibit or materially interfere with the current use of said
breach of SELLER's premises;
covenants in leases
where necessary.
5. PLANS If said deed refers to a plan necessary to be recorded therewith
the SELLER shall deliver such plan with the deed in form adequate
for recording or registration.
6. REGISTERED
TITLE
7. PURCHASE PRICE The agreed purchase price for said premises is ONE HUNDRED THIRTY THOUSAND EIGHT HUNDRED
(fill in); space is (130,800.00) -----------dollars, of which
allowed to write
out the amounts $
if desired $
$
$
$130,800.00* TOTAL
*payment to be made as provided for in paragraph 35 of Rider
COPYRIGHT 1979 1984. 1986. 1987, 1988 [GRAPHIC OMITTED] All rights reserved This form may not be
GREATER BOSTON REAL ESTATE BOARD [Real Estate Logo] copied or reproduced in whole or in part
in any manner whatsoever without the prior express
written consent of the Greater Boston Real Estate
Board.
<PAGE>
8. TIME FOR Such deed is to be delivered at 10:00 o'clock AM on the 27th day of December 1995* at the
PERFORMANCE; Office of Atty. Wayne Mathews or at Plymouth County Registry of Deeds at Brockton, MA.
DELIVERY OF It is agreed that time is of the essence of this agreement.
DEED (fill in) * or such sooner date as agreed to between the parties.
9. POSSESSION AND Full possession of said premises free of all tenants and occupants, except C.W.B.
CONDITION OF CONTRACTORS, INC. herein provided, is to be delivered at the time of the delivery of the
PREMISE deed, said premises to be then (a) in the same condition as they now are, reasonable use and
(attach a list of wear thereof excepted, and (b) not in violation of said building and zoning laws, and (c) in
exceptions, if any) compliance with provisions of any instrument referred to in clause 4 hereof. The BUYER shall
be entitled personally to inspect said premises prior to
the delivery of the deed in order to determine whether the
condition thereof complies with the terms of this clause.
10. EXTENSION TO If the SELLER shall be unable to give title or to make conveyance, or to deliver possession
PERFECT TITLE of the premises, all as herein stipulated, or if at the time of the delivery of the deed the
OR MAKE PREMISES premises do not conform with the provisions hereof, then the SELLER shall use reasonable
CONFORM efforts to remove any defects in title, or to deliver possession as provided herein, or to
(Change period of make the said premises conform to the provisions hereof, as the case may be, in which event
time if desired) the SELLER shall give written notice thereof to the BUYER at or before the time for
performance hereunder, and thereupon the time for performance hereof shall be
extended for a period of thirty days.
11. FAILURE TO If at the expiration of the extended time the SELLER shall have failed so to remove any
PERFECT TITLE defect in title, deliver possession, or make the premises conform, as the case may be, all as
OR MAKE herein agreed, or if at any time during the period of this agreement or any extension
PREMISES thereof, the holder of a mortgage on said premises shall refuse to permit the insurance
CONFORM, etc. proceeds, if any, to be used for such purposes, then any payments made under this agreement
shall be forthwith refunded and all other obligations of the
parties hereto shall cease and this agreement shall be void
without recourse to the parties hereto.
12. BUYER's The BUYER shall have the election, at either the original or any
ELECTION TO extended time for performance, to accept such title as the SELLER
ACCEPT TITLE can deliver to the said premises in their then condition and to
pay therefore the purchase price without deduction, in which case
the SELLER shall convey such title, except that in the event of
such conveyance in accord with the provisions of this clause, if
the said premises shall have been damaged by fire or casualty
insured against, then the SELLER shall, unless the SELLER has
previously restored the premises to their former condition, either
(a) pay over or assign to the BUYER, on delivery of the deed, all
amounts recovered or recoverable on account of such insurance,
less any amounts reasonably expended by the SELLER for any partial
restoration, or
(b) if a holder of a mortgage on said premises shall not permit
the insurance proceeds or a part thereof to be used to restore the
said premises to their former condition or to be so paid over or
assigned, give to the BUYER a credit against the purchase price,
on delivery of the deed, equal to said amounts so recovered or
recoverable and retained by the holder of the said mortgage less
any amounts reasonably expended by the SELLER for any partial
restoration.
13. ACCEPTANCE The acceptance of a deed by the BUYER or his nominee as the case
OF DEED may be, shall be deemed to be a full performance and discharge of
every agreement and obligation herein contained or expressed,
except such as are, by the terms hereof, to be performed after the
delivery of said deed.
14. USE OF To enable the SELLER to make conveyance as herein provided, the
MONEY TO SELLER may, at the time of delivery of the deed, use the purchase
CLEAR TITLE money or any portion thereof to clear the title of any or all
encumbrances or interests, provided that all instruments so
procured are recorded simultaneously with the delivery of said
deed, or reasonably satisfactory arrangements are made for
subsequent record.
15. INSURANCE Until the delivery of the deed, the SELLER shall maintain insurance on said premises as
Insert amount follows:
(list additional Type of Insurance Amount of Coverage
types of insurance
and amounts as (a) Fire and Extended Coverage $ as currently insured
agreed) (b)
16. ADJUSTMENTS water charges, and taxes for the then current fiscal
(list operating ex- year, shall be apportioned and fuel value shall be adjusted, as of
penses, if any, or the day of performance of this agreement and the net amount
attach schedule) thereof shall be added to or deducted from, as the case may be,
the purchase price payable by the BUYER at the time of delivery of
the deed. Uncollected rents for the current rental period shall be
apportioned if and when collected by either party.
17. ADJUSTMENT If the amount of said taxes is not known at the time of the
OF UNASSESSED delivery of the deed, they shall be apportioned on the basis of
AND the taxes assessed for the preceding fiscal year, with a
ABATED TAXES reapportionment as soon as the new tax rate and valuation can be
ascertained; and, if the taxes which are to be apportioned shall
thereafter be reduced by abatement, the amount of such abatement,
less the reasonable cost of obtaining the same, shall be
apportioned between the parties, provided that neither party shall
be obligated to institute or prosecute proceedings for an
abatement unless herein otherwise agreed.
18. BROKER's FEE THE PARTIES REPRESENT THAT NO BROKERAGE COMMISSION IS DUE UNDER THIS
(fill in fee with AGREEMENT
dollar amount or
percentage; also
name of Brokerage
firm(s))
19. BROKER(S)
WARRANTY
(fill in name)
21. BUYER's If the BUYER shall fail to fulfill the BUYER's agreements herein,
DEFAULT all deposits made hereunder by the BUYER shall be retained by the
DAMAGES SELLER as liquidated damages and shall be the Seller's sole and
exclusive remedy at law or in equity.
22. RELEASE BY
HUSBAND OR
WIFE
23. BROKER AS
PARTY
24. LIABILITY OF If the SELLER or BUYER executes this agreement in a representative
TRUSTEE, or fiduciary capacity, only the principal or the estate
SHAREHOLDER, represented shall be bound, and neither the SELLER or BUYER so
BENEFICIARY, etc. executing, nor any shareholder or beneficiary of any trust, shall
be personally liable for any obligation, express or implied,
hereunder.
25. WARRANTIES AND The BUYER acknowledges that the BUYER has not been influenced to enter into this transaction
REPRESENTATIONS nor has he relied upon any warranties or representations not set forth or incorporated in the
(fill in); if none, agreement or previously made in writing, except for the following additional warranties and
state "none"; if representations, if any, made by either the SELLER or the Broker(s): NONE
any listed, indicated
by whom each war-
ranty or represen-
tation was made
26. (omit if not
provided for
in Offer to
Purchase)
27. CONSTRUCTION This instrument, executed in multiple counterparts, is to be
OF AGREEMENT construed as a Massachusetts contract, is to take effect as a
sealed instrument, sets forth the entire contract between the
parties, is binding upon and ensures to the benefit of the parties
hereto and their respective heirs, devisees, executors,
administrators, successors and assigns, and may be cancelled,
modified or amended only by a written instrument executed by both
the SELLER and the BUYER. If two or more persons are named herein
as BUYER their obligations hereunder shall be joint and several.
The captions and marginal notes are used only as a matter of
convenience and are not to be considered a part of this agreement
or to be used in determining the intent of the parties to it.
30. ADDITIONAL The initialed riders, if any, attached hereto, are incorporated herein by reference.
PROVISIONS
SEE RIDER TO PURCHASE AND SALE AGREEMENT HERETO ANNEXED CONTAINING
PARAGRAPHS 31-36.
</TABLE>
FOR RESIDENTIAL PROPERTY CONSTRUCTED PRIOR TO 1978, BUYER MUST ALSO HAVE SIGNED
LEAD PAINT "PROPERTY TRANSFER NOTIFICATION CERTIFICATION"
NOTICE: This is a legal document that creates binding obligations. If not
understood, consult an attorney.
BOSTON BIOMEDICA, INC.
BY: /s/Richard T. Schumacher, President
----------------------------------- -----------------------------
SELLER SELLER
/s/Donald M. Leonard Trustee
------------------------------------- -----------------------------
BUYER BUYER
DONALD M. LEONARD, TRUSTEE
LIVE OAK REALTY TRUST
- -------------------------------------------------------------------------------
Broker(s)
EXTENSION OF TIME FOR PERFORMANCE
The time for the performance of the foregoing agreement is extended until
____ o'clock M. on the _______________________ day of ____________________ 19
_____ , time still being of the essence of this agreement as extended. In all
other respects, this agreement is hereby ratified and confirmed.
This extension, executed in multiple counterparts, is intended to take
effect as a sealed instrument.
- ----------------------------------- -----------------------------
SELLER (or spouse) SELLER
- ----------------------------------- -----------------------------
BUYER BUYER
---------------------------------------------------------------------
Broker(s)
RIDER TO PURCHASE AND SALE AGREEMENT BETWEEN BOSTON BIOMEDICA, INC., SELLER AND
DONALD M. LEONARD, TRUSTEE, LIVE OAK REALTY TRUST, BUYER, WITH RESPECT TO THE
PREMISES AT 80 MANLEY STREET, WEST BRIDGEWATER, MA
31. NOTICES: All notices under this Agreement shall be in writing and shall be
delivered personally or shall be sent by U.S. Post Office, Express Mail, Federal
Express, return receipt requested, addressed as follows:
TO SELLERS: KEVIN W. QUINLAN, SR. VICE PRESIDENT
CHIEF FINANCIAL OFFICER
BOSTON BIOMEDICA, INC.
375 West Street
Bridgewater, MA 02329
With a copy to: HOWARD L. LEVIN, ESQUIRE
BROWN RUDNICK FREED & GESMER
1 FINANCIAL CENTER
BOSTON, MA 02111
TO BUYER: DONALD M. LEONARD, TRUSTEE
LIVE OAK REALTY TRUST
80 Manley Street
West Bridgewater, MA 02379
With a copy to: James M. Burke, Esquire
48 North Pearl Street
Brockton, MA 02401
32. AFFIDAVITS: Seller agrees to execute at the time of closing customary
affidavits or other documents required by the title insurance company insuring
title to the Premises as may be necessary to delete the standard exceptions for
mechanic's liens, and for claims of tenants. Seller agrees to execute such
affidavits required by Section 1445 of the Internal Revenue Code.
33. CAPTIONS: The captions in this Agreement are inserted for convenience of
reference only and in no way define, describe or limit the scope or intent of
this Agreement or any of the provisions thereof.
34. SELLER'S RIGHT OF OPTION AND FIRST REFUSAL:
The Buyer and the Seller agree that the Seller shall have a right of
first refusal to purchase the property for a period of ten (10) years from the
date of this Agreement, if offered for sale by the owner at the same or equal
sales price as long as the Buyer holds title to the property and Seller, or its
successor, is still an operating entity. The Buyer (Oak) will provide copies of
any bonified written offer to purchase the property to the Seller (Boston)
within seven (7) calendar days of receipt. Boston shall then have the right to
purchase at the same price by giving written notice to Oak within thirty (30)
calendar days. Boston will purchase the property at the offered selling price
within sixty (60) days of its notification of intent to purchase at the Plymouth
County Registry of Deeds. Should Boston not notify Oak of its intent to purchase
or not purchase the property on or before the date required, Oak shall be free
to sell the property to any third party, at that purchase price, for a period of
three months. If the Property is not sold at that purchase price within said
three month period, any subsequent offer to sell within said ten (10) year
period shall be subject to this right of refusal.
The foregoing right of refusal shall be incorporated into the Deed by
including the following language in the Deed: [SEE EXHIBIT "B"].
Further, the Seller shall have an option to purchase the subject property
at any time after June 27, 2000, subject to the proviso set forth below,
provided the Seller gives the Buyer written notice of its intent to repurchase
at the then current fair market value, as set forth in the following language to
be inserted into the Deed:
Said premises (the "Premises') are conveyed subject to an option to
purchase in favor of Grantor, its successors and/or assigns (hereinafter
referred to as "BBI"). To that end BBI hereby reserves an option to purchase
(the "Option") the Premises upon the following terms and conditions:
1. BBI may exercise the Option at any time from and after the date of
June 27, 2000 through and including June 27, 2015, (provided, however, that BBI
may exercise the Option prior to June 27, 2000, upon the failure of Grantee to
perform the Grantee's options under that certain Parking and Service Agreement
dated December 20, 1995, between Grantee and BBI), by giving written notice to
Grantee (hereinafter referred to as "OAK"), its successors and/or assigns of its
intent to exercise the Option in the manner required hereunder (the "Option
Notice").
2. The Option Notice shall specify (a) the name, address and telephone
number of a real estate appraiser doing business in West Bridgewater,
Massachusetts, whom BBI wishes to provide a fair market value appraisal with
respect to the Premises, and (b) a date and time between 9:00 a.m. and 3:00 p.m.
on any day on which the Plymouth County Registry of Deeds is open for business
on which BBI wishes the closing of the acquisition of the Premises to take
place, said date to be not less than nine months after the date on which the
option notice is given. Within seven days from Oak's receipt of the Option
Notice, Oak shall give written notice (the "Response Notice") to BBI specifying
the name, address and telephone number of a real estate appraiser familiar with
commercial real estate values and doing business in West Bridgewater,
Massachusetts, whom Oak wishes to provide a fair market value appraisal with
respect to the Premises.
3. BBI and Oak shall use best efforts to obtain, within seven days from the
date of the Response Notice, written appraisals of the fair market value of the
Premises without consideration of any brokerage commission, from the real estate
appraisers specified in each of the Option Notice and Response Notice. If the
values stated by such appraisers differ by less than $10,000.00, the average of
such values shall be deemed to be the fair market value of the Premises. If such
values differ by $10,000.00 or more, BBI and Oak shall use good faith efforts to
agree to a value, provided, however, if the parties are unable to agree within
seven days from the date the later of the two appraisals is received, BBI shall
request the two appraisers to select a third appraiser whose determination of
value shall be deemed to be the fair market value, provided the third
appraiser's value shall not exceed or be less than the values determined by the
prior two appraisers. If the third appraiser's value exceeds the high appraisal
of the two, the high appraisal of the first two shall be deemed the fair market
value. If the third appraiser's value is below the low appraisal of the two, the
low appraisal of the first two shall be deemed the fair market value. BBI shall
have fourteen days from the date of receipt of the determination of fair market
value, in accordance with this paragraph, to notify Oak whether BBI elects to
complete the acquisition of the Premises at a purchase price (the "Purchase
Price") equal to the fair market value as determined pursuant to this paragraph.
In the event that BBI elects not to complete the acquisition of the Premises for
the Purchase Price, this option shall terminate. If BBI elects to proceed with
the acquisition of the premises for the Purchase Price, the closing shall take
place at the Plymouth County Registry of Deeds at the time and on the date
specified (the "Closing Date") in the Option Notice, unless another time or
place is mutually agreed upon in writing.
4. At the closing, BBI shall tender the full Purchase Price for the
Premises, determined in accordance with the preceding paragraph, by certified,
cashiers, treasurers or bank check(s), and Oak shall deliver to BBI a Quitclaim
Deed to the premises, conveying good and clear record and marketable title to
the premises, free and clear from encumbrances other than (a) provisions of
existing building and zoning laws, (b) such taxes for the then current year as
are not due and payable on the date of the delivery of such Deed, (c) any liens
for municipal betterments assessed after the date of the Option Notice, and (d)
easements, restrictions and reservations of record, if any, so long as the same
do not prohibit or materially interfere with the current use of the Premises.
Oak agrees that, prior to the expiration of this Option, Oak will not suffer or
permit the Premises to be encumbered by any lien beyond the initial mortgage
amount of $100,000.00 without the permission of BBI, and will not permit the
Premises to be contaminated by oil, or other hazardous materials as defined and
described in Massachusetts General Laws Chapter 21C or 21E, or applicable
federal law.
5. Rent, taxes for the then current fiscal year and water and sewer use
charges shall be apportioned, as of the date Closing
Date, and the net amount thereof shall be added to or deducted from, as the case
may be, the Purchase Price payable by BBI at the time of the delivery of the
Deed. If the amount of said taxes is not known at the time of the delivery of
the Deed, they shall be apportioned on the basis of the taxes assessed for the
preceding fiscal year, with a reapportionment as soon as the new tax rate and
valuation can be ascertained; and, if taxes which are apportioned shall
thereafter be reduced by abatement, the amount of such abatement, less the
reasonable cost of obtaining the same, shall be apportioned between the parties,
provided that neither party shall be obligated to institute or prosecute
proceedings for an abatement. Any other obligations of Oak to BBI shall be
applied to reduce the Purchase Price, and any other obligations of BBI to Oak
shall be added to the Purchase Price.
6. If BBI fails to purchase the Premises on the date specified in the
Option Notice, or on such other date as may be agreed upon in writing between
the parties, or if BBI notifies Oak in writing following the determination of
the Purchase Price pursuant to paragraph 3 above that BBI does not wish to
purchase the Premises for the Purchase Price, then this Option shall terminate,
and neither BBI nor Oak shall have any further obligation hereunder, except that
the parties agree to execute a written notice of termination suitable for
recording with the Plymouth County Registry of Deeds.
7. All notices required or which may be given under the terms of this
Option, shall be deemed properly given (a) two business days after being mailed,
postage prepaid, by certified mail, return receipt requested, or (b) one day
after delivered to a national overnight delivery service, or (c) when actually
received by hand delivery, including but not limited to, courier service or
facsimile transmission, to the parties as follows:
if to Oak, to: Donald M. Leonard, Trustee
Live Oak Realty Trust
80 Manley Street
West Bridgewater, MA 02379
if the to BBI, to: Boston Biomedica, Inc.
375 West Street
West Bridgewater, MA 02379
ATTN: Chief Financial Officer
Either party, may by written notice to the other sent in accordance with the
provisions of this paragraph, change the address for such party to receive
notice.
8. The Option shall be construed as a Massachusetts contract, is to take
effect as a sealed instrument, is binding upon and shall inure to the benefit of
the parties hereto and their respective transferees, successors and assigns, and
may be modified or amended only by a written instrument executed by BBI, Oak or
their respective transferees, successors and assigns.
35. PURCHASE PRICE: The purchase price for the subject property is
$130,800.00 of which the sum of $50,000.00 shall be paid to the Seller in cash,
cashier's check or bank funds. The remainder of the purchase price of $80,800.00
will be paid by means of the attached Promissory Note and the attached Service
and Parking Agreement (marked as Exhibit "A") dated this date between the Seller
and Buyer, by which the Buyer agrees to perform maintenance services on the
Seller's adjacent property at 375 West Street, West Bridgewater, MA, for a
period of fifty four (54) months. For each month of service provided the Buyer
will be credited with a payment toward the outstanding balance of the Promissory
Note of $1,496.29. Upon completion of the Service and Parking Agreement the
Seller shall have received the full purchase price of $130,800.00. For so long
as said Promissory Note remains unsatisfied, or said Service and Parking
Agreement has not been fully and completely performed, whichever is longer,
Buyer will not suffer or permit the Premises to be encumbered by any lien beyond
the first mortgage amount of $100,000.00 without the prior written approval of
the Seller, which approval shall not be unreasonably withheld.
Should the Buyer sell the subject property prior to performance of all
work required under the Service and Parking Agreement, then the Buyer shall
provide the Seller with the balance of funds due under the contract for purchase
less sums credited for services provided.
36. EARLY SALE: The parties agree that the Buyer shall have a period of
fifty-four months from 12/27/95, before the Options to Purchase shall take
effect. The Buyer agrees, therefore, that should the property be sold for a
price above $130,800.00 at any time within the said fifty four (54) months, the
Seller shall be entitled to any excess upon sale, including any additional
payments for services not yet performed under the Service and Parking Agreement
or credited, according to the following formula (the "Appreciation Credit"): If
the property is sold within one month following 12/27/95, the original date of
transfer, the Seller (Boston) shall be entitled to the full proceeds in excess
of $130,800.00. Should the property be sold after the first month, but prior to
the second month, then the Seller (Boston) shall receive 53/54ths of any excess
beyond the purchase price of $130,800.00. This formula shall continue on a
descending scale until the expiration of the 54 months at which time the Seller
(Boston) shall not be entitled to any excess beyond the original purchase price
of $130,800.00. In the event Seller should reacquire the property prior to the
expiration of said 54 month period the Appreciation Credit shall be applied to
reduce the Purchase Price due from the Seller.
SELLER: BUYER:
BOSTON BIOMEDICA, INC.
BY: /s/Richard T. Shumacher, President /s/Donald M. Leonard, Trustee
---------------------------------- -----------------------------
DONALD M. LEONARD, TRUSTEE
LIVE OAK REALTY TRUST
EXHIBIT "A"
LIVE OAK REALTY TRUST
80 Manley Street
West Bridgewater, Massachusetts 02379
December 20, 1995
Boston Biomedica, Inc.
375 West Street
West Bridgewater, MA 02379
RE: Parking and Service Agreement
Fifty Four month agreement from
December 27, 1995 to June 27, 2000
The intent of this Agreement is to supply ten parking spaces and building and
yard maintenance for the benefit of 375 West Street, Brockton, MA. This
Agreement includes the following:
1. Ten additional parking spaces for Boston Biomedica at 80 Manley Street (see
attached parking plan).
2. Snow removal services as required to keep parking area and sidewalks clean
and passable.
3. Law mowing services-keeping law mowed to a reasonable appearance and
fertilizing as necessary.
4. Supply labor for maintenances as required and requested (it being the
intention of the parties that labor and maintenance provided shall average
approximately 20.6 hours per month) for:
a. weeding, mulching, trimming of bushes;
b. snow shoveling and installation of ice melt;
c. Exterior building maintenance-roof work,
caulking, repairs and cleaning;
d. interior repairs;
e. or any services required by BBI.
This Agreement does not include any materials. All materials will be supplied at
cost or by Boston Biomedica.
In consideration for the services provided in accordance with this Agreement,
Live Oak shall be credited an amount equal to $1,496.29 per month, which amount
is equal to, and shall be credited as, the
Boston Biomedica, Inc.
December 20, 1995
Page 2
monthly payment due under that certain Promissory Note made by Live Oak to the
order of Boston Biomedica, Inc., dated as of December 20, 1995. Any default
under or failure by Live Oak to perform this Agreement that remains uncured for
ten (10) days after BBI provides notice to Oak, shall constitute an event of
default under said Promissory Note.
This Agreement is for the benefit of and has been fully performed by Boston
Biomedica and its successors and assigns and is not cancelable for the term of
the Agreement. It can be extended by mutual agreement between both parties.
Your signature below and our acceptance thereof will formalize the Agreement.
BOSTON BIOMEDICA INC. LIVE OAK REALTY TRUST
BY: /s/Richard T. Shumacher BY: /s/Donald M. Leonard
----------------------- -----------------------
TITLE: President TITLE: Trustee
-------------------- --------------------
DATE: 12/27/95 DATE: 12/27/95
-------------------- ---------------------
QUITCLAIM DEED
Property Address: 80 Manley Street, West Bridgewater, Massachusetts
Boston Biomedica, Inc., a Massachusetts corporation having an address at 375
West Street, West Bridgewater, Plymouth County, Massachusetts ("Grantor"), in
consideration of ONE HUNDRED THIRTY THOUSAND EIGHT HUNDRED ($130,800.00) DOLLARS
paid, grants to DONALD M. LEONARD, TRUSTEE of LIVE OAK REALTY TRUST, u/d/t dated
June 30, 1995 recorded herewith, having an address at 80 Manley Street, West
Bridgewater, Massachusetts ("Grantee"),
the land with buildings thereon located at 80 Manley Street, West Bridgewater,
Plymouth County, Massachusetts, more particularly described as follows:
The land in West Bridgewater, Plymouth County, Massachusetts on the northerly
side of West Street and the westerly side of Manley Street as shown as Lot 2A on
a plan entitled, "Plan of Land in West Bridgewater, Massachusetts owned by
C.W.B. Contractors, Inc., June 11, 1985" said plan being recorded in Plymouth
County Registry of Deeds in Plan Book 26, Page 260.
Being the same premises conveyed to Grantor by deed dated December 11, 1995 from
JAMES LEONARD, TRUSTEE, C.W.B. REALTY TRUST u/d/t dated March 21, 1988, recorded
at Plymouth County Registry of Deeds at Book 8406, Page 168, which deed recorded
at Plymouth County Registry of Deeds at Book 14018 Page ___.
Said premises (the "Premises") are conveyed subject to an option to
purchase in favor of Grantor, its successors and/or assigns (hereinafter
referred to as "BBI"). To that end BBI hereby reserves an option to purchase
(the "Option") the Premises upon the following terms and conditions:
1. BBI may exercise the Option at any time from and after the date of June
27, 2000 through and including June 27, 2015 (provided, however, that
BBI may exercise the Option prior to June 27, 2000, upon the failure of
Grantee to perform any of Grantee's obligations under that certain
Service and Parking Agreement dated December 20, 1995, between Grantee
and BBI), by giving written notice to Grantee (hereinafter referred to
as "OAK"), its successors and/or assigns of its intent to exercise the
Option in the manner required hereunder (the "Option Notice").
2. The Option Notice shall specify (a) the name, address and telephone
number of a real estate appraiser doing business in West Bridgewater,
Massachusetts, whom BBI wishes to provide a fair market value appraisal
with respect to the Premises, and (b) a date and time between 9:00 a.m.
and 3:00 p.m. on any day on which the Plymouth County Registry of Deeds
is open for business on which BBI wishes
- 1 -
the closing of the acquisition of the Premises to take place, said date
to be not less than nine nor more than thirty-six months after the date
on which the Option Notice is given. Within seven days from OAK's
receipt of the Option Notice, OAK shall give written notice (the
"Response Notice") to BBI specifying the name, address and telephone
number of a real estate appraiser familiar with commercial real estate
values and doing business in West Bridgewater, Massachusetts, whom OAK
wishes to provide a fair market value appraisal with respect to the
Premises.
3. BBI and OAK shall use best efforts to obtain, within seven days from
the date of the Response Notice, written appraisals of the fair market
value of the Premises without consideration of any brokerage
commission, from the real estate appraisers specified in each of the
Option Notice and Response Notice. If the values stated by such
appraisers differ by less than $10,000.00, the average of such values
shall be deemed to be the fair market value of the Premises. If such
values differ by $10,000.00 or more, BBI and OAK shall use good faith
efforts to agree to a value, provided, however, if the parties are
unable to agree within seven days from the date the later of the two
appraisals is received, BBI shall request the two appraisers to select
a third appraiser whose determination of value shall be deemed to be
the fair market value, provided that the third appraiser's value shall
not exceed the greater of, or be less than the lesser of, the two
values determined by the prior two appraisers. If the third appraiser's
value exceeds the high appraisal of the two, the high appraisal of the
first two shall be deemed the fair market value. If the third
appraiser's value is less than the low appraisal of the two, the low
appraisal of the first two shall be deemed the fair market value. BBI
shall have fourteen days from the date of receipt of the determination
of fair market value, in accordance with this paragraph, to notify OAK
whether BBI elects to complete the acquisition of the Premises at a
purchase price (the "Option Purchase Price") equal to the fair market
value as determined pursuant to this paragraph. In the event that BBI
elects not to complete the acquisition of the Premises for the Option
Purchase Price, this Option shall terminate. If BBI elects to proceed
with the acquisition of the Premises for the Option Purchase Price, the
closing shall take place at the Plymouth County Registry of Deeds at
the time and on the date specified (the "Closing Date") in the Option
Notice, unless another time or place is mutually agreed upon in
writing.
4. At the closing, BBI shall tender the full Option Purchase Price for the
Premises, determined in accordance with the preceding paragraph, by
certified, cashiers, treasurers or bank check(s), and OAK shall deliver
to BBI a Quitclaim Deed to the Premises, conveying good and clear
record and marketable title to the premises, free and clear from
encumbrances other than (a) provisions of existing building and zoning
laws, (b) such taxes for the then current year as are not due and
payable on the date of the delivery of such Deed, (c) any liens for
municipal betterments assessed after the date of the Option Notice, and
(d) easements, restrictions and reservations of record, if any, so long
as the same do not prohibit
- 2 -
or materially interfere with the current use of the Premises. OAK
agrees that, prior to the expiration of this Option, OAK will not
suffer or permit the Premises to be encumbered by any lien beyond the
initial mortgage amount of $100,000.00 without the permission of BBI,
and will not permit the Premises to be contaminated by oil, or other
hazardous materials as defined and described in Massachusetts General
Laws Chapter 21C or 21E, or applicable federal law.
5. Rent, taxes for the then current fiscal year and water and sewer use
charges shall be apportioned, as of the date Closing Date, and the net
amount thereof shall be added to or deducted from, as the case may be,
the Option Purchase Price payable by BBI at the time of the delivery of
the Deed. If the amount of said taxes is not known at the time of the
delivery of the Deed, they shall be apportioned on the basis of the
taxes assessed for the preceding fiscal year, with a reapportionment as
soon as the new tax rate and valuation can be ascertained; and, if
taxes which are apportioned shall thereafter be reduced by abatement,
the amount of such abatement, less the reasonable cost of obtaining the
same, shall be apportioned between the parties, provided that neither
party shall be obligated to institute or prosecute proceedings for an
abatement. Any other obligations of OAK to BBI shall be applied to
reduce the Option Purchase Price, and any other obligations of BBI to
OAK shall be added to the Option Purchase Price.
6. If BBI fails to purchase the Premises on the date specified in the
Option Notice, or on such other date as may be agreed upon in writing
between the parties, or if BBI notifies OAK in writing following the
determination of the Option Purchase Price pursuant to paragraph 3
above that BBI does not wish to purchase the Premises for the Option
Purchase Price, then this Option shall terminate, and neither BBI nor
OAK shall have any further obligation hereunder, except that the
parties agree to execute a written notice of termination suitable for
recording with the Plymouth County Registry of Deeds.
The Premises are also conveyed subject to a right of first refusal in
favor of BBI. To that end, BBI hereby reserves a right of first refusal (the
"Right of Refusal") with respect to the Premises upon the following terms and
conditions:
A. OAK shall not sell all or any portion of the legal or beneficial
ownership in the Premises for a period of ten (10) years from the date
of this Deed without first offering to sell the Premises to BBI, as
hereinafter set forth.
B. In the event that OAK shall receive any bona fide written offer (the
"Offer") to purchase the Premises, or any interest therein, OAK shall
provide a copy of such offer within seven (7) calendar days of receipt
of such offer, together with a written offer to sell the Premises, or
such interest therein, for the purchase price set forth in the Offer.
BBI shall have the right to elect to purchase the Premises, or such
portion thereof described in the Offer, for the purchase price
specified in the Offer, by giving written notice to OAK within thirty
(30) days of receipt by BBI of the
- 3 -
Offer (the "Acceptance Notice"). The Acceptance Notice shall specify
the time, date and place within Plymouth or Suffolk County that the
closing is to take place, provided that such date shall be not more
than sixty (60) days from the date of giving the Acceptance Notice.
C. In the event that BBI elects to purchase the Premises at the purchase
price stated in the Offer, BBI shall purchase the Premises as set forth
in the Acceptance Notice. At the closing, BBI shall tender the full
purchase price for the Premises, as specified in the Offer, by
certified, cashiers, treasurers or bank check(s), and OAK shall deliver
to BBI a Quitclaim Deed to the Premises, conveying good and clear
record and marketable title to the premises, free and clear from
encumbrances other than (a) provisions of existing building and zoning
laws, (b) such taxes for the then current year as are not due and
payable on the date of the delivery of such Deed, (c) any liens for
municipal betterments assessed after the date of the Acceptance Notice,
and (d) easements, restrictions and reservations of record, if any, so
long as the same do not prohibit or materially interfere with the
current use of the Premises. OAK agrees that, prior to the expiration
of this Right of Refusal, OAK will not suffer or permit the Premises to
be encumbered by any lien beyond the initial mortgage amount of
$100,000.00 without the permission of BBI, and will not permit the
Premises to be contaminated by oil, or other hazardous materials as
defined and described in Massachusetts General Laws Chapter 21C or 21E,
or applicable federal law. Rent, taxes for the then current fiscal year
and water and sewer use charges shall be apportioned, as of the date
closing date specified in the Acceptance Notice, and the net amount
thereof shall be added to or deducted from, as the case may be, the
purchase price payable by BBI at the time of the delivery of the Deed.
If the amount of said taxes is not known at the time of the delivery of
the Deed, they shall be apportioned on the basis of the taxes assessed
for the preceding fiscal year, with a reapportionment as soon as the
new tax rate and valuation can be ascertained; and, if taxes which are
apportioned shall thereafter be reduced by abatement, the amount of
such abatement, less the reasonable cost of obtaining the same, shall
be apportioned between the parties, provided that neither party shall
be obligated to institute or prosecute proceedings for an abatement.
Any other obligations of OAK to BBI shall be applied to reduce the said
purchase price, and any other obligations of BBI to OAK shall be added
to said purchase price.
D. If BBI notifies OAK that it does not elect to purchase the Premises for
the purchase price stated in the Offer, or if BBI does not give the
Acceptance Notice on or before the date required, OAK shall be free to
sell the Premises to any third party for a period of three (3) months
at the purchase price specified in the Offer. If the Premises are not
sold at that purchase price within that three (3) month period, any
subsequent offer to purchase the Premises shall be subject to the Right
of Refusal.
- 4 -
E. If, after giving the Acceptance Notice, BBI fails to purchase the
Premises on the date specified in the Acceptance Notice, or on such
other day as may be agreed upon in writing between the parties, or if
BBI fails or declines to give the Acceptance Notice and OAK sells the
Premises for the purchase price specified in the Offer to a bona fide
third party within the three (3) month period provided in the preceding
paragraph, or if BBI ceases to exist as a going concern leaving no
assignee or successor by merger, acquisition or other reorganization,
then this Right of Refusal shall terminate, and neither BBI nor OAK
shall have any further obligation hereunder, except that the parties
agree to execute a written notice of termination suitable for recording
with the Plymouth County Registry of Deeds.
All notices required or which may be given under the terms of the
Option or the Right of Refusal, shall be deemed properly given (a) two business
days after being mailed, postage prepaid, by certified mail, return receipt
requested, or (b) one day after delivered to a national overnight delivery
service, or (c) when actually received by hand delivery, including but not
limited to, courier service or facsimile transmission, to the parties as
follows:
if to OAK, to: Donald M. Leonard, Trustee
Live Oak Realty Trust
80 Manley Street
West Bridgewater, MA 02379
if to BBI, to: Boston Biomedica, Inc.
375 West Street
West Bridgewater, MA 02379
ATTN: Chief Financial Officer
Either party, may by written notice to the other sent in accordance with the
provisions of this paragraph, change the address for such party to receive
notice.
Each of the Option and the Right of Refusal shall be construed as a
Massachusetts contract, is to take effect as a sealed instrument, shall run with
the land, is binding upon and shall inure to the benefit of the parties hereto
and their respective transferees, successors and assigns, and may be modified or
amended only by a written instrument executed by BBI, OAK or their respective
transferees, successors and assigns.
- 5 -
Executed as a sealed instrument as of the 20th day of December, 1995.
GRANTOR: BOSTON BIOMEDICA, INC.
By: /s/Richard T. Shumacher
--------------------------------
Richard T. Schumacher, President
By: /s/Kevin W. Quinlan
--------------------------------
Kevin W. Quinlan, Treasurer
GRANTEE:
/s/Donald M. Leonard, Trustee
------------------------------------
Donald M. Leonard, Trustee of Live Oak
Realty Trust, as aforesaid
COMMONWEALTH OF MASSACHUSETTS
PLYMOUTH, SS December 28, 1995
Then personally appeared the above named Kevin W. Quinlan, Treasurer
as aforesaid, and acknowledged the foregoing instrument to be his free act and
deed, and the free act and deed of Boston Biomedica, Inc., before me,
/s/Candice J. Kobyluck
---------------------------
,Notary Public
My commission expires: June 1, 2001
COMMONWEALTH OF MASSACHUSETTS
PLYMOUTH, SS December 28, 1995
Then personally appeared the above named Donald M. Leonard, Trustee
of Live Oak Realty Trust, as aforesaid, and acknowledged the foregoing
instrument to be his free act and deed, before me,
/s/Candice J. Kobyluck
---------------------------
,Notary Public
My commission expires: June 1, 2001
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EXHIBIT 10.14
STOCK PURCHASE AGREEMENT
------------------------
This Stock Purchase Agreement is entered into as of April 26, 1996, by
and between Kyowa Medex Co., Ltd. ("Investor") and Boston Biomedica, Inc., a
Massachusetts corporation (the "Company").
RECITALS
The Investor desires to purchase from the Company that number of shares
of Common Stock, $.01 par value per share, set forth in paragraph 1 hereof (the
"Shares").
The Investor is currently the exclusive distributor in Japan of the
Company's products. The Company and the Investor are currently negotiating the
terms and conditions of a formal agreement pursuant to which the Investor will
continue as the exclusive distributor of the Company's products in Japan.
AGREEMENT
For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree as follows:
1. Purchase of Shares; Payment. Investor hereby agrees to purchase from the
Company, and the Company hereby agrees to sell to the Investor, 235,295 Shares,
in accordance with the terms hereof. The purchase price shall be $4.25 for each
Share being acquired, or $1,000,003.75 in the aggregate. The closing of the
purchase and sale contemplated hereby shall be on a date determined by mutual
agreement of the parties, provided that the closing shall take place on or
before April 30, 1996.
2. Agreement to be Bound by Securities Laws. By executing this Stock Purchase
Agreement, the Investor agrees as follows: the Shares offered hereby have not
been and will not be registered under the United States Securities Act of 1933,
as amended, and the rules and regulations promulgated thereunder (the "1933
Act"), and Investor shall not offer or sell the Shares offered hereby within the
United States (as defined in Regulation S of the 1933 Act) or to, or for the
account or benefit of, U.S. Persons (as defined in Regulation S of the 1933 Act)
except in accordance with Regulation S of the 1933 Act, or pursuant to a
registration statement under the 1933 Act or an exemption from the registration
requirements of such Act.
3. Representations. Investor represents and warrants that:
(a) All information provided to the Corporation concerning Investor is
true and correct in all respects as of the date thereof;
(b) Investor is acquiring the Shares subscribed for hereunder for its
own account for investment and not for the account of another nor with a view
to, or for resale in connection with, any distribution or public offering
thereof within the meaning of the Securities Act, the state
securities laws of the applicable jurisdiction, or the rules and regulations
promulgated thereunder;
(c) Investor is able financially to bear the risk of losing its entire
investment, has adequate means of providing for its current needs and possible
contingencies, and has no need for liquidity of this investment;
(d) Investor has itself, or is relying on a qualified purchaser
representative who has, sufficient knowledge and expertise in business, tax and
financial matters to be able to evaluate the risks and merits inherent in
investments of this type;
(e) Investor and/or its professional adviser or purchaser representative
has received information from the Corporation with respect to all matters it
considers material to its investment decision, has had the opportunity to ask
questions of the officers of the Corporation on any matter material to its
investment decision, and all such questions have been answered to its
satisfaction;
(f) Investor acknowledges that no representations have been made to it
orally or in writing regarding the Corporation except by means of responses by
the officers of the Corporation to questions asked and written information
furnished in response to requests by Investor for such information pursuant to
paragraph 3(e) above, and by executing this Agreement, Investor acknowledges
that it is not relying upon any representations or information other than
representations or information furnished in response to questions and requests
for information under paragraph 3(e), and the results of its own investigation
or that of its financial adviser or purchaser representative; and
(g) Investor understands that an investment in the Shares involves a
high degree of risk.
Investor understands that the Corporation will rely upon these
representations and warranties and those contained in paragraph 4 in determining
its exemption from registration of the offering of the Shares under the
Securities Act and applicable state securities laws.
4. Additional Representations and Covenants. Investor certifies, represents and
warrants to, and covenants and agrees with, the Company as follows:
(a) Investor is not organized under the laws of any jurisdiction within
the United States, was not formed by a U.S. Person (as defined in Section 902(o)
of Regulation S) for the purpose of investing in Regulation S securities and is
not otherwise a U.S. Person. Investor is not, and on the closing date will not
be, an affiliate of the Company;
(b) At the time the buy order for the Shares was originated, Investor
was outside the United States and is outside of the United States as of the date
of the execution and delivery of this Agreement;
(c) No offer to purchase the Shares was made in the United States;
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(d) Investor is purchasing the Shares for its own account and not for
the account or benefit of any U.S. Persons, and Investor is qualified to
purchase the Shares under the laws of its residence and the offer and sale of
the Shares will not violate the securities or other laws of such jurisdiction;
(e) Any offers and sales of the Shares by Investor permitted hereunder
shall be made in compliance with any applicable securities laws of any
applicable jurisdiction and in accordance with Rule 903 or 904, as applicable,
of Regulation S or pursuant to registration of the Shares under the 1933 Act or
pursuant to an exemption from registration;
(f) The transactions contemplated by this Agreement (a) have not been
and will not be prearranged by Investor with a purchaser located in the United
States or a purchaser which is a U.S. Person, and (b) are not and will not be
part of a plan or scheme by Investor to evade the registration provisions of the
1933 Act;
(g) Investor understands that the Shares are not registered under the
1933 Act and are being offered and sold to it in reliance on specific exemptions
from the registration requirements of Federal and State securities laws, and
that the Company is relying upon the truth and accuracy of the representations,
warranties, agreements, acknowledgments and understandings of Investor set forth
herein in order to determine the applicability of such exemptions and the
suitability of Investor to acquire the Shares;
(h) Investor has not conducted and shall not conduct any "directed
selling efforts," as that term is defined in Rule 902(b) of Regulation S, nor
has Investor conducted any general solicitation relating to the offer and sale
of the Shares in the United States or elsewhere;
(i) Any invitations, offers or sales of, or in respect of, the Shares by
Investor and any distribution by Investor of any documents relating to any offer
by it of the Shares will be in compliance with applicable laws and regulations
and will be made in such a manner that no prospectus need be filed and no other
filing need be made by the Company with any regulatory authority or stock
exchange in any country or any political subdivision of any country;
(j) Investor will not make any offer or sale of the Shares by any means
which would not comply with the laws and regulations of the territory in which
such offer or sale takes place or to which such offer or sale is subject or
which would in connection with any such offer or sale impose upon the company
any obligation to satisfy any public filing or registration requirement or
provide or publish any information of any kind whatsoever or otherwise undertake
or become obliged to do any act;
(k) Neither Investor nor any of its affiliates has entered into, has the
intention of entering into, or will during the Restricted Period enter into, any
put option, short position or other similar instrument or position with respect
to the Shares or securities of the same class as the Shares;
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(l) Investor has an overall commitment to investments which are not
readily marketable which is not disproportionate to the Investor's net worth and
which, with the investment in the Shares, will not cause such overall commitment
to become excessive;
(m) Investor was not formed for the specific purpose of making this
investment, has been in existence for more than one year and is investing less
than 25% of its capital in the Corporation; and
(n) Investor is a corporation or other entity not formed for the
specific purpose of acquiring the Shares, and Investor has total assets in
excess of Five Million United States Dollars ($5,000,000).
5. Representations and Warranties of the Company. The Company hereby represents
and warrants to the Investor that:
(a) Organization and Qualification. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all required corporate power and
authority to own its property, to carry on its business as presently conducted
and to carry out the transactions contemplated hereby. The Company is qualified
to do business as a foreign corporation and is in good standing in each
jurisdiction where such qualification is required.
(b) Subsidiaries. The Company has no investments in any other
corporation or business organization except its investments in the following
Subsidiaries:
Name of Subsidiary Place of Incorporation
- ------------------ ----------------------
BBI - North American Clinical Connecticut
Laboratories, Inc.
BTRL Contracts and Services, Inc. Maryland
(d/b/a) Biotech Research Laboratories
Each Subsidiary is duly organized, validly existing and in good standing under
the laws of the state of its incorporation and is qualified to do business as a
foreign corporation and is in good standing in each jurisdiction where such
qualification is required. Each Subsidiary has all required corporate power and
authority to own its property and to carry on its business as presently
conducted. All of the outstanding shares of capital stock of each Subsidiary are
owned by the Company, which has good and marketable title thereto free of any
lien, restriction or encumbrance, and said shares have been duly issued and are
validly outstanding.
(c) Capitalization. The authorized capital stock of the Company
consists of 15,000,000 shares of Common Stock, .01 par value, of which 5,280,835
shares are validly issued and outstanding, fully paid and non-assessable.
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(d) Authorization of Transaction. The execution, delivery and
performance of this Agreement have been duly authorized by all necessary
corporate or other action of the Company and it is the valid and binding
obligation of the Company, enforceable in accordance with its terms, subject to
laws of general application relating to bankruptcy, insolvency and the relief of
debtors. The issuance of the Shares pursuant to the terms of this Agreement
shall be duly and validly authorized, and no further approval or authority of
the shareholders or the directors of the Company or of any governmental
authority or agency will be required for the issuance and sale of the Shares as
contemplated by this Agreement. When issued and sold to the Investors, the
Shares will be duly and validly issued, fully paid and non-assessable.
(e) Approvals; Compliance With Laws. Neither the Company nor any
Subsidiary is in violation of its Charter or by-laws as of the date hereof. The
execution, delivery and performance of this Agreement and the transactions
contemplated hereby (i) do not require any approval or consent of, or filing
with, any governmental agency or authority in the United States of America or
otherwise which has not been obtained and which is not in full force and effect
as of the date hereof, (ii) will not conflict with or constitute a breach or
violation of the respective Charters or by-laws of the Company or any
Subsidiary, and (iii) will not result in a violation of or any law or regulation
to which they are subject.
(f) Condition of Properties. All of the Company's and its Subsidiaries'
properties, machinery and equipment which are necessary to the business of the
Company or any Subsidiary is in good condition and repair.
(g) Payment of Taxes. The Company and each of its Subsidiaries have
filed all federal, state and local income, excise or franchise tax returns, real
estate and personal property tax returns, sales and use tax returns and other
tax returns required to be filed by them and have paid all taxes owing by them
except taxes which have not yet accrued or otherwise become due. Neither the
Internal Revenue Service nor any other taxing authority is now asserting or, to
the knowledge of the Company or any Subsidiary, threatening to assert against
the Company or any Subsidiary any deficiency or claim for additional taxes or
interest thereon or penalties in connection therewith.
(h) Compliance with Instruments. Neither the Company nor any Subsidiary
is in default in the performance of any material obligation, agreement or
condition contained in any bond or debenture or any other evidence of
indebtedness or any indenture or loan agreement of the Company or any Subsidiary
which default affords to any person the unconditional right to accelerate any
material indebtedness or terminate any material right or agreement of the
Company or any Subsidiary. Neither the execution and delivery of this Agreement,
nor the fulfillment of the terms herein set forth, nor the consummation of the
transactions contemplated hereby, will (i) conflict with or constitute a breach
of, default under or violation of any agreement, indenture, mortgage, deed of
trust or other material instrument or undertaking by which the Company or any of
the Subsidiaries is bound or to which they or any of their respective properties
are subject, or (ii) result in a violation of any court decree binding upon the
Company or any of the Subsidiaries, or (iii) result in the creation or
imposition of any material
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lien, charge or encumbrance upon any property or assets of the Company or any of
the Subsidiaries.
(i) Litigation. There is no litigation pending or, to the knowledge of
the Company, any Subsidiary, threatened against the Company or any Subsidiary
and there are no outstanding court orders, court decrees, or court stipulations
to which the Company or any of its Subsidiaries is a party which question this
Agreement or affect the transactions contemplated hereby, or which will or could
result in any materially adverse change in the business, properties, operations,
prospects, assets or in the condition, financial or otherwise, of Company or any
of its Subsidiaries. Neither the Company nor any Subsidiary has reason to
believe that any such action, suit, proceeding or investigation may be brought
against the Company or any of its Subsidiaries.
(j) Permits and Licenses; Compliance with Law. The Company and each of
its Subsidiaries have all necessary franchises, permits, licenses and other
rights and privileges necessary to permit them to own their properties and to
conduct their present business. Neither the Company nor any Subsidiary is in
violation of any law, regulation, authorization or order of any public authority
relevant to the ownership of its properties or the carrying on of its present
business which violation would have a material adverse effect on the Company and
its subsidiaries taken as a whole.
(k) Descriptive Memorandum. The Company's Descriptive Memorandum dated
June 1995 furnished to the Investor prior to the date hereof describes all
material aspects of the business of the Company and its Subsidiaries, contains
no untrue or misleading statement of a material fact or any omission to state a
fact material to the business of the Company and its Subsidiaries or necessary
to make the statements contained therein not misleading, except however, with
respect to the financial projections contained therein, which have been revised
and furnished to the Investor and are included as Exhibit A hereto.
(l) Financial Projections. Attached hereto as Exhibit A are financial
projections dated April 10, 1996 prepared by the Company. The Company believes
that the assumptions upon which such financial projections are based are
reasonable. However, there can be no assurance that actual results will not vary
materially from those contained in the projections. Investor acknowledges that
it has received and has read and understands the risk factors described in the
Company's Descriptive Memorandum dated June 1995. Investor further acknowledges
that actual results may differ materially from those contained in the financial
projections as a result of a number of important factors, including those risk
factors described in the Company's Descriptive Memorandum.
6. Registration Rights. The Company hereby grants the following rights with
respect to the Shares.
(a) "Piggy-Back" Registration. If at any time after the expiration of
the one-year period following the Company's initial public offering, the Company
shall determine to register under the Securities Act of 1933 any of its common
stock (other than on Form S-8 or Form S-4
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or their then equivalents relating to shares of common stock issuable in
connection with any stock option or other employee benefits plan or shares of
common stock to be issued solely in connection with an acquisition of any entity
or business), it shall send to Investor written notice of such determination
and, if within 5 days after receipt of such notice, Investor so requests in
writing, the Company shall include in such registration statement all or any
part of the Shares as to which Investor requests inclusion in the registration
statement. The Company shall cause the managing underwriter of the proposed
offering to offer the Shares on the same terms and conditions as the capital
stock to be included in the offering by the Company. Notwithstanding the
foregoing, if in connection with any underwritten offering, the managing
underwriter shall impose a limitation on the number of shares of common stock
which may be included in any such registration statement because, in its
judgment, such limitation is necessary to effect an orderly public distribution
of the common stock and to maintain a stable market for the securities of the
Company, then the Company shall be obligated to include in such registration
statement only such limited portion (which may be none) of the Shares with
respect to which Investor has requested registration. The obligations of the
Company under this section shall expire and terminate at such time as Investor
shall be entitled to sell such securities without restriction and without
registration under the Securities Act, pursuant to subparagraph (k) of Rule 144
as promulgated by the Securities and Exchange Commission.
(b) Demand Registration Rights. One time after the expiration of the
one-year period following the Company's initial public offering, within sixty
(60) days of the written request of the Investor, the Company shall file a
Registration Statement on Form S-3 (or any successor Form) under the Securities
Act of 1933, and use its best efforts to cause the Shares to be registered for
resale by the Investor under such Act and to be qualified for resale under
applicable state securities laws, as necessary. The Company shall maintain the
effectiveness of such Registration Statement under the Act and shall maintain
such qualifications for a period of three months after the effective date of
such Registration Statement. The Company shall only be obligated to register the
Shares under this subsection if the Company is eligible to use a Form S-3
Registration Statement (or a successor Form).
(c) Expenses. In the case of a registration under subsection (a), the
Company shall bear all costs and expenses of each such registration, including,
but not limited to, printing, legal and accounting expenses, Securities and
Exchange Commission and NASD filing fees, and "Blue Sky" fees and expenses;
provided, however, that the Company shall have no obligation to pay or otherwise
bear any portion of the underwriters commissions or discounts attributable to
the Shares, or the fees and expenses of any counsel for Investor in connection
with the registration of the Shares. In the case of a registration under
subsection (b), the Investor shall bear all the costs and expenses of such
registration.
7. Restrictions on Transfer.
(a) As long as the Distributor Agreement of even date between the
Company and the Investor (the "Distributor Agreement") remains in effect,
subject and in addition to any other restrictions provided herein on the
transferability of the Shares, the Investor shall not transfer the Shares until
the expiration of the earlier of (i) the one-year period following consummation
of an
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initial public offering of the Company's Common Stock and (2) two years from the
date hereof, provided, however, that the Investor may transfer the Shares to an
"affiliate" of the Investor (which, for purposes hereof, means an entity (which
is not a U.S. Person) controlled by, or under common control with, the
Investor), provided that such transfer is in compliance with Regulation S of the
1933 Act.
(b) Notwithstanding anything to the contrary contained herein, in no
event shall the Shares be offered or sold by the Investor to or for the account
or benefit of any U.S. Person prior to the expiration of the earlier of (i) the
one-year period following consummation of an initial public offering of the
Company's Common Stock and (2) two years from the date hereof (the "Restricted
Period"). However, the Investor shall not at any time transfer the Shares to any
person or entity engaged in a business which is in any way competitive with the
Company's business.
8. Restrictive Legend. The certificate(s) evidencing the Shares shall bear a
restrictive legend, substantially in the following form:
"THE SHARES OF COMMON STOCK EVIDENCED HEREBY HAVE NOT BEEN
AND WILL NOT BE REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED, AND THE RULES AND
REGULATIONS PROMULGATED THEREUNDER (THE "1933 ACT"), AND MAY
NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES (AS DEFINED
IN REGULATION S OF THE 1933 ACT) OR TO, OR FOR THE ACCOUNT
OR BENEFIT OF, U.S. PERSONS (AS DEFINED IN REGULATION S OF
THE 1933 ACT) EXCEPT IN ACCORDANCE WITH REGULATION S OF THE
1933 ACT OR PURSUANT TO REGISTRATION UNDER OR AN EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT."
"TRANSFER OF THE SHARES OF COMMON STOCK EVIDENCED HEREBY IS
SUBJECT TO RESTRICTION UNDER THE TERMS AND CONDITIONS OF A
CERTAIN STOCK PURCHASE AGREEMENT."
9. Transfer and Registration of Shares. The Company shall not register in the
Company's stock transfer records any transfer of the Shares which is not made in
accordance with Regulation S of the 1933 Act.
10. Authorization of Agreement. Investor represents that: (i) it is duly
organized, validly existing and in good standing in its jurisdiction of
organization and has all the requisite power and authority to invest in the
Shares as provided herein; (ii) such investment does not result in any violation
of, or conflict with, any term of the charter, bylaws or other governing
documents of the Investor or any instrument to which it is bound or any law or
regulation applicable to it; (iii) such investment has been duly authorized by
all necessary action on behalf of the Investor; and (iv) this Stock Purchase
Agreement has been duly executed and delivered on behalf of the Investor and
constitutes a legal, valid and binding agreement of the Investor. The foregoing
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representations and warranties shall be true and accurate as of the date hereof
and as of the date of delivery of the purchase price to the Corporation and
shall survive such delivery.
11. Indemnity. Investor agrees to indemnify and hold harmless the Corporation,
its directors and officers and its affiliates from and against all damages,
losses, costs and expenses (including reasonable attorneys' fees) which they may
incur by reason of the failure of the Investor to fulfill any of the terms,
conditions or agreements of this Stock Purchase Agreement, or by reason of any
breach of the representations and warranties by the Investor herein or in any
document provided by Investor to the Corporation.
12. Repurchase Rights. Investor shall sell the Shares to the Company and the
Company shall buy the Shares from the Investor if the Distributor Agreement is
terminated or expires prior to the Company's initial public offering ("IPO") of
securities upon the terms and conditions hereinafter set forth (the "Repurchase
Rights"). The purchase price for such Shares under the Repurchase Rights shall
be $4.25 per share or $1,000,003.75 in the aggregate, subject to proportionate
adjustment in the event of any stock dividends, stock splits, recapitalizations
or similar events. The obligation to sell and purchase the Shares under the
Repurchase Rights may be exercised by either Investor or the Company during the
three (3) month period following termination or expiration of the Distributor
Agreement, provided the Company's IPO has not been completed, by written notice
to the other party of the exercise of the Repurchase Rights. The purchase price
for the Shares shall be paid by the Company in three equal installments of
$333,334.58 payable one (1) month, thirteen (13) months and twenty-five (25)
months following such notice. Certificates representing all such Shares, duly
endorsed for transfer, shall be delivered in escrow to the Company's counsel,
Brown, Rudnick, Freed & Gesmer, Attn: Steven R. London, Esq., One Financial
Center, Boston, MA 02111 in exchange for the initial installment of the purchase
price. Upon receipt of notice from the Investor that it has received the full
amount of the purchase price for the Shares, the Company's counsel shall deliver
the certificates evidencing the Shares to the Company. In the event Investor
fails to tender the Shares or the certificate(s) evidencing the Shares, the
Company may cancel the Shares and the certificate(s) representing the Shares and
deposit the purchase price in a bank account for the benefit of the Investor,
whereupon such Shares shall be for all purposes canceled, and neither the
Investor nor any transferee shall have any rights as stockholders of the Company
for any purpose, including, without limitation, dividend and voting rights. In
addition to any other legal or equitable remedies which it may have, the Company
may enforce its rights by actions for specific performance (to the extent
permitted by law).
13. Miscellaneous.
(a) This Agreement may not be modified or amended except in writing.
(b) This Agreement shall be governed by and interpreted under the laws
of the Commonwealth of Massachusetts, without regard to the choice of law
principles thereof.
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14. Record Ownership. The Shares will be registered in the name of Kyowa Medex
Co., Ltd., unless otherwise indicated in the space provided below:
IN WITNESS WHEREOF, the parties have executed this Stock Purchase
Agreement on the day and year first above written.
Kyowa Medex Co., Ltd.
By: /s/ Akira Furuya 4/30-96
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Akira Furuya, Ph.D., President
Boston Biomedica, Inc.
By: /s/ Richard T. Schumaker 4/30/96
---------------------------------
Richard T. Schumacher, President
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EXHIBIT 10.15
BOSTON BIOMEDICA, INC.
1987 NON-QUALIFIED STOCK OPTION PLAN
[REVISED AS OF JULY 23, 1993]
1. Purpose. This 1987 Non-Qualified Stock Option Plan is intended to
provide an opportunity to employees, officers, directors and consultants now or
hereafter employed by or affiliated with the Corporation or any of its
Subsidiaries to acquire stock in the Corporation, to provide increased
incentives to such persons to promote the success of the Corporation's business
and to encourage such persons to become affiliated with the Corporation through
the granting of options to acquire its capital stock.
2. Definitions. As used herein, the following terms will have the
indicated meaning:
"Committee" means the Committee of the Board of Directors as described
in Section 4.
"Corporation" means Boston Biomedica, Inc., a Massachusetts Corporation.
"Fair Market Value" means the fair market value of the Stock or other
asset, as reasonably determined in good faith by the Committee, on the date as
of which Fair Market Value is determined.
"Option" means the contractual right to purchase shares of Stock upon
specified terms pursuant to this Plan.
"Plan" means this Boston Biomedica, Inc. 1987 Non-Qualified Stock Option
Plan.
"Stock" means the Common Stock, $.01 par value, of the Corporation.
"Subsidiary" means any corporation in an unbroken chain of corporations
beginning with the Corporation if, at the time of grant of the Option, each of
the corporations other than the last in the unbroken chain owns stock possessing
50% or more of the total combined voting power of all classes of stock in one of
the other corporations in such chain.
3. Stock Subject to the Plan. The aggregate number of shares of the
Corporation's Stock that may be issued and sold under the Plan shall be
1,795,200 shares. The shares to be issued upon exercise of Options granted under
this Plan shall be made available, at the discretion of the Board of Directors,
from (i)
* Increased by Board of Directors in connection with the 20 to 1 stock split in
the form of a 19 shares for each share divided effective July 23, 1993.
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Corporation for the purpose, including shares purchased in the authorized but
unissued shares, (ii) shares previously reserved for issuance upon exercise of
Options which have expired or been terminated, or (iii) treasury shares and
shares reacquired by the open market. If any Option granted under this Plan
shall expire or terminate for any reason without having been exercised in full,
the unpurchased shares covered thereby shall become available for grant under
additional Options under the Plan so long as it shall remain in effect.
4. Administration of the Plan.
(a) The "Plan" shall be administered by the Committee. The Committee
shall consist of at least one member appointed by the Board of Directors, and
such member shall serve at the pleasure of the Board of Directors. The Board of
Directors may from time to time appoint additional members of the Committee or
remove members and appoint new members in substitution for those previously
appointed and fill vacancies however caused. A majority of the Committee shall
constitute a quorum and the acts of a majority of the members present at any
meeting at which a quorum is present shall be deemed the action of the
Committee. At such time as any class of equity security of the Corporation is
registered pursuant to Section 12 of the Securities Exchange Act of 1934 as
amended (the "Exchange Act"), (i) the Committee shall consist of at least two
members of the Board of Directors and (ii) no member of the Committee while a
member thereof shall be eligible to participate in the Plan, nor may any person
be appointed to the Committee unless he or she was not eligible to participate
in the Plan or any other Plan of the Corporation at any time within the one-year
period immediately prior to such appointment as provided in Rule 16b-3
promulgated under the Exchange Act.
(b) Subject to the express provisions of this Plan and provided that all
actions taken shall be consistent with the purposes of the Plan, the Committee
shall have full and complete authority and the sole discretion to: (i) determine
those persons to whom Options shall be granted under the Plan; (ii) determine
the number of shares covered by and the form of the Options, if any, to be
granted, (iii) determine the time or times when Options shall be granted; (iv)
establish the terms and conditions upon which Options may be exercised and/or
transferred; (v) alter any restrictions or conditions upon Options; and (vi)
adopt rules and regulations, establish, define and/or interpret any other terms
and conditions, and make all other determinations (which may be on a
case-by-case basis) deemed necessary or desirable for the administration of the
Plan.
(c) In making its determinations hereunder, the Committee shall take
into account the nature of the services rendered or to be rendered by the
potential recipients, their present and potential contributions to the success
of the Corporation, and such other factors as the Committee, in its discretion,
shall deem relevant in order to accomplish the purposes of the Plan.
5. Eligibility. Options will be granted only to persons who are
employees of the Corporation or of a Subsidiary or to persons who are officers
or directors of, or consultants or providers of services to, the Corporation or
a Subsidiary.
6. Terms of Options and Limitations Thereon.
(a) General. Any Option granted under this Plan shall be evidenced by a
written agreement between the Corporation and the Option holder and shall be
upon such terms and conditions not inconsistent with this Plan as the Committee
may determine.
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(b) Price. The price at which any shares of Stock may be purchased
pursuant to the exercise of an Option shall be determined by the Committee, but
in no event shall the price be less than the par value of the Stock.
(c) Period of Option. Each Option granted under this Plan shall continue
in effect for such period as the Committee shall determine.
(d) Non-Assignability. No Option or right or interest in an Option shall
be assignable or transferable by the holder except by will or the laws of
descent and distribution and during the lifetime of the holder shall be
exercisable only by him.
(e) Other Restrictions. At the discretion of the Committee, any Options
granted may be subject to restrictions on vesting or transferability or to risk
of forfeiture, any of which may be accelerated or waived in the Committee's sole
discretion.
7. Exercise of Options; Payment.
(a) Options may be exercised in whole or in part at such time and in
such manner as the Committee may determine and as shall be prescribed in the
written agreement with each holder.
(b) The purchase price of shares of Stock upon exercise of an Option
shall be paid by the Option holder in full upon exercise and must be paid in
cash.
(c) At the discretion of the Committee, any Stock issuable upon exercise
of an Option may be subject to restrictions on vesting or transferability or to
risk of forfeiture upon the happening of such events as the Committee may
determine, any of which may be accelerated or waived in the Committee's sole
discretion.
(d) No shares of Stock shall be issued or transferred upon exercise of
any Option under this Plan unless and until all legal requirements applicable to
the issuance or transfer of such shares and such other requirements as are
consistent with the Plan have been complied with to the satisfaction of the
Committee, including without limitation those described in Section 11 hereof.
8. Stock Adjustments.
(a) If the Corporation is a party to any merger or consolidation, any
purchase or acquisition of property or stock, or any separation, reorganization
or liquidation, the Board of Directors (or, if the Corporation is not the
surviving corporation, the Board of Directors of the surviving corporation)
shall have the power to make arrangements, which shall be binding upon the
holders of unexpired Options, for the substitution of new options for, or the
assumption by another corporation of, any unexpired Options then outstanding
hereunder.
-3-
(b) If by reason of recapitalization, reclassification, stock split-up,
combination of shares, separation (including a spin-off) or dividend on the
Stock payable in Stock, the outstanding shares of Stock of the Corporation are
increased or decreased or changed into or exchanged for a different number or
kind of shares or other securities of the Corporation, the Board of Directors
shall conclusively determine the appropriate adjustment in the exercise prices
of outstanding Options and in the number and kind of shares as to which
outstanding Options shall be exercisable.
(c) In the event of a transaction of the type described in paragraphs
(a) and (b) above, the total number of shares of Stock on which Options may be
granted under this Plan shall be appropriately adjusted by the Board of
Directors.
9. Termination of Affiliation. The Committee may provide for the
termination of any Option upon termination of the holder's affiliation with the
Corporation.
10. No Rights Other Than Those Expressly Created. No person affiliated
with the Corporation or any Subsidiary or other person shall have any claim or
right to be granted an Option hereunder. Neither this Plan nor any action taken
hereunder shall be construed as (i) giving any Option holder any right to be
retained in the employ of, or continue to be affiliated with the Corporation,
(ii) giving any Option holder any equity or interest of any kind in any assets
of the Corporation, or (iii) creating a trust of any kind or a fiduciary
relationship of any kind between the Corporation and any such person. As to any
claim for any unpaid amounts under this Plan, any person having a claim for
payments shall be an unsecured creditor. No Option holder shall have any of the
rights of a stockholder with respect to shares of Stock covered by an Option
until such time as the Option has been exercised and shares of Stock have been
issued to such person.
11. Miscellaneous.
(a) Withholding of Taxes. Pursuant to applicable Federal, state, local
or foreign laws, the Corporation may be required to collect income or other
taxes upon the grant of an Option to, or exercise of an Option by, a holder. The
Corporation may require, as a condition to the exercise of an Option, that the
recipient pay the Corporation, at such time as the Committee or the Corporation
determines, the amount of any taxes which the Committee or the Corporation may
determine is required to be withheld.
(b) Securities Law Compliance. Upon exercise of an Option, the holder
shall be required to make such representations and furnish such information as
may, in the opinion of counsel for the Corporation, be appropriate to permit the
Corporation to issue or transfer the shares of Stock in compliance with the
provisions of applicable Federal or state securities laws. The Corporation, in
its discretion, may postpone the issuance and delivery of shares of Stock upon
any exercise of an Option until completion of such registration or other
qualification of such
-4-
shares under any Federal or state laws, or stock exchange listing, as the
Corporation may consider appropriate. The Corporation is not obligated to
register or qualify the shares of Stock under federal or state securities laws
and may refuse to issue such shares if neither registration nor exemption
therefrom is practical. The Committee may require that prior to the issuance or
transfer of Stock upon exercise of an Option, the recipient enter into a written
agreement to comply with any restrictions on subsequent disposition that the
Committee or the Corporation deems necessary or advisable under any applicable
Federal and state securities laws. Certificates of Stock issued hereunder may be
legended to reflect such restrictions.
(c) Indemnity. Neither the Board of Directors nor the Committee, nor any
members of either, nor any employees of the Corporation or any Subsidiary, shall
be liable for any act, omission, interpretation, construction or determination
made in good faith in connection with their responsibilities with respect to the
Plan, and the Corporation hereby agrees to indemnify the members of the Board of
Directors, the members of the Committee, and the employees of the Corporation
and its Subsidiaries in respect of any claim, loss, damage, or expense
(including counsel fees) arising from any such act, omission, interpretation,
construction or determination to the full extent permitted by law.
12. Effective Date; Amendment; Termination.
(a) The effective date of this Plan shall be the date of adoption by the
Board of Directors.
(b) The date of grant of any Option granted hereunder shall be the date
upon which such Option shall be voted by the Committee, unless the vote
expressly otherwise provides.
(c) The Board of Directors of the Corporation may at any time, and from
time to time, amend, suspend or terminate this Plan in whole or in part.
However, except as provided herein, no amendment, suspension or termination of
this Plan may affect the rights of any person to whom an Option has been granted
without such person's consent.
(d) This Plan shall terminate ten (10) years from its effective date,
and no Option shall be granted under this Plan thereafter, but such termination
shall not affect the validity of Options granted prior to the date of
termination.
Date of Board of Director Adoption: December 16, 1987
----------------------
Amended June 2, 1993 effective July 23, 1993
A true copy.
ATTEST:
/s/ Illegible
-------------------------------
Clerk or Secretary
-5-
EXHIBIT 10.16
BOSTON BIOMEDICA, INC.
EMPLOYEE STOCK OPTION PLAN
1. Purpose. The purpose of this Boston Biomedica, Inc. Employee Stock
Option Plan (the "Plan") is to provide increased incentives to employees of
Boston Biomedica, Inc. and its Parent and Subsidiaries, if any (referred to,
unless the context otherwise requires, as the "Corporation") to remain
affiliated with the Corporation, to promote the success of the Corporation's
business, to encourage new employees to become affiliated with the Corporation
and to associate more closely the interests of such persons with those of the
Corporation through the granting of options to acquire the capital stock of the
Corporation.
2. Definitions. As used herein, the following terms will have the
indicated meaning:
"Board" means the "Board of Directors" of the Corporation.
"Code" means the Internal Revenue Code of 1986, as it may be amended
from time to time.
"Committee" means the Committee of the Board as described in Section 4.
"Corporation" means Boston Biomedica, Inc.
"Fair Market Value" means, on the date for which the Fair Market Value
is to be determined, the closing price of the Corporation's Stock on the New
York Stock Exchange, American Stock Exchange or such other national securities
exchange or the National Association of Securities Dealers Automated Quotation
System on which the Stock is then traded, or if no such price is available or if
the Stock is not then so traded, the fair market value reasonably determined by
the Committee in good faith.
"Incentive Stock Option" means any Option issued hereunder which is
treated as an Incentive Stock Option under Section 422 of the Code.
"Option" means the contractual right to purchase shares of Stock upon
specified terms pursuant to this Plan.
"Parent" has the meaning specified for "Parent Corporation" in Section
424(e) of the Code.
"Permanent and Total Disability" has the meaning specified for permanent
and total disability in Section 22(e)(3) of the Code.
"Plan" means this Boston Biomedica, Inc. Employee Stock Option Plan.
"Employees" means all those persons who are employed by the Corporation
for a minimum of 20 hours per week.
"Stock" means the Common Stock, $.01 par value, of the Corporation.
"Subsidiary" has the meaning specified for "Subsidiary Corporation" in
Section 424(f) of the Code.
"Ten Percent Stockholder" means an individual who directly or indirectly
owns capital stock possessing more than 10% of the total combined voting power
of all classes of capital stock of the Corporation or any Parent or Subsidiary
at the time an Incentive Stock Option is granted under this Plan.
3. Stock Subject to the Plan. The aggregate number of shares of the
Corporation's Stock that may be issued and sold under the Plan shall be
1,500,000 shares. The shares of Stock to be issued upon exercise of Options
granted under this Plan shall be made available, at the discretion of the Board
of Directors, from (i) authorized but unissued shares, (ii) shares previously
reserved for issuance upon exercise of Options which have expired or been
terminated, or (iii) treasury shares and shares reacquired by the Corporation
for this purpose, including shares purchased in the open market. If any Option
granted under this Plan shall expire or terminate for any reason without having
been exercised in full, the unpurchased shares covered thereby shall become
available for grant under additional Options under the Plan so long as it shall
remain in effect.
4. Administration of the Plan.
(a) The Plan shall be administered by the Committee. The Committee shall
consist of at least one member appointed by the Board, and such member shall
serve at the pleasure of the Board. The Board may from time to time appoint
additional members of the Committee or remove members and appoint new members in
substitution for those previously appointed and fill vacancies however caused. A
majority of the Committee shall constitute a quorum and the acts of a majority
of the members present at any meeting at which a quorum is present shall be
deemed the action of the Committee. At such time as any class of equity security
of the Corporation is registered pursuant to Section 12 of the Securities
Exchange Act of 1934, as amended (the "Act"), (i) the Committee shall consist of
at least two members of the Board and (ii) no member of the Committee while a
member thereof shall be eligible to participate in the Plan, nor may any person
be appointed to the Committee unless he or she was not eligible to participate
in the Plan or any other plan of the Corporation at any time within the one-year
period immediately prior to such appointment as provided in Rule 16b-3
promulgated under the Act.
(b) Subject to the express provisions of this Plan and provided that all
actions taken shall be consistent with the purposes of the Plan, the Committee
shall have full and complete authority and the sole discretion to: (i) determine
those Employees of the Corporation to whom Options shall be granted under the
Plan; (ii) determine the number of shares of Stock subject to and the form of
Options to be granted to such Employees; (iii) amend the number of shares
-2-
covered by and the form of the Options to be granted; (iv) determine the time or
times when Options shall be granted; (v) establish the terms and conditions upon
which Options may be exercised and/or transferred; (vi) establish the terms and
conditions, if any, upon which the shares of Stock issuable upon exercise of
Options may be transferred, including, but not limited to the return of such
shares to the Corporation upon the occurrence of certain events; (vii) alter any
restrictions or conditions upon Options and/or the shares of Stock issuable upon
exercise of Options; and (viii) adopt rules and regulations, establish, define
and/or interpret any other terms and conditions, and make all other
determinations (which may be on a case-by-case basis) deemed necessary or
desirable for the administration of the Plan.
(c) In making its determinations hereunder, the Committee shall take
into account the nature of the services rendered or to be rendered by the
Employees, their present and potential contributions to the success of the
Corporation, and such other factors as the Committee, in its discretion, shall
deem relevant in order to accomplish the purposes of the Plan.
5. Eligibility. Options may be granted only to persons who are Employees
as defined in Section 2 of this Plan.
6. Terms of Options and Limitations Thereon.
(a) General. Any Option granted under this Plan shall be evidenced by a
written agreement between the Corporation and the Option holder and shall be
upon such terms and conditions not inconsistent with this Plan as the Committee
may determine. The Committee shall designate, at the time of the grant, whether
the Option is an Incentive Stock Option. If the Option is not intended to be an
Incentive Stock Option, but otherwise qualifies as an Incentive Stock Option
under the Code, such agreement shall include the following, or a similar
statement: "This Stock Option is not intended to be an Incentive Stock Option,
as that term is described in Section 422 of the Internal Revenue Code of 1986,
as amended."
(b) Price. The price at which any shares of Stock may be purchased
pursuant to the exercise of an Option shall be for any lawful consideration
determined by the Committee, but not less than par value, and, in the case of
any Incentive Stock Option, such purchase price shall not be less than the Fair
Market Value of the Stock on the date of the grant of the Option (or, in the
case of Ten Percent Stockholders, 110% of the Fair Market Value on such date),
without regard to any restrictions other than those restrictions which by their
terms will never lapse.
(c) Period of Option. Each Option granted under this Plan shall continue
in effect for such period as the Committee shall determine, provided that no
Incentive Stock Option, or installment thereof, may be exercisable subsequent to
ten years from the date of grant (five years from the date of grant in the case
of Incentive Stock Options issued to Ten Percent Stockholders). No Incentive
Stock Option shall be exercisable beyond three months after the date upon which
the Incentive Stock Option holder ceases to be an employee of the Corporation,
except that the Committee may provide in the Incentive Stock Option that in the
event of termination of employment by reason of death or Permanent and Total
Disability of the holder, the Incentive Stock Option may be exercised by the
holder or his or her estate for a period of up
-3-
to one year after termination of employment. The Committee may provide for the
termination of any Option upon termination of the Option holder's affiliation
with the Corporation.
(d) Non-Assignability. No Option or right or interest in an Option shall
be assignable or transferable by the holder except by will or the laws of
descent and distribution. During the lifetime of the holder, an Option shall be
exercisable only by him or her.
(e) Other Restrictions. At the discretion of the Committee, any Options
granted and the shares of Stock issuable upon exercise of Options may be subject
to restrictions on vesting or transferability or to risk of forfeiture upon the
happening of such events as the Committee may determine, any of which may be
accelerated or waived in the Committee's sole discretion.
7. One Hundred Thousand Dollar Limitation. To the extent that the
aggregate Fair Market Value of Stock with respect to which any incentive stock
options of the Corporation issued under this Plan or any other plan of the
Corporation (determined without regard to this Section) are exercisable for the
first time by any holder during any calendar year exceeds $100,000, such
Incentive Stock Options shall be treated as Options which are not Incentive
Stock Options. For the purpose of this limitation, Options shall be taken into
account in the order granted, and the Committee may designate that portion of
any Incentive Stock Option that shall be treated as not an Incentive Stock
Option in the event that the provisions of this Section apply to a portion of
any Option, unless otherwise required by the Code or regulations of the Internal
Revenue Service. The designation described in the preceding sentence may be made
at such time as the Committee considers appropriate, including after the
issuance of the Option or at the time of its exercise. For the purpose of this
Section, Fair Market Value shall be determined as of the time the Option with
respect to which such Stock is granted.
8. Exercise of Options; Payment.
(a) Options may be exercised in whole or in part at such time and in
such manner as the Committee may determine and as shall be prescribed in the
written agreement with each holder.
(b) The purchase price of shares of Stock upon exercise of an Option
shall be paid by the Option holder in full upon exercise and may be paid (i) in
cash, (ii) by delivery of shares of Stock (valued at Fair Market Value at the
date of purchase of the shares of Stock subject to the Option), or (iii) any
combination of cash and Stock, as the Committee may permit. The Committee also
may allow the cashless exercise of Options, subject to applicable law.
9. Stock Adjustments.
(a) If the Corporation is a party to any merger or consolidation, any
purchase or acquisition of property or stock, or any separation, reorganization
or liquidation, the Board of Directors (or if the Corporation is not the
surviving corporation, the board of directors of the surviving corporation)
shall have the power to make arrangements, which shall be binding upon
-4-
the holders of unexpired Options, for the substitution of new Options for, or
the assumption by another corporation of, any unexpired Options then outstanding
hereunder.
(b) If by reason of recapitalization, reclassification, stock split-up,
combination of shares, separation (including a spin-off) or dividend on the
Stock payable in Stock, the outstanding shares of Stock of the Corporation are
increased or decreased or changed into or exchanged for a different number or
kind of shares or other securities of the Corporation, the Board of Directors
shall conclusively determine the appropriate adjustment in the exercise prices
of outstanding Options and in the number and kind of shares as to which
outstanding Options shall be exercisable.
(c) In the event of a transaction of the type described in paragraphs
(a) and (b) above, the total number of shares of Stock on which Options may be
granted under this Plan shall be appropriately adjusted by the Board of
Directors.
10. No Rights Other Than Those Expressly Created. No Employee of the
Corporation or other person shall have any claim or right to be granted an
Option hereunder. Neither this Plan nor any action taken hereunder shall be
construed as (i) giving any Option holder any right to be retained in the employ
of the Corporation, (ii) giving any Option holder an equity or interest of any
kind in any assets of the Corporation, or (iii) creating a trust of any kind or
a fiduciary relationship of any kind between the Corporation and any such
person. As to any claim for any unpaid amounts under this Plan, any person
having a claim for payments shall be an unsecured creditor. No Option holder
shall have any of the rights of a stockholder with respect to shares of Stock
covered by an Option until such time as the Option has been exercised and shares
of Stock have been issued to such person.
11. Miscellaneous.
(a) Withholding of Taxes. Pursuant to applicable Federal, state, local
or foreign laws, the Corporation may be required to collect income or other
taxes upon the grant of an Option to, or exercise of an Option by, a holder. The
Corporation may require, as a condition to the exercise of an Option, that the
recipient pay the Corporation, at such time as the Committee or the Corporation
determines, the amount of any taxes which the Committee or the Corporation may
determine is required to be withheld or collected. In its discretion, the
Corporation may withhold shares of Stock to be received upon exercise of an
Option if it deems this an appropriate method for withholding or collecting
taxes.
(b) Legal and Other Requirements. Upon exercise of an Option, the holder
shall be required to make such representations and furnish such information as
may, in the opinion of counsel for the Corporation, be appropriate to permit the
Corporation to issue or transfer the shares of Stock in compliance with the
provisions of applicable Federal or state securities laws. The Corporation, in
its discretion, may postpone the issuance and delivery of shares of Stock upon
any exercise of an Option until completion of such registration or other
qualification of such shares under any Federal or state laws, or stock exchange
listing, as the Corporation may consider appropriate. The Committee may require
that prior to the issuance or transfer of Stock
-5-
upon exercise of an Option, the recipient enter into a written agreement to
comply with any restrictions on subsequent disposition that the Committee or the
Corporation deems necessary or advisable under any applicable law, regulation or
official interpretation thereof. No shares of Stock shall be issued upon
exercise of Options unless and until the Corporation is satisfied, in its sole
discretion, that there has been compliance with all legal requirements
applicable to the issuance of such shares. Certificates of Stock issued
hereunder may be legended to reflect such restrictions.
(c) Indemnity. Neither the Board of Directors nor the Committee, nor any
members of either, nor any employees of the Corporation, shall be liable for any
act, omission, interpretation, construction or determination made in good faith
in connection with their responsibilities with respect to the Plan, and the
Corporation hereby agrees to indemnify the members of the Board of Directors,
the members of the Committee, and the employees of the Corporation in respect of
any claim, loss, damage, or expense (including counsel fees) arising from any
such act, omission, interpretation, construction or determination to the full
extent permitted by law.
12. Effective Date; Amendment; Termination.
(a) The effective date of this Plan shall be the date of adoption by the
Board of Directors; provided, however, that the Plan is subject to the approval
of the stockholders at the next meeting of stockholders of the Corporation and
within twelve months from the effective date of this Plan.
(b) The date of grant of any Option granted hereunder shall be the date
upon which such Option shall be voted by the Committee, unless the vote
expressly otherwise provides.
(c) The Board of Directors of the Corporation may at any time, and from
time to time, amend, suspend or terminate this Plan in whole or in part;
provided, however, that the Board of Directors may not materially increase the
benefits accruing to participants in the Plan, materially increase the number of
shares of Stock reserved for purposes of this Plan other than pursuant to an
adjustment under Section 9, or materially modify the requirements as to
eligibility for participation in this Plan without stockholder approval.
(d) Without amending this Plan, except to the extent required by the
Code in the case of Incentive Stock Options, the Committee may modify grants
made to participants who are foreign nationals or otherwise employed outside the
United States so as to recognize differences in local law, tax policy or custom.
(e) Except as provided herein, no amendment, suspension or termination
of this Plan may affect the rights of any person to whom an Option has been
granted without such person's consent.
(f) Stockholder approval of this Plan or any amendment requiring
stockholder approval under paragraph (c) shall mean the affirmative vote of at
least a majority of the shares of capital stock present and entitled to vote at
a duly held meeting of stockholders unless a
-6-
greater vote is required by state or federal law. Stockholder approval may be
obtained by written consent or other means permitted by applicable state law.
(g) This Plan shall terminate ten (10) years from the earlier of the
date of stockholder approval of the Plan or its effective date, and no Option
shall be granted under this Plan thereafter, but such termination shall not
affect the validity of Options granted prior to the date of termination.
(h) This Plan and all Options granted hereunder shall be governed by the
law of the state in which the Corporation is incorporated.
Date of Board of Director Adoption: March 29, 1994
Date of Stockholder Approval: June 29, 1994
A true copy.
ATTEST:
------------------------------
Clerk
EXECUTION
SECOND AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
By and Among
BOSTON BIOMEDICA, INC., BTRL CONTRACTS AND
SERVICES, INC. and BBI-NORTH AMERICAN CLINICAL LABORATORIES, INC.
as the Borrower
and
THE FIRST NATIONAL BANK OF BOSTON
as the Lender
Dated: As of August 2, 1995
SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Preamble......................................................................................... 1
Section 1 - Definitions; Use of Terms; Incorporation by Reference................................ 2
Section 2 - Establishment of Loan Account and Description of Loan Arrangement
and Credit Facilities.......................................................... 7
2.1 Amounts and Types of Loans; Notes Evidencing Loans.......................................... 7
2.2 Interest Rate on Loans...................................................................... 8
2.3 Repayment of Loans.......................................................................... 8
2.4 Security for the Loans...................................................................... 8
2.5 Use of Proceeds ............................................................................ 8
2.6 Loan Advances............................................................................... 8
2.7 Other Advances and Payments................................................................. 9
2.8 Loan Statements............................................................................. 9
2.9 Release of Guaranty......................................................................... 10
2.10 Review of Line of Credit................................................................... 10
Section 3 - Security Interest in Collateral...................................................... 10
3.1 Granting Clause; Description of Collateral................................................... 10
3.2 Certain Representations, Warranties, and Covenants Regarding the Collateral.................. 12
3.2.1 Lock Box Agreement.................................................................... 12
3.2.2 Schedules and Assignments of Account/Consents to Assignments.......................... 12
3.2.3 Bona Fide Accounts.................................................................... 13
3.2.4 Notification To Account Debtors and Others by Lender.................................. 13
3.2.5 Allowances and Adjustments............................................................ 13
3.2.6 Notification To Account Debtors by Borrower........................................... 14
3.2.7 Title to Collateral................................................................... 14
3.2.8 Actions To Maintain Perfection........................................................ 14
3.2.9 Lender's Payment of Taxes and Other Payments.......................................... 14
3.2.10 Verification.......................................................................... 15
3.2.11 Location of Collateral................................................................ 15
3.2.12 Powers of Attorney.................................................................... 15
3.2.13 Ratification and Indemnification Under Power of Attorney.............................. 17
3.2.14 Motor Vehicle Certificates of Title................................................... 17
3.2.15 Audit Fees............................................................................ 17
3.2.16 Borrowing Base Determinations......................................................... 17
3.3 Inventory Collateral........................................................................ 18
3.4 Equipment Collateral........................................................................ 18
3.4.1 Business Use; Purchase Money Acquisitions............................................. 18
3.4.2 Fixtures.............................................................................. 18
Section 4 - Representations, Covenants and Warranties............................................ 19
4.1 General Representations, Covenants and Warranties............................................ 19
4.1.1 Business; Supplementary Information Regarding Borrower................................. 19
4.1.2 Due Organization and Existence; Authorization.......................................... 19
4.1.3 Articles of Organization; Stock; Accurate Records...................................... 20
4.1.4 Binding Documents; Violation of Other Agreements....................................... 20
4.1.5 Title To Assets; Security Interests and Mortgages; Leases;
Royalties; etc................................................................. 20
4.1.6 Investments............................................................................ 20
4.1.7 Litigation; Outstanding Orders......................................................... 20
4.1.8 Financial Statements Delivered......................................................... 21
4.1.9 Current Stockholders................................................................... 21
4.1.10 Other Liabilities; Tax Returns; No Adverse Changes.................................... 21
4.1.11 No Agency Between Borrower and Lender................................................. 21
4.1.12 Regulation U.......................................................................... 22
4.1.13 ERISA................................................................................. 22
4.1.14 Necessary Permits and Licenses........................................................ 22
4.1.15 Governmental Approvals Not Required................................................... 22
4.1.16 Adequate Financing.................................................................... 23
4.1.17 No Event of Default................................................................... 23
4.1.18 Compliance with Leases................................................................ 23
4.1.19 President and Chief Executive Officer; Major Stockholder.............................. 23
4.1.20 Compliance with Certain Environmental Laws............................................ 23
4.1.21 Recent Changes of Name or Structure................................................... 24
4.1.22 Payment of Wages...................................................................... 24
4.2 Certain Affirmative Covenants................................................................ 24
4.2.1 Payment of Obligations................................................................. 24
4.2.2 Books and Records...................................................................... 24
4.2.3 Inspection............................................................................. 24
4.2.4 Commercial Purposes.................................................................... 25
4.2.5 Notice of Adverse Matters.............................................................. 25
4.2.6 Principal Lending Business............................................................. 25
4.2.7 Maintenance of Corporate Existence; Compliance with Laws.............................. 25
4.2.8 Payment of Taxes and Filing of Returns................................................ 25
4.2.9 Maintenance of Properties............................................................. 26
4.2.10 Collection Costs; Legal Fees; etc..................................................... 26
4.2.11 Insurance............................................................................. 26
4.2.12 Further Agreements; Compliance with Other Obligations; Tax Returns;
Notice of Litigation and of Events of Default.................................. 27
4.2.13 Certain Environmental Matters......................................................... 28
4.2.14 Changes in Master Exhibit............................................................. 29
4.2.15 Government Approvals.................................................................. 29
4.2.16 Key Man Life Insurance................................................................ 29
4.3 General Negative Covenants.................................................................. 29
4.3.1 Other Debt............................................................................. 29
4.3.2 Payment of Dividends................................................................... 30
4.3.3 Loans by the Borrower.................................................................. 30
4.3.4 Investments............................................................................ 30
4.3.5 Mergers, etc........................................................................... 30
4.3.6 Sales of Assets........................................................................ 30
4.3.7 No Liens; Permitted Encumbrances ...................................................... 30
4.3.8 Continuance of Business................................................................ 30
Section 5 - Financial and Reporting Covenants.................................................... 31
5.1 Reporting Covenants.......................................................................... 31
5.1.1 Quarterly Financial Statements......................................................... 31
5.1.2 Annual Financial Statements............................................................ 32
5.1.3 Monthly and Weekly Reports............................................................. 32
5.1.4 Officer's Certificate.................................................................. 33
5.1.5 Other Information...................................................................... 33
5.2 Financial Covenants......................................................................... 33
Section 6 - Events of Default.................................................................... 35
Section 7 - Remedies............................................................................. 37
7.1 General Remedies............................................................................. 37
7.2 License ..................................................................................... 39
7.3 No Duty of Preservation; Joint Property...................................................... 39
7.4 Cumulative Remedies ......................................................................... 39
Section 8 - Waiver; Termination ................................................................. 40
8.1 Waiver By The Borrower....................................................................... 40
8.2 Lender's Option To Waive..................................................................... 40
Section 9 - Miscellaneous........................................................................ 40
9.1 Deposits As Collateral; Set-Off.............................................................. 40
9.2 Transfer of Collateral to Bank............................................................... 41
9.3 No Duty To Preserve or Collect............................................................... 41
9.4 Survival of Covenants; Binding Effect........................................................ 41
9.5 Termination of Agreement..................................................................... 42
9.6 Conflict of Terms............................................................................ 42
9.7 Prior Discussions; Amendments in Writing; Counterparts;
Filing As Financing Statement.................................................. 42
9.8 General Indemnification...................................................................... 43
9.9 Destruction of Documents; Jurisdiction....................................................... 43
9.10 Notices..................................................................................... 43
9.11Application of Proceeds...................................................................... 44
9.12 Continuance of Defaults..................................................................... 44
9.13 Severability................................................................................ 44
9.14 Headings.................................................................................... 44
9.15 Governing Law; Sealed Instrument............................................................ 45
9.16 Force Majeure............................................................................... 45
9.17 Interpretation of Agreement................................................................. 45
</TABLE>
Master Exhibit
Exhibit 1.4.1 1994 BBI, BTRL and NACL Equipment Appraisal Report
Exhibit 1.8 Existing Government Contracts
Exhibit 3.2.1 Form of Lock Box Agreement
Exhibit 4.2.15(A) Form of Collateral Assignment
Exhibit 4.2.15(B) Form of Notice of Collateral Assignment
Exhibit 5.2.3 Calculation of Debt Service Ratios
SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
-------------------------------------------------------
This Second Amended and Restated Loan and Security Agreement (this
"Agreement") is dated as of August 2, 1995, and is by and among BOSTON
BIOMEDICA, INC. ("BBI"), BTRL CONTRACTS AND SERVICES, INC. ("BTRL"), and
BBI-NORTH AMERICAN CLINICAL LABORATORIES, INC. ("NACL"), formerly known as NORTH
AMERICAN LABORATORY GROUP, INC., each of which is a Massachusetts corporation
validly created, legally existing and in good standing under the laws of the
Commonwealth of Massachusetts and each of which has its "Notice Address" at 375
West Street, West Bridgewater, Massachusetts 02379 (BBI, BTRL and NACL, together
with their respective successors and assigns, are collectively referred to
herein as the "Borrower") and THE FIRST NATIONAL BANK OF BOSTON, a national
banking association having an office and "Notice Address" at Bank of
Boston-Worcester Tower, P.O. Box 15073, 100 Front Street, Worcester,
Massachusetts 01608-1438 (together with its successors and assigns, the
"Lender"), successor-by-merger to WORCESTER COUNTY INSTITUTION FOR SAVINGS, a
Massachusetts savings bank ("WCIS").
WHEREAS, the Borrower and the Lender entered into a certain amended and
restated loan arrangement (the "Loan Arrangement") as evidenced by a certain
Amended and Restated Loan and Security Agreement dated as of June 18, 1993 (the
"Amended and Restated Agreement"), which Loan Arrangement has been subsequently
amended by a certain letter agreement dated August 26, 1993 ("Amendment No. 1")
by and between the Borrower and the Lender, further amended by a certain
Amendment No. 2 to Amended and Restated Loan Agreement dated as of July 29, 1994
("Amendment No. 2") by and between the Borrower and the Lender and further
amended by Amendment No. 3 to Amended and Restated Loan and Security Agreement
dated as of October 11, 1994 ("Amendment No. 3") by and between the Borrower and
the Lender (the Amended and Restated Agreement as amended by Amendment No. 1,
Amendment No. 2 and Amendment No. 3 is sometimes hereinafter referred to as the
"Amended Agreement"); and
WHEREAS, BTRL and NACL are each wholly-owned subsidiaries of BBI,
formed to acquire certain assets determined to be useful and necessary to the
business conducted by BBI; and
WHEREAS, the Borrower and the Lender desire to again restate in their
entirety all of the provisions of the Loan Arrangement, to amend certain
provisions of the Loan Arrangement as more particularly described herein, and to
further increase the amount of credit available to the Borrower; and
WHEREAS, the Lender is willing to enter into this Agreement and grant
such financial accommodations to or for the benefit of the Borrower in
accordance with the terms of this Agreement only if the Borrower shall make and
enter into certain agreements, covenants, representations and warranties as set
forth herein and as further set forth and contained in the Financing Instruments
(as hereinafter defined), all of the terms and conditions of which Financing
Instruments are hereby incorporated herein by reference;
NOW THEREFORE, in order to induce the Lender to lend certain sums, to
extend such additional credit and to grant financial accommodations, all to or
for the benefit of the Borrower, and in consideration thereof and in
consideration of the mutual covenants herein contained, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Borrower hereby represents and warrants to the Lender, and
hereby covenants and agrees with the Lender, all as follows:
SECTION 1
DEFINITIONS; USE OF TERMS;
INCORPORATION BY REFERENCE
--------------------------
In this Agreement:
1.1 "Accounts" shall mean and refer to any and all of Borrower's rights
to payment for goods sold or leased or for services rendered, which are not
evidenced by an Instrument or Chattel Paper, whether or not such
rights have been earned by performance, and shall include all receivables,
notes, drafts, acceptances, other forms of obligations and "accounts" as defined
in the UCC, all in whatever form and however arising or created;
1.2 "Borrowing Base" shall mean and refer to the lesser of the Line of
Credit Maximum Amount (defined below), or the Calculated Amount (defined below),
where:
1.2.1 "Line of Credit Maximum Amount" shall mean and refer to
the amount of THREE MILLION FIVE HUNDRED THOUSAND DOLLARS ($3,500,000);
and
1.2.2 "Calculated Amount" shall mean and refer to the sum of
the following items:
1.2.2.1 Eighty Percent (80%) of the net amount of
Eligible Accounts; plus
1.2.2.2 the lesser of Forty percent (40%) of all
Eligible Inventory, or One Million Five Hundred Thousand
Dollars ($1,500,000);
1.3 "Eligible Accounts" shall mean and refer to that portion of
Borrower's Accounts which arise in the ordinary course of Borrower's business,
which have been earned by performance and which are not:
1.3.1 outstanding more than ninety (90) days;
1.3.2 based on payment terms other than those which are usual
and customary to the Borrower's business;
1.3.3 due from any Account Debtor which holds or is entitled
to any claim, counterclaim, setoff or chargeback or which has the right
to return to the Borrower for credit or refund the goods giving rise to
such Account;
1.3.4 based on any sale made on, so-called, "delayed
shipping", "bill and hold" or "dating" basis;
1.3.5 evidenced by a promissory note;
1.3.6 due from any Person employed by, or any salesman or
independent contractor of, the Borrower;
1.3.7 due from any Guarantor or any past, present or future
affiliate, parent or subsidiary of BBI, BTRL or NACL;
1.3.8 due from Account Debtors with respect to which the
Borrower is an Account Debtor (to the extent of the amount payable by
Borrower);
1.3.9 based on delivery of goods on consignment or otherwise
on "sale on approval", "sale or return" or similar terms (whether or
not compliance has been made with Section 2-326 of the UCC); or
1.3.10 determined by the Lender, in the exercise of reasonable
judgment, to be difficult to collect, to be of diminished or uncertain
value, or in which the Lender may not have a perfected security
interest pursuant to the provisions of the Financing Instruments.
Notwithstanding the foregoing, if at any time, fifty percent (50%) or
more of the Accounts due from any particular patient Account Debtor of
NACL remain unpaid (in whole or in part) after the passage of more
than ninety (90) days from the respective dates of each such patient
Account invoice from NACL, then from and after such determination, none
of the Accounts (then existing or thereafter arising) due from such
patient Account Debtor shall be deemed to be Eligible Accounts until
such time as all patient Accounts due from such patient Account Debtor
are no more than ninety (90) days past due from date of invoice as a
result of actual payments received thereon.
In addition, Eligible Accounts shall not include Accounts relating to
Existing Government Contracts (as hereinafter defined) until such time
as the same have been novated into the name of BTRL and are otherwise
in full compliance with 48 C.F.R. ss.42.12 (1991) to the satisfaction
of Lender;
Characterization of any account due from an Account Debtor as an
Eligible Account shall not be deemed a determination by the Lender as
to its actual value nor in any way obligate the Lender to accept any
Account subsequently arising from such Account Debtor to be, or to
continue to open such account to be, an Eligible Account; it is
Borrower's responsibility to determine the creditworthiness of Account
Debtors and all risks concerning the same and collection of Accounts
are with Borrower. All Accounts whether or not Eligible Accounts
constitute Collateral hereunder.
1.4 "Eligible Equipment" shall mean
1.4.1 that part of BBI's Equipment purchased in 1994
appraised by the appraisal dated August 9, 1994
conducted by Frank Ronne & Associates, which Eligible
Equipment is listed in Exhibit 1.4.1 annexed hereto;
1.4.2 Equipment owned by BTRL (the "BTRL Equipment"), which
was appraised by appraisal dated August 9, 1994
conducted by Frank Ronne & Associates, which Eligible
Equipment is listed in Exhibit 1.4.1 annexed hereto;
1.4.3 Equipment owned by NACL (the "NACL Equipment"), which
was appraised by appraisal dated August 9, 1994
conducted by Frank Ronne & Associates, which Eligible
Equipment is listed in Exhibit 1.4.1 annexed hereto;
and
1.4.4 Equipment to be purchased by the Borrower ("New
Eligible Equipment").
1.5 "Eligible Inventory" shall mean that part of BBI's Inventory which
the Lender determines, from time to time and in its sole discretion, to be
eligible for purposes of determining the Calculated Amount;
1.6 "Equipment" shall mean all motor vehicles (whether or not subject
to motor vehicle registration), rolling stock, machinery, furniture, office
equipment, plant equipment, laboratory equipment, fixtures, tools, spare parts,
accessories, dies, molds and all other like goods, property and assets owned now
or hereafter by Borrower and used in the operation or furtherance of Borrower's
business (whether or not Eligible Equipment or New Eligible Equipment); and
"equipment" as defined in the UCC;
1.7 "Equipment Collateral" shall mean all Equipment and all Documents
(whether negotiable or non-negotiable) which relate to Equipment;
1.8 "Existing Government Contracts" means the United States contracts,
subcontracts and agreements relating to BTRL which are listed on Exhibit 1.8
annexed hereto;
1.9 "Financing Instruments" shall mean and refer to any and all
agreements (including this Agreement), Instruments, Documents, and other
writings including without limitation, security agreements, loan agreements,
notes, guarantees, mortgages, deeds of trust, collateral assignments,
subordination agreements, contracts, notices, leases, financing statements and
all other written matter, whether heretofore, now, or hereafter executed by or
on behalf of the Borrower and delivered to the Lender in connection with the
transactions described in this Agreement or contemplated hereby, together with
all agreements and documents referred to therein or contemplated thereby;
1.10 "GAAP" shall mean and refer to generally accepted accounting
principles in the United States;
1.11 "Inventory" shall mean and refer to any and all of the following
owned by Borrower: goods, wares, merchandise, raw materials, supplies,
components, work in process, finished goods and all packaging, advertising,
shipping material, labels and other devices, names, or marks affixed thereto for
purpose of selling the same; tangible personal property held by the Borrower for
processing, sale, license, or lease, or furnished or to be furnished by the
Borrower under contracts of sale or service or to be used or consumed in the
Borrower's business (whether or not Eligible Inventory); items referred to above
which are in transit, returned, rejected, repossessed or detained (whether or
not Eligible Inventory); and "inventory" as defined in the UCC;
1.12 "Inventory Collateral" shall mean all Inventory and all Documents
(whether negotiable or non-negotiable) which relate to Inventory;
1.13 "IRC" shall mean and refer to the Internal Revenue Code of 1986,
as amended, and regulations as promulgated and in effect, from time to time,
thereunder;
1.14 "Liens" shall mean and refer to any and all: mortgages, pledges,
security interests, encumbrances, liens, or charges of any kind including, but
not limited to, agreements to give any of the foregoing; conditional sales or
other title retention agreements or devices, or any leases in the nature
thereof; and the filing of, or agreement to give, any financing statement under
the Uniform Commercial Code of any jurisdiction;
1.15 "Obligations" shall mean and refer to any and all indebtedness,
liabilities, duties, undertakings, covenants and agreements (including those of
payment or of performance) of the Borrower to the Lender, all of every kind,
nature and description, and arising pursuant to the terms of the Financing
Instruments or otherwise, including, without limitation:
1.15.1 Borrower's liability to repay the Loans (hereinafter
defined), together with the payment of all interest and other monies
due pursuant to the terms of any and all notes, and any and all
substitutions, renewals, extensions, amendments and rewritings of the
Loans or such notes and all present and future advances made
thereunder;
1.15.2 the faithful performance and observance by the Borrower
of all agreements, covenants and conditions contained in this Agreement
and in each of the other Financing Instruments; and
1.15.3 any and all such indebtedness, liabilities, duties,
undertakings, covenants and agreements whether or not the same are: now
existing or hereafter arising; imposed by agreement or by operation of
law; due or not due, absolute or contingent, liquidated or
unliquidated, voluntary or involuntary; evidenced by a writing;
presently contemplated by the parties; the joint or the several
liabilities of the Borrower; direct or indirect; related or unrelated
to the transactions described in or contemplated by the Financing
Instruments; liabilities or undertakings of the Borrower as surety,
guarantor or endorser with respect to obligations of one or more other
parties; specifically described as secured or unsecured; hereafter
acquired by Lender by assignment, other transfer or operation of law;
the result of any transaction whatsoever between the Borrower and the
Lender; or by reason of any cause of action which the Lender may have
against the Borrower.
1.16 "Persons" shall mean and refer to any and all individuals,
corporations, partnerships, joint stock associations, business or other trusts,
governments or any agencies or subdivisions thereof, joint ventures or other
entities or associations whatsoever;
1.17 "UCC" shall mean the Uniform Commercial Code as in effect from
time to time in the Commonwealth of Massachusetts;
1.18 The following terms shall have the respective meanings ascribed to
them in the UCC: "Account Debtor", "Chattel Paper", "Deposit Account",
"Document", "Equipment", "General Intangibles" and "Instrument";
1.19 Terms defined elsewhere in this Agreement shall have the
respective meanings ascribed to them where so defined;
1.20 All exhibits to this Agreement are hereby incorporated herein by
reference;
1.21 The use of the singular of terms which are defined in the plural
shall mean and refer to any one of the matters or items or entities included in
such definition; and
1.22 Use of the connective "or" is not intended to be exclusive; the
term "may not" is intended to be prohibitive and not permissive; use of
"includes" and "including" is intended to be interpreted as expansive and
amplifying and not as limiting in any way; and pronouns used herein shall be
deemed to include the singular and the plural and all genders.
SECTION 2
ESTABLISHMENT OF LOAN ACCOUNT AND
DESCRIPTION OF LOAN ARRANGEMENTS AND CREDIT FACILITIES
------------------------------------------------------
Upon all the terms and conditions established by the Financing
Instruments, the Lender and the Borrower agree to enter into certain loan
transactions, pursuant to which the Lender agrees to lend (or otherwise extend
credit or provide other financial accommodations) to or for the benefit of the
Borrower, and the Borrower agrees to borrow (or otherwise guarantee, undertake
to repay or be liable for) the amount and the Obligations described below
(altogether, the "Loans"), and the Lender hereby opens for and in the name of
the Borrower one or more loan accounts for the purposes of administering the
following Loans:
2.1 Amounts and Type of Loans; Notes Evidencing Loans. The respective
amounts and types of the Loans shall be:
2.1.1 a Three Million Five Hundred Thousand Dollars
($3,500,000) term revolving line of credit (the "Line of Credit") (the
authorized maximum principal amount outstanding from time to time, of
which shall not exceed the Borrowing Base), which is evidenced by
Borrower's Second Amended and Restated Term Revolving Promissory Note
(the "Line of Credit Note") dated of even date herewith in the face
amount of the Line of Credit Maximum Amount;
2.1.2 a term loan in the original principal amount of Eight
Hundred Forty-nine Thousand Dollars ($849,000) (the "Amended and
Restated Term Loan"), evidenced by the Borrower's Amended and Restated
Term Promissory Note (the "Amended and Restated Term Note") dated
October 11, 1994;
2.1.3 a term loan in the original principal amount of Two
Hundred Thousand Dollars ($200,000) (the "$200,000 Term Loan"),
evidenced by the Borrower's Term Promissory Note (the "$200,000 Term
Note") dated October 11, 1994 in the face amount of the full principal
thereof; and
2.1.4 a term loan in the original principal amount of Three
Hundred Fifty Thousand Dollars ($350,000) (the "$350,000 Term Loan"),
evidenced by the Borrower's Term Promissory Note (the "$350,000 Term
Note") dated of even date herewith in the face amount of the full
principal thereof.
(The Line of Credit Note, the Amended and Restated Term Note, the $200,000 Term
Note and the $350,000 Term Note may each be referred to as a "Note" and
collectively as the "Notes".)
2.2 Interest Rate on Loans. The principal amount outstanding, from time
to time, of each of the Loans shall bear interest at the respective rates
applicable to each Loan in accordance with the provisions of the Notes.
2.3 Repayment of Loans. Principal and interest of the Loans shall be
paid to the Lender in accordance with the provisions of the Notes.
2.4 Security for the Loans. All of the Loans shall be secured by the
security interests granted in the Collateral (as hereinafter defined) as
provided by this Agreement.
2.5 Use of Proceeds. The proceeds of the Loans shall be used:
2.5.1 with respect to the Line of Credit, for working capital
purposes;
2.5.2 with respect to the Amended and Restated Term Loan,
advances up to the full amount of the Amended and Restated Term Note
have been made for the purchase by the Borrower of laboratory
equipment, furniture and computer equipment, and to pay down the Line
of Credit;
2.5.3 with respect to the $200,000 Term Loan, advances up to
the full amount of the $200,000 Term Loan have been made for purposes
of the purchase and installation by BBI, BTRL and NACL of Eligible
Equipment; and
2.5.4 with respect to the $350,000 Term Loan, advances shall
be made at the request of the Borrower from time to time for a period
of six (6) months from the date hereof for purposes of the purchase of
New Eligible Equipment, but such advances shall not exceed seventy-five
percent (75%) of the purchase price of such New Eligible Equipment.
2.6 Loan Advances. After the date hereof, Loans shall be made by
advances by the Lender to one or more of the accounts maintained by the Borrower
pursuant to Section 4.2.6 hereof (hereafter, the "Main Operating Account").
Subject to the terms and conditions hereof, the Lender may make Loans to the
Borrower (i) to cover checks drawn by Borrower on the Main Operating Account and
(ii) to cover other authorized charges whether given to the Lender orally,
telephonically or in writing and (iii) to cover other charges due and payable
hereunder. As an accommodation to the Borrower, and to facilitate the "zero
balance account" relationship contemplated by this Agreement, and to avoid the
necessity that the Lender communicate with the Borrower each time checks are
presented for payment against the Main Operating Account, the Borrower requests
the Bank to make a Loan charged to the Loan Account sufficient to cover checks
and other authorized charges on each occasion that the same are presented. All
actions of the Lender in connection with the ordinary administration of the
foregoing are hereby ratified and confirmed and shall be conclusive and binding
upon the Borrower. Each request by the Borrower to Lender for an advance under
the Line of Credit or the $350,000 Term Loan shall constitute a representation
by the Borrower that as of the date of such request (a) each of the
representations and warranties set
forth herein are true, (b) the Borrower is in compliance with all of the
covenants, terms and conditions hereof, and (c) no event or circumstances exist
which constitute or with the lapse of time or notice, or both, would constitute
or result in the occurrence of an Event of Default (as hereinafter defined).
2.7 Other Advances and Payments. Whether or not the entire amount
available under the Line of Credit shall have been advanced to or for the
benefit of the Borrower, and whether or not the Loans shall be payable (by
maturity or by acceleration) or an Event of Default shall have occurred under
this Agreement, the Lender shall be entitled (but shall not be obligated and may
not be required) to make, at its sole discretion, additional advances from time
to time:
2.7.1 in payment or reimbursement, as the case may be, of any
and all payments made or amounts owing pursuant to applicable
provisions of the Financing Documents;
2.7.2 to pay the Lender's usual and customary charges for (a)
services rendered by it to the Borrower at the Borrower's request which
charges relate to the Obligations; and (b) charges otherwise required
to be paid by the Borrower pursuant to this Agreement; and
2.7.3 otherwise to or for the benefit of the Borrower, as
requested or consented to by the Borrower, as the Lender may in its
discretion deem proper or expedient;
and each such additional advance shall be a part of the Obligations and shall at
all times be subject to the terms and conditions of this Agreement and secured
as provided in the Financing Instruments.
2.8 Loan Statements. All advances to or for the benefit of the Borrower
pursuant to this Agreement shall be charged to the loan account or accounts
opened in the Borrower's name on the Lender's books. The Lender periodically
shall render to the Borrower statements of such loan account or accounts,
setting forth the daily loan balance and total accrued interest during the
subject period, which, when so rendered, shall be considered prima facie
evidence of the correctness thereof except to the extent that the Lender
receives written notice of any exceptions proposed by the Borrower within a
reasonable time, but in no event later than one hundred twenty (120) days from
the date of such statement. If for any reason the Borrower has not paid interest
charges and/or any fees for services, expenses incurred or other charges owed to
the Lender by the Borrower, the Lender, at its option and discretion, may at any
time or times debit such charges, expenses, and fees to the Borrower's loan
account and such amounts shall be added to the principal amount thereof, or the
Lender may debit such interest, charges and fees, and any other unpaid
Obligations then due, to any deposit or other account of the Borrower at the
Lender. Such debits shall not constitute a waiver of any Event of Default. Any
item received in payment towards the Borrower's outstanding indebtedness which
requires clearance or payment shall not be considered to have been credited
until final clearance and final payment.
2.9 Additional Term Loan. Provided that there exists no Event of
Default hereunder, and no event shall have occurred which with the passage of
time or the giving of notice, or both, could become an Event of Default
hereunder, the Lender agrees to provide the Borrower, by January 1, 1996, with
an additional term loan in an original principal amount not to exceed One
Hundred Thousand Dollars ($100,000) for purposes of paying down the balance of
the Line of Credit then outstanding. Such additional term loan shall have a
five-year term and shall be upon such additional terms, and shall bear interest
at a rate, as shall be determined by the Lender in its sole and absolute
discretion.
2.10 Review of Line of Credit. The Lender agrees (a) to review the Line
of Credit annually on or before July 30 of each year commencing in 1996, to
determine whether the Maturity Date (as defined in the Line of Credit Note)
thereof will be extended for an additional twelve-month period beyond the
Maturity Date then in effect; and (b) to notify the Borrower of such
determination in accordance with the notice provisions of the Agreement.
Notwithstanding the foregoing, any determination by the Lender to extend the
Maturity Date shall not be binding and enforceable against the Lender until the
execution of an Extension Agreement, executed by the parties hereto.
SECTION 3
SECURITY INTEREST IN COLLATERAL
-------------------------------
3.1 Granting Clause; Description of Collateral. As security for the
prompt and full repayment (and performance as the case may be) of the
Obligations, the Borrower hereby grants to the Lender a continuing security
interest in and to all of the Borrower's present and future right, title and
interest in and to the following assets and property, and each item thereof,
whether now or hereafter existing, owned or acquired by Borrower, or now or
hereafter arising or due or to become due, wherever such assets and property may
be located, together with all substitutions, replacements, additions,
accessions, products and proceeds (of every kind and nature, cash and non-cash,
including, without limitation, insurance proceeds and proceeds which may be
property of any type described below) of or to any of the following, (all of
which, together with any other property in which the Lender may in the future be
granted a security interest to secure the Obligations, is collectively included
within the meaning of "Collateral" as used herein):
3.1.1 all Inventory and all Documents (whether negotiable or
non-negotiable);
3.1.2 all Accounts (whether or not Eligible Accounts for
purposes of determining the Borrowing Base hereunder); all rights of
Borrower to draw under letters of credit; and all rights of Borrower in
and to the Inventory which gave rise to any Account, and all liens,
guaranties and security granted to or held by Borrower with respect to
Accounts or other obligations owing to Borrower (all of the foregoing
are collectively referred to herein as the "Receivables Collateral");
3.1.3 all contract rights, including, without limitation, all
rights to payment under Existing Government Contracts and contracts not
yet earned by performance and not evidenced by an Instrument or Chattel
Paper;
3.1.4 all General Intangibles, including without limitation
all goodwill, customer lists, judgments, licenses, permits, trade
names, logos, trademarks, service marks, patents, patent applications,
copyrights, blueprints, drawings, designs, papers, rights to
performance, intellectual property, trade secrets, proprietary
processes, developmental ideas and concepts, and proprietary rights,
information and property of any kind and nature;
3.1.5 all Equipment, whether or not Eligible Equipment or New
Eligible Equipment;
3.1.6 all items of tangible and intangible personal property
of any and every kind and description which are not otherwise described
in this subsection 3.1;
3.1.7 all Instruments (whether negotiable or non-negotiable,
and regardless of their being attached to Chattel Paper), Chattel
Paper, policies and certificates of insurance, securities, deposits,
Deposit Accounts, money, cash and other property;
3.1.8 all liens, guarantees, rights, remedies and privileges
pertaining to any of the Collateral, including the right of stoppage in
transit;
3.1.9 all federal, state, and local tax refunds and/or
abatements to which the Borrower is, or becomes, entitled no matter how
or when arising, including but not limited to any loss carryback tax
refunds;
3.1.10 all books, records and information relating to any of
the Collateral or the operation of the Borrower's business in whatever
medium the same may be stored, contained, recorded or maintained,
including without limitation all electronically recorded information
and all rights of access to such books, records and information,
computer software and information (and all rights, programs, manuals,
storage, backup, service contracts, licenses and source codes with
respect thereto), and all property in which such books, records and
information are stored, contained, recorded or maintained; and
3.1.11 all insurance proceeds, refunds, and premium rebates,
whether arising out of insurance relating to any of the foregoing or
otherwise.
3.2 Certain Representations, Warranties, and Covenants Regarding the
Collateral. In addition to the warranties, representations and covenants of the
Borrower set forth elsewhere in this Agreement, the Borrower hereby warrants,
represents, and covenants as follows:
3.2.1 Lock Box Agreement. The Borrower shall hereafter make
collection of all Receivables Collateral in accordance with the terms
and provisions of the form of Lock Box Agreement attached hereto as
Exhibit 3.2.1 (the "Lock Box Agreement"), and shall immediately
instruct its Account Debtors to remit all payments, including without
limitation all checks, drafts, cash, instruments, and other items and
forms of payment which represent, or constitute proceeds or collections
of, the Receivables Collateral, in accordance with the terms and
provisions of the Lock Box Agreement. Upon receipt, Lender shall
deposit all such Receivables Collateral in a collateral account with
the Lender (the "Collateral Account"), subject to the provisions of
this subsection 3.2.1. After allowing two (2) business days for
collection of checks and other instruments, Lender will credit (but
conditional upon final collection) such payments to Borrower's Line of
Credit loan account (except foreign collection items received by check
of a foreign bank drawn on U.S. Dollars which shall be credited when
actually received in immediately available funds by the Lender). Such
credits shall be conditional upon final payment in cash or solvent
credits of the items giving rise to them. If any item is not so paid,
the Lender, in its discretion, whether or not the item is returned, may
either reverse any credit given for the item or charge it to Borrower's
Deposit Account. Any surplus remaining in the Collateral Account after
payment of any then due amounts under the Loans shall be then deposited
in Borrower's Deposit Account and may be used by Borrower in its
discretion subject to the terms and conditions of this Agreement.
3.2.2 Schedules and Assignments of Accounts/Consents to
Assignments. As and to the extent the Lender may from time to time
request, the Borrower shall provide the Lender with schedules
describing all Accounts created or acquired by the Borrower, and the
Borrower shall execute and deliver written assignments of such Accounts
to the Lender, including without limitation the Collateral
Assignments contemplated by Section 4.2.15 hereof when applicable,
provided, however, that the Borrower's failure to execute and deliver
such schedules and/or assignments shall not affect or limit the
Lender's security interest or other rights in and to each Account.
Together with each schedule so requested, the Borrower shall furnish
its sales and cash journals or equivalents acceptable to the Lender,
and shall warrant the genuineness thereof. the Borrower shall also, on
request of the Lender, furnish the Lender with the original shipping
and/or delivery receipts for all merchandise sold.
3.2.3 Bona Fide Accounts. The Borrower hereby warrants that
all Accounts are and will be bona fide existing obligations created by
the sale and delivery of merchandise (not on consignment or approval)
or the rendition of services to customers in the ordinary course of
business, free of Liens, and unconditionally owed to the Borrower,
without defense, offset or counterclaim, or that in the event the
Borrower becomes aware of the existence of a claim of defense, offset
or counterclaim, the Borrower will promptly notify the Lender of such
status of any such Account, and the portion of such Account subject to
defense, offset or counterclaim shall be excluded from classification
as an Eligible Account until such time as the Lender is satisfied that
such Account is no longer subject to claim of defense, offset or
counterclaim.
3.2.4 Notification To Account Debtors and Others by the
Lender. The Lender or the Lender's designee may, at any time or times
thereafter, with notice to the Borrower (given before, concurrently
with or within a reasonably prompt time thereafter, except that no
notice shall be required if an Event of Default has occurred and is
continuing), notify customers or Account Debtors of the Borrower,
either in the name of the Lender or the Borrower, that Accounts have
been assigned to the Lender and of the Lender's security interest
therein, and may instruct such customers and Account Debtors to make
payment directly to the Lender or such other address as may be
specified by the Lender, and the Lender may collect directly from the
obligors thereon all amounts due on account of any or all of the
Collateral and may charge the collection costs and expenses to the
Borrower, and the Lender may, at any time or times, advise any Person
of the Lender's security interest in and to the Collateral.
3.2.5 Allowances and Adjustments. Unless and until otherwise
directed by the Lender acting in its sole discretion, the Borrower may
grant such allowances or other adjustments to Account Debtors as may
reasonably accord with sound business practice; provided however that
no extension of time for payment shall be granted without the Lender's
prior written consent and provided that the Borrower shall furnish the
Lender with all reports required hereby with respect to such allowances
and adjustments. If any Inventory is returned to or repossessed by the
Borrower (other than for any routine warranty, modification or repair
service) or is downgraded in quality or has its marketability adversely
affected, or is detained from or refused entry to the United States, or
required to be removed from the United States, the Borrower shall
report any such occurrence to the Lender in writing in accordance with
the provisions hereof, and if within three (3) days after receipt by
the Lender of such written report thereof, the Lender fails to issue
specific instructions to the Borrower concerning such Inventory, the
Borrower shall have the right to dispose of the same in accordance with
sound business practices, subject, however, to the Lender's security
interest therein and in any Collateral arising from the disposition
thereof. Upon the occurrence of an Event of Default, the Lender may
settle or adjust disputes and claims directly with customers or Account
Debtors for amounts and upon terms which the Lender considers
advisable, and in all cases the Lender will credit the Borrower's Line
of Credit loan account with only the net amounts received by the Lender
in payment of such Accounts.
3.2.6 Notification To Account Debtors by the Borrower. At the
request of the Lender made at any time or times, the Borrower will
provide written notifications to any or all of the Borrower's Account
Debtors concerning the Lender's security interest in the Collateral and
will request that such Account Debtors forward payment thereof directly
to the Lender or as the Lender may direct.
3.2.7 Title to Collateral. Except for the security interest
hereby granted or previously granted and the Permitted Encumbrances (as
hereinafter defined), the Borrower is and shall remain the owner of the
Collateral free from all Liens, and the Borrower will defend the
Collateral against all claims and demands of all persons at any time
claiming the same or any interest therein, and, except with respect to
the Permitted Encumbrances, no financing statement covering any of the
Collateral is on file in any public office in any jurisdiction. The
Borrower will promptly upon learning thereof report to the Lender all
matters materially adversely affecting the value, collectibility or
enforceability of any Collateral. The Borrower does not have presently,
and shall not have hereafter, possession of any Inventory on
consignment.
3.2.8 Actions To Maintain Perfection. From time to time,
whether or not requested by the Lender, the Borrower will take all
steps and actions necessary in order to create, confirm and maintain a
valid and perfected security interest in favor of the Lender in the
Collateral, subject only to the Permitted Encumbrances, and will join
with the Lender in taking any such actions reasonably requested by the
Lender, including without limitation executing one or more financing
statements in form satisfactory to the Lender, and will pay the cost of
filing the same in all public offices wherever filing is deemed by the
Lender to be necessary for the purpose of creating, perfecting, or
maintaining the perfection or priority of the security interests
granted herein; and the Borrower will from time to time at the request
of the Lender also do, or execute and deliver, such additional and
further acts, things, assurances and instruments as are deemed
desirable by the Lender in order to more completely vest in and assure
to the Lender all of its rights hereunder and in or to the Collateral.
3.2.9 Lender's Payment of Taxes and Other Payments. At the
Lender's option, the Lender may at any time or times (but shall have no
obligation to):
3.2.9.1 discharge taxes, Liens, or security interests
or other encumbrances (other than Permitted Encumbrances, and
other than taxes being contested in good faith in accordance
with and to the extent permitted by this Agreement, unless in
either case an Event of Default shall have occurred and be
continuing) at any time levied, placed or assessed on the
Collateral;
3.2.9.2 pay for insurance on the Collateral if the
Borrower shall at any time fail to maintain such insurance, or
if the Lender shall at any time receive notice or otherwise
become aware that such insurance may be cancelled or become
cancelable within twenty (20) days; and
3.2.9.3 pay for the maintenance and preservation of
the Collateral.
The Borrower shall reimburse the Lender on demand for any payment made
or expense incurred by the Lender pursuant to the foregoing
authorization, and such obligation to reimburse the Lender shall
constitute part of the Obligations secured by this Agreement.
3.2.10 Verification. The Borrower hereby authorizes the Lender
to verify the Collateral, and any portion thereof, including
verification with Account Debtors, and with the Borrower's billing
companies, collection agencies, and accountants at any time and from
time to time, and to sign the Borrower's name to any notice to Account
Debtors or any notice relative to such verification of Collateral.
3.2.11 Location of Collateral. Such of the Collateral as
constitutes tangible property will be kept at all times at the
Borrower's Notice Address or at the Maryland Office (as hereinafter
defined) or the Connecticut Office (as hereinafter defined), wherever
the same is currently located. The Borrower will not remove such
Collateral from such location without the prior written consent of the
Lender. All the
Borrower's books and records regarding Collateral are and will be kept
and maintained at the Borrower's Notice Address or at BTRL's principal
office at 3 Taft Court, Rockville, Maryland 20850 (the "Maryland
Office") or at NACL's principal office at 75 North Mountain Road, New
Britian, Connecticut 06053 (the "Connecticut Office"), wherever the
same are currently located and shall not be removed from those
locations without the Lender's prior written consent.
3.2.12 Powers of Attorney. The Borrower hereby irrevocably
constitutes and appoints the Lender as the Borrower's true and lawful
attorney, with full power of substitution (in each case at the sole
risk, cost and expense of the Borrower but for the benefit of the
Lender) to do the following:
3.2.12.1 at any time or times (whether or not an
Event of Default has occurred), to file and record without the
Borrower's signature, or sign the Borrower's name to and file
and record, financing statements and any other instruments
(including without limitation applications to name the Lender
as lienholder on any motor vehicle or other Certificates of
Title), and to take such other actions as the Lender may deem
necessary in order to, perfect or maintain the perfection or
priority of or disclose or protect the Lender's security
interests in the Collateral or any portion thereof; to receive
and open the Borrower's mail, remove therefrom and hold or
apply any Collateral and dispose of such mail or turn over
such mail (other than such Collateral) to the Borrower or any
trustee in bankruptcy, receiver, assignee for benefit of
creditors or other legal representatives to whom the Lender
determines to be the appropriate Person to turn over such
mail; to endorse the name of the Borrower in favor of the
Lender upon any and all checks, drafts, notes, money orders,
acceptances and other items, Instruments and forms of payment,
and to sign and endorse the name of the Borrower on, and
receive as secured party, any of the Collateral; to sign the
Borrower's name to any invoices, schedules, freight or express
receipts, bills of lading, and other Documents or writings of
a similar or different nature, relating to the Collateral; to
sign the name of the Borrower on any schedules and assignments
of Accounts, and on notices of assignment, financing
statements and other public records relating to the
Collateral, and on any notice to the Borrower's Account
Debtors for verification of the Receivables Collateral; and to
receive and apply any proceeds of any Collateral and to
otherwise exercise any rights or remedies available to the
Lender hereunder or under any of the Financing Instruments or
otherwise under agreement or applicable law, to the extent
exercisable or available to the Lender prior to an Event of
Default; and
3.2.12.2 at any time or times after an Event of
Default has occurred and is continuing, in addition to the
actions described in subsection 3.2.12.1 above, to prosecute,
defend, compromise or release any action relating to the
Collateral; to notify the post office authorities to change
the address for delivery of the Borrower's mail to an address
designated by the Lender, and to sign change of address forms
therefor; to sign the Borrower's name in proofs of claim in
bankruptcies of Account Debtors, notices of lien, claims of
mechanics' liens, or assignments or releases of mechanics'
liens securing the Accounts; to take any such actions as may
be necessary to obtain payment of any letter of credit of
which the Borrower is a beneficiary; to repair, manufacture,
assemble, complete, package, deliver, alter or supply goods,
if any, necessary to fulfill in whole or in part the purchase
order of any customer of the Borrower; to take any and all
other actions (including, without limitation, the right to sue
in the name of the Borrower or the Lender to collect upon any
and all Collateral and to settle, adjust or compromise any and
all claims with respect to Collateral including insurance
claims) as the Lender shall deem necessary or expedient to
convert the Collateral into cash; and to otherwise exercise
any rights or remedies to the Lender hereunder or under any of
the Financing Instruments, or otherwise under agreement or
applicable law.
3.2.13 Ratification and Indemnification Under Power of
Attorney. In connection with all powers of attorney set forth in this
Agreement or in the other Financing Instruments, the Lender shall have
full power to exercise such powers as fully and effectually as the
Borrower might or could do; and the Borrower agrees that the Lender
shall not be obligated to exercise any of the powers authorized herein,
and shall be free to exercise or refrain from exercising any of such
powers at any time or times in its absolute discretion, and, if the
Lender elects to exercise any of such powers, it shall not be
accountable for more than it actually receives as a result of such
exercise of power, and shall not be responsible to the Borrower except
for the Lender's actual bad faith or gross negligence; and that all
powers conferred upon the Lender by this Agreement, being coupled with
an interest, shall be irrevocable until such time as all Obligations
have been paid or performed and the Lender's agreement to make advances
has terminated.
3.2.14 Motor Vehicle Certificates of Title. The Borrower
hereby represents and warrants that, with the exception of Equipment
which has been financed in compliance with Section 4.3.1 hereof, it
will promptly deliver to the Lender upon request the originals of all
Certificates of Title within its possession or control pertaining to
any Equipment owned by it for which Certificates of Title are currently
issued, together with a duly completed and executed Application to Add
Lienholder for each such Certificate; and the Borrower covenants and
agrees that it will promptly deliver to the Lender upon request all
Certificates of Title relating to any Equipment hereafter acquired by
it, together with a duly completed and executed Application to Add
Lienholder therewith (in form and content satisfactory for filing with
the appropriate office), and that the Borrower shall not seek to obtain
any Certificate of Title for any Equipment currently lacking such a
Certificate, and it shall not attempt to recertify or obtain a new
Certificate for any Equipment currently evidenced by a Certificate of
Title (whether in the Commonwealth of Massachusetts or any other
jurisdiction) without first notifying the Lender, and only if the
original of such Certificate of Title properly names the Lender as
first lienholder thereon (subject only to any Permitted Encumbrances),
in each case duly perfecting the Lender's security interest granted
under this Agreement.
3.2.15 Audit Fees. The Borrower shall pay to the Lender the
Lender's usual audit fees (as determined by the Lender for accounts of
the type and size of the Borrower) per audit conducted by the Lender,
from time to time, of the Collateral located outside of Massachusetts,
plus any reasonable out-of-pocket expenses of the Lender associated
therewith.
3.2.16 Borrowing Base Determinations. The calculations used to
determine the Borrowing Base are intended solely for purposes of
determining the aggregate amount of Loans which the Lender is presently
willing to make to the Borrower. The Borrower and the Lender expressly
agree that such calculations are not intended to and shall not
constitute for any purposes:
3.2.16.1 a determination by the Lender of the actual
present or future value of any Collateral;
3.2.16.2 any limitation with respect to the
description of Collateral;
3.2.16.3 any determination by the Lender with respect
to the creditworthiness of Account Debtors or any assumption
by the Lender of any risk concerning such creditworthiness; or
3.2.16.4 any limitation, reduction or diminution of
the Obligations or the security therefor, all as provided in
this Agreement and the other Financing Instruments.
3.3 Inventory Collateral. With respect to all Inventory Collateral, so
long as no Event of Default has occurred, the Borrower may sell items of
Inventory Collateral:
3.3.1 Pricing and Cash Sales. for cash in amounts not less
than the Borrower's published, usual or customary prices, less only
usual and customary discounts for volume sales or prompt payment; or
3.3.2 Credit Terms and Accounts. on credit terms usual and
customary in the business conducted by the Borrower, at prices which
conform to the terms of subsection 3.3.1, above, and under such
circumstances as give rise to Accounts subject to this Agreement.
Any Inventory Collateral which will be acquired with proceeds of the Loans is
described on the Master Exhibit.
3.4 Equipment Collateral. With respect to all Equipment Collateral:
3.4.1 Business Use; Purchase Money Acquisitions. all of the
Equipment Collateral is and will be used by the Borrower in the
ordinary course of its business operations, and the Equipment
Collateral which is being acquired with proceeds of the Loans is
specifically described on the Master Exhibit; and
3.4.2 Fixtures. if any part of the Equipment Collateral is or
will be a Fixture (as defined in the UCC), the same shall be affixed to
the real property at the Notice Address of the Borrower or to the real
property at the Maryland Office or at the Connecticut Office and to
such additional locations as are specifically identified and designated
in the Master Exhibit; and, with respect to all items of Collateral
which are or become Fixtures prior to the perfection of, or in such
circumstances as the interests of any other Person may have priority
over, the security interest granted to the Lender under this Agreement,
the Borrower will, on demand of the Lender, furnish to the Lender such
waivers or disclaimers of any and all interests in and to the
Collateral which could claim or have priority over the interests of the
Lender, in each case in such form and upon such terms as the Lender may
request.
SECTION 4
REPRESENTATIONS, COVENANTS AND WARRANTIES
In addition to such other representations, covenants and warranties as
are contained herein, or elsewhere in the Financing Instruments or as have
otherwise been made to the Lender, the Borrower hereby represents, covenants and
warrants that:
4.1 General Representations, Covenants and Warranties.
4.1.1 Business; Supplemental Information Regarding the
Borrower. BBI is engaged in the business of assaying, processing,
manufacturing, selling, and distributing human blood-based products;
BTRL is engaged in the business of biomedical and biotechnical contract
research and services; NACL is engaged in the business of providing
clinical reference laboratory services; BBI's principal place of
business and chief executive office and mailing address is located at
the Notice Address set forth at the beginning of this Agreement; BTRL's
principal place of business and mailing address is the address of the
Maryland Office and NACL's principal place of business and mailing
address is the address of the Connecticut Office. The Borrower does not
and will not conduct any business under any trade name or trade style
other than the Borrower's legal name or as set forth in the Master
Exhibit. Set forth in the Master Exhibit attached hereto are the names
and addresses of the respective officers and members of the Board of
Directors of each Borrower, the name and title of each officer
authorized to execute the Financial Instruments and thereafter deal
with the Lender on behalf of the Borrower, and locations of all the
Borrower's other places of business or at which the Borrower's
properties may be kept or located, which information is true, accurate
and complete; the Borrower agrees to furnish the Lender with written
notice
within ten (10) days of any changes in such information, or any
additional information necessary to insure that said Master Exhibit
remains true, accurate and complete. Nothing in this subsection 4.1.1
shall be construed to permit any action which is otherwise restricted
or prohibited pursuant to the terms of this Agreement.
4.1.2 Due Organization and Existence; Authorization. Each of
BBI, BTRL and NACL (a) is duly organized, validly existing and in good
standing under the laws of the Commonwealth of Massachusetts, (b) has
adequate corporate power and authority to own its properties and assets
and to carry on its business activities as and where now conducted, (c)
is qualified to do business as a foreign corporation and is in good
standing in each jurisdiction wherein such qualification is necessary,
and where the failure to so qualify would have a material adverse
effect on the business or property of the Borrower, and (d) has the
corporate power and authority to execute and deliver such of the
Financing Instruments as have been executed by it, and to perform the
Financing Instruments in accordance with the terms thereof.
4.1.3 Articles of Organization; Stock; Accurate Records. The
Articles of Organization and all amendments thereto of each of BBI,
BTRL and NACL have been duly filed and are in proper order. All capital
stock issued by BBI, BTRL and NACL and currently outstanding is
properly issued, and all books and records of BBI, BTRL and NACL ,
including but not limited to, its minute book, by-laws and books of
account, are accurate and up-to-date and will be so maintained.
4.1.4 Binding Documents; Violation of Other Agreements. Each
of BBI, BTRL and NACL has taken all steps required by applicable law to
make this Agreement, and each of such Financing Instruments, its legal,
valid and binding obligation enforceable in accordance with its terms,
and neither the execution, delivery nor performance of this Agreement
or any of the Financing Instruments is in violation of any law, the
Articles of Organization, Bylaws or other organizational documents of
it, or of any other agreement or instrument to which it is a party or
by which it or any of its assets is or may be bound, and does not
constitute a default under any of the foregoing, or result in the
creation or imposition of a Lien upon any of its properties or assets
other than that in favor of the Lender.
4.1.5 Title To Assets; Security Interests and Mortgages;
Leases; Royalties; etc. The Borrower has title (and good, clear, record
and marketable title in the case of real property) to all assets
reflected in the financial statements hereinafter referred to and
delivered to the Lender, and to all assets acquired since the date of
said financial statements (other than those assets subsequently
disposed of in the ordinary course of business), free of any Lien
except in favor of the Lender and except for the Permitted
Encumbrances.
4.1.6 Investments. The Borrower has no investment, in equity
or debt, in any Person other than obligations of the United States or
Deposit Accounts.
4.1.7 Litigation; Outstanding Orders. Except as disclosed on
the Master Exhibit attached hereto, there are no actions, suits,
proceedings or investigations pending or, to the knowledge of the
Borrower, any of its agents, servants or employees, threatened against
the Borrower or any of its properties in any court, before any other
tribunal or any federal, state, municipal or other governmental
authority. The Borrower is not in default with respect to any order of
any court, or other tribunal or governmental authority. The execution,
delivery and performance of this Agreement and each of the Financing
Instruments by the Borrower will not constitute a default of any order
of any court, or any other tribunal or governmental authority.
4.1.8 Financial Statements Delivered. The Borrower has
furnished to the Lender its financial statements, including
consolidated balance sheet and statement of profit and loss as at and
for the fiscal years ended December, 1993 and 1994, as audited by
Coopers & Lybrand, LLP. Said financial statements fairly present the
financial position of the Borrower as at the dates thereof and said
statement of profit and loss fairly presents the results of the
operations of the Borrower for the fiscal years indicated, all in
conformity with GAAP consistently applied.
4.1.9 Current Stockholders. Set forth on the Master Exhibit
annexed hereto and made a part hereof are the names and addresses of
each shareholder of the Borrower holding 5% or more of any class of the
outstanding capital stock of the Borrower having ordinary voting power
and the number of fully paid and non-assessable shares held by each.
4.1.10 Other Liabilities; Tax Returns; No Adverse Changes.
Except as may be set forth in the Master Exhibit annexed hereto, (a)
the Borrower has no knowledge of any contingent obligations or
liabilities of the Borrower for taxes or long-term commitments which
are not shown in the balance sheets included in said statements or
noted therein; (b) the Borrower has filed all required tax returns or
extensions therefor and has paid all applicable federal, state and
local taxes shown to be due (other than taxes which may hereafter be
paid without penalty) and the Borrower has no knowledge of any
deficiency or additional assessment in connection therewith for which
no provision has been made on its books; (c) there has been no material
adverse change in the business, properties or condition (financial or
otherwise) of the Borrower since the date of the most recent financial
statement referred to above and (d) the Borrower's Taxpayer
Identification Numbers are 04-2652826 (BBI), 04-3152484 (BTRL) and
04-3196246 (NACL). The Borrower's federal income tax returns have been
prepared and filed for its fiscal year(s) stated in the Master Exhibit.
4.1.11 No Agency Between the Borrower and the Lender. Nothing
herein contained shall be construed to constitute the Borrower as the
Lender's agent for any purpose whatsoever, and the Lender shall not be
responsible or liable for any shortage, discrepancy, damage, loss or
destruction of any part of any Collateral wherever the same may be
located and regardless of the cause thereof other than as a direct and
proximate result of the Lender's actual bad faith or negligence
provided however that a standard of "gross negligence" shall be used
with respect to the Lender's engagement of third parties with respect
to the foregoing. The Lender does not, by anything herein or in any
assignment or otherwise, assume any of the Borrower's obligations under
any contract or agreement assigned to the Lender, and the Lender shall
not be responsible in any way for the performance by the Borrower of
any of the terms and conditions thereof.
4.1.12 Regulation U. The Borrower does not own, nor has any
present intention of acquiring, any "margin security" as defined in
Regulation U (12 C.F.R. Part 221) of the Board of Governors of the
Federal Reserve System (herein called a "margin security"). None of the
proceeds of the Loans will be used, directly or indirectly, for the
purpose of purchasing or carrying any margin security or for the
purpose of reducing or retiring any indebtedness which was originally
incurred to purchase or carry a margin security or for any other
purpose which might constitute this transaction a "purpose credit"
within the meaning of said Regulation U.
4.1.13 ERISA. The Borrower has not incurred any material
accumulated funding deficiency within the meaning of the Employee
Retirement Income Security Act of 1974, as amended, or incurred any
material liability to the Pension Benefit Guaranty Corporation
established under such Act (or any successor thereto under such Act),
nor does the Borrower foresee that it will incur any such material
accumulated funding deficiency or material liability in the future, in
connection with any employee benefit plan established or maintained by
the Borrower. The making of the Loans will not involve any prohibited
transaction within the meaning of the Employee Retirement Income
Security Act of 1974 or Section 4975 of the Internal Revenue Code, as
amended. There are no facts known to the Borrower which create, or in
the future may (so far as the Borrower can now foresee) create, any
withdrawal or other liability of the Borrower under the Multi-employer
Pension Plan Amendment Act of 1980.
4.1.14 Necessary Permits and Licenses. The Borrower possesses
all franchises, rights, certificates, variances, licenses, permits and
other authorizations, consents and approvals from all administrative,
regulatory or governmental bodies and all patents, trademarks, service
marks, trade names, copyrights, licenses and other rights, in each
case, free from burdensome restrictions, that are necessary in any
material respect for the ownership, maintenance and operation of its
business, properties and assets, and the Borrower is not in violation
of any thereof in any material respect.
4.1.15 Governmental Approvals Not Required. Neither the nature
of the Borrower nor its business or property, nor any relationship
between or among the Borrower and any other Person is such as to
require any consent, authorization, waiver, approval or other action by
or any notice to or filing with any court or administrative, regulatory
or governmental body, including, without limitation, government
agencies, offices and instrumentalities with which the Borrower has
contracts, in connection with the execution and delivery by the
Borrower of this Agreement or the other Financing Instruments or the
fulfillment of or compliance by the Borrower with, or the enforcement
by the Lender of, the terms and provisions hereof or thereof.
4.1.16 Adequate Financing. The Borrower has no reason to
believe that the proceeds of the Loans, together with such other
sources of funds as are now directly and immediately available to the
Borrower, will not be adequate to finance its business operations for
the terms of the Amended and Restated Term Loan, the $200,000 Term Loan
and the $350,000 Term Loan.
4.1.17 No Event of Default. As of the date hereof, there does
not exist any Event of Default or any event which, but for the giving
of notice or the lapse of time or both, would constitute an Event of
Default under this Agreement, any of the Financing Instruments or under
the provisions of any instrument evidencing any indebtedness of the
Borrower to any other Person.
4.1.18 Compliance with Leases. The Borrower enjoys peaceful
and undisturbed possession as lessee under all leases necessary in any
material respect for the operation of its business or of its properties
and assets, none of which contains any provisions which might
materially affect or impair the operation of its business or such
properties and assets. All such leases are valid and subsisting and are
in full force and effect.
4.1.19 President and Chief Executive Officer; Major
Stockholder. RichardET. Schumacher shall continue to perform the
traditional functions of President and chief executive officer of the
Borrower and shall continue to exercise the traditional authority of
such officer. In addition, Richard T. Schumacher shall continue to own
and exercise complete control over not less than twenty-five percent
(25%) of the outstanding capital stock of BBI; provided however that
such limitation shall not apply in the event that BBI offers stock in
BBI pursuant to an initial public offering or private placement to
investors. In addition, while any Obligations remain outstanding, BBI
shall continue to own one hundred percent (100%) of the issued and
outstanding capital stock of BTRL and NACL.
4.1.20 Compliance with Certain Environmental Laws. Neither the
Borrower, nor any Person for whose conduct the Borrower is responsible,
owns, occupies or operates, or has ever owned, occupied or operated a
site or vessel on which has been stored any hazardous material or oil,
without compliance with all statutes, regulations, ordinances,
directives, and orders of every federal, state, municipal and other
governmental authority which has or claims jurisdiction relative
thereto (the terms "site", "vessel", and "hazardous material",
respectively, as used herein include the definitions of those terms in
Massachusetts General Laws, Ch. 2lE); neither the Borrower, nor any
Person for whose conduct the Borrower is responsible, has ever disposed
of, transported, or arranged for the transport of any hazardous
material or oil without compliance with all such statutes, regulations,
ordinances, directives, and orders; and neither the Borrower, nor any
Person for whose conduct the Borrower is responsible, has ever been
legally responsible for any release or threat of release of any
hazardous material or oil; received notification of any potential or
known release or threat of release of any hazardous material or oil
from any site or vessel owned, occupied or operated by the Borrower, or
any Person for whose conduct the Borrower is responsible, or of the
incurrence of any expense or loss in connection with the assessment,
containment, or removal of any release or threat of release of any
hazardous material or oil from any such site or vessel.
4.1.21 Recent Changes of Name or Structure. Except as
reflected in the Master Exhibit with respect to the corporate name of
NACL, the Borrower has not within the preceding four (4) months changed
its name, identity or corporate structure and has not previously had a
principal place of business or chief executive office located outside
the Commonwealth of Massachusetts; and no Collateral has been brought
into this Commonwealth within the past four (4) months subject to a
security interest in favor of a third party perfected in any manner
under the law of the jurisdiction from which said Collateral was
removed.
4.1.22 Payment of Wages. The Borrower represents and warrants
that all currently owed wages to employees have been paid, and agrees
and covenants that all wages to employees will be paid as and when due.
4.2 Certain Affirmative Covenants.
4.2.1 Payment of Obligations. The Borrower will duly and
punctually pay or cause to be paid, and perform or observe, or cause to
be performed or observed, as the case may be, all of the Obligations
and will pay and perform or observe, or cause to be paid, performed or
observed all other duties or liabilities of any kind of the Borrower to
the Lender, under or as provided in the Financing Instruments, or
otherwise by agreement or applicable law.
4.2.2 Books and Records. The Borrower will maintain its
financial books and records in an accurate, up-to-date, complete and
standardized fashion in accordance with GAAP consistently applied, and
in accordance with any state or federal regulatory requirements
applicable to the Borrower's business or activities.
4.2.3 Inspection. The Borrower will, at all reasonable times
during regular business hours, and upon reasonable advance notice, make
available in its offices, and shall allow the Lender, at the Lender's
expense, access to, all of the Borrower's books and records for
inspection, audit, examination and copying by the Lender and the
Lender's representatives, and the Borrower will, at all reasonable
times, permit entry by the Lender upon the Borrower's premises for
purpose of inspection of its properties by the Lender and the Lender's
representatives and agents, including but not limited to the Collateral
or any portion thereof.
4.2.4 Commercial Purposes. All advances under the Loans shall
be used exclusively for the Borrower's business purposes and operations
and shall not in any respect be used for personal, family or household
purposes.
4.2.5 Notice of Adverse Matters. The Borrower will,
immediately upon learning thereof, report to Lender all matters
materially adversely affecting the Borrower's business or financial
condition or properties, including, without limitation, any damage or
destruction of any material amount of the Borrower's properties
(whether or not constituting Collateral) by fire or other casualty,
whether or not insured against.
4.2.6 Principal Lending Business. The Borrower will use the
Lender as its sole lender of account and depository for BBI's main
operating accounts; provided however that BTRL and NACL may maintain
checking accounts at banks other than the Lender for purposes of
handling their accounts payable and payroll.
4.2.7 Maintenance of Corporate Existence; Compliance with
Laws. The Borrower will maintain and keep in full force its corporate
existence and good standing and comply with all laws, regulations and
orders of the United States and of any state or states, and other
political subdivision thereof, and of any other governmental authority
which may have jurisdiction over the Borrower or its properties or
businesses.
4.2.8 Payment of Taxes and Filing of Returns. The Borrower
will pay when due all taxes, including without limitation all real and
personal property taxes, assessments and charges and all franchise,
income, unemployment, old age benefit, withholding, sales and other
taxes assessed against it or any of its properties, and otherwise
payable by it, at such times and in such manner as is necessary to
prevent any penalty from accruing or any Lien or charge from attaching
to its properties. The Borrower shall prepare and file when due all
federal, state and local tax, informational and other governmental
returns, reports, extensions, and filings, as may be applicable to the
Borrower. The provisions of this subsection, however, shall not
preclude the Borrower from contesting in good faith and by expeditious
process any such tax, and the Borrower shall not be in default under
this subsection by reason of the existence of a Lien for taxes not then
due, all provided that: (a) an adequate reserve therefor is maintained
on the books of the Borrower; (b) the Lender has been notified in
writing by the Borrower of such contest; (c) the enforcement of any and
all Liens for non-payment of such taxes is effectively stayed and the
Lender is satisfied, in its judgment, that such contest or dispute does
not materially affect the existence, perfection or priority of the
Lender's security interest in any of the Collateral; (d) the Lender is
reasonably satisfied that the Borrower has reasonable basis for such
contest or dispute; and (e) the Borrower shall immediately pay the full
amount of such charges and claims in the event the Borrower's contest
or dispute is unsuccessful.
4.2.9 Maintenance of Properties. The Borrower will safeguard,
protect and preserve the Collateral for the benefit of the Lender, will
keep the Collateral free from any adverse lien, security interest or
encumbrance taking priority over the security interest of the Lender
(other than Permitted Encumbrances), will keep all tangible property
constituting part of the Collateral in good working order and repair,
will preserve all beneficial contract rights, will take commercially
reasonable steps to collect all Accounts, and will not waste or destroy
the Collateral or any part thereof; and the Borrower will otherwise
preserve, maintain and protect its rights and keep its properties and
assets in good repair, working order and condition, and capable of
identification, and make (or cause to be made) all needful and proper
repairs or renewals, replacements, additions and improvements thereto,
and shall use its assets only in the ordinary course of business.
4.2.10 Collection Costs; Legal Fees; etc. The Borrower agrees
to pay, and to reimburse the Lender, on demand, for all fees, costs and
expenses (including, without limitation, attorneys' reasonable fees and
expenses) incurred or paid by the Lender in connection with the
preparation, negotiation, interpretation or amendment of this
Agreement, and of any or all of the Financing Instruments, and of any
other instrument, agreement or document executed and delivered pursuant
thereto or in connection therewith, and for any and all such fees,
costs and expenses incurred in connection with collection of the
Obligations or the enforcement of the Lender's rights and remedies
under this Agreement or any of the Financing Instruments or otherwise
against the Borrower, or in the administration, supervision, protection
of or realization on any Collateral held as security for any
Obligation, or in the defense of any action against the Lender with
respect to the Lender's rights or remedies in respect of any
Obligation; and all of the foregoing fees, costs, and expenses shall be
part of the Obligations secured by this Agreement, and the other
Financing Instruments.
4.2.11 Insurance. The Borrower will maintain insurance at all
times with financially sound and reputable companies as are reasonably
satisfactory to the Lender, in such amounts and against such risks as
are customarily insured against by businesses operating in a similar
line of business in a similar area, and consistent with sound business
practice, in no event less than the greater of (a) the amount required
to avoid coinsurance or (b) the total aggregate outstanding principal
indebtedness owing by the Borrower to the Lender, including without
limitation casualty insurance covering the Collateral and other
property of the Borrower against the hazards of fire, flood, sprinkler
leakage, burglary, theft, pilferage, loss in transit, those hazards
covered by extended coverage, and such other hazards as the Lender may
require, all such insurance to be in such form, for such periods and
with such companies as shall be reasonably acceptable to the Lender.
All premiums thereon shall be paid by the Borrower and if the Borrower
fails to do so, the Lender may at its option (but without obligation)
procure such insurance and charge the cost to the Borrower's Line of
Credit account; provided, however, that any such payment by the Lender
shall not constitute satisfaction of the Borrower's obligations with
respect to payment hereunder, or a waiver by the Lender of any Event of
Default with respect to such non-payment. Without limiting the
generality of the foregoing, all such insurance policies shall provide,
in form and substance satisfactory to the Lender, that (i) any loss
thereunder shall be payable to the Lender as loss payee (first to the
Lender and then to the Borrower, as their interests may appear), (ii)
any such payment to the Lender shall be made by an instrument to the
Lender alone and not to the Borrower and Lender jointly and (iii) no
cancellation or modification of such policy shall be effective without
at least thirty (30) days prior written notice to the Lender. If any
insurance losses are paid by check, draft or other instrument payable
to the Borrower and the Lender jointly, the Lender may endorse the
Borrower's name thereon and do such other things as the Lender may deem
advisable to reduce the same to cash. All loss recoveries received by
the Lender upon any such insurance shall be applied to the Obligations
in such order as the Lender in its sole discretion may determine,
unless otherwise expressly consented to in writing by the Lender. Any
surplus shall be paid by the Lender to the Borrower or applied as may
be otherwise required by law. Certificates of insurance of, and true
and complete copies of, and upon request the originals of, all such
casualty insurance policies and endorsements thereto shall be delivered
to the Lender contemporaneously with the execution of this Agreement.
Annually thereafter, the Borrower shall deliver certificates of such
insurance coverages to the Lender, along with satisfactory evidence of
general liability, products liability, workmens compensation and other
insurance coverage, in form and substance satisfactory to the Lender.
The Borrower shall advise the Lender of each claim made by the Borrower
under any policy of insurance which covers the Collateral and will
permit the Lender, to the exclusion of the Borrower, at the Lender's
option in each instance, to conduct the adjustment of each such claim.
The Borrower hereby appoints the Lender as the Borrower's attorney to
obtain, adjust, settle, and cancel any insurance described in this
section and to endorse in favor of the Lender any and all drafts and
other instruments with respect to such insurance. The foregoing
appointment being coupled with an interest is irrevocable until the
within Agreement is terminated by a written instrument executed by a
duly authorized officer of the Lender. The Lender shall not be liable
on account of any exercise pursuant to said power except for any
exercise in actual wilful bad faith. The Lender may apply any proceeds
of such insurance against the Obligations at any time, whether or not
such have matured, in such order of application as the Lender may
determine.
4.2.12 Further Agreements; Compliance With Other Agreements;
Payment of Other Obligations; Tax Returns; Notice of Litigation and of
Events of Default.
The Borrower will:
4.2.12.1 from time to time execute and deliver or
cause to be executed and delivered, and furnish to the Lender
such other agreements, documents, instruments or statements,
and do or cause to be done such other acts as the Lender may
reasonably request, to effect, confirm and secure to the
Lender all rights and advantages intended by this Agreement
and the Financing Instruments;
4.2.12.2 comply with all leases, and with all other
agreements to which the Borrower is a party if a default under
any such agreement could materially adversely affect the
Collateral;
4.2.12.3 generally pay all other debts and
liabilities as they become due (except for liabilities, other
than the Obligations, being contested in good faith for which
adequate provision has been made on the books of the Borrower,
provided that all enforcement proceedings are effectively
stayed pending such contest) and not permit the acceleration
of any indebtedness owed by the Borrower to any Person; and
4.2.12.4 give written notice to the Lender within ten
(10) days of the occurrence thereof of any litigation filed by
or against the Borrower which claims in connection therewith
exceed, either individually or when aggregated with other
existing litigation filed by or against the Borrower, the sum
of Twenty-Five Thousand Dollars ($25,000), and the occurrence
or existence of any Event of Default hereunder, or the
existence of any situation or state of facts which, either
with notice or lapse of time, or both would constitute an
Event of Default hereunder, and the action the Borrower has
taken or proposes to take with respect thereto, all provided
that the receipt of such notice shall not limit or impair, in
any way the Lender's rights hereunder.
4.2.13 Certain Environmental Matters. The Borrower shall:
4.2.13.1 not store (except in compliance with all
laws, ordinances, and regulations pertaining thereto), or
dispose of any hazardous material or oil on any site or vessel
owned, occupied, or operated by the Borrower or by any Person
for whose conduct the Borrower is responsible;
4.2.13.2 neither directly nor indirectly transport or
arrange for the transport of any hazardous material or oil
except in compliance with all laws, ordinances and regulations
pertaining thereto;
4.2.13.3 provide the Lender with written notice: (a)
upon the Borrower's obtaining knowledge of any potential or
known release, or threat of release, in violation of any
federal, state or local law, ordinance or regulation
pertaining thereto, of any hazardous material or oil at or
from any site or vessel owned, occupied or operated by the
Borrower, or by any Person for whose conduct the Borrower is
responsible or whose liability may result in any lien on any
Collateral; (b) upon the Borrower's receipt of any notice to
such effect from any federal, state or other governmental
authority; or (c) upon the Borrower's obtaining knowledge of
any incurrence of any expense or loss by such governmental
authority in connection with the assessment, containment or
removal of any hazardous material or oil for which expense or
loss the Borrower may be liable or for which expense a Lien
may be imposed on any Collateral.
4.2.14 Changes in Master Exhibit. The Borrower shall promptly
notify the Lender in writing of any changes in or additions to the
information set forth in the Master Exhibit.
4.2.15 Governmental Approvals. To the extent that the Borrower
has entered into, or enters into in the future, any contract subject to
the provisions of the Assignment of Claims Act of 1940, as amended, 31
U.S.C. 3727 (the "Assignment of Claims Act"), the Borrower covenants
and agrees to promptly execute and deliver to Lender a Collateral
Assignment for each such contract in the form of the Collateral
Assignment annexed hereto as Exhibit 4.2.15(A) and to complete, execute
and send by certified mail return receipt requested a Notice of
Assignment of Contract (the "Notice") in the form of the Notice annexed
hereto as Exhibit 4.2.15(B) to (a) the Contracting Officer or the
agency head; (b) surety on any bond applicable to the contract; and (c)
the Disbursing officer designated in the contract to make payment.
Furthermore, the Borrower agrees to seek acknowledgement of each such
Notice from the addressees thereof as provided in the form of Notice in
Exhibit 4.2.15(B) and to transmit the same to the Lender upon receipt
thereof.
4.2.16 Key Man Life Insurance. So long as any of the
Obligations remain outstanding, the Borrower agrees to maintain life
insurance on the life of Richard T. Schumacher providing for a net
payment in cash upon the death of said Richard T. Schumacher in an
amount of not less than Two Million Dollars ($2,000,000), and the
Borrower shall pledge or collaterally assign such policy or policies to
the Lender and, at all times, maintain such pledge or collateral
assignment. Such insurance coverage shall include a disability rider in
the full amount of such coverage.
4.3 General Negative Covenants.
4.3.1 Other Debt. The Borrower will not issue any evidence of
indebtedness or create, or incur, assume, guarantee, become
contingently liable for or suffer to exist, any indebtedness in excess
of One Hundred Fifty Thousand Dollars ($150,000) (other than
indebtedness to the Lender), without the prior written consent of the
Lender which consent will not be unreasonably withheld or delayed;
provided, however, that the Borrower may incur liabilities which are
incurred or arise in the ordinary course of the Borrower's business
(other than liabilities incurred or arising with respect to money
borrowed or for the purchase or lease of assets) without the prior
written consent of the Lender. The Borrower shall not enter into or
participate in any agreement, arrangement or transaction with any
Person without the prior written consent of the Lender, if the effect
of such agreement, arrangement or transaction has, or could reasonably
be expected in the future to have, the effect of (i) rendering the
Borrower either primarily or contingently liable for any indebtedness
or other obligation of any Person (ii) transferring any asset of the
Borrower to or for the benefit of any Person (except as may be
otherwise expressly permitted by this Agreement); or (iii) subjecting
any of the Collateral to any lien in favor of any third party (other
than Permitted Encumbrances), including but not limited to any creditor
or obligee of any Person. Notwithstanding the foregoing, the Borrower
shall be permitted to grant purchase money security interests for the
purchase of assets otherwise permitted hereunder.
4.3.2 Payment of Dividends. The Borrower will not pay any
dividends either in cash or kind on any class of its stock nor make any
distribution on account of their stock, nor redeem, purchase or
otherwise acquire directly or indirectly any of their stock, without
prior written notice to and written consent of the Lender except in
compliance with this subparagraph 4.3.2. During any period that the
Borrower is a "Subchapter S" corporation pursuant to the IRC, the
Borrower may pay dividends to its shareholders in the amounts necessary
to permit such shareholders to pay the portion of their federal and
state income taxes which is directly related to the Borrower's net
income attributable to such shareholders.
4.3.3 Loans By the Borrower. The Borrower will not make any
loan or advances to any Person, including, without limitation, its
officers and employees.
4.3.4 Investments. The Borrower will not invest in equity or
debt of any Person other than obligations of the United States or
Deposit Accounts.
4.3.5 Mergers, etc. The Borrower will not merge or consolidate
or be merged or consolidated with or into any other Person, or be a
party to any reorganization, change in legal structure or any sale,
lease, transfer or other disposition of all or substantially all of its
assets.
4.3.6 Sales of Assets. The Borrower will not sell, lease, or
dispose of any of its assets except for sales of Inventory in the
ordinary and usual course of its business, and for Equipment no longer
needed in the operation of its business, so long as the Borrower
receives therefor a sum substantially equal to such Equipment's fair
value and such sum is immediately paid to Lender to be applied to the
Loan.
4.3.7 No Liens; Permitted Encumbrances. The Borrower will not
grant or assume or suffer to exist any Lien with respect to any of its
assets or property, tangible or intangible, whether now owned or
hereafter acquired, except for Liens granted to the Lender pursuant to
this Agreement, and except for the following (collectively, the
"Permitted Encumbrances"): (a) liens in respect of taxes, fees,
assessments and other governmental charges not yet due and payable, or
with respect to which the validity thereof is currently being contested
in good faith by appropriate proceedings in accordance with the
provisions of this Agreement; (b) landlord's liens in respect of rent
not in default or Liens in respect of pledges or deposits under
worker's compensation, unemployment insurance, social security laws or
similar legislation or in connection with appeal and similar bonds
incidental to litigation, mechanics', laborers', and materialmen's and
similar liens, if the obligations secured by such liens are not then
delinquent, and liens securing statutory obligations incidental to the
conduct of the business of the Borrower which do not in the aggregate
materially detract from the value of the property of the Borrower or
materially impair the use thereof in the operation of their respective
businesses; (c) judgment liens which shall not have been in existence
for a period longer than thirty (30) days after the creation thereof
(provided no foreclosure or execution action shall have been commenced)
or if a stay of execution shall have been obtained for a period longer
than thirty days after the expiration of such stay (provided no
foreclosure or execution action shall have yet been commenced) or
judgment liens for which the Borrower has obtained a bond in favor of
the judgment holder in the full amount of the lien and which bond is
otherwise satisfactory to Lender; (d) the security interests, mortgages
or Liens, if any, described in the Master Exhibit annexed hereto; and
(e) Liens otherwise permitted pursuant to Section 4.3.1 hereof.
4.3.8 Continuance of Business. The Borrower will not engage in
any business other than the businesses in which it is currently engaged
or a business reasonably allied thereto, and the Borrower will continue
to conduct and operate its business actively and in good faith.
SECTION 5
FINANCIAL AND REPORTING COVENANTS
5.1 Reporting Covenants. The Borrower agrees to provide the Lender with
the reports, statements, certificates and information set forth in this Section
5, all of which are referred to as the "Reporting Requirements".
5.1.1 Quarterly Financial Statements. The Borrower will
furnish to the Lender, within forty-five (45) days after the close of
each calendar quarter of its fiscal year, consolidated and
consolidating (except
the last in each fiscal year) financial statements, including a balance
sheet, and a statement of profit and loss reflecting the financial
condition of the Borrower at the end of such period and the results of
its operations for such period and for the period from the beginning of
the current fiscal year to the end of such period, in comparative form
with figures for the corresponding periods of the previous fiscal year
accompanied by a certificate by the Borrower's chief financial officer
or President to the effect that such financial statements fairly
present such financial condition and results of operations as of the
end of and during such period, in accordance with GAAP consistently
applied, subject only to year-end adjustments and audit.
5.1.2 Annual Financial Statements. The Borrower will furnish
the Lender, within one hundred twenty (120) days after the close of
each fiscal year, consolidated and consolidating financial statements,
including a balance sheet, statement of profit and loss, statements of
cash flow, and a statement of changes in shareholders equity,
reflecting the financial condition of the Borrower at the end of such
fiscal year and the results of its operations during such fiscal year
(in each case setting forth in comparative form the corresponding
figures for the preceding year) audited and reported upon (in form
generally recognized as "unqualified") by Coopers & Lybrand, LLP, or
such other independent certified public accountant satisfactory to the
Lender, prepared in accordance with GAAP, applied consistently in the
preparation thereof and with prior periods, and accompanied by a
certificate by the Borrower's chief financial officer or president that
such financial statements fairly present such financial condition and
results of operations as of the end of and during such period; together
with, upon request of the Lender, an opinion of such certified public
accountant that to its knowledge there has occurred no event which
constitutes, or which with the lapse of time or giving of notice or
both would constitute an Event of Default hereunder, or, if the
contrary appears to be true, a statement of such Event of Default and
the nature thereof.
5.1.3 Monthly and Weekly Reports. The Borrower shall also
furnish to the Lender monthly, within fifteen (15) days of the last day
of each month hereafter:
5.1.3.1 an accounts receivable agings and collections
report in sufficient detail to allow Lender to determine if
the Borrower is in compliance with the Borrowing Base;
5.1.3.2 a Borrowing Certificate detailing the
Eligible Accounts and Eligible Inventory then available to
support the Line of Credit in accordance with this Agreement;
and
5.1.3.3 an Inventory breakdown report, with
certificates of the Borrower's President or chief financial
officer as to the values of the Borrower's Inventory, each in
form satisfactory to Lender, together with evidence of
shipments or deliveries and such other information regarding
Inventory as Lender may request.
The Borrower shall also furnish to the Lender weekly, within two (2)
business days of the end of each week, copies of its weekly sales and
cash journals.
All of such reports, to the extent governed by GAAP, shall be
prepared in accordance with GAAP, applied consistently in the
preparation thereof and with prior periods.
5.1.4 Officer's Certificates. The Borrower will, upon request
of the Lender but in any event within thirty (30) days of the end of
each calendar quarter, deliver to the Lender an officer's certificate
signed by its President or chief financial officer certifying that: (a)
the signer has reviewed the relevant terms of the Financing Instruments
and is familiar with the operations and financial condition of the
Borrower; (b) there is in existence no Event of Default described in
any of the Financing Instruments and no event which, with the giving of
notice or lapse of time, or both, would result in the occurrence of an
Event of Default; or (c) if there is a continuing Event of Default or a
continuing condition which, with the giving of notice or lapse of time,
or both, would result in the occurrence of an Event of Default, the
nature and period thereof and the action which has been taken, is being
taken or is proposed to be taken with respect thereto, provided that no
such notice, action or proposed action shall affect Lender's rights
hereunder with respect to any Event of Default.
5.1.5 Other Information. In addition to the foregoing, the
Borrower will furnish the Lender from time to time with such financial
information and statements as the Lender may reasonably request, and,
upon request of the Lender, with copies of all financial statements and
financial reports that the Borrower sends or makes available to its
members of its Board of Directors or to any governmental authority,
together with copies of all management letters of substance and other
reports of substance submitted to the Borrower by its independent
accountants in connection with any annual or interim audit; and, upon
request of the Lender, the Borrower will authorize and direct all
accountants and auditors to exhibit and deliver copies of any financial
statements, trial balances or other accounting records of any sort, and
to disclose to the Lender any information they may have concerning the
Borrower's financial or business condition.
5.2 Financial Covenants.
The Borrower shall maintain and observe all of the following financial
standards, in each case, determined and classified in accordance with GAAP
applied on a consistent basis at the applicable dates or during the applicable
time periods indicated in the following table:
<TABLE>
<CAPTION>
====================================================================================================================
APPLICABLE DATE OR TIME APPLICABLE RATIOS
FINANCIAL STANDARDS PERIOD OR MONETARY REQUIREMENTS
- --------------------------------------------------------------------------------------------------------------------
<C> <C> <C>
5.2.1: Consolidated Debt Service Quarterly, at the end of At least 1.25:1 (rounded to nearest hundredth)
Ratio each quarter on an average four- quarter rolling basis
- --------------------------------------------------------------------------------------------------------------------
5.2.2: Consolidated Total Debt: Quarterly Not to exceed 3.0:1 (in each case rounded to the
Tangible Net Worth Ratio nearest hundredth)
- --------------------------------------------------------------------------------------------------------------------
5.2.3: Fixed Asset Expenditures Annually For 1995, the Borrower will not make
Expenditures (as hereinafter defined) for the
purchase of fixed assets from the proceeds of
any debt financing (including the Line of Credit
or the other Loans) in excess of an aggregate of
$600,000; provided however that the Borrower may
$150,000 for such Expenditures. Thereafter, the
Borrower will not make Expenditures for the
purchase of fixed assets from the proceeds of
the Line of Credit in any fiscal year in excess
of an aggregate of $150,000 per year, without
the prior written consent of the Lender, which
consent will not be unreasonably withheld or
delayed; provided however that this covenant
shall not reduce the level of indebtedness of
$150,000 which is permitted to be incurred by
the Borrower pursuant to subsection 4.3.1
hereof. This covenant shall be reviewed
annually by the Lender and any change therein
shall be determined by the Lender by notice to
the Borrower.
=====================================================================================================================
</TABLE>
3.3.6 As used in this Agreement:
(a) "Total Debt" means the aggregate of all liabilities of the
Borrower for money borrowed, incurred from any source and in any manner
whatsoever, all in accordance with GAAP, including all subordinated
debt, plus the capitalization of all obligations on leases of real and
personal property;
(b) "Tangible Net Worth" means the aggregate tangible assets
of the Borrower after excluding the book value of all Intangible
Assets, minus the amount of aggregate liabilities, including all
deferred income taxes, and "Intangible Assets" shall include all
goodwill, organizational expense, licenses, patents, trademarks,
tradenames, copyrights, capitalized research and development expenses,
deferred charges, and all other intangible assets as determined in
accordance with GAAP consistently applied);
(c) "Consolidated Debt Service Ratio" means Adjusted Operating
Cash Flow (as described on Exhibit 5.2.1 attached hereto) divided by
Total Debt Service (as described on Exhibit 5.2.1 attached hereto).
(d) "Expenditures" shall refer to entire purchase price of any
fixed asset in the event of purchase, and the aggregate rental over the
entire rental period in the case of a lease. The acquisition of any
fixed asset under a lease shall be deemed a purchase of a fixed asset.
3.3.6 Computation According to GAAP. All of the terms used in
the foregoing financial covenants, except to the extent otherwise
specifically defined herein, and all computations made under the
foregoing covenants, shall in all respects be governed by and performed
in accordance with GAAP consistently applied.
SECTION 6
EVENTS OF DEFAULT
Notwithstanding any provision to the contrary in any instrument
evidencing any Obligation, the occurrence of any one or more of the following
shall constitute and mean an "Event of Default" under this Agreement:
6.1 Any statement, report, certificate, representation or warranty,
made or furnished by the Borrower in, or in connection with the execution and
delivery of this Agreement or any of the Financing Instruments, or in compliance
with the provisions of this Agreement or any of the Financing Instruments, or
otherwise furnished to the Lender at any time, shall prove to have been false or
erroneous when made in any material respect, or omits or fails to state a
material fact necessary in order to make the statements contained therein or
herein not misleading;
6.2 The Borrower shall fail to make payment of the principal or
interest on the Loans when and as due;
6.3 The Borrower shall fail to make payment of any other Obligation
within fifteen (15) days of the date when and as due;
6.4 The Borrower shall fail to perform, observe, comply with or satisfy
any covenant, agreement or condition contained in this Agreement (other than
payment of any Obligation) not cured within thirty (30) days of the earlier of
(i) notice by the Lender to the Borrower or (ii) actual knowledge by the
Borrower of the occurrence thereof, plus such additional time as may be required
to cure such default because of delays beyond the Borrower's control, if such
default is susceptible of being cured and if the Borrower is acting in good
faith and is making diligent efforts to cure such default; provided, however,
that such cure period shall not exceed the aggregate of ninety (90) days and
shall not apply to: (a) any transfer or voluntary encumbrance of assets
(including Collateral); (b) any failure with respect to any requirement of the
Borrower to give notice to the Lender as provided herein; (c) the Reporting
Requirements; or (d) any event which is otherwise an Event of Default pursuant
to any other subsections of this Section 6; and such cure period shall run
concurrently with, and not in addition to, any and all applicable grace or cure
periods contained in any of the other Financing Instruments;
6.5 The Borrower shall default in payment of (a) any obligations under
the lease between BBI and C.W.B. Realty Trust concerning the premises from which
the Borrower operates its business; or (b) any obligation under any lease which
default could materially adversely affect the Collateral or the business
operations of the Borrower; or (c) any obligation or indebtedness to any other
Person at any time outstanding, continued for a period sufficient to cause the
acceleration of the maturity of such obligation or indebtedness (whether or not
such obligation or indebtedness is actually accelerated) and such acceleration
could materially adversely affect the Collateral or the business operations of
the Borrower;
6.6 Failure, generally, of the Borrower to pay its debts when due and
such failure could materially adversely affect the Collateral or the business
operations of the Borrower; or the taking of possession, custody or control of,
or the attachment by judicial process of, or issuance of an injunction against,
or creation of any other Lien (other than in favor of the Lender) upon, any part
of the Borrower's assets by any Person, which action is not dissolved within
thirty (30) days;
6.7 The Borrower:
6.7.1 files a voluntary petition in bankruptcy (which term
includes any action under Title 11 of the United States Code entitled
"Bankruptcy" and commonly referred to as the "Bankruptcy Code"); or
6.7.2 is adjudicated a bankrupt or insolvent; or
6.7.3 files any petition or answers seeking or acquiescing in
any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief for itself under any law
relating to bankruptcy, insolvency or other relief for debtors; or
6.7.4 seeks or consents to or acquiesces in the appointment of
any trustee, receiver, master or liquidator (or other similar official)
of itself or of all or any substantial part of its property; or
6.7.5 makes any general assignment for the benefit of
creditors; or
6.7.6 admits in writing to its general inability to pay its
debts as they become due;
6.8 Commencement of any bankruptcy, insolvency, or other creditor's
relief proceedings against, or entry by a court of competent jurisdiction of any
order, judgment or decree approving a petition filed against the Borrower,
seeking any reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any present or future federal or state law
or regulation relating to bankruptcy, insolvency, or other relief for debtors,
which proceeding, order, judgment or decree remains unvacated or unstated for an
aggregate of thirty (30) days, whether or not consecutive, from the date of
entry thereof;
6.9 A material portion of the Borrower's assets shall be damaged by
fire or other casualty, the restoration or replacement cost of which damage
exceeds, in the aggregate, the amount of insurance proceeds readily available
(less applicable deductibles and plus capital in an amount which, in Lender's
sole discretion (a) is available for such purposes and (b) expenditure of such
capital for such purposes is appropriate under the circumstances) for such
restoration or replacement;
6.10 The issuance or existence of any judgment or judgments against the
Borrower by any court of competent jurisdiction, or other governmental authority
of competent jurisdiction, aggregating in excess of One Hundred Thousand Dollars
($100,000) in any fiscal year, and not covered by insurance, not paid within
thirty (30) days of the date thereof;
6.11 The loss, suspension or revocation of any governmental license
required or necessary in connection with the operation of the Borrower's
business;
6.12 The termination or revocation of any guaranty given by any
Guarantor to guarantee payment of any of the Obligations;
6.13 Service of any process upon the Lender seeking to attach by means
of trustee process any funds of the Borrower or of any Affiliate on deposit with
Lender, which attachment or process is not dissolved within thirty (30) days; or
6.14 The occurrence of any change in the Borrower's condition or
affairs (financial or otherwise) that, in the Lender's reasonable opinion,
impairs the Lender's security or materially increases the Lender's risk under
this Agreement or the Financing Instruments, or the occurrence of any event or
circumstance with respect to the Borrower such that the Lender reasonably deems
itself insecure.
SECTION 7
REMEDIES
7.1 General Remedies. In addition to and without in any way limiting
any other rights and remedies available to the Lender under this Agreement prior
to an Event of Default, or any other rights and remedies available to the Lender
(whether prior to or after an Event of Default) under any of the Financing
Instruments or under applicable law or in equity, upon and at any time or times
after the occurrence of any Event of Default hereunder:
7.1.1 the Lender may declare and cause all or any portion of
the Obligations to be immediately due and payable;
7.1.2 the Lender may decline to honor the credit of the
Borrower or may refuse to make further advances to the Borrower;
7.1.3 The Lender may collect the Receivables Collateral with
or without taking possession of the Collateral;
7.1.4 the Lender shall be entitled to immediate possession of
the Collateral or any portion or portions thereof and may enter upon
the Borrower's premises to take possession thereof; may require the
Borrower to assemble the Collateral and make it available to the Lender
at a place to be designated by the Lender which is reasonably
convenient to both parties; and/or may require the Borrower to deliver
all books, records and accounts relating to the Collateral to the
Lender;
7.1.5 the Lender may enter upon, occupy, and use any premises
owned or occupied by the Borrower, and may exclude the Borrower from
such premises or portion thereof as may have been so entered upon,
occupied, or used by the Lender. The Lender shall not be required to
remove any of the Collateral from any such premises upon the Lender's
taking possession thereof, and may render any Collateral unusable to
the Borrower. In no event shall the Lender be liable to the Borrower
for use or occupancy by the Lender of any premises pursuant to this
Agreement except for claims arising out of the Lender's gross
negligence, willful misconduct or bad faith, nor for any charge (such
as wages for the Borrower's employees and utilities) incurred in
connection with the Lender's exercise of the Lender's rights and
remedies;
7.1.6 the Lender may take such steps as it deems necessary to
protect the Lender's interest in and to preserve the Collateral and the
Borrower agrees to cooperate fully with all of Lender's efforts to
preserve, and will take such actions as the Lender shall direct to
preserve, the Collateral;
7.1.7 the Lender shall have the rights and remedies of a
secured party under the UCC and other applicable laws, the choice and
manner of exercise of any right or remedy being in the Lender's sole
discretion; and pursuant thereto the Lender shall have the right to
foreclose the security interest granted in any Collateral by any
available judicial procedure and to take possession of and sell any or
all of the Collateral with or without judicial process; the Lender may
lease or otherwise dispose of the Collateral, or may sell the
Collateral, or any part thereof, at public or private sale, at any time
or place, in one or more sales, at such price or prices, and upon such
terms, either for cash, credit or future delivery, as the Lender may
elect, and, except as to that part of the Collateral which is
perishable or threatens to decline steadily in value, or is of the type
customarily sold on a recognized market, the Lender shall give the
Borrower reasonable notification of such sale or sales, it being agreed
that in all events written notice mailed to the Borrower at least seven
(7) days prior to such sale or sales is reasonable notification, and it
is hereby further agreed that at any public sale the Lender may (but
shall have no obligation to) bid for and become the purchaser of any
Collateral; the Borrower hereby waives any and all rights it may have
to judicial hearing in advance of the enforcement of any of the
Lender's rights hereunder, indicting without limitation the Lender's
right to take immediate possession of the Collateral; and the Lender
may do any of the foregoing or otherwise deal with the Collateral in
its then condition or following such preparation as the Lender deems
advisable, with or without taking possession thereof;
7.1.8 the Lender shall have the right to apply to the
Obligations any deposits or other sums at any time credited by or due
from the Lender to the Borrower; and
7.1.9 the Lender may treat any or all of the Financing
Instruments as being in default and may exercise any rights and
remedies thereunder as it shall deem appropriate.
7.2 License. The Borrower hereby grants to the Lender a nonexclusive
irrevocable license to use, apply, and affix any trademark, trade name, logo, or
the like in which the Borrower or any Affiliate now or hereafter has rights,
such license being granted in connection with the completion of the manufacture
of Inventory or sale or other disposition of Inventory by Lender in the exercise
of its rights and remedies hereunder.
7.3 No Duty of Preservation; Joint Property. The Lender may at all
times proceed directly against the Borrower to enforce the payment of the
Borrower's Obligations to the Lender, and shall not be required to take any
action of any kind to preserve, collect upon or protect the rights of the Lender
in any Collateral obtained pursuant to the Financing Instruments. In the event
any Collateral, or any Deposit Account, is held in joint or common names, the
Lender may deal with such Collateral, or any Deposit Account, for all purposes
hereunder, and under any or all of the Financing Instruments, as if belonging to
any one, and no more than one, of such joint or common owners.
7.4 Cumulative Remedies. The enumeration of rights and remedies herein,
and in each of the Financing Instruments, shall be cumulative and not exclusive,
and shall be in addition to, and shall not exclusive of, any other rights or
remedies the Lender may have, whether under the UCC or other applicable law, or
in equity, or otherwise. The Lender shall, in its discretion, determine its
choice of rights and remedies and the order in which they shall be exercised,
and whether or not, and which, Collateral is to be proceeded against, and in
which order. The exercise of any right or remedy shall not preclude the exercise
of others.
SECTION 8
WAIVER; TERMINATION
8.1 Waiver By the Borrower. The Borrower hereby waives demand,
presentment, protest and notice thereof with respect to any and all instruments,
notice of acceptance hereof, notice of Loan or advances made, credit extended,
Collateral received or delivered, or any other action taking in reliance herein,
and all other notices and demands of any kind except as expressly set forth
herein.
8.2 Lender's Option To Waive. The Lender may at its sole discretion, at
any time and from time to time, waive any of the requirements or provisions
hereof, or contained within any of the Financing Instruments, or any default
hereunder or under any of the Financing Instruments, but only by an express
written waiver signed by an authorized officer of the Lender; no act other than
an express written waiver, nor any failure to act or delay by the Lender shall
constitute a waiver of any requirement or provision of, or any default under, or
any of the Lender's rights or remedies under, this Agreement or any of the
Financing Instruments. No single or partial waiver by the Lender of any
provision of this Agreement or any of the Financing Instruments, or any breach
or default thereunder, or of any right or remedy which the Lender may have,
shall operate as a waiver of any other provision, breach, default, right or
remedy, nor of the same one on any future occasion.
SECTION 9
MISCELLANEOUS
9.1 Deposits As Collateral; Set-Off. Any and all deposits, Deposit
Accounts, and other sums at any time credited by or due to the Borrower from the
Lender or any of its banking or lending affiliates or any lender acting as a
participant under any loan arrangement between the Lender and the Borrower, and
any cash, certificates of deposit, securities, instruments, documents, policies
and certificates of insurance, goods, Accounts, choses in action, Chattel Paper,
and other property of the Borrower in the possession or control of, or in
transit to or from, the Lender, or any of its banking or lending affiliates, or
any lender acting as a participant under any loan arrangement between the Lender
and the Borrower, or any third party acting on the Lender's behalf, regardless
of the reason the Lender, or such other party, receives or is to receive the
same (whether in pledge, or for safekeeping, or as agent for collection or
transmission or otherwise) and regardless of whether the Lender has
conditionally released the same, shall at all times constitute security for any
and all Obligations, and may be applied or set off against such Obligations at
any time, whether or not other collateral is available to the Lender. Lender
shall have the unrestricted right from time to time to apply (or to change the
application already made of) proceeds of Collateral to any Obligations, as
Lender in its discretion may determine.
9.2 Transfer of Collateral to Bank. Upon the occurrence of an Event of
Default, the Lender may at any time thereafter transfer any securities or other
property constituting Collateral into its own name or that of its nominee and
receive the income thereon and hold the same as security for Obligations or
apply it to principal or interest due on Obligations. Insofar as Collateral
shall consist of Accounts, contract rights, other claims and rights to the
payment of money, insurance policies, instruments, chattel paper, chose in
action or the like, the Lender may, without notice to or demand on the Borrower,
demand, collect, receipt for, settle, compromise, adjust, use, sue for,
foreclosure or realize upon Collateral as the Lender may determine, whether or
not Obligations or Collateral are then due, and for the purpose of realizing the
Lender's rights therein, the Lender may receive and open mail addressed to the
Borrower and endorse and/or remove notes, checks, drafts, money orders,
documents of title or other evidences of payment, shipment or storage or any
form of Collateral or items which relate directly to any of the Collateral on
behalf of and in the name of the Borrower. All contents of mail opened by the
Lender, except for removal of Collateral therefrom, shall be forwarded to the
Borrower and the Lender shall not disclose the contents thereof to any other
party, except Bank's attorneys, agents and independent contractors who are
directly involved with the Lender's relationship with the Borrower, unless any
such contents relate directly to Collateral. The powers conferred on the Lender
by this subsection are solely to protect the interest of the Lender and shall
not impose any duties on the Lender to exercise any powers.
9.3 No Duty To Preserve or Collect. The Lender shall have no duty as to
the collection or protection of the Collateral beyond the safe custody of such
of the Collateral as may come into possession of the Lender and shall have no
duty as to the preservation of rights against prior parties or any other rights
pertaining thereto. The Lender's rights and remedies may be exercised without
resort or regard to any other source of satisfaction of the Obligations.
9.4 Survival of Covenants; Binding Effect. All agreements,
representations, covenants and warranties made by the Borrower in this
Agreement, the Financing Instruments, or in any certificate or other document
delivered to the Lender in connection herewith shall survive the termination of
this Agreement and survive the execution and delivery of this Agreement, and
shall remain in full force and effect until all Obligations to the Lender have
been paid in full and satisfied, and the security interest, lien and rights
granted to the Lender in any Collateral and its rights and remedies hereunder
and under the Financing instruments shall continue in full force and effect
notwithstanding the fact that the Borrower's Line of Credit loan account may
from time to time be in a zero or credit position, until all Obligations have
been satisfied. All the terms and provisions of this Agreement and the Financing
Instruments shall be binding upon and inure to and be enforceable by and against
the parties hereto and their respective successors and assigns.
9.5 Termination of Agreement.
9.5.1 This Agreement shall terminate upon the final and
irrevocable payment in full by the Borrower of the Obligations, or upon
acceleration of the Obligations pursuant to the terms of this
Agreement.
9.5.2 The termination of this Agreement shall not affect any
rights of the Borrower or the Lender arising prior to the effective
date of such termination, as the case may be, and the provisions hereof
shall continue to be fully operative until all transactions entered
into, rights created or Obligations incurred prior to such occurrence
or termination shall have been fully disposed of, concluded or
liquidated. Upon termination of this Agreement, all Obligations
(including, without limitation, the Loans) shall be due and payable
without notice or demand. The security interests, liens and rights
granted to the Lender hereunder and under any instrument or document
delivered pursuant hereto or in connection herewith shall continue in
full force and effect, notwithstanding the termination of this
Agreement or the fact that the Borrower's Accounts may from time to
time be temporarily in a credit position, until all of the Obligations
have been paid in full after the termination hereof. All
representations, warranties, covenants, waivers and agreements
contained herein shall survive the termination hereof unless otherwise
provided.
Notwithstanding the foregoing, if after receipt of any payment of all
or any part of the Obligations, the Lender is for any reason compelled
to surrender such payment to any person or entity because such payment
is determined to be void or voidable as a preference, impermissible
setoff, a diversion of trust funds or for any other reason, this
Agreement shall continue in full force and the Borrower shall be liable
to, and shall indemnify and hold the Lender harmless for, the amount of
such payment surrendered until the Lender shall have been finally and
irrevocably paid in full. The provisions of the foregoing sentence
shall be and remain effective notwithstanding any contrary action which
may have been taken by the Lender in reliance upon such payment, and
any such contrary action so taken shall be without prejudice to the
Lender's rights under this Agreement and shall be deemed to have been
conditioned upon such payment having become final and irrevocable.
9.6 Conflict of Terms. In the event of any conflict or contradiction
between or among any provision or provisions of this Agreement and any provision
or provisions of any of the other Financing Instruments, the provisions of this
Agreement shall govern.
9.7 Prior Discussions; Amendments in Writing; Counterparts; Filing As
Financing Statement. This Agreement and all other Financing Instruments
incorporate all discussions and negotiations between the Borrower and the
Lender, either express or implied, concerning the matters included herein and
therein, any custom or usage to the contrary notwithstanding. No such
discussions or negotiations shall limit, modify, or otherwise affect the
provisions of the Financing Instruments. This Agreement may be amended or
modified only in writing signed by the parties hereto, and in the case of the
Lender signed by a duly authorized officer thereof. This Agreement may be
executed in two or more counterparts, each of which shall constitute an
original, but such counterparts together shall constitute one and the same
instrument. A carbon, photographic or other reproduction of this Agreement or of
any financing statement executed to perfect the security interest created herein
may be filed as a financing statement under the UCC (or under the Uniform
Commercial Code in effect in any jurisdiction outside Massachusetts).
9.8 General Indemnification. The Borrower shall, and does hereby,
further indemnify and save the Lender harmless from any and all liabilities,
damages, costs, losses and expenses (including, without limitation, court costs
and attorney's reasonable fees and expenses) that the Lender may sustain or
incur by reason of, relating to or arising out of the preparation of this
Agreement, the defending or protecting of any Collateral or the priority of
Lender's interest therein, or in collecting or enforcing the Obligations, or in
enforcing any of Lender's rights or remedies, or in the prosecution or defense
of any action or proceeding concerning any matter growing out of or connected
with this Agreement, any of the Financing Instruments, the Obligations, or the
Collateral, or on account of the Lender's relationship with the Borrower (each
of which may be defended, compromised, settled or pursued by the Lender with
counsel of Lender's selection, at expense of the Borrower) except for such
claims which have been determined by a court of competent jurisdiction to have
arisen out of the Lender's gross negligence or bad faith. The within
indemnification shall survive termination of this Agreement. The Borrower's
obligations under this subsection constitute part of the Obligations secured by
the security interest created by this Agreement and by the other Financing
Instruments.
9.9 Destruction of Documents; Jurisdiction. This Agreement and all
other Financing Instruments, may be reproduced by the Lender by any
photographic, photostatic, microfilm, or similar process, and the Lender may
destroy the original from which any document was so reproduced. Any such
reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made in the regular course of
business). The Borrower acknowledges receipt of a true, correct and complete
copy or counterpart of this Agreement.
9.10 Notices.
9.10.1 All notices or demands hereunder to the parties hereto
shall be made in writing and shall be deemed to have been sufficiently
given for all purposes one business day after being sent by recognized
overnight delivery service for next day delivery service, on the same
business day if delivered by hand and three business days after being
sent by United States mail, certified mail return receipt requested,
first class, postage prepaid, and addressed to the parties at their
respective Notice Addresses set forth above, together with the
following additions: (a) for the Lender, "Attention: Commercial Banking
Group" and (b) for the Borrower, "Attention: Richard T. Schumacher,
President". Either of the parties may change its Notice Address
hereunder by giving notice of such change to the other party in
accordance with the provisions of this subsection.
9.10.2 Notwithstanding any provision herein to the contrary,
the Borrower agrees that the failure or delay by the Lender in giving
any notice or statement hereunder, or any inaccuracy therein or
incompleteness thereof, shall not in any way alter or affect the
absolute and unconditional obligation of the Borrower to pay and
perform in full the Obligations, but any action taken or not taken by
the Borrower as a direct result of such lack or delay of notice, or of
the Borrower's good faith reliance upon a material inaccuracy therein
or the material incompleteness thereof, as the case may be, shall not
in of itself, and to the extent thereof, constitute an Event of Default
hereunder, so long as the Borrower does not otherwise have or receive
notice or knowledge of the material contents or substance of such
notice, or of the inaccuracy or incompleteness thereof, as the case may
be, and the Borrower acts at all times in good faith.
9.11 Application of Proceeds. The proceeds of any collection, sale or
disposition of the Collateral, or of any other payments received hereunder,
shall be applied toward the Obligations in such order and manner as the Lender
determines in its sole discretion, any statute (the application of which may be
waived or modified by agreement), customs or usage to the contrary
notwithstanding. The Borrower shall remain liable to the Lender for any
deficiency remaining following such application.
9.12 Continuance of Defaults. As used herein, and in any of the
Financing Instruments, upon any and each occurrence of an Event of Default, such
Event of Default shall be deemed to continue until cured by the Borrower in
accordance with this Agreement (and the applicable provisions of the Financing
Instruments, as the case may be), and until such time as the Borrower requests
and receives from the Lender the Lender's written acknowledgment that such Event
of Default (as specified in the request) has been cured and is no longer
continuing, which acknowledgment the Lender shall not unreasonably withhold or
delay.
9.13 Severability. If any provision of this Agreement or any of the
Financing Instruments, or any portion of such provision, or the application
thereof to any person or circumstance, shall to any extent be held invalid or
unenforceable, the remainder of this Agreement and the Financing Instruments or
the remainder of such provision and the application thereof to other persons or
circumstances (other than those as to which it is held invalid or unenforceable)
shall not be affected thereby, and each term and provision hereof and of the
Financing Instruments shall be valid and enforced to the fullest extent
permitted by law. To the extent permitted by law, the parties hereto waive any
provision of law which renders any such provision prohibited or unenforceable in
any respect.
9.14 Headings. Headings appearing in this Agreement are intended for
convenience only and do not constitute and shall not be interpreted to be a part
of this Agreement.
9.15 Governing Law; Sealed Instrument. This Agreement is executed and
delivered in The Commonwealth of Massachusetts, and for all purposes shall be
construed in accordance with and governed by the laws of The Commonwealth of
Massachusetts, and shall take effect as a sealed instrument. The Borrower
submits
itself to the jurisdiction of the Courts of The Commonwealth of Massachusetts
for all purposes with respect to this Agreement and the Borrower's relationship
with the Lender.
9.16 Force Majeure. The Lender shall not be responsible for delays or
failures in performance hereunder resulting from causes beyond its control,
including without limitation, acts of God, strikes, lockouts, riots, acts of
war, governmental regulations, fire, communication line failures, power
failures, earthquakes or other disasters.
9.17 Interpretation of Agreement. Should any provision of this
Agreement or the other Financing Instruments require interpretation or
construction, it is agreed by the parties hereto that the court, administrative
body, or other entity interpreting or construing this Agreement or the other
Financing Instruments shall not apply a presumption that the provisions thereof
shall be more strictly construed against one party by reason of the rule of
construction that a document is to be construed more strictly against the party
who itself or through its agents prepared the same, it being agreed that the
parties and/or their respective attorneys and agents have fully participated in
the preparation of all provisions of this Agreement and the other Financing
Instruments.
EXECUTED as an instrument under seal as of the day and year first
stated above.
Borrower:
Signed in the presence of: BOSTON BIOMEDICA, INC.
______________________________ By:_________________________________
Witness Kevin W. Quinlan, Treasurer, hereunto
duly authorized
BTRL CONTRACTS AND SERVICES, INC.
By:_________________________________
Kevin W. Quinlan, Treasurer,
hereunto duly authorized
BBI-NORTH AMERICAN CLINICAL
LABORATORIES, INC.
By:_________________________________
Kevin W. Quinlan, Treasurer,
hereunto duly authorized
Lender:
THE FIRST NATIONAL BANK OF BOSTON
By:_________________________________
Roger F. Allard
Vice President/Director
EXHIBIT 1.4.1
Appraisal conducted by Frank Ronne & Associates dated
August 9, 1994 of BBI, BTRL and NACL Eligible
Equipment is held
in the Lender's files
EXHIBIT 1.8
TO SECOND AMENDED AND RESTATED LOAN
AND SECURITY AGREEMENT
1) Contract Number: 263-MQ-519321-1
Issued By: National Cancer Institute, NIH
Contracting
Officer: Ms. Patricia Haun
Description: LN2 Freezer Maintenance Contract (#108)
Disbursing
Officer: Chief, Contracts Section, FAAB, Division of
Financial Mgmt. Bldg. 31, Rm. B1B05A,
9000 Rockville Pike, Bethesda, MD 20892
Sureties: N/A
2) Contract Number: NO1-CP-33060
Issued By: Cancer Etiology Contracts Section, NCI, NIH
Contracting
Officer: Nancy E. Coleman
Description: Repository for Cancer Study (#115)
Disbursing
Officer: Chief, Contracts Section, FAAB, Division of
Financial Mgmt. Bldg. 31, Rm. B1B05A,
9000 Rockville Pike, Bethesda, MD 20892
Sureties: N/A
3) Contract Number: 2-R44-AI29224
Issued By: National Institute of Allergy &
Infectious Diseases, NIH
Contracting
Officer: Todd Ball, Grants Mgmt. Officer, GMB, DEA-NIAID
Description: Lyme PCR (#117)
Disbursing
Officer: Ms. Jessilynn Elliott, Division of Payment
Management, P.O. Box
6021, Rockville, MD 20852
Sureties: N/A
4) Grant Number: 5-RO1-AI-33066 (NIH, NIAID)
Subcontract No.: 5-50257
Issued By: University of North Carolina
Contracting
Officer: Ms. Carol Alderson, NIAID Contract Specialist
Description: Plant Anti-HIV Drug Testing (#112)
Disbursing
Officer: Mary Fedash, Chief, Contracts Section, FAAB, Div. of
Financial Mgmt. Bldg. Rm. B1B05A,
9000 Rockville Pike, Bethesda, MD 20892
Sureties: N/A
5) Contract Number: N01-HD-33183
Issued By: NICHD, NIH
Contracting
Officer: Harvey Shifrin
Description: Repository for PAMA Studies (116)
Disbursing
Officer: Chief, Contracts Section, FAAB, Division of
Financial Mgmt. Bldg. 31, Rm. B1B05A,
9000 Rockville Pike, Bethesda, MD 20892
Sureties: N/A
6) Contract Number: 1 R43 HL54370
Issued By: National Heart, Lung & Blood Institute, NIH
Contracting Officer: Jane R. Davis, Section Grants Mgmt. Officer, GOB
Description: Multiplex PCR (#120)
Disbursing
Officer: Ms. Mary S. Reid, Division of Financial
Management, NIH
Building 31, Room B1B11, Bethesda, MD 20892
Sureties: N/A
7) Contract Number: N01-HD-5-3232
Issued By: NICHD, NIH
Contracting Officer: Ms. Mya Hlaing
Description: Repository for MFMU Studies (122)
Disbursing
Officer: Chief, Contracts Section, FAAB, Division of
Financial Mgmt. Bldg. 31, Rm. B1B05A,
9000 Rockville Pike, Bethesda, MD 20892
Sureties: N/A
8) Contract Number: 263-00045134-03-BPA/G
Issued By: NIH, PHS, DHHS
Contracting Officer: Bill Ainsworth
Description: NIH BPA
Disbursing
Officer: Accounts Payable Section, DFM, Bldg. 31,
Rm. B1B39
Sureties: N/A
9) Contract Number: FDA 001273-00-95-00 00
Issued By: FDA, Supply Contracts Section, HFA-513
Contracting
Officer: Donald W. Broome
Description: FDA BPA
Disbursing
Officer: DHHS/FDS/Commercial Accts., 5600 Fishers Lane,
HFA-122, Rockville, MD 20857
Sureties: N/A
10) Contract Number: DAMD17-94-A-4011 (BPA)
Issued By: U.S. Army Medical Research Acquisition Activity
Contracting
Officer: Herman F. Willis, Jr.
Description: Army BPA
Disbursing
Officer: Finance & Accounting Office, Bldg. 810,
Fort Detrick, MD 21702-5000
Sureties: N/A
11) Contract Number: N01-AI-42902 (MAA)
Issued By: National Institute of Allergy and Infectious Disease,
NIH
Contracting
Officer: Toni A. Kuhn
Description: NIAID Master Agreement
Disbursing
Officer: Chief, Contracts Section, FAAB, Division of
Financial Mgmt. Bldg. 31, Rm. B1B05A,
9000 Rockville Pike, Bethesda, MD 20892
Sureties: N/A
EXHIBIT 3.2.1
LOCK BOX AGREEMENT
This Lock Box Agreement (the "Agreement"), dated as of this ___ day of
________ , 199_ , by and between ______________ , a Massachusetts corporation
("________"), and THE FIRST NATIONAL BANK OF BOSTON (the "Lender"). Capitalized
terms used without definition shall have the meanings given them in the Loan
Agreement (as hereinafter defined).
WHEREAS, the Lender has entered into a Second Amended and Restated Loan
and Security Agreement with Boston Biomedica, Inc., BTRL Contracts and Services,
Inc. and BBI - North American Clinical Laboratories, Inc. (together, the
"Borrower") dated as of August 2, 1995 (the "Loan Agreement") pursuant to which
the Borrower has granted the Lender a security interest in, inter alia, its
present and future Eligible Accounts and proceeds thereof; and
WHEREAS, the Loan Agreement provides that all collections and proceeds of
such Eligible Accounts shall be remitted in kind to the Lender in accordance
with the provisions of this Agreement and the Loan Agreement.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. Post Office Box. The Lender has rented a Post Office Box (the "Lock
Box") at the post office located at , in the name of for the benefit of the
Lender under United States Post Office Box No. . hereby authorizes Lender to
date and deliver the executed Notice to Postmaster to the Post Office attached
hereto as Exhibit A. __________ hereby represents, warrants and covenants that
all customers of have been instructed to mail their remittances to the Lock Box
in accordance with the terms of the Loan Agreement. In the event that receives
any such remittances, shall promptly deliver such remittances to the Lender.
2. Access to Contents of Lock Box. The Lender will have exclusive and
unrestricted access to the Lock Box and will have complete and exclusive
authority to receive, pick up and open all regular, registered, certified or
insured mail addressed to at the Lock Box. Such mail will be picked up by the
Lender at the same time as its own mail is collected throughout the working day.
3. Remittance Collection. The Lender will open all mail addressed to the
Lock Box and will remove and inspect the enclosures. All checks, money orders
and other forms or orders for the payment of money and other collection
remittances (hereinafter collectively referred to as "checks") shall be
processed by the Lender as follows:
(a) Missing Date. All undated checks will be dated by the Lender
as of the date of receipt and processed as hereafter provided.
(b) Postdated. Checks postdated two days from date of receipt
will be processed on the date of receipt. Checks postdated three days or
more from the date of receipt will be processed on the date of receipt in
the absence of notice of a specific agreement between ________ and the
Lender in which case the Lender will consult with ___________ .
(c) Stale Date. Checks dated six months or more prior to the date
of collection will be deposited on the date of receipt.
(d) Differing Amounts. Where written and numeric amounts differ,
a check will be processed by the Lender in accordance with the written
amount.
(e) Signature Missing. Checks which do not bear the drawer's
signature will be deposited and processed by affixing a notice thereto
requesting that the drawee Lender contact the drawer thereof for authority
to pay thereunder.
(f) Alterations and Restrictions. The Lender will consult with
__________ regarding checks with alterations and checks bearing
restrictive notations such as those marked "Payment in Full", and the
Lender will either deposit such checks or return them to the maker.
(g) Foreign Currency. Checks drawn in foreign currency will be
processed in accordance with the Lender's normal procedure for such
checks.
4. Processing of Acceptable Checks. All checks, except those not
acceptable for deposit under the terms of this Agreement, shall be deposited on
the day of receipt by the Lender to Account _______________ , and shall be
endorsed as follows:
CREDIT TO THE ACCOUNT OF THE WITHIN NAMED PAYEE. PAYMENT ACCEPTED WITHOUT
PREJUDICE. ABSENCE OF ENDORSEMENT GUARANTEED. WORCESTER COUNTY INSTITUTION
FOR SAVINGS.
__________________ agrees to indemnify the Lender from and against any and
all losses, costs and expenses incurred by it which result from such
endorsement.
All remittances, advices, envelopes and written matter (except as
expressly provided herein) received in the Lock Box shall be sent by the Lender
to ____________ . On each day on which there is a deposit to said account, the
Lender shall send by telecopier to a detailed analysis of the check amount, the
check number and the invoices being paid, and the Lender shall mail a monthly
statement of account to ______________.
5. Returned Checks. Checks deposited in said account which are returned
unpaid because of insufficient or uncollected funds will be redeposited by the
Lender only once. If redeposit is not warranted because payment has been stopped
on the check or because the account on which the check was drawn has been
closed, or if a check is returned a second time, the Lender will charge said
account and send a debit advice with the item to ____.
6. Remittances Received by _______. will forward to the Lock Box on the
day received any remittances which are sent directly to ____.
7. Record Maintenance. All deposited checks will be microfilmed on front
and back by the Lender and retained for seven years by the Lender prior to
destruction thereof.
8. Lender Charges. All charges of the Lender for services rendered
pursuant to this Agreement shall be debited to ______'s account.
9. Force Majeure. The Lender shall not be responsible for delays or
failures in performance hereunder resulting from causes beyond its control,
including without limitation, acts of God, strikes, lockouts, riots, acts of
war, governmental regulations, fire, communication line failures, power
failures, earthquakes or other disasters.
10. Term. This Agreement shall continue in full force and effect until
termination by the Lender in accordance with the Loan Agreement or prior written
notice to _____.
11. Modification. This Agreement may be modified only by a writing signed
by all of the parties hereto.
12. Addresses. All notices, including phone notices, daily deposit
advices, monthly statements of account and copies of all checks and the
documents which are to be given or sent hereunder shall be sent as provided in
the Loan Agreement and, where applicable, given at the following phone numbers:
If to the Lender: The First National Bank of Boston
ATTN: Roger F. Allard, Vice President/Director
(508) 770-7125
If to the Borrower: ________________________________
ATTN: Kevin J. Quinlan, Chief
Financial Officer
(508) 580-1900
13. Jurisdiction. This Agreement shall be governed by the laws of the
Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date and year first above written.
THE FIRST NATIONAL BANK OF BOSTON
By:
---------------------------
Roger F. Allard
Vice President/Director
By:
-----------------------------
Kevin W. Quinlan, Treasurer
EXHIBIT A
____________
DATE __________, 199
Postmaster
Worcester, Massachusetts
Dear Sir/Madam:
We request and authorize that you rent to The First National Bank of
Boston ("FNBB") a post office box in our name and to grant representatives of
FNBB unrestricted access to the post office box for the removal of any mail
placed therein.
______________
By:____________________
Name: Kevin W. Quinlan
Title: Treasurer
EXHIBIT 4.2.15 (A)
[FORM OF COLLATERAL ASSIGNMENT]
This Collateral Assignment (the "Assignment") is made this ___ day of
_______, 19___ by _____________________________________________, a Massachusetts
corporation having a principal place of business at
_________________________________ (the "Assignor") to
____________________________, a Massachusetts bank having a principal place of
business at _____________________________________________ (the "Assignee").
This Assignment is executed and delivered by the Assignor to the
Assignee pursuant to and in furtherance of a certain
_____________________________________ executed and delivered by the Assignor to
the Assignee dated _____________________ (the "Loan Agreement").
FOR VALUE RECEIVED, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Assignor does
hereby transfer, assign, convey, set over and deliver to the Assignee all of
Assignor's rights, title and interests in and to all moneys due or to become due
under the contracts listed on Schedule A attached hereto and incorporated herein
by reference and entered into by and between the Assignor and the United States
of America and amendments thereof and supplements thereto heretofore or
hereafter made (the "Contracts").
This Assignment shall be deemed to include, and the Assignor does
hereby assign to the Assignee all moneys due or to become due to the Assignor
from the UNITED STATES OF AMERICA, under any letter of intent, letter of award,
acceptance of bid or proposal, other contract, order, authorization to commence
performance, communication or instruction received by the Assignor relative to
or in anticipation of said Contracts, including said Contracts in their final
definitive form and any amendments thereof and supplements thereto, all of which
shall be included in the term "Contracts" as herein used. Assignor warrants that
the property purported to be assigned hereby is assignable by it to the
Assignee, that it has full right to make this Assignment and that it has not
made any prior assignment of the Contracts or of any moneys due or to become due
thereunder. Assignor will execute and deliver such further instruments and do
such further acts as the Assignee may request or as shall be necessary or
desirable for the further assurance of the Assignee of the moneys due or to
become due from the UNITED STATES OF AMERICA under the Contracts, will deliver
and transfer to the Assignee upon request all books, correspondence and other
papers appropriate to verify or substantiate such moneys, and will give the
Assignee all reasonable assistance in collecting such. Assignor will hold in
trust for the Assignee all such moneys hereafter received by it and will
forthwith transmit the same in specie (after first making any necessary
endorsements) to the Assignee.
This Assignment is executed in accordance with the provisions of the
Assignment of Claims Act of 1940 as amended.
The Assignee is authorized and shall be entitled to do in its name, or
in the name of the Assignor, all things with reference to the moneys due under
the Contracts or any of them and hereby assigned under the terms of this
instrument, that the Assignor might have done but for this Assignment. Such
include, without limitation, the following:
1. To receive, collect (by suit or otherwise) and receipt for the
payment of all moneys due or hereafter to become due under any of
the Contracts;
2. To endorse in the name of the Assignor any checks or drafts
payable to the Assignor which shall be collected or received on
account of or in payment of any moneys due or which shall
hereafter become due under the terms of any of the Contracts;
3. To settle, adjust and compromise all present and future claims
arising out of any of the moneys due or hereafter to become due
under the terms of the Contracts or any of them, without liability
except for its own wilful malfeasance in connection therewith.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the Assignor has caused this instrument to be
executed and delivered in its name and on its behalf by an officer duly
authorized, as an instrument under seal, as of the date first written above.
ATTEST: ASSIGNOR:
_____________________________
________________________ By: ______________________________
Clerk/Assistant Clerk
Its: ____________________
[AFFIX CORPORATE SEAL OR
ATTACH CERTIFIED COPY OF
BOARD OF DIRECTORS' RESOLUTION
AUTHORIZING EXECUTION BY SIGNOR]
COMMONWEALTH OF MASSACHUSETTS
___________________, ss. Date: __________________
Then personally appeared the above named ________________________ who
being by me duly sworn, said that he is the _________________ of
_______________________ the corporation described above and which executed the
foregoing instrument, and that he is duly authorized to so execute said
instrument as aforesaid, before me.
----------------------------
Notary Public
My Commission Expires:
SCHEDULE A
TO COLLATERAL ASSIGNMENT BETWEEN ___________________________ AND
______________________________________________
1) Contract Number:
Issued By:
Contracting
Officer:
Disbursing
Officer:
2) Contract Number:
Issued By:
Contracting
Officer:
Disbursing
Officer:
EXHIBIT 4.2.15 (B)
[FORM OF NOTICE OF COLLATERAL ASSIGNMENT]
Certified Mail Date: _________, 199__
Return Receipt Requested
Receipt No. __________________
________________________ ________________________
________________________ ________________________
________________________ ________________________
ATTN: ____________ ATTN:___________________
(CONTRACTING OFFICER OR
DISBURSING OFFICER OR DESIGNATED
AGENCY HEAD IN THE CONTRACT
TO MAKE PAYMENT)
Re: NOTICE OF ASSIGNMENT OF CONTRACTS as more particularly described
on Schedule A attached hereto (hereinafter referred to as the
"Contracts") made by _________________________________________
with BTRL Contracts and Services, Inc., a Massachusetts
corporation with a principal place of business at 375 West
Street, West Bridgewater, MA 02379 (hereinafter called the
"Corporation")
Dear Sir/Madam:
Please take notice that all of the Corporation's rights, title and
interest in and to all monies due or to become due under the above-described
Contracts, including all amendments thereof and supplements thereto, have been
assigned to The First National Bank of Boston having a principal office at 100
Front Street, Worcester, MA 01608 (hereinafter called "FNBB") pursuant to the
provisions of the Assignment of Claims Act of 1940, as amended, 31 U.S.C. 3727,
41 U.S.C. 15 (the "Act").
A true copy of the instrument of assignment executed by the Corporation as
Contractor on / / is attached to this notice.
Pursuant to the Act, we advise you that:
1. FNBB is a Massachusetts bank;
2. The assignment covers all amounts payable to the Corporation
under the Contracts which have not already been paid;
3. The assignment has been made to FNBB and no part thereof has been
made to any other parties; and
4. No further assignment has been made.
The copy of the Contracts we have reviewed does not indicate any sureties
with respect to the Contracts. We would appreciate your confirming this fact or,
if such is not the case, please supply us with appropriate names and addresses
of all sureties with respect to the Contracts, so that they can be notified
under the Act.
The Contracts also indicate that payment will be made by the "disbursing
officer" as defined under the Act unless you advise us further below.
All payments due or to become due on the Contracts should be made payable
to: FNBB, and should be mailed to: 100 Front Street, Worcester, MA 01615-0073
Attention: Commercial Banking Group.
Please return to the undersigned the three enclosed copies of this Notice
with the appropriate notations (showing the date and hour of receipt, and
confirming the above information concerning sureties and disbursing officer) and
duly signed by the addressee or person acknowledging receipt on behalf of the
addressee, to: First National Bank of Boston, 100 Front Street, Worcester, MA
01608, Attention: Commercial Banking Group.
If you have any questions or problems, please contact the undersigned.
Thank you for your cooperation.
Very truly yours,
FIRST NATIONAL BANK OF BOSTON
By: _______________________________
(Signature of Signing Officer)
Its: _______________________________
(Title of Signing Officer)
100 Front Street
Worcester, MA 01615-0073
Address of Assignee
ACKNOWLEDGMENT
The addressee designated above hereby acknowledges receipt of the above
Notice of Assignment of Contracts and of a copy of the instrument of assignment
attached hereto at _______, __m. on ________________, 19___.
----------------------------
Title: ________________________
ON BEHALF OF:
----------------------------
EXHIBIT 5.2.1
A. OPERATING CASH FLOW ("OCF")
Add: 1. Earnings before interest and taxes (EBIT)
2. Depreciation and Amortization
3. Non-cash related and other
Less: 4. Cash taxes
5. Capital Expenditures (CAPEX)
6. OCF
B. ADJUSTMENTS TO OCF ("Adjusted OCF")
Add: 7. Net Equity Raised (1)
8. Financed Capex (2)
9. Adjusted OCF
C. TOTAL DEBT SERVICE ("TDS")
1. Interest Expense
2. Current Maturities of Long Term Debt (CMLTD)
3. TDS
Adjusted OCF/TDS = Debt Service Ratio
Note:
(1) Net equity raised is less any equity used to finance acquisitions.
(2) Financed Capex is bank/lease debt used to offset capital purchases.
EXECUTION
FIRST AMENDMENT TO SECOND AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
This First Amendment to Second Amended and Restated Loan and Security
Agreement (this "Agreement") is dated as of December ___, 1995, and is by and
among BOSTON BIOMEDICA, INC., ("BBI"), BTRL CONTRACTS AND SERVICES, INC.
("BTRL") and BBI - NORTH AMERICAN CLINICAL LABORATORIES, INC., formerly known as
NORTH AMERICAN LABORATORY GROUP, INC. ("NACL"), each of which is a Massachusetts
corporation validly created, legally existing and in good standing under the
laws of the Commonwealth of Massachusetts and each of which has its "Notice
Address" at 375 West Street, West Bridgewater, Massachusetts 02379 (BBI, BTRL
and NACL, together with their successors and assigns, are collectively referred
to herein as the "Borrower") and THE FIRST NATIONAL BANK OF BOSTON, a national
banking association having an office and "Notice Address" at Bank of
Boston-Worcester Tower, P.O. Box 15073, 100 Front Street, Worcester,
Massachusetts 01608-1438 (together with its successors and assigns, the
"Lender").
WHEREAS, the Borrower and the Lender are parties to a certain Second
Amended and Restated Loan and Security Agreement (the "Loan Agreement") dated as
of August 2, 1995 (the Loan Agreement, together with any other documents and
instruments executed and delivered in connection therewith or securing the
payment and performance obligations of the Borrower thereunder shall be referred
to collectively as the "BBI Commercial Financing Documents"); and
WHEREAS, the Borrower has requested that the Lender extend to the Borrower
and the Lender has agreed to so extend a loan (the "Real Estate Loan") in the
original amount of $750,000 to finance BBI's acquisition of two parcels of real
property with the improvements thereon known as and numbered 375 West Street and
80 Manley Street, West Bridgewater, Plymouth County, Massachusetts (referred to
together as the "Property"); and
WHEREAS, the Real Estate Loan is to be evidenced by a Term Promissory Note
given by the Borrower to the Lender in the original principal amount of the Real
Estate Loan and a Real Estate Loan Agreement, which is, in turn, secured in part
by two certain Mortgage, Financing Statement and Security Agreements, two
certain Assignments of Rents and Leases and two certain Assignments of
Agreements, Permits and Rights, each with respect to the Property, and an
Environmental Indemnification (the foregoing documents referred to together as
the "Real Estate Loan Documents"); and
WHEREAS, the Lender is willing to extend the Real Estate Loan to or for
the benefit of the Borrower in accordance with the terms of the Real Estate Loan
Documents only if the Borrower agrees to amend the Loan Agreement to provide
that (i) the payment and performance obligations of the Borrower under the Real
Estate Loan Documents are "Obligations" under the Loan Agreement, which
Obligations are secured, in part, by the BBI Commercial Financing Documents and
in part by the Real Estate Loan Documents, and (ii) the occurrence of any Event
of Default, as defined in the Real Estate Loan Documents, shall constitute an
Event of Default under the Loan Agreement and the other BBI Commercial Financing
Documents;
NOW, THEREFORE, in order to induce the Lender to extend the Real Estate
Loan and to grant certain other financial accommodations, all to or for the
benefit of the Borrower, and in consideration thereof and in consideration of
the mutual covenants herein contained, the parties hereby agree as follows:
1. Definitions. Terms not otherwise specifically defined in this Agreement
shall have the respective meanings given to them in the Loan Agreement or in the
Real Estate Loan Documents.
2. Amendments to the Loan Agreement. The Loan Agreement is hereby amended
as follows:
A. Section 2.1 Amounts and Types of Loans; Notes Evidencing
Loans. The word "and" at the end of subsection 2.1.3 is hereby deleted.
The period at the end of subsection 2.1.4 is hereby deleted and "; and"
substituted therefor. The following subsection 2.1.5 is hereby added at
the end of Section 2.1:
2.1.5 a term loan in the original principal amount of
Seven Hundred Fifty Thousand Dollars ($750,000) (the "$750,000
Real Estate Term Loan"), evidenced by the Borrower's Term
Promissory Note (the "$750,000 Term Note") dated December 11,
1995 in the face amount of the full principal thereof.
and the sentence in parentheses at the end of Section 2.1 is hereby
deleted and the following substituted therefor:
(The Line of Credit Note, the Amended and Restated Term Note,
the $200,000 Term Note, the $350,000 Term Note and the $750,000
Term Note may each be referred to as a "Note" and collectively
as the "Notes".
B. Section 2.5 Use of Proceeds. The word "and" at the end of
subsection 2.5.3 is hereby deleted. The period at the end of subsection
2.5.4 is hereby deleted and ";and" substituted therefor. The following
subsection 2.5.5 is hereby added at the end of Section 2.5:
2.5.5 with respect to the $750,000 Real Estate Term Loan,
advances up to the full amount of the $750,000 Real Estate Term
Loan shall be made to acquire two parcels of real estate, with
the buildings and other improvements thereon, known as 375 West
Street and 80 Manley Street, West Bridgewater, Massachusetts
(together, the "Property") as more particularly described in the
Mortgages.
C. Section 3.1 Granting Clause; Desription of Collateral. The
word "and" at the end of subsection 3.1.10 is hereby deleted. The period
at the end of subsection 3.1.11 is hereby deleted and ";and" substituted
therefor. The following subsection 3.1.12 is hereby added at the end of
Section 3.1:
3.1.12 The "Mortgaged Estate" as defined in the
Mortgages.
-2-
D. Section 6.4. The phrase "or any Financing Instrument" is
hereby added after the word "Agreement" in the second line of Section
6.4.
2. Ratification and Confirmation of Representations, Covenants and
Warranties. In order to induce the Lender to enter into this Agreement, the
Borrower hereby ratifies and confirms all representations, covenants and
warranties contained in the Loan Agreement and all other Financing Instruments,
and the Borrower hereby restates all such representations, covenants and
warranties as of the date of this Agreement.
3. Incorporation of Agreement into the Loan Agreement. Except as expressly
amended hereby, the Loan Agreement shall continue in full force and effect, and
all references to the Loan Agreement in any of the Financing Instruments
hereafter shall mean the Loan Agreement as amended by this Agreement.
4. Counterpart Execution. To facilitate execution, this Agreement may be
executed in as many counterparts as may be convenient or required. It shall not
be necessary that the signature and acknowledgment of, or on behalf of, each
party, or that the signature and acknowledgment of all persons required to bind
any party, appear on each counterpart. All counterparts shall collectively
constitute a single instrument. It shall not be necessary in making proof of
this Agreement to produce or account for more than a single counterpart
containing the respective signatures and acknowledgment of, or on behalf of,
each of the parties hereto.
-3-
EXECUTED AS A SEALED INSTRUMENT as of the day and year first stated above.
BOSTON BIOMEDICA, INC.
__________________________ By:_______________________________
Witness as to Borrower Richard T. Schumacher
President
Hereunto duly authorized
BTRL CONTRACTS AND SERVICES,
INC.
By:__________________________
Richard T. Schumacher
President
Hereunto duly authorized
BBI - NORTH AMERICAN CLINICAL
LABORATORIES, INC.
By:__________________________
Richard T. Schumacher
President
Hereunto duly authorized
THE FIRST NATIONAL BANK OF BOSTON
By:_________________________
Witness as to Lender Roger F. Allard
Vice President/Director
Hereunto duly authorized
PABOS:SCS:201888_2
-4-
EXHIBIT 10.19
INDEMNIFICATION CONTRACT
------------------------
This Agreement, made and entered into as of this __ day of ___________,
1996 ("Agreement"), by and between BOSTON BIOMEDICA, INC., a Massachusetts
corporation (the "Company"), and ( ) (the "Indemnitee").
WHEREAS, highly competent persons are becoming more reluctant to serve
corporations as directors, officers or in other capacities unless they are
provided with adequate protection through insurance or adequate indemnification
against inordinate risks of claims and actions against them arising out of their
service to and activities on behalf of the corporation; and
WHEREAS, the current impracticability of obtaining adequate insurance
and the uncertainties relating to indemnification have increased the difficulty
of attracting and retaining such persons; and
WHEREAS, it is reasonable, prudent and necessary for the Company
contractually to obligate itself to indemnify such persons to the fullest extent
permitted by applicable law so that they will serve or continue to serve the
Company free from undue concern that they will not be so indemnified; and
WHEREAS, Indemnitee is willing to serve, continue to serve and to take
on additional service for or on behalf of the Company on the condition that
Indemnitee be indemnified to the fullest extent permitted.
NOW, THEREFORE, in consideration of the premises and the covenants
contained herein, the Company and Indemnitee do hereby covenant and agree as
follows:
ARTICLE I
Definitions
-----------
For purposes of this Agreement the following terms shall have the
meanings indicated:
1.01 "Board" shall mean the Board of Directors of the Company.
1.02 "Corporate Status" describes the status of a person who is or was a
director, officer, employee, agent, trustee or fiduciary of the Company or of
any other corporation, partnership, joint venture, trust, employee benefit plan
or other Enterprise which such person is or was serving at the express written
request of the Company.
1.03 "Court" means the court in which the Proceeding in respect of which
indemnification is sought by the Indemnitee shall have been brought or is
pending, or another court having subject matter jurisdiction and personal
jurisdiction over the parties.
1.04 "Disinterested Director" means a director of the Company who is not
and was not a party to the Proceeding in respect of which indemnification is
sought by Indemnitee.
1.05 "Enterprise" shall mean the Company and any other corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise of
which Indemnitee is or was serving at the express written request of the Company
as a director, officer, employee, agent, trustee or fiduciary.
1.06 "Expenses" shall include, without limitation, all reasonable
attorneys' fees, retainers, court costs, transcript costs, fees of experts,
witness fees, travel expenses, duplicating costs, printing and binding costs,
telephone charges, postage, delivery service fees, facsimile transmission
charges, and all other disbursements or expenses of the types customarily
incurred in connection with prosecuting, defending, preparing to prosecute or
defend, investigating or being or preparing to be a witness in a Proceeding.
1.07 "Good Faith" shall mean Indemnitee having acted in good faith and
in a manner Indemnitee reasonably believed to be in or not opposed to the best
interests of the Company or, in the case of an Enterprise which is an employee
benefit plan, the best interests of the participants or beneficiaries of said
plan, as the case may be, and, with respect to any Proceeding which is criminal
in nature, having had no reasonable cause to believe Indemnitee's conduct was
unlawful.
1.08 "Improper Personal Benefit" shall include, but not be limited to,
the personal gain in fact by reason of a person's Corporate Status of a
financial profit, monies or other advantage not also accruing to the benefit of
the Company or to the stockholders generally and which is unrelated to his usual
compensation including, but not limited to, (i) in exchange for the exercise of
influence over the Company's affairs, (ii) as a result of the diversion of
corporate opportunity, or (iii) pursuant to the use or communication of
confidential or inside information for the purpose of generating a profit from
trading in the Company's securities. Notwithstanding the foregoing, "Improper
Personal Benefit" shall not include any benefit, directly or indirectly, related
to actions taken in order to evaluate, discourage, resist, prevent or negotiate
any transaction with or proposal from any person or entity seeking control of,
or a controlling interest in, the Company.
1.09 "Independent Counsel" means a law firm, or a member of a law firm,
that is experienced in matters of corporation law and may include law firms or
members thereof that are regularly retained by the Company but not any other
party to the Proceeding giving rise to a claim for indemnification hereunder.
Notwithstanding the foregoing, the term "Independent Counsel" shall not include
any person who, under the standards of professional conduct then prevailing and
applicable to such counsel, would have a conflict of interest in representing
either the Company or Indemnitee in an action to determine Indemnitee's rights
under this Agreement.
1.10 "Officer" means the president, vice presidents, treasurer,
assistant treasurer(s), clerk, assistant clerk and such other executive officers
as are appointed by the board of directors of the Company or any other
Enterprise, as the case may be.
1.11 "Proceeding" includes any action, suit, arbitration, alternate
dispute resolution mechanism, investigation (including any internal corporate
investigation), administrative hearing or any other actual, threatened or
completed proceeding, whether civil, criminal, administrative or
-2-
investigative, other than one initiated by Indemnitee. For purposes of the
foregoing sentence, a "Proceeding" shall not be deemed to have been initiated by
Indemnitee where Indemnitee seeks, pursuant to Article VIII of this Agreement,
to enforce Indemnitee's rights under this Agreement.
ARTICLE II
Term of Agreement
-----------------
This Agreement shall continue until and terminate upon the later of: (i)
ten (10) years after the date that Indemnitee shall have ceased to serve as a
director, officer, employee, agent, trustee or fiduciary of the Company or of
any other Enterprise; or (ii) the final termination of all pending Proceedings
in respect of which Indemnitee is granted rights of indemnification or
advancement of expenses hereunder and of any proceeding commenced by Indemnitee
pursuant to Article VIII of this Agreement relating thereto.
ARTICLE III
Services by Indemnitee, Notice of Proceedings
---------------------------------------------
3.01 Services. Indemnitee agrees to serve or continue to serve as a
Director or Officer of the Company for so long as he is duly elected or
appointed. Indemnitee may at any time and for any reason resign from such
position (subject to any other contractual obligation or any obligation imposed
by operation of law).
3.02 Notice of Proceeding. Indemnitee agrees promptly to notify the
Company in writing upon being served with any summons, citation, subpoena,
complaint, indictment, information or other document relating to any Proceeding
or matter which may be subject to indemnification or advancement of Expenses
covered hereunder, but the omission so to notify the Company shall not relieve
the Company from its obligations hereunder.
ARTICLE IV
Indemnification
---------------
4.01 In General. In connection with any Proceeding, the Company shall
indemnify and advance Expenses to Indemnitee serving as a Director of the
Company, and may, at the discretion of the Board, indemnify and advance Expenses
to Indemnitee serving as an Officer of the Company, as provided in this
Agreement and to the fullest extent permitted by applicable law in effect on the
date hereof and to such greater extent as applicable law may hereafter from time
to time permit.
4.02 Proceedings Other Than Proceedings by or in the Right of the
Company. Indemnitee shall be entitled, subject to Section 4.01 hereof, to the
rights of indemnification provided in this Section 4.02 if, by reason of
Indemnitee's Corporate Status, Indemnitee is, or is threatened to be made, a
party to or is otherwise involved in any Proceeding, other than a Proceeding by
or in the right of the Company. Indemnitee shall be indemnified, subject to
Section 4.01 hereof, against Expenses, judgments, penalties, fines and amounts
paid in settlement, actually
-3-
and reasonably incurred by Indemnitee or on Indemnitee's behalf in connection
with such Proceeding or any claim, issue or matter therein, if Indemnitee acted
in Good Faith and such Indemnitee has not been adjudged during the course of
such Proceeding to have derived an Improper Personal Benefit from the
transaction or occurrence forming the basis of such Proceeding.
4.03 Proceedings by or in the Right of the Company.
(a) Indemnitee shall be entitled, subject to Section 4.01 hereof, to the
rights of indemnification provided in this Section 4.03 if, by reason of
Indemnitee's Corporate Status, Indemnitee is, or is threatened to be made, a
party to or is otherwise involved in any Proceeding brought by or in the right
of the Company to procure a judgment in its favor. Indemnitee shall be
indemnified, subject to Section 4.01 hereof, against Expenses, judgments,
penalties, and amounts paid in settlement, actually and reasonably incurred by
Indemnitee or on Indemnitee's behalf in connection with such Proceeding if
Indemnitee acted in Good Faith and such Indemnitee has not been adjudged during
the course of such Proceeding to have derived an Improper Personal Benefit from
the transaction or occurrence forming the basis of such Proceeding.
Notwithstanding the foregoing, no such indemnification shall be made in respect
of any claim, issue or matter in such Proceeding as to which Indemnitee shall
have been adjudged to be liable to the Company if applicable law prohibits such
indemnification; provided, however, that, if applicable law so permits,
indemnification shall nevertheless be made by the Company in such event if and
only to the extent that the Court which is considering the matter shall so
determine.
4.04 Indemnification of a Party Who is Wholly or Partly Successful.
Notwithstanding any other provision of this Agreement, to the extent that
Indemnitee is, by reason of Indemnitee's Corporate Status, a party to or is
otherwise involved in and is successful, on the merits or otherwise, in any
Proceeding, Indemnitee shall be indemnified, subject to Section 4.01 hereof, to
the maximum extent permitted by law, against all Expenses, judgments, penalties,
fines, and amounts paid in settlement, actually and reasonably incurred by
Indemnitee or on Indemnitee's behalf in connection therewith. If Indemnitee is
not wholly successful in such Proceeding but is successful, on the merits or
otherwise, as to one or more but less than all claims, issues or matters in such
Proceeding, the Company shall indemnify Indemnitee, subject to Section 4.01
hereof, to the maximum extent permitted by law, against all Expenses, judgments,
penalties, fines, and amounts paid in settlement, actually and reasonably
incurred by Indemnitee or on Indemnitee's behalf in connection with each
successfully resolved claim, issue or matter. For purposes of this Section 4.04
and without limitation, the termination of any claim, issue or matter in such a
Proceeding by dismissal, with or without prejudice, shall be deemed to be a
successful result as to such claim, issue or matter.
4.05 Indemnification for Expenses of a Witness. Notwithstanding any
other provision of this Agreement, to the extent that Indemnitee is, by reason
of Indemnitee's Corporate Status, a witness in any Proceeding, Indemnitee shall
be indemnified, subject to Section 4.01 hereof, against all Expenses actually
and reasonably incurred by Indemnitee or on Indemnitee's behalf in connection
therewith.
ARTICLE V
-4-
Advancement of Expenses
-----------------------
Notwithstanding any provision to the contrary in Article VI, the Company
(acting through the President or any Vice President of the Company) shall
advance all reasonable Expenses which, by reason of Indemnitee's Corporate
Status, were incurred by or on behalf of Indemnitee serving as a Director of the
Company in connection with any Proceeding, within thirty (30) days after the
receipt by the Company of a statement or statements from Indemnitee requesting
such advance or advances, whether prior to or after final disposition of such
Proceeding. Notwithstanding any provision to the contrary in Article VI, the
Company (acting through the President or any Vice President of the Company) may,
at the discretion of the Board, advance all reasonable Expenses which, by reason
of Indemnitee's Corporate Status, were incurred by or on behalf of Indemnitee
serving as an Officer of the Company in connection with any Proceeding, within
thirty (30) days after the receipt by the Company of a statement or statements
from Indemnitee requesting such advance or advances, whether prior to or after
final disposition of such Proceeding. Such statement or statements shall
reasonably evidence the Expenses incurred by Indemnitee and shall include or be
preceded or accompanied by an undertaking by or on behalf of Indemnitee to repay
any Expenses if it shall ultimately be determined that Indemnitee is not
entitled to be indemnified against such Expenses. Any advance and undertakings
to repay pursuant to this Article V shall be unsecured and interest free.
Advancement of Expenses pursuant to this Article V made to an Indemnitee serving
as a Director of the Company shall not require approval of the Board of
Directors or the stockholders of the Company, or of any other person or body.
The Clerk of the Company shall promptly advise the Board in writing of the
request for advancement of Expenses, of the amount and other details of the
advance and of the undertaking to make repayment pursuant to this Article V.
ARTICLE VI
Procedures for Determination of Entitlement to Indemnification and Defense of
-----------------------------------------------------------------------------
Claims
------
6.01 Initial Request. To obtain indemnification under this Agreement
(other than advancement of Expenses pursuant to Article V), Indemnitee shall
submit to the Company a written request, including therein or therewith such
documentation and information as is reasonably available to Indemnitee and is
reasonable necessary to determine whether and to what extent Indemnitee is
entitled to indemnification. The Clerk of the Company shall promptly advise the
Board in writing that Indemnitee has requested indemnification.
6.02 Method of Determination. A determination (if required by applicable
law in the specific case) with respect to Indemnitee's entitlement to
indemnification shall be made (a) by the Board by a majority vote of a quorum
consisting of Disinterested Directors, or (b) in the event that a quorum of the
Board consisting of Disinterested Directors is not obtainable or, even if
obtainable, such quorum of Disinterested Directors so directs, by Independent
Counsel in a written opinion to the Board, a copy of which shall be delivered to
Indemnitee, or (c) by the holders of a majority of the votes of the outstanding
stock at the time entitled to vote on matters other than the election or removal
of directors, voting as a single class, including the stock of the Covered
Person seeking indemnification.
-5-
6.03 Selection, Payment, Discharge, of Independent Counsel. In the event
the determination of entitlement to indemnification is to be made by Independent
Counsel pursuant to Section 6.02 of this Agreement, the Independent Counsel
shall be selected, paid, and discharged in the following manner:
(a) The Independent Counsel shall be selected by the Board,
and the Company shall give written notice to Indemnitee
advising Indemnitee of the identity of the Independent
Counsel so selected.
(b) Following the initial selection described in clause (a)
of this Section 6.03, Indemnitee may, within seven (7)
days after such written notice of selection has been
given, deliver to the Company a written objection to
such selection. Such objection may be asserted only on
the ground that the Independent Counsel so selected
does not meet the requirements of "Independent Counsel"
as defined in Section 1.10 of this Agreement, and the
objection shall set forth with particularity the
factual basis of such assertion. Absent a proper and
timely objection, the person so selected shall act as
Independent Counsel. If such written objection is made,
the Independent Counsel so selected may not serve as
Independent Counsel unless and until a court has
determined that such objection is without merit.
(c) Either the Company or Indemnitee may petition a Court
if the parties have been unable to agree on the
selection of Independent Counsel within twenty (20)
days after submission by Indemnitee of a written
request for indemnification pursuant to Section 6.01 of
this Agreement. Such petition may request a
determination whether an objection to the party's
selection is without merit and/or seek the appointment
as Independent Counsel of a person selected by the
Court or by such other person as the Court shall
designate. A person so appointed shall act as
Independent Counsel under Section 6.02 of this
Agreement.
(d) The Company shall pay any and all reasonable fees of
Independent Counsel and expenses incurred by such
Independent Counsel in connection with acting pursuant
to this Agreement, and the Company shall pay all
reasonable fees and expenses incident to the procedures
of this Section 6.03, regardless of the manner in which
such Independent Counsel was selected or appointed.
(e) Upon the due commencement of any judicial proceeding or
arbitration pursuant to Section 8.02 of this Agreement,
Independent Counsel shall be discharged and relieved of
any further responsibility in such capacity (subject to
the applicable standards of professional conduct then
prevailing).
6.04 Cooperation. Indemnitee shall cooperate with the person, persons or
entity making the determination with respect to Indemnitee's entitlement to
indemnification under this Agreement, including providing to such person,
persons or entity upon reasonable advance request any documentation or
information which is not privileged or otherwise protected from
-6-
disclosure and which is reasonably available to Indemnitee and reasonably
necessary to such determination. Any costs or expenses (including attorneys'
fees and disbursements) incurred by Indemnitee in so cooperating with the
person, persons or entity making such determination shall be borne by the
Company (irrespective of the determination as to Indemnitee's entitlement to
indemnification) and the Company hereby indemnifies and agrees to hold
Indemnitee harmless therefrom.
6.05 Defense of Claim. With respect to any Proceeding to which
Indemnitee shall have requested indemnification in accordance with Section 6.01:
(a) The Company will be entitled to participate in the
defense at its own expense.
(b) Except as otherwise provided below, the Company jointly
with any other indemnifying party will be entitled to
assume the defense with counsel reasonably satisfactory
to Indemnitee. After notice from the Company to the
Indemnitee of its election to assume the defense of a
suit, the Company will not be liable to the Indemnitee
under this Agreement for any legal or other expenses
subsequently incurred by the Indemnitee in connection
with the defense of the Proceeding other than
reasonable costs of investigation or as otherwise
provided below. The Indemnitee shall have the right to
employ his own counsel in such Proceeding but the fees
and expenses of such counsel incurred after notice from
the Company of its assumption of the defense shall be
at the expense of the Indemnitee unless (i) the
employment of counsel by the Indemnitee has been
authorized by the Company, (ii) the Indemnitee shall
have concluded reasonably that there may be a conflict
of interest between the Company and the Indemnitee in
the conduct of the defense of such action and such
conclusion is confirmed in writing by the Company's
outside counsel regularly employed by it in connection
with corporate matters or (iii) the Company shall not
in fact have employed counsel to assume the defense of
such Proceeding, in each of which cases the fees and
expenses of counsel shall be at the expense of the
Company. The Company shall not be entitled to assume
the defense of any Proceeding brought by or in the
right of the Company or as to which the Indemnitee
shall have made the conclusion provided for in (ii)
above and such conclusion shall have been so confirmed
by the Company's said outside counsel.
(c) Notwithstanding any provision of this Agreement to the
contrary, the Company shall not be liable to indemnify
the Indemnitee under this Article of any amounts paid
in settlement of any Proceeding or claim effected
without its written consent. The Company shall not
settle any Proceeding or claim in any manner which
would impose any penalty, limitation or
disqualification of the Indemnitee for any purpose
without the Indemnitee's written consent. Neither the
Company nor the Indemnitee will unreasonably withhold
their consent to any proposed settlement.
-7-
6.06 Payment. If it is determined that Indemnitee is entitled to
indemnification not covered by defense of the claim afforded under Section 6.05
above, payment to Indemnitee shall be made within ten (10) days after such
determination.
ARTICLE VII
Presumptions and Effect of Certain Proceedings
----------------------------------------------
7.01 Burden of Proof. In making a determination with respect to
entitlement to indemnification hereunder, the person or persons or entity making
such determination shall presume that Indemnitee is entitled to indemnification
under this Agreement if Indemnitee has submitted a request for indemnification
in accordance with Section 6.01 of this Agreement, and the Company shall have
the burden of proof to overcome that presumption in connection with the making
by any person, persons or entity of any determination contrary to that
presumption.
7.02 Effect of Other Proceedings. The termination of any Proceeding or
of any claim, issue or matter therein, by judgment, order, settlement or
conviction, or upon a plea of guilty or of nolo contendere or its equivalent,
shall not (except as otherwise expressly provided in this Agreement) of itself
adversely affect the right of Indemnitee to indemnification or create a
presumption that Indemnitee did not act in Good Faith.
7.03 Reliance as Safe Harbor. For purposes of any determination of Good
Faith, Indemnitee shall be deemed to have acted in Good Faith if Indemnitee's
action is based on the records or books of account of the Enterprise, including
financial statements, or on information supplied to Indemnitee by the Officers
of the Enterprise in the course of their duties, or on the advice of legal
counsel for the Enterprise or on information or records given or reports made to
the Enterprise by an independent certified public accountant or by an appraiser
or other expert selected with reasonable care by the Enterprise. The provisions
of this Section 7.03 shall not be deemed to be exclusive or to limit in any way
the other circumstances in which the Indemnitee may be deemed to have met the
applicable standard of conduct set forth in this Agreement.
7.04 Actions of Others. The knowledge and/or actions, or failure to act,
of any Director, Officer, employee, agent, trustee or fiduciary of the
Enterprise shall not be imputed to Indemnitee for purposes of determining the
right to indemnification under this Agreement.
ARTICLE VIII
Remedies of Indemnitee
----------------------
8.01 Application. This Article VIII shall apply in the event of a
Dispute. For purposes of this Article, "Dispute", shall mean any of the
following events:
(a) a determination is made pursuant to Article VI of this
Agreement that Indemnitee is not entitled to
indemnification under this Agreement;
-8-
(b) advancement of Expenses is not timely made pursuant to
Article V of this Agreement;
(c) the determination of entitlement to be made pursuant to
Section 6.02 of this Agreement has not been made within
sixty (60) days after receipt by the Company of the
request for indemnification;
(d) payment of indemnification is not made pursuant to
Section 4.05 of this Agreement within ten (10) days
after receipt by the Company of a written request
therefor; or
(e) notice of election by the Company to assume defense of
a claim as provided for in Section 6.05 or payment of
indemnification, as the case may be, is not given or
made within ten (10) days after a determination has
been made that Indemnitee is entitled to
indemnification or such determination is deemed to have
been made pursuant to Article VI of this Agreement.
8.02 Adjudication. In the event of a Dispute, Indemnitee shall be
entitled to an adjudication in an appropriate Court of Indemnitee's entitlement
to such indemnification or advancement of Expenses. Alternatively, Indemnitee,
at Indemnitee's option, may seek an award in arbitration to be conducted by a
single arbitrator pursuant to the rules of the American Arbitration Association.
Indemnitee shall commence such proceeding seeking an adjudication or an award in
arbitration within one hundred eighty (180) days following the date on which
Indemnitee first has the right to commence such proceeding pursuant to this
Section 8.02. The Company shall not oppose Indemnitee's right to seek any such
adjudication or award in arbitration.
8.03 De Novo Review. In the event that a determination shall have been
made pursuant to Article VI of this Agreement that Indemnitee is not entitled to
indemnification, any judicial proceeding or arbitration commenced pursuant to
this Article VIII shall be conducted in all respects as a de novo trial, or
arbitration, on the merits and Indemnitee shall not be prejudiced by reason of
that adverse determination. In any such proceeding or arbitration, the Company
shall have the burden of proving that Indemnitee is not entitled to
indemnification or advancement of Expenses, as the case may be.
8.04 Company Bound. If a determination shall have been made or deemed to
have been made pursuant to Article VI of this Agreement that Indemnitee is
entitled to indemnification, the Company shall be bound by such determination in
any judicial proceeding or arbitration absent (i) a misstatement by Indemnitee
of a material fact, or any omission of a material fact necessary to make
Indemnitee's statement not materially misleading, in connection with the request
for indemnification, or (ii) a prohibition of such indemnification under
applicable law.
8.05 Procedures Valid. The Company shall be precluded from asserting in
any judicial proceeding or arbitration commenced pursuant to this Article VIII
that the procedures and presumptions of this Agreement are not valid, binding
and enforceable and shall stipulate in any such court or before any such
arbitrator that the Company is bound by all the provisions of this Agreement.
-9-
8.06 Expenses of Adjudication. In the event that Indemnitee, pursuant to
this Article VIII, seeks a judicial adjudication of or an award in arbitration
to enforce Indemnitee's rights under, or to recover damages for breach of, this
Agreement, Indemnitee shall be entitled to recover from the Company, and shall
be indemnified by the Company against, any and all expenses (of the types
described in the definition of Expenses in Section 1.08 of this Agreement)
actually and reasonably incurred by Indemnitee in such adjudication or
arbitration, but only if Indemnitee prevails therein. If it shall be determined
in such adjudication or arbitration that Indemnitee is entitled to receive part
but not all of the indemnification or advancement of Expenses sought, the
expenses incurred by Indemnitee in connection with such adjudication or
arbitration shall be appropriately prorated.
ARTICLE IX
Non-Exclusivity, Insurance, Subrogation
---------------------------------------
9.01 Non-Exclusivity. The rights of indemnification and to receive
advancement of Expenses as provided by this Agreement shall not be deemed
exclusive of any other rights to which Indemnitee may at any time be entitled
under applicable law, the Amended and Restated Articles of Organization, the
By-Laws, any agreement, a vote of shareholders or a resolution of directors, or
otherwise. No amendment, alteration, rescission or replacement of this Agreement
or any provision hereof shall be effective as to Indemnitee with respect to any
action taken or omitted by such Indemnitee in Indemnitee's Corporate Status
prior to such amendment, alteration, rescission or replacement.
9.02 Insurance. The Company may maintain an insurance policy or policies
against liability arising out of this Agreement or otherwise.
9.03 Subrogation. In the event of any payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the rights
of recovery of Indemnitee, who shall execute all papers required and take all
action necessary to secure such rights, including execution of such documents as
are necessary to enable the Company to bring suit to enforce such rights.
9.04 No Duplicative Payment. The Company shall not be liable under this
Agreement to make any payment of amounts otherwise indemnifiable hereunder if
and to the extent that Indemnitee has otherwise actually received such payment
under any insurance policy, contract, agreement or otherwise.
ARTICLE X
General Provisions
------------------
-10-
10.01 Successors and Assigns. This Agreement shall be binding upon the
Company and its successors and assigns and shall inure to the benefit of
Indemnitee and Indemnitee's legal representatives, heirs, executors and
administrators.
10.02 Severability. If any provision or provisions of this Agreement
shall be held to be invalid, illegal or unenforceable for any reason whatsoever:
(a) the validity, legality and enforceability of the
remaining provisions of this Agreement (including
without limitation, each portion of any Section of this
Agreement containing any such provision held to be
invalid, illegal or unenforceable, that is not itself
invalid, illegal or unenforceable) shall not in any way
be affected or impaired thereby; and
(b) to the fullest extent possible, the provisions of this
Agreement (including, without limitation, each portion
of any Section of this Agreement containing any such
provision held to be invalid, illegal or unenforceable,
that is not itself invalid, illegal or unenforceable)
shall be construed so as to give effect to the intent
manifested by the provision held invalid, illegal or
unenforceable.
10.03 No Adequate Remedy. The parties declare that it is impossible to
measure in money the damages which will accrue to either party by reason of a
failure to perform any of the obligations under this Agreement. Therefore, if
either party shall institute any action or proceeding to enforce the provisions
hereof, such party against whom such action or proceeding is brought hereby
waives the claim or defense that such party has an adequate remedy at law, and
such party shall not urge in any such action or proceeding the claim or defense
that the other party has an adequate remedy at law.
10.04 Headings. The headings of the paragraphs of this Agreement are
inserted for convenience only and shall not be deemed to constitute part of this
Agreement or to affect the construction thereof.
10.05 Modification and Waiver. No supplement, modification or amendment
of this Agreement shall be binding unless executed in writing by both of the
parties hereto. No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provisions hereof (whether or
not similar) nor shall such waiver constitute a continuing waiver.
10.06 Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if (i)
delivered by hand and receipted for by the party to whom said notice or other
communication shall have been directed, (ii) sent by prepaid commercial
overnight courier, or (iii) mailed by certified or registered mail with postage
prepaid, on the third business day after the date on which it is so mailed:
If to Indemnitee, to: As shown with Indemnitee's
Signature below.
If to the Company, to: BOSTON BIOMEDICA, INC.
-11-
375 West Street
West Bridgewater, Massachusetts 02379
Attention: Richard T. Schumacher, President
or to such other address as may have been furnished to Indemnitee by the Company
or to the Company by Indemnitee, as the case may be.
10.07 Governing Law. The parties agree that this Agreement shall be
governed by, and construed and enforced in accordance with, the laws of the
Commonwealth of Massachusetts without application of the conflict of laws
principles thereof.
-12-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the __ day of ________, 1996.
BOSTON BIOMEDICA, INC.
By: ___________________________
Richard T. Schumacher, President
INDEMNITEE
-------------------------------
Name:
Address: _______________________
_______________________
_______________________
EXHIBIT 11
BOSTON BIOMEDICA, INC. AND SUBSIDIARIES
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
----------------------- -------------------------
1993 1994 1995 1995 1996
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
WEIGHTED AVERAGE SHARES OUTSTANDING:
Average common stock outstanding 2,402,534 2,551,946 2,569,641 2,562,398 2,625,241
Net effect of dilutive common stock
equivalents -- based on treasury stock
method using average market price -- -- 548,542 -- 623,044
Issuance of "cheap stock" 77,117 77,117 74,013 77,117 17,826
------ ------ ------ ------ ------
Weighted average common and common
equivalent shares outstanding 2,479,651 2,629,063 3,192,196 2,639,515 3,266,111
========= ========= ========= ========= =========
ADJUSTED NET INCOME:
Income before extraordinary item 92,586 96,528 102,990 (36,156) 82,869
Extraordinary item -- gain on elimination
of debt, net of income taxes 49,736 -- -- -- --
------ ------ ------- ------ ------
Net income 142,322 96,528 102,990 (36,156) 82,869
Add: net reduction of interest on debt, less
40% taxes based on adjusted treasury stock
method -- -- 27,258 -- 20,894
------- ------ ------- ------- -------
Adjusted net income for earnings per share
calculation 142,322 96,528 130,248 (36,156) 103,763
======= ====== ======= ======= =======
Income (loss) per share 0.06 0.04 0.04 (0.01) 0.03
==== ==== ==== ===== ====
</TABLE>
Exhibit 21
Subsidiaries of the Registrant
Name Jurisdiction of Organization
---- ----------------------------
BBI -- North American Clinical
Laboratories, Inc. Massachusetts
BTRL Contracts and Services, Inc.
(d/b/a Biotech Research Laboratories) Massachusetts
EXHIBIT 23.2
This is the form of the consent which will be issued upon effectiveness of
the common stock split described in the first paragraph of Note 11 to the
financial statements.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
August 23, 1996
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this registration statement on Form S-1 to
issue shares of Common Stock of our reports dated March 12, 1996, except as to
the information in the first paragraph of Note 11, for which the date is
September [ ], 1996 on our audits of the financial statements and financial
statement schedule of Boston Biomedica, Inc. and Subsidiaries. We also consent
to the references to our firm under the captions "Selected Consolidated
Financial Data" and "Experts."
Boston, Massachusetts
See Notes to Financial Statements
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial information extracted from the
Company's audited financial statements for the year ended December 31, 1995 and
the Company's unaudited financial statements for the six months ended June 30,
1996 and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> YEAR 6-MOS
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1995
<PERIOD-START> JAN-01-1995 Jan-01-1996
<PERIOD-END> DEC-31-1995 JUN-01-1996
<CASH> 11,463 10,548
<SECURITIES> 0 0
<RECEIVABLES> 3,218,242 2,999,980
<ALLOWANCES> 142,372 133,579
<INVENTORY> 3,676,851 3,865,219
<CURRENT-ASSETS> 7,129,149 7,250,352
<PP&E> 4,026,668 4,301,587
<DEPRECIATION> 1,411,686 1,676,470
<TOTAL-ASSETS> 9,928,373 10,047,283
<CURRENT-LIABILITIES> 2,300,215 2,753,251
<BONDS> 4,215,501 2,797,581
3,330,948 3,332,217
0 0
<COMMON> 0 0
<OTHER-SE> (144,000) 0
<TOTAL-LIABILITY-AND-EQUITY> 9,928,373 10,047,283
<SALES> 6,621,631 3,945,759
<TOTAL-REVENUES> 12,270,730 6,928,383
<CGS> 7,731,866 4,256,443
<TOTAL-COSTS> 3,850,234 2,288,211
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 181,084 77,145
<INTEREST-EXPENSE> 335,899 168,469
<INCOME-PRETAX> 171,647 138,115
<INCOME-TAX> 68,657 55,246
<INCOME-CONTINUING> 102,990 82,869
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 102,990 82,869
<EPS-PRIMARY> .04 .03
<EPS-DILUTED> .04 .03
</TABLE>
